In our experience as counsel and arbitrator, we see the arbitrator in several guises: the absolute monarch who governs the proceeding through imperial dictate; the constitutional monarch who rules with deference to the expressed desires of the parties accommodating conflicting views by generous compromise; and the indecisive leader who swings in the gale of argument advanced by opposing counsel.

I. Arbitrators' rights and duties

Our Colloquium began this morning with interesting discussions of several aspects of the role of arbitrator. First, we learned of his rights and duties. Professor Fouchard spoke of the arbitrator's relation to (1) the parties and (2) the arbitral institution, and he analyzed the bases of these relationships. In an enlightening comparative analysis, he considered them in the context of a variety of legal systems, including the English, French, Swiss and German. He then considered the effects of the relationships. With respect to the relationship between the arbitrator and the parties, he concluded that the arbitrator has four obligations to the parties: (a) to conduct himself in an equitable and impartial manner and to treat the parties equally; (b) to complete his mission within the applicable time limit; (c) to complete his mission by pronouncing an award; and (d) to respect the confidentiality of the arbitration.

The parties have obligations to the arbitrator as well: (a) to pay for his services and (b) to conduct themselves with civility and to render cooperation.

Mr Carter and Mr Hausmaninger then discussed the same relationships in the context of the common law and the civil law. Mr Carter considered six obligations of the arbitrator based upon six Canons of the AAA-American Bar Association Code of Ethics for Arbitrators. He balanced the obligations of the arbitrator against the "rights" of the arbitrator through the application of a rule of reasonableness. I note, because of limitations of time, only his discussion of just and independent decisions. Canon V says that an arbitrator is obliged to "make decisions in a just, independent and deliberate manner". Mr Carter raised the question whether it is "just" for an arbitrator to resolve a matter in a manner other than the way in which it has been presented by the parties. He concluded that, on the one hand, an arbitrator may not decide an issue that is not before the tribunal but that, on the other, he has the right to exercise flexibility in raising and in determining how to decide those issues. He suggests that, when the arbitration is under the ICC Rules, the terms of reference might well include the following provision:

The Arbitral Tribunal is to resolve all issues of fact and law that shall arise from the claims and counterclaims and pleadings as duly submitted by the parties, including, but not limited to, the following issues, as well as any additional issues of fact or law which the Arbitral Tribunal, in its own discretion, may deem necessary to decide upon for the purpose of rendering any Arbitral Award in the present Arbitration.

Mr Carter concluded his discussion with a consideration of the obligation of confidentiality. I shall come back to that question later. I should note, however, that Mr Carter suggests, quite correctly, that freedom of speech should at least permit the arbitrator to tell war stories, subject only to the proviso that the identity of the war and field of battle are appropriately concealed.

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Mr Hausmaninger's paper gave an overview of the more important rights and obligations an arbitrator has towards the parties and the arbitral institute from the civil law point of view. His analysis strikes many of the same chords as Prof. Fouchard's and Mr Carter's. He discussed one subject not directly considered before, the question of settlement. He notes that "it is unclear in most civil law jurisdictions whether and if so to what extent arbitrators may on their own initiative become involved in settlement procedures". This problem raises an issue of the arbitrator's independence of the parties and equal treatment with respect to the parties. He concluded that it is usual and appropriate for arbitrators to promote settlement, but noted that an arbitrator may not force settlement. He also recognized the dangers of the arbitrator discussing any settlement unilaterally with the parties.

After looking at the arbitrator through the spectacles of legal systems, our morning program then turned to a consideration of the arbitrator's rights and duties viewed within the institutional perspective. The three speakers represent the perspective of our hosts today ICSID, the AAA and the ICC.

Mr Parra gave the ICSID perspective on the rights and duties of arbitrators. His analysis was presented within the framework of the ICSID Convention of 1965. He emphasized two rights conferred upon ICSID arbitrators which are intended to protect their independence - security of tenure and immunity from legal process. With respect to these duties, Mr Parra underscored that ICSID arbitrators "are appointed to make decisions. Most of what might be called their other duties relate to the manner in which they perform their basic decision-making one." Moreover, he noted that the ICSID Convention and its Arbitration Rules, through frequent repetition, make clear that a pervasive obligation of an ICSID arbitrator is to hear fully both parties with respect to the matter before the tribunal.

The meeting then turned to Michael Hoellering of the AAA. I mention here his discussion of the arbitral jurisdiction and the right of the arbitrator to rule on his own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. He noted that the arbitrator is entitled under the doctrine of severability, if there is a broad arbitration clause, to decide in the first instance the question of fraud in the inducement of the contract as distinguished from fraud in the inducement of the arbitration clause itself.

He then discussed recent United States' decisions on the proper scope of judicial review of an arbitrator's decision on jurisdiction. The Supreme Court of the United States considered this issue in First Options of Chicago Inc. v. Kaplan 115 S.Ct. 1920 (1995) and held that "unless the parties have agreed unmistakenly to submit the question of arbitrability itself to the arbitrator for decision, the standard of review of an arbitrator's decision on jurisdiction will be de novo i.e., without the traditional deference accorded to the arbitrator's decision on the merits of the dispute".

