04 IN CONVERSATION WITH LOUKAS MISTELIS
INTERNATIONAL ARBITRATION 1/3LY
Then, from the 1980s and1990s, there was a democratisation of arbitration: it became less cosmopolitan and more of a tool. Arbitration became more accessible to people, some of whom hadn’t experienced it previously. I actually remember being involved in a particular dispute where there were constant objections raised and calls for strike out throughout the hearing, because the parties’ representatives weren’t accustomed to the process – the eminent tribunal was amused and a bit intimidated by this behaviour to say the least! And, for me, this serves as a reminder that arbitration is a service provided to the parties; not an expression of state authority. The development of arbitration as a service meant that more and more people came to arbitration – which I think is a good thing in the long run – but it has also been the cause for a massive learning curve, and has resulted in a lot of change in practice. ARBITRATION IN OPERATION: COMPETING INTERESTS AND EXPECTATIONS LOUKAS One of the main issues affecting the practice as a service, is the expectations of the parties. Generally, parties expect arbitrators to operate in the Swiss or French style, taking a managerial approach and focussing on getting the parties to where they think they ought to be. But, at the same time, the legal representation (and advocacy) in arbitration often follows a common law style. This throws up some issues around the distribution of power between the tribunal and the parties and counsel: the tribunal doesn’t own the dispute – one might view it as the captain of the vessel; the parties own the vessel but the captain can dictate the route. I personally think that the common law training of English lawyers means some aren’t well suited to practice as arbitrators. BEN Can I pick up on this comment? One of the things that I’ve observed over the last 20 years is an element of ‘international arbitration of the lowest common denominator’, in relation to those involved.
There was a period in the English High Court when, in my view, cases became too complicated, subtle and precedent based; making it impossible for a user to understand what the likely outcome might be. Conversely, in arbitration, there’s sometimes a risk of operating at the level of the least sophisticated member of the panel and this isn’t necessarily the ideal we should all be aiming for. What do you think about this, given your involvement on all sides? LOUKAS I think arbitration is dependent on confidence; of the parties in the tribunal and vice versa. That suggests that there’s an immediate advantage for a member of the ‘establishment’, because they have the respect that goes with reputation; whereas entirely new members have to build up that confidence on both sides of the equation. At the same time, there’s no equality of arms in arbitration – it’s not for the arbitrator to correct mistakes. After all, the arbitrators have a duty to make a decision. Parties are generally satisfied when arbitrators succeed in creating an efficient and fair process: they feel that they own the process, and that it’s developing based on their particular needs and interests, rather than in accordance with an objective standard. I think this is where counsel can create problems, because their expectations are often determined by what they’ve seen done before, and they, in turn, communicate these preconceptions to the parties. In this respect, counsel often shape the process of arbitration more than the arbitrators. So there are probably a lot of common elements between arbitrations under different institutional rules; although there are certainly varying levels of interaction between the parties and counsel, the tribunal and the institution. For example, while London Maritime Arbitration Association (LMAA) arbitrators have very little interaction with the parties until fairly late in the process (which is rather uncommon), the International Centre for Settlement of Investment Disputes (ICSID) and ICC have a lot of interaction; and commercial arbitration on average is somewhere in between. BEN Another issue that occurs to me is the problem of how to balance flexibility and the parties’ ownership of the process, with the requirement for an element of certainty around their legal rights. There’s a tension there which is difficult.
Relative certainty of outcome is one of the main elements distinguishing international arbitration from English law and the High Court. The precedent-based system of English common law gives clients a fairly certain idea as to the likely outcome of any dispute, which is particularly important in areas where contracts are very sophisticated. The system benefits both clients and lawyers because it allows them to come up with solutions to problems which they know give rise to a fairly predictable outcome, if litigated. International arbitration has many strong benefits but certainty of outcome is not one of them! On the plus side, it’s typically more flexible than court proceedings, as well as less formal and intimidating. For a party operating in a number of jurisdictions, the form of proceedings will feel fairly familiar wherever a dispute is being resolved. However, the lack of predictability can lead to tension for clients who might have arbitration clauses in some contracts and court clauses in other contracts. And sometimes there’s a level of sophistication in arbitration contracts which isn’t always appreciated by the arbitral tribunal. LOUKAS Well, arbitration is a legal process so it should be reasonably predictable! There shouldn’t be a lot of surprises, and the reasoning of the awards should be transparent. I always emphasise that the award should be written almost exclusively for the losing party, because there’s a need to explain why they lost and that each of their submissions was taken into account. The rationale of the award should be easy for somebody not present during the hearing to understand. BEN But there are many arbitrations now – particularly at the ICC – where the submissions of the claimant’s counsel and the respondent’s counsel seem to have been cut and pasted into the award. And then there are two or three paragraphs which say, “ergo... and we declare as follows...” LOUKAS It sounds as though you’re describing a certain practice that’s developing on the continent, as a consequence of the increased influence of tribunal secretaries. Increasingly, the first draft of the award is done with the participation of the tribunal secretary, many of whom are very talented but more likely to stick closely to the written submissions.
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