Pursuant to Section 588 para 1 Austrian Code of Civil Procedure (“ACCP“) an arbitrator is under the continuous obligation to “disclose any circumstances likely to give rise to doubts as to his impartiality or independence“. According to Section 588 para 2 ACCP an arbitrator might be challenged “if circumstances exist that give rise to justifiable doubts as to his impartiality or independence“. In two (almost identical) decisions, the Austrian Supreme Court (“OGH“) dealt with the interaction between those provisions and determined whether the failure to disclose facts possibly giving rise to the challenge of an arbitrator might itself constitute a ground for challenge.
Both decisions dealt with materially the same facts: The parties to the disputes on the one side were a former shareholder of a company and on the other side the remaining shareholders of that company (and in one case the company itself). In both arbitrations the same arbitrator was appointed and in turn challenged by the former shareholder for the same reasons. Besides alleging a number of grounds for challenge (business and scientific contacts between the arbitrator and some of the remaining shareholders and their legal representative) the former shareholder also asserted that the arbitrator did not disclose the fact that he was a member of the advisory board of a fund established by him and that a prominent member of the law firm that represented the remaining shareholders and the company in the arbitration was a member of this advisory board as well. The former shareholder argued that the failure to disclose this fact in itself constituted a ground for challenge.
The OGH assessed whether the failure to disclose facts might itself constitute a ground for challenge. However, more precisely the question would have to be whether such failure also constitutes a ground for challenge, if the undisclosed fact indeed is no ground for challenging an arbitrator. After all, an arbitrator has to disclose any circumstances likely to give rise to doubts as to his impartiality or independence, but a challenge is only successful in case circumstances exist that give rise to justifiable doubts as to his impartiality or independence. In case there would indeed be a ground for challenge, the question, namely which consequences the failure to disclose entails, would no longer arise.
The OGH considered the available legal literature on this topic: There are authors who state that a failure to disclose such circumstances normally constitutes a ground for challenge. Other authors take the view that the failure to disclose cannot as such and in any case justify a challenge of an arbitrator. This view is based on the IBA Guidelines on Conflicts of Interest in International Arbitration (“IBA Guidelines“). According to the latter authors, only a culpable violation of the duty to disclose can justify a challenge on a case-by-case basis.
Eventually, the OGH chose a flexible approach. It held that the connection between the weight of the failure to disclose and the likelihood of the relevant circumstance constituting a ground for challenge needs to be assessed on a case-by-case basis. It is important to establish whether the arbitrator deliberately concealed the information to avoid a possible challenge. Further, the OGH considered that it is not always clear which facts have to be disclosed; not every detail which has not been disclosed leads to the reasonable assumption that the arbitrator is not impartial and independent.
In the present case the OGH held that the arbitrator would have had to disclose his membership to the advisory board; however, the non-disclosure of this fact did not justify a challenge. It could not be assumed that he concealed this fact to avoid a challenge. Also the other (disclosed) facts did not constitute grounds for challenge.
 OGH, 5 August 2014, 18 ONc 1/14p; OGH, 5 August 2014, 18 ONc 2/14k.
 Section 588 ACCP.
 Hausmaninger in Fasching/Konecny IV/22 Section 588 mn 67; Reiner, ecolex 2006, 468; Schütze in Wieczorek/Schütze, Zivilprozessordnung4 Section 1036 mn 12.
 Riegler/Petsche in Liebscher/Oberhammer/Rechberger, Schiedsverfahrensrecht I mn 5/176; Hanusch in Klausegger et al, Austrian Arbitration Yearbook 2007, 74.
 Note that the new version of the IBA Guidelines on Conflicts of Interest in International Arbitration adopted on 23 October 2014 reads in the relevant part II, 5: “Nondisclosure cannot by itself make an arbitrator partial or lacking independence: only the facts or circumstances that he or she failed to disclose can do so.”
 Riegler/Petsche in Liebscher/Oberhammer/Rechberger, Schiedsverfahrensrecht I mn 5/176.