Columbia Arbitration Day 2020

Special thanks to all the panel participants for their contribution to these summaries and to Columbia Arbitration Day 2020. The views presented in these summaries are the personal views of the panelists or ones that they were asked to argue.

INTRODUCTION

Author: Adnane Ayeb, CAD Chair[1]

Now in its eleventh year, Columbia Arbitration Day (CAD) again presented an opportunity to gather scholars, practitioners, and students to discuss current issues that drive the international arbitration community. Focusing on what makes international arbitration a fertile ground for legal innovation, this year’s theme “Breaking New Ground in International Arbitration” endeavored to explore uncharted territories for international arbitration and to revisit traditional legal fields and possibilities for their evolution. As the modern world rapidly evolves and becomes increasingly interconnected, international dispute resolution is confronted with unprecedented issues, forcing it to adapt. This interconnectedness was amply demonstrated by the unfortunate, yet unavoidable, cancellation of a panel on arbitration under China’s One Belt, One Road initiative, which was overtaken by the COVID-19 pandemic. With contractual freedom at its core, international arbitration nevertheless thrives in such an environment and can and should continue to play a central role in resolving many of the disputes of the future.

This year’s conference covered the extent to which international arbitration can provide an adequate answer to novel issues and navigate uncharted waters. The panels addressed environmental and human rights questions, reforming investment arbitration, practical ways to implement diversity, technology and decentralized justice, and conflicting ethical issues. Summaries of these discussions were prepared by members of the Columbia Arbitration Day Board and are provided below. The views presented in these summaries are the personal views of the panelists or reflect the positions the panelists were asked to argue and do not necessarily reflect the views of the American Review of International Arbitration, Columbia Law School, or the panelists’ affiliated organizations.

[1] Columbia Arbitration Day Chair, Columbia International Arbitration Association; J.D. Candidate 2021, Columbia Law School; Master 2 Candidate 2021, University of Paris I: Panthéon-Sorbonne.

PANEL 1 – HUMAN RIGHTS AND ENVIRONMENTAL DISPUTES IN INTERNATIONAL ARBITRATION

Author: Nadja Al Kanawati[2]

Panelists: Kabir Duggal,[3] Katerina Yiannibas,[4] Matthew Draper,[5] Elliot Friedman[6] and Anya George[7]

Columbia Arbitration Day 2020’s first panel addressed the question of whether or not international arbitration is the right forum to address human rights issues and how climate change-related disputes can effectively be addressed in international arbitration proceedings.

Moderated by Kabir Duggal, Lecturer in Law at Columbia Law School and Senior Associate at Arnold & Porter, the panel first discussed the new Hague Rules on Business and Human Rights Arbitration before turning to the ICC Task Force’s Report on Climate Change related Disputes. The panel ended with a debate of the motion “Investment Arbitration and Human Rights are like Oil and Water: The twain shall never meet.”

Katerina Yiannibas introduced the Hague Rules on Business and Human Rights Arbitration.[8] Prof. Yiannibas is a member of the Working Group and the Drafting Team for the Hague Rules. In conceiving the project, the Working Group recognized that international arbitration had potential to resolve disputes over obligations and commitments arising out of human rights violations on the part of businesses but that changes to arbitration rules were an important first step to provide some procedural safeguards for rightsholders. The Drafting Team is composed of 14 members with expertise in human rights, arbitration, operation of supply chains, anti-corruption, community organizing and other topics relevant to the elaboration of the Rules.[9] After establishing a Sounding Board and an initial public consultation with over 125 contributions to determine the scope of the Rules, the Drafting Team produced a first draft of the Rules for a second round of public consultation before finally launching the Hague Rules in December 2019. Prof. Yiannibas focused on some of the key provisions of the Rules, including, inter alia, transparency (Articles 38-43), where the aim of the drafters was to balance rightsholders’ interest in confidentiality and protection against intimidation versus the public interest in transparency. Prof. Yiannibas further addressed the possibility of collective redress and proceedings with third party beneficiaries, the selection of arbitrators, the applicability of business and human rights standards, emergency and expedited arbitration, and the promotion of other forms of collaborative settlement.

