The only way is Ethics

The only way is Ethics

In his President’s Message of September 2014, Elliott Geisinger, President of the Swiss Arbitration Association (ASA) stated his concerns about the ethical guidance published recently by both the IBA (Guidelines on Party Representation in International Arbitration) and the LCIA (General Guidelines for the Parties’ Legal Representatives)*.

In short, his main concerns were:

  • that, under both ‘codes’ the power to decide on counsel’s ethical/unethical conduct is in the hands of the tribunal
  • the breadth of the standards (this objection was mainly focussed on the IBA) is excessive
  • initiatives by individual groups such as the IBA and LCIA risk fragmentation between potentially contradictory rules or codes which may of itself undermine their legitimacy

Taking these concerns (in of course much greater detail than I have set out) into account, Geisinger has issued a call to action for the creation of a ‘truly transnational body to apply and enforce ethical principles’. The proposal is:

  • for the major arbitral associations (such as ICCA and CIArb) with support from the institutions to work together to form a standalone committee which would hold the power to apply rules of professional ethics that it deemed relevant and applicable
  • the committee would have the power to apply sanctions but, at this stage, the nature of those sanctions is an ‘open’ subject – the idea being for the committee to have the power to issue warnings and reprimands and in serious case more severe penalties that would need to be defined
  • that the committee’s decisions would be subject to appeal either before other associations or institutions or fast-track arbitration
  • and that the committee would not have all-encompassing jurisdiction; certain circumstances would be best dealt with by the institutions themselves

In parallel with creation of the committee, Geisinger propose a creation of a set of ‘core principles’ for counsel conduct drafted jointly by the institutions. He is clear that this would not be just another set of rules, this would be a truly joint global project with principles common to all parts of the arbitration community enshrined in the rules. He anticipates the core principles being only 1-2 pages long and potentially being similar to the LCIA Annex. The principles would work alongside statutory or other rules that apply to counsel by virtue of their bar admission.

Geisinger acknowledges the ambition of this project and that similar projects have been launched and failed. However, given the current debate and focus on ethics in the arbitration community, he feels that the time may be ripe for a project of this nature.

While Mr Geisinger is to be applauded for having ambition and drive to improve the practice and image of international arbitration some obvious concerns spring to mind:

  • It is unclear how a counsel would become subject to the core principles and the scrutiny of the committee.
  • For example, is it intended that submission to the principles form part of any agreement to arbitrate under a set of institutional rules? As it is the parties that agree to arbitrate under the rules, not the counsel, the counsel would become bound by virtue of acting for a party who has agreed to arbitrate under those rules, this is an obligation on counsel ‘by the back door’, is that the right way to engage counsel in ethical conduct?
  • If it is by membership of a relevant arbitral association (eg ICCA, CIArb) such membership is not compulsory to act as a representative in arbitration (and should not in my view be made so) and therefore, potentially, many of those acting in arbitration who the arbitration community might like to be ‘caught’ by this code could in fact fall outside of it.
  • Or is the plan for those who act in arbitration to ‘sign up’ to abide by the rules and the scrutiny of the committee. In this case is there not a danger that those who sign up are not those the rules are really trying to ‘catch’?
  • Who will pay for the committee? While it is crass to talk about money, the type of individuals who would be best placed to sit on an ethical committee are likely to be busy with paid commitments and are likely to want to be reimbursed for their involvement in this committee. Will that be funded by the institutions and in turn the parties? While this is a point of details it is worth considering at the outset
  • While there have always been (and inevitably always will be)ethical questions raised as different cultures/legal systems and practices meet/clash in arbitration, this debate will inevitably to some extent go ‘cold’  by the time a joint committee of institutions is even created, let alone produced an agreed code (the IBA took, give or take, 5 years from the establishment of the task force to production of its guidelines!). This is not to say that an agreed code would not beneficial, just that the ‘fragmentation’ that ASA fears is already happening and will only get worse during the time it takes for its ideas to come to fruition
  • The issue of conflict with ‘home Bar’ rules or equivalent will still pervade. While no ‘home Bar’ is likely to allow, for example, bribery, the ethical issues that raise their heads often in arbitration eg witness preparation, ex-parte communications, are going to be very difficult to deal with. If the ‘ASA code’ is developed by a more diverse group than the IBA committee then perhaps these concerns will be addressed in drafting and such practices will not be banned. Would this then lead to a code which says nothing at all for fear of conflicting with one country’s practice? In case of conflict counsel will still follow their home Bar’s rules (and could a committee really punish them if they did?) thus continuing the un-level playing field that already exists
  • Geisinger does not offer any real solution to the issue of sanction (both the IBA and LCIA Rules have already been criticised for having no real teeth). Do they penalise the party for whom the lawyer acts? Do they punish the lawyer on costs (query how this would ever be enforceable as the committee would not have a judicial status)? Rules with no teeth are, essentially, pointless and may only serve to be disruptive of the arbitral process.

And what do those outside our community think? Arbitration, particularly involving states, is becoming more well-known and scrutinised outside of the arbitration/legal world. There is a real fear that if we do not regulate ourselves others who know less about our ‘world’ will try to do so (an uncomfortable thought for those who engage with this topic academically and with good intentions, let alone for those who tread a fine ethical tightrope). In my, humble, opinion Geisinger’s proposals are laudable and well-meaning but too theoretical to have any real substance at this stage and fail to address all of its own concerns about the IBA and LCIA codes already in the market.  While ethics in arbitration is a practical problem and not just an academic debate, these initiatives ought to be appraised and supported but whether this is the one that will really take hold, we will have to wait and see but I fear that the ‘waiting’ may be the undoing of this initiative.

*LexisPSL Arbitration subscribers can find content here on the IBA and LCIA rules.

See also: Key Features of the LCIA Arbitration Rules 2014 – A Guide

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