Guilty or not guilty of non-disclosure ?

The Problem

The judicialization of arbitration and the increasing aggressiveness of many members of the arbitration community who want to win “at any cost”, while they probably make aggressive litigants quite happy, may give rise in various ways to a sort of “witch   hunting”.

A very fertile ground for such fighters is the challenge of arbitrators for non-disclosure.

While on the one hand, arbitrators who purposely hide facts which might create reasonable concern as to their impartiality cannot be praised for that, on the other hand it may happen that an arbitrator, in spite of his conflicts check, does not become aware of facts which might create some legitimate concern in one of the parties.

If one of those aggressive fighters is involved in a similar situation, the arbitrator is very likely to be challenged. His/her non-disclosure is thrown on him/her as a sign of serious misconduct and even his/her private life may be seriously affected by them.

These excesses cannot of course produce a balanced situation.

While the arbitrator is bound to find out whether there is any fact which might give rise to a reasonable doubt as to his/her impartiality, when he/she has not deliberately breached that duty, perhaps he/she should not be crucified.

 

The judgment

In this respect, in Case no. Heisei 28[1], the Supreme Court of Japan has issued a ruling which seems to deserve attention. The Court, disagreeing with the standard set up by the Osaka High Court, has held that the arbitrator has a duty to disclose all the facts that would give rise to doubts as to his/her impartiality or independence if he/she was aware of such facts or could have discovered such facts by conducting a reasonable investigation.

 

Two Comments

 The first comment is that it is true that wisdom is a top quality of Asian civilisation.

The second one is that perhaps in front of the challenge of an award on the ground that the arbitrator has not disclosed relevant facts, the conclusion on the one hand could be to affirm that the arbitrator has not breached his/her duty of correctness if he has made a reasonable investigation, and on the other hand to set aside the award, if the non-disclosed fact gives rise to a reasonable doubt as to his/her impartiality or the arbitrator’s independence.

 

[1] Supreme Court, Third Bench, Decision 12 December 2017, Case no. Heisei 28 (Kyo) 43, reported by Yoshiaki Muto, Baker McKenzie, Global Arbitration News, in GAR Arbitration News, 11 June 2019.

About the article

This article has been published by Mauro Rubino-Sammartano on Lexology

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