Lastly, Eric Schwartz presented a lengthy and very interesting paper discussing our topic from the ICC perspective. He devoted about eight pages of his paper to a discussion of the arbitrator's duty of confidentiality. He began his discussion as follows:

Among the duties of arbitrators as to which there also appears to be widespread international agreement is a duty of confidentiality, although this is not expressly set forth in either the ICC Rules or most arbitral legislation. Moreover, insofar as such a duty has been articulated, its precise scope and implications remain subject to some uncertainty.

The issue of confidentiality in international commercial arbitrations has recently been the subject of considerable discussion (11 International Arbitration, Issue 3 (1995) is a special issue devoted entirely to this question). The springboard is a decision of the High Court of Australia in Esso/BHD v. Plowman (April 1995). The opinion of the High Court is published in its entirety. Excerpts from four of the expert opinions presented to the High Court, as well as commentary on the High Court's decision, are also set forth. It is a very interesting issue and I commend it to you.

The conclusions which I draw, at least tentatively, from a reading of this material and reflecting upon it are these:

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1. Arbitrations are clearly private proceedings, but the obligation of confidentiality which attaches to the participants is much less clear than has often been asserted.

2. The obligation of confidentiality presses most severely upon the arbitrators, not only because institutional arbitration rules or practices may require confidentiality, but also, because of their role, arbitrators should use the information which they receive only for purposes of fulfilling their duty of decision and not for other purposes.

3. Insofar as parties are concerned, the question of the duty and scope of confidentiality is very unclear. It certainly has never been absolute, e.g., financial reporting, regulatory requirements, insurance claims, etc. have always permitted reference to arbitrations as required to satisfy other duties of the parties. Moreover, the mere production or use of documents in an arbitration does not confer a privilege of confidentiality.

4. Parties should consider seeking to create a contractual duty of confidentiality as between themselves by agreements made either in the arbitration clause or in connection with the submission of specific evidence in the course of the arbitration.

5. Whether or not arbitral institutions should consider rules dealing with confidentiality is a matter to which attention should be given.

I should note one matter of considerable importance which came up during the discussion period - the question whether it was appropriate for arbitrators sitting in a panel of three to receive differing compensation. I expressed the view that this matter must be considered within the framework of the applicable fee system. When, for example, the system is based upon a schedule of fees resting fundamentally upon the amount in issue - e.g., the ICC system - the arbitrators will necessarily receive the same fee, subject only to the 40%-30%-30% division which rewards the chairman for his additional service as chair. In this type of system, it is obviously inappropriate for the arbitrators to negotiate fees directly with the parties and to receive differing fees.

In AAA, LCIA and ad hoc arbitration, it is, however, fairly common practice for the arbitrators to negotiate their fees - which will usually be based on the time spent in the arbitration and not on the amount involved - directly with the parties. In my own experience, this system does not result in disharmony among the arbitrators and functions well.

II. The fiscal status of the arbitrator and recourse against the arbitrator

After lunch, the fiscal status of the arbitrator was discussed by Jean-Pierre Le Gall. I must confess that much of his interesting discussion was beyond me. My knowledge of the VAT is rudimentary, being limited to the fact that I pay VAT in Europe and that my wife seems always to be de-taxing when we depart from European airports.

The remaining papers dealt with recourse against the arbitrator and the related issue of immunity of arbitrators. Judge Ajibola discussed the recourse issue when it arises during the course of the arbitral proceeding. He devoted a considerable portion of his paper to the "current problem ... whether a party should be prevented from appointing the same arbitrator in a series of related cases which examine the same or similar subject matter". This is a matter of personal interest because I have just been appointed as an arbitrator in three related cases, after all parties in the three cases were notified of the appointing party's intention to appoint me. I look forward to working on these cases and shall keep the instant problem in mind.

Mr Townsend addressed the question of recourse against an arbitrator after the arbitral award from the American perspective. He noted that, in the United States, "an arbitrator is immune from suit for all acts which he performs in his capacity as an arbitrator" (quoted from Tamari v. Conrad, 552 F.2d, pp. 778, 780 (7th Cir. 1977)). He further observed that this immunity does not prevent the commencement [Page129:] of lawsuits against arbitrators and that, in the USA, generally speaking, the winning party cannot recover the cost of litigation (including attorneys' fees) from the loser. There is, therefore, some fiscal exposure, but it should not be a huge one. He also remarked that the AAA limits or removes this fiscal exposure because it has a tradition of defending its arbitrators when they are attacked.

Finally, Mr Redfern dealt with the question of the immunity of arbitrators and of arbitral institutions in the context of English law and the suggestion that the ICC should adopt a new rule dealing with immunity. He noted that the immunity of arbitrators is not entirely clear under present English law. This situation will, however, be remedied if the new Arbitration Bill as presently drafted becomes law. He also advocated that the ICC consider a rule dealing with immunity.

Conclusion

Mr Shihata in his introductory remarks emphasized the essential role of the arbitrator. This thought ran like a leitmotiv throughout the Colloquium. The arbitrator is the sine qua non of the arbitral process. The process cannot rise above the quality of the arbitrator. That should be the one message from this most interesting meeting that should not be forgotten.