The IBA Guidelines on Party Representation in International Arbitration (“IBA Guidelines on Party Representation“), which were recently adopted by a resolution of the International Bar Association (IBA) Council on 25 May 2013, seek to address some of the uncertainties which inevitably arise in arbitrations where party representatives come from different jurisdictions.
The uncertainties stem from the fact that “party representatives in international arbitration may be subject to diverse and potentially conflicting bodies of domestic rules and norms” (see Preamble at p. 9). Furthermore, a survey conducted by the IBA Arbitration Committee’s Task Force on Counsel Conduct in International Arbitration in 2010 found that there was “a high degree of uncertainty amongst respondents regarding what rules govern party representation in international arbitration“.
It is not uncommon for parties to engage counsel (and even co-counsels) from multiple jurisdictions, or to have their arbitrations governed by the laws of another jurisdiction and/or to have physical hearings in yet another jurisdiction. In such scenarios, counsels are faced with the tricky prospect of having to comply with the rules and norms of: (a) their home jurisdiction, (b) the supervisory jurisdiction/seat of the arbitration, (c) the jurisdiction of the governing law of the arbitration and (d) the jurisdiction of the venue where the arbitration is physically held.
Most of the guidelines stipulated in the IBA Guidelines on Party Representation do not depart from a Singapore/English common law understanding of what is to be expected of counsel vis-à-vis communications with the tribunal (Guidelines 7 to 8), obligations with respect to factual and legal submissions (Guidelines 9 to 11), information exchange and disclosure of documents (Guidelines 12 to 17) as well as in dealing with witnesses and experts (Guidelines 18 to 25). There are, however, a number of guidelines that all parties should pay particular attention to.
(A) Challenges to Party Representative (Guidelines 5 and 6)
Guidelines 5 and 6 provide as follows:
5. Once the Arbitral Tribunal has been constituted, a person should not accept representation of a Party in the arbitration when a relationship exists between the person and an Arbitrator that would create a conflict of interest, unless none of the Parties objects after proper disclosure.
6. The Arbitral Tribunal may, in case of breach of Guideline 5, take measures appropriate to safeguard the integrity of the proceedings, including the exclusion of the new Party Representative from participating in all or part of the arbitral proceedings.”
A typical contentious scenario where such guidelines could be invoked is where parties “silk up” i.e. where a party’s counsel engages the services of a Queen’s Counsel (QC) after the tribunal has been constituted and where that QC is from the same chambers as a member of the tribunal.
Whilst common law lawyers and experienced arbitration practitioners understand that there is a difference between the way law firms and barristers’ chambers operate, clients and less experienced practitioners tend to be much less sanguine about this. Where counsel and tribunal member are from the same law firm, there are real problems of conflict of interests and issues of non-independence and partiality coming into playing. The IBA Guidelines on Conflicts of Interest in International Arbitration puts such a scenario on the most serious Red List, albeit that such a conflict is still waivable by the prejudiced party (see Guideline 2.3.3). The Red List sets out a non-exhaustive list of situations in which “an objective conflict of interest exists from the point of view of a reasonable third person having knowledge of the relevant facts (see General Standard 2(b))“.
However, a set of barristers’ chambers operates very differently from a law firm. The principal difference is that barristers operate much like sole practitioners and independently from one another. Accordingly, where counsel and members of the tribunal are from the same set of chambers, this situation falls within the Orange List instead. The Orange List is a non-exhaustive list of situations which “may give rise to justifiable doubts as to the arbitrator’s impartiality or independence” and imposes a duty on the arbitrator to disclose that conflict. However, unlike a Waivable Red List situation, parties are deemed to have accepted the arbitrator if no timely objection is made to his or her appointment after disclosure. Furthermore, disclosure of such situations “should not automatically result in a disqualification of the arbitrator” and also “no presumption regarding disqualification should arise from a disclosure” (see Part II, Point 5). We have a fuller account of the IBA Guidelines on Conflicts of Interest here.
Guideline 6 of the IBA Guidelines on Party Representation thus appears to resolve the issue of whether the party representative or the arbitrator is to be challenged in the event that such a conflict situation arises. The IBA Guidelines on Party Representation also provide that “[b]efore resorting to such measure, it is important that the Arbitral Tribunal give the Parties an opportunity to express their views about the existence of a conflict, the extent of the Tribunal’s authority to act in relation to such conflict, and the consequences of the measure that the Tribunal is contemplating” (see Comments to Guidelines 4 – 6).
Absent the IBA Guidelines on Party Representation, the usual course of action would be to invite the newly appointed counsel to discharge himself or herself, failing which, an application would be made to remove the conflicted counsel. There is an explicit right to challenge and remove an arbitrator for conflict of interests, but there is no such equivalent right to challenge a party’s representative. In fact, that might even be considered a protected right under the rules of certain arbitral institutions. For example, Articles 26(3) and (4) of the ICC Rules provide that,
“Article 26: Hearings
3) The arbitral tribunal shall be in full charge of the hearings, at which all the parties shall be entitled to be present. Save with the approval of the arbitral tribunal and the parties, persons not involved in the proceedings shall not be admitted.
4) The parties may appear in person or through duly authorized representatives. In addition, they may be assisted by advisers.”
