ARBITRATOR AND THE THRESHOLD OF THE DUTY OF DISCLOSURE

INTRODUCTION

In arbitration, an arbitrator’s obligation to disclose potential conflicts is central to preserving party confidence in the neutrality of the tribunal. Yet, determining the exact scope and limits of this responsibility remains complex, particularly in cross-border disputes where standards differ across jurisdictions. With the increasing reliance on guidelines such as the IBA Guidelines on Conflicts of Interest, the question arises: what level of connection or interest is significant enough to trigger a mandatory disclosure? This article explores how the current disclosure threshold is understood and applied, and the implications for arbitrators operating within Nigeria and globally.

THE GOVERNING INSTRUMENTS

The new Nigerian statute modernised Nigeria’s arbitration framework and explicitly requires arbitrators to be impartial and independent and to disclose circumstances likely to give rise to justifiable doubts about those qualities. The Arbitration and Mediation Act 2023 (“AMA 2023”) provides that when an arbitrator is appointed, the person shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence.[1] It further states and requires that the arbitrator from the time appointed and throughout the arbitral proceedings disclose to the parties any relevant circumstances not within the knowledge of the parties.[2] It therefore creates a statutory baseline that complements but does not get overridden by the IBA Guidelines. In short: the IBA Guidelines are persuasive ‘best practice’; the AMA is the local law that supplies enforceable duties and challenge/remedy routes.

On the other hand, the IBA’s 2024 Guidelines on Conflicts of Interest in International Arbitration remain the principal international soft-law standard for disclosure as the Guidelines set out a “traffic-light” framework (red/amber/green) that categorises connections and recommends whether disclosure is required or whether the connection is deemed non-problematic[3]. The Guidelines emphasize materiality, reasonable perception of bias, and context: an isolated, immaterial economic interest often falls within the Green List and need not produce disqualification. But the Guidelines also press for proactive disclosure where a reasonable third-party would think the interest relevant.

However, it is important to note that the IBA Guidelines do not have the force of statute; they are tools for assessing disclosure. Some international institutions that have incorporated the IBA guidelines in their rules are the Australian Centre for International Commercial Arbitration (ACICA), International Chamber of Commerce (ICC), Lagos Chamber of Commerce (LCC), London Court of International Arbitration (LCIA) and so many more. Courts and annulment panels look to them for guidance, but ultimately domestic law and the particular statutory and procedural rules of the seat (or the applicable lex arbitri) govern challenges. Therefore, they are persuasive and not mandatory unless parties expressly give them a binding effect.

CONTEXT AND WHY THE QUESTION MATTERS

Recent controversy in a high-value arbitration in the matter of General Hydro-Carbon Limited and First Bank of Nigeria Limited (“the Bank”) and a sole arbitrator, in the person of Honourable. Justice Bayang Kumai Akaahs JSC (Rtd.) who held shares in the bank has focused attention on precisely where the line lies between immaterial interests (which do not impair impartiality) and material conflicts that do. The debate turns on three related questions:

(i)             what must an arbitrator disclose;

(ii)            how material must an interest be before it disqualifies or creates a justifiable appearance of bias; and

(iii)          whether disclosure to an appointing authority (but not to the parties) is sufficient.

The answers should balance two values: (a) parties’ right to an impartial tribunal, and (b) the efficient functioning of arbitration and the reasonable availability of experienced arbitrators. Recent instruments and case law provide a framework for answering these questions.

The Supreme Court in Halliburton v Chubb (UK Supreme Court)[4] affirmed a legal duty of disclosure and clarified the objective test of whether a fair-minded and informed observer would conclude there was a real possibility of bias. The test is contextual and does not mechanically disqualify the arbitrator for nominal or unrelated interests. The Halliburton reference emphasises transparency: where an arbitrator’s multiple appointments or social capital could reasonably be seen to give one party informational advantage, disclosure is obligatory; but trifling links will not automatically void proceedings.

