TagTime with Prof. Catherine Rogers – Does International Arbitration Enfeeble or Enhance Local Legal Institutions?*

Author: Nika Madyoon**

On July 1, 2020, Professor Catherine Rogers† appeared on Delos’ webinar series, TagTime, to discuss the dynamic relationship between international arbitration and local legal institutions.[1] In this episode, she talked listeners through the question of whether international arbitration serves as an effective tool for the development and improvement of the rule of law, or instead, acts as a “parasite” undermining local legal institutions.

Professor Rogers argued that the former description is more accurate, highlighting various synergies between international arbitration and domestic systems. But she noted that the question is a complicated one. Indeed, many scholars have addressed it and it has given rise to considerable empirical research. The question itself springs from a common critique of investment arbitration: namely, that it diverts foreign investors away from local legal systems, thereby reducing the incentive to improve them. “Outsourcing” justice in this way is said to leave domestic institutions behind. Professor Rogers noted that the truth of this critique would be particularly damning to the field of investment arbitration, given that one of its primary “selling points” is its ability to enhance local governance and increase adherence to the rule of law, both internationally and domestically.

In this episode, Professor Rogers explores topics from a book chapter she co-authored with Christopher Drahozal.[2] She argues that the relationship between international arbitration and local institutions is a symbiotic one, which has the potential to foster the development of local rule of law. She sets forth two propositions that help to explain this phenomenon.

• The first is that international arbitration creates unique, valuable professional opportunities for local legal professionals. Professor Rogers notes that, importantly, there is no firm barrier between commercial and investment arbitration; that is, the lawyers, experts, and clients who participate in one also participate in the other. And this overlap produces a fertile ground for professional opportunities from the perspective of local practitioners.
• The second is that international arbitration gives local legal professionals “a readymade tool kit to implement local rule of law reforms and incentives to pursue them.”

To illustrate how these propositions play out on the ground, Professor Rogers walked listeners through the process by which international arbitration permeates local legal systems, and ultimately produces a positive effect on the rule of law. The process is as follows:

• First, local legal professionals have a desire—an “enlightened self-interest,” in Rogers’ words—to access the aforementioned professional benefits associated with international arbitration.
• International arbitration then provides them with detailed laws, rules and standards designed to promote effective arbitration in their respective jurisdiction(s). Examples include the New York Convention,[3] the UNCITRAL Model Law,[4] various arbitral rules (such as the IBA Rules on the Taking of Evidence[5]), and certain standards of professional conduct.
• Next, local professionals introduce legislative reforms, judicial training, reforms in legal education, and attorney training. They take the materials described above and teach them at the local level. The effects of this step are two-fold: professionals are promoting themselves as arbitration experts in their jurisdictions, as well as introducing these international standards in a manner that is more organic than having them imposed from the outside.
• Ultimately, these arbitration-related reforms are rendered more effective because they are implemented by local professionals.

A common criticism of international law is that its standards are not effectively absorbed into domestic legal systems. While States may sign multilateral treaties to demonstrate adherence to international principles, the argument goes, they do not internalize the rules or norms therein. There is a rich body of scholarship, however, that goes against this idea, particularly emanating from the field of public international law. Professor Rogers referenced several legal theories advanced by scholars to this effect. These include Anne-Marie Slaughter’s theory about the way professional networks of international and domestic legal practitioners enhance the incorporation of international standards into local law,[6] as well as Ryan Goodman and Derek Jinks’ theory of socialization, persuasion, and acculturation to explain domestic acceptance of international human rights standards.[7]

The process that Professors Rogers and Drahozal delineated (described above) builds on some of these theories. Professor Rogers noted that international arbitration is, in fact, “an even better test case for the theories and provides more substantial opportunity to operationalize [them].” There are two primary reasons for this. The first is buy-in from well-positioned legal professionals (motivated by self-interest) who have the ability to implement reforms locally. The second is that unlike generalized public international law norms, international arbitration “has essentially disaggregated big norms into a bunch of specific rules” and detailed standards, which are more readily implementable.

The next question, naturally, is what concrete impact(s) this process of internalization will have. How does international arbitration actually end up enhancing the local rule of law? Professor Rogers provided examples of what these effects would look like. One illustrative example is related to conflicts of interest; local practitioners “trained in international standards for conflicts of interest are less likely to accept much lower standards in domestic arbitration or in national court litigation.” Another example is judicial training. When a jurisdiction works to train judges in understanding the New York Convention, for instance, the byproduct is the provision of skills and methodologies for the proper interpretation of treaties more generally. Professor Rogers explains that this training has spillover effects at the local level: “a judge trained to accurately interpret international arbitration laws and treaties does not easily take a different approach when applying domestic law.” She cites Peru and Georgia as case studies for the effective internalization of international arbitration norms, and the positive impact this can have on local legal institutions.

