Reconceptualizing the Party-Appointed Arbitrator and the Meaning of Impartiality

Abstract

Despite the popularity of the age-old practice, several prominent arbitrators and industry leaders have proposed eliminating party-appointed arbitrators. These critics contend that party-appointment injects bias into a tribunal that is supposed to be impartial.

Various empirical studies seem to confirm the uncomfortable contradiction between the rhetoric of impartiality and the purportedly biased conduct of party-appointed arbitrators. Most of these empirical claims, however, are deeply flawed both in both their substance and methodology. More fundamentally, these claims also ignore Legal Realism’s insight that decisionmaker “bias” (or reliance on extra-legal factors) is an inevitable consequence of law’s inherent indeterminacy.

If some forms of bias are inevitable, the key inquiry is not whether bias exists, but more nuanced questions: Which forms of bias are legitimate? Who decides which forms of bias are legitimate? And, How do we police the boundary between legitimate and illegitimate forms of bias?

This Article answers those questions with respect to party-appointed arbitrators.

Rejecting both critiques and defenses, this Article instead makes an affirmative case for party-appointed arbitrators. This Article reconceptualizes party-appointed arbitrators as an essential structural check against various forms of cognitive bias that necessarily exist among all arbitrators on all on arbitral tribunals. Arbitrators’ cognitive biases cannot be eliminated, even by eliminating party-appointed arbitrators. They can, however, be bounded and counter-balanced by reconceiving party-appointed arbitrators as a type of Devil’s Advocate that guards against cognitive biases that distort tribunal decisionmaking.

In this reconceptualized role, party-appointed arbitrators provide a check against individual- and group-based cognitive biases, ensure representativeness on the tribunal, establish a structural counterweight to the opposing party-appointed arbitrator. This reconceptualized role portends specific impartiality obligations that are both more conceptually coherent and more consistent with actual practice and expectations.

Keywords: international arbitration, groupthink, cognitive biases, international law, investment arbitration

JEL Classification: K41, K33