Gorriceta Africa Cauton & Saavedra | View firm profile
By: Atty. Mary Christine Salome C. Florete (Partner for Visayas)
December 9, 2025
- Introduction
In the landscape of dispute resolution, the quality of arbitrator selection is not merely essential—it is arguably the most monumental factor, surpassing even the brilliance of case theory development. An arbitration award that cannot be successfully enforced is, at a minimum, as detrimental as losing the dispute on its merits. The losing party will invariably seek to weaponize any perceived procedural lapse, claiming a failure to observe the duty to treat the parties equally, whether judged by a subjective or objective standard.
This critical issue of maintaining impartiality and avoiding conflict was top of mind when I recently attended “Navigating Conflicts: Insights into the IBA Guidelines on Conflicts of Interest in International Arbitration.” The event, held on 14 November 2025 at the Makati Shangri-La, was jointly sponsored by the International Bar Association and the Philippine Dispute Resolution Center, Inc., and provided valuable insights into the very guidelines designed to mitigate the risks discussed above.
The stakes of a flawed appointment are immense. Imagine a scenario where a client secures a multi-billion-dollar damages award for a complex breach of contract, only to have the entire judgment set aside based on the New York Convention. The procedural challenge could stem from something as seemingly innocuous as an arbitrator’s previous comments made on social media. This risk is not merely theoretical; a comparable procedural challenge was successfully raised in the landmark case of Sun Yang v. WADA before the Swiss Federal Supreme Court.
- Background of the IBA Guidelines on the Conflict of Interest
To address these systemic risks and provide a necessary lex specialis, the IBA Guidelines were formally introduced in 2004. This landmark initiative represented a critical step toward codifying best practices, emerging from the dedicated work of a working group comprising 19 esteemed experts under the auspices of the IBA Arbitration Committee. Their core mandate was to establish a globally recognized, uniform standard for assessing arbitrator independence and impartiality. Consequently, the Guidelines are fundamentally designed to compel the comprehensive and timely disclosure of all existing and potential relationships between the parties, their counsel, and the arbitrators that could legitimately raise an objective doubt as to the neutrality of the decision-makers.
The core of the Guidelines is a tiered disclosure framework, delineated into the Red Lists (Non-Waivable and Waivable), the Orange List, and the Green List. This structure provides a granular classification of relationships and circumstances, offering a systematic and objective methodology for assessing the independence and impartiality of arbitrators, counsel, and parties. Recognizing the imperative for evolution, the IBA Arbitration Committee established a sub-committee on Conflicts of Interest in 2012. This subsequent effort focused on refining the rules through a rigorous, consensus-driven process, involving extensive consultation with a broad spectrum of stakeholders, including arbitral institutions, in-house counsel, and practitioners. The sub-committee’s crucial work was led by David Arias, and later co-chaired by Julie Bédard, under the distinguished committee leadership of Pierre Bienvenu and Bernard Hanotiau.
The initial efforts culminated in the promulgation of the revised Guidelines in 2014, which effectively governed the standard for a decade. A comprehensive review was consequently mandated, leading to substantive revisions that were officially introduced in 2024. These incremental updates are strategically designed to keep pace with the dynamic nature of international arbitration, notably addressing emerging complexities in third-party funding, the impact of social media on disclosure duties, and the need for tighter, more prescriptive rules on general disclosure.
- The 2024 Guidelines: Reinforcing the Duty of Reasonable Inquiry
The 2024 Guidelines, while maintaining the foundational tiered disclosure framework of the colored classifications, introduce substantive revisions that fundamentally enhance clarity, reinforce party autonomy, and refine the standard for reasonable inquiries. The standard of reasonable inquiry, as articulated by the rules, is a mechanism to secure accountability and transparency among the disputing parties and the appointed arbitrators, ensuring the procedural integrity and sustaining public confidence in the efficacy of arbitration.
