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WILMERHALE
David W. Ogden
+1 202 663 6440 (t)
+1 202 663 6363 (f)
July 9, 2012
Permanent Court of Arbitration
H.E. Hugo Hans Siblesz
Secretary-General Peace Palace
Carnegieplein 2
2517 KJ The Hague
The Netherlands
E-mail: [email protected]
Re: Ecuador's Challenge of Judge Stephen M. Schwebel as Arbitrator in Connection with Merck
Sharp & Dohme (I.A.) Corp. v. The Republic of Ecuador - UNCITRAL Arbitration
Dear Secretary-General:
We write on behalf of Claimant Merck Sharp & Dohme (I.A.) Corp. ("MSDIA") in response to
Respondent Ecuador's 21 June 2012 challenge of Judge Stephen Schwebel as arbitrator in the
above-referenced matter. This is Ecuador's second challenge to Judge Schwebel's service in this
case. As with its unsuccessful first challenge, Ecuador's second challenge is without any
credible factual or legal basis. We therefore respectfully request that you deny Ecuador's
challenge.
Contrary to Ecuador's contention, Judge Schwebel's two prior appointments as arbitrator and
two prior retentions as an expert witness by this law firm (Wilmer Cutler Pickering Hale and
Dorr LLP or WilmerHale) plainly do not constitute a "protracted and consistent working
relationship" that falls "outside of the normal contacts among professionals in the international
arbitration arena." None of the appointments was within the past three years, none involved any
of the parties to this case, and none bears any relationship to the present matter. Not
surprisingly, none of these matters is even disclosable under the IBA Guidelines, much less even
the shred of a basis for a challenge to Judge Schwebel's independence and impartiality. That is
particularly true given Judge Schwebel's international stature as an arbitrator and expert on
matters of public international law, and his frequent service in similar roles pursuant to the
appointment of innumerable other law firms.
Background
Judge Schwebel has been appointed as an arbitrator by this firm on only two prior occasions. In
the first, which dates back fifteen years to 1997, WilmerHale appointed Judge Schwebel as one
of five arbitrators on a tribunal that decided a dispute between Eritrea and Yemen on questions of
Wilmer Cutler Pickering Hale and Dorr LLP, 1875 Pennsylvania Avenue NW, Washington, DC 20006
Beijing Berlin Boston Brussels Frankfurt London Los Angeles New York Oxford Palo Alto Waltham Washington
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territorial sovereignty and maritime boundaries in connection with certain islands in the Red Sea.
In the second, which dates back four years to 2008, WilmerHale appointed Judge Schwebel as
one of five arbitrators that decided a dispute arising from a 2005 peace agreement between
Sudan and the Sudanese People's Liberation Movement. Neither case involved, in any
conceivable fashion, either the Claimant MSDIA (or any Merck entity) or Ecuador; neither
appointment was within the past three years; neither case was an investor-state arbitration;
neither case involved issues similar to those raised in the present arbitration; both cases were
matters of public record, well-known to counsel for Ecuador; and both cases involved only
service as an independent and impartial arbitrator.
Nor does Judge Schwebel's service as an expert witness in two inter-connected U.S. litigation
matters in which WilmerHale was among the various counsel even begin to establish a
"protracted and consistent working relationship." Those engagements date back to 2005 and
2008, again more than three years prior to this one. Judge Schwebel was not WilmerHale's co-
counsel. He served as an independent expert witness on issues of public international law. In
that capacity, his responsibility was to submit his independent and impartial opinions on the
questions presented, and because the issues in the two cases were identical to one another he
submitted substantively identical legal opinions to the courts there. The issue he addressed in
both cases was whether Nicaraguan Special Law 364, which created very unusual substantive
and procedural rules in the context of the products liability litigation there at issue, comported
with international standards of due process. That issue is not (and could not conceivably be) at
issue here.
Argument
Judge Schwebel's public biography reports that he has served as an arbitrator in 63 arbitrations,
in addition to serving as a Judge on the International Court of Justice and conducting an active
practice as counsel and expert. Of those 63 arbitral appointments, Judge Schwebel has been
appointed as an arbitrator by WilmerHale only twice (or 3.17% of his publicly reported
appointments). In addition, he has served as a legal expert in connection with a single legal issue
that arose in two connected cases, in which WilmerHale was among the counsel for the party-
proponent of his expert opinion.
It is clear, therefore, that Judge Schwebel does not have a "protracted and consistent working
relationship" with WilmerHale that goes beyond normal contacts between counsel and arbitrators
in the international arbitration community. To the contrary, by the standards of that community,
and in particular, in contrast to the multiple, repeat appointments commonly seen in investor-
state arbitrations, Judge Schwebel's relationship with WilmerHale has been very limited.
Moreover, Judge Schwebel has had and continues to have a substantial and active professional
career on the International Court of Justice and elsewhere, as to which there is no suggestion of
any relationship or connection with WilmerHale.
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Ecuador asserts that Judge Schwebel's removal is independently required by his inclusion of
these matters in the joint disclosure submitted by all three arbitrators, instead of at the time of his
appointment, and his omission of one of the two inter-connected cases in which he submitted his
expert opinion. But Judge Schwebel's disclosures were entirely consistent with—and in fact, far
exceeded—his obligations under the UNCITRAL Rules, and in any event, even an untimely
disclosure—even a failure to disclose—cannot support a challenge where, as here, the facts that
were not disclosed do not likely give rise to justifiable doubts as to the arbitrator's independence
or impartiality. Ecuador's arguments regarding disclosure are therefore misplaced.
