SIAC-CIArb Debate 8 June 2017

you don't dear colleagues your guests welcome to tonight's fic Cir bait my name is Chang Liu it is my great pleasure to be your host this evening and on behalf of the Singapore international arbitration center and the Singapore branch of the childhood the Institute of arbitrators it is our great pleasure to have you to have your company tonight and before before we start the debate please allow me to address a few minor but non- negligible how to be matters first and as a courtesy to our debaters could you please turn off your cell phones as well as your electronic devices and during the whole and how debate and and for those claiming for our CBD points please also remember to sign now and don't forget to sign out at the end of the debate in addition and your feedbacks are very valuable to us so could you please fill in the feedback form on your seat and the please deliver to us at the end of debate thank you very much without further ado and I would like to introduce mr. our mr. Guerin balls the president of the si si code of arbitration to deliver his opening remarks thank you [Applause] thank you so much the most important thing about opening remarks as we all know is that they be very very short and mine will be short they're mostly to say thank you thank you to the program sponsors thank you to my fellow judges arrow Yee and Lucy Reed thank you to our participants and in particular Francis Xavier who will do proper introductions we have in many ways the best of the world here it's suiting for siak of course as a global arbitration institution to have the best of the world not just common law but also civil law to debate before you today thank you perhaps though most importantly to the siak Secretariat the registrar the CEO who have organized this evenings event the fact that 400 or so of you came to listen tonight I think his testimony to the rise of SIAC and to the importance of it in this legal community and thank you all for hundred of you for coming tonight I know you have many things to do but the fact that you came to an SIAC event like this means a lot to all of us and SIAC itself thank you [Applause] Thank You mr. bone now I would like to invite mr. Chu's to show to show you the young chairman of Chartered Institute of up traders to deliver his opening remarks mr. Chu please ladies and gentlemen the way good evening on behalf of the Singapore branch the Board of Directors very warm welcome to the second edition of the SIAC CI up debate we hope that it will be an annual event and that the turnout in the subsequent editions will be as impressive as it is this evening we in fact had to stop taking registrations some weeks ago it was a complete sold-out no doubt because of the one public CBD boring that would offer and the fact that it's it's a it's a free event both very important considerations in Singapore so thank you once again but I think the real reason why all of you are here is really because of the stellar cast of debaters that we've managed to persuade to join us this evening no doubt the debate will be exciting and it's certainly I think hotly anticipated I hope so thanks again Francis will effect the proper introductions in due course and also introduced you the very few rules that we have for the debate this evening but it also remains for me to thank again our sponsors and that's the real reason why it's on a no fee basis thank you once again to our good friends from Mountain Court chambers and FTI Consulting for extending your kind sponsorship for this evening if I may just very quickly a quick plug for the Chartered Institute some of you here are already members those of you who are not may encourage you to consider joining as members we are an international organization we just cross our 15,000 membership mark and in fact quite interestingly the 15,000 member is a Singaporean so we hope that those of you who have not join up as members please consider doing so they are membership forms and materials just also add a whole I wish everyone an exciting evening ahead thank you Thank You massachu and now we would like to start the si si si IAP debate and the subject of the debate has been raised addressed challenged and revived it Miami in London in Singapore and tonight we have the privilege to hear a live debate on this motion that is this house believes we practice so far of party appointed arbitrators is the moral hazard in international operation and should be abolished I will now hand over the time to miss to a moderator are mister on Frances the VSC to introduce the debaters the judges as well as the format of the debate thank you thank you now I I think first of all we want to thank the judges Gary Baun president code of society code of arbitration miss I really member as I see caught of arbitration and Lucy Reed director Center for international law we're very grateful that they're here now there's already tension with my right and left the the the gentleman on my right have already lodged a complaint saying that they've been approached before the debate by two members of the judging panel I've indicated to them that they are against the motion so I understand that mr. Landau is in the midst of preparing his application to remove to remove them projections now I think we've got to start the rules are very simple no fistfights yeah now you know and three sighs so 12 minutes each speaker right so first we go for the other motion for speaker for the opposition and so on after which you the audience get 20 minutes to air your grievances and to debate with the debaters all right at the end of which each team will be given five minutes one representative five minutes to respond to what you've said to your grievances if they if they choose to and at the end of all that when the dust has settled we will have a vote by a show of hands from you as to who you think carried the motion today all right after which the judges will it's an odd sequence I know after which finally the last save will be with the panel of judges if they haven't been removed by then and one of them one of them it's having taken into account your vote will express their views on what they've seen or heard today without further ado I'm not going to introduce I'll introduce the speakers as as I call them first of all the first speaker for the motion mr. Dhar is combated QC who was as you would be aware Additional Solicitor General of India for three years after which she was advocate general for the state of Maharashtra between the years 2012 and 2014 without further ado I call upon the first week of the proposition to address you Thank You Francis the Chairman judges to whom we've now been told our doctrinally predisposed evening my fellow debaters ladies and gentlemen a arbitrator traditionally has been a judge whom you could choose for yourself that's what they all said in the old days at the turn of the 20th century but times have changed we are now in an era of rapid globalization where all of us I believe want to transform arbitration into an autonomous and independent legal order my friend Emmanuel himself has written a beautiful book path-breaking where he says an award is a decision of international justice and an arbitrator is an international judge now as we move towards this new transnational legal order the question before you today is whether we stay entrenched in the so-called fundamental and historic right of parties to appoint arbitrator or must we now welcome change and go forward into a brave new world where an arbitrator is in all respects and international judge this is inexorable and I think it must come sooner rather than later now let me run through very quickly the usual arguments in favor of party appointments and I am sure my friends here will have some new ones up their sleeve with the big five as it were me confidence in the process parties and lawyers like to appoint or choose their own judges who wouldn't Gary borne in his book refers to the Queen Mary call it survey where he said 92% of practitioners prefers some role in selection of the winged arbitrators but that same survey said 27% prefer the role in selection of the chairman that's very significant because that shows the some conscience recognition that a chairman has to be truly neutral to inertia fundamental right historic practice it's like saying today we will not help self driven cars in the future because we always driven ourselves three the shared outlook argument wonderfully enunciated by Jack Bishop and Lou series in their article a cultural legal affinity a broad doctrinal sympathy that's what parties look for when their point and as Martin hunter famously said when I appoint an arbitrator for a client I look for someone with a maximum predisposition towards my clients case but with the minimum appearance of bias for a subject matter expertise horses for courses you need certain special skills which to my mind is really just a euphemism for the shared