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On 11 September 2014, the Queen Mary Institute for Regulation and Ethics (ILE) hosted its inaugural conference, ‘The Arguments For and Against Further Regulation of Arbitration Counsel’. Over the course of the day, high-quality speakers drawn from legal practice and academia, and armed with common law and civil law perspectives, discussed some of the measures currently in place to regulate the ethical conduct of counsel in international arbitration and argued variously in favour and against the imposition of further regulation.
In a recent article for Lexis®PSL Arbitration, Professor Stavros Brekoulakis, co-director of the ILE with Professor Catherine Rogers, explained that the objective of the ILE is to ‘bring business, the legal profession and regulatory specialists together with governments, regulators and other policy makers to debate key issues leading to improvements in the regulatory environment and to disseminate knowledge at an advanced level through publications, partnerships and events.’ As Professor Rogers stated, the conference was ‘designed, consistent with the purpose of the Institute, not only to take stock of [recent international developments in ethics regulation], but to consider what they might mean for the future of international arbitration and what else needs to be done.’
The event, held at the Royal College of Surgeons on Lincoln's Inn Fields, was organised into four sessions, with each session intended to build on those before it. This article provides a concise summary of what was discussed during the conference by some of the leading experts in this important field*.
A video of the event will be available soon and will be posted here on the LexisNexis DR Blog.
The first session, chaired by Cyrus Benson (Gibson Dunn), addressed the content and international application of ethical rules. After a warm introduction by the chair, David Brynmor Thomas (39 Essex Street Chambers) provided an instructive overview of the ethical obligations of English and Welsh solicitors and barristers pursuant to separate regimes of ‘outcome focused’ regulation presided over by the Solicitors Regulation Authority and the Bar Standards Board. Mr Brynmor Thomas also discussed whether English and Welsh solicitors and barristers are bound by those ethical regimes when they act as counsel in international arbitration and provided illustrations of the problems that an ethical vacuum can present to counsel and arbitrators.
The next speaker was Laurence Shore (Herbert Smith Freehills), who provided an US-qualified attorney’s perspective and, amongst other matters, spoke on the adoption, in whole or in part, of the ABA Model Rules of Professional Conduct (the Model Rules) across the USA. Notably, Mr Shore discussed rule 8.5 of the Model Rules, which deals with disciplinary authority and choice of law, and proposed that a ‘law of the seat’ approach to determining which ethical rules apply to counsel in international arbitration may resolve some of the confusion encountered when seemingly conflicting regulatory regimes apply to lawyers when they act as counsel in international arbitrations.
Providing the first civil law perspective of the day, Carlos Alberto Carmona (Marques Rosada, Toledo Cesar & Carmona Advogados) provided a useful overview of the regulation of ethics in Brazil, both domestically and internationally. In the sphere of international arbitration, Mr Carmona’s view was that Brazilian lawyers are not subject to any explicit ethics regulation; a ‘beast’ in such circumstances and not a ‘lawyer’, according to his entertaining metaphoric distinction. Elliott Geisinger (Schellenberg Wittmer and President of the Swiss Arbitration Association (ASA)) was called upon (at the eleventh hour) to provide a second civil lawyer’s perspective and offered an insightful overview of the ethical regulation of Swiss lawyers and those who practice law within that key arbitral jurisdiction. Interestingly, Mr Geisinger emphasised the availability of criminal sanctions under Swiss law for breaches of what can also be considered as ethical standards, ie if a lawyer makes false statements that lead to the procurement of an arbitral award that may amount to fraud.
The second session was introduced by Queen Mary’s Professor Brekoulakis, who provided context to the development of international perspectives and rules on the regulation of counsel conduct in international arbitration. Now that international arbitration has moved from Professor Roger’s ‘ethical no-man’s land’ to a land of increased regulation (see below), Professor Brekoulakis posed three questions that need to be addressed: (1) how far does such regulation go?; (2) how does regulation affect the enforceability of awards?; (3) and, what remains of the perceived problem of double deontology (in this context, the situation where a lawyer is subject to the ethical rules of his home jurisdiction as well as the ethical rules of the jurisdiction where the arbitration is seated)?
In this session, Mr Benson, James Castello (King & Spalding) and Mr Geisinger focused, in particular, on two notable and recent developments in the ethical regulation of counsel: (1) the adoption of the IBA Guidelines on Party Representation in International Arbitration (the IBA Guidelines) in 2013; and (2) the inclusion of a mandatory code of conduct for legal representatives in the Annex to the LCIA Rules 2014.
Mr Benson, a member of the IBA Task Force on Counsel Ethics in International Arbitration Survey, provided valuable insight into the work of the task force and discussed some of the key features of the IBA Guidelines. Although recognising that the IBA Guidelines are not perfect (he was speaking at the conference in his personal capacity), Mr Benson emphasised that they are aimed at achieving a level playing field for lawyers in arbitral proceedings and thus help ensure that the process is fair. Mr Benson concluded his speech by posing the question (and I paraphrase): is there any downside for parties to having a conversation with their tribunal regarding the IBA Guidelines at any early stage of their arbitration? This approach has much to recommend it.