Specifically, with reference to the timing of Judge Schwebel's disclosure, the Tribunal was not
fully constituted until 8 May 2012. All three appointed arbitrators, including Judge Schwebel,
elected to make a joint disclosure statement shortly thereafter. In that statement, in addition to
Judge Schwebel's disclosures, Judge Simma disclosed for the first time that he had been
appointed by Ecuador in a prior investor-state arbitration within the past year. We do not
suggest that Judge Simma's disclosure was untimely, or that it gives rise to justifiable doubts as
to his independence and impartiality. But Ecuador can hardly maintain that Judge Schwebel's
disclosure was untimely if it also maintains that Judge Simma's disclosure was timely. And if
Judge Simma's omission, for six months after his appointment, to disclose that he was appointed
in another investor-state arbitration by the very same party as in this case, within the past year,
does not give rise to justifiable doubts about his impartiality and independence, then a fortiori,
Judge Schwebel's disclosures at the same time of these appointments more remote in time in
cases involving different parties also cannot give rise to justifiable doubts.
Similarly, with reference to the second of the two inter-connected appointments as an expert
witness, this engagement was substantively identical to the first, involved four different parties
and four law firms, and was a matter of public record. This obviously inadvertent omission can
hardly give rise to justifiable doubts.
The relevant issues in Ecuador's challenge application are straightforward, turn largely on the
facts, and leave no doubt that Ecuador's challenge should be rejected. Indeed, as Ecuador's
inconsistent positions with regard to Judge Schwebel and Judge Simma illustrate, its challenge is
in reality nothing more than another questionable effort to obstruct these proceedings and
obstruct objective consideration of the lawfulness of the actions of the Ecuadorean courts. The
legal arguments and authorities raised by Ecuador add little to its challenge and are also
addressed below.
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Under Article 10(1) of the UNCITRAL Rules, an "arbitrator may be challenged if circumstances
exist that give rise to justifiable doubts as to the arbitrator's impartiality or independence." This
is an objective criterion: whether circumstances "give rise to justifiable doubts as to the
arbitrator's impartiality or independence" is evaluated from the perspective of a reasonable third
party.1 WilmerHale's prior appointments of Judge Schwebel as arbitrator and expert witness
cannot objectively give rise to justifiable doubts about his impartiality or independence.
As set forth in the Tribunal's Joint Disclosure Statement, WilmerHale twice nominated Judge
Schwebel as an arbitrator prior to nominating him in this case.2 The first such appointment was
in the Red Sea Islands Arbitration, Eritrea/Yemen in 1997—fifteen years before Ecuador
submitted the present challenge—and the second was in the Abyei Arbitration, Sudan/Sudan
People's Liberation Movement in 2008, approximately four years ago.3 Both appointments were
matters of public record and widely publicized in the international law community;4 there can be
no serious question that Ecuador's counsel have been fully aware of these matters since the time
of Judge Schwebel's nomination in this case.
In format, and especially in content, these arbitrations were very different than commercial or
investment treaty arbitrations. Nor were they even remotely connected to the parties or issues in
this arbitration. Instead, these two arbitrations were state-to-state territorial and boundary
disputes governed by public international law. The tribunal in each case was comprised of five
members, a chairman and two arbitrators nominated by each side. Given his long tenure at the
1 At one point Ecuador suggests that "[w]hat matters is the challenging party's point of view." See Respondent ↩
Ecuador's Request for Determination of Challenge of Judge Stephen Schwebel as Arbitrator, dated 21 June 2012
("Respondent's Challenge"), at p. 7. But Ecuador submits, the standard under Article 10(1) is that of a
"reasonable third party." Id. The case upon which Ecuador relies for the standard make clear that the test under
Article 10(1) is objective. Id. at pp. 6-7. See e.g. Country X v. Company Q, UNCITRAL, Challenge Decision (11
January 1995), at paras. 23-24 ("Under the UNCITRAL Arbitration Rules, doubts are justifiable as soon as they
give rise to an apprehension of bias that is, to the objective observer, reasonable.") (RCL-17) (emphasis added).
2 Joint Disclosure Statement, attached to email from Sir. Franklin Berman to the Parties (22 May 2012) (RCE-4). ↩
4 See Biography of Judge Stephen M. Schwebel, available at http://www.londonarbitrators.net/cvs/sschw.pdf (last ↩
visited 25 June 2012) (Claimant's Challenge Ethical ("CCE") 1); Terms of Appointment, The Government of Sudan
v. The Sudan People's Liberation Movement/Army (24 November 2008), at para. 3.4, available at http://www.pca-
cpa.org/showpage.asp?pag_id=1306 (CCE-2); Award of the Arbitral Tribunal In The First Stage Of The
Proceedings, The Government of the State of Eritrea V. The Government of the Republic of Yemen (9 October 1998),
at para. 4, available at http://www.pca-cpa.org/showpage.asp?pag_id=1160 (CCE-3).
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International Court of Justice, including his presidency of the Court, Judge Schwebel was
uniquely qualified to serve on those two panels.
