INTERNATIONAL ARBITRATION 1/3LY
PUBL I C SCRUT INY HA S INCRE A SED, AND DEMANDS FOR TRANSPARENCY ARE BECOMING MORE VOC AL AND WIDESPRE AD.
NA SS IB Definitely; it’s amuch bigger problem in investment arbitration, because the issues and fact patterns in those cases tend to overlapmore; plus, the global pool of arbitrators in that area is smaller than elsewhere. But almost everything in investment arbitration is public now. It’smore 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.
NA SS IF 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’. NA SS IB It’s an important issue. Introducing strong ethical guidelines will enhance transparency, andmay even prevent unnecessary challenges. Adopting clear guidelines that everyone followsmaymean the arbitration process canmove forwardmore smoothly; which can only be a positive outcome. ALEC Another issuearound transparency is that not all institutionspublish the reasons, or disclose the rationale, for acceptingor rejectinga challenge. Some institutions commission awell-knownpractitioner or arbitrator towritea reportwhich goes to the relevant committeeor court for consideration, and is usuallyadopted. That typeof document couldbemadeavailable without breaching confidentiality, if redacted. I’mof 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. NA SS IB In ICSID, when one arbitrator is challenged the two unchallenged arbitrators typically decide; there’s a lot of criticismof 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! NA SS IB 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 decidemuchmore difficult questions of substance?
NA SS IF 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 whichwould bemore permissive than prohibitive. NA SS IB If the guidelines were enacted by the institutions, theywouldn’t bemore permissive than prohibitive! Again, my problem is how can arbitrators be comfortable in awardingmillions 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. NA SS IB Absolutely. If arbitration institutions are to flourish, modernisation is needed and regulation is key to that process.
E T HI C A L GU I DEL INE S
ALEC Would you like to pick one last area of importance to discuss? NA SS IB We’vealready touchedon this and I firmlybelieve institutions should implement ethical guidelines for their staff and their owncounsel; there’snotmuchawareness around this issuebut it’s very important. Frankly, before the institutions start regulating thearbitrationpractitioners and counsel appearing before them, theyshould regulate their ownstaff. 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? NA SS IB 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, theywill not have a viable future.
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