07 Feb 2019
30 November 2018
Reported by Natalia Otlinger YMG, CIArb YMG Social Media Coordinator
On 30 November 2018, Dublin played host to the annual conference of the Chartered Institute of Arbitrators’ (CIArb) Young Members’ Group (YMG), with this year’s theme being ‘Innovation in Arbitration: A Brave New World’.
Yvonne Czajkowski (Trinity College Dublin), chair of the YMG Conference Planning Subcommittee, kicked off proceedings by welcoming attendees and introducing the keynote speaker, Lucy Greenwood (Greenwood Arbitration), as well as the President of the CIArb, James Bridgeman SC.
James’ opening remarks looked back on the high quality of presentations seen during YMG conferences, as well as looking forward, commenting on the need for greater diversity in the arbitration community. After a warm introduction from the President, where James reflected on Lucy’s great contribution to CIArb culminating in her recent election to the Board of Trustees, Lucy delivered her keynote address.
Key Note Address
“Arbitration: it’s really not that bad” was the title of Greenwood’s keynote address, which she explained in British terms means that it’s actually “quite good”. Greenwood began by reflecting on how arbitration has evolved over the last 10 years and where we are heading. There was an unremittingly bleak view of international arbitration 10 years ago, which Greenwood also admitted to sharing. Users of the systems felt that it was too expensive and time consuming. The international arbitration institutions responded to these criticisms by adopting tighter deadlines, which resulted in shorter arbitrations and reduced costs.
Having dealt with the issue of time and costs, the arbitration community has more recently decided to focus its attention on the lack of diversity in international arbitration, a problem which has always existed. Tribunals are not reflective of the parties engaging in the process both in terms of gender and ethnic diversity. To illustrate this point, Greenwood referred to a recent case where US rapper Jay-Z requested a stay of an arbitration on the basis that the lack of diverse arbitrators on the list provided by AAA rendered the arbitration agreement void as contrary to public policy. The case highlights that the lack of diverse panels of arbitrators undermines the legitimacy of the system.
Greenwood had no doubt about the benefits of diversity in arbitration. She stated that “diversity generates strength in decisions and flexibility in approach – and diverse groups produce better outcomes.” However, she remarked that one of the main challenges to achieving greater diversity is to “re-wire our brains” to counteract our subconscious biases. She illustrated this point with a humorous video clip of people trying to learn how to ride a so-called “backwards bike” (a bike that works in reverse - if you turn the handlebars left, the front wheel will turn right, and vice versa). All the participants in the experiment failed to adjust their brains to learn how to ride the backwards bike and it took the researcher eight months to master it. Greenwood noted that if re-learning a discrete skill such as riding a bike was this difficult, the challenge of re-learning our subconscious prejudices would likely be even greater.
Greenwood then went on to highlight some initiatives that have been taken by the international arbitration community to achieve greater diversity such as the Equal Representation in Arbitration Pledge, which has just reached a milestone of 3,000 signatories, Arbitral Women, and the Alliance for equality in Dispute Resolution which is focused on address the lack of ethnic and geographic diversity. She also mentioned two things that we can do as individuals to improve the odds of selecting a non-typical arbitration. The first is to start with a detailed list of objective criteria we want from an arbitrator, rather than a list of names, and to search more widely, rather than phoning a friend. Secondly, Greenwood encouraged young practitioners to be more innovative in our approach to selecting arbitrations, e.g. by using a system of blind appointments.
Greenwood concluded her keynote address on an optimistic note. “The arbitration community is a small community working in a young and developing field, making mistakes along the way but also identifying and rectifying those mistakes”. She is optimistic that the arbitration community will succeed in changing the landscape.
In the first panel discussion – moderated by Daniel Grodinsky (Borden Ladner Gervais LLP) - Arran Dowling-Hussey (Barrister Law Library of Ireland), Emilie Gonin (Doughty Street Chambers), Sebastiano Nessi (Schellenberg Wittmer) and Lucian Ilie (Reed Smith LLP) considered innovation in arbitration.
A broad overview of what innovation in arbitration consists of, who is involved and why it is necessary was considered. Nessi identified parties as key driving forces in shaping the proceedings in an innovative way due to the principle of party autonomy. He also showed an appreciation for the role that other actors play – such as arbitral institutions and national legislators – in introducing innovative features in their rules and portraying themselves as attractive arbitration seats.
The discussion moved to an examination of problems of arbitration and limitations of parties’ autonomy and innovation. Despite many of the innovative changes, statistics show that costs and duration of the average arbitration are still rising. Ilie proposed practical solutions – for instance, strict adherence to the proposed time schedule of the proceedings – as well arguing for more common sense and making use of arbitration’s flexibility to adapt to particular needs of cases.
Gonin cautioned parties to be mindful of potential challenges that innovation may pose especially concerning enforcement of awards in the context of due process and party access to new technology.
Dowling-Hussey concluded the discussion by underlining that the meaning of the term innovation has evolved over time as well as having the potential to mean different things to different actors in the arbitration community.
In the second panel discussion – moderated by Noor Kadhim (Cubism Law) - Ulliana Cooke (Withers), Pierre Daureu (Alfredo De Jesús O.) and Iain McKenny (Profile Investment) considered investment treaty arbitration.
The discussion started with Cooke’s analysis of third-party funding as an innovative trend in investment arbitration and indeed often the only means for an aggrieved investor to obtain redress against a state. She underlined the need for due diligence and the importance of managing expectations of the claimants and those of the funders.
Daureu pointed to the new trend of ‘subsidiary shopping’ replacing ‘forum shopping’. He explained that this strategy includes using a small subsidiary to pursue a test case against the state as a form of preparation for the bigger claim coming from the same group of companies. The purpose of this small case is to obtain the relevant documentation and examine the state's strategy.
