CHAPTER 15 ISSUES ASSOCIATED WITH SELECTING ARBITRATORS: APPOINTMENTS AND CHALLENGES
| Jurisdiction | United States |
(Sep 2013)
ISSUES ASSOCIATED WITH SELECTING ARBITRATORS: APPOINTMENTS AND CHALLENGES
Professor of Law & International Relations, Penn State Law
University Park, Pennsylvania, USA
Chair of Regulation, Ethics, and the Rule of Law
Queen Mary University of London
London, UK
CATHERINE ROGERS is a Professor of Law and International Relations at Perm State Law and the Chair of Regulation, Ethics, and the Rule of Law at Queen Mary, University of London. She has taught and published in the areas of international dispute resolution and professional legal ethics throughout the world. Professor Rogers first began writing about the need for clearer ethical regulation in international arbitration in a series of law review articles that were published in 2001-2004. Among other prizes, these articles were blindly selected by leading U.S. law professors in various fields for inclusion in two of the Stanford-Yale Junior Faculty Forums. Her book, Ethics in International Arbitration, is due to be published by Oxford University Press in 2014. Professor Rogers is a Reporter for the American Law Institute's new Restatement of the Law (Third) of International Commercial Arbitration, and has served as an expert on topics of international arbitration for various international organizations, including the OECD, the U.S. State Department Delegation to UNCITRAL's ODR Working Group, the International Judicial Academy, the American Society of International Law, ARIAS-US, and the International Bar Association. In addition, Professor Rogers is engaged in several ongoing initiatives to implement in practice many of her scholarly proposals. Among these initiatives is co-chairing, together with William "Rusty" Park, an ICCA Task Force on Third-Party Funding in International Arbitration and consulting with the International Chamber of Commerce (ICC) of Palestine, and in conjunction with the ICC Israel and the new Jerusalem Arbitration Center, to enable Palestinian parties and legal professionals to participate effectively in international arbitration.
[I]n real estate the three key elements are 'location, location, location,' ... in arbitration the applicable trinity is 'arbitrator, arbitrator, arbitrator.'*
Empirical studies consistently verify that parties' ability to select arbitrators is one of the primary reasons they select arbitration as a means of dispute resolution. Parties also consistently vote with their feet by mostly rejecting available options to have arbitral institutions or appointing authorities select arbitrators on their behalf. Parties seek to actively participate in the arbitrator selection process because it is the ultimate form of forum shopping. This essay explains the how's and why's of arbitrator selection, and offers proposals for ensuring that it is fair and contributes to the legitimacy of the arbitral process.
I. The Marketplace for International Arbitrator Services
Arbitrators are selected and appointed in a market for international arbitration services. As international arbitration has become a high-stakes and a highly competitive marketplace, arbitrator selection is being understood as part of that market and the processes for selecting and appointing arbitrators is under increasing scrutiny. This Part describes who constitutes the pool of international arbitrators in that marketplace, and how arbitrators are selected and appointed in individual cases. Finally, it evaluates how the market for arbitrator services operates.
A. The Field of International Arbitrators
International arbitrators are exceptionally talented individuals. Most speak multiple languages.1 They boast rich and multi-national educations from the world's most prestigious universities,2 and often have experience in the highest echelons of diverse legal systems. Their multi-faceted, multi-cultural legal experience is often supplemented by technical or industry-
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specific expertise. These cumulative credentials are often leveraged in scholarly research3 and enhanced by university professorships. The most experienced of these arbitrators are appointed and re-appointed to the most important international disputes.4 Leading arbitrators are called on to resolve everything from delicate matters of diplomacy, to controversies involving sums larger than the annual operating budget of some smaller nations, to issues at the edge of the legal frontiers of international and transnational law.5
Historically, arbitral justice then was more rough-hewn, Euro-centric, and equity-driven. International arbitrators in that era were a small, intimate group of European "grand notables" or "Grand Old Men." Individuals were trusted as arbitrators because they reputedly shared a sense of duty about what it means to perform their function.6 This view is captured in one arbitrator's comment that they viewed their role as "a duty, not a career."7 It also may account for why the New York Convention does not even mention the possibility that arbitrators may engage in misconduct. In that era, consistent with the small, intimate nature of the field, arbitrators' internal ethos was imaged as sufficient, and hence the exclusive means of regulating their conduct.