outlook argument and Phi's the big elephant in the room party autonomy I think that's been a bit overplayed and my friend Toby is going to deal with that in greater detail but the classic definition I feel of party autonomy is in Barbara's case where the u.s. 7th Circuit Court of Appeals said party autonomy is so absolute that it is a freedom to stipulate dispute resolution in any way short of authorizing a trial by battle or by ordeal almost doubtfully by a panel of three monkeys no offense meant all present persons excluded now that brings me to the shared outlook point because I think that's the real point the heart of the debate Gary Baun famously described an arbitrator or four to the commentators discussing an arbitrator as a chameleon who takes on the expectations of his the party appointing him now this is not bias it is narrow really held to be bias and it does not disqualify an arbitrator but to my mind that's what makes it all the more dangerous I again quote Harry Warren who cited a Talmudic observation and I think it's very telling a judge who is chosen will search for arguments in favor of the party who chose him so is partiality to a call or a doctrinal predisposition something that is consistent with the role of an arbitrator today as an international judge we are today in a world where where we speak quite readily of an enforcing court enforcing an award which is even being set aside on its seat of tribunals continuing with an arbitration though the court of the seat has injuncted them from doing so this is now a new order on tone and those who take part and who are stakeholders in this order must stand up and live up to the standards of being international judges in the u.s. the old law was that the winged arbitrator only party nominated arbitrator was presumed to be partisan and you did not adopt the same standards to judge his neutrality or independence that is now changed even in the u.s. it was never so internationally internationally the same standard of impartiality and independence applied and indeed that must be more so in the new order now there is a fine line to my mind between the culturally or doctrinally sensitive arbitrator and a committed or partial one and that line becomes finer and more difficult to draw given the nature of arbitration or decision making you have three men or women sitting there often consolidating in the absence of the parties on their own and you never know exactly how far the sensitive or the party of want arbitrator has gone so bringing all this together what this that we run the moral hazard of having party appointed arbitrators the first and I think I agree that that's completely exceptional is of an arbitrator completely identified with the appointing parties and committed to upholding its case that's very rare I concede that but the more likely risk is having worried on false and false the advocate arbitrator who sees his role is espousing the case of the party appointing him and to even argue its case if necessary with the rest of the tribunal and sometimes even with opposing counsel Charles brah referred to that practice of shared outlook as benign but I do not share his lack of concern third a party runs the risk of appointing someone completely unknown to the rest of the tribunal an unfamiliar face and force and who was there for ease himself into a dissenting role rather than be an equal member of an independent tribunal for in some cases the repeat business danger that an arbitrator wants to be appointed again and will therefore depart from norms of proper conduct 5 sometimes the risk of compromising the integrity of the tribunal we have the slovenia croatia arbitration where you had lawyers and arbitrators from the same chambers something that is intelligible and acceptable in common law countries but is extraordinary in civil law jurisdictions 6 the ability of a party appointed arbitrator to delay or to derail an arbitration like sometimes even by resigning to allow repeated appointments to his party nominating him and as I said the veil of secrecy says shadowing the confabulations of the arbitrators makes it very difficult to draw the line between sensitivity culturally compatible arbitrators and bias ones we are going to lose and we have already lost the benefit of quick sole arbitration but there is no party who has a right to a point is there going to agree with the other side on whom to avoid we are also going to lose the benefit of an independent neutral institution using its expertise in selecting the right arbitrator from amongst the vast numbers available today and to make sure that you've got the right woman was a job in an era of increasing specialization and skills you can't expect a party or indeed apart his lawyer to have all the knowledge a good institution will have and then of course that brings me to the van gent birth 100 where he said that in 34 out of 150 investment arbitration Awards there was a dissent but each and every time that dissent was by a party nominated arbitrator the party being the losing party nothing wrong in a dissent I think it dissent is a good thing but the hundred percent score of the arbitrator nominated by the losing party dissenting is troubling is it merely a case of shared outlet or is it a coincidence or is there something more is what I put to this house we are now aware that arbitration has seized to be a purely contractual matter there are public law elements certainly and certainly when we go with an award to various countries in the world seeking their sanction their sovereignty to enforce awards we are invoking public law elements we then as they called us in the world of arbitration have to stand up that standard we have to make international judges and the time has come however this is those that may be to step forward now say let an institution appoint arbitrators definitely neutrality an appointment so that we have a tribunal where both the parties have mutual confidence in each and every one of the arbitrator's so that it doesn't become a battle for the mind and heart of the Chairman one wing versus the other wing equal stature unequal stature trying to persuade the chairman who then ends up being the only neutral truly independent arbitrator this is a brave new world and I agree it is a step forward but it is a step we must now take it's a safe step the chief justice from the Richmond on not long ago spoke about here in Singapore saying we must move away from our outdated notions and move forward into what the modern trends and pressures required today after all the arbitral process cannot rise above the quality of the arbitrator's which is what I serve on Marin had said and unless we now move to the stage of neutrality of appointment we cannot get away from the old notion of two committed or shared Outlook wings and only one true neutral arbitrator let us leave aside was like fundamental or historic or it's always been a contract to write or party autonomy as if that is something that overrides everything else that has instead has arbitrators who may have intellectual or doctrinal predispositions but they are not chosen for that reason by any particular parties in any particularly I therefore commend stepping forward into this brave new world by this August house thank you very much venturing venture derives from fossil case of inclinations and predispositions once I note that the propositions seem to have abandoned their discharge application I now call upon you to forgive I hear voice on my right saying they have it miss Judith Gill the current president of the LC I do it over to you ladies and gentlemen good evening to you the issue at the heart of this motion presents an interesting and important topic for discussion in arbitration circles the role of party appointed arbitrators is of course relevant to an assessment of how operation operates and how it can continue to improve and develop but the propositions in this motion are flawed what is contemplative is an extreme and excessive response to perceived issues the scope of which have not been fully explored and are instead largely based on anecdotal evidence plus the occasional horror story in short it is a sledgehammer to crack enough the motion rests on two propositions first that the practice of party appointed arbitrators is a moral hazard and secondly that as a result the practice should be abolished let's look at the first the moral hazard the origins of that term were essentially a term of art using insurance and economic circles but let's assume for these purposes we all know what we're talking about here is shorthand for a risk of unethical behavior but exactly what behavior are we talking about and by whom is it the party who appoints an arbitrator because they seem in that party's eyes to be well suited to the role and perhaps they're even perceived to be likely to view the dispute in a way that would be favorable to the appointing party do we really think that that calls into