Conducting Arbitration correspondence: 5 guiding principles

Much discussion in the last year or so has revolved around addressing so-called “guerrilla tactics” in arbitration, and the resultant codes of conduct for party counsel and other representatives in arbitration, which are variously welcomed for setting out a minimum standard of behaviour, and criticised for lacking meaningful sanctions.  In the main, such codes of conduct focus on behaviour which would or might in any event breach a party representative’s professional body’s rules of professional conduct.

Philippa Charles, Head of Arbitration at Stewarts Law, considers these concerns over counsel’s conduct, and the potential impact in international arbitration of 5 guiding principles recently set out by Walker J in relation to correspondence in litigation.

One noticeable recent development is for arbitrators to become more vocal about the extent to which party counsel’s conduct is making a negative impression on the Tribunal, particularly when it comes to the tone of the correspondence between party representatives.  Such conduct falls short of directly engaging the codes of conduct, but the extent to which it displeases the Tribunal is a matter which few exponents of “arbitration by war of attrition” seem to appreciate, given the prevalence of such approach in practice.

Recent case law suggests that at least one of the judges in the Commercial Court has reached the limit of tolerance for expensive, extensive, tendentious and unproductive correspondence, and although his comments initially emerged in a case concerned with applications for freezing orders and other interim applications, they are intended by him to be of general application and warrant careful consideration by arbitration practitioners.

In Kazakhstan Kagazy [2015] EWHC 996 (Comm), Walker J identified an urgent need for practitioners to bring a 'sense of proportion' to large claims involving without notice freezing orders and heavy interim applications. He put the problem as follows:

'This case is an example of something which the court is seeing with increasing frequency. Claims are made for large sums. Emergency orders are obtained, without notice to the other side, which freeze assets worldwide up to the value of the sums claimed. From then on there is a series of interlocutory applications. They are heavier than they should be. Not weeks, but months, are spent assembling material to be put in evidence. Correspondence is exhibited. In some cases it includes something which correspondence should never include, namely the trading of insults between the solicitors for the parties. There has been little, if any, attempt to agree facts or issues. Time estimates for pre-reading are given which underestimate the time needed to read the key evidence and gain a grasp of what the real issues may be. The time needed is far more than it ought to be, largely because no expense has been spared in taking every point.'

Such an approach, in the view of the Judge, represents bad practice.  He therefore proposed the following (non-exhaustive) universal guiding principles:

  • the court expects solicitors and counsel to take appropriate steps to conduct the debate, whether in advocacy or in correspondence, in a way which will lower the temperature rather than raise it
  • this remains the case even where, indeed particularly where, any concession is perceived as anathema by one or other or both sides. It is perfectly possible to be vigorous without being insulting
  • imputations on others, whoever they may be, should only be made if they are both necessary and justified. If they are not strictly necessary, or they are not objectively justified, they should be rigorously excluded.
  • rather than focus on criticisms of the other side, the focus should be on working out a timetable which will enable opposing parties to consider what facts and issues can be agreed, and what information and revised estimates for reading and hearing time can be given to the court prior to the hearing so as to ensure that the court's time is used efficiently and productively, and
  • if it is likely that a point which might be taken by a party, or it becomes likely that a point previously taken by a party, will not significantly advance that party's case, or will require a disproportionate amount of time or resources if it is to be resolved, then notification should be given that the point will not be relied upon for present purposes. The notification can be accompanied by an appropriate reservation as to the position in future.

Note: in Jivraj v Hashwani [2015] EWHC 998 (Comm), [2015] All ER (D) 169 (Apr), Walker J added a gloss to this fifth principle stating that there is no guarantee that an express reservation will entitle the party in question to advance the point later. If an attempt is made to raise a point later which could have been raised earlier, and the circumstances are such that raising it later amounts to harassment of the other party, then the court will generally not allow its procedures to be abused in that way. An express notification of the reason why a point is not being taken, accompanied by an appropriate reservation, will put the other party in a position where they can object to the course proposed. If they do not object, then they may find it difficult to justify a later complaint. If they do object, then further consideration can be given to whether or not the point should be advanced. Moreover notification will enable a party to invite the court, if the court thought right to do so, to give case management directions as to when and how any particular issue should be determined. Indeed the court might think it desirable to consider this of its own motion]

Most practitioners can readily point to current or former cases where the correspondence has verged on the hyperbolic or intemperate.  The temptation to respond in kind to such communication is intense, particularly where the issues are or may be finely balanced or where one side considers the other to be engaged in obfuscation, wilful misunderstanding or other attacking conduct as a means of diverting attention from the core issues.  The law is not alone in having lost its manners: consider David Cameron’s failed pledge to do away with the Punch and Judy show point-scoring aspect of Prime Minister’s Questions, and the proliferation of intemperate debate on social media platforms or in the “below the line” comments on newspaper articles, which so quickly descends into personal attacks.

What Walker J’s comments demonstrate is that aggression for the sake of it, or a tit for tat approach to correspondence, is liable to have the opposite effect to that desired: tribunals are not often, or indeed at all, persuaded by invective but rather by productive, balanced submissions which reflect a sense of proportion.  Too often, it appears that party counsel are descending into the arena armed with vitriol rather than with evidence.  Ultimately, unhelpful correspondence may damage the party’s substantive position in the eyes of the Tribunal, particularly where an issue is finely balanced.

The old adage that one should never put in writing anything which one would not wish to hear read out by the judge or tribunal holds true now as much as ever.  Time for reflection on the true purpose and effect of inter-solicitor correspondence is time well spent, if only to demonstrate that party counsel can do considerably better than mere mud-slinging in terms of productive, substantive correspondence.  Courtesy, it is said, costs nothing.  If the cases above demonstrate anything, it is that a lack of courtesy can cost clients dearly.

Philippa Charles is Head of Arbitration at Stewarts Law

Filed Under: Arbitration

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