The start of the year is a great time to take stock of the year that has passed, and plan for the year ahead. In 2018, the Singapore Institute of Arbitrators (“SIArb”) launched the Guidelines on Party-Representative Ethics (“Guidelines”) in response to the growing call to harmonise and define the parameters of permissible ethical conduct in international arbitration. Looking ahead in 2019, SIArb would like to move the needle by finding practical and concrete ways to ensure that these guidelines will not be mere pious declarations.
To catalyse this search for practical and concrete solutions, SIArb, in conjunction with the Singapore International Arbitration Centre (“SIAC”), held a seminar on ‘Party-Representative Ethics: Time to Move the Needle?’ on 24 January 2019 at The Central in Clarke Quay. The seminar featured a prominent line-up of leading thinkers in international arbitration: Mr Gary Born, Dr Michael Hwang SC, Mr VK Rajah SC, and Professor Lucy Reed. It was chaired by Mr Chan Leng Sun SC, SIArb’s Immediate Past President, who conceptualized and spearheaded the Working Group that drafted the SIArb Guidelines.
I. Opening Remarks by the Chairperson
Mr Chan Leng Sun SC
Senior Counsel of the Supreme Court of Singapore, member of Essex Court Chambers Duxton
Mr Chan opened the seminar by providing a background of the Guidelines. He told a packed conference hall that the approach the Working Group took was to create guiding principles rather than mandatory rules with sanctions. Similar to the International Bar Association’s (“IBA”) Guidelines on Conflicts of Interest in International Arbitration, the SIArb Guidelines are not meant to be laws but merely a ‘port of call’ when there is uncertainty as to the permissibility of certain types of conduct in international arbitration. Mr Chan said that it is useful to articulate these guidelines to clarify and minimise arguments on what can and cannot be done during the arbitral proceedings.
Mr Chan noted that ethics in international arbitration has been a topic of interest for many years. In 2013, the IBA released its Guidelines on Party Representation in International Arbitration. In 2014, the London Court of International Arbitration (“LCIA”) incorporated the General Guidelines for the Parties’ Legal Representatives in its arbitration rules. In the same year, the Swiss Arbitration Association called for the creation of a Global Arbitration Ethics Council. In Singapore, former Judge of Appeal of the Supreme Court and Attorney-General Mr VK Rajah SC chose counsel ethics as the theme of his address at SIArb’s 36th Anniversary Annual Dinner in 2017. Chief Justice of Singapore Sundaresh Menon also raised the issue of counsel ethics in international arbitration in his keynote address at the 2018 SIAC Congress. Despite these developments and discussions, there remains uncertainty as to the conduct expected of party representatives in international arbitration. It is against this backdrop that Mr Chan invited the panellists to discuss concrete solutions to promote ethical behaviour, in particular, suggestions as to the kind of ethical device Singapore should take the lead in creating, or the status that can be conferred on any ethical guidelines, and how these guidelines can be made effective.
II. Panel Discussion
Mr Gary Born
Chair of the International Arbitration Practice Group at Wilmer Cutler Pickering Hale and Dorr LLP
Mr Born recognized SIArb’s important initiative but queried whether in fact the ethical needle needs to be moved. Mr Born observed that one looks at the legal regime for ethics in international arbitration, or the lack thereof, and assumes or presumes that it should be changed because there are problems or defects with it.
The problem, Mr Born stated, is not that ethics in international arbitration is a “no man’s land” (referring to Professor Catherine Rogers’ description) because of the lack of substantive set of rules that govern international ethics or the lack of regulatory bodies that enforce these rules. Instead, like a teenager’s bedroom, there are in fact too many sources of standards. Every counsel is subject to his/her own standards in addition to other guidelines, whether it is the IBA Guidelines, the LCIA General Guidelines or the proposed SIArb Guidelines. Mr Born queried whether we need more of these guidelines and the cost of having too many. He also queried how much we really know about the existence of unethical conduct in international arbitration which leads to problems that require redress. In Mr Born’s own experience, the number of cases where unethical behaviour affects the outcome or the fairness of the arbitral proceedings is extraordinarily limited. One important question one ought to ask, Mr Born said, is whether adopting these guidelines or international standards, creating a regulatory body, or vesting existing institutions (whether they be arbitral tribunals or arbitral institutions) with authority to identify and sanction unethical behaviour in fact moves the needle in a positive way.
