The Landscape of Arbitrators in Germany - The Institutional Perspective

One of the internationally most prominent and the largest arbitral institution in the German-speaking realm, the German Arbitration Institute (DIS) has not only garnered a reputation for promoting procedural efficiency with its DIS Arbitration Rules 2018 (the “DIS Rules”) but has also positioned itself at the forefront of equal representation in arbitration. While this offers new and exciting opportunities for up-and-coming arbitrators, the DIS is conscious of maintaining the core values and high standards for the arbitrations administered by it. The below interview illustrates the work of the DIS in this key area of interest and reflects on the ensuing challenges. Katia Rener, Associate in the Hamburg Office speaks with Carina Alcoberro Llivina, Senior Counsel at the DIS.

C&C: One of the most discussed topics in international commercial arbitration of late is the lack of diversity and equal representation. Where, in your opinion, does the responsibility for the lack of diversity in arbitral tribunals lie and what are the pitfalls from the perspective of the DIS? 

CAL: When it comes to institutional appointments, the DIS is responsible for promoting diversity and to ensure that female arbitrators make the cut. At the same time, the DIS must balance such responsibility with its obligation towards the parties to ensure that the most qualified arbitrator is selected for a specific dispute. If the case is particularly complex, requires specific experience or expertise, or is likely to raise multiple conflicts, the pool of potential arbitrators may significantly decrease – even excluding potential female candidates altogether. The DIS however always intends to include female candidates in the shortlist. 

C&C: Is the situation the same with party-appointed arbitrators? 

CAL: In the case of party-appointed arbitrators, we sometimes see the opposite in that, on the demand side, parties may select an arbitrator based on reputation and tend to gravitate towards the more well-known or popular arbitrators – many of whom are male and of an older generation. This is not necessarily an indication that parties are per se biased towards female arbitrators, but rather that many qualified female arbitrators are younger or below the parties’ radar. 

C&C: What does the DIS do to promote diversity in arbitral tribunals? 

CAL: Pursuant to Art. 9.2 DIS Arbitration Rules, the DIS may propose names of potential arbitrators to any parties upon such party’s request. Such request may be made at multiple stages before or during the arbitration, for example before submitting a Request for Arbitration, in the Request for Arbitration itself, or after the DIS has invited one or multiple parties to nominate an arbitrator. As with institutional appointments, the DIS takes such recommendations very seriously and will endeavour to propose the most suitable candidates for the specific dispute. To the DIS, such proposals present a unique chance to bring the names of more diverse but equally qualified candidates to the table while giving the parties as many options as possible to select the most suitable arbitrator. If parties are made aware of lesser known but equally qualified candidates, the likelihood for such candidates to be nominated will increase – irrespective of their gender. 

C&C: Are there any other measures the DIS has taken to promote diversity? 

CAL: The DIS has launched the DIS-ERA Pledge Gender Champion Initiative together with the Equal Representation in Arbitration Pledge (ERA Pledge) in October 2019. Building on the work of the ERA Pledge, the project aims to promote gender equality in international arbitration. Participating firms and organisations are asked to nominate an individual to act as a Gender Champion within their organisation. The Gender Champions monitor the appointment of female and male arbitrators nominated by their firms. The statistical data collected by the Gender Champions will remain within their firms and will not be recorded or published.

C&C: What is the idea behind the Gender Champion Initiative?

CAL: The Gender Champion Initiative was initiated to increase the effectiveness of statistical self-monitoring and to raise awareness for gender equality in international arbitration. The Gender Champions exchange the collected data on arbitrator appointments as well as their experiences with the appointment of female arbitrators in conference calls regularly held with DIS. 

C&C:  Are there any reports on how successful any of these measures have been? 

CAL: The DIS publishes its current statistics on arbitrator appointments on its website which can be accessed here. In the year 2022, 44.4% of arbitrators appointed by the DIS were female compared to 17.04% of party-appointed arbitrators and 30% of arbitrators appointed by the co-arbitrators. Of all three-member tribunals, 48% were all male and 0% were all female. When it comes to the composition of arbitral tribunals, 33% of presiding arbitrators, 45% of sole arbitrators and 16% of co-arbitrators were female. It may be too early to assess whether these numbers are related to the Gender Champion Initiative but the DIS sees this as a promising starting point to continue the mission to promote diversity in DIS arbitrations. 

C&C: Are conflicts of interest a concern while promoting diversity in DIS arbitrations? What are the rules governing the arbitrator’s disclosure obligations in international arbitrations under the DIS Rules? 

CAL: The DIS Arbitration Rules do not contain a standard for independence or impartiality. Potential arbitrators routinely resort to the IBA Rules on Conflicts of Interest as international best practice to assess whether they are able to accept an appointment as arbitrator or whether there are facts or circumstances that need to be disclosed. This may vary from case to case and may also depend on the specific circumstances of the arbitrators themselves; whether they are independent practitioners or members of a global law firm, whether they regularly sit as arbitrators or act as party counsel in a specific industry or for specific companies. The duty of disclosure stems directly from Art. 9.4 DIS Arbitration Rules, pursuant to which each prospective arbitrator shall disclose any facts or circumstances that could cause a reasonable person in the position of a party to have doubts as to the arbitrator’s impartiality and independence. It affects all prospective arbitrators irrespective of their gender. 