Matthew Draper shared his experience as a member of the ICC’s Task Force on Climate Change related Disputes, which released its report in December 2019.[10] While the business community seems to have understood the important impact of climate change on how business will be conducted in the future, Mr. Draper felt that for a long time, business lawyers did not understand the potential role they could play in this context. The Task Force was comprised of 130 lawyers from geographically diverse regions, representing private practice, arbitral institutions and academia. It identified what would qualify as a climate change-related dispute and determined three distinct types of cases: (i) disputes concerning specific transition, adaptation or mitigation contracts, i.e., contracts that specifically relate to climate change, such as contracts related to transitioning to renewable energy or to infrastructures to deal with severe weather changes; (ii) contracts not specifically related to climate change, where contract performance is impacted by climate change or government regulation in response to climate change; and (iii) submission agreements in non-commercial contexts. The Task Force concluded that it did not need to develop specific rules for climate change-related disputes. Rather, the Task Force found that arbitration’s procedural flexibility means that existing frameworks may be employed to handle such disputes. Some of the many procedural options the Task Force highlighted include the appointment of arbitrators with relevant climate change expertise, use of experts, and, in appropriate circumstances, dispute boards. The Task Force Report includes numerous sample arbitration clauses, terms of reference, and procedural orders adopting such options. Mr. Draper also pointed out that since climate change-related disputes often have broader public implications, arbitration of those disputes may require greater transparency or roles for third parties as amicus curiae.

Anya George and Elliot Friedman then debated the suitability of investment arbitration proceedings as a forum to resolve human rights disputes. For the purposes of the debate, they were asked to assume a certain position, which does not necessarily reflect their actual views.

Elliot Friedman was tasked with arguing in favor of the motion that human rights issues have no place in investment arbitration beyond the scope in which they are already an integral part of such disputes today. According to Mr. Friedman, it is obvious that international investment law cannot be read and interpreted in a way that violates the most fundamental rules of protection of human rights.[11] Relying on case law such as Biloune v Ghana,[12] Mr. Friedman argued that human rights violations should not lead to independently actionable claims. Such violations may impact the investor’s claim in other ways, including the possibility that an investment in violation of human rights standards may not meet the jurisdictional requirements under the applicable BIT. Mr. Friedman argued further that investor state tribunals may lack the necessary expertise to adjudicate human rights issues, creating the risk of setting incorrect or inconsistent standards. Rather, the interpretation of human rights obligations should be left to the specialized bodies set up for this purpose, such as the Human Rights Committee. Furthermore, rightsholders also face hurdles in accessing the investor state system to resolve their disputes: they depend on an investor bringing a claim and on the state raising a counterclaim on the basis of human rights violations by the investor.

Anya George argued against the motion that human rights and investment arbitration are incompatible. Ms. George posited that there is a gap in investment treaty jurisprudence where states are seeking to rely on human rights standards to justify measures taken[13] and where states seek to apply human rights standards to investors.[14] It is not sufficient to rely on domestic human rights standards in the host state as such obligations typically do not apply directly to investors. The standard set out in the Phoenix Action decision[15] is not particularly helpful in practice since it seems unlikely that an investor would bring claims where its investment was made in pursuance of genocide or slavery. Furthermore, Ms. George argued that there are many important policy reasons why investor state tribunals can and should address human rights issues. In particular in light of the current legitimacy crisis in investment arbitration, taking into account all aspects of a dispute, including impacts of the investment on human rights, could go a long way to relegitimize the system. Investment tribunals should not operate in a vacuum: human rights law is an integral part of international law — tribunals cannot simply disregard it when adjudicating investment treaty disputes.[16] In fact, arbitral tribunals are well positioned to acquire the necessary expertise (or expert advice) to adjudicate human rights issues and the inherent flexibility of arbitration allows arbitrators to respond to changes in human rights standards. Finally, allowing arbitral tribunals to address human rights violations will not preclude rightsholders from bringing their claims in other international fora. Instead, it simply creates an additional avenue to achieve redress.

While there are certainly still many issues open to discussion, what has become abundantly clear is that both human rights and environmental concerns will increasingly affect disputes before arbitral tribunals and dispute resolution practitioners will have to find innovative and effective ways to resolve these issues.

[2] Senior Associate, WilmerHale. At the time of CAD 2020, Nadja was a Co-Chair of CAD, Columbia International Arbitration Association and LL.M. Candidate 2020, Columbia Law School.

[3] Dr. Kabir Duggal is an attorney in Arnold and Porter’s New York office focusing on international investment arbitration, international commercial arbitration and public international law matters, serving as both as counsel and arbitrator. Dr. Duggal is a Lecturer-in-Law at Columbia Law School, teaching “International Investment Law and Arbitration.”

[4] Lecturer in Law, Columbia Law School; Associate Professor, University of Deusto.

[5] Partner, International Arbitration and Natural Resources Disputes, Draper & Draper LLC.

[6] Partner, Disputes, litigation and arbitration, Freshfields Bruckhaus Deringer.

[7] Partner, Dispute Resolution Group, Schellenberg Wittmer.

[8] The Hague Rules on Business and Human Rights Arbitration, Ctr. for Int’l Legal Cooperation (Dec. 2019), https://www.cilc.nl/cms/wp-content/uploads/2019/12/The-Hague-Rules-on-Business-and-Human-Rights-Arbitration_CILC-digital-version.pdf.

