New SCC policy encouraging disclosure of third party interests
A policy encouraging parties in SCC arbitrations to disclose the identity of any third parties with an interest in the outcome of the dispute has been adopted by the board of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC).
As do most institutions, the SCC requires arbitrators to sign a statement of independence and impartiality prior to appointment. This statement must disclose any circumstances that could give rise to justifiable doubts as to the arbitrator’s impartiality or independence in the dispute. Arbitrators necessarily base their disclosures on the parties’ information in the first brief pleadings, which typically do not provide information on third parties that have an interest in the dispute – such as third party funders, ultimate beneficial owners or parent companies.
The SCC has identified a risk that an arbitrator may be appointed who has a relationship with an undisclosed third party that has an interest in the outcome of the dispute. If such a relationship is discovered late in the proceedings, it may cause significant delay and additional expense to the parties, and if it is discovered after an award has been rendered it may be a ground for challenging the award.
To ensure the integrity of the proceedings and the award, the new SCC policy encourages parties to disclose, in their first submissions, the identity of any third parties that have an interest in the outcome of the dispute. “Disclosure in accordance with the new policy is in the best interest of the parties,” says SCC Secretary General Annette Magnusson, “to avoid the risk of conflicts relating to arbitrator-third party relationships surfacing at a later point.”
The policy was adopted by the SCC Board on 11 September 2019 and is effective immediately. The text of the policy is available here.