The International Bar Association's Arbitration Committee recently released updated Guidelines on Conflicts of Interest in International Arbitration,
1 now commonly known around the world simply as the “IBA Guidelines.” These revisions modernize the previous 2014 edition without altering their core principles. Additionally, the IBA has issued a useful comparative document illustrating the differences between the 2014 and 2024 versions of the Guidelines, facilitating easier understanding of the recent changes.
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The IBA Guidelines have been widely relied upon in Malaysia for many years and are expected to remain extensively utilized across various arbitration domains in the future, in particular for commercial disputes. This brief commentary:
The background to the 2024 amendments
Initially published in 2004, the IBA Guidelines have quickly evolved
3 into a widely acknowledged framework reflecting global norms of arbitrator impartiality and independence. The 2024 edition of these guidelines retains its dual-part structure. Part One delineates overarching principles concerning impartiality, independence, and disclosure, while Part Two delves into specific scenarios commonly found in international arbitration, employing a “traffic light system” of red, orange and green lists to aid in practical application. This system has proven instrumental in implementing the IBA Guidelines effectively.
The 2024 revision stems from a comprehensive survey conducted among arbitration professionals and stakeholders in 2022. Results affirmed the continued relevance of the IBA Guidelines and rendered a complete overhaul of the 2014 version unnecessary. However, as our world is rapidly evolving, so are various aspects of the arbitral process. Therefore, certain areas required modernization or fine-tuning. The amendments in the 2024 Guidelines underscore the primacy of the general standards outlined in Part One. These standards must always guide assessments of conflicts of interest and disclosure needs, prioritizing them over the specifics outlined in Part Two's traffic light lists.
Key revisions to the IBA Guidelines
Key revisions to Part One
Key amendments to the general standards outlined in Part One of the IBA Guidelines include:
Enhanced user-friendliness
Finally, from a practical perspective, the latest revisions to the IBA Guidelines bring a notable improvement in user-friendliness. A key enhancement is the addition of a table of contents complete with hyperlinks, a feature absent in prior versions of the IBA Guidelines. This small but significant change streamlines navigation through the IBA Guidelines, allowing users to swiftly access relevant sections with ease. Although not a change to the substance, for busy lawyers and arbitrators, this means saving valuable time and effort, ultimately enhancing the practical usability of the IBA Guidelines.
Take-aways for Malaysia – what Malaysian arbitrators and counsel should consider
The IBA Guidelines are not as widely used in Malaysia as in other jurisdictions
As the author knows from his time as Head of Legal Services at the
Asian International Arbitration Centre and as counsel in arbitration proceedings in Malaysia/with a Malaysian nexus, there are often (but by no means always!) misconceptions about the IBA Guidelines in Malaysia. The most common misconception is that the IBA Guidelines stand as “
mere recommendations” and should thus not be given much weight, if any at all.
Possibly because of this misconception, in the author’s experience, both Malaysian arbitrators and counsel often do not even consult the IBA Guidelines or make reference to them in their submissions when there are circumstances that give rise to justifiable doubts as to an arbitrator’s impartiality or independence. As far as can be seen, no court in Malaysia has ever dealt with the IBA Guidelines
4 and maybe it is for this reason that the IBA Guidelines appear to not be given the weight in Malaysia they deserve, considering their international prominence.
The author also encountered the “reasoning” in Malaysia several times that there cannot be a situation that gives rise to justifiable doubts as to the arbitrator’s impartiality or independence “
when a specific circumstance is not described in the IBA Guidelines.” This could hardly be any further from the truth, as the IBA Guidelines make clear themselves in the introduction.
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In the author’s experience, this leads to less disclosure of (prospective) arbitrators. This can also be explained by – yet another misunderstanding – the fact that many consider a disclosure to mean that the arbitrator himself/herself takes the view that there is a conflict of interest. Again, this is a myth which could be easily dispelled by a closer look at the IBA Guidelines.
