International Arbitration in 2022
Emerging standards for the conduct of international arbitration
While it is uncontroversial to say that the procedural architecture of a legal system is among the most pivotal elements that determine its ability to deliver justice, we have tended not to accord procedural issues and reforms the attention that is commensurate with their significance.
The Honourable Chief Justice Sundaresh Menon’s opening words at the 36th Annual Freshfields-SIA Lecture in November 2021
The past few years have seen a marked increase in initiatives and cross-border protocols seeking to regulate the procedure and conduct of various aspects of international arbitration, many of which are worthy of attention. Here, we focus on notable initiatives relating to (i) standards of practice; (ii) diversity; and (iii) greener arbitrations and virtual hearings.
Standards of practice
In June 2021, ICCA introduced its Guidelines on Standards of Practice in International Arbitration, an amalgamation of professional standards and ethical rules reflecting the melting pot of cultures and legal traditions germane to the international arbitration community. Seeking to encourage “civility” and diversity but also to guarantee cost-efficiency, privacy, and confidentiality, ICCA’s Guidelines are not intended to be mandatory, yet are designed to enable their incorporation by reference into arbitration agreements or procedural orders. The Guidelines contain guidance for various stakeholders across the arbitration community, including party representatives (e.g., refraining from disrupting or delaying the process), arbitrators (eg acting “efficiently”) as well as other participants.
While the aim of achieving greater “civility” in our practice is undoubtedly a laudable one, cross-border cultural differences may make convergence in some areas challenging. The Guidelines themselves acknowledge that “[w]hether a particular course of action is offensive…may vary depending on…personal, cultural and/or religious background[s]”. To take a practical example, while the first guideline provides that “[a]ll participants” are to “act with integrity,” there are legitimate differences across jurisdictions as to the extent to which counsel may prepare fact and expert witnesses ahead of their testimony. Practices in some jurisdictions may give rise to integrity concerns in others. While such differences will endure, the Guidelines nevertheless successfully record basic rules of civility and ethical standards that can be universally referred to and ought not to be controversial for any participant in an international arbitration.
In September 2021, the third version of the Code of Conduct for Adjudicators in International Investment Disputes (IID) was published by ICSID and UNCITRAL following an extensive consultation period during which State delegates and other stakeholders were invited to provide their input. The Code seeks to increase the efficiency and transparency of investment dispute proceedings and enhance confidence in the independence and impartiality of investment dispute tribunals, as well as to give effect to important policy considerations, such as fostering diversity.
Two developments bear mentioning. Firstly, the third version of the Code contains a more nuanced provision governing the permissibility of sitting arbitrators concurrently playing other roles, such as counsel, in other proceedings (so-called “double hatting”), providing the parties with greater autonomy to consent to or prohibit the practice (Article 4). The prior iteration of the Code was less permissive and the drafters observed that a more permissive structure would create fewer barriers to entry, with a view to fostering an environment that will promote diversity of arbitrators as much as possible. Relatedly, the Code provides that arbitrators shall disclose all investment disputes “in which the Candidate or Adjudicator has been involved in the past [five/ten] years or is currently involved in as a legal representative, expert witness, or Adjudicator” (Article 10), equipping the parties with the information necessary to raise any “double hatting” concerns at the outset.
Secondly, the initial draft of the revised Code suggested specific limitations on the number of cases investment dispute arbitrators could handle concurrently. While controversial, that provision would have helped to solve two problems that continue to plague the community: an insufficiently diverse pool of arbitrators appointed to hear cases and overly subscribed arbitrators that cause delays in the resolution of disputes. The third version of the Code omits any specific limitation but maintains the previously existing provision that arbitrators shall not accept appointments if they do not have the “availability to fulfil their duties” (Article 6.2). If adhered to properly, that rule would also foster diversity.
On diversity of arbitrators, while the trend remains positive, more progress is needed.