Similarly, Rule 20 of the SIAC Rules provides that,
“Rule 20: Party Representatives
20.1 Any party may be represented by legal practitioners or any other representatives.”
The position is possibly different under ICSID (investment) arbitration. In Hrvatska Elektropriveda d.d. v. Republic of Slovenia (ICSID Case No. ARB/05/24), the Tribunal found that it did have the power to exclude a party’s representative (a barrister) on the basis of the “immutability of properly constituted tribunals (Article 56(1) of the ICSID Convention)” (see paragraph ). See, however, the Decision of the Tribunal on the Participation of a Counsel in The Rompetrol Group N.V. v Romania (ICSID Case No. ARB/06/3) where the tribunal merely accepted the possibility that such a power may exist (see paragraph ). It stressed that “[a]bsent express provision, the only justification for the tribunal to award itself the power by extrapolation would be an overriding and undeniable need to safeguard the essential integrity of the entire arbitral process. It plainly follows that a control of that kind would fall to be exercised rarely, and then only in compelling circumstances” (see paragraph ).
Interestingly enough, in the proposed changes to the HKIAC Administered Arbitration Rules the proposed rule 13.6 provides that,
“The arbitral tribunal may exclude a party representative from the arbitration if his conduct or representation threatens to disrupt the fair and expeditious conduct of the arbitration”.
As noted elsewhere however, this proposed rule 13.6 would appear to go further than Guideline 6 and it will be interesting to see how the rule change plays out in practice (if ever used).
(B) Communications with the tribunal (Guidelines 7 and 8)
Guidelines 7 and 8 prohibit ex-parte communication between a party representative and an arbitrator concerning the arbitration unless parties have agreed otherwise. Guideline 8(b) also clarifies that it is not “improper” for a party representative to have ex-parte communications with a prospective or appointed party-nominated arbitration “for the purpose of the selection of the Presiding Arbitrator“.
At a recent seminar that one of the editors of this blog attended, attendees were almost perfectly split as to the permissibly of such ex-parte communications with respect to the selection of the presiding arbitrator. The IBA Guidelines on Party Representation thus brings welcomed clarity to this area of practice.
(C) Obligations with respect to factual and legal submissions (Guidelines 9 to 11)
This can be summed up as the “duty of candour or honesty owed to the Tribunal” (see Comments to Guidelines 9–11). The onus is placed on the party representative not to make “any knowingly false submission of fact to the Arbitral Tribunal” (Guideline 9) and to correct any such false submission of fact should the party representative become aware of it (Guidelines 10).
Guideline 11 addresses a situation where a party representative submits evidence that he or she knows or later discovers to be false. Helpfully, Guideline 11 also provides a (non-exhaustive) series of remedial steps that party representatives “may” take when faced with such a situation. He or she may:
“(a) advise the Witness or Expert to testify truthfully;
(b) take reasonable steps to deter the Witness or Expert from submitting false evidence;
(c) urge the Witness or Expert to correct or withdraw the false evidence;
(d) correct or withdraw the false evidence;
(e) withdraw as Party Representative if the circumstances so warrant.”
However, as the IBA Guidelines on Party Representative notes, the use of the word “may” “acknowledges….that certain remedial measures, such as correcting or withdrawing false Witness or Expert evidence may not be compatible with the ethical rules bearing on counsel in some jurisdictions” (see Comments to Guidelines 9–11).
(D) Information exchange and disclosure of documents (Guidelines 12 to 17)
Guidelines 12 to 17 are “intended to foster the taking of objectively reasonable steps to preserve, search for and produce Documents that a Party has an obligation to disclose“.
The purpose of these Guidelines is to try to resolve, at least in part, the common problem where “Party Representatives in the same arbitration proceedings… apply different standards” with respect to their personal obligation to ensure disclosure of documents by the party he or she is representing.
“For example, one Party Representative may consider him- or her-self obligated to ensure that the Party whom he or she represents undertakes a reasonable search for, and produces, all responsive, non-privileged Documents, while another Party Representative may view Document production as the sole responsibility of the Party whom he or she represents. In these circumstances, the disparity in access to information or evidence may undermine the integrity and fairness of the arbitral proceedings.”
(E) Witnesses and Experts (Guidelines 18 to 25)
Guidelines 18 to 25 “are intended to reflect best international arbitration practice with respect to the preparation of Witness and Expert testimony” and are meant to create “more transparent and predictable standards of conduct…in order to promote the principle of equal treatment amongst Parties” (see Comments to Guidelines 18–25).
Most of these guidelines will already be familiar to practitioners, except perhaps Guideline 19 which provides that a party representative should make a potential witness aware that he or she has the right to inform or instruct his or her own counsel about the contact and to discontinue the communication with the party representative.
Remedies for Misconduct (Guidelines 26 and 27)
The final two guidelines (Guidelines 26 and 27) deal with the powers of the tribunal where the tribunal has found that a party representative has committed “Misconduct” i.e. “a breach of the present Guidelines or any other conduct that the Arbitral Tribunal determines to be contrary to the duties of a Party Representative“.
If so, the tribunal may:
“(a) admonish the Party Representative;
(b) draw appropriate inferences in assessing the evidence relied upon, or the legal arguments advanced by, the Party Representative;
(c) consider the Party Representative’s Misconduct in apportioning the costs of the arbitration, indicating, if appropriate, how and in what amount the Party Representative’s Misconduct leads the Tribunal to a different apportionment of costs;
(d) take any other appropriate measure in order to preserve the fairness and integrity of the proceedings.”
The IBA Guidelines on Party Representation also stress that parties (and their representatives) must be given notice and the right to be heard, not only for a finding of Misconduct but also before any remedy is imposed in respect of the Misconduct.
The IBA Rules on the Taking of Evidence in International Arbitration (see our earlier blog post) and the IBA Guidelines on Conflicts of Interest in International Arbitration have become very much de facto international standards and applied in a wide spectrum of international arbitration proceedings (see here). The IBA Guidelines on Party Representation may similarly follow suit.