If you look at the list of Article 21.3(c) arbitration awards, you will see that in all 32 awards, the arbitrator was a current or former Appellate Body Member. Nothing in the DSU requires this, but it developed as a practice, and that's the way it always worked.
But that trend has finally been broken, with the appointment of Australian government official Simon Farbenbloom as the arbitrator in U.S. Shrimp II (Viet Nam) (DS429). I'm not sure if this is the start of a new trend, or just an aberration.
(As a sidenote, this post serves as a test. If you found this information interesting, you are a true WTO dispute settlement nerd!)
