Arbitration, a form of Alternate Dispute Resolution (ADR), is a prominent mechanism for resolving international disputes, and Arbitration clauses are found in nearly all international agreements. Over time, International Arbitration has evolved from a lesser-known remedy to the most preferred mode for international dispute resolution.
Considering the aspect of ethics and conduct, International Arbitration is situated in a morally ambiguous area. The extraterritorial effect of national ethical standards is sometimes unclear, as is the application of national ethical rules in non-judicial forums like Arbitration.
Local bar associations rarely, if ever, extend their jurisdiction to this extent, and there is no international body to monitor conduct of the counsel in this context. There is no legal authority for Arbitral Tribunals to penalise attorneys, and ethical standards for lawyers engaged in International Arbitration are yet to be given the force of law.
The Arbitral process functions efficiently in tune with the principles of natural justice, when the conduct of each party involved is in good faith and in adherence with the notional requirements of integrity, honesty and candour. Few international Arbitral Institutions have prescribed such notions for the conduct of International Arbitration. This Blog intends to shed some light upon the standards of conduct laid down by such institutions, and highlight their implications on the parties involved.
STANDARDS FOR CONDUCT OF INTERNATIONAL ARBITRATION
In most International Arbitrations, the conduct of the Arbitrator(s) along with the counsel representing the parties are of crucial importance. The counsels for parties facilitate disclosure requirements, communicate with witnesses and make factual and other representations, which are then relied upon by the Arbitral Tribunals. As a result, the Arbitral process hinges on the substance and veracity of the counsel’s ethical practices and the independence and neutrality of the Arbitrator(s).
A surge in International Arbitrations and the expansion of the International Arbitration community to include a large number of new participants also raises the question of fair play amongst the counsels, and if ethical conduct of the counsels could be guaranteed by implicit cultural or professional norms.
Various International Institutions of Arbitration have issued Guidelines, Rules and Standards to regulate the conduct of all participants to an Arbitration proceeding in order to maintain neutrality and impartiality during the proceeding. Few of such Guidelines, Rules and Standards are enlisted as follows:
1. The International Bar Association Guidelines on Conflicts of Interest in International Arbitration (“IBA Guidelines”)
The IBA Guidelines are divided into two parts, with Part I stipulating the General Standards regarding Impartiality, Independence and Disclosure; and Part II providing for the Practical Application of the General Standards.
Part I of the IBA Guidelines focuses on the impartial and independent nature of the Arbitrator(s) at the time of accepting appointment, and requires the Arbitrator(s) to remain so till the conclusion of the proceedings. It comprises of provisions to avoid conflict of interest, disclosures by the Arbitrator, waiver by the Parties and the applicability of the IBA Guidelines to Tribunal Chairs, Sole Arbitrators and Co-Arbitrators, howsoever appointed.
2. International Bar Association Rules of Ethics for International Arbitrators, 1987 (“IBA Rules”)
According to the Introductory Note of the IBA Rules, International Arbitrators must be “impartial, independent, competent, diligent and discreet,” and the objective of the IBA Rules are “to establish the manner in which these abstract qualities may be assessed in practise.”
The Fundamental Rule prescribed by Rule 1 of the IBA Rules state that Arbitrators shall proceed diligently and efficiently to provide just and effective dispute resolution, free from biasness. The IBA Rules elaborate upon the elements of biasness, the duty of disclosure of an Arbitrator, conditions for acceptance of appointment by an Arbitrator, and so on.
The Introductory Note also stipulates that the IBA Rules “do not intend to generate grounds for the setting aside of awards by national courts.” Paragraph 8 of the IBA Guidelines also stipulate that the IBA Rules address more areas than the IBA Guidelines and thus “remain in effect as regards subjects that are not mentioned in the Guidelines.” Thus, the IBA Guidelines take precedence over the IBA Rules when it comes to concerns such as the Arbitrators’ impartiality, independence and responsibility to disclose, but the IBA Rules remain in force for other concerns not specifically addressed by the IBA Guidelines.