Mr Born also discussed two interrelated issues. First, whether there is a need for regulatory bodies or whether there is an existing part of the international arbitration regime to which the authority to identify and sanction unethical counsel behaviour can be assigned. Second, whether there is some desirable or politically achievable mechanism to create substantive standards to govern conduct of counsel in international arbitration. Put another way, whether there is a way to populate the “no man’s land” or, alternatively, tidy up the “teenager’s bedroom” to create a single uniform set of standards administered by a single body.
As to the first issue, Mr Born is deeply sceptical that any of the exiting participants in the international arbitration system can do well in policing counsel ethics. With respect to arbitral tribunals, Mr Born said that they are not responsible nor are they trained to identify and sanction unethical counsel conduct. Arbitral tribunals are vested with a power to do something very different, namely, to decide disputes between the parties. When arbitral tribunals have to deal with consequences of potentially unethical conduct, they do so by addressing the procedures in the arbitration in a way that is aimed at producing a fair procedure and a true and accurate assessment of the facts and the law. As to arbitral institutions, Mr Born likewise thinks that they are not trained to police ethical misconduct. National bar associations or regulatory authorities are trained to do so but they don’t really focus on international arbitration. Mr Born’s least favourite approach towards resolving this question would be for leading bar regulatory institutions in leading arbitral seats around the world to confer and hopefully negotiate a mechanism whereby they could address counsel misconduct. The contours of what that mechanism would look like will require a lot of study, in particular, with respect to the question of whether this in fact moves the needle in a positive way.
With respect to the second issue, Mr Born thinks that negotiating substantive standards that could apply across the board to all counsel is extraordinarily difficult. He said that part of the problem of many guidelines is that these avoid many of the very difficult questions such as what does counsel do when he/she discovers deliberately untrue testimony by a party, or what are a counsel’s obligation in the disclosure process, or how does one deal with conflict of interest issues. Mr Born thinks that grappling with these kinds of issues is necessary in order to truly address the debate in ethics.
Dr Michael Hwang SC
Senior Counsel of the Supreme Court of Singapore, Chartered Arbitrator
Dr Hwang provided a summary of the paper that he presented at the Queen Mary University of London School of International Arbitration’s 30th Anniversary Conference. In this paper, Dr Hwang proposed a new regime on how to control counsel misbehaviour. As a starting point, Dr Hwang believes that an arbitral tribunal has the inherent jurisdiction to maintain the integrity of the arbitral proceedings. The arbitral tribunal therefore has the power, in certain situations, to sanction the counsel if his/her behaviour threatens the integrity of the arbitral proceedings.
This is not to say that Dr Hwang is advancing the cause that arbitral tribunals should be the ones to police counsel behaviour. Dr Hwang only allows for it in certain circumstances. While there is no one- size-fits-all rule, Dr Hwang said that the power of the arbitral tribunal to discipline counsel varies depending on the stage of the arbitral proceedings. In his paper, Dr Hwang names three sanctions that an arbitral tribunal can impose at three different stages of the arbitral proceedings: (1) prophylactic/preventive sanctions, (2) remedial sanctions, and (3) punitive sanctions.
At the early stages of the arbitral proceedings – when the arbitral tribunal has been constituted but the hearing has not yet commenced – the arbitral tribunal has the power to impose preventive sanctions or take pre-emptive actions to prevent a breach of ethical conduct by counsel. For instance, arbitral tribunals dealing with a challenge to a counsel due to a conflict of interest can exercise its power to disqualify that counsel from representing a party in the arbitration to avoid disruption. From a practical standpoint, this power is not controversial as it is done at the very early stage and does not disrupt the arbitral proceedings.
The second stage occurs when the proceedings have started. The arbitral tribunal can theoretically impose remedial sanctions, that is, to control, stop and even punish objectionable conduct by counsel to preserve the integrity of the proceedings. An extreme example would be when a counsel makes trouble at the actual hearing. In such a case, the arbitral tribunal may exercise immediate action by either admonishing or imposing penalties on counsel. Although theoretically this form of sanction can be justified, in practice it is quite difficult.
The third stage would be after the hearing but before the award is issued. During this period, the arbitral tribunal may choose to retroactively impose punitive sanctions on “non-disruptive” but nonetheless unethical behaviour, that was committed during the hearing. Arbitral tribunals, however, would find it difficult to discipline counsel at this stage without putting their own positions in peril. Dr Hwang noted that there is a risk that the offending counsel would use this as an excuse to challenge the arbitral tribunal on the grounds of bias, thereby delaying the release of the award. On the other hand, if punitive sanctions are imposed after the award is issued, arguments might be raised that the arbitral tribunal is functus officio. This leaves the arbitral tribunal with the only option of recording its disapproval by making a complaint. Because of confidentiality issues, Dr Hwang suggested in his paper that arbitral institutions are best placed to deal with these complaints.
Recently, Dr Hwang had the chance to revisit the issue and came to the conclusion that his proposal will go nowhere because arbitral institutions have no appetite to police ethical misconduct. Dr Hwang therefore proposed instead that arbitral institutions amend their rules to remove the requirement of confidentiality to the extent that allows arbitrators or counsel to file a complaint to the relevant bar council, who will then govern their members behaviour accordingly.
Another possible solution, Dr Hwang shared, is for Singapore to adopt the Hong Kong system. Hong Kong has a disciplinary committee that deals with arbitrator complaints. The disciplinary committee hears and makes recommendations to the Hong Kong International Arbitration Centre (“HKIAC”) Council. The HKIAC Council thereafter decides the complaint based on the disciplinary committee’s recommendation. While this mechanism is only applied to arbitrator misconduct, Dr Hwang believes that a similar mechanism can be adapted to counsel complaints.
Professor Lucy Reed
Director of the NUS Centre for International Law and Professor at the NUS Law Faculty
Professor Reed agrees with Mr Born that there is no clear dissonance in international ethical standards. In fact, there is near consensus on these standards, at least in countries and regions where the leading international arbitral institutions are located. The IBA Guidelines on Party Representation in International Arbitration, the LCIA General Guidelines for the Parties’ Legal Representatives, and the SIArb Guidelines cover basically the same issues, such as dealing with witnesses, honesty, and document production.
Professor Reed also agrees with Dr Hwang’s discussion on the three stages of arbitration. She agrees that at the preventive stage, it is the arbitral tribunal’s responsibility to set the tone of the proceedings. The arbitral tribunal should inform the counsel or indicate in the terms of reference or procedural orders that there is every expectation of civility, honesty and fairness.
For the remedial stage, Professor Reed agrees that arbitral tribunals have the responsibility to take charge of the proceedings. For instance, the arbitral tribunal can call out counsel or see them in private the moment they step out of line. The arbitral tribunal can also award cost against a party for his/her counsel’s misconduct. What Professor Reed thinks works well too is for arbitration rules to provide assurance that the arbitral tribunal has the power to impose sanctions against counsel misconduct.
Where Professor Reed differs with Dr Hwang is at the punitive stage. In Professor Reed’s view, the primary responsibility for avoiding attorney misconduct still lies with the arbitral tribunal, and not with the bar associations. Whereas Dr Hwang is of the view that lawyers would find it difficult to discipline counsel at this stage without putting their own positions in peril, Professor Reed believes that arbitrators are actually paid to put themselves in peril. Arbitral tribunals are paid to be responsible for the management of the arbitration in a way that maximizes fairness and due process.