WilmerHale also retained Judge Schwebel as an expert witness in two inter-connected cases
adjudicated in United States federal courts. In 2005 and 2008, Judge Schwebel submitted
substantively identical expert opinions in related cases in which WilmerHale was counsel to the
Shell Oil Company. In the first of those cases, Shell Oil Company v. Sonia Eduarda Franco
Franco et al. (2005) (hereinafter "Shell Oil v. Franco"), Judge Schwebel submitted a legal
opinion to the United States District Court for the Central District of California regarding the
question whether the provisions of a specific Nicaraguan law comported with international due
process.5 In the second case, Judge Schwebel submitted substantially the same legal opinion on
the same question in connection with a parallel matter before the United States District Court for
the Southern District of Florida.6 In that case, Miguel Angel Sanchez Osorio et al v. Dole Food
Company, Inc., et al (2008) (hereinafter "Sanchez Osorio v. Dole"), WilmerHale's client, Shell
Oil, was but one of four named defendants, all four of whom jointly retained Judge Schwebel as
an expert to submit his opinion,7 and who divided Judge Schwebel's fees equally four ways.
Judge Schwebel's opinion in the Shell Oil cases involved the question whether a particular
Nicaraguan law, Special Law 364, comported with international standards of due process.
Nicaragua's Special Law 364 was enacted by Nicaragua's National Assembly in 2000, and it
dictated the conduct of lawsuits filed by persons allegedly affected by the use of a particular
pesticide. Judge Schwebel's opinion principally provided an analysis of the law itself. As part
of that analysis, Judge Schwebel determined that the law did not comport with international
standards of due process because, among other things the law (a) required deposits by the named
defendants, as a condition to mounting a defense under the law, of more than $20 million; (b)
included an "irrefutable presumption" of causation; (c) provided for a large minimum level of
liquidated damages; (d) provided for accelerated trials that required the answer be submitted,
hearings be held and evidence gathered, and a judgment issued within 14 days of the defendant's
receipt of the complaint; and (e) expressly targeted foreign corporations under procedures that
departed significantly from otherwise applicable Nicaraguan law.8
5 Declaration of Stephen M. Schwebel, Shell Oil v. Franco (C.D. Cal. March 10, 2005) (CCE-4). ↩
6 Declaration of Stephen M. Schwebel, Miguel Angel Sanchez Osorio et al v. Dole Food Company, Inc., et. al. (S.D. ↩
Fla. June 30, 2008) (CCE-5).
8 See Declaration of Stephen M. Schwebel, Shell Oil v. Franco (March 10, 2005) at pp. 5-6 (CCE-4). ↩
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Ecuador characterizes these matters involving Judge Schwebel and WilmerHale since 1997 as
constituting a "protracted and consistent working relationship" that falls "outside of the normal
contacts among professionals in the international arbitration arena."9 There is no support for
Ecuador's position.
WilmerHale's appointments of Judge Schwebel as arbitrator fall far short of the circumstances
described in the Orange List of the International Bar Association Guidelines on Conflicts of
Interest in International Arbitration ("IBA Guidelines") as even possibly giving rise to justifiable
doubts as to the arbitrator's impartiality or independence.10 Prior arbitrator appointments by
counsel are included in the Orange List only when "[t]he arbitrator has within the past three
years received more than three appointments by the same counsel or the same law firm."11
Here, there are just two prior appointments and neither is within the last three years.
The IBA Guidelines are often looked to by treaty tribunals determining whether justifiable
doubts exist as to an arbitrator's fitness to serve. In Universal Compression Holdings Inc. v.
Venezuela, for example, the chairman of the tribunal dismissed a challenge against a co-
arbitrator based on multiple prior appointments, observing that "Section 3.3.7 of the IBA
Guidelines' Orange List is not implicated because it envisages ... 'more than three appointments
by the same counsel" within the past three years.12 Judge Schwebel has received no
appointments from WilmerHale in the past three years.
The number of prior appointments of an arbitrator by counsel is considered relevant to whether
the arbitrator has "a relationship of dependence [with counsel], which could endanger her
9 Respondent's Challenge, at p. 15 (emphasis in original). ↩
10 As defined by the IBA guidelines, the Orange List comprises "specific situations which (depending on the facts of ↩
a given case) in the eyes of the parties may give rise to justifiable doubts as to the arbitrator's impartiality or
independence." IBA Guidelines, Practical Application of the General Standards, at p. 18 para. 3 (RCL-3). The
circumstances described in the Orange List do not necessarily, but rather may, give rise to justifiable doubt.
11 IBA Guidelines, Orange List, at p. 23 para. 3.3.7 (RCL-3) (emphasis added). ↩
12 Universal Compression International Holdings, S.L.U. v. Venezuela, ICSID Case No. ARB/10/9, Decision on ↩
Claimants' Proposal to Disqualify Prof. Brigitte Stern and Prof. Guido Santiago Tawil, Arbitrators (20 May 2011),
at para. 86 (RCL-6).