question the ethics or morality of the approach and what about the arbitrator is it unethical or immoral for that individual to want to ensure that a party's arguments and approach are properly understood and considered by the tribunal particularly in circumstances where perhaps for reasons of shared legal cultural background or social cultural background that arbitrator may have particular and greater insight into the rationale the social so-called cultural interpreter role I suggest you that none of these are objectionable because they are entirely consistent with that arbitrator's continuing duty to act fairly and impartially and that is the relevant benchmark now some of you may be saying to yourselves yes but that's not really what's at the heart of the concern behind this motion it's important to understand therefore exactly what we mean by moral hazard I heard Darius saying on a number of occasions so no we're not really talking about bias we're talking about an arbitrary acting as an ad an advocate or we're talking about partiality to a cause well frankly I think we should be blunt what we are dealing with here when we describe the moral hazard of party appointed arbitrators is a risk of bias a risk of partisan decision-making or behavior by the party appointed arbitrator the risk of them favoring the party appointing them rather than acting independently and impartially and it's right to examine that but I suggest you the danger is in overstating both the risk of parties seeking such an arbitrator and indeed the risk that arbitrators will be will see fit to succumb to such conduct so what's the evidence of bias well I think it's agreed the evidence of actual bias by arbitrators in terms of verifiable and documented instances are extremely rare they do happen one does have the well-known examples of the Loen type situation where an arbitrator subsequently admits that inappropriate pressure was exerted upon him by his government authorities or perhaps as Darius mentioned the recent case of the Slovenian arbitrator caught on tape disclosing the tribunals deliberations to a party representative but such instances represent a minuscule proportion of the many arbitrations conducted over the decades and they also bear the notable feature that these being politically charged arbitrations involving state parties in the context of the many commercial arbitrations such insolence instances of indisputable bias are much harder to come by so instead those who argue that we should all be very worried about this rely essentially on anecdotal evidence and dissenting opinions well anecdotal evidence obviously should not be ignored among cars escape the fact that in certain jurisdictions this is more of a challenge but ultimately anecdotal evidence is neither a reliable nor a safe basis for the assessment of the true nature of the extent of any problem which leaves us with dissenting opinions and the uncomfortable fact has mentioned that as commentators have highlighted such a large proportion of dissenting opinions are written by arbitrators appointed by the losing party but what should we conclude from that is it that the risk of bias is substantial and there's a major problem does it suggest that actually the system is not working I think not to state the obvious in the particular case of a dissenting arbitrator any attempt that partisan decision-making has failed they act they were appointed by the arbitrator the arbitration party who has lost as a partisan arbitrator on a three-person tribunal you have to overcome the other two impartial arbitrators or at least the impartial chair in order for the ultimate decision to be affected so the fact of dissenting opinions and what they represent should not be overstated it's sometimes said that dissenting opinions undermine the arbitral award but where majority awards and decisions by the chair are part of the agreed process that is part and parcel of what the parties signed up for and a dissenting opinion does not prevent an award being enforced and if we can rely on the majority or at least the impartial chair not to be swayed by an unmeritorious biased dissent surely we can have similar confidence in the many courts around the world who thanks to the New York Convention might be asked what hold the award and we mustn't equate dissenting opinions with bias arbitrators independent and impartial arbitrators can honestly and genuinely take different views on the evidence or the law judges in appellate courts do so on a regular basis and not all dissenting opinions necessarily represent a completely opposite view from the majority they may simply be relating to particular issues rather than the central reasoning or indeed the outcome so we should not treat dissenting opinions as a proxy for bias objection is also taken to the unscrupulous arbitrators effectively manipulating the process of deliberation the concern is said to be that they might extract confessions from the other tribunal members particularly as the price of securing a unanimous award and this it's said is even more pernicious than the defending arbitrator because it undermines the coherence and the sincerity of the ward by pressing for compromises but I have at least two issues with this the first is that there is nothing wrong with compromise per se if it leads to a unanimous decision when the parties select a tribunal they don't expect three clones what they want is a binding result and a deal degree of compromise arguably enhances rather than undermines that secondly implicit in this concern is that the arbitrator seeking compromise is doing so on an unprincipled or somehow improper basis but where is the evidence of that and I think one has to view it with caution how can we be sure that that's not simply the perspective of an arbitrator who naturally prefers his or her own intellectual reasoning and is perhaps frustrated at that being challenged in short the actual evidence of moral hazard if we find that phrase more palatable than bias is at best sparse the risk then of bias also has to be weighed against how material it is and how one can manage it it's not the occasion to delve into detail into all the different checks and balances but they do exist within the arbitration process and indeed to me there's an irony in our questioning before this house now that party appointed arbitrators are a cause of a problem because enormous strides have been made to tackle the previous concerns that have been raised about such matters it's now an almost universally accepted norm that arbitrators has to be independent and impartial and that has never been so deeply entrenched in national laws in institutional rules and in soft or materials like the IBA guidelines on conflicts arbitration have its own safeguards majority decisions or Chairman's decision the very real risk of an arbitrator being marginalized if they appear in partial institutional controls requiring written disclosures by arbitrators of previous contacts with the parties the institution's right to refuse an appointment of an unsuitable candidate and the pool of professional arbitrators we hear it says that well that we've terribly concerned about repeat appointments well a they will be revealed by the disclosures now required and secondly that pool are going to be far more concerned with their personal reputations rather than the off-chance of a particular party giving them repeat appointments plus of course we have the procedures to challenge and removal I wouldn't we want to want to suggest there's room for complacency there isn't we need to continue with its working progress we've got the recent arbitrator databases as perhaps the most recent innovation this is all moving but it's dynamic and the concerns are being addressed what we need to keep it in perspective and not deal with the alleged concerns by prescribing a remedy that could have drastic implications so for my mind the moral hazard is largely unproven there are checks against it but let's turn to the second proposition is the risk of bias such that the practice of that appointed and arbitrators should be abolished well I'm not going to talk about historical context although this right has been around for a very long time and I won't dwell overly on party autonomy although it is indeed extremely important in many systems and too many parties that they do have the right to the point it's seen as a defining characteristic and key advantage not least because it's a quid pro quo for effectively the right to appeal being taken away in respect of the arbitration award but at the more practical level the parties want this they exercise the right to a point even when there is an option to leave it to the institution or indeed as under the LCA evils the default is that the institution appoints in the majority of cases the parties reject that for their own appointment there'd be no rush to change in the seven or so years since this suggestion came to the fore