Mr Castello, who served on the drafting committee for the LCIA Rules 2014, offered insight into why the LCIA developed its own (less comprehensive) ethical code for counsel appearing in LCIA arbitrations (pursuant to the revised rules) rather than adopting the IBA Guidelines. Mr Castello emphasised that the LCIA’s general guidelines for party legal representatives was a first effort, that there was no harm in initial conservatism and that there was, of course room, for amendment in the future should it be required.
The third speaker in this session, Mr Geisinger, addressed some of his and ASA’s concerns with the IBA Guidelines and the Annex to the LCIA Rules 2014, and proposed an interesting alternative solution to the perceived problem. In summary, Mr Geisinger argued, firstly, that it was questionable whether increased ethics regulation corresponded with a need in practice to address unethical conduct (and, in any event, that ethical issues can be dealt with effectively by tribunals procedurally without wading into matters of ethical misconduct) and, secondly, that it was not healthy for ethics regulation to rest in the hands of the tribunal due to its primary role of deciding the merits of the case.
Mr Geisinger, however, agreed that the ethics debate is one worth having and officially announced ASA’s proposition for the creation of a Global Arbitration Ethics Council: a transnational body, with appointees from all major arbitration associations (ICCA, CIArb, etc) as well as representatives from the arbitral institutions, which would have authority over lawyers who had signed up as members of associations that were represented on the council. This body would deal with ethical misconduct of counsel outside of the arbitration process and therefore free arbitrators from dealing with such matters during proceedings. Mr Geisinger was clear that the idea for the project was in its early stages and was ambitious, but we wait with interest for further details of this project.
As Professor Rogers explained in her insightful introduction to the third session, lawyers, including international arbitration lawyers, are not the only groups dealing with the impact of globalisation, as many other groups and industry sectors have experienced significant change as they continue to adapt to a changing economic climate, which includes, for many, increased regulation. The speakers for the third session, Professor David Wilkins (Harvard Law), Professor Iain MacNeil (Glasgow University) and Michael Todd QC (Erskine Chambers) discussed different aspects of the question above.
Professor Wilkins spoke about the history, current state and future of regulation of the legal profession, and was clear that if the profession is not to lose its valued autonomy and become simply another subject of state and market control, it will need to justify self-regulation on broader, principled grounds, which is where strong ethics regulation can play a role. Michael Todd QC gave a learned speech on the important role that lawyers, acting in accordance with ethical obligations, play in upholding the Rule of Law and Professor MacNeil drew parallels and distinctions between the regulation of ethics in the legal and financial services sectors and discussed how the latter sector has reacted in the wake of the global financial crisis.
The day’s final session was introduced by Professor Julian Lew QC, with speeches from Gary Born (Wilmer Hale) and Andrea Carlevaris (ICC) providing a fitting end to the conference.
Mr Carlevaris, the sole speaker from the international arbitral institutions, stated that such institutions should not regulate themselves or engage in the codification of ethical precepts. Whilst recognising that proposed solutions such as the IBA Guidelines and the LCIA Annex contribute to the development of a positive culture and a level playing field, Mr Carlevaris remarked that it is difficult for institutions to hold themselves up as guardians of ethics and that the current solutions do not necessarily take into account global ethical standards. This latter criticism, essentially that the IBA Guidelines have a North-American/English bias and do not necessarily reflect the views and values of emerging markets, was raised a number of times throughout the day. To illustrate the importance that such markets will play in the future of the legal profession, during the third session Mr Wilkins referred to the IMF’s forecast that by 2050 the “West” will account for only 18% of global GDP, whereas Africa will account for approximately 40%.
Mr Born provided a pertinent overview of the debate on ethics regulation and discussed the prominent players. He considered that the debate is crowded, but that there are serious things to be said on both sides. Rather than an ethical no man’s land, Mr Born playfully compared international arbitration to a teenager’s bedroom, filled with too many people. Mr Born referred to familiar grounds for concern regarding the proposed cures of the IBA Guidelines and LCIA solutions, including the risk that breaches of ethical rules may be used to found challenges to awards or to resist recognition and enforcement. Mr Born took the view that in order to arrive at an international solution to the issue of conflicting ethical regulation, national regulatory authorities need to confer in order to find an appropriate international solution, citing the example of international cooperation on transnational bankruptcy as an example of where such cooperation has proved successful.
As many attendees agreed, the conference illuminated and enhanced the debate on ethics in international arbitration. Future developments in this field, and in the work of the Queen Mary ILE, will be observed with close interest.
*This article reflects the views of the author only and the summary above is intended to give a flavour of what was discussed rather than a comprehensive overview. The views of the speakers summarised in this article are paraphrased and generalised although it is hoped that they reflect the substance of what was said.
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