When asked about the potential to create a universal (or close to universal) code of ethics in international arbitration, Professor Rogers explained that there do need to be certain core standards in place, and that the community must identify “fundamentals we are uncompromising about.” However, she noted that there is also room for diversification, and that being sensitive to cultural or substantive differences is “important and healthy.”

Some listeners raised concerns about international arbitration stifling the development of national commercial law, thereby enfeebling local legal institutions. Professor Rogers’ response was that rather than viewing international arbitration and local institutions as competitive, we ought to search for synergies. She highlighted institutional efforts (from the ICC and others) to publish redacted versions of awards as what she called “a partial solution” to the problem of atrophying local commercial law.

In addition to her scholarship in international arbitration and professional ethics, Professor Rogers has taken matters into her own hands when it comes to enhancing the appeal of international arbitration across jurisdictions. She is the founder of Arbitrator Intelligence,[8] a legal tech start-up she created with the goal of “leveraging local insights to promote transparency, accountability, and diversity globally.” Rogers founded the project to level what she described as an “unfair playing field.” Due to the confidentiality of awards, large practitioners often have access to much more information about arbitrators than newcomers (such as smaller firms or regional players) do. By gathering information at the end of arbitrations through an online, confidential questionnaire and producing Arbitrator Intelligence Reports available for sale to anyone, the company “universalize[s]” access to this information. This way, newcomers can choose arbitrators based on the full range of available practitioners rather than word of mouth. Demystifying the arbitrator selection process in this way has the potential to encourage local adoption of international arbitration, along with the positive development it brings.

[1] Catherine Rogers, Does International Arbitration Enfeeble or Enhance Local Legal Institutions?, TagTime (July 1, 2020), available athttps://member-delosdr.org/video-tagtime-prof-catherine-rogers-on-does-international-arbitration-enfeeble-or-enhance-local-legal-institutions/.

[2] Catherine A. Rogers & Christopher R. Drahozal, Does International Arbitration Enfeeble or Enhance Local Legal Institutions?, in The Legitimacy of Investment Arbitration (forthcoming Cambridge University Press, 2021), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3404615.

[3] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Jun. 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38.

[4] U.N. Comm’n on Int’l Trade Law, UNCITRAL Model Law on International Commercial Arbitration, U.N. Sales No. E.08.V.4 (2008), available at https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/19-09955_e_ebook.pdf.

[5] International Bar Association, IBA Rules on the Taking of Evidence in International Arbitration (2010), available at https://www.ibanet.org/ENews_Archive/IBA_30June_2010_Enews_Taking_of_Evidence_new_rules.aspx.

[6] Anne-Marie Slaughter & Jose E. Alvarez, A Liberal Theory of International Law, 94 Proceedings of the Annual Meeting (American Society of International Law) 240 (2000), https://www.jstor.org/stable/25659406?seq=1.

[7] Ryan Goodman & Derek Jinks, How to Influence States: Socialization and International Human Rights Law, 54 Duke L. J. 621 (2004).

[8] Arbitrator Intelligence, https://arbitratorintelligence.com/about/ (last visited Mar. 12, 2021).

* This post is part of a series summarizing episodes of Delos Disputes Resolution TagTime webinars. A list of past TagTime webinars is available at https://delosdr.org/index.php/past-webinars/.
** J.D. Candidate 2021, Columbia Law School.
† Catherine A. Rogers is a scholar of international arbitration and professional ethics at Penn State Law, with a dual appointment as Professor of Ethics, Regulation, and the Rule of Law at Queen Mary, University of London, where she is also Co-Director of the Institute for Ethics and Regulation. Her scholarship focuses on the convergence of the public and private in international adjudication, the intersection of markets and regulation in guiding professional conduct, and on the reconceptualization of the attorney as a global actor. Professor Rogers teaches, lectures, and publishes on these topics around the world, including as an invited participant at two Stanford-Yale Junior Faculty Fora.
Professor Rogers is a Reporter for the American Law Institute’s Restatement of the U.S. Law of International Commercial Arbitration. Among other appointments, she sits on the Board of Directors of the Lagos Court of Arbitration, the International Advisory Board of the Vienna International Arbitration Centre, the Geneva Center for International Dispute Settlement (CIDS) Academic Forum on ISDS, and Oxford University Press’ Investment Claims Advisory Board.  Professor Rogers co-chaired the ICCA-Queen Mary Task Force on Third-Party Funding in International Arbitration, and is the founder of Arbitrator Intelligence, a global information aggregator and legal tech start-up that aims at improving transparency, fairness, and accountability in arbitrator selection. Professor Rogers also regularly engages in capacity-building activities to promote international dispute resolution and the rule of law in developing and emerging economies.