04 IN CONVERSATION WITH LOUK AS MISTELIS
INTERNATIONAL ARBITRATION 1/3LY
Then, from the 1980s and1990s, there was a democratisation of arbitration: it became less cosmopolitan andmore of a tool. Arbitration becamemore accessible to people, some of whomhadn’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. Thedevelopment of arbitrationas a servicemeant thatmoreand morepeople came toarbitration –which I think is agood thing in the long run –but it has alsobeen the cause for amassive learning curve, andhas resulted ina lot of change inpractice. A RB I T R AT I ON IN OP ER AT I ON : C OMP E T ING IN T ERE S T S A ND E X P EC TAT I ONS LOUK A S One of themain 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 amanagerial 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 – onemight 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 lawyersmeans 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, inmy view, cases became too complicated, subtle and precedent based; making it impossible for a user to understandwhat the likely outcomemight 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? LOUK A S 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 amember of the ‘establishment’, because they have the respect that goes with reputation; whereas entirely newmembers 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 tomake a decision. Parties are generally satisfiedwhen 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 LondonMaritime Arbitration Association (LMAA) arbitrators have very little interactionwith 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 tome is the problemof 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 themain elements distinguishing international arbitration fromEnglish lawand the High Court. The precedent-based systemof 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 systembenefits both clients and lawyers because it allows them to come upwith solutions to problems which they know give rise to a fairly predictable outcome, if litigated. International arbitration hasmany strong benefits but certainty of outcome is not one of them! On the plus side, it’s typicallymore flexible than court proceedings, as well as less formal and intimidating. For a party operating in a number of jurisdictions, the formof proceedings will feel fairly familiar wherever a dispute is being resolved. However, the lack of predictability can lead to tension for clients whomight 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. LOUK A S 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 explainwhy 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 aremany 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... andwe declare as follows...” LOUK A S 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 whomare very talented but more likely to stick closely to the written submissions.
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