Conventional wisdom in arbitral proceedings
Introduction
Questioning the meaning of conventional wisdom and identifying the principles which constitute it requires going back to the foundations of international arbitration, which is particularly relevant when the role of arbitrators and counsel in international arbitration comes under criticism. Among the criticisms that international arbitration faces are the increased time and cost of proceedings and the quality of arbitrators' decisions,(1) with criticisms against investor-state arbitration being particularly acute.(2) In this context, conventional wisdom bears an element of acceptability and thus, if properly observed, should have an ability to:
unite and inspire trust in end users; and
strengthen a system which has been a source of discontentment.
However, just because the principles identified as conventional wisdom are recognised as wise, does that mean that they represent the right principles to apply in any circumstances? This is probably not the case, mainly for two reasons:
The way in which arbitrators work has evolved over the years, not only due to technological innovations, but also because of an increased arbitration caseload. Therefore, it could be argued that wisdom requires a constant adaptation of arbitral procedures to the changing environment in which arbitrators operate.
The specificities of individual cases sometimes require a deviation from admitted practice.
This article analyses the role of conventional wisdom in the promotion of efficient arbitration proceedings and identifies numerous ideas and principles which are generally accepted and ensure the good functioning of the arbitration process.
Conventional wisdom as a set of generally accepted principles
In international arbitration numerous generally recognised principles are applied consistently.(3)
Commonly accepted wisdoms in international arbitration
Constitution of arbitral tribunals: preference for three arbitrators?
At the stage of constitution of an arbitral tribunal, one idea which has been described as a conventional wisdom relates to the preference for a three-member tribunal where the economics of the case allow for this.(4)
One argument in favour of this conventional wisdom is that having three arbitrators improves the quality of the arbitral process and the award since three arbitrators allows for "true deliberation – the sharing of ideas, perspectives reasoning and drafting"(5) and a more thorough consideration of the issues from different points of view.(6)
Another argument in support of three arbitrators rather than one is that having the ability to nominate a co-arbitrator generally increases party confidence in the arbitral process. This is because the parties "believe that there is at least one member of the arbitral tribunal who will listen attentively and sympathetically to its case, understand its position, and ensure that the party gets a fair hearing and that its views are considered during the deliberations".(7)
When arbitrators have the same ethical and professional values, as well as a good knowledge of the applicable law, or at least an open and flexible approach to the application of a foreign law, three-member tribunal deliberations can be fruitful. This is particularly the case in complex procedures where the complementary approaches of three well-versed individuals is usually beneficial to the decision-making process.
However, criticism against three-arbitrator tribunals has developed, underlying the potential risk of excesses associated with party-appointed arbitrators, such as the risk of arbitrators:
having ex parte communication with their party;
resigning at a time designed to disrupt the proceedings;
making themselves unavailable for deliberations;
encouraging the filing of challenges;
secretly feeding information about deliberations to their party;
failing to deal with an award that needs their signature before it can be notified to the parties;
secretly sending their party the draft of a forthcoming award;
taking months to draft a promised dissenting opinion; and
filing a dissenting opinion designed to undermine the enforceability of the award.(8)
The risk of excesses with three-member tribunals is not negligible but would likely be attenuated if a proper system of penalties existed for cases of abuse. For example, the Chartered Institute of Arbitrators has adopted its own code of conduct for arbitrators who are also members. Pursuant to Article 15.2 of the Code of Conduct, the misconduct of an arbitrator may involve "a significant breach of professional or ethical conduct which shall include the Code of Professional and Ethical Conduct or other similar document published from time to time by the Institute."(9) However, such mechanisms are still in their infancy and could be further developed to ensure stricter observance of arbitrators' ethical duties.
Conventional wisdom at preliminary stages of arbitral proceedings
Arguably, the initial stages of arbitral proceedings are essential for the conduct of the rest of the proceedings as they set the tone for the arbitration and build the basis for efficient proceedings.
