1. Rules on Conflict of Interest of the Arbitration Court attached to the Hungarian Chamber of Commerce and Industry
Arbitration is a method of dispute resolution based on the mutual trust of the parties. To maintain and reinforce this trust, it is essential that clear and transparent rules are available which make the ethical requirements applicable to arbitrators predictable. The issue of conflict of interest frequently poses difficulties in arbitral proceedings today. On the one hand, it carries a serious risk with regard to the potential setting aside, as well as obstacles to the recognition and enforcement of the arbitral award; on the other hand, it may also jeopardise the reputation of the acting arbitrator and the institution administering the proceedings.
The Arbitration Court attached to the Hungarian Chamber of Commerce and Industry has set itself the objective of establishing its own rules to ensure the independence and impartiality of arbitrators, building on norms accepted in international practice and taking into account the growing practice of other arbitral institutions. As a result, the Rules on Conflict of Interest of the Arbitration Court were adopted.
2. Why was a separate set of rules necessary?
In addition to the framework-type regulation of national laws, widely applied international soft law instruments – above all the IBA Guidelines on Conflicts of Interest in International Arbitration (IBA Guidelines) – provide significant assistance in identifying and managing conflict of interest situations. However, the IBA Guidelines were prepared on the basis of a different legal and economic environment. Accordingly, the legal culture and market conditions of individual states may create specific situations to which more general international instruments do not always provide a satisfactory answer.
An institution’s own set of rules makes the requirements applicable to arbitrators predictable and provides clear guidance for arbitrators, parties and their legal representatives alike. By adopting such rules, the Arbitration Court joins the international trend reflected in the practice of other leading institutions – such as SIAC (Singapore International Arbitration Centre), HKIAC (Hong Kong International Arbitration Centre) or the ICC (International Chamber of Commerce).
3. Structure and content of the Rules
The aim in preparing the Rules was not to adopt the IBA Guidelines in their entirety, but rather to create a simpler, educational set of rules tailored to Hungarian conditions. The Rules consist of the following main parts:
· General provisions: This part defines the relevant concepts and the scope of the Rules. The parties may agree that the Rules shall be binding on their proceedings; however, even in the absence of such an express agreement, the Rules may be taken into account by the Arbitration Court pursuant to the Rules of Proceedings.
· Fundamental principles: This part sets out the requirement of independence and impartiality, as well as the rules governing the arbitrator’s communication with the parties.
· Grounds for exclusion: The grounds for exclusion define circumstances in the presence of which the arbitrator must decline the nomination or resign from office.
· General rules on the duty of disclosure: These rules set out the general provisions relating to the disclosure obligation, i.e. the arbitrator’s duty to disclose all circumstances that may give rise to justifiable doubts in the eyes of the parties.
· Specific circumstances calling into question independence and impartiality: This part defines particular categories of situations reflecting domestic conditions, the narrower professional community and prior practical experience, including material bias, academic and professional relationships, as well as personal relationships.
4. Significance of the Rules
The Rules contain a procedural framework and a code of conduct that makes it more predictable how the Arbitration Court assesses particular circumstances. They assist arbitrators in determining which circumstances must be disclosed, and assist the parties and their legal representatives in identifying cases where a challenge may be warranted. The Rules also support the work of arbitrators, parties and their legal representatives participating in arbitral proceedings by reflecting the practice considered relevant and to be followed by the Presidium of the Arbitration Court when deciding on challenges. All this contributes to strengthening trust in arbitral proceedings and to enhancing the efficiency and legitimacy of such proceedings.