New rules have been strategically introduced as procedural guardrails, designed to prevent parties from abusing the disclosure process by imposing onerous or disproportionate burdens. A prime example is General Standard 4, which introduces the concept of a presumed waiver when a party fails to make a timely objection to an arbitrator’s potential conflict, thereby reinforcing the principles of promptness and good faith.
IBA Guidelines on Conflicts of Interest in International Arbitration
The IBA Guidelines on Conflicts of Interest in International Arbitration are a crucial tool in addressing concerns about arbitrator impartiality and independence (Moses, 2024). Originally introduced in 2004, they have been widely accepted and reflect best international practices, providing guidance to arbitrators, parties, and institutions (Crook, 2019; Moses, 2024). The 2014 revisions aimed to clarify their application in commercial and investment arbitration, extending to non-legal professionals as arbitrators, and addressing issues like advance waivers and the complexities of increased disclosures (Petti and Voser, 2015; Marques and Mas, 2021; Moses, 2024). These guidelines, though not legally binding, are frequently consulted in assessing disclosure obligations (Crook, 2019). The guidelines emphasize an arbitrator’s duty to conduct reasonable inquiries to identify potential conflicts of interest or circumstances that could raise doubts about their impartiality or independence (PACHAHARA and GANDHI, 2022).
Duty of Reasonable Inquiry
General Standard 7 of the IBA Guidelines explicitly states that an arbitrator has a duty to make reasonable inquiries to identify any conflict of interest or facts that might raise doubts about their impartiality or independence. A failure to disclose a conflict is not excused if the arbitrator did not perform such reasonable inquiries (PACHAHARA and GANDHI, 2022; Brosseau, 2023). This duty extends beyond an arbitrator’s existing knowledge, requiring proactive investigation (Brosseau, 2023; Li, 2024). Some institutional rules, however, do not explicitly impose this duty to investigate (Brosseau, 2023).
Insignificant Holdings
Regarding insignificant holdings, the general view in arbitration is that a minor ownership interest in a company or a “de minimis” economic interest typically does not warrant disqualification (Park, 2012). The IBA Guidelines and other ethical standards incorporate a notion of triviality to prevent arbitration from being easily disrupted by minor connections (Park, 2012). The document you provided mentions the 2024 Guidelines introduce a change where trivial stakeholdings no longer require disclosure under General Standard 4.5.2, aiming to enhance efficiency. While I found discussions on “de minimis” interests and the evolution of disclosure requirements, specific details on this particular change in the 2024 Guidelines regarding General Standard 4.5.2 were not explicitly detailed in the external search results to directly cite that specific rule change from the 2024 version. However, general principles regarding insignificant holdings are consistent (Park, 2012).
Enforcement Risk and the New York Convention
The enforceability of arbitral awards is paramount. The New York Convention outlines grounds for refusing recognition and enforcement, including situations where the arbitral procedure or tribunal composition was not in accordance with the agreement of the parties or applicable law, or if the award’s scope exceeds the submissions (Park, 1999; Kurniawan, 2017; Seyadi, 2017; Zaheeruddin, 2023; Brower, 2024). Courts may also refuse enforcement if the subject matter is not arbitrable or if enforcement goes against public policy (Kurniawan, 2017; Zaheeruddin, 2023). Some jurisdictions, however, have enforced annulled awards if the annulment procedure was considered unfair, biased, or violated fundamental norms of justice (Zaheeruddin, 2023).
Sun Yang v. WADA Case
The Sun Yang v. WADA case is a notable example of a procedural challenge in sports arbitration. The Swiss Federal Court overturned the Court of Arbitration for Sport decision due to concerns regarding arbitrator impartiality, highlighting the critical importance of fair hearing rights and equal treatment for parties in sports arbitration (Vetrova, Khalatova and Kashaeva, 2021; Baddeley, 2022). This case underscored the need for arbitrators to fulfill impartiality requirements (Baddeley, 2022).
