The creation of the IBA Guidelines on Party Representation in International Arbitration

Julie Bédard
Chair, Guidelines Task Force; Skadden, Arps, Slate, Meagher & Flom LLP, São Paulo and New York
julie.bedard@skadden.com

Amanda Raymond Kalantirsky
Skadden, Arps, Slate, Meagher & Flom LLP, New York
amanda.raymond@skadden.com

In 2008, the IBA Arbitration Committee formed a Task Force on Counsel Ethics in International Arbitration. The impetus for the creation of the task force was the observation that a lack of international guidelines on counsel ethics, and potentially conflicting norms to which counsel in the same arbitration may be subject, may undermine the fundamental fairness, equality of treatment of the parties, and integrity of international arbitration proceedings.

Specifically, the Arbitration Committee was concerned with issues that may emerge where opposing counsel believe themselves subject to different and potentially conflicting professional conduct principles. These potential conflicts are troublesome to the extent that they may result in the parties operating on an uneven playing field, thereby threatening the procedural integrity of the arbitration. Some of the practical areas where counsel’s differing obligations and limitations generated these concerns were in ex parte communications with arbitrators, conflicts of interest of counsel/arbitrators, candour and honesty of the parties and their counsel, information exchange and disclosure, and the preparation of witnesses prior to their appearance at the hearing.

The Task Force set out to investigate the various ethical and cultural norms and rules that may apply to counsel in international arbitration, and to consider whether any international guidelines were desirable and appropriate to level the playing field.

In 2009 and 2010, we met to develop initial views on the threshold question of whether ethical issues arise with sufficient frequency as to warrant further investigation. The Task Force decided to survey the arbitral community to help identify: (a) international arbitrations in which the conduct of counsel raised ethical issues or problems in the proceedings; (b) international arbitrations where tribunals have reviewed (or declined to review) these issues; (c) court decisions on counsel ethics in international arbitration; (d) disciplinary proceedings by professional bodies on ethical issues raised in international arbitrations; and (e) local, national, regional or international ethical codes and standards that impact practitioners in international arbitrations.

In 2010, the Task Force distributed a survey of approximately 60 questions to members of the IBA Arbitration Committee. We received responses from around 300 practitioners around the globe: they reflected significant uncertainty among counsel as to what norms governed their and their opponent’s ethical duties in an international arbitration. The fact that many individual jurisdictions do not regulate counsel conduct in international arbitrations within their borders, let alone for arbitrations seated abroad, suggested that an international soft law mechanism may fill this void. On their other hand, some jurisdictions strictly regulate such conduct and do not draw a distinction between litigation and arbitration.

Armed with the survey findings, the Task Force members set out to develop proposed guidelines. During the next phase of work, Task Force members contributed research regarding potentially applicable sources of guidance in matters of professional conduct, namely bar or other professional organisation, guidelines enacted by international organisations, mandatory law of the arbitral seat, the rules of the arbitration institution, the principles developed in international arbitration awards, and/or the law of jurisdictions where eventual enforcement of an award may be sought. As the Task Force’s research and work evolved, so too did the name – from Counsel Ethics, to Professional Conduct Norms, to Counsel Conduct, to Party Representation.

One area of considerable controversy – before, during and after the preparation of the Guidelines – was whether arbitrators have power and jurisdiction to address counsel conduct issues. Arbitrators cannot displace national bar and professional authorities. Would local courts and bar authorities agree that arbitration tribunals have jurisdiction over counsel conduct issues?

In the end the Guidelines explained that parties may adopt the Guidelines by agreement or '[a]rbitral tribunals may also apply the Guidelines in their discretion, subject to any applicable mandatory rules, if they determine that they have the authority to do so', thus leaving the determination that they have authority to apply the Guidelines in the absence of party consent to the judgment of individual tribunals, given the case-specific considerations that may impact whether a specific tribunal has jurisdiction over a specific issue.

Whether Guidelines should be 'opt-in' was a related issue of contention. To what extent could Guidelines that were only 'opt-in' with regard to counsel conduct actually be effective in levelling the playing field? What if counsel/parties never opted in?