none of the institutional rules have changed reflect that only one institution in Romania there are betrayin courts of the Romanian chamber of commerce they changed their rules in 2012 to remove the party's right to a point it was a disaster they had to change back two years later because their caseload had greatly diminished to deter there were concerns of corruption I'm just gonna I'm going to stop my final point is be careful what you ask for when you think about the alternatives there are huge problems with the sense of the use of institutions as sole appointed of arbitrations it would completely change the dynamic of the appointment process thank you thank you thank you now before we delve further into the case of the unscrupulous arbitrator I do want to remind the audience and I was reminded before the debate started by Richard Hillier that you are entitled to jail or boo or support and the timing of this advance event is not intended to put any difficulties in the way of the next picture but we just wanted to remind you with two speakers remaining that you're entitled to that all right with that it gives me great pleasure now to introduce the next speaker for the proposition I was talking Lander who requires no no introduction ladies and gentlemen my fellow debaters one remaining judge who is not subject to a pending removal application Judith has painted an entirely rosy but entirely unrealistic picture of the world of international arbitration and let's face it we're all being polite we know it there are two key points to address and a third if I have time the first one is the real nature of party autonomy which is the driving force here Judith wanted to sidestep it because it's tricky for her to analyze it we're going to analyze it secondly what is the moral hazard actually what is going on out there in practice number one party autonomy this is the core argument it is a demand thank you of party autonomy that leads us to the necessary conclusion that people must be able to select their own arbitrator now if you pause and you step back and you subject party autonomy to a little bit of scrutiny we didn't have much scrutiny in the last presentation here's some scrutiny there is nothing in the nature of party autonomy that leads you necessarily to the conclusion you must choose your arbitrator what you get from party autonomy is that you have freedom to shape the process for sure and of course within that you may want to have a central key involvement and role in the Constitution of the tribunal but there are many ways of achieving that without simply making a direct appointment you can have the choice of an arbitral institution you can have the choice of an appointing authority within that you could have the choice of setting out parameters for the selection you can guide an institution by contract by agreement you can guide an appointing authority you can steer them towards issues of nationality issues of legal background issues of sympathy of culture expertise personal qualities restrictions you can agree to a process with an appointing authority of active consultation in order to collectively arrive at the appointment of the three best people or indeed the one person that you really want all of that is still party autonomy all of it involves choice all of it involves active participation in the process and you can thereby address the needs that people keep calling for which is let's have somebody who we trust let's have someone who's expert let someone have someone who has got a particular perspective which is common to us now I can feel a bristling already especially from two members of the Judicial Panel why are they bristling well I'll tell you I'll tell you if we're honest why they are bristling that is because this is not a process about choosing the most neutral best most expert arbitrators that's not what we want when we are council what do we want we want to win that's what we want we're there to win we're not there to achieve some high ideal that this is a very neutral independent tribunal we want to win now to win me means to try and wait the tribunal beforehand to get a vote on board as quickly as you can in the hope that that person might also secure another vote from the president or the chair and that is leads us to the reality the reality of practice is that there's an awful lot of time and expense now spent on due diligence of candidates huge amounts of man hours are spent and women hours are spent on due diligence due diligence means you try and explore every possible personality trait of your candidate what do they like what do they not like what have they decided previously what personal foibles do they have how much can we predict human nature to the extent that we know that they're going to like our argument are they broad construction people order to go for black-letter details are they merits based or not put this into investor-state arbitration and then you can ask more specific questions what do they say about an umbrella clause what's their view on MFN this is the process it's going on it's not about neutrality if we're honest it's about getting that vote so what have we done to our arbitration process what have we made it into we have caused it to degenerate the process now is degenerating into something where in fact it's not not the ideals the premium is on how good is your due diligence that's what's important and that's unfair because there's inequality of information around the world not everybody can do the same due diligence so instantly the process is stacked against various participants if we continue the scrutiny a bit further and think what is the essence of the process now it is as follows each side does their best to secure the most robust arbitrator who will fight for them in the deliberation room now can I just ask you to pause for a minute how different is that from trial by combat I mean trial by combat was a very effective form of ADR in the Germanic law and it had various stages trial by combat was where you would fight your opponent now there came an amazingly inspired procedural reformer in Germanic law and that was Louis the pious who was the Lord wolf of his day because his procedural innovation was you don't have to fight yourself now you can get someone else to fight for you and that was a major step forward in trial by combat so you would then choose the best fighter to go into the ring how different is our system as a matter of analysis that's what we're doing we have downgraded our system to a battle of Co arbitrators who can get the best side of the chair now let's move to the second one before I get rugby tackled off stage for taking too long moral hazard if party autonomy doesn't demand this particular solution and it can actually be if we collectively apply our imagination it can be satisfied by other techniques what are the countervailing dangers of not changing what is the moral hazard now Judith has set the standard a little bit too high she says we can only look at really actual bias or bias that can be proven she says we can't talk about just our own experiences well I think that's a little unfair I think we have to talk about our experiences we have to talk about word on the street experiences that we've had from case to case because we don't have transparency and you can't set the standard so high as actual bias you have to look at the field as being more subtle than that so let me just take everybody in the room for a few minutes to the other side of the arbitration table what goes on in deliberation rooms what actually is happening here's a little distillation of some experience mentioning no names for now if you are a party appointed Co arbitrator it and I'm telling you this it feels different to if you are appointed by an institution whether you like it or not it feels why is that that is because there are extra forces in your head you are sitting there and because if you are not everyone but if you are human you will have these emotional responses they are as follows you want to be nice to the party who has been nice to you by appointing you you can't get out of that they've done something for you they've appointed you you're going to be there and be all sort of hostile and obstreperous you want to be nice to them you want to return a favor there's a some element of reciprocation you want to prove that all the time they spent on due diligence was actually paid off and it was correct and you were a good choice and you want that all the more so if you have some professional familiarity with them all the more so if you went through an arbitral interview beforehand and they asked you general questions not mention anything about the case would you could do this or would you do that then you've got that link already you want to secure your track record you want to secure future appointments actually all the reasons why you have permanently 10 years judges now those are necessarily there they are