Have the IBA Guidelines on Conflicts of Interest in International Arbitration Become Hard Law?

On 19 May 2025, the Norwegian Supreme Court issued a ruling in the Mo Industripark case, clarifying the standards for independence and impartiality of arbitrators under the Norwegian Arbitration Act (“NAA”). The Court relied extensively on the 2024 IBA Guidelines on Conflicts of Interest in International Arbitration (“IBA Guidelines” or “Guidelines”). This article explains the Supreme Court’s application of the IBA Guidelines and discusses whether the Guidelines have become de facto hard law in Norway.

A different aspect of the judgement was recently discussed in another Blog post (see here).

Overview of the Case

In 2023, an arbitral award was rendered in a shareholder dispute. An unsuccessful shareholder challenged the award, arguing that one of the arbitrators was not independent because the law firm in which the arbitrator was a partner was acting for one of the parties in an unrelated matter.

The Supreme Court rejected the challenge to the award, noting that the other matter, in which the arbitrator’s firm was involved, was financially insignificant compared to the law firm’s annual revenue. The Court also noted that the arbitrator had no personal involvement in the other matter, which was handled by a separate department within the firm.

The Court acknowledged that the arbitrator was a key person in the firm but found that this was not sufficient to outweigh the other factors in the case.

The Court also found that the arbitrator had not fulfilled his duty of disclosure by failing to provide information about his firm’s work for one of the parties in the arbitration. However, the Court held that the failure to disclose the client relationship could not be a decisive factor in the assessment of the arbitrator’s impartiality and independence.

The Statutory Framework

The NAA, which is based on the UNCITRAL Model Law, applied to the arbitration and the challenge proceedings. Section 13 (1) of the NAA requires arbitrators to be impartial and independent, and section 14 (2) specifies that an objection may only be raised against an arbitrator if there are circumstances that give rise to justifiable doubts as to the arbitrator's impartiality or independence.

An award may be set aside under NAA section 43 (1)(d) if “the composition of the arbitral tribunal was incorrect,” which includes disqualification due to lack of impartiality and independence. It is not necessary that the grounds for disqualification may have affected the content of the award.

The Supreme Court's Reliance on the IBA Guidelines

The wording of the relevant provisions in the NAA, as well as the preparatory works, provide limited guidance for specific cases. The same is true for decisions under the Norwegian Courts of Justice Act which concern impartiality for court judges.

The Supreme Court stated that international sources, including the IBA Guidelines, may be relevant for interpreting the NAA’s requirements. The Court noted that the Guidelines may be particularly useful where issues arise that are specific to arbitration, such as appointing lawyers as arbitrators.

The Court relied quite extensively on the IBA Guidelines in its reasoning. With regard to the assessment of independence and impartiality, it referred to the test in General Standard 2 (c), namely that “[d]oubts are justifiable if a reasonable third person, having knowledge of the relevant facts and circumstances, would reach the conclusion that there is a likelihood that the arbitrator may be influenced by factors other than the merits of the case [---]."

Furthermore, the Court adopted the principle in General Standard 6 that an arbitrator in principle should be identified with their law firm or employer, but that a specific assessment is required based on the relevant facts and circumstances.

Regarding the scope of work, the Court referred to the distinction between the Waivable Red List section 2.3.6 and the Orange List section 3.1.7. The Court held that disqualification will in principle extend to all the lawyers in the firm if the client relationship qualifies as "a significant commercial relationship," while a specific assessment must be made if the scope of the client relationship is too modest to be considered significant.

The Court formulated a general test for the assessment of independence and impartiality, and identification between a lawyer and a law firm, largely based on the IBA Guidelines. The Court stated that the starting point must be that if the firm with which the lawyer is affiliated – as a partner or regular employee – has an assignment for a party which is not insignificant while the arbitration is ongoing, then the lawyer will be disqualified from serving as an arbitrator. This applies even if the client relationship is managed by other lawyers in the firm.

The Court also referred to the Guidelines when assessing the duty of disclosure. The Court stated that a breach may in itself contribute to diminishing confidence in the arbitrator and may therefore be considered when assessing the arbitrator’s impartiality, but that it will mainly affect borderline cases. In this respect, the Court referred to General Standard 3 (g) of the Guidelines, which states that "[a]n arbitrator's failure to disclose certain facts and circumstances that may, in the eyes of the parties, give rise to doubts as to the arbitrator's impartiality or independence, does not necessarily mean that a conflict of interest exists, or that a disqualification should ensue."

From Soft Law to Hard Law

Paragraph 6 in the introduction to the Guidelines emphasizes that they do not override any applicable national law, arbitral rules, codes of conduct, or other binding instruments chosen by the parties. In the ruling from the Norwegian Supreme Court, the Guidelines did not override the NAA but had a considerable impact on the interpretation of the relevant provisions. The Court used the Guidelines to define the scope of identification between a lawyer and their firm, the threshold of significance for a client relationship and the duty of disclosure.

The Guidelines’ nuanced approach to the relationship between a lawyer and a law firm, and the distinction between significant and insignificant cases, was fundamental in the Court’s reasoning. By making the difference between Red and Orange List situations central to its analysis, it can be argued that the Court essentially established that the Guidelines’ classifications are decisive when assessing independence and impartiality under the NAA. This is notable since the Application Lists in the Guidelines are meant to be illustrative, and the introduction to the Guidelines emphasizes that the General Standards must always be considered. 

In general, the Court’s judgment adds considerable authority to the relevance and weight of the IBA Guidelines, not only in international arbitrations, but also in purely domestic arbitrations; the arbitration in question only involved Norwegian parties.

The Court’s reliance on the IBA Guidelines provides a strong argument that the same relevance and weight should be given to other parts of the Guidelines. In other words, the decision sends a clear message that arbitrators should treat the IBA Guidelines not just as best-practice recommendations, but as the necessary standard for compliance to avoid challenges under the NAA.

Comparison with Decisions from Other Courts

The IBA Guidelines have generally gained wide acceptance. However, the extent to which national courts have applied the Guidelines varies considerably.

For example, in a well-known (though unpublished) decision from the Vienna Commercial Court on 24 July 2007, the court held that the Guidelines should not be applied due to the absence of legislative direction.

In W Limited v. M SDN BHD (2016), the English Commercial Court found that an arbitrator was not disqualified despite the circumstances falling within the wording of section 1.4 of the Non-Waivable Red List.

In other cases, such as the Swedish Supreme Court’s judgment in case no. T 2448-6 (2007), the Court found support in the IBA Guidelines for its view that an arbitrator was not impartial and independent in circumstances similar to the Mo Industripark case. However, the Swedish Supreme Court did not rely on the Guidelines to the same extent as the Norwegian Supreme Court.

To date, there seem to be no judicial decisions which have adhered to the IBA Guidelines as closely as the Norwegian Supreme Court. It will be interesting to see if courts in other countries follow the Supreme Court’s approach in future cases, and if the IBA Guidelines will gain further acceptance as the standard for conflicts of interest in arbitration.