The procedural planning of an arbitration requires that the arbitral tribunal ascertain at an early stage:
the source of the dispute;
the delimitation of factual and legal issues; and
how the parties contemplate the arbitral proceedings and timetable.(10)
Appendixes to the International Chamber of Commerce Rules of 2012, 2017 and 2020 include numerous specific case management techniques which arbitral tribunals are encouraged to consider in conjunction with the case management conference or preliminary meeting.(11)
The preliminary meeting is key since it allows a dialogue between the arbitrators and the counsel for the claimant and respondent. The presence of the parties themselves at this stage is highly recommended since it represents the best occasion for the arbitrators to explain to them how the arbitration proceedings work, particularly when they are unfamiliar with such proceedings.
Further, the preliminary meeting allows the arbitrators to ensure that the parties are aware of the other mechanisms available for resolving their dispute. The preliminary meeting can be the best occasion to encourage settlement as the parties acquire a full understanding of the arbitral procedure, including the times and costs involved.
Conventional wisdom in conduct of arbitration
The international arbitral process seeks to achieve numerous objectives which can be described as conventional wisdoms. Some of the most important characteristics of the arbitral procedure are:
procedural fairness;
efficiency;
expertise; and
tailoring procedures to specific disputes and parties.(12)
As international arbitration disputes involve parties coming from different jurisdictions, one of the fundamental objectives of international arbitration is that the dispute will not be resolved in accordance with the procedures of any of the parties' home jurisdictions. Instead, a neutral procedure is used, in which both parties are treated fairly and equally.
It is also a conventional wisdom that international arbitration proceedings should be efficient and as expedite as possible, with most arbitral institutions imposing extendable limitations for rendering the arbitral award. There is a growing trend of imposing penalties on arbitrators who are delayed in rendering their award.
The use of arbitral procedures that are flexible and tailored to the parties' specific dispute and wishes is another well-known essential feature of international arbitration. The parties' ability to tailor the arbitration procedure to their own requirements – by choosing where the arbitration is to be held, which language should be used and whether the arbitrators require any qualification and expertise – is an important advantage over court proceedings for international business actors and investors.
Conventional wisdom in organisation of arbitral proceedings and role of arbitral institutions
International organisations and arbitral institutions have attempted to codify and regularise the organisation of arbitral proceedings.
Produced by the United Nations Commission on International Trade Law (UNCITRAL), the UNCITRAL Notes on Organising Arbitral Proceedings set out numerous non-binding principles developed over years of international arbitration practice and, as such, are a useful guide on the principles applicable to arbitration case management. The notes are meant as a reference tool to be used during the initial stages of an arbitration, aimed at producing a well-organised, efficient arbitral proceeding by identifying issues for the tribunal and the parties to address.(13)
The introduction to the notes states that:
[a]rbitration laws usually grant the arbitral tribunal broad discretion and flexibility in the conduct of arbitral proceedings, provided that a fair, equitable and efficient process is observed. A set of arbitration rules selected by the parties would also shape the arbitral tribunal's discretion to conduct the arbitral proceedings, either by strengthening or limiting that discretion. Discretion and flexibility are useful as they enable the arbitral tribunal to make decisions on the organization of arbitral proceedings that take into account the circumstances of the case and the expectations of the parties, while complying with due process requirements.(14)
The notes provide guidelines in relation to:
the adoption of procedural rules;
language, translation and costs;
the seat of the arbitration and location of the hearings;
administrative matters and the appointment of a secretary;
deposits for costs and arbitrators' fees;
confidentiality;
the timetable for:
written submissions;
evidence;
witness testimony; and
the hearing;
the appointment of experts;
interim measures;
hearing procedures;
possible settlement issues; and
the issue definition.