sources in your head so the next question is how well can you resist those forces so some people can resist them if you're appointed by an institution or an appointing Authority or there's some break some kind of break between the party and you in the appointment mechanism there is a massive diminution in those forces most of those forces disappear they're just not there you don't need to be nice to anybody please be nice to the institution or the appointing Authority otherwise you can be nasty to people or you can just do what you want the pressure is off and that tells you something very very important straightaway about the dangers of party appointment and it tells you about the merits of looking and we're all capable of this at alternatives the truth is that those forces that I have described very often take hold and I'm now going to give you just a few glimpses of what goes on in that deliberation room which and it is all completely well you can't mention this outside of this room there are well established techniques that go on as follows co-operators first of all early on in the case will prove their neutrality credentials with their chair that's what they do so fir Lian they will make a point of disagreeing violently with the party who appointed them on something which doesn't matter so then we're going to the glowbrasion room and they will say that was an outrageous argument I cannot believe they made that argument they had the courage to make it straight out I would not extend time by one day myself all right so it made their credentials and they show their neutral they're not party predisposed this is all part of a jockeying it's part of a positioning the more that one of them does that the more the other one will do it as well so the auntie will get wet get raised what happens in practice let's not talk about actual bias let's just talk about things which a lot of you will recognize weighted loaded questions from one Co arbitrator to the parties we've all had them intervening questions which actually sound a bit too much of a witness like cross-examination but all going in one direction worse still the tribunal has a preliminary discussion about what they think the strengths and weaknesses are of the case and then going back into the room one of the arbitrator's starts asking questions to fill what is perceived in the tribunal as a gap or an inconsistency or a problem then there is jockeying that goes on with Co arbitrators to get the attention of the President and notice to use the technical expression brown-nosing but it happens and of course it's counterbalanced always by the other co arbitrator and then you have the danger of dysfunctional deliberations because somebody is pushing one side and the other arbitrator is pushing the other side the deliberation becomes polarized and that their own grades the quality of the deliberation and it leads to poor reasoning in yan paulsen in his words he says something cobbled together to encompass in but the result of an unprincipled negotiation unexplained or inexplicable diversions or obiter dicta verging on contradiction or incoherence just to show that one arbitrator has done his best and so in in concluding my message to you is this this is not a system that we all intended this is not what it should be let's not downgrade it further we have a collective responsibility not to downgrade it to make sure it remains legitimate and trustworthy so how do we do it we can do it the answer is not simply you default blindly to what we have always done the answer is you step up we all transcend ourselves we resist the temptation to do what we've always done and we simply look to the alternatives and believe me there are alternatives and those are workable and as long as they're workable the answer is absolutely obvious you have to support the motion thank you well you know Toby has given us a lot of ideas about how we can run a future debate and the rule of hand-to-hand combat in deciding who should be the victor it gives me great pleasure now to invite the next speaker who as you know has the singular distinction of being counsel for you cause in probably the largest arbitration ever with without further ado you might not grab we were actually going to take in a minute or so uh mr. guy our time because you still win over her time but mr. Landau went over his time even more so we'll leave things where they stand thank you thank you that's very good Thank You mr. chairman so now that Toby Landau as antagonized two-third of the tribunal by challenging I can limit my remarks to three points the first is the methodology underpinning the notion if you want to understand motion you have to deconstruct it and see of what it's made of even if it looks good and let's see if it tastes good the the basic element in the motion the ingredient is a number of oral stories in which an arbitrator would leak the award to the party you have the low end case where the arbitrator is naive enough to brag about having been pressured by the the u.s. you have a LCI a case in which the party was child a party arbitrator was challenged for having leaked the award also I had my own case I was a chairman in the case in which the one of the party appointed arbitrators we deliberated we exchanged draft Awards he sent the draft awards to one of the parties and that party was naive enough or inexperienced enough or stupid enough to file that in a court litigation in the u.s. saying we won is res judicata so we had not learned the real world yet so it was a bit problematic I rushed the award and the federal tribunal said that the award is the the idea of what we are going to decide not the actual piece of paper fortunately another case is paid casado which is notorious for many things including the fact that the party appointed arbitrator did by the state did brush and told the state what the award will be of the draft award yet again will be and then exceed was stupid enough to receive them ex parte because the party not only they received the award before it was even finalized but they went to exit and said well we're losing in this case it's a disgrace it's a awful disgrace so we want something to be done about it and it was not even an award so of course the arbitrator's were removed so we we have all kinds of our stories regarding arbitration but this is only a small tiny fraction that may be the most interesting part but it's the tiny fraction of what what's going on in arbitration it's not good enough for the motion they make these oral stories but you have to use legitimacy souls to make them stick together legitimacy may be the most abused word in international arbitration these days people know self-appointed NGOs professors sociologists all kinds of good minds know what's good for arbitration what's good for arbitration was legitimate it's not what the parties want it's it's transparency it's an appeal because you want to ensure the hypothetical consistency you want now to take away from the parties the right to appoint an arbitrator let's call it a court and it becomes a court so you don't need arbitration if you are going to have a court of course what you want to leave to the parties is the privilege to pay the fees and that's what the EU wants to do to arbitration it's like a court you don't even call them arbitrators because it's a dirty world and the parties can only pay but what some want to happen to arbitration but when you talk to the parties about well it's good for the system you talk about what's good for the system parties I'm sorry I may be too naive but I thought that was just solving a problem I have with my my opponent and we were in agreement to have a tribunal solve it sorry it must be very nice no no that's not valid arbitration is you will tell you what's good for the system now if you apply the same and that's my point if you apply the same we CP which is of course not a good one to cause sis to the causes and what does it give you do you have our stories yes plenty plenty of our stories I would command you to read them mr. international on the independence of the judiciary in the world and there you will learn lots of oral stories and let me give you one of my own since and was reminded of the Yukos case you know that in one of the ancillary cases of Yukos there is a dispute on the assets the former Yukos assets which are outside of Russia mainly in the Netherlands and there is a dispute was nest wants to say to my assets because was left is be inherited the Yukos assets through the phony bankruptcy and in in the Netherlands there is a dispute on the rest of the asset the the former management has created the trust to say this belong in fact to to us and to the former to the form of shoulders now in that context litigation happened in Armenia why in Armenia because some of the assets were were owned by an Armenian the structure now in this context it transpired that a judge was asked by his hierarchy by the authorities