Furthermore in Aiteo v Shell (Commercial Court, EWHC, Jacobs J)[5], the English Commercial Court applied the decision in Halliburton, stressing that failure to disclose matters that would reasonably be regarded as material can lead to setting aside; yet the Court also signaled that not all non-disclosures are equal and that the surrounding facts, timing and whether the non-disclosure actually affected outcome are relevant.

International tribunals and supervising courts focus on perception and materiality whether the undisclosed interest would reasonably generate a real possibility of bias not on a strict zero-tolerance rule.

THE NIGERIAN CASE STUDY: DISCLOSURE TO THE APPOINTING AUTHORITY ONLY

In the recent Nigerian arbitration involving General Hydrocarbons Limited (GHL) and First Bank of Nigeria PLC (FBN) reports indicate that the sole arbitrator disclosed his shareholding to the appointing institute (the Nigerian Institute of Chartered Arbitrators) but not directly to the parties.

The IBA Guidelines specifically treat small, passive holdings in the Green List in many contexts; a token shareholding that does not confer control, influence, or a significant economic stake is unlikely to create a reasonable perception of bias. If the holding is genuinely passive and quantitatively trivial relative to the arbitrator’s wealth or the bank’s market capitalisation, the holding is materially insignificant.

Institutional appointment mechanisms often require an arbitrator to provide a disclosure statement to the appointing body. Where the arbitrator has done so in good faith and the appointing institution has vetted the disclosure under its own rules, there is a strong practical argument that the procedure for appointment including institutional vetting has functioned as intended. Institutional oversight is a recognised safeguard. The IBA Guidelines explicitly recognise that relationships with institutional employers or appointing authorities must be considered in context. Consequently, where there is no evidence that the arbitrator’s conduct, reasoning, or rulings were coloured by the interest or that appointment to parallel matters gave one party an informational advantage, the courts are reluctant to set aside awards merely on the basis of non-disclosure of trifling interests. The Halliburton case and subsequent authorities require a practical showing that the appearance of bias is one that a fair-minded and informed observer would have. Trivial shareholdings often fall short of that standard.

The provisions of the AMA 2023 require impartiality and disclosure, but it does not prescribe that every minor interest must produce automatic disqualification. Where an arbitrator has complied with institutional disclosure requirements, acted fairly, and has no role-conferring control or indemnity from a party, a court will balance the circumstances rather than impose a per se rule. This is consistent with international practice that focuses first on materiality, the perspective of the fair-minded observer, and whether the disclosure or lack thereof actually resulted in procedural prejudice.

While the prior section argues why a small holding disclosed to an appointing authority may not automatically disqualify an arbitrator, there are important caveats and strong good-practice reasons to prefer full party disclosure. Parties are the stakeholders in the arbitration and should be informed of potential connections so they can make an informed decision about consent or challenge. Even if an institutional vetting occurred, a party may reasonably expect direct disclosure; failing to provide it risks complaints and collateral litigation. The Halliburton reasoning underscores the role of party awareness in preserving confidence. Even trivial non-disclosures can generate expensive setting-aside or enforcement litigation. To preserve the finality and legitimacy of awards, fuller disclosure to parties is the pragmatic policy choice.

CONCLUSION

The threshold of disclosure is not an all-or-nothing binary; it is a materiality-based, contextual inquiry. The IBA Guidelines, international case law, and Nigeria’s Arbitration and Mediation Act 2023 together create a framework that pressures arbitrators to be transparent while recognising that nominal or passive shareholdings do not always undermine impartiality. Where a small shareholding was disclosed in good faith to the appointing authority, and where there is no evidence of actual bias or improper influence, a defensible argument exists that independence and impartiality have not been waived.

It is, however, the position that the safer, modern practice, is to disclose directly to the parties as well as to the appointing body, to avoid collateral litigation and to preserve confidence in the arbitral process. Transparency is the best prophylactic as it protects the arbitrator, the institution, and the enforceability of awards while still allowing experienced arbitrators with inevitable, often trivial connections to serve.

Please note that the foregoing does not in any way constitute legal advice. Please kindly contact the authors for any legal advice on the subject matter.

REFERNCES