Demographic ally, the body of international arbitrators is, still today, overwhelmingly dominated by men8 from North America and Europe. The figures are startling,9 but the composition of the field is changing. These changes bring new challenges for a group that still considers itself as consisting of a closed "circle" that "deliberate[s] within an intellectual zone of shared confidence."10 Historically, there were many benefits to social and intellectual cohesion
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among arbitrators. But that cohesion may also itself be the cause of concerns among outsiders concerned that members of the inner circle may lack the objectivity to assess accurately conduct of their colleagues that seems reasonable from the inner circle, but unacceptable to outsiders.11
A version of this concern explains the challenge raised in HEP v. Slovenia. In that case, Respondent retained an English barrister who was a member of the barristers' chambers in which the Tribunal's President was a door tenant.12 Respondent contended that there was no conflict of interest because it was accepted in English practice to have a barrister from the same chambers on opposing sides of the same case or acting as an arbitrator and party representative counsel in the same case. In response, the Croatian Claimant argued, "the community of participants in ICSID arbitrations is much broader than the English bar, and what may not, apparently, be cause for concern in London may well be viewed very differently by a reasonable third person from Africa, Argentina, or Zagreb, Croatia."13 It was based on distrust "from the Claimant's cultural perspective" that practices considered perfectly acceptable among the English Bar instead caused "justified" or even "unavoidable" doubts about the impartiality of arbitrators.14 While this particular case involved issues of arbitrator impartiality specifically, similar arguments have been raised more generally to the legitimacy of arbitration, particularly investment arbitration.15
Stepping back from arbitrators themselves, in the last twenty years, international arbitration has matured, become more sophisticated and diversified in a range of categories. Modern international arbitration involves a constellation of parties, counsel, and arbitrators from legal cultures that span the entire globe. The transnational legal environment has also become more complex as a host of regulatory issues are now routinely implicated, such as antitrust, securities fraud, anti-corruption and anti-money-laundering laws, and intellectual property.16
As the nature and range of disputes have expanded and diversified, arbitrators have adjusted to the new marketplace. The new generation of arbitrators can no longer invoke "grand principles of law" or vague notions of equity with the same innate sense of legitimacy on which the earlier generation relied.17 Instead, they have adopted a more technocratic and procedurally
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rigorous approach to arbitral decision making.18 This technocratic approach appeals to modern parties, who are drafting increasingly complex and detailed contracts,19 which they want enforced with legal precision.
The effect of these overlapping trends is that the opaque compromise-oriented decisionmaking of the past have been largely displaced with more meticulous reasoning based on the law selected by the parties. Arbitral procedures for gathering and presenting evidence and argumentation had traditionally had been open-textured, subject to improvisation, and, as a practical matter, crafted on a case-by-case basis to suit the predilections of individual arbitrators in the absence of party agreement. Recent changes have formalized rules, bringing greater predictability for parties and, relatedly, a shift in the role of arbitrators. As James Carter explains:
[N]ew international arbitration "players" [sought] transparency in the rules, procedures and institutional arrangements [because they were] impatient with customs and understandings not accessible to them, and they [were] suspicious of the idea that there [was] or [might have been] an inner "club" of practitioners and arbitrators from which they [were] excluded.20
Modern developments have substantially harmonized and standardized international arbitration procedures:
The arbitration world . . . has . . . articulated[ed] and standardize[ed] many of the aspects of international proceedings, so that newcomers will be able to find their way without undue difficulty .... [T]he "unwritten" procedures--those typically followed but not written into the formal rules and previously often passed down in internal administrative form--now appear in...
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