Third-Party Funding in International Arbitration
Third-party funding is increasingly common in international arbitration (Doğan, 2022). This practice involves a third party financing arbitration proceedings in exchange for a share of the proceeds (PACHAHARA and GANDHI, 2022). While TPF aims to provide access to justice for parties who might otherwise find arbitration financially prohibitive (Puri, 1998; Mechantaf, 2019; 2024), it also raises disclosure requirements (Kadarisman, 2019; Li, 2024). Arbitral institutions and national regulations often require disclosure of funding arrangements to ensure transparency, prevent conflicts of interest, and allow for appropriate cost allocation (PACHAHARA and GANDHI, 2022; Brosseau, 2023; Li, 2024). The IBA Guidelines, while not binding, encourage disclosure of relationships between arbitrators and entities with a direct financial interest in the award, including third-party funders (Tufte-Kristensen and Pihlblad, 2016; PACHAHARA and GANDHI, 2022).
Champerty
Historically, TPF has been juxtaposed with the common law doctrines of champerty and maintenance, which prohibited outsiders from supporting litigation, often for profit (Kidd, 2017; Mechantaf, 2019; Muriithi, 2022; PACHAHARA and GANDHI, 2022). These doctrines originated in medieval times to prevent abuses and exploitation (Kidd, 2017; PACHAHARA and GANDHI, 2022). However, in modern arbitration, particularly in jurisdictions like England and Hong Kong, these doctrines are increasingly considered not to apply to arbitral cases, allowing for the growth of TPF (Theoduloz, 2019; Doğan, 2022).
Arbitrator Impartiality and Independence
Arbitrator independence and impartiality are fundamental principles in commercial arbitration globally (PACHAHARA and GANDHI, 2022). Independence refers to the absence of improper connections, while impartiality relates to the absence of bias or prejudgment (Park, 2012; Al‐Hawamdeh, Dabbas and Al-Sharariri, 2018; Bungenberg and Reinisch, 2019; Whitfield, 2023).
Another notable feature of the 2024 Guidelines is the reinforced duty of both the parties and the arbitrator. This is covered by General Standard 7, which requires both parties to provide all relevant information to fulfill their general disclosure obligations. The revised text of General Standard 7(d) provides: An arbitrator is under a duty to make reasonable enquiries to identify any conflict of interest, as well as any facts or circumstances that may reasonably give rise to doubts as to the arbitrator’s impartiality or independence. Failure to disclose a conflict is not excused by lack of knowledge if the arbitrator does not perform such reasonable enquiries. General Standard 7(d) provides:
An arbitrator is under a duty to make reasonable enquiries to identify any conflict of interest, as well as any facts or circumstances that may reasonably give rise to doubts as to the arbitrator’s impartiality or independence. Failure to disclose a conflict is not excused by lack of knowledge if the arbitrator does not perform such reasonable enquiries.
Crucially, this duty of reasonable inquiry extends to associated entities, such as affiliates, third-party funders, and any entity with an economic interest in the arbitral outcome. While the Guidelines intentionally avoid exhaustive definitions, the concept of “reasonable inquiries” is interpreted to encompass accessible, non-speculative efforts that effectively balance procedural transparency with non-obstructive practices.
- Case Law on Green List Elements
A key revision introduced in the new guidelines concerns the treatment of insignificant holdings. In the 2024 iteration, trivial stakeholdings in one of the parties no longer require disclosure under General Standard 4.5.2, a change intended to enhance the efficiency of the appointment process by avoiding unnecessary jurisdictional questions before the tribunal. However, a potential risk of this refinement is an increased risk of oversight if parties fail to proactively disclose.
A relevant case for this matter is Monster Energy Co. v. City Beverages on undisclosed institutional ties. Here, one of the parties had insignificant shareholdings. Monster entered into a distribution agreement with the respondent, granting it exclusive rights to distribute its products. The contract allowed the claimant to terminate the agreement without cause upon the payment of a severance fee. The claimant later terminated the agreement and offered to pay an amount to the respondent. The latter refused, claiming it was protected by law. Claimant filed an arbitration before the JAMS. Later, the parties appointed an arbitrator who disclosed that he had a general economic interest in JAMS’ success. Later on, the arbitrator ruled in favor of Monster. During the enforcement stage, the respondent questioned the enforceability of the award on the ground that the arbitrator failed to disclose his ownership interest in JAMS and its business dealings with the Claimant, pursuant to the Federal Arbitration Act. The district court confirmed the award.