The Task Force considered the interplay between soft law guidelines and applicable domestic ethical rules. Of course, the IBA Guidelines could not displace the application of local ethical rules for counsel. But what if the Guidelines actually conflicted with local ethical rules? Walking that line generated much discussion. Could the Guidelines establish standards that go beyond the rules or applicable national law?

The view was that the Guidelines would serve to fill the gap for the many grey areas where there is no applicable rule, in particular because many local bar rules do not apply in international arbitrations, particularly those seated in a foreign jurisdiction. However, in a hypothetical situation where there may be two mandatory and opposing requirements applicable to opposing counsel in international arbitration, that situation is not solved by the Guidelines.

The Task Force also discussed what information to include in the commentary to the Guidelines on this point. For example, in certain respects the commentary noted that domestic professional conduct norms in some jurisdictions may require higher standards than those provided in the Guidelines.

Finding common ground between common law and civil law approaches to a number of issues proved challenging in several areas during the development process, in particular with respect to document production. Civil lawyers on the Task Force challenged the extent to which common lawyers proposed that the Guidelines include obligations on counsel (as opposed to clients) to ensure that evidence is preserved and that relevant documents are reviewed for potential production. Members raised the question of whether, if the obligation does not exist for certain lawyers, should such a burden actually be imposed by the Guidelines?

In the end, given the existing framework of the IBA Rules on the Taking of Evidence, which provides guidance on document disclosure, the decision was made to place the burden on the lawyers to inform the clients of the need to preserve and the necessity of producing relevant documents (see Guidelines 12, 14 and 15).

In connection with Guidelines 9-11 on submissions to the tribunal, the Task Force members discussed at length the differing obligations in this regard in different legal systems. The common lawyers’ the duty of candour requires disclosure of binding contrary authorities to the decisionmaker. Whereas civil lawyers may consider the duty of loyalty to the client to be the absolute principle in this area.

The Guidelines did not go as far as some common lawyers had proposed (requiring affirmative disclosure of binding authorities, for instance). Instead, Guidelines 9-11 focus on the truthfulness of representations that are made to arbitration tribunals.

Other issues proved more straightforward. As to ex parte communications with arbitrators, although they are permitted in some jurisdictions, the Task Force reached quick consensus that party representatives should not engage in ex parte communications with arbitrators in international arbitrations (Guideline 7), subject to the well-recognised exception of communications pertaining to the constitution of the tribunal (Guideline 8).

Regarding the preparation of witnesses prior to their appearance at a hearing, practices vary widely in domestic jurisdictions. Nevertheless, the Task Force recognized that the practice in international arbitration was for counsel to meet with witnesses to assist in the preparation of witness statements and to prepare for cross-examination. The Task Force was of the view that a lack of guidance on this issue could give an advantage to some counsel and parties if they thought they were permitted to meet with witnesses in arbitrations where opposing counsel did not view themselves as permitted to have those communications. Therefore, the Task Force’s approach, reflected in Guidelines 20-24, was to permit counsel to meet with witnesses to prepare their testimony, while ensuring that party representatives seek to ensure that witness statements and expert reports reflect the witnesses’ own evidence (Guidelines 21-22). As always, such guidance remains subject to any mandatory rules to the contrary.

As to conflicts of interest, although arbitrator conduct with respect to conflicts of interest was not addressed because it is the subject of the separate IBA Guidelines on Conflicts of Interest, the Task Force agreed to place the burden on counsel to decline a representation in a pending arbitration where a relationship exists between the counsel and arbitrator, which would create a conflict of interest after the tribunal has been constituted (Guideline 8).

The Guidelines took several positions intended to walk a line between common law and civil law traditions. They nevertheless drew criticism after the Guidelines were released. For instance, practitioners in some civil law jurisdictions opined that the Guidelines’ approach was too much in line with common law practice and not sufficiently attuned with civil law practice regarding the production of evidence. This was consistent with a similar perception developed in many civil law jurisdictions with respect to the guidance on document disclosure in the IBA Rules on the Taking of Evidence. However, many civil law practitioners use document disclosure even in cases that do not involve common law parties.

In the end, the Guidelines drew support from many corners and have been included by consent in procedural orders drafted by Tribunals in recent arbitrations in order to perform their core function of levelling the playing field.