Article 14(1) of the ICSID Convention requires that all ICSID arbitrators "should be persons of high moral character ... who may be relied upon to exercise independent judgment". Article 57 of the Convention provides for challenges to arbitrators on the basis that the arbitrator has exhibited "a manifest lack of the qualities" required by Article 14(1) of the Convention. For further discussion, see Practice note, ICSID arbitration: a step-by-step guide: Challenging arbitrators.

In Hrvatska Elektroprivreda DD v The Republic of Slovenia (ICSID Case No ARB/05/24), an ICSID tribunal held that it had power to exclude a barrister from arbitral proceedings (see Legal update, ICSID tribunal has power to exclude barrister).

The claimant instructed a firm of solicitors to represent it in an ICSID arbitration. Part way through the proceedings, the claimant informed the tribunal and the respondent that the conduct of the case would be passed to a particular partner in that firm, BL. The respondent objected on the grounds that BL had previously been employed by a firm in which one of the arbitrators was a partner. The respondent applied for an order requiring the claimant to remove BL from the case and to forbid him from participating in it in any way.

The tribunal refused the order.

It noted that the basis for the respondent's objection was, in essence, that the presence of BL might give rise to potential bias on the part of the arbitrator. However, the respondent had not made any application to remove the arbitrator. Instead, it had elected to challenge the claimant's chosen legal representative.

Although the tribunal accepted that, in principle, there was an inherent power to exclude counsel, this power arose as part of a more general power to ensure the integrity of the arbitral process. The tribunal expressly refrained from deciding the limits of such power, but noted that it would be exercised only rarely and in compelling circumstances, where there was an overriding and undeniable need to safeguard the essential integrity of the entire arbitral process.

Analysing the position in more detail, the tribunal noted that there was no requirement for legal representatives to be impartial or unbiased. On the contrary, parties were entitled to freedom of choice in their legal representation. There was no necessary tension between the basic principles of the independence and impartiality of the tribunal on the one hand, and the freedom of representation on the other. In most cases, the tribunal should balance these two principles rather than assigning priority to one over the other.

In the present case (applying the test established in the English case of Porter v Magill [2002] 2 WLR 37), the evidence did not establish that there was a "real possibility" of bias and there was, therefore, no basis for the tribunal interfering in the claimant's choice of legal representation.

This is a difficult area of law that has given rise to a good deal of debate. The award represents a deliberate retreat from Hrvatska. The tribunal clearly wished to discourage challenges to legal representatives, noting that "to put the matter bluntly, there should be no room for any idea to gain ground that challenging counsel is a handy alternative to raising a challenge against the tribunal itself, with all the consequences that the latter implies". Hrvatska was carefully distinguished and analysed as a case where the tribunal had imposed an "ad hoc sanction for the failure to make proper disclosure [of the late appointment of the barrister in question]", rather than as a "holding of more general scope". Whether or not this case will be followed in the future remains to be seen.