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( Source of the document: ICC Digital Library )
One of the recurring concerns of the arbitration world over many years has been the issue of barristers from the same chambers coming together as advocates and arbitrators in the same case. This is usually thought of as an English problem, with its roots in the organisation of the Bar in England and Wales. However, it is not peculiar to England and Wales, but is also found, though perhaps less acutely, in other common law countries in which there is a split profession. In this note the issue will be referred to as the 'arbitrator/counsel conflict'.
The IBA Guidelines on Conflicts of Interest in International Arbitration largely avoided the arbitrator/counsel conflict in 2004, but in the second iteration of the Guidelines in 2014 it was dealt with in the explanation to General Standard 6 in the following terms:
Although barristers' chambers should not be equated with law firms for the purposes of conflicts, and no general standard is proffered for barristers' chambers, disclosure may be warranted in view of the relationships among barristers, parties or counsel.
Every barrister is self-employed, although that may change in the future as different organisational models become available. Traditionally, barristers have organised themselves in 'chambers', so called because until comparatively recently barristers tended to be sole practitioners, who practised from home, which was in one of the four Inns of Court (Lincoln's Inn, the Inner and Middle Temples and Gray's Inn). Life is very different nowadays when it is not unusual to find fifty or more barristers all practising from the same chambers. Although barristers in chambers are still sole practitioners and keep their own receipts, they make a contribution from those receipts towards the expenses of the chambers. It is, therefore, indisputable that each member of the chambers has a financial interest in the performance of the other members of chambers, although in most cases that interest is vanishingly small.
In the last few years many chambers have embarked on a branding exercise designed to accentuate the differences between them and their competitors. This branding has been seen most vividly in the major commercial chambers in London, which are in competition with major solicitors and accountancy firms. Over many years, the major commercial chambers have provided both counsel and arbitrators, and they have increasingly recruited arbitrators from overseas and from the ranks of retired judges.
It is now commonplace for chambers to have between ten and twenty arbitrators as members. One of the principal difficulties this creates - embodied in the arbitrator/counsel conflict - is when a barrister from a set of chambers appears as counsel in a case in which another member of those chambers has been appointed as an arbitrator. Although it does not seem strange to English practitioners, it undoubtedly causes concern to parties and lawyers from other countries. It may of course be argued that, so long as the fact that counsel and one or more of the arbitrators are in the same chambers is disclosed, conflict problems can be avoided. Yet, that is to take a superficial view. Disclosure is of course important, but it cannot lead to the conclusion that the other party and its lawyers will accept the situation. They may, but they do not have to.
For many years, the English Bar has argued that those who arbitrate in England must be assumed to understand the way in which barristers organise themselves and therefore should not have any concern about the arbitrator/counsel conflict. They point out that it is commonplace for barristers to appear in front of judges who had been members of the same chambers and insist that foreign parties and their lawyers should accept the same practice. The situation came to a head in the Slovenia case in 20082 when the tribunal excluded counsel who was in the same chambers as one of the arbitrators. However, it is unclear upon what juridical basis the tribunal in that case refused to allow the participation of counsel from the same chambers as one of the members of the tribunal.
Since the decision in the Slovenia case, there has been considerable debate about how to deal with such a situation. Over the last few years the arbitration world has been inundated with a plethora of 'guidelines', 'protocols', 'rules' and other guidance for arbitrators and users of arbitration. These initiatives have attempted to deal with such real or perceived problems as conflicts of interest, party representation, the taking of evidence, the engagement of administrative secretaries, the conduct of counsel during an arbitration and how to conduct oneself at a 'beauty parade'. Their weakness is that they provide guidance, but do not prescribe: they are examples of what is known as 'soft law'.
A number of arbitral institutions have contributed to this seemingly never-ending source of advice and wisdom. However, it is noticeable that, until recently, they have failed to deal with the issue of the arbitrator/counsel conflict. This changed when the London Court of International Arbitration (LCIA) sought to clarify the situation in its 2014 Rules, Article 18 and the Annex of which provides, in relevant part:
18.3 Following the Arbitral Tribunal's formation, any intended change or addition by a party to its legal representatives shall be notified promptly in writing to all other parties, the Arbitral Tribunal and the Registrar; and any such intended change or addition shall only take effect in the arbitration subject to the approval of the Arbitral Tribunal.
18.4 The Arbitral Tribunal may withhold approval of any intended change or addition to a party's legal representatives where such change or addition could compromise the composition of the Arbitral Tribunal or the finality of any award (on the grounds of possible conflict or other like impediment). In deciding whether to grant or withhold such approval, the Arbitral Tribunal shall have regard to the circumstances, including: the general principle that a party may be represented by a legal representative chosen by that party, the stage which the arbitration has reached, the efficiency resulting from maintaining the composition of the Arbitral Tribunal (as constituted throughout the arbitration) and any likely wasted costs or loss of time resulting from such change or addition.
18.5 Each party shall ensure that all its legal representatives appearing by name before the Arbitral Tribunal have agreed to comply with the general guidelines contained in the Annex to the LCIA Rules, as a condition of such representation. In permitting any legal representative so to appear, a party shall thereby represent that the legal representative has agreed to such compliance.
18.6 In the event of a complaint by one party against another party's legal representative appearing by name before the Arbitral Tribunal (or of such complaint by the Arbitral Tribunal upon its own initiative), the Arbitral Tribunal may decide, after consulting the parties and granting that legal representative a reasonable opportunity to answer the complaint, whether or not the legal representative has violated the general guidelines. If such a violation is found by the Arbitral Tribunal, the Arbitral Tribunal may order any or all of the following sanctions against the legal representative: (i) a written reprimand; (ii) a written caution as to future conduct in the arbitration; and (iii) any other measure necessary to fulfil within the arbitration the general duties required of the Arbitral Tribunal under Articles 14.4(i) and (ii).