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independence or impartiality."13 Thus, in the case LCIA Reference No. 81160, "[t]he Division
stressed that the mere fact that an arbitrator was regularly nominated (by different arbitral
parties) on the recommendation of the same Counsel or the same firm of solicitors ought not of
itself to give rise to justifiable doubts as to his independence and impartiality."14 In that case,
what proved decisive in disqualifying the arbitrator was the "obvious professional importance to
the arbitrator of his relationship with Respondents' Counsel, combined with his barrister/client
relationship with one of the Respondents, [which] would reasonably suggest a real possibility of
bias."15
OPIC Karimum Corp. v. Venezuela demonstrates that even far more arbitral appointments than
at issue here—constituting a far higher percentage of all the arbitrator's appointments—do not
suffice to disqualify an arbitrator absent a showing that the arbitrator is somehow dependent on a
counsel or a party. In OPIC Karimum Corp., Professor Philippe Sands was challenged because
of his multiple appointments by Curtis Mallet-Prevost Colt & Mosle LLP ("Curtis Mallet") and
Venezuela. The claimant in that case noted that: (i) Professor Sands had been appointed by
Curtis Mallet in three of his six then-current treaty arbitrations, (ii) Professor Sands had been
appointed by Curtis Mallet or by Venezuela in five of the eight treaty arbitrations he had sat on
in the prior three years, and (iii) Professor Sands had sat on only nine treaty arbitrations total.
Based on these facts, the claimant argued that Professor Sands could not "be relied upon to
exercise independent judgment because he is beholden to the Respondent and the Respondent's
law firm for a significant number of his arbitration appointments (and therefore presumably his
compensation)."16
The two arbitrators reviewing the challenge rejected the claimant's arguments. They determined
that the multiple appointments of Professor Sands by Curtis Mallet, despite the significant
percentage of all his appointments those represented, did not "reach the level of multiple
appointments that would by themselves demonstrate" the lack of independence necessary to
13 Id. at para. 87. A different Division of the LCIA has similarly noted that an arbitrator's "relations with Counsel ↩
are relevant only if the arbitrator draws an important part of his or her revenues from an ongoing relationship with
the Counsel of the appointing party." LCIA Reference No. 81224, Decision Rendered 15 March 2010, in
Arbitration International, Special Edition On Arbitration Challenges, Volume 27 Issue 3 (2011), at p. 467 para. 4.4
(Claimants' Challenge Legal Exhibit ("CCL") 6). In that case, as is the case with Judge Schwebel, there was
nothing to indicate that the "Co-Arbitrator [has] drawn any significant revenue from a relationship with [counsel]."
Id.
14 LCIA Reference No. 81160, Decision Rendered 28 August 2009, in Arbitration International, Special Edition On ↩
Arbitration Challenges, Volume 27 Issue 3 (2011), at p. 451 para. 4.6 (CCL-5).
15 Id. While the Division also took into account the fact that the arbitrator "had made five disclosures which were, by ↩
and large, general, selective and incomplete," the Division clarified that "the absence of disclosure or incomplete
disclosure did not, as such, constitute sufficient grounds for removal." Id. at p. 452 para. 4.16.
16 OPIC Karimum Corp. v. Venezuela, ICSID Case No. ARB/10/14, Decision on the Proposal to Disqualify ↩
Professor Philippe Sands, Arbitrator (5 May 2011), at para. 21 (RCL-4).
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sustain a successful challenge.17 The arbitrators added that they were "unpersuaded by
Claimants' submissions regarding the alleged financial dependence of Professor Sands upon
either Respondent or Respondent's counsel. It is clear that Professor Sands has extensive
independent income sources unrelated to fees derived from his appointments as arbitrator in
investment arbitrations."18
Ecuador correctly notes that the Working Group responsible for the IBA Guidelines expressed
the view that the time limits described in the Orange List should be subject to the circumstances
of particular cases.19 But the circumstances relevant to this case only further magnify the
weakness of Ecuador's challenge. Judge Schwebel's public biography reflects that he has been
appointed in more than 60 arbitrations, and has served as counsel or an expert in countless other
cases.20 Only two of Judge Schwebel's arbitrations—or barely 3 percent—involved
appointments by WilmerHale. Clearly Judge Schwebel does not have a "relationship of
dependence" with WilmerHale "which could endanger [his] independence or impartiality."
That Judge Schwebel provided expert witness opinions in the Shell Oil cases does not bolster
Ecuador's argument. In those cases, Judge Schwebel was retained to provide testimony to the
court as an expert in international standards of due process. He was not acting as counsel or an
arbitrator, but as an independent witness, with duties of honesty and integrity to the courts.21
Moreover, like the two arbitral appointments, neither of these engagements of Judge Schwebel
occurred within the past three years. Judge Schwebel has long been among the most sought-after
and oft-appointed arbitrators and experts in public international law. It is not credible to allege
that the past retention of Judge Schwebel to provide an expert witness opinion in two related
matters on a single legal issue would affect his impartiality or independence in this case today.
19 Respondent's Challenge, at p. 16 (citing to the Working Group for the proposition that "the three-year period in ↩
Orange List 3.1 may be too long in certain circumstances and too short in others.").
20 Biography of Judge Stephen M. Schwebel, available at http://www.londonarbitrators.net/cvs/sschw.pdf (last ↩
visited 25 June 2012) (CCE-1) (listing, among other things, 63 cases in which Judge Schwebel has served as
arbitrator).
21 In the case LCIA Reference No. 97/X27, a Division of the LCIA rejected the contention that an arbitrator's having ↩
several years earlier served as an expert witness for a third party at the instruction of one of the counsel in the case
raised justifiable doubts about the arbitrator's impartiality or independence. The Division noted that "the
relationship between an arbitrator as expert witness and solicitors for the party on whose behalf the expert was
acting was less likely to put his independence or impartiality at risk, than the relationship between a barrister and a
solicitor on the same side, as the expert's role was to express his own opinion regardless of whether it furthered the
client's interests, and even if his services, his having given his opinion, were unlikely to be retained." LCIA
Reference No. 97/X27, Decision Rendered 23 October 1997, in Arbitration International, Special Edition On
Arbitration Challenges, Volume 27 Issue 3 (2011), at pp. 323-4 para. 4.3 (CCL-4).