including the court Cassation in his same Venice system what to say about that one element of that dispute in fact he was given a USB stick with the judgment in it and in fact you have also it also transpired that the Rosneft itself the FSB and Rosneft lawyers were concocting and strategizing as to how to draft the judgment in the best way in order to be the most convincing for a Dutch court because the idea was to have a judgment in Armenia and enforce it in the Netherlands where you had the assets attributes so talking about our stories you have wonderful evidence of markups by the lawyers of the purported judgment which was handed to the judge to adopt not the judge fled the country he received political asylum in the US and he testified about always so that's a nice or so let's put a little bit of legitimacy sauce on it is it legitimate now it's not legitimate at all what do we do cancel the judicial institution that's simple enough some judges are bad that's a typical faulty syllogism some judges are bad therefore all judges are bad therefore you have to cancel the sister judicial system in every country similarly some arbitrator rigged the award you have some oral stories therefore arbitrators are bad cancel the party appointed arbitrator institution lets of faulty syllogism as I hope you are now convinced now my second remark has to do with the essence of arbitration what makes arbitration great and I didn't say great again it has always been great what made arbitration great is the fact that in arbitration we make all kinds of choices we choose the institution we choose the seat we choose the applicable law we choose one of the members of the tribunal we participate in the selection of the chair we choose at least the profile of the chair all these choices are essential to arbitration and by the way if the institutions have the right in some cases to appoint arbitrators it's simply a right which was delegated to them by the parties the arbitrator's the institution have no right of their own they just have the right which was delegated to them a deposit so if some institutions want to say by default like the LCI a by default we will appoint everybody unlike unless you say otherwise that's a choice others will say and do say that like the sigh accruals or the ICC rules by default your point one unless we are in multi-party arbitration or in small cases and I've met anecdotal evidence shows that the parties are very very jee-in to a point at least one member and look at even the chair even the chair they and one could say that when the chair is to be selected by the co-operators we all know that this has been perverted and now you say yes but we need to be transparent so let's talk to the parties let's do it in consultation with the parties to be transparent now and what it makes is you can take all the statistics in which the parties chose the chair through the coop iterators in essence it's the parties who channel because they they give instructions to the garbha traitors they do it transparently but still they do it so the parties are very keen to to choose at least one arbitrator and the profile of the chair is not the chair by consent and in many cases where you had we had a recent case in which the party said three arbitrators appointed by the NIGC appointed by the institution at the end of the day when the actual trial the actual case popped up we decided to appoint all three by consent now my last remark has to do with the system because I know I cannot get away with talking about the system what's good for the system so I have a good argument which has never been used so far so it's a risky one but I believe it's right about the good party appointed arbitrators due to the system and I think there is a direct correlation between the sense of ownership the parties can have in the arbitral process a direct correlation between that sense of ownership and the willingness to satisfy the outcome when you have an award in 90% of cases it's it satisfied voluntarily which is amazing and that's why the system works in commercial cases at least and why is that because think about oh I don't like the award it's bad and and you know who is this arbitrator who slept all all along never you know never asked a single question we didn't open a piece of paper who is the idiot who appointed that arbitrator asked me so well okay fine so next time I do better and who is the idiot who appointed that chair who didn't understand the thing and was too idiotic to understand my own fantastic arguments well in fact go back to the file we agreed you know we had the shortlist and we agree so yeah okay so let's talk to the parties let's talk to the client would say yeah next time we do better and I think that there is a direct in more general term so it's a direct relationship between the participation of the parties in shaping the system in choice choosing the the arbitrator including the chair and that's why arbitration works well and I think the arbitration is facing a big challenge the big challenge is standardization and this standardization would be at its paramount if we were to a point to let the institution appoint every arbitrator that's why we need to protect our patrician we need to make it great again and to reject the motion thank you very much thank you [Music] [Applause] and now it's time for you the flow we see many eminent faces amongst you do you have mics roving mics yes so we're going to throw it open you can say something you can add a comment you can air your complaint you can heckle the debaters you can ask them questions which they will you know if they do not answer will be taken against them yes Albert can I ask a question of the four motion we had very little as to the alternative to to the party's appointing the the tribunal I suppose the you would argue that the institution should appoint all three members of the tribunal but method calls are the problems such as entrenched cronyism yes we will leave that for now we leave that for now Thank You Albert supply you want to take a ticket in the five minutes the debaters will respond in the five minutes in behavior to choose to answer it yes up okay yes sorry yes we're being told that the practice should be abolished if we're not to act in vain until we came very close to addressing this question but didn't quite cross the threshold who is to do the abolishing because you urged us all to act in the closing remarks that you made but I'm not sure how we're supposed to act is it being said that the newel convention should get a new clause saying that any award which is rendered by party appointed experts is not enforceable under the convention or is it the institutions themselves should act singly or collectively to abolish it or is it being suggested that we as advisors to parties should be encouraging them to be self effacing in give up this right because ultimately otherwise perhaps this motion is simply should SIAC abolish the right and then our student has suggested the matter becomes a competitive one between institutions and the parties can choose thank you well we would urge some questions to draw this way yes my question I have a question for those against the motion Ruth they have addressed this very clearly on cases of obvious bias of arbitrators but they haven't yet addressed in any detail the issue of subconscious bias and it strikes me that that's really the key to this issue and it's the point that was raised by toby landau about human nature being that you want to reward those who reward you we did have one response I think from Judith which is that what you will end up with will be a compromised award but from the citation that Toby gave from Yan Paulson there is a suggestion that really what you get is a cobbled-together award a very poor reasoning so could I ask those against emotion to really address Heather on this issue of unconscious bias not a really obviously biased arbitrator he'll be marginalised by the rest of the tribunal but one who isn't of the cbyosu probably doesn't know themselves but they're biased yes I think yeah could you give thank you hi my name is Samuel and I used to work at the SIUC and so at the end of a channel like that the situ give time to dream and I recall when you're considering excuse me used to have time to drink sorry not not you know yeah I just kept once in a while we will continue to new rules you have no longer need to be afraid that's similar but you know yeah when we were considering perhaps some suggestions for the court in this view rules one of the suggestions that I remember discussing very vigorously with Kevin Nash was should we suggest blind nominations and where a party appoints but the arbitrator is by no means allowed to be told who appointed him and I saw the question for then the namelen' panel would be would such a suggestion be workable at any point Thanks thank you yes right at the back I'm Kerry and from China to number four so my question goes