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Finally, there appears to sometimes be a perception that an arbitrator “
is above all potential conflicts” and as a result needs not make any disclosures or can brush them aside. The author has observed several situations where an arbitrator made a disclosure during the arbitration “
out of an abundance of caution” only to emphatically state that there could not be any doubt as to that arbitrator’s impartiality or independence.
Greater awareness and understanding of the IBA Guidelines would be beneficial
The lack of greater awareness and understanding of the IBA Guidelines thus means that all stakeholders except for the concerned arbitrator often operate with less information than would be the case in other jurisdictions. This makes the entire process less efficient, to the detriment of parties involved in Malaysian proceedings.
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At the international level, the lack of greater awareness and understanding of the IBA Guidelines puts Malaysian counsel at a disadvantage in arbitration proceedings. Whilst their foreign counterparts may use the IBA Guidelines to their advantage, this would be more difficult for Malaysian counsel, who lacks experience in their application. Equally, Malaysian arbitrators who are less familiar with the IBA Guidelines may find it difficult to make the appropriate disclosures in international arbitration proceedings. This may ultimately result in their successful challenge.
Conclusion
As is set forth in the IBA Guidelines, they “
embody the understanding of the IBA Arbitration Committee as to the best current international practice, firmly rooted in the principles expressed in the General Standards […]. The General Standards and the Application Lists are based upon statutes, practices, and case law and other decisions in a cross-section of jurisdictions, and upon the judgment and experience of the main participants in international arbitration.”
Their use applies a more uniform standard to situations which could give rise to justifiable doubts as to the arbitrator’s impartiality or independence. This more uniform standard in turn leads to greater efficiency in arbitration proceedings. Therefore, it must be hoped that the updated IBA Guidelines will be more widely relied upon in arbitration proceedings in Malaysia than their predecessors from 2014 and 2004.
Dr. Harald Sippel, MBA is a Foreign Lawyer at Skine and acts as arbitrator (chair, sole, wing) and counsel in international arbitration proceedings. He was previously in charge of the case management team at the Asian International Arbitration Centre, where he supervised the administration of several 100 arbitrations.
3 The impact of the IBA Guidelines was immediate. As reported by Matthias Scherer, Chair of the IBA Conflicts of Interest Subcommittee (2008/2009), in a paper on the use of the 2004 IBA Guidelines, “
most international arbitrators consult the Guidelines whenever they must exercise their judgment on whether to disclose circumstances that might be viewed as conflicts. Whilst the courts in most cases rightly do not directly apply the IBA Guidelines, the cases reported below illustrate that courts called on to decide on challenges to arbitrators are increasingly referring to the IBA Guidelines.”
See Scherer, M., The IBA Guidelines on Conflicts of Interest in International Arbitration: The First Five Years 2004–2009, available at
www.lalive.law/data/publications/The_IBA_guidelines_on_conflicts_of_interest_in_international_arbitration.pdf (last accessed on 2024-03-06).
4 However, in a decision from July 2015, the High Court mentioned the IBA Guidelines when summarizing one party’s submission.
See MMC Engineering Group Bhd v Wayss & Freytag (M) Sdn Bhd. & Anor [2015] MLJU 477.
5 As such, para. 7 states that “
[t]he Application Lists contained in Part II cover many of the varied situations that commonly arise in practice, but they do not purport to be exhaustive, nor could they be.”
6 Item (c) of (3) Disclosure by Arbitrator states as follows: “
It follows from General Standards 1 and 2(a) that arbitrators who have made a disclosure consider themselves to be impartial and independent of the parties, despite the disclosed facts, and, therefore, capable of performing their duties as arbitrator. Otherwise, the arbitrators would have declined the nomination or appointment at the outset, or resigned.”
7 It must be noted that the IBA Guidelines should generally relied upon in international proceedings. However, they also serve as a useful guidance in domestic proceedings.