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Ecuador's related contention that Judge Schwebel's past connections with WilmerHale "establish
a pattern of joint efforts by Judge Schwebel and Claimant's counsel that bear a high degree of
similarity to the effort of Claimant in this case"22 is flatly false. First, it is just not true that these
matters involved "joint efforts." Judge Schwebel's service as an arbitrator or expert witness
involved independent roles that he performed with integrity. Moreover, contrary to Ecuador's
contention, Judge Schwebel's expert opinions in the Shell Oil cases did not involve issues that
"feature prominently in the instant case."23 Ecuador does not identify a single "issue" from the
Shell Oil cases that features at all in the present matter, but the contention appears to boil down
to Ecuador's claim that the Shell Oil cases broadly involved "issues of denial of justice."24 The
issues Judge Schwebel addressed in the Shell Oil cases, however, are not relevant to the present
dispute.
Those cases involved the enforceability in the United States, of certain Nicaraguan judgments,
and Judge Schwebel's opinion in those cases focused on the question whether an act of the
Nicaraguan legislature under which those judgments were rendered comported with due process.
The opinion did not involve Ecuador or its courts, did not address the U.S.-Ecuador BIT, and did
not involve issues of a lack of objectivity or bias by a judicial tribunal. Whether or not the
Nicaraguan law in question there was consistent with international due process standards is
simply not germane here, and there is for that reason no basis at all for Ecuador's suggestion that
Judge Schwebel's opinion in the Shell Oil cases was somehow "favorable ... to Claimant in this
case."25
22 Respondent's Challenge, at p. 15. ↩
23 See, e.g., Respondent's Challenge, at p. 11 (describing Judge Schwebel's expert opinions as "involv[ing] issues of ↩
denial of justice ... which feature prominently in the instant case").
24 See Respondent's Challenge, at p. 11. ↩
25 Id. at p. 15. Ecuador's attempt to draw a comparison between Judge Schwebel's past service as an expert in cases ↩
involving WilmerHale and the facts of Republic of Ghana v. Telekom Malaysia Berhad is strained and misleading.
In the Telekom matter, Professor Gaillard disclosed that while simultaneously serving as a member of the arbitral
tribunal, he had been instructed to serve as counsel in a separate action (RFCC/Morocco). In the RFCC/Morocco
case, Professor Gaillard would be seeking the reversal of a prior judgment involving the identical treaty provision at
issue in Telekom, and on which the petitioner in Telekom had relied in its arguments to the Telekom tribunal.
Professor Gaillard was therefore in a position in which he would be obligated to simultaneously take positions in
connection with his role as advocate in the RFCC/Morocco matter that were incompatible with his role as neutral
arbitrator in Telekom. Ecuador misleadingly suggests that Professor Gaillard's advocacy in the RFCC/Morocco case
was "earlier" than his appointment in Telekom, a suggestion undermined by the fact that the remedy in the Telekom
challenge was to recommend that Professor Gaillard withdraw as counsel in RFCC/Morocco. In truth, Telekom
involved a situation in which an arbitrator was poised to take simultaneous, arguably incompatible positions on a
single treaty provision in separate proceedings. Here, Judge Schwebel prepared an expert opinion on a particular
Nicaraguan law more than five years ago, and is now asked to preside over an arbitration raising entirely different
questions arising out of litigation in Ecuador and governed by the U.S.-Ecuador BIT. Telekom thus has no bearing
on the present case.
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In any event, treaty tribunals have uniformly found that prior legal opinions, even on a similar
issue, cannot serve as a basis for disqualification. The two arbitrators deciding a challenge to
Professor Stern in Tidewater v. Venezuela, for example, determined that "there is neither bias
[nor] partiality where the arbitrator is called upon to decide circumstances of fact close to those
examined previously, but between different parties, and even less so when he is called upon to
determine a question of law upon which he has previously made a decision."26 As the two
arbitrators correctly noted, "[i]nvestment and even commercial arbitration would become
unworkable if an arbitrator was automatically disqualified on the ground only that he or she was
exposed to similar legal or factual issues in concurrent or consecutive arbitrations."27
Similarly, in Urbaser S.A. v. Argentina, Professor Campbell McLachlan was challenged because
he had expressed views regarding most-favored nation clauses in a previously-published
treatise, and the arbitration was to address such a clause in the Argentina-Spanish BIT. The
claimant asserted that Professor MacLachlan had already prejudged an essential element of the
conflict that is the object of this arbitration and could not "issue an opinion contrary to that
which he [had] published."28 The two arbitrators deciding the challenge rejected this argument,
concluding that it would be "extremely strange ... to accept Claimants' position that a view
previously expressed on an item in an arbitral proceeding should be qualified as a
prejudgment that demonstrates a lack of independence or impartiality."29
Thus, even if Judge Schwebel had previously expressed opinions on issues relevant here, which
he did not, that could not serve as a basis for disqualification. Given that there is, in fact, no
meaningful connection between the issues on which he expressed opinions in the Shell Oil cases
and those at issue here, the challenge on this ground is entirely frivolous.