Other institutions have produced useful guidance on the management of arbitration proceedings. The International Chamber of Commerce Task Force on Controlling Time and Costs in International Arbitration provides useful recommendations regarding case management. The Chartered Institute of Arbitrators has also published guidelines on managing arbitrations and procedural orders, which can be a useful source of conventional wisdom in arbitration case management.(15)
Endnotes
(1) See William W Park, "Arbitration and Fine Dining: Two Faces of Efficiency", P Shaughnessy and S Tung, The Powers and Duties of an Arbitrator: Liber Amicorum Pierre A. Karrer (Kluwer 2017) p 251; Steven Seidenberg, "International Arbitration Loses its Grip", 96 ABA Journal (2010) p 50; Peter Yuen and John Choong, "Is Arbitration Value for Money? Assessing Some Common Complaints about the Costs of International Arbitration", 3 Asian Dispute Review (2008) pp 90-95; Leon E Trakman and Hugh Montgomery, "The 'Judicialization' of International Commercial Arbitration: Pitfall or Virtue?", 30 Leiden Journal of International Law (2017) p 405; and Jennifer Kirby, "Efficiency in International Arbitration: Whose Duty Is It?", 32(6) Journal of International Arbitration (2015) pp 689-696.
(2) Alison Ross, "'Game of Tribunals' – winter is coming, warns Born", Global Arbitration Review (2016).
(3) The discussion below is not exhaustive, but provides a description of some accepted wisdoms in international arbitration and where they can be found.
(4) Jennifer Kirby, "With Arbitrators, Less can be More: Why the Conventional Wisdom on the Benefits of Having Three Arbitrators may be Overrated", 26(3) Journal of International Arbitration (Kluwer Law International, 2009) p 338.
(5) Stephen Jagusch, "Starting out as an Arbitrator: How to Get Appointments and What to Do When you Receive Them", 71 Arb (2005) p 335.
(6) Julian D M Lew, Loukas A Mistelis and Stefan M Kroll, Comparative International Commercial Arbitration (Kluwer Law International 2003) pp 227-228; Jan Paulsson, "Ethics, Elitism, Eligibility", 14 Journal of International Arbitration (1997) p 13; and Wendy Miles, "Practical Issues for Appointment of Arbitrators", 20 International Arbitration (2003) p 226.
(7) Jennifer Kirby, "With Arbitrators, Less can be More: Why the Conventional Wisdom on the Benefits of Having Three Arbitrators may be Overrated", p 342. In a survey 2012 Queen Mary University of London survey on current and preferred practices in the arbitral process, a significant majority of interviewees stated that they preferred each party to unilaterally select the two co-arbitrators in a three-member tribunal because:
it gives the parties control over the constitution of the tribunal and inspires confidence in the arbitral process, which consequently raises the legitimacy of the final award;
parties are better placed to know what skills and knowledge are required for resolving the dispute; and
many interviewees expressed some distrust in arbitral institutions selecting arbitrators.
(8) Jennifer Kirby, "With Arbitrators, Less can be More: Why the Conventional Wisdom on the Benefits of Having Three Arbitrators may be Overrated", p 344.
(9) The Chartered Institute of Arbitrators Code of Professional and Ethical Conduct for Members (2009).
(10) Gary B Born, "Chapter 15: Procedures in International Arbitration", International Commercial Arbitration, 2nd ed (Kluwer Law International, 2014).
(11) Appendix IV to the International Chamber of Commerce Rules of 2012 and 2017.
(12) Gary B Born, "Chapter 15: Procedures in International Arbitration", International Commercial Arbitration, 2nd ed (Kluwer Law International, 2014) p 2120.
(13) Ibid at pp 2235-2236.
(14) UNCITRAL Notes on Organising Arbitral Proceedings (New York, 2016), Introduction, Paragraph 8.
(15) Chartered Institute of Arbitrators' Guideline on Managing Arbitrations and Procedural Orders (2015). Other institutions have also published guidelines for the organisation of arbitral proceedings, including the Singapore International Arbitration Centre's Practice Note for Administered Cases (2 January 2014), the Singapore International Arbitration Centre's Practice Note for UNCITRAL Cases (2 January 2014), the London Court of International Arbitration's Notes for Arbitrators (26 October 2017) and the International Bar Association's Rules on the Taking of Evidence in International Arbitration (2010).
By Nayla Comair Obeid