Debate: This House believes that ethics in international arbitration requires no further regulation

Halsbury’s Law Exchange has assembled a panel of great experience and distinction to discuss ethical practice in arbitration at an event to be held tonight. We will be live tweeting from the debate using the hashtag #HLEdebate (follow us at LexisUK_DR and LexisUK_Arb).

Speakers:

Khawar Qureshi QC (Chair) – Barrister at Serle Court

Cyrus Benson – Gibson Dunn

Hilary Heilbron QC – Brick Court Chambers

Philippa Charles - Stewarts Law LLP

David Joseph QC - Essex Court Chambers

Points for discussion include:

  • Are the existing professional codes or conduct or institutional rules sufficient?
  • Are there any reasons why arbitrators should not be able to sanction parties and Counsel who behave improperly?
  • What are the main issues which require further regulation (if any) and how – by code/guidance or court and arbitral decisions?

And from Halsbury's Law Exchange:

International arbitration has gone big. Huge numbers of cases are being heard and the cases themselves involve parties, arbitrators and counsel from a vast array of different countries and, most importantly, different legal jurisdictions. With such diverse legal frameworks in play, problems arise with conflicting ethical rules applying to opposing arbitrators and counsel. The question all too often posed is “which rules apply?”. With international arbitration being governed by a myriad of overlapping ethical guidelines, this can be a difficult question to answer.

Yet ethics form the backbone of the arbitration process and the upholding of ethical standards is of vital importance. The ability to resolve disputes in a neutral forum is one of the key advantages of arbitration and forms the basis upon which parties place their confidence in it as an effective method of dispute resolution.

So, what is the answer? Has the time come for increased regulation? Is an overarching international code of conduct required? Would this even be viable?

These are tricky questions, but ones worth asking given the difficulties with the current legal framework and the huge expansion that we are seeing in international arbitration; an expansion which will only test this framework further.

We will be exploring these issues in our upcoming debate hosted by HLE on 18 November 2013 – the motion: “This House believes that ethics in international arbitration requires no further regulation”. It is sure to be a lively debate and we are interested to find out what our attendees’ views will be. In the meantime, we include a guide to the current rules below and invite you to give your thoughts on reforming this complicated area of law.

Handy guide: current rules

The rules governing ethics in international arbitration are comprised of a patchwork of sources. The main guidance and statutes (excluding case law) can be summarised as follows:

International Bar Association (IBA):

Arbitrators – The main guidance on ethics is that adopted by the IBA. While not binding, the broad international reach of the IBA has meant that this guidance has been considered by a number of arbitral tribunals since its adoption. “Rules of Ethics for International Arbitrators” (1987) provide for a general rule that an arbitrator will proceed diligently and efficiently to provide the parties with a just and effective resolution, and shall be and remain free from bias. The guidelines also include provisions on elements of bias, the duty of disclosure of arbitrators and rules on communications with parties. These are supplemented by the “Guidelines on Conflicts of Interest in International Arbitration” (2004). These guidelines identify circumstances which can raise doubts as to an arbitrator’s independence or impartiality and establish specific situations in which disclosure should be made.

Counsel – The “Guidelines on Party Representation in International Arbitration” (2013) provide guidance on party representation, communication with arbitrators, submissions to the arbitral tribunal, information exchange and disclosure, witnesses and experts and remedies for misconduct. These guidelines are “inspired by the principle that party representatives should act with integrity and honesty and should not engage in activities designed to produce unnecessary delay or expense”.

International Court of Commerce (ICC): The ICC Arbitration Rules (1998) provide that arbitrators must be, and remain, impartial and independent (art 11). Prior to appointment, a prospective arbitrator must sign a statement of acceptance, availability and independence, and is required to disclose in writing any facts or circumstances which might be of such a nature as to call into question his independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to his impartiality. The Rules also contain one of the broadest challenge provisions, providing for a challenge to an arbitrator based on “an alleged lack of impartiality or independence, or otherwise” (art 14).

UN Commission on International Trade Law (UNCITRAL): The UNICITRAL Arbitration Rules (2010) provide that a prospective arbitrator must disclose (and has a continuing duty to disclose) any circumstances likely to give rise to justifiable doubts as to his impartiality or independence (art 11). An arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence.

London Court of International Arbitration (LCIA): The LCIA Rules (1998) specify that all members of the arbitral tribunal must remain impartial and may not act as advocates of the parties. Prospective arbitrators are required to provide a declaration that there are no circumstances known to him likely to give rise to any justified doubts as to his impartiality or independence, other than any circumstances disclosed by him in the declaration and this a continuing duty (r 5.3). An arbitrator may be challenged by any party if circumstances exist that give rise to justifiable doubts as to his impartiality or independence (r 10.3).

International Centre for Settlement of Investment Disputes (ICSID): The ICSID Convention (1966) provides that those designated to serve as an arbitrator in an ICSID proceeding “shall be persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment” (art 14(1)). Prospective arbitrators are required to give a declaration giving details of any past or present professional, business or other relationship with the parties, along with any other circumstances that might cause an arbitrator’s reliability for independent judgment to be questioned (r 6). An arbitrator may be challenged on the grounds of “any fact indicating a manifest lack of the qualities required by art 14(1)” (art 57).

Domestic Law – England and Wales – Arbitration Act 1996: Under s 24(1)(a), the supervising court is allowed to remove an arbitrator for justifiable doubts as to his impartiality. This is often pleaded alongside a claim under s 68(2)(a) and (g) to apply to challenge an award made on the ground of a serious irregularity that has caused or will cause substantial injustice to the applicant.

Codes of conduct for lawyers: Lawyers are typically subject to codes of conduct and standards imposed by the legal institutions in their own jurisdiction, however, there have been various attempts (in addition to the IBA Guidelines discussed above) to impose a transnational code applicable to lawyers engaged in international arbitration. The Council of the Bars and Law Societies of the European Community (CCBE) adopted the Code of Conduct for Lawyers in the European Union (1988). The Code extended the principles governing a lawyer’s relationship with the courts to his relations with arbitrators and also imposed obligations in respect of a lawyer’s relationship with the courts, his client and other lawyers (art 4.5). The CCBE Code is part of the Code of Conduct of the Bar of England and Wales and barristers are required to obey it unless to do so would be inconsistent with the provisions of the Bar’s Code.

Food for thought

The rules on ethics in international arbitration are formed of layers upon layers of overlapping and sometimes conflicting guidance and statutes. Some degree of consistency and clarity is certainly desirable. But then again, that is the very nature of the beast that is the legal system; the law is adapted, amended and tweaked to respond to changes. In a practice area as complex and diverse as international arbitration, are we asking too much for there to be a uniform set of rules to govern the ethics involved? Were an overarching international code or guidance introduced, would it all too soon be outgrown? Would it even be feasible to create such a code or guidance and, if so, how many years in the making would this be and can practitioners wait that long?

Clearly, this is a topic that requires careful thought and consideration. Follow our debate on 18 November 2013 (#HLEDebate) to explore these issues and come back here to find out what conclusions we reach.

This article by Rebecca Carter was first published on the HLE blog on 13 November 2013

Filed Under: Arbitration

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