Author: Claire Sheridan**
Powers of Arbitrators
Arbitrators and Arbitral Tribunals
Practice and Procedure
In this TagTime episode, Professor Nayla Comair-Obeid† spoke with Professor Dr. Kabir Duggal and Amanda Lee about dilatory and guerrilla tactics that parties sometimes use to frustrate and delay arbitral proceedings. She drew upon her extensive arbitral experience to provide examples of such tactics that she has seen, as well as providing some preventive measures that arbitrators and parties can take to avoid these tactics.
Sergey Lazarev has previously described arbitration as a “procedure whereby gentlemen would settle in a gentlemanly way disputes between them.” Is this still the case? Professor Comair-Obeid has, in her practice, witnessed an increasing number of guerrilla and dilatory tactics employed by counsel to delay and frustrate arbitral proceedings, as well as attempts to destabilise arbitral tribunals. In this context, she has seen not only that counsel have become much more aggressive over the years, but also that parties during the past decade have resorted to all types of legal attacks and maneuvers against arbitrators at any stage of the proceedings.
Such attacks may involve questioning the independence and impartiality of arbitrators, allegations of unequal treatment of the parties and violation of due process. Arbitrators may have to deal with these accusations at any stage of the arbitral proceedings, not only at the end of the proceedings when the dissatisfied party files an annulment action before the court.
In light of this trend, the need for robust arbitrators, who are independent, impartial and fair and who have a strong grip throughout the proceedings, is becoming essential. Furthermore, they should have the assistance of local courts, which should take a robust approach in support of arbitrators in order to discourage parties from advancing guerrilla tactics that seek to undermine the arbitral process, especially its integrity.
1. At the Inception of the Proceedings
Some dilatory tactics that are adopted at the inception of the proceedings are refusing to sign the Terms of Reference or a continuous refusal to pay the advance on costs set by the institution. Many dilatory tactics at this stage of the proceedings, however, will happen with respect to the selection of arbitrators.
Arbitration clauses are often drafted in a broad manner, stating, for example, that the tribunal will be composed of three arbitrators without address the manner in which these arbitrators will be appointed. Instead, the process of appointment is left to the freedom and choice of the parties and, thus, the ease of the appointment process will depend on the extent of cooperation between counsel.
One dilatory tactic that parties will therefore employ to frustrate the appointment procedure is failing to adopt a cooperative approach, which can even go as far as to deny opposing counsel an opportunity to nominate a co-arbitrator. Even if arbitrators are nominated, parties may make a series of disclosures and objections, which delay the constitution of the tribunal. This in turn will defer the commencement of the proceedings by three to five months, and possibly even longer than that.
Once the tribunal is constituted, parties may then systematically file groundless challenges against arbitrators to further delay the process. These challenges may include alleging that an arbitrator is violating due process on the basis that the arbitrator requested the parties to submit a certified power of attorney as required by the law of the seat of arbitration. This type of dilatory challenge, in fact, highlights a lack of understanding of arbitral proceedings.
2. During the Course of the Proceedings
There are even more dilatory and guerrilla tactics that parties may employ once the proceedings have commenced. For example, they may persistently provoke the arbitrator with the aim of subsequently filing a challenge alleging serious irregularities in the proceedings, unfairness of the arbitrator and violation of due process. For example, a party may allege unfairness and violation of due process in each of its correspondences with the tribunal member, hoping that the arbitrator will commit a faux pas, which could be used as a ground for challenge.
In addition to this, parties may also continuously and abusively request extensions of time, submit excessive numbers of documents, persistently refuse to file submissions at the agreed deadline, ignore the orders of the tribunal, misuse confidentiality, make inappropriate objections or even refuse to grant opposing counsel access to a site during a site visit. An example of this occurred during an ICC arbitration, in which Professor Comair-Obeid acted as President of the Tribunal. A party, which owned a site that was to be visited, notified the tribunal about four days before the scheduled visit of its objection to the counterparty being present on the basis of trade secrets and other important and highly confidential technical know-how. The tribunal nevertheless attempted to reach a compromise by suggesting that the opposing party’s participation be restricted to its legal counsel only. However, the objecting party was persistent in its objection to the site inspection and ultimately, the tribunal had to cancel the site visit altogether. Instead, it informed the obstructing party that is position might lead the tribunal to draw adverse inferences.