3. Arbitration Rules of the London Court of International Arbitration, 2014 (“LCIA Arbitration Rules”)
The updated LCIA Arbitration Rules include mandatory recommendations for the parties’ legal representatives in every LCIA Arbitration. Article 14 of the LCIA Arbitration Rules outlines the conditions for conduct of proceedings, and emphasizes on the Arbitral Tribunal’s duty at all times to act fairly and impartially between all parties, and to provide a fair, efficient and expeditious means for the final resolution of the parties’ dispute.
4. International Center for Dispute Resolution of the American Arbitration Association (AAA-ICDR) Standards of Conduct for Parties and Representatives (“Standards of Conduct”)
The AAA-ICDR has laid down certain criteria for the conduct of parties and representatives to the Arbitration in its Standards of Conduct. The Standards for Conducts stipulate the manner in which parties and representative must conduct themselves in an Arbitration proceeding conducted through AAA-ICDR, which include treating all those involved in the proceedings in a courteous, respectful and civil manner; no unlawful discrimination based on gender, race, religion, etc.; not engaging in harassment, threats, intimidation, etc.; refraining from using vulgar, profane or inappropriate language; and similar other standards of conduct.
5. The International Centre for Settlement of Investment Disputes (ICSID) Draft Code for Conduct of Arbitrators in Investor-State Dispute Settlement, 2020 (“the Draft Code”)
The ICSID has issued the Draft Code in September 2021, prescribing the standards for the conduct of Arbitrators, judges and other Adjudicators involved in investor-state dispute settlement.
All persons who adjudicate ICSID disputes, irrespective of whether they are Arbitrators, members of annulment committees, members of an appeal mechanism or judges on a bilateral or multilateral standing mechanism are referred to as “Adjudicators” under the Draft Code.
The Draft Code stipulates eleven Articles which provide a comprehensive framework for the conduct of Adjudicators in an investor-state dispute matter. Article 3 of the Draft Code emphasizes on the independence and impartiality of the Adjudicators. An Adjudicator is required under Article 3(2) of the Draft Code to not be influenced by self-interest, outside pressure, political considerations, loyalty to any party, past or present financial or other relation; and not to take instruction from any organization, government or individual regarding the dispute, etc.
6. The International Council for Commercial Arbitration (ICCA) Guidelines on Standards of Practice in International Arbitration (“ICCA Guidelines”)
ICCA Guidelines were issued by ICCA, taking into account the recommendations of various experts of International Arbitration from different countries. Under the ICCA Guidelines, all participants of Arbitration, along with Arbitrators, are required to disclose any material information which is likely to threaten the integrity of the Arbitration process or the finality of the judgement, if not disclosed at the right time. Thus, the ICCA Guidelines prescribes standards of conduct for all participants to the Arbitration in their individual capacities.
The ICCA Guidelines require all participants to act with integrity, respect and civility vis-à-vis other participants in the Arbitral process. Accordingly, all participants are to be given access to all relevant material at the right time, in order to protect the integrity of the Arbitration process from challenges based on any failure to disclose.
During most International Arbitration proceedings, a significant issue arises when counsels and parties belong to different jurisdictions and thus follow different legal ethics regulations governing their conduct.
Although various international institutions such as the LCIA, IBA and AAA-ICDR have devised standards for the conduct of all participants to an International Arbitration, an uneven playing ground is created when the parties and their counsels come from different jurisdictions and are not habituated to such code of conduct in Arbitration proceedings.
At present, the international community is far from adopting a universally accepted code of conduct applicable for International Arbitrations conducted in any jurisdiction. However, the IBA Guidelines and IBA Rules stipulate exhaustive general standards for the conduct of Arbitrators, and the AAA-ICDR has made applicable the code of conduct to parties to International Arbitration and their representatives.
A proactive approach may be adopted by the international community by collaboratively entering into treaties amongst pro-Arbitration countries for the adoption of a uniform code of conduct for International Arbitrations. The adoption and inculcation of a uniform and enforceable code of conduct, which governs all participants of Arbitration during the Arbitration proceedings, will pave the way for just and efficient resolution of disputes.
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