The liability of arbitrators and arbitral institutions is increasingly a contentious issue which reflects a trend toward the expansion of disputes beyond the arbitration forum. Lawsuits against arbitrators and arbitral institutions are, more and more, part of a procedural tactic and certain parties hope to "transform a procedure lost before the arbitrator in a procedure won against the arbitrator."
Arbitrators and arbitral institutions must, however, make sure that the arbitration procedure is properly run. As a result, they must be sure that they can render a decision without undue pressure or fearing legal proceedings. They must, therefore, benefit, to some extent, of certain warranties to make sure they can exercise their function with efficiency and serenity.
French courts have, therefore, endeavoured to create a specific legal regime for arbitrators and arbitral institutions' liability, by protecting them in their jurisdictional role, with notable exceptions, while allowing lawsuits against arbitrators and arbitral institutions when they fail to properly run the arbitration and, as a result, breach one of their contractual commitments to the parties. This will, for instance, be the case when arbitrators fail to render an award before the legal deadline for doing so, when they fail to properly reveal circumstances which affect their independence and impartiality and when they unduly resign from their mission.
The liability of arbitrators and arbitral institution is, however, not limited to contractual liability and recent practice demonstrate that parties are more and more ready to pursue their suits against arbitrators and arbitral institutions before criminal courts.
Attempts to limit the arbitrators and arbitral institutions' liability by way of contractual provisions, in particular in arbitration rules, have been received with scepticism by scholars and courts have, to a large extent, held that these clauses have no effect in practice. The best way for arbitrators and arbitral institutions to manage their liability risk may, therefore, lie with a proper insurance coverage.ASA Bulletin