[9] For members of the working group and drafting team, see The Hague Rules on Business and Human Rights Arbitration, Ctr. for Int’l Legal Cooperation, https://www.cilc.nl/project/the-hague-rules-on-business-and-human-rights-arbitration/ (last visited Mar. 16, 2020).

[10] Resolving Climate Change Related Disputes through Arbitration and ADR, Int’l Chamber of Commerce (Nov. 2019), https://iccwbo.org/publication/icc-arbitration-and-adr-commission-report-on-resolving-climate-change-related-disputes-through-arbitration-and-adr/.

[11] Cf. Phoenix Action Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award, ¶ 78 (Apr. 15, 2009), https://www.italaw.com/sites/default/files/case-documents/ita0668.pdf (“To take an extreme example, nobody would suggest that ICSID protection should be granted to investments made in violation of the most fundamental rules of protection of human rights, like investments made in pursuance of torture or genocide or in support of slavery or trafficking of human organs.”).

[12] Biloune v. Ghana, Award on Jurisdiction and Liability (Ad hoc Oct. 27, 1989), https://jusmundi.com/en/document/decision/pdf/en-biloune-and-marine-drive-complex-ltd-v-ghana-investments-centre-and-the-government-of-ghana-award-on-jurisdiction-and-liability-friday-27th-october-1989.

[13] Cf. Philip Morris Brands Sàrl v. Oriental Republic of Uru., ICSID Case No. ARB/10/7, Award (July 8, 2016), https://www.italaw.com/sites/default/files/case-documents/italaw7417.pdf.

[14] Cf. Urbaser S.A. v. Argentine Republic, ICSID Case No. ARB/07/26, Award (Dec. 8, 2016), https://www.italaw.com/sites/default/files/case-documents/italaw8136_1.pdf.

[15] Phoenix Action.

[16] Cf. Urbaser.

PANEL 2 – REFORMING INVESTMENT ARBITRATION: WORKING GROUP III AND ECT[17]

Author: Mirjam Escher[18]

Panelists: Patrick W. Pearsall,[19] Nathalie Voser,[20] Graham Coop[21] and Patricia Nacimiento[22]

The second panel of Columbia Arbitration Day 2020 was concerned with the reforms proposed in the field of investment arbitration. While there have been numerous discussions on the struggles of investment arbitration – especially in the European Union — this panel focused on the specific solutions, in particular the steps proposed by the UNITRAL Working Group III and the modernization of the Energy Charter Treaty. The two reform initiatives were presented individually and later discussed in light of their common features.

The panel was moderated by Patrick W. Pearsall who started the discussion off by addressing the position investment arbitration is taking in our current times. He highlighted that the paradigm that once governed international investment law is shifting.

The panel then moved to its first section: The reform efforts of the UNCITRAL Working Group III which has just completed its 38th session in January 2020. Working Group III began its work in November 2017 and is comprised of member States, observer States, as well as observer inter-governmental and non-governmental organizations. UNCITRAL entrusted the Working Group with a broad mandate to identify concerns regarding investor-State dispute settlement. The Group has distinguished three areas of concern: (1) the consistency, coherence, predictability, and correctness of arbitral awards;[23] (2) arbitrators and decision-makers;[24] and (3) the cost and the duration of investor-State dispute settlement cases.[25]

The panelists began the discussion by introducing one of the proposed solutions: The Advisory Centre.[26] Following the model of the Advisory Centre on WTO law (ACWL), the Centre would provide legal advice on investment law and support to States in sharing best practices. Mr. Pearsall raised the issue of staffing such a Centre. He pointed out that while States would presumably be open to accepting free trainings, it may be crucial to find experienced practitioners willing to work in this advisory capacity.

Providing a practitioner’s perspective on this topic, Nathalie Voser was confident that such a Centre could be a helpful support to investors in addition to States. Small and mid-sized companies especially could gain valuable resources through such a Centre. It would be crucial for the Centre’s acceptance not only to provide support to States and thereby disadvantage investors without access to comparable resources. Regarding the issue of when the Advisory Centre would be most efficiently included in the arbitral process, Ms. Voser submitted that the Centre should support the parties before the constitution of the arbitral tribunal. Thereby, it would be able to fulfill its educational mission to the full extent.

The audience raised the question of whether an arbitrator’s prior work as counsel to States through the Advisory Centre should bar this person’s subsequent nomination as arbitrator. The panelists answered that the prospective arbitrator should disclose this fact but – depending on the circumstances – might not be precluded from the nomination. However, the nature of investment arbitration is to be kept in mind and the disclosed information much be considered carefully.