Annex to the LCIA Rules
General Guidelines for the Parties' Legal Representatives (Articles 18.5 and 18.6 of the LCIA Rules)
Paragraph 1: These general guidelines are intended to promote the good and equal conduct of the parties' legal representatives appearing by name within the arbitration. Nothing in these guidelines is intended to derogate from the Arbitration Agreement or to undermine any legal representative's primary duty of loyalty to the party represented in the arbitration or the obligation to present that party's case effectively to the Arbitral Tribunal. [Page262:] Nor shall these guidelines derogate from any mandatory laws, rules of law, professional rules or codes of conduct if and to the extent that any are shown to apply to a legal representative appearing in the arbitration.
Paragraph 2: A legal representative should not engage in activities intended unfairly to obstruct the arbitration or to jeopardise the finality of any award, including repeated challenges to an arbitrator's appointment or to the jurisdiction or authority of the Arbitral Tribunal known to be unfounded by that legal representative.
Paragraph 3: A legal representative should not knowingly make any false statement of the Arbitral Tribunal or the LCIA Court.
Paragraph 4: A legal representative should not knowingly procure or assist in the preparation of or rely upon any false evidence presented to the Arbitral Tribunal or the LCIA Court.
Paragraph 5: A legal representative should not knowingly conceal or assist in the concealment of any document (or any part thereof) which is ordered to be produced by the Arbitral Tribunal.
Paragraph 6: During the arbitration proceedings, a legal representative should not deliberately initiate or attempt to initiate with any member of the Arbitral Tribunal or with any member of the LCIA Court making any determination or decision in regard to the arbitration (but not including the Registrar) any unilateral contact relating to the arbitration or the parties' dispute, which has not been disclosed in writing prior to or shortly after the time of such contact to all other parties, all members of the Arbitral Tribunal (if comprised of more than one arbitrator) and the Registrar in accordance with Article 13.4.
Paragraph 7: In accordance with Articles 18.5 and 18.6, the Arbitral Tribunal may decide whether a legal representative has violated these general guidelines and, if so, how to exercise its discretion to impose any or all of the sanctions listed in Article 18.6.
The advantage of having such a rule is that it becomes part of the contract between the parties and the tribunal, and provides a tribunal with the ability to control who appears before it. There is little doubt that other institutions will follow the LCIA in adopting a similar rule. Indeed, it is a mark of the general acceptance of such a rule that even in cases administered under institutional rules that do not contain a similar provision, many arbitrators are incorporating such a provision in their terms of reference or procedural orders, and the ICC encourages tribunals to adopt such a provision.
One of the questions often asked about the LCIA's rule is how and when it is envisaged that a tribunal will exercise its power to impose sanctions or refuse to permit counsel to appear. I would suggest that only very rarely will a tribunal feel obliged to refuse to permit counsel to appear, and even more rarely will it issue a reprimand or a written caution. The reason for this is that a tribunal will be reluctant to take any step that might compromise the proceedings. Article 14.4 of the LCIA Rules, which, as has been seen, is referred to in Article 18.6 provides:
14.4 Under the Arbitration Agreement, the Arbitral Tribunal's general duties at all times during the arbitration shall include:
(i) a duty to act fairly and impartially as between all parties, giving each a reasonable opportunity of putting its case and dealing with that of its opponent(s); and
(ii) a duty to adopt procedures suitable to the circumstances of the arbitration, avoiding unnecessary delay and expense, so as to provide a fair, efficient and expeditious means for the final resolution of the parties' dispute.
Any tribunal will want to ensure that the proceedings are not compromised by its appearing to take steps that might be thought to infringe its general duties under Article 14.4.
But that reluctance does not mean that the rule is worthless. It is a discipline with which all parties have to comply. The simple fact of its existence should be enough to deter the vast majority of parties from behaving badly. Of course, it will not prevent some parties from behaving badly or, indeed, continuing to behave badly, but such cases will be rare, and the advantage of such a rule is that the tribunal now has the ability and necessary clout to control the behaviour of those appearing before it. If the rule acts only as a deterrent, it is a welcome addition to the tools available to arbitrators.
It would be idle to pretend that the rule completely removes the risk of abuse in the future, and one of the criticisms of the rule is that it will enable the unscrupulous to disrupt proceedings by making unjustified complaints. I do not believe that is a real problem, and I am confident arbitral tribunals will all know how to deal with cases of abuse.
I started this short piece by talking about the difficulties of counsel from the same chambers appearing as both counsel and arbitrators in the same case - the arbitrator/counsel conflict. It is, I believe, unfortunate if there is a blanket prohibition against that happening. Parties should be given the opportunity to choose both counsel and arbitrators. That is of the essence of party autonomy. But if a party says it does not feel comfortable with having an arbitrator from the same chambers as counsel, I believe that should be treated as a valid objection. The appearance of justice is an important ingredient in the satisfactory administration of justice. Not that in all cases will an objection be made. Even today it is not unknown for counsel and one of the arbitrators to be from the same chambers, and that is done with the knowledge and acceptance of the parties and their legal representatives. If the parties and their legal representatives are comfortable in such a situation, it seems to me that it is an unacceptable intrusion on the parties' autonomy for an institution to operate a blanket prohibition.
Queen's Counsel and arbitrator with chambers at One Essex Court, London, UK; firstname.lastname@example.org.
Hrvatska Elektroprivreda d.d. v. Republic of Slovenia, ICSID Case No. ARB/05/24, ruling of 6 May 2008 on the participation of counsel in the case.