WHO SHOULD TAKE UP THE MANTLE OF ETHICS REFORM?
- Peter A. Halprin
Keywords: ethics, good faith, institutional arbitration
Two years ago, I took part in a fantastic day-long training put on by CPR and the Alliance for Equality in Dispute Resolution entitled “Diversity and Inclusion in International Dispute Resolution.” During one of the lively and open discussions on the path forward, the participants weighed in on this question of who should take up the mantle of reform for diversity and inclusion. Some suggested institutions, some suggested counsel, and others felt responsibility lay with the parties – companies, investors, and states.
More recently, I reviewed a forthcoming draft of a manuscript on ethical dilemmas in international arbitration. The draft took issue with the notion that ethical issues could be controlled at the tribunal level and posited a top-down approach involving new transnational bodies that might address such issues.
At the heart of both discussions is the same issue, who is responsible for this thing – international arbitration – that has become so prevalent in the resolution of disputes? And, given the broad deference given by national courts to arbitration, who is responsible for policing the conduct of arbitrators, parties, counsel, institutions, and beyond?
Arbitrators, Counsel, and Parties?
As my prior writings on this topic suggest, my general inclination is to view these issues, particularly in the realm of ethics, as something best addressed in a bespoke fashion by a given set of arbitrators, counsel, and parties. When properly done, this approach can take into account cultural nuances and differences while also providing for a robust consent mechanism, thus reinforcing the legitimacy of the actions and the authority of tribunals. It can also ensure due process by giving the parties an opportunity to comment and even make revisions to the proposed rules and mechanisms for enforcement.
The obvious criticism of this approach is that it leaves the door open too widely for guerrilla tactics. A nefarious actor, lingering in a grey zone, can inflict costs and delays on the process. Such an actor also reveals the circularity of this proposed course – legitimacy is needed to control behaviors but cannot be compelled absent the conferral of legitimacy.
Another criticism of an arbitrator-centric approach is that it puts too much faith in arbitrators. Arbitrators, after all, are human. Arbitrators, famously, have been accused of having a tendency to “split the baby.” Whether or not this is true, there is certainly some validity to the idea that arbitrators are loathe to police the conduct of the parties. And this is even more so when such conduct takes place in a grey zone (such as in the form of slight delays). Arbitrators derive income from appointments, appointments come from counsel and parties, and so arbitrators are further deterred from taking actions which will displease counsel and parties.
Counsel and Parties?
This also highlights a related issue for counsel and parties. While sitting in one’s ivory tower, office, or (today) bedroom/home office, one can think altruistically about the system or the greater good, which is much harder to do when one is actively engaged in a dispute. This is particularly true for matters that are in the grey zone. Suppose one’s client is slow to comply with deadlines. Counsel’s obligation to zealously advocate for their clients would compel them to seek additional time to respond. Failing that, counsel would no doubt argue that a short delay does not merit sanction, let alone tribunal intervention. On the other side, though frustrated by delay (particularly when it happens repeatedly), opposing counsel may not want to trouble the tribunal with such issues and spend precious social/political capital on a technical violation (delay) that might be remedied or moot by the time the tribunal were to rule on the issue.
Such a challenge is not readily solved by institutions either. The role of the institution is to administer arbitrations. But once the panel has been constituted, the institution recedes and the initiative reverts to the panel, which is checked only by the rules of the institution and the parties’ will. To the extent parties step too far out of line or are obstreperous, it is really left to the victim of such behavior to pursue remedies before the tribunal or to otherwise compel arbitration (if a party is refusing to participate) through the courts. It is hard, however, to envision a scenario where a court would be receptive to a challenge to an award against the bad actor on the grounds that the bad actor was wronged insofar as the arbitrator(s) exceeded their power in sanctioning that actor. But it is conceivably possible.
Bar Associations and the Bar?
We are then left with the “beyond.” You may be asking yourself, “what remains?” If so, you are asking the right question. Beyond, the tribunal, the parties, counsel, and institutions, there are bar associations at many levels of legal practice. In New York City, for example, we have county, city, state, and national bar associations. We also have affinity bar associations. In addition, there is the International Bar Association. Participation in these organizations is entirely voluntary. There is the “Bar” – referring, here, to the New York Bar. As an officer of the Court and member of the Bar, obligations are derived therefrom. But, as is obvious, for those who are officers of other Courts and members of other Bars, New York’s Code of Professional Conduct and other pertinent regulations are unlikely to apply to them in arbitration.
A New Dimension?
The “beyond” therefore requires a new dimension - a kind of new world order to govern ethics in international arbitration. The problem here, however, is even more challenging. In a similar vein, my former undergraduate economics professor Myron Frankman wrote about the need for a “World Democratic Federalism” to manage global public finance, a single world currency and a planet-wide citizen’s income. He posited that such a democratic structure was needed to administer the system.
The issue here may be even more complex. Who would serve on the supranational body and with what legitimacy? What would be the scope of their mandate? What would be the limits of their power? What enforcement mechanisms would exist? And what checks would be placed on their powers?
And while the supranational body might capture the international nature of international arbitration, such a top-down approach would challenge notions of party autonomy, procedural flexibility, and due process. Given the import of these cornerstone principles, it seems that – on balance- a tribunal and dispute-centric approach is the best way forward.
Back to Arbitrators, Counsel, and Parties?
Indeed, while imperfect, a dispute-focused approach has the best chance of respecting cultural nuances and differences while also providing for a robust consent mechanism, reinforcing the legitimacy of the actions to combat guerrilla tactics in line with the authority of tribunals, and ensuring due process.
Peter A. Halprin is a partner in Pasich LLP’s New York office. Peter acts as counsel for U.S. and foreign companies in domestic and international arbitrations, including both ad hoc (ARIAS, Bermuda Form, London) as well as institutional (AAA, ICC, ICDR, JAMS, LCIA) arbitration forums. He has served as both party-appointed and sole arbitrator, and is a Member of the AAA National Roster of Arbitrators and a Member of the Reserve Panel of Arbitrators at the Singapore International Arbitration Centre.
Preferred Citation - Peter A. Halprin, ‘Who should take up the mantle of Ethics Reform?’ (ICAR, 3 December 2020) <https://www.investmentandcommercialarbitrationreview.com/post/who-should-take-up-the-mantle-of-ethics-reform>.
The views and opinions expressed in the article are those of the author(s) solely and do not reflect the official position of the institution(s) with which the author(s) is /are affiliated. Further, the statements of the author(s) produced herein should not be construed as legal advice.