In a next step, the panel addressed the topic of security for costs and the elimination of multiple proceedings in investment arbitration under Working Group III. The question was raised what rules for security for costs should apply when third-party funders are involved. It was stated that third-party funders are driven by business concerns and market realities rather than legal concerns. The panelists disagreed, however, on whether the fact that third-party funders are financing an investor should automatically result in ordering security for costs. While the argument was made that the market would take care of third-party funders supporting frivolous claims, others disagreed and called for more regulation in this area. Patricia Nacimiento argued that security for costs was a concern that must be considered carefully and the integrity of the system of investor-State dispute settlement must be kept in mind.

Graham Coop introduced the Energy Charter Treaty (ECT) and the European Commission’s proposal for modernization. He explained that criticisms had been raised concerning legitimacy, consistency and transparency of the ECT as well as alleged lack of support for environmental sustainability in the instrument. However, he showed the audience a graph of the distribution of ECT energy cases by energy sources, highlighting the high number of renewable energy cases.

Especially regarding the consistency and clarity of legal standards—such as fair and equitable treatment (FET) and expropriation—the reform attempts regarding the ECT and the concerns raised by the Working Group III align. In regards to the modernization of the ECT, the EU has formulated the goal of “creating a coherent and up-to-date legally binding framework that provides for legal certainty and ensures a high level of investment protection while respecting the ECT Contracting Parties’ right to regulate.”[27] Ms. Nacimiento underlined the connection between the different attempts of reform by addressing the common areas of concern and the need to level the playing field in investor-State dispute settlement.

Mr. Pearsall ended the discussion by addressing the audience. He spoke especially to the students and young practitioners just entering the world of investment arbitration. He called on them to join the discussion and get actively involved in these dynamic times. It is a rare moment of possible change that should not just pass by.

[17] Special thanks as well to Gaela Gehring Flores, Arnold & Porter, without whose advice and guidance the panel discussion would not have been the same.

[18] Associate, Schmitz & Partner Rechtsanwälte. At the time of CAD 2020, Mirjam was a Co-Chair of CAD, Columbia International Arbitration Association and LL.M. Candidate 2020, Columbia Law School.

[19] Partner, Allen & Overy LLP. At the time of CAD 2020, Mr. Pearsall was a Partner at Jenner & Block.

[20] Partner, Volterra Fietta.

[21] Partner, Herbert Smith Freehills.

[22] Founding Partner, Rothorn Legal. At the time of CAD 2020, Ms. Voser was a Partner at Schellenberg Wittmer.

[23] Secretariat of UN Comm’n on Int’l Trade Law (UNCITRAL) Working Grp. III, Possible reform of investor-State dispute settlement (ISDS): Consistency and related matters, U.N. Doc. A/CN.9/WG.III./WP.150 (Aug. 28, 2018)

[24] Secretariat of UNCITRAL Working Grp. III, Possible reform of investor-State dispute settlement (ISDS): Ensuring independence and impartiality on the part of arbitrators and decision makers in ISDS, U.N. Doc. A/CN.9/WG.III/WP.151 (Aug. 30, 2018); Secretariat of UNCITRAL Working Grp. III, Possible reform of investor-State dispute settlement (ISDS): Arbitrators and decision makers: appointment mechanisms and related issues, U.N. Doc. A/CN.9/WG.III/WP.152 (Aug. 30, 2018).

[25] Secretariat of UNCITRAL Working Grp. III, Possible reform of investor-State dispute settlement (ISDS) — cost and duration, U.N. Doc. A/CN.9/WG.III/WP.153 (Aug. 31, 2018).

[26] Secretariat of UNCITRAL Working Grp. III, Possible reform of investor-State dispute settlement (ISDS): Advisory Centre, U.N. Doc. A/CN.9/WG.III/WP.168 (July 25, 2019).

[27] Energy Charter Secretariat, Decision of the Energy Charter Conference, CCDEC 2019/08 STR (Oct. 6, 2019), https://www.energycharter.org/fileadmin/DocumentsMedia/CCDECS/2019/CCDEC201908.pdf.

PANEL 3A – FROM PROMISE TO PRACTICE: HOW TO RAISE THE BAR FOR DIVERSITY IN INTERNATIONAL ARBITRATION?

Author: Andrea Avila Salgado[28]

Panelists: Erin Thomas,[29] Arjun Agarwal,[30] Ndanga Kamau,[31] Yasmine Lahlou[32] and Karima Sauma[33]

In last year’s edition of Columbia Arbitration Day, we hosted a panel celebrating the important steps made towards moving the needle on diversity in international arbitration and presenting the challenges that the system still faced. In this year’s edition of CAD, we hosted another panel on the topic of diversity with two main goals: the first was to assess the landscape of the current initiatives and their limitations in promoting diversity in the international arbitration practice; and the second was to provide concrete guidance on how to enhance diversity with a multi-stakeholder approach.

