The external and internal impact of the challenge of an arbitrator are addressed. In case of a challenge, the functioning of the arbitral tribunal may become conditional upon an external factor, such as the decision of a state court, if the latter has jurisdiction to deal with the proposal on disqualification of the challenged arbitrator. This may be the case if the domestic provisions reproduce the basic solution of the UNCITRAL Model Law on International Commercial Arbitration.

The situation is less complex for the internal functioning of the arbitral tribunal if another court or authority decides on the challenge. This is the solution adopted by important institutional arbitrations such as the ICC, ICAC, LCIA, VIAC and SCC. When the arbitral tribunal has jurisdiction to decide on the challenge, its decision may create a rift within the tribunal, in particular if the challenge has been dismissed by a not unanimous award. Irrespective of the court or authority deciding on the challenge, its dismissal may lead to a polarization between this party and the unchallenged co-arbitrators. On the other hand, the acceptance of the challenge may alienate the party who nominated the removed arbitrator.

A telling example related to the dysfunction that challenges can generate and the way to handle them can be found in an ICC arbitration and the judgment Number 11/2009 of the Greek Supreme Court related to the enforcement of the arbitral award.