INTERNATIONAL ARBITRATION 1/3LY
PUBLIC SCRUTINY HAS INCREASED, AND DEMANDS FOR TRANSPARENCY ARE BECOMING MORE VOCAL AND WIDESPREAD.
NASSIB Definitely; it’s a much bigger problem in investment arbitration, because the issues and fact patterns in those cases tend to overlap more; plus, the global pool of arbitrators in that area is smaller than elsewhere. But almost everything in investment arbitration is public now. It’s more a question of whether commercial arbitration should remain totally confidential, become only partially secretive, or be gradually opened up for greater transparency. There is a view that commercial arbitrations should be completely public, like a court system, but I wouldn’t go that far.
NASSIF Speaking as a practitioner, I think you’re right. Ultimately, if the institutions don’t fill this void – or if some do and others don’t – practitioners will advise clients to adopt the rules of a centre which takes itself ‘more seriously’. NASSIB It’s an important issue. Introducing strong ethical guidelines will enhance transparency, and may even prevent unnecessary challenges. Adopting clear guidelines that everyone follows may mean the arbitration process can move forward more smoothly; which can only be a positive outcome. ALEC Another issue around transparency is that not all institutions publish the reasons, or disclose the rationale, for accepting or rejecting a challenge. Some institutions commission a well-known practitioner or arbitrator to write a report which goes to the relevant committee or court for consideration, and is usually adopted. That type of document could be made available without breaching confidentiality, if redacted. I’m of the view that challenged decisions should be published, even in a redacted form, so there’s a better understanding of what’s considered to be important within the decision-making process. Although there would be practical implications of producing that level of paperwork. NASSIB In ICSID, when one arbitrator is challenged the two unchallenged arbitrators typically decide; there’s a lot of criticism of this practice, precisely because there are no guidelines. And sometimes the unchallenged arbitrators who have the decision-making power have themselves been challenged in the past; and, in the absence of guidelines, all they have to go on is their own experience. ALEC And there’s clearly a potential conflict with two arbitrators deciding the challenge on the third person! NASSIB Many people say they’re not comfortable in that type of situation. But if they’re uncomfortable deciding whether a colleague is neutral enough, impartial enough, or independent enough to be on the panel, how can they decide much more difficult questions of substance?
NASSIF At the end of the day, any guidelines to decide whether or not a colleague is impartial would ultimately be applied to you in the same circumstances. And, taking the earlier example of the IBA Guidelines, I wonder whether that would lead to an expression of principles which would be more permissive than prohibitive. NASSIB If the guidelines were enacted by the institutions, they wouldn’t be more permissive than prohibitive! Again, my problem is how can arbitrators be comfortable in awarding millions of dollars as damages, if they feel uncomfortable deciding whether a co-arbitrator ought to be disqualified? Where’s the comfort in having a dissenting opinion against two colleagues? ALEC So, the essence of the issue is deciding what the applicable principles are; and it goes back to Nassib’s original point that there need to be rules. NASSIB Absolutely. If arbitration institutions are to flourish, modernisation is needed and regulation is key to that process.
ETHICAL GUIDELINES
ALEC Would you like to pick one last area of importance to discuss? NASSIB We’ve already touched on this and I firmly believe institutions should implement ethical guidelines for their staff and their own counsel; there’s not much awareness around this issue but it’s very important. Frankly, before the institutions start regulating the arbitration practitioners and counsel appearing before them, they should regulate their own staff. It’s a very small field and the staff of arbitration institutions often go on to work for law firms, and vice versa, so clear guidelines are needed to ensure the system isn’t manipulated, or taken advantage of, because of inside knowledge gained in a previous role. ALEC So do you have a plan to bring in such guidelines at BCDR-AAA? NASSIB Yes. I think that institutions should first enact internal codes of conduct, and then enact external codes of conduct applicable to the arbitrators and counsel appearing before them; by doing this, arbitration institutions will strengthen their legitimacy. And the bottom line is that if they don’t do it, they will not have a viable future.
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