C&C: Does the DIS issue any guidelines or make recommendations as to what a prospective arbitrator should disclose? Is there a risk of being disqualified for disclosing “too much”? 

CAL: There is no “one size fits all” solution. What an arbitrator shall or shall not disclose is highly individual and depends on the specific circumstances of the case. The IBA Guidelines as international best practice are a good indicator for what needs to be disclosed but, in the end, it will come down to whether the parties of the individual dispute have any doubts as to an arbitrator’s independence and impartiality based on their disclosure. As a rule, the DIS will recommend that the arbitrators make their disclosures as detailed as possible so that the parties are put in the position where they can easily assess whether a piece of information is relevant to the dispute and may affect the arbitrator’s independence and impartiality. If the arbitrators are as transparent in their disclosure as possible, this is likely to increase the parties’ trust. If any undisclosed information previously known to the arbitrator is revealed at a later stage such trust may be called into question. 

C&C: What can prospective arbitrators do if the parties object to their appointment or if they are challenged at a later stage of the proceedings? 

CAL: The decision on an objection or challenge lies exclusively with the DIS; more specifically, with two distinct decision-making bodies. Parties may object to the appointment of an arbitrator or challenge arbitrators once they are appointed. In case of an objection, pursuant to Art. 13.2, 13.3 DIS Arbitration Rules, the Appointing Committee of the DIS decides whether the prospective arbitrator shall be appointed or not. In case of a challenge, the Arbitration Council of the DIS shall decide pursuant to Art. 15.4 DIS Arbitration Rules. Before each decision is made, the parties and the arbitrators are invited to comment on the objection or challenge. The Secretariat will carefully evaluate such comments and all facts of the case and prepare a written statement for the Appointing Committee or the Arbitration Council summarizing the issues, referring to any existing practice in comparable cases (if any) and making a non-binding recommendation based on the specific case. When making such recommendation, the Secretariat will also look at the IBA Guidelines as international best practice and try to balance the conflicting interests in the specific case. While the Appointing Committee and the Arbitration Council treat every decision with the utmost concern this does not mean that any reason for the objection or challenge will be accepted. Rather, the decision-making bodies of the DIS will closely examine whether the reasons upon which the objection or challenge is based present justifiable doubts as to an arbitrator’s independence and impartiality. 

C&C: Is double-hatting i.e., where an individual acts in two different capacities for example as an arbitrator and counsel or arbitrator and an expert, etc., becoming a concern in the context of international arbitrations under the DIS Rules? 

CAL: This is not a concern that is exceedingly prevalent in DIS arbitrations. First, because DIS arbitrations are subject to strict confidentiality under Art. 44 DIS Arbitration Rules. Awards may only be published with the prior written consent of the parties which is seldom given. The risk that an arbitrator may consciously or unconsciously decide in a way that is advantageous to the interests of his or her client in another proceeding is thus limited to begin with. While many arbitrators in DIS arbitrations have previously acted as party counsel – and vice versa – or have been appointed as experts, mediators, etc., the problem of double-hatting is more a problem of the duty of disclosure. If there are no conflicts relating to an individual case, and no party raises any objections, it is unlikely that there will be any issue related to double-hatting. 

C&C: Are arbitrators in DIS arbitrations governed by any rules that prevent or limit double-hatting? Are there any more general rules, guidance as to the circumstances in which arbitrators can act in two or more different capacities in international arbitrations? 

CAL: This will ultimately come down to the question whether an arbitrator may act in two or more capacities in the same or a similar context. There are no specific rules in the DIS Arbitration Rules itself preventing or limiting double-hatting per se. However, the Appointing Committee or the Arbitration Council may prevent a person from acting as arbitrator who has a previous connection to or any other significant interest in the outcome of a dispute. 

C&C: Does the DIS offer any further guidance for arbitrators that have received their first appointment in a DIS arbitration? 

CAL: Arbitrators may always reach out to the DIS Secretariat for advice at any stage of the proceedings. Our staff will always try to assist with any procedural issue that may arise during the course of the arbitration. Once the award is made, the DIS will review it and make non-binding recommendations on formalities or any other aspects that might come to its attention, such as the correct calculation of the costs. 

C&C: What can prospective arbitrators do to get appointed or recommended by the DIS?

CAL: The DIS does not have a closed list of arbitrators but operates based on its extensive institutional memory. Prospective first-time candidates will likely be known to the DIS in the context of arbitrations administered by it – either as party counsel or tribunal secretary – or from speaking engagement or networking at DIS events. Anyone who is interested in acting as arbitrator in a DIS arbitration is encouraged to get active and meet the members of the Case Management Team. The DIS is always keen to meet new and interesting candidates and to add them to its pool of prospective arbitrators. 

This series will continue next week with the position from Singapore.