In relation to gender diversity, real progress has been made over the last few years thanks to initiatives like the Equal Representation in Arbitration (ERA) Pledge and ArbitralWomen. The average percentage of women arbitrators being appointed in cases reported by the main arbitral institutions has doubled from around 12% in 2015 to nearly 24% in 2020.
Although party appointments of women still lag significantly behind appointments by arbitral institutions (some of which, including the LCIA, DIS, VIAC and SCC, have achieved gender parity in their recent statistics), the statistics for 2020 show improvement, with women arbitrators appointed in over 21% of appointments by parties, compared to only 8.5% in 2019.
The ERA Pledge (founded and co-chaired by Partner, Sylvia Noury) will continue to focus on improving party appointments, including through its Corporate subcommittee, focusing not only on ensuring the visibility of more qualified women candidates, but also on moving women candidates off lists and on to tribunals. The Pledge’s extensive network of Subcommittees will continue to address diversity issues in specific regions. 2021 saw the launch of its Middle East and USA subcommittees and a new Asia-Pacific Subcommittee is in the pipeline for 2022.
There has also been a recent increase of initiatives focusing on other forms of diversity in arbitration, including notably Racial Equality for Arbitration Lawyers (REAL), launched in early 2021, with the main aim of progressing racial equality and the representation of unrepresented groups in international arbitration. The “Africa Promise”, Katherine Simpson’s list of Arbitrators of African Descent with a US Nexus, and the African Arbitration Academy, an initiative focused on improving the expertise of African arbitration practitioners by equipping them with the right set of skills to succeed within the international arbitration community, are examples of other initiatives aimed at promoting African arbitrators that have emerged over the past few years.
Greener arbitrations and virtual hearings
There has also been an emergence of greener arbitration initiatives, led by the Campaign for Greener Arbitrations (CGA), which won the GAR Award for Best Development in 2020. The CGA is an initiative to reduce the environmental impact of international arbitrations through a variety of measures. It launched in 2019 with a Green Pledge pursuant to which signatories undertake to adhere to a set of guiding principles. CGA reached a milestone in its work on Earth Day this past year, 22 April 2021, when it launched its landmark six Green Protocols. The Green Protocols provide practical guidance to all arbitration stakeholders on how they can reduce their carbon footprint. A unique Protocol exists for each of: arbitral proceedings generally, law firms and legal service providers, arbitrators, arbitral institutions, arbitration conferences and arbitration hearing venues. The Protocols include guidance on the elimination of paper copies, minimisation of travel, use of clean forms of energy and use of virtual hearings, among other things.
The CGA’s work has, naturally, coincided with the global pandemic, which has caused the arbitration community to adopt by necessity many of the carbon-reducing measures that CGA recommends. If 2020 was the year that virtual hearings came to the fore, 2021 was the year in which the arbitration community perfected (for the most part) the art of the virtual hearing. And, depending on the state of the pandemic, 2022 may be the year when virtual hearings continue to take place by choice rather than by necessity. In that regard, coinciding with CGA’s work has been a confluence of efforts by a variety of different arbitration stakeholders in the development of protocols and procedures for the effective conduct of a virtual hearing. Most institutions now have either a set of guidelines or a model procedural order for the efficient conduct of virtual hearings. Although the arbitration community is perhaps not yet ready for arbitration hearings in the metaverse (and that no doubt will come), virtual hearings in their current form will be a consequence of the pandemic that is here to stay.
It is clear that the recent and growing initiatives addressing standards of practice, diversity, environmental and pandemic-related issues in arbitration are already having a positive impact on the conduct of international arbitration and the behaviour of its participants. In order for arbitration to remain attractive to its users, it is important that the arbitration community continues not only to produce new standards and guidance on “best practice”, but also to implement those standards to effect real and lasting change. Only time will tell which codes, protocols and guidelines achieve the ubiquity of one of the earliest and most successful efforts at harmonising arbitral practice: the IBA Rules on the Taking of Evidence. Stay tuned in 2022.
With thanks to Stephanie Mbonu for her contributions to this theme.