to mr. topi and Roy so my question is whether is the whether there is a perfect system that can even can eliminate all the moral hazard if not why the existence of moral hazard can justify a abolishment of the current system Thanks thank you yes yes Mike is coming those who will father mortgagee will introduce your story it'shat got that from India those who will for the motion need quite a lot the part about the practice of issuing dissenting opinion especially investment treaty arbitration by partly appointed arbitrators why should that necessarily lead to abolishment of body appointed arbitrators the easier thing perhaps would be to just abolish the practice of issuing dissenting opinions especially given that the vandenberg article that mr. combative mention itself finds that dissenting opinions in investment treaty allocations make no contribution to the close of law because they never cited or even on one instance as a dissenting opinion website thank you again i will urge if there could be some more questions this way so i have a question from my two party appointed co arbitrators it's a question for mr. Landau no he's going normal the question is could he be a little more specific he asked for specificities in his speech about his challenge who is being challenged yep duress we'll be addressing mr. cabassa straightaway both Madrid and you Mr Bond for your previous writing and clear predisposition against the motion ordering on bias but not actually bias missmiss key will consider that very carefully and make a decision thank you Thank You mr. president yes mr. e I did not say to mr. Landau that I was against her solution I said I was against you that's right it wasn't I lament and hominem Thank you Thank You Missy for clarified identified spectral alright I think we farm we've come to the end of the audience participation if I can now invite a member of the proposition heavier decided no maybe we'll give them a couple of minutes firstly to decide who are you in the village yeah then you can give me Reverend all right all right sure you have five minutes you can share you can share it between the turkeys that's fine can you can you can you just climb it yeah I'll do from here all right thank you very much for all those people who asked a question at the other side the there are a number points to make firstly this this argument gets itself downgraded if we just think about extremes it's not about horror stories it's something much more subtle than that including when we talk about unconscious bias secondly it's not about saying well this is syllogistic reasoning if there's a horror story in the judiciary we don't talk about abandoning the judiciary again it's a much more subtle point and it's not about dissenting opinions per se dissenting opinions are fine that's not the problem the problem is dissenting opinions give you a little window into what the dynamics are and it's those cases where you don't get a dissent where you won't see it but those dynamics may well still be in play and it's the fact of the way in which the sense go that they all seem to be in the direction of a party who has appointed a dissenting arbitrator that again shows you the dynamic now the key point here is the one the question addressed by elders and a lot people come back to it what are the other solutions there are many other solutions and we are all able to imagine probably many more than the ones I'm going to outline it's not just a question of getting an institution to appoint three arbitrators or one arbitrator however many you can have many different techniques for example an institution that will be acting actively in consultation with each party that can be by way of a list procedure it can be by way of a backwards and forwards of names it's just not a direct appointment between party and arbitrator it's being mediated through an institution or it can be done with arbitrating an appointment or appointing authority not just an institution you select an appointing authority who does the mediating in between to break that link so that whoever is appointed isn't sitting there thinking they must be grateful to somebody and in that process there's any amount of consultation that can happen and that consultation can take care of these concerns takes care of your desire to have somebody of your choice it also takes care of a man or gals very valid point that you need to retain ownership of the process in order to assist enforcement but you can have ownership if you through part of your party autonomy have been participating in a process where you have your say you are having your say you are vetoing people you are suggesting names and lastly it is not an answer to say well the fact that the parties wanted means they must have it because people can be read and let me give you one example of that the re-education we have already had for the appointment of female arbitrators because of the pledge that is something which has already showing concrete results and it's because we've all got together and agreed we must do it so why can't we get together and agree it's not about saying this is now illegal or can't be done it's about creating a new ethos and that we thoughts will be assisted by institutions by Council in the same way as the pledge let's all try and make our process better thank you - how many ministers do I have to work great all right sorry we're not things was the baby with the bathwater Toby has already outlined some of the many alternatives that are possible but it will be institution driven to answer one of the questions primarily institution driven and institutions ultimately are made up of people like you who will drive the process maybe not each and every one but many will and many worlds because of what each of you know in your heart of hearts actually happens in a matter and Toby gave us a wonderful window into that it's really it's the lunch talk on who manages to persuade or convince the chairman it all happens there and that's not really what we want as lawyers we want to be able to succeed in their arbitration room on merits rather than on a fortuitous comment made at lunch now you can have lists you can want one of the other solutions could be that the parties suggest the various factors that they perceive to be important in the arbitrator and based on those an institution makes up a shortlist and sends it back to the parties and then the party choose from that shortlist so we are not saying abolish party autonomy certainly not there is a fair amount of party autonomy even in such a process all we are saying is don't leave it absolutely to the parties to a point who they choose that's all thank you thank you thank you nature tries now in order to have a semblance of neutrality I would want to remind the audience that you can gon boo somebody speaking and now I leave the floor now to the opposition to address you I start we will share these remarks also as to the subconscious bias and human nature basic human nature on each side so it's perfectly it's perfectly neutral and if you think that you have to remove you man nature then you have to remove not only the arbitrator the judges but you have to replace all that by artists artificial intelligence which is the only way to adjudicate without that kind of this kind of bias and if you see the cases the cases are slightly and if you see a real life which which some of the critics not campus under some of the critiques of the system certainly do you never never seen any deliberation and they should know that in many many cases of it it goes very well arbitrators do agree and sometimes it's the Corbett raters who agree against the chair and you see the tip of the iceberg is the Tokyo circulars or another recent case in which don't share descends to where the majority of the two-party point think of the reaction of the party who appointed they are betrayed an arbitrator siding with the other side to make them lose so that takes guts from embeds a tribute to neutrality now second point institutions the institution should should make it happen okay be my guest and we see the people will vote with their feet the parties will vote with their feet out the a CIA has started to say by default which rules now unless you agree over was will see if they say in all cases will choose be my guest and the third remark other concern is political Toby said something - absolutely self-defeating he said yeah they don't have to be nice in my system they don't have to be nice the arbitrator's no one has to be nice to the parties you can clip out the pocket they want an extension they both agree for extension I don't care because I'm working on my stats is a VDI CCD as you see is putting pressure on me they want to have fast arbitrations you reform on spawn mobs don't either I'm going to give you one each that's it I don't have to be nice to the politics but have to be nice to be institution so imagine the amount of lunches with the staff