Two further procedural tactics that Professor Comair-Obeid has seen in a number of incidents are the submission of groundless bankruptcy allegations in order to suspend the arbitral proceedings and the late submission of evidence or claims with the sole purpose of further prolonging the proceedings. Such incidents, depending on the circumstances of the case, may be broad and may be brought only with the intention of complicating and delaying the arbitration.
With regards to bankruptcy, most of the time, these allegations are groundless. In such instances, a good knowledge of applicable law is key in order for the arbitrator to make the right decision. For example, she has witnessed allegations of bankruptcy in several cases seated in the Middle East where the party will either allege that it has gone bankrupt or that the opposing party is going bankrupt. In many Arab countries, bankruptcy proceedings start only when the court is satisfied that the bankruptcy action is sound and a liquidator is appointed. In these cases, those two events are instrument for the tribunal’s decision on the seriousness of the bankruptcy allegations and whether the arbitral proceedings need to be suspended.
The late submission of evidence or claims is a very frequent scenario and the right decision depends on the circumstances of the case. Here, arbitrators need to balance the due process rights of parties while ensuring the smooth conduct of the proceedings. In an arbitration matter seated in the United Kingdom, a challenge was filed under § 68 of the Arbitration Act against a procedural decision rendered by a tribunal which ruled on the issue of admissibility of evidence. The English courts dismissed the application not only on the ground that a procedural order was not an award within the meaning of the Arbitration Act that was capable of challenge under § 68, but also because it considered that “[i]t is clear that the exclusion of evidence is within the arbitrator’s case management powers and that the decision reached was one reached with due process and was a rational determination. It is hard to see, therefore, how any question of serious irregularity could possibly arise.” The court further said that “[t]he decision was taken to exclude a new case and new evidence shortly before the hearing and this constitutes a paradigm example of a case management procedural decision of the kind that no court of appeal would interfere with, if made by a court of first instance in this jurisdiction[.]” This is an example of a case where the court took a robust approach in support of the tribunal’s decision (and of arbitration) and considered that there was no breach of due process and that the exclusion of evidence fell within the tribunal’s case management powers.
Yet another dilatory tactic that parties may adopt during the course of the proceedings is the withdrawal of counsel at the last minute. Professor Comair-Obeid experienced this during an ad hoc arbitration conducted in New York under UNCITRAL rules when a counsel for a party suddenly withdrew from the case a mere few weeks before the scheduled filing date of the pre-hearing submissions. Counsel did not provide any reasons for doing so and when requested by the tribunal to disclose the grounds for his withdrawal, he stated that he could not due to confidentiality obligations. It is noteworthy that under the rules of the New York Bar, a lawyer is not permitted to withdraw from a case without first obtaining the arbitral tribunal’s approval and only after providing sufficient cause for doing so. The tribunal, on its part, was not only surprised, but face a difficult decision as to how to move forward with the case. Ultimately, the parties decided to settle the case, saving the tribunal from this dilemma.
3. During the Hearing
Dilatory and guerrilla tactics that parties may employ during the hearing process itself include sending the tribunal new applications during the night before or even one minute before the beginning of the hearing. This is done in order to force the tribunal to divert its attention from the issues that it has to deal with. Furthermore, parties may inundate the tribunal with new documents or applications with the aim of disrupting the proper conduct of the proceeding. In an arbitration in which Professor Comair-Obeid was acting as sole arbitrator, she received hundreds of documents on the eve of a hearing on interim measures from midnight until five in the morning. This common tactic is used to destabilise the tribunal and to delay the proper conduct of the hearing with the intention of postponing the hearing. Arbitrators must deal with such tactics in a firm manner whilst also observing the party’s right to be heard.
During the hearing itself, parties may try to influence or intimidate the arbitrator by informing the tribunal that a challenge will be filed against it for lack of independence and impartiality or that a challenge will be filed against a decision rendered by the tribunal. In some jurisdictions, parties will employ wire-tapping or other surveillance methods against the tribunal, something that she has experienced. Some parties will even go so far as to threaten the arbitrator. During another arbitration in which Professor Comair-Obeid was acting as sole arbitrator, a witness, who was the Chief Justice or the chief police officer of the country of the seat of arbitration, was called to give his testimony and was cross-examined. During the break, this witness came to the breakout room and “explained” his position to her, with the intent of directly intimidating, with the result that she had to set him straight.
Arbitrators may also deal with the bad temperament and, in some cases, even the misbehavