By Chew Yee Teck, Eric – Director, ECYT Law LLC
I. INTRODUCTION OF SIARB DRAFT GUIDELINES
1. In the absence of a universally-applicable code for ethics in international arbitration, members of the Singapore Institute of Arbitrators (“SIArb”) Working Group drafted the Singapore Institute of Arbitrators Guidelines on Party-Representative Ethics Consultation Paper (the “Guidelines”) to address concerns on Party Representatives’ conduct in such proceedings.
2. As traditional means of dispute resolution are governed by statutory sanctions to ensure that lawyers behave ethically, with an appropriate level of decorum and courtesy, the introduction of the Guidelines similarly contributes to the development of sanctions regulating the conduct of Party Representatives in arbitration proceedings.
3. A consistent standard of ethics is reasonably expected of Party Representatives in arbitrations. However, problems are compounded by the lack of a unified body or internationally-accepted enforcement mechanism. In light of recent developments in the domestic arbitration sphere, this article highlights some of the persistent issues faced by the arbitration community, the difficulty in resolving them and the prospects of doing so.
II. OVERARCHING PRINCIPLES OF THE GUIDELINES
4. Essential values of integrity, honesty and professionalism are the cornerstones upon which the Guidelines are founded. These principles prevail throughout the Guidelines and provide further guidance on the conduct of Party Representatives in arbitrations.
5. At a glance, the core principles embodied in the Guidelines are as follows:
(a) Integrity – “A Party Representative should respect the integrity of international proceedings, including the independence of the Tribunal, the Tribunal’s members, and any Potential Arbitrator(s).1”
(b) Honesty – “A Party Representative should act honestly and with integrity in all of his or her dealings with the Tribunal and parties involved in the arbitration proceedings.2”
(c) Professionalism – “A Party Representative should treat the Tribunal and other parties with respect and act with the highest degree of professionalism.3”
6. The Guidelines bear resemblance to existing rules and codes on ethics in international arbitration, reiterating the salience and sanctity of a judicious process and a fair hearing.
III. ISSUES AND CONCERNS TO BE ADDRESSED
7. At his keynote address at the 1st ICCA Conference in South America, Doak Bishop succinctly distilled the key difficulties surrounding ethics in international arbitration:4
“International Arbitration dwells in an ethical no-man’s land. Often by design, arbitration is set in a jurisdiction where neither party’s counsel is licensed. The extraterritorial effect of national ethical codes is usually murky … There is no supra-national authority to oversee attorney conduct in this setting, and local bar associations rarely if ever extend their reach so far… specialised ethical norms for attorneys in international arbitration are nowhere recorded. Where ethical regulations should be, there is only an abyss.”
Reconciliation of Conflicting Rules
8. Conflicting rules of ethics from different codes present this difficulty – one of reconciliation, which remains a challenge yet to be overcome.
9. The issue of reconciliation was raised by Jan Paulsson in his article last century. Paulsson questioned the possibility of an unlevel playing field skewing the result in favour of the party whose jurisdiction held a lower standard of ethics for its lawyers. The journey towards unification of a standard code of ethics for international arbitration has not progressed much since the time of his article.
Difficulty in Enforcement
10. Although associations around the world may formulate these guidelines out of good intentions, an additional concern relating to these rules and codes of ethics is none other than difficulty in enforcement.
11. The Code of Conduct for European Lawyers (“CCBE Code”),6 prepared by the Council of Bars and Law Societies of Europe, attempts to resolve the enforcement issue.
12. The CCBE Code similarly centres on notions of fair conduct of proceedings, respect of the tribunal, and focus on clients’ interest. However, the provisions in the CCBE Code do not provide any practical solutions for enforcement of non-compliance.
13. Despite stating that a lawyer is to observe the rules of the Tribunal, the generality of the CCBE Code results in much confusion over which rules of conduct are applicable for lawyers appearing before an international arbitration tribunal.
14. Furthermore, the CCBE Code is limited to guidance regarding lawyers’ conduct, with no additional mention relating to non-legal Party Representatives.
Differences in Cultural Perception
15. Further to Doak’s observations, there are inherent practical difficulties with formulating a substantive universal code of ethics to govern the conduct of Party Representatives, who clearly hail from different jurisdictions and diverse cultures. Guided by an individual’s moral compass, ethics can be assigned distinct nuances due to cultural perspectives. Accordingly, what constitutes “ethically acceptable conduct” in one jurisdiction may be viewed otherwise in another.
16. Existing codes of ethics have attempted to deliver a desirable course of conduct by lawyers engaged in international practice of law. The International Code of Ethics (1988) (“IBA Code”), which provides lawyers a framework to carry out their duties in an ethical manner, contains a rule which denies a universal yardstick for ethical conduct. This rule provides that a lawyer should both adhere to the professional ethics of the jurisdiction in which he has been admitted and to the jurisdiction where he is working. An issue arises when ethics codes from different jurisdictions contradict. This double deontology element enshrined in the IBA Code, recurs in most ethics codes for arbitration. This mechanism creates a conundrum for lawyers engaging in arbitration in a jurisdiction different from where they practise. This essentially hinders the enforcement and execution of a standard code of ethics. Civil and Common Law jurisdictions respectively impose contrasting standards of ethics on Party Representatives; this stems from differences in cultural perspective. The following paragraphs illustrate this issue in practice.
17. In formulating a coherent enforcement mechanism, two further complications arise:
(a) What is the legal basis for enforcement; and
(b) Which body or organisation is best placed for such enforcement.
Legal Basis for Enforcement
18. It is trite that arbitration proceedings are governed by an arbitration agreement, under which parties agree to submit existing disputes to arbitration.
19. The constitutionalising of a legal basis, where Party Representatives yield to a multitude of jurisdictions, is an uphill task which requires multilateral agreement amongst parties. Even before such an arrangement can be reached, there will be implications concerning the legality of arbitration proceedings, let alone the enforcement of ethical codes.
Association for International Enforcement
20. Even if the legal basis for enforcement were to be settled, there remains unease over the extent to which an international arbitration body is allowed to interfere in, and regulate the conduct of, Arbitrators and Party Representatives.
21. In a hypothetical scenario, Johnny Veeder concisely summed up the difficulty in determining applicable rules:
“An Indian lawyer in a Hong Kong arbitration between a Bahraini claimant and a Japanese defendant represented by NY lawyers. What are the professional rules applicable? The answer is no more obvious than it would be in London, Paris, Geneva and Stockholm. There is no clear answer.”7
22. Governance of ethics and conduct, by convention, stems from the home Tribunal. Different arbitration forums contain their own unique set of ethical rules, which only makes it savvy for parties to arbitrate in a forum favourable to them.
23. Parties have the choice of their preferred arbitration forum. However, the double deontology element of the current codes of ethics permeates the ethical assessment of Party Representatives’ conduct in international arbitration. With Party Representatives originating from different jurisdictions, different codes of ethics govern their conduct. This predicament is best illustrated in the areas of witness preparation and discovery.
Witness Preparation
24. Different jurisdictions have their own subjective perception of ethical conduct in general.
25. Contrasting ethical perspectives on witness preparation is evident from a juxtaposition of the US and UK rules.
26. It is an acceptable practice in the US for Party Representatives to prepare witnesses for cross-examination in detail, albeit to the extent that improper influence shall not taint such testimonies.
27. On the contrary, witness preparation in the UK is impermissible, save for a minimal level of contact with witnesses for the purpose of discussing evidence or enabling witness statements or affidavits to be prepared.
28. The US adopts a liberal approach, giving Party Representatives more freedom to influence their case. This might pose a danger to the truth of the witness’ statement, but safeguards are in place to restrict the extent of influence.
29. Instead of assessing the Party Representative’s conduct based on the lower standard of the two, the Guidelines propose a middle ground towards witness preparation, notwithstanding the lack of consensus in this area. The standard set by the Guidelines permits witness preparation to the extent that perjury will not be committed knowingly. The proposal extracts the intrinsic principles in both ethics rules to set this standard, to which jurisdictions can potentially agree.
Document Production
30. The Civil and Common Law systems hold polarized views on document production.
31. Disclosure of documents is not an obligation in the Civil Law system, as lawyers have no duty to ensure that relevant documents required to be disclosed are searched for and, to the extent found, produced.
32. In contrast, Common Law systems place a two-fold duty on lawyers to inform clients of the necessity of making full disclosure and to assist clients in fulfilling their discovery obligations. For instance, the US system places a duty on lawyers to make reasonable inquiry and certify that disclosure is complete and correct.
33. The Guidelines suggest that “Parties and their Representatives should not deliberately destroy evidence or assist in the beach of any direction by the Tribunal on document production8”. Setting a low standard in this regard, jurisdictions can be agreeable that Party Representatives’ conduct is held to this bare minimum.
34. An arbitral body will only be appropriate on condition that it harmonises diverging perspectives of ethical conduct to formulate a mechanism to legally enforce a code of ethics that meets the standards of participating jurisdictions.
IV. CASE STUDIES
35. An examination of two cases conducted at the International Centre for Settlement of Investment Disputes (“ICSID”) highlights the issues of counsel’s conduct and how the Tribunal dealt with such matters.
Hrvatska v Slovenia9
36. This case deals with issues of tribunal integrity and illustrates how it was addressed.
37. Respondent’s Party Representative and the Tribunal’s President were members of the same Chambers. The Party Representative joined the ‘legal team’ after commencement of the case and the relationship was only disclosed prior to the final hearing.10
38. At the outset, it must be said that the arbitration was conducted on the principle that parties are at liberty to engage Party Representatives of their choice. However, due to the relationship between the Respondent’s Party Representative and the President of the Tribunal, the Tribunal disqualified the Respondent’s Party Representative “so as to not imperil the Tribunal’s status or legitimacy”.11
Rompetrol v Romania12
39. This case similarly concerns itself with the integrity of the Tribunal. The Tribunal was asked to disqualify Claimant’s Party Representative who involved himself in the case after commencement. The Arbitrator appointed by the Claimant and the Claimant’s Party Representative were practitioners from the same law firm.
40. Notwithstanding the conflict of interest, the Claimant’s Party Representative was not disqualified. The Tribunal was disinclined to accept that Tribunals possess the inherent power to disqualify counsel. The Tribunal further averred that even if it had such an inherent power, it was only to be exercised in exceptional circumstances where the integrity of the Tribunal is in danger of violation.
41. The inherent power to exclude counsel is not explicitly provided for in the ICSID Convention or Arbitration Rules, and as such, the Tribunal can only justify such an action to safeguard the integrity of the arbitral process13.
42. From the case studies, without any enforceable rule regarding the appointment of Party Representatives that have a conflict of interest or even a perceived conflict of interest, the fate of Party Representatives in an arbitration rests with the discretion of the Tribunal, which may then turn out to be arbitrary. Such a lack of rules also leaves open the question on the parameters and circumstances in which the Tribunal can override a litigant’s prerogative to appoint a Party Representative of his or her choice and exclude his or her Party Representatives.
V. FUTURE OF INTERNATIONAL ARBITRATION
43. The Tribunals in the above ICSID cases reached different verdicts to the best of their ability. This unsatisfactory state of affairs is unsustainable in the long run, and does not coincide with the vision to creating a uniform and universally-applicable code of ethics.
44. Existing Tribunals will have their reservations on setting an undesirable precedent with regard to actions against unethical conduct; furthermore, such actions may be called into question because of their constitutionality. Hence, issues on ethics in international arbitration must be addressed delicately; arbitrariness of the Tribunal may displace confidence for Arbitration as a forum for dispute resolution.
45. Achieving a unified standard of ethics is an arduous task. The salient principles and elements have been identified but the execution requires close multilateral efforts. A deep understanding of the fundamental nature and differences in law, culture and custom of every jurisdiction is required to address and enforce uniform rules of ethics, if at all possible. The Guidelines appear to be a step in the right direction.
[1] Available at https://www.siarb.org.sg/images/SIArb-Guidelines.pdf; see page 2
[2] Available at https://www.siarb.org.sg/images/SIArb-Guidelines.pdf; see page 3
[3] Available at https://www.siarb.org.sg/images/SIArb-Guidelines.pdf; see page 5
[4] Doak, B., Ethics in International Arbitration, Arbitration Advocacy in Changing Times, 2
[5] Standards of Conduct for Counsel in International Arbitration - ARIA - Vol. 3, Nos. 1-4, 1992
[6] Code of Conduct for European Lawyers
[7] Doak, B., Ethics in International Arbitration, Arbitration Advocacy in Changing Times, 11
[8] Singapore Institute of Arbitrators, Guidelines on Party-Representative Ethics, Consultation paper, 5
[9] Hrvatska Elektroprivreda d.d. v. Republic of Slovenia, ICSID Case No. ARB/05/24
[10] Doak, B., Ethics in International Arbitration, Arbitration Advocacy in Changing Times, 4
[11] Doak, B., Ethics in International Arbitration, Arbitration Advocacy in Changing Times, 4
[12] The Rompetrol Group N.V. v. Romania, ICSID Case No. ARB/06/3
[13] http://www.holmeskirby.com/index_bestanden/Bishop_Doak_Ehtics%20in%20intl%20arbitration_icca_rio_keynote_speech.pdf; see page 6