Professor Reed also thinks that it is very rare for arbitral tribunals to reach the point where they feel that counsel behaved in such a way that requires referral to a bar association or an actual punishment. When this happens, Professor Reed cautioned that one has to consider the length of time it takes for bar associations to resolve a complaint.
Professor Reed also recommended that SIArb go beyond principles and actually set out specific sanctions as this might be useful to the arbitrators. She also suggested that arbitral institutions publish a sanitized account of complaints on counsel misconduct in order to elucidate how and why such behaviours might be considered disruptive and inappropriate. This, she said, might be helpful in avoiding undue complaints or misconduct.
Mr VK Rajah SC
Senior Counsel of the Supreme Court of Singapore, Member of Essex Court Chambers Duxton
Mr Rajah accepts that the present system is not broken in that counsel misconduct is not pervasive. Nevertheless, he thinks that Singapore still needs to guard against the possibility that lawyers might dial down decency if their actions are not properly policed, and if they see that others are getting away with it.
According to Mr Rajah, self-regulation is a myth. The current situation is a potpourri of standards and few professionals have an interest in increasing oversight over themselves. Users, like corporates (e.g. through their counsel), should have a louder voice in this area, rather than just the bar associations and arbitral institutes.
When it comes to setting standards for professional conduct and integrity, Singapore has historically not shied away from striking its own path. The financial sector is a good example and Singapore has taken the lead in policing market players in several areas. Mr Rajah therefore supports the making of a statement of standards. Opt in standards, for now, strike the right note.
Mr Rajah noted that the LCIA has been progressive in incorporating the General Guidelines for the Parties’ Legal Representatives in its arbitration rules. According to LCIA president Ms Judith Gill QC, the General Guidelines has not adversely affected the LCIA, but has in fact brought about greater consciousness among its users that the LCIA has a defined party-representative standards. Most users, Mr Rajah said, want parties in institutional arbitrations to observe the “Queensberry rules”. At the moment, however, there is a lot of guesswork especially with respect to witness preparation and obligations in document production.
As far as the way forward is concerned, Mr Rajah adopts the Deng Xiaoping philosophy. Deng Xiaoping famously said that it doesn’t matter if a cat is black or white so long as it catches mice. Applying the same philosophy, Mr Rajah said that he is not too particular about the procedure for disciplining erring lawyers, but what matters for now is to take the giant step forward and agree on common ethical standards. The key is for major arbitral institutions to discuss and decide what the common ethical standards are. At a minimum, Mr Rajah suggested that Singapore take inspiration from what LCIA has done.
Mr Rajah also commended SIArb for starting the initiative with the publication of its Guidelines and welcomed Mr Chan’s update that SIArb is also inviting other members of the Regional Arbitral Institutes Forum (“RAIF”) to work towards a regional, RAIF-endorsed set of guidelines.
III. Free-Flowing Dialogue
The panel session was followed by a free-flowing dialogue amongst the speakers. Mr Chan summarized the points given by each speaker. In response to Mr Rajah’s discussion, Mr Born said that there might be more progress if bar regulators, rather than arbitral institutions, were to discuss common ethical rules specifically targeted to international arbitration. He also reiterated that we should have empirical data and factual understanding of the issue before we try to move the needle. Dr Hwang provided three hypothetical scenarios of counsel misconduct and asked the audience whether the arbitral tribunal should exercise control over these misconduct. He concluded that arbitral institutions ought to amend their rules to allow arbitral tribunals to report counsel misconduct. Professor Reed reiterated the value of setting out the ethical guidelines and said that there is no harm in adding these guidelines in the arbitration rules. Mr Rajah said that while there is no one or right solution at the moment, this should not weaken our resolve. If we cannot obtain a global consensus for now, there is no downside in acquiring at least a Singapore consensus.
The panel dialogue was followed by a number of questions and comments from the audience. The outcome of a straw poll prompted by Mr Rajah revealed strong support from the audience for something to be done to move towards common standards of ethical behaviour.
Before the cocktail reception, Mr Chan thanked the panellists for their ideas that were both creative and practical.
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