Perhaps recognizing that there are no circumstances in this case that give rise to justifiable doubt
as to Judge Schwebel's impartiality or independence, Ecuador focuses its fire principally on
26 Tidewater v. Venezuela, ICSID Case No. ARB/10/5, Decision on Claimants' Proposal to Disqualify Professor ↩
Brigitte Stern, Arbitrator, (23 December 2010), at para. 67 (internal quotation and citation omitted) (CCL-7).
27 Id. at para. 68 (internal quotation and citation omitted). ↩
28 Urbaser S.A. v. Argentina, ICSID Case No. ARB/07/26, On Claimants' Proposal to Disqualify Professor ↩
Campbell McLachlan, Arbitrator (12 August 2010), at para. 23, n. 11 (CCL-8).
29 Id. at para. 48. The arbitrators' decision is in line with 4.1.1 of the IBA Guidelines' Green List, which includes: ↩
"The arbitrator has previously published a general opinion (such as in a law review article or public lecture)
concerning an issue which also arises in the arbitration (but this opinion is not focused on the case that is being
arbitrated)." This is a situation that, according to the IBA Guidelines, does not give rise to justifiable doubts
about an arbitrator's independence or impartiality. IBA Guidelines, Explanation to General Standard 3, at p. 10
(RCL-3).
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Judge Schwebel's allegedly deficient disclosure, arguing that this in and of itself justifies
Ecuador's challenge. This contention too is incorrect. An arbitrator's duty to disclose under the
UNCITRAL Rules is closely tied to the standard of Article 10(1). Under Article 9 of the Rules,
an arbitrator is obligated to disclose only "circumstances likely to give rise to justifiable doubts
as to his impartiality or independence."30 The circumstances in this case plainly did not meet
this test, and Judge Schwebel had no duty to disclose any of them.31
Moreover, a "failure to disclose is not itself a ground for challenge in addition to those set forth
expressly in Articles 10 and 13" of the UNCITRAL Rules,32 and therefore "non-disclosure does
not per se give rise to justifiable doubts as to arbitrator's impartiality and justify
disqualification."33 As commentators and tribunals have noted, whether an arbitrator's non-
disclosure raises doubts regarding his independence depends on various factors including
whether "the facts that were not disclosed raised obvious questions about impartiality and
independence."34 The IBA Guidelines on Conflicts of Interest in International Arbitration (the
"IBA Guidelines"), on which Ecuador purports to rely, are similarly clear, stating that "non-
disclosure cannot make an arbitrator partial or lacking independence; only the facts or
30 The UNCITRAL Arbitration Rules (1976), Art. 9 (emphasis added). This test, like the one of Article 10(1), is an ↩
objective one. Thus, it presents a higher threshold for disclosure than the IBA Guidelines which provide a
subjective test—whether circumstances "in the eyes of the parties may give rise to justifiable doubts." The test
under the IBA Guidelines is unusual since "[a] purely objective test for disclosure exists in the majority of the
jurisdictions analyzed and in the UNCITRAL Model Law." IBA Guidelines, Explanation to General Standard 3, at
p. 10 (RCL-3).
31 See Suez and others v. Argentina, ICSID Case No. ARB/03/19, Decision on a Second Proposal for the ↩
Disqualification of a Member of the Arbitral Tribunal (12 May 2008), at para. 26 (RCL-11). As one commentator
has observed, "although there can be many relationships between the arbitrator and the parties, the duty to disclose
does not require disclosure of all circumstances which might support a challenge under Article 10. Rather, the duty
extends only to those circumstances which more likely than not would support a challenge." Caron, Caplan &
Pellonpää, The UNCITRAL Arbitration Rules 202 (2006) (emphasis in original) (CCL-1).
32 Caron, Caplan & Pellonpää, The UNCITRAL Arbitration Rules 226 (2006) (CCL-1). ↩
33 Daele, Challenge and Disqualification of Arbitrators in International Arbitration 434-35 (2012) (CCL-3). ↩
34 Baker & Davis, The UNCITRAL Arbitration Rules in Practice 50 (1992) (Whether a failure to disclose "give[s] ↩
rise to doubts as to an arbitrator's impartiality ... depends on whether the failure to disclose was inadvertent or
intentional, whether it was the result of an honest exercise of discretion, whether the facts that were not disclosed
raised obvious questions about impartiality and independence, and whether the nondisclosure is an aberration on the
part of a conscientious arbitrator or part of a pattern of circumstances raising doubts as to impartiality.") (RCL-31).
This articulation of the test with regard to non-disclosure has been followed by subsequent commentators and
tribunals. See e.g. Daele, Challenge and Disqualification of Arbitrators in International Arbitration 434-35 (2012)
(CCL-3); Caron, Caplan & Pellonpää, The UNCITRAL Arbitration Rules 226-227 (2006) (CCL-1); Tidewater v.
Venezuela, ICSID Case No. ARB/10/5, Decision on Claimants' Proposal to Disqualify Professor Brigitte Stern,
Arbitrator, (23 December 2010), at para. 47 (CCL-7); Suez and others v. Argentina, ICSID Case No. ARB/03/19,
Decision on a Second Proposal for the Disqualification of a Member of the Tribunal (12 May 2008), at para. 44
(RCL-11).