McKenny, founder of the first regulated third party funder, discussed the evolution of third party funding from isolated investment opportunities, to an burgeoning industry to what he described as a current battle between price the risk models of third party funding and merits models. He emphasised that disputes cannot be treated like commodities because of the dispensation of justice aspect and indicated that if left unchecked the price the risk model would likely lead to heavy handed regulation that would be detrimental to the longevity of the industry. He also considered whether artificial intelligence may be used by third party funders in choosing investment opportunities and concluded that currently technology is unable to predict the chances of success based on previous arbitration data because arbitrators make qualitative decisions rather than quantitative ones.
In the final panel discussion – moderated by Rahul Donde (Lévy Kaufmann-Kohler) - Katia Rener (DIS), Gauthier Vannieuwenhuyse (Hogan Lovells) and Claire Morel de Westgaver (Bryan Cave Leighton Paisner) looked at technology in arbitration.
Rener set out the new DIS (German Arbitration Institution) rules introduced on 1 March 2018. The new regime aims to provide a modern way of dispute resolution by leveraging the technology. Rener shared the difficulties encountered when convincing German lawyers to use less paper or discontinue using fax machines pursuant to Article 4, which requires all submissions to be sent electronically.
Vannieuwenhuyse explored the potential disputes that may arise from self-executing smart contracts. Smart contracts were defined as self-executing instructions drafted in computer code using blockchain technology as a platform. The discussion centred around bug errors emanating from faulty coding and discrepancies between the coded and written version of the agreement. He also suggested that certain abstract legal concepts, such as good faith, are impossible to be coded. Finally, he concluded that we are far from the reality in which arbitrators can be replaced with lines of codes or robots.
The panel turned its mind to the types of disputes in which technology is likely to be involved, namely: IP, competition, M&A, corporate, confidentiality agreements and data protection. Morel de Westgaver commented that whilst disputes between technology companies can be purely commercial, arbitration is the natural forum for technological disputes because of specialisation and expertise of arbitrators, confidentiality and flexibility of the proceedings. However, she also noted that the technical knowledge required to arbitrate complex disputes also posed problems with a potential solution being special rules and institutions targeted at these kinds of disputes such as Silicon Valley Arbitration & Mediation Center.
The first debate – moderated by Ronan O'Reilly (White & Case, London) – considered the motion “This house believes that arbitrators should be evaluated at the end of proceedings”. Simon Maynard (Three Crows LLP) argued for the motion and Hanna Roos (Quinn Emanuel Urqhart & Sullivan LLP) opposed it.
Maynard argued that arbitrators are – and always have been – evaluated at the end of proceedings, mainly through informal means, such as word of mouth. He contended that the evaluation of the arbitrators at the end of proceedings would make a significant contribution to the transparency of the whole arbitral process and shape the future of the profession. He highlighted the paradox that people nowadays do not order meals or taxis without first checking the rating of the service provider, but they appoint arbitrators to resolve their complicated and high value disputes on the basis of limited information about them. Maynard observed that an overwhelming percentage of arbitration users want to be able to evaluate arbitrators, so the focus for us, as practitioners, should really be about how to shape the assessment process.
Roos began by questioning the accuracy of reviews, noting that a change in parties’ views of arbitrators often occurs after they receive an award. Evaluations post proceedings are much more nebulous, she added. Roos also argued that a distorted or nebulous review may be neither accurate or helpful for the end users. For example, in a consumer context, she noted that overly positive reviews often result in customers experiencing greater disappointment if the purchased item does not live up to its rave reviews. Performance reviews can also be misleading because they often turn on how complex the case is. For instance, the best surgeons have the worst statistics because they undertake the most complicated medical cases. Thus, compulsory evaluation of arbitrators may discourage arbitrators accepting appointments in difficult cases. Roos concluded that there is no need to introduce a system of evaluations for arbitrators because arbitration remains parties’ preferred method of dispute resolution and the courts rarely have to intervene to correct serious errors.
The majority of the audience voted against the motion.
In the second debate – moderated by Bryan Fok (Herbert Smith Freehills) – the motion of "This house believes that, as zealous advocates, counsel are free to use any tactics to win arbitration" was tabled. Patrick Mair (Law Library of Ireland) argued for the motion and Vanina Sucharitkul (University of Paris-Descartes) argued against it.
Mair drew attention to the variance in ethical rules imposed by different jurisdictions and how this created discrepancy and unfairness between counsels appearing in the same arbitration. An example cited was the difference in approach to witness preparation between the US and civil law jurisdictions. Mair further argued by analogy that a tax advisor would not refuse to advise a client about legal tax avoidance simply because his client had a moral duty to pay their taxes. Concluding, Mair held that within the limits of the law, lawyers should employ whatever tactics possible to achieve the desired outcome for their clients.
Sucharitkul posed the question where the line should be drawn between acceptable tactics and unethical behaviour. She referred to 2010 survey of counsels and arbitrators according to which 66% of the respondents have experienced guerrilla tactics in arbitration. Guerrilla tactics are deployed when counsel no longer use safeguards provided by arbitration, such as the right to challenge arbitrators or the right to be heard, as a shield but as a sword to attack the integrity of the arbitral proceeding. Such tactics can be detrimental to parties and counsel and undermine the arbitration process as a whole. Concluding she held that arbitration in itself is a contradictory event but there are natural boundaries that should not be overstepped.
In bringing the conference to a close, Maria Kennedy of Matheson thanked all of the speakers and the CIArb YMG for organising the event.
Mandy Lee, YMG Chair, summarised all of the topics discussed during the conference and thanked the speakers, everyone involved in the organisation of the event and in particular, Matheson.
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