One of the salient features of ISDS is the use of independent arbitrators. This begs the question, who they are and how they are appointed.
As the main function of ISDS is to have investment disputes resolved in a neutral international forum, neutrality should underpin the whole arbitration proceeding, starting from the appointment of arbitrators by both investors and States.
The first and most important consideration in the arbitrators’ appointment is that parties have to choose an arbitrator whose independency and impartiality cannot be second-guessed. Second, they are free to appoint individuals whom they trust to have the expertise in the area of the dispute.
In the event parties or arbitrators appointed by parties failed to appoint the chairperson of a tribunal, a third party can make the appointment. For instance, in SCC arbitration, the SCC Board, which consists of arbitration experts, makes the appointment.
Arbitrators are not beyond the law and there are strict consequences if they fail to maintain their independency and impartiality. An arbitrator may be challenged if there is a reasonable doubt about their competence or impartiality and when this is proven, he or she can be dismissed. Further, an arbitral award may be annulled for reasons of, among others; the Tribunal has exceeded its powers or has committed corruption.
ISDS has a greater transparency compared to commercial arbitration. Transparency allows parties and arbitration institute to access and peruse the awards rendered by potential arbitrators, which will guide them in assessing their independency and impartiality.
To prevent bias, the ICSID Convention provides that the majority of arbitrators should not be the nationals of the parties having dispute. According to a recent article, while mostly lawyers act as arbitrators in ICSID arbitration, non-lawyers, including architects, maritime experts and an economist have been appointed in some instances. ICSID’s appointed arbitrators come from more than seventy different nationalities.
The SCC does not maintain a panel of arbitrator and this allows the SCC to choose arbitrators from different geographic areas, from younger generation as well as to provide more gender balance. The SCC has appointed not only lawyers but also law professors. For more information on the SCC arbitration procedure, see this link.