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circumstances that he or she did not disclose can do so."35 It is therefore axiomatic that the
non-disclosure of facts that do not raise genuine questions about impartiality or independence
cannot form the basis of a successful challenge.36
Ecuador attempts to avoid the plain language of the IBA Guidelines on this issue by turning
instead to the IBA Rules on Ethics for International Arbitrators to support its contention that
"failure to disclose itself may be fatal to an arbitrator's qualification to serve."37 But the IBA
Rules on Ethics were explicitly superseded by the later IBA Guidelines, which state that "[the]
Rules of Ethics for International Arbitrators ... remain in effect as to subjects that are not
discussed in the Guidelines. The Guidelines supersede the Rules of Ethics as to the matters
treated here."38 Ecuador's reliance on the IBA Rules on Ethics is therefore misleading at best.39
Even if Ecuador's arguments about the governing legal standard had any merit, which they do
not, Judge Schwebel in fact made timely disclosure in the Tribunal's Common Disclosure
Statement circulated to the parties on 22 May 2012, which also included disclosures made by the
other two members of the Tribunal.40 The prior appointments at issue were already publically
known; before the Common Disclosure Statement was made, Judge Schwebel's two
appointments as arbitrator by WilmerHale and his submission of an expert report in one of the
35 IBA Guidelines, Practical Application of the General Standards, at 18 para. 5 (RCL-3). The Guidelines add that ↩
the fact of non-disclosure "should not result automatically in either non-appointment, later disqualification or a
successful challenge to any award." Id.
36 The IBA Guidelines recognize that "some situations should never lead to disqualification under the objective test, ↩
and therefore need not be disclosed, regardless of the parties' perspective." IBA Guidelines, Explanation to General
Standard 3, at p. 10 (RCL-3).
37 Respondent's Challenge, at p. 5. ↩
38 IBA Guidelines, Introduction, at p. 5 para 8 (RCL-3). ↩
39 Ecuador's reliance on decisions from the French, Finnish and U.S. courts is also unavailing. In the matter of J&P ↩
Avax S.A. v. Société Tecnimont SpA, the courts applied French law and ICC Rules in concluding that the Chairman
of the Arbitral Tribunal had failed to disclose a financial relationship between his firm and a party to the arbitration
(and its affiliated companies) that ran concurrently with the arbitral proceedings. S.A. J&P Avax S.A. v. Société
Tecnimont SPA, Paris Court of Appeal (12 February 2009) (RCL-24). The Finnish Supreme Court decision upon
which Ecuador relies concerned a case in which the chairman of the tribunal did not disclose that both he and
during the arbitration, he was engaged to provide expert opinions for parties related to parties in the arbitration for
"significant financial consideration." Case KKO 2004:111 of the Finnish Supreme Court, in Bond and Bachand
(eds.), International Arbitration Court Decisions (3d. Ed 2011) at paras. 24-25 (CCL-2). In Applied Indus.
Materials Corp. v. Ovalar Makine Ticaret Ve Sanayi, A.S., the U.S. federal courts vacated an arbitral award where
an arbitrator failed to satisfy his disclosure obligations as expressly set forth in the Submission Agreement that
governed the arbitration requiring him to disclose an ongoing financial relationship between his firm and one of the
parties. 2006 U.S. Dist. LEXIS 44789, at *27-28 (S.D.N.Y. June 28, 2006) (RCL-29). In none of these cases was the
non-disclosure by an arbitrator of past appointments by counsel, and in any event, these cases involved the
application of a standard that governs the present dispute. And in all of these cases, the non-disclosure concerned a
nondisclosure by an arbitrator of facts relating to a current financial interest or relationship between the
arbitrator's firm and a party to the arbitration, obviously a far cry from the facts on which Ecuador rests the present
challenge.
40 Joint Disclosure Statement, attached to email from Sir. Franklin Berman to the Parties (22 May 2012) (RCE-4). ↩
[Page 13]
two Shell Oil matters were easily discoverable matters of public record.41 Moreover, as the
Common Disclosure Statement affirmed, nothing contained therein "affects the impartiality of
the Tribunal or any of its Members or their independence of the Parties to this Arbitration."42
Insofar as the timeliness of the disclosure is concerned, it is noteworthy that Ecuador's appointed
arbitrator here—Judge Simma—disclosed prior relationships with Ecuador in the same Common
Disclosure Statement in which Judge Schwebel made his appointment. Although he had been
appointed by Ecuador in this arbitration on 30 December 2011, Judge Simma disclosed for the
first time that he had been appointed as an arbitrator by Ecuador within the past year in another
investment arbitration. The Claimant does not assert that Judge Simma's recent appointment by
Ecuador in another arbitration, nor his disclosure of such appointment six months after his
appointment in this arbitration, raises questions about his independence or impartiality.43 The
Claimant does note, however, the inconsistency of Ecuador's argument that Judge Schwebel's
disclosure in the Common Disclosure Statement of contacts with counsel more than three years
ago constitutes grounds for disqualification when its own appointed arbitrator disclosed a
concurrent appointment by a party to this arbitration at the very same time—a concurrent
appointment undoubtedly fully known to Ecuador and its counsel at the time they named Judge
Simma in this case.
