SCC Arbitration Institute Has Updated its Policy on Disclosure of Third Parties in Arbitration

Key Provisions of the Policy

Under the policy, each party involved in an SCC arbitration must disclose the identity of any third party with a significant interest in the outcome of the dispute in their first written submission. This includes, but is not limited to, funders, parent companies, and ultimate beneficial owners. Additionally, parties are required to promptly disclose any new third parties who acquire a significant interest during the course of the arbitration.

Prospective and appointed arbitrators are mandated to consider this disclosed information when making any declarations of independence and impartiality, as required by Article 18 of the SCC Rules. This article obliges arbitrators to disclose any circumstances that may give rise to justifiable doubts about their independence or impartiality.

Rationale Behind the Policy

The SCC Arbitration Institute identified the need for this policy to address potential conflicts of interest that may arise from relationships between arbitrators and third parties with a vested interest in the dispute's outcome. Traditionally, the information provided in the initial arbitration requests and answers is brief and does not typically include details about such third parties.

Third parties with significant interests may include ultimate beneficial owners, individuals obligated to pay an award under indemnification agreements, recipients of award proceeds under third-party funding agreements, and ultimate parent companies of a party. The policy aims to ensure that arbitrators are fully informed about these interests to avoid any inadvertent conflicts.

Ensuring Neutrality and Preventing Annulment

The SCC Arbitration Institute emphasized that without such disclosures, there is a risk of appointing arbitrators who may unknowingly have relationships that could be considered conflicts of interest. This jeopardizes the neutrality of the arbitral proceedings and increases the risk of the award being annulled.

By updating this policy, the SCC Arbitration Institute aims to uphold the integrity of the arbitration process, ensuring that all disclosures and statements of independence and impartiality are comprehensive and informed. This move is expected to bolster confidence in the SCC arbitration process and maintain its reputation for fairness and transparency.

This updated policy marks a step towards greater transparency and impartiality in SCC arbitrations, reflecting the SCC’s commitment to maintaining high standards in international dispute resolution.