Eventually, the Ninth Circuit reversed the district court, finding that the respondent did not waive its claim because it lacked constructive knowledge of the arbitrator’s ownership interest. Thus, the award was vacated.
- Key Themes from the IBA-PDRCI Event
The event, co-hosted by the IBA and PDRCI, featured in-depth discussions on the significance of the new IBA Guidelines. Participants explored the major revisions affecting parties and arbitrators, including expanded disclosure duties, measures to control external influence on decisions, and the formal codification of the ongoing duty to conduct reasonable inquiry.
During the morning sessions, there was consensus among its panelists that soft law must reflect the modern realities brought by social media, conferences, and professional networks. Interestingly, the discussion pivots to whether institutions ought to adopt the 2024 Guidelines into their institutional rules. Although there were arguments in favor of a more organic over a more compulsive approach, it was clear that, according to the Report on the reception of the IBA Arbitration soft law products spearheaded by the IBA Arbitration Guidelines and Rules Subcommittee, 65% of counsels and 67% of decision-makers heavily rely on the IBA Guidelines in conflict cases.
With social media blurring the lines between professional and social relationships, the panel’s key takeaway was that a simple LinkedIn connection falls under the Green List. This means an arbitrator is not required to disclose it. However, certain areas were identified as gray areas, such as whether to disclose the relationship between the arbitrator and the counsel where the latter was a student of the former. This warrants a case-specific disclosure. Another interesting area, especially in the Philippine context, was the potential conflict arising when the arbitrator and one of the counsels are members of the same fraternity. It was noted that fraternity and sorority dynamics are common in the Philippines. For the sake of transparency, it was argued that the most prudent course was to disclose, but one member believed that it should not permanently bar an arbitrator from exercising jurisdiction simply because a fraternity brother serves as one of the counsel.
Diversity was also addressed, as it is believed that the lack of diversity is no longer limited to gender alone but also includes factors such as access to prior professional experience.
During the afternoon’s session, the focus was on a multifaceted examination of third-party funding. It would seem that third-party funding was no longer an esoteric question but rather part of a reality in which it converged with the idea of access to justice for sectors that found arbitration financially prohibitive at its outset. It was a view in the afternoon’s panel that third-party funding should not be viewed with suspicion. Concerns on champerty were raised as our own courts view an outsider who finances the preparation of a case with aspersion. Again, issues of disclosure could not be dismissed as mere hints of the risk of arbitrator bias arising from the arbitrator’s financial interests, and the potential third-party funder was flagged. The dialogue is balanced with a funder-driven, practical insight, and it blends plausible legal interpretations and advances policy advocacy to establish a strong Philippine foundation for adopting modern arbitration practices.
A pivotal moment arose during discussions as the case Rodco v. Ross (2018) was raised. The case stems from a dispute between a seafarer who initiated claims against the manning agency that hired him to serve on a foreign shipowner’s vessel. This dispute impleaded the insurer as well. The complainant authorized Rodco Consultancy and Maritime Services Corporation to process his claims on his behalf in exchange for reimbursement of expenses and a portion of the proceeds.
In satisfaction of the services given by Rodco, Ross and his wife issued two checks totalling P1,240,800 pesos. When Rodco presented the checks for payment, the two checks were dishonored for having insufficient funds. Because of this, Rodco filed a complaint for Sum of Money and Damages before the Regional Trial Court (RTC). The RTC ruled in favor of Rodco which ordered Ross to pay the value of the checks plus interest, moral and exemplary damages, attorneys’ fees and costs of the litigation.