Finally, contrary to Ecuador's claim, Judge Schwebel's omission of the second of two
functionally identical expert opinions does not call into question Judge Schwebel's impartiality
or independence.44 We expect that the omission was a mere oversight, given that Judge
Schwebel's expert opinion in Shell Oil v. Franco in 2005—which he fully disclosed—was
substantively identical to and addressed precisely the same issues as his expert opinion in
Sanchez Osorio v. Dole in 2008. As one of the counsel in that matter, we know that very little
41 WilmerHale's appointments of Judge Schwebel as arbitrator in the 1997 Red Sea Island Arbitration, ↩
Eritrea/Yemen and in the 2008 Abyei Arbitration, Sudan/Sudan People's Liberation Movement matter are easily
ascertainable through even a cursory public search. See Terms of Appointment, The Government of Sudan v. The
Sudan People's Liberation Movement/Army (24 November 2008), available at http://www.pca-
cpa.org/showpage.asp?pag_id=1306 (CCE-2); Award of the Arbitral Tribunal In The First Stage Of The
Proceedings, The Government of the State of Eritrea V. The Government of the Republic of Yemen (9 October 1998),
available at http://www.pca-cpa.org/showpage.asp?pag_id=1160 (CCE-3). The United States District Court opinion
in Sanchez Osorio v. Dole, published on October 20, 2009, cited explicitly to the expert opinion submitted by Judge
Schwebel in those proceedings. 665 F. Supp. 2d 1307, 1342, 2009 U.S. Dist. LEXIS 99981, at *99 (S.D. Fl. 2009)
(CCE-6) ("According to defense expert Stephen Schwebel, who served as a judge on the International Court in The
Hague for 20 years, the unfair, discriminatory nature of Special Law 364 exceeds that of any law of which he is
aware."); see id. at *4 (listing Wilmer as counsel for Shell Oil).
43 As noted above, under the IBA Guidelines, prior appointments by a party need only be disclosed when they are ↩
two or more in the previous three years. IBA Guidelines, Orange List, at p. 21 para. 3.1.3 (RCL-3).
44 Respondent's Challenge, at p. 15. ↩
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additional work was required of Judge Schwebel in the second case because the opinion had
already been prepared in 2005.
Ecuador's second challenge of Judge Schwebel, like its first challenge, lacks merit and appears
to be little more than a thinly veiled attempt to delay the arbitration and deny the Claimant its
right to appoint an arbitrator of its choice in accordance with Article 7 of the UNCITRAL Rules.
Ecuador's suggestion that Judge Schwebel's disclosures would have somehow strengthened its
first challenge is entirely spurious. None of Judge Schwebel's prior contacts with WilmerHale is
even remotely connected to the Nicaragua v. United States case in the International Court of
Justice twenty-five years ago or Ecuador's argument that Judge Schwebel's comments about that
case somehow indicate bias against Ecuador's counsel.
Finally, Ecuador seeks to mask the overall weakness of its current challenge by alleging that not
only did "each basis" it articulated raise "justifiable doubts as to the propriety of Judge
Schwebel's service as an arbitrator in this case" but that these bases should be considered "in the
aggregate" and that "the totality of the facts and circumstances" should lead to Judge Schwebel's
disqualification.45
This is not a serious argument. Ecuador declines to elaborate meaningfully on its "totality of the
circumstances" argument, and fails to provide any authority whatsoever in support of it. And
indeed, it makes no sense that a challenge could succeed by aggregating allegations that are
themselves of no weight. Past adjudicators have had little trouble dismissing challenges like
Ecuador's that cited a variety of factors—including multiple appointments by counsel and non-
disclosure of such appointments—allegedly giving rise to justifiable doubts about the arbitrator's
independence or impartiality. In none of those cases did an adjudicator, having concluded that
none of the individual allegations justified disqualification, nevertheless find that the totality of
the allegations was sufficient to sustain the challenge.46 The same result is warranted here.
For all of the above reasons, we respectfully request that you deny Ecuador's challenge.
45 Respondent's Challenge, at p. 19. ↩
46 See e.g. Tidewater v. Venezuela, ICSID Case No. ARB/10/5, Decision on Claimants' Proposal to Disqualify ↩
Professor Brigitte Stern, Arbitrator, (23 December 2010) (rejecting a challenge based on multiple appointments by
party, multiple appointments by counsel, non-disclosure of multiple appointments, and the possibility of deciding on
a legal issue related to one already considered) (CCL-7); OPIC Karimum Corp. v. Venezuela, ICSID Case No.
ARB/10/14, Decision on the Proposal to Disqualify Professor Philippe Sands, Arbitrator (5 May 2011) (rejecting a
challenge based on multiple appointments by party and multiple appointments by counsel) (RCL-4); Universal
Compression International Holdings, S.L.U. v. Venezuela, ICSID Case No. ARB/10/9, Decision on Claimants'
Proposal to Disqualify Prof. Brigitte Stern and Prof. Guido Santiago Tawil, Arbitrators, (20 May 2011) (rejecting a
challenge based on multiple appointments by party, multiple appointments by counsel, non-disclosure of multiple
appointments, and the possibility of deciding on a legal issue related to one already considered) (RCL-6).
[Page 15]
Sincerely,
Signature
Gary B. Born
David W. Ogden
Rachael D. Kent
cc: Sir Franklin Berman KCMG QC
Judge Stephen M. Schwebel
Judge Bruno Simma
Mr. Martin Doe
Mr. Mark Clodfelter
Ms. Janis Brennan
Ms. Diana Tsutieva
Mr. Ronald Goodman
Mr. Alberto Wray
Mr. Constantinos Salonidis
Dr. Diego Garcia Carrion
Dra. Christel Gaibor
Ab. Diana Terán
Ab. Juan Francisco Martínez