Erin Thomas of Covington moderated the discussion with a panel of speakers composed of Arjun Agarwal of Chevron, Ndanga Kamau of Ndanga Kamau Law, Yasmine Lahlou of Chaffetz Lindsey, and Karima Sauma of the International Center for Conciliation of the American Chamber of Commerce in Costa Rica. Even though the conversation had two primary aims, Ms. Thomas provided a unique platform for the audience to voice their concerns and integrated them in the panel’s discussion. Below is a brief guide through the panel’s thought-provoking conversation and its main takeaways.

UNDERSTANDING THE VALUE OF THE DIVERSITY INITIATIVES WITH A CRITICAL VIEW

            Despite the fact that diversity programs started in big law in the early 2000s, less than 20% of tribunal-appointed arbitrators are women. While Arjun Agarwal recognized the progress made in increasing the numbers of appointments, he remarked that the numbers have remained unchanged in years and are not reflective of the proportion of practitioners in the current marketplace. He also highlighted the importance of law firms as training grounds for the professionals of the arbitration community. Yasmine Lahlou, on her part, acknowledged the meaningful progress already made. Ms. Lahlou highlighted the importance of starting small through providing more visibility to minorities in arbitral lists, conferences and networking platforms instead of calling for quotas. She observed that while there were concerns that many actors would support the initiatives solely for self-publicity, some initiatives, including the ERA Pledge and institutional programs such as those of the ICC, have demonstrated material impact through published statistics. In this line, Karima Sauma commented on the utility of tools like Arbitrator Intelligence to tackle the imbalance of information. Ms. Sauma highlighted how this questionnaire-based arbitrator selection proposal creates more opportunities for diverse arbitrators to be seen for their case management skills and competence. Finally, Ndanga Kamau pointed out two limitations on the initiatives: lack of clear metrics and expectations. Ms. Kamau asserted that initiatives push for more representation without establishing what percentage of representation would be satisfactory or how much time would be necessary to achieve the expected outcomes. She explained that while these proposals are beneficial and we should continue executing them, we should be aware of their limitations as well.

THE NEED FOR A PARADIGM SHIFT ACCOMPANIED WITH ALIGNED INCENTIVES

            The panelists agreed that a change of mentality is needed in order to further diversity among adjudicators in a more efficient way. From Mr. Agarwal’s perspective as an in-house counsel, ideally, this mindset should become so ingrained that a corporate client does not need to direct its external counsel to bring back a list with actual diverse arbitrators. In this line, while the panelists agreed that the main incentive when choosing an arbitrator is and will remain his or her ability to persuade and win cases, they do not believe that offering a diverse list of arbitrators compromises quality. Indeed, in Ms. Thomas’ view, many complex investor-State disputes require socio-political and cultural knowledge, and as counsel, she believes that lawyers should re-evaluate the alternatives and ask themselves whether a non-diverse pool of arbitrators can possibly include the best candidates that will give the best results for these cases. Building on this idea, as Ms. Lahlou and Ms. Kamau added that even though the nexus to the dispute is an important criterion, we should encourage parties to go beyond that principle because the system should strive to put the best qualified people, male or female, in the front lines, and to make them available to users regardless of their geography and demographics.

IS THE LACK OF DIVERSITY A WOMEN’S DECISION?

            When faced with the question of whether the shortage of female representation in the field is due to the personal choices of women professionals, the speakers found it hard to believe that this was the sole explanation to such a complex issue. Whilst they conceded that ambition and fire are key, they emphasized that ambition is nothing without opportunities. In their eyes, law firms and organizations play an important role and must reassess the distributions of tasks and opportunities – from client engagement to administrative responsibilities. In addition, law firms must be able to implement structural changes in their working conditions to materially foster diversity, for example, by facilitating a proper parental leave policy. Diverse arbitration rosters are not enough and while they might represent a quick solution, they are not able to rectify the root problems by themselves.

EVERY STAKEHOLDER SHOULD PLAY A ROLE IN THIS PARADIGM SHIFT

            Panelists agreed that measures need to be taken collectively in order to have a meaningful impact. Arbitral centers take into account many factors as they work to promote diversity – the nature of the case, the jurisdiction of the center, the availability of diverse arbitrators in the region – however, even if the recommendations regarding transparency and roster diversification are implemented, the clients have the last word. Karima Sauma stressed that the clients need to press lawyers harder to get creative and nudge them to integrate diversity in their proposals. From the law firm’s perspective, apart from the structural changes mentioned above, other initiatives such as foreign associate programs and training for professionals of developing jurisdictions should also be encouraged. For Yasmine Lahlou, when a candidate checks all the boxes, law firms need to take a leap of faith and reflect whether they have any convincing reason not to do so. In addition, as an arbitrator, Ms. Kamau complemented this view by affirming the importance of visibility and taking away the barriers that would not allow the background work of ambitious and talented women to be seen. And finally, turning to the client’s role, there is a major long-term responsibility to engrain understanding of diversity’s value in arbitration tribunals. For Mr. Agarwal, the best efforts are those that cultivate within counsel the fundamental belief that embracing diversity will actually increase their chances of winning.