Ross appealed the assailed decision to the Court of Appeals, citing that the contract between Rodco and him was void as it violated public policy and lacked consideration. Ross also cited a failure to specify the contingency fee.
Upon reaching the Supreme Court, it held that the contract between Rodco and Ross was void ab initio as it contravenes public policy. The Supreme Court explained that such contracts between the parties are a champertous arrangement that resembles third-party litigation financing. A third-party, such as Rodco, embraces all the risk by undertaking litigation expenses in consideration of an undefined share of what Ross would recover in the event of a favorable judgment. The Supreme Court maintained that these agreements violate the doctrines of maintenance and champerty, which are the fiduciary duties owed by lawyers to their clients. The Supreme Court further justified that this is against a policy that is against profiteering from litigation.
On the downside, one of the central criticisms of those in favor of a more pro-arbitration stance in the country is that such a position prevents access to justice. On the other end of the spectrum, there are lawyers who champion that Third-Party Funding agreements are not void, as a policy against it fails to account for the modern and evolving landscape of dispute resolution. The Rodco decision goes beyond a simple action for a Sum of Money. It has implications in making the country a viable venue or seat of arbitration.
The most compelling argument for Third-Party Funding (TPF) is that it serves as an indispensable access to justice. A TPF enables a party to enforce its claims despite costly arbitrator and administrator fees on top of lawyers’ fees that are truly prohibitive. During the discussions at the IBA-PDRC event, it was agreed that arbitration is financially prohibitive at its outset. Multi-million or billion-dollar claims prevent parties from jumpstarting the process unless there is a system that democratizes the process. TPFs allow those with lesser means to pursue justice against parties who have the wherewithal, where resources would have served as an economic barrier.
Furthermore, TPF shifts the risk from the Claimant out of adverse risk costs and outright case preparation costs, to a financial intermediary or the professional funder. In return, when the funder is able to filter those cases worthy of merit, there is a greater chance of it recovering from a favorable final award. From the award, the funder receives a guaranteed return, especially when the Claimant prevails. Thus, capital is allocated to cases with a sound chance of success.
This in line with the 2024 IBA Guidelines, which has evolved to address the complexity of TPFs by requiring parties to disclose the relationship of the TPF with the arbitrator or the parties. This ensures transparency and the regulation of the field. Rather than having a more draconian approach by prohibiting TFPs altogether, this proportionate approach is leaning towards the modernization of an outdated policy.
- Critical Evaluation and Looking Forward Elements
These guidelines foster trust by modernizing the process that addresses digital and funding trends without disrupting established practices. While technology is a tool, arbitrators must bear in mind that there are mandates that they cannot totally delegate to technology. This is the heart of why parties select an arbitrator.
- Conclusion
With the threat of arbitration being weaponized only to be set aside due to procedural lapses, which hinge on arbitrator conflicts, the 2024 IBA Guidelines on Conflicts of Interest in International Arbitration serve as a critical tool. This offers a refined, tiered framework, which, without these guidelines, the existential risk to international arbitration would remain. These frameworks reinforce the duty of reasonable inquiry on the part of arbitrators.
These rules are strategically designed to address the blurring lines of social media and blockchain technology and the complexities of TPF. The guidelines, however, only become efficacious when stakeholders promote trust and integrity through their consistent application. Ultimately, we look forward to a Philippine justice system that embraces the idea of access to justice, so that those parties, regardless of economic profile, will achieve the economic means to hire the best lawyers one’s resources may allow. Whether the battlefield is no longer one of David versus Goliath, for the country to be a globally recognized venue for arbitration, it cannot afford to adhere to an archaic policy that views TPF through the suspicious lens of champterty. This effectively creates an insurmountable economic barrier for parties to achieve, even if their claims are meritorious. By embracing changes and adhering to a principle of transparency, the community may achieve procedural integrity and ensure a society where justice is available to all, regardless of financial status.
Article Link: https://gorricetalaw.com/weaponizing-procedure-arbitrator-conflicts-enforcement-risk-and-the-2024-iba-solution/