members you're going to receive if you are the only one to appoint the arbitrator's the politicking would be extreme and frankly distasteful let me just catch up very quickly on a couple of points first of all on party autonomy I hope everybody in the room makes it is a wonderful double act from those four the motion Darrius bang the table says we mustn't talk about historical context and party autonomy and then Tony said they didn't talk about party autonomy well part autonomy is vital and what is noticeably lacking in truth from submissions to those thought emotion any realistic assessment of the parties wishes and we can fit in conferences we can discuss and debate but at the end of the day it is the parties who decide whether there will be arbitrations and decide what dispute resolution they want two other very quick points just following up on what Emmanuel said the institutions are not clamoring for this role and for very good reason what Toby describes of party involvement by effectively discussing and agreeing and rejected in doing and throwing with the institution is absolute time skyy what you would get is the institution either being involved in a process which becomes the complete nightmare for and which is not equipped to deal with or you get an institution effectively saying no sorry I'm going to make their point and when it does you can just hear the complaint too many civil lawyers on my tribunal too many common lawyers to too many people to go past their prime too many inexperienced people it's unworkable I would suggest as a default approach and then finally this point about are we overstating talking about obvious bias well look at this motion we are talking about abolishing what entries we all know is something parties hold very very near the proportionality suggests that there must be something serious mere unconscious or anecdotal suggestion of unconscious fire bias is not appropriate the arbitrator behavior we've heard a sycophant see the pantomime acting that is not caught what most us know happens in deliberation and fault finally what it always seems to come down to it they do it because they want repeat appointments where's the evidence where's the evidence thank you thank you thank you all right we withdrawal the application that is noted well the moment of truth when you now get to decide the outcome of this debate first so we're going to have a show of hands now we've got about what four for other people in the room yeah so it's it's going to be a little hard but let's so let's start with so just raise your hands one hand right right just raise your hand so I'll start with all those in favor of the opposition okay so please raise your hands now okay can somebody take a quick on just hold them please that we do want to count them up can can you count it the left side okay Adaline can you count the right side married asparagus in order to maintain the very strictest judicial independence we're not watching check here clenches the back just keep count to yourself don't tell tell us yet I think yeah we're all done thank you okay now all those in favor of the proposition please raise your hands okay just hold them there please there's more heading up the back foot yeah the right side we are done just the left side right side you look at your hands up there Moses okay can you tell E and let me know what what the audience vote is that seemed a little close from where from from over here we may have to settle this with a duel but let me still have to hear from the judges though and often yeah I would ask the judges in a moment whether they need time to deliberate yes it is rather close they are vaporization here inflation here I want you process s well now let's talk about it we obviously that there is a point of objection now so the point being said to to me is that the judges should not hear this verdict okay let me switch to the hook to the Frost ourselves now now this is not a democracy this is an adjudicative project we're in the tribunal and I am the chairman I decide procedural issues I think it's quite right I think we should get to be quite fair to be quite fair to be quite right it was decided before the the debate that the judges having heard the vote of the audience would then decide their vote all right so it's two separate forum and so the for the the votes for the opposition because that was the order a hundred and eighteen hands in support of the opposition and for the proposition a hundred and three hands all right bye-bye so far the auditor consented a by a narrow margin there is a request for a recount which is being declined now now do the Gary do the judges need to know the tribunal has carefully deliberated and we're going to deliver our opinions seriatim very very briefly mindful of the time well I am despite my just saying I would be against mr. Landau I am in favor of the motion slightly restated that it need not be abolished but it should be improved and it's not as someone pointed out it's not to me a question of whether we allows parties to be arbitrary in their appointment versus institutions being arbitrary in their appointments but there being a list process and more of a back and forth with institutions who can provide equal documentation on arbitrators to the parties as they proceed and I point out also that until just now until the questions nobody addressed this well-documented fact that parties rarely make diverse choices in international arbitration institutions do and that's one of the only ways to make sure we get broader representation of all sorts of ideas and other issues on a panel thank you gee I have a tool of practical points regarding actually on this site because if or we're talking about the companies from uh developing countries they are the newcomers to the international area and therefore if we I mean in our practice we also always say that if we lose the case we're always blamed arbitrator so it doesn't matter what the arbitrator is appointed by parties or whether the arbitrator appointed by institution and if we now argue that the arbitrator should be all appointed by institution that makes the life of what counsel easier because then which is simply blaming the institution hahahaha so that we one point and the second point is that in terms of why it's important and for partner to having somebody for knowing to them I appointed as an arbitrator is because when they come to something new to them when they see some face either tribe you know as well as a bench and who happened to be you know know their culture particularly know their language and I think that that gave them a great comfort and that's the reason I would say on this site Thank You mr. president well there's a famous saying by Lord Denning who delivered judgment in the English Court of Appeal in the case he delivered judgment in a in a free person tribunal and when he had finished delivering his judgment he went behind the curtain with his two judicial colleagues one of them rather timidly expressed the view that he didn't agree with didn't agree with Lord dennings conclusions his holding in the case which prompted the second of the three judges to say that he too disagreed with what Lord Jenny had had delivered as judgment from the branch to extort Lord Denning imperiously remarked well then the two of you will just have to dissent I had rather hoped that my two Co arbitrators would agree so that I could use that line but they disagree I used it anyway and I've been using the last three minutes to try to figure out what I would say as a majority if you actually think there's force to both sides of the proposition there no doubt is moral hazard to appointing party arbitrators on the other hand does that really mean we should have polished something that has worked so well especially here at SIAC for the last 25 years there's an ancient adage we're not supposed to look at history but an ancient adage that if it ain't broke don't fix it and I suspect that is an adage that we should all pay attention to in the future thank you I'm not sure where that leads to tribe you know perhaps we can have another debate next year to decide that question I did though I voted for the first half in favor and the second half again I'm wearing I'm afraid we have a hug judging banner and that too may have to be settled by something along the lines of a fistfight but guys and girls thank you for coming you've really made this evening special so many of you have appeared I think next year we need an even bigger venue especially if you're going to have a boxing ring in the middle but thank you but please do stay on you know at least I think on behalf of the audience we like to thank once again the effort the great efforts put in by the speakers the basis of do stay on for the drinks and the fellowship thank you thank you very much

Channel: SIAC

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Length: 90min 57sec (5457 seconds)

Published: Mon Jun 19 2017