[28] Intern, United Nations. At the time of CAD 2020, Andrea was a Co-Chair of CAD, Columbia International Arbitration Association and LL.M. Candidate 2020, Columbia Law School.

[29] Partner, Covington & Burling LLP.

[30] Senior Global Litigation Counsel, Chevron.

[31] Arbitrator, Ndanga Kamau Law.

[32] Partner, Chaffetz Lindsey LLP.

[33] Executive Director, International Center for Conciliation and Arbitration, American Chamber of Commerce in Costa Rica.

PANEL 3B – TECHNOLOGY IN ARBITRATION AND THE ADVENT OF DECENTRALIZED JUSTICE: BALANCING INNOVATION WITH FAIRNESS, DUE PROCESS, SECURITY AND PRIVACY

Author: Craig D. Gaver[34]

Panelists: Sophie Nappert,[35] Hugh Carlson,[36] Jennifer Permesly[37] and Federico Ast[38]

Following Judge Donoghue’s keynote speech, an eager audience convened to discuss important issues of technology under an ambitious title and theme. Artfully moderated by Sophie Nappert, the panelists’ presentations perhaps could be viewed as addressing the past, the present, and the future of technology in arbitration, as follows.

Hugh Carlson began by boldly challenging the fundamental premise of the panel. His view honors international arbitration’s past—not in a pejorative sense or inherently opposed to the march of progress, but in the sense that the way we have practiced our craft of international arbitration is likely to continue without significant disruption. His view of technological progress is welcome but incremental. The primary reason for this is that technological advances in general, and artificial intelligence in particular, are primarily concerned with processing large quantities of data. While this might replace some tasks performed by junior associates, it is unlikely to affect the tasks of senior associates and partners of contextualizing what the data represents and advancing arguments before a tribunal. Indeed, Mr. Carlson drew a distinction between litigation—traditionally very data-heavy—versus international arbitration, which has instead placed a higher premium on oral advocacy and direct submissions. However, the extent to which advances in data processing will make litigation a more efficient method of dispute resolution over arbitration for that reason might cause a shift in clients’ preferences. In sum, Mr. Carlson welcomed the coming changes in the long run wrought by technology, but expressed cheerful skepticism about how dramatic they would be in the near term.

Jennifer Permesly followed by explaining the present state of play concerning technological resources. A member and driving force behind the IBA Arb40 Subcommittee Guide on Technology Resources for Arbitration Practitioners, Ms. Permesly explained that the purpose of the subcommittee was to collect and explain the multitude of different resources that practitioners could employ in an arbitration, including in the realms of audio and videoconferencing; document collection, review, and production; data management and transfer; advocacy presentations; virtual and augmented reality; analytical tools; translation and interpretation; and cybersecurity and data privacy.^[21] Ms. Permesly gave thorough illustrations of several of the software and tools, highlighting the efficiency gains that counsel and tribunals alike could enjoy. Finally, she raised several important issues concerning how changes in technology are changing the way humans process and communicate information, including attention drift, digital amnesia, and an increasingly symbiotic relationship with our technology, arguing that the use of technological innovation may become critical for the persuasiveness and effectiveness of our advocacy.^[22]

Following discussions of the past and present, Federico Ast gave the panel a glimpse into the future of international dispute resolution. Dr. Ast’s company, Kleros, is an “alternative-alternative dispute resolution” mechanism that uses smart contracts, blockchain, and crowdsources to resolve disputes consensually.[23] Kleros represents decentralized justice, in which international dispute resolution can be an entirely denationalized mechanism. He provided an extended illustration using the example of Alice and Bob, two participants in the gig economy living across the world who entered into a service agreement embodied in a smart contract. Remuneration under their agreement might only be $500—far too small a sum to go to international arbitration as traditionally practiced. In the event of a dispute, resolution would be effected by a crowdsourced “tribunal.” Members of this tribunal—ordinary individuals just like Alice and Bob—would reach their decision through the use of game theory and Schelling points.^[24] Decision-makers would be rewarded in the long run for reaching “correct” decisions (i.e., decisions that command a majority) but receiving modest amounts of pay, but “punished’ for failing to reach the correct decision by failing to receive pay. The decision-makers are thus incentivized to vote in a way they would expect their peers to vote, forming a consensus. Dr. Ast provided a number of examples where Kleros’ decentralized justice would have a positive effect, such as the sharing economy, small intellectual property disputes, or even e-sports disputes. He clarified that Kleros is not meant to compete with or replace international arbitration, but will complement it by providing an analogous service for disputes that traditional international arbitration does not reach. For this reason, practitioners and tribunals might study the decentralized justice model to consider what lessons can be drawn and applied to the practice of international arbitration as we know it.

