Procedural Background and Parties' Positions

This document is a decision issued by two members of the arbitral tribunal, Professors Vaughan Lowe and Zachary Douglas, on a proposal by the Respondent, the Kingdom of Spain, to disqualify the Claimant-appointed arbitrator, Mr. Gary B. Born. The proceedings were suspended pending the resolution of this challenge.

Spain's proposal was grounded in Article 57 of the ICSID Convention, alleging that Mr. Born manifestly lacked the qualities of independence and impartiality required by Article 14(1). Spain contended that Mr. Born had demonstrated an "immutable prejudgment" on core issues of the case. The evidence cited included Mr. Born's dissenting opinion in Wirtgen v. Czech Republic and his questioning of counsel and witnesses in two other arbitrations involving Spain (Masdar and KS Invest). Spain argued these actions would lead a reasonable third party to conclude that Mr. Born was biased and unable to exercise independent judgment.

The Claimants countered that the proposal was "utterly groundless." They argued that an arbitrator's previously expressed views on legal issues, even in similar cases, do not constitute grounds for disqualification. They maintained that neither the Wirtgen dissent nor the questioning in other proceedings demonstrated any manifest lack of independence or prejudgment of the issues in the present case.

The Tribunal's Analysis and Findings

The two deciding arbitrators applied the objective standard for disqualification under the ICSID Convention: whether the evidence would cause a reasonable third party to conclude that the challenged arbitrator could not be relied upon to exercise independent judgment. This standard does not require proof of actual bias but is satisfied by establishing an appearance of dependence or bias.

Upon careful review of the evidence, the arbitrators found Spain's arguments unpersuasive. They characterized Mr. Born's dissenting opinion in Wirtgen as a "close and precise analysis, based firmly on the specific facts of the case" before that tribunal, rather than an expression of a fixed and biased view applicable to other cases. Similarly, they examined the hearing transcripts from the Masdar and KS Invest cases and concluded that Mr. Born's questioning was an "entirely reasonable attempt to clarify the points being presented" and a "perfectly proper process." They found no evidence of partiality, disdain for Respondent's witnesses, or an unwillingness to consider opposing arguments.

Decision and Order

Based on this analysis, the two arbitrators concluded that there was "no basis for the suggestion that Mr Born cannot be relied upon to exercise independent judgment, or is not impartial, or does not have a mind open to the arguments to be presented in this case."

Accordingly, the decision formally rejects the Respondent's proposal to disqualify Mr. Gary B. Born. The arbitrators also invited the parties to file supplementary submissions on the costs arising from the challenge, with a final determination on the allocation of those costs to be made at a later stage of the proceedings.