The audience’s rapt attention and thoughtful questions proved the panel’s success. The panelists’ persuasive and informative views demonstrated that the international arbitration community is ready for whatever brave new world awaits it.

[34] Managing Editor, Yearbook on International Investment Law and Policy. At the time of CAD 2020, Craig was a Co-Chair of CAD, Columbia International Arbitration Association and LL.M. Candidate 2020, Columbia Law School.

[35] Co-Founder, ArbTech; Arbitrator, 3 Verulam Buildings, Gray’s Inn.

[36] Founder & CEO, Kleros.

[37] Managing Director, Three Crowns.

[38] Partner, International Litigation and Arbitration, Skadden, Arps, Slate, Meagher & Flom LLP.

[39] Technology Resources for Arbitration Practitioners, Int’l Bar Ass’n, https://www.ibanet.org/technology-resources-for-arbitration-practitioners.aspx.

[40] See Henry H. Wilmer et al., Smartphones and Cognition: A Review of Research Exploring the Links between Mobile Technology Habits and Cognitive Functioning, 8 Frontiers Psych. 605 (2017).

[41] About Kleros, Kleros, https://kleros.io/about (last visited Apr. 26, 2021).

[42] See generally Thomas Schelling, The Strategy of Conflict (1960).

PANEL 4 – DEBATE: HOW TO RESOLVE CONFLICTING ETHICAL RULES

Author: Ondrej Cech[43]

Panelists[44]: George A. Bermann,[45] Julie Bédard,[46] Eduardo Zuleta,[47] Felix Dasser,[48] Ari D. MacKinnon,[49] Joseph E. Neuhaus[50] and Sven Volkmer[51]

The final panel of the Columbia Arbitration Day 2020 concerned the issue of conflicting ethical rules governing practice of counsel in different jurisdictions. The panel was constructed as a debate on the motion: “There should be a working group to create binding rules for counsel ethics in international arbitration.” The panelists were assigned roles of judges and debaters to present the respective positions on the issue.

The debate was introduced by Professor George A. Bermann in the role of chief judge. He provided the audience with a brief explanation of the issue at hand and its practical implications. Counsel ethics is an especially problematic field, even as compared to arbitrator ethics, due to the incomparably greater moments over the course of an arbitral proceeding at which counsel have an opportunity to make a decision or take a step having ethical implications. Unlike arbitrators, whose ethical obligations are addressed by various laws and rules in a roughly comparable vein, there is much less consensus over norms of counsel conduct. As counsel are based in a great many different jurisdictions, the conduct of counsel is governed by a great many different bar rules and national laws. Beyond that, the law of the arbitral seat may always have something to say. The IBA Guidelines on Party Representation in International Arbitration go some distance in building a consensus, but even they cannot override national norms having binding force. In extreme circumstances, the same conduct may even be ethically required to do something in one jurisdiction but ethically prohibited to do so in another. The paradigmatic example is witness preparation. Finally, discrepancies in ethical standards governing opposing counsel from different jurisdictions in a given case may produce an uneven playing field, which is obviously an area of concern. Professor Bermann concluded his introduction by presenting the motion and inviting the audience to take a preliminary vote on the motion. The vote showed that a slight majority of the participants was in favor of the motion.

The first speaker in favor of the motion was Joseph E. Neuhaus. He explained that the current situation results in an unequal playing field where lawyers from certain jurisdiction have an unfair advantage over those from other jurisdictions. Mr. Neuhaus provided a number of examples of issues on which national rules differ on matters that arise in international arbitration, including witness preparation, contacts with persons represented by other counsel, counsel’s duties when a witness or client gives false testimony, and the propriety of contingent fees. National courts and disciplinary authorities, arbitral institutions and arbitral tribunals have not dealt with the problem and often are not in a position to do so. Mr. Neuhaus proposed that a working group could draft a model law or a treaty that would establish a standard for counsel conduct in international arbitration, which would clearly avoid conflicting national rules. This would result in leveling the playing field and establishing global clarity in applicable rules. IBA Guidelines represent an international compromise which corresponds to best practices of international practitioners, and would be useful starting point for the working group preparing the model law or treaty.

The first speaker against the motion, Felix Dasser, followed with a reaction. First, he established that the differences between jurisdictions do not actually represent fundamentally different understandings of ethics in the common sense of the term but rather minor variations in regional customs of professional conduct and procedure. Keeping that in mind is crucial to keep the discussion rational and objective. Second, the debates on this topic seem to search for a problem to a solution rather than a solution to a problem. The reason why there are no harmonized rules after a decade of debates is not that the practitioners are unable to create such rules but that such rules are unnecessary. An international working group organized by the Swiss Arbitration Association as a reaction against the IBA Guidelines on Party Representation failed to identify real problems that needed to be addressed by global rules. Third, instead of a global level playing field, there is only a need for equality between counsels in given arbitration proceedings. That is the responsibility of arbitral tribunals (and can mostly be dealt with by Procedural Order No. 1 if there is an obvious conflict of professional rules) and not model laws and treaties. It does not make sense to impose the same rules of conduct on, e.g., North American cases and on Swiss-Chinese cases. General rules to prevent bad behavior are anyway not just useless (bad apples do not follow rules), but also likely to be counterproductive by allowing misbehaving counsel to disrupt proceedings even more.

Ari D. MacKinnon continued as the second speaker in favor of the motion. He explained that the notion that the ethical issues would be addressed by arbitral tribunals at the outset of proceedings is unrealistic. Tribunals generally do not address ethical issues until a problem arises and at that point it may be too late. This ad hoc solution also does not provide a sufficient level of clarity because each proceeding would differ depending on the background of the counsels and arbitrators. Using modified IBA Guidelines as a state-of-the-art instrument in governing counsel ethics in a form of a treaty or model law would ensure that no uncertainties ever arise. Mr. MacKinnon further suggested that the proposed model law or treaty should have an opt out mechanism which would allow parties to reach a different agreement on counsel ethics if they so desire. As a result, this would be a win for everyone.

The second speaker against the motion was Sven Volkmer who reacted to arguments of Mr. MacKinnon. He observed that the IBA Guidelines are not universally accepted as an international compromise that can be easily turned into a model law.  He illustrated how tribunals are already equipped to resolve issues regarding counsel conduct (e.g., through awards of costs) where this is necessary to safeguard the integrity of the proceedings.  He warned that tribunals should not be burdened with policing counsel ethics beyond what is necessary to safeguard the arbitral proceedings as this would increase costs and distract from the resolution of the parties’ dispute. Mr. Volkmer presented examples from jurisdictions where international arbitration communities successfully lobbied their bar organizations to amend the applicable rules to include exceptions for international arbitration, such as witness preparation. Such measures are more effective and more appropriate than trying to create universal rules of ethics for the entire world.

In the rebuttal against the motion, Felix Dasser pointed out first that there is a case to be made for competition between different styles of arbitration, second that the arbitration community does not want to turn to the community of states to regulate professional conduct, and third that the IBA Guidelines, having been modeled on US litigation standards, are not widely accepted outside of North America and thus unsuitable for an international model law in any case. In response, Joe Neuhaus noted that the international community was well used to international instruments governing the intersection between arbitration and national law, giving as examples the UNCITRAL Model Law on International Commercial Arbitration, the UNCITRAL convention and rules on transparency in investor-state arbitration and, relatedly, the Singapore Convention on Mediation.

The debate continued with questions from the bench. The first question was posed by Julie Bédard who asked the speakers in favor of the motion about whether they consider realistic that the states would actually adopt such a model law or treaty. Ms. Bedard also noted that in some jurisdictions judges consider that they have exclusive jurisdiction over ethical matters, including the conduct of counsel in arbitration cases. Further questions were posed by Eduardo Zuletawho shared the concern of Ms. Bedard and wondered why an institutional harmonization would not suffice. He also wanted to hear further details about the proposed model law and what would be its sanctioning mechanism. After further series of questions equally critical of both positions, Professor Bermann made an alternative proposal to reconcile the two sides of a dispute. He suggested that the working group could create an inventory or checklist of ethical issues, some of which may have a standard solution. Those on which views may and do differ could be addressed at the outset of the proceedings – for example during a case management. The debate was concluded by another vote of the audience which showed a slight shift of the majority against the motion.

[43] Senior Associate, Zeiler Floyd Zadkovich. At the time of CAD 2020, Ondrej was a CAD Officer, Columbia International Arbitration Association and LL.M. Candidate 2020, Columbia Law School.

[44] Further thanks to Preeti Bhagnani, Partner, White & Case, and Cyrus Benson, Partner, Gibson, Dunn & Crutcher, who participated in preparation of the debate but were unable to attend in person.

[45] George A. Bermann, Gellhorn Professor of Law and Money Professor in European Union Law, Columbia Law School

[46] Partner, International Litigation and Arbitration, Skadden, Arps, Slate, Meagher & Flom.

[47] Adjunct Professor, Georgetown University Law Center.

[48] Partner, Homburger.

[49] Partner, Cleary Gottlieb Steen & Hamilton.

[50] Partner, Sullivan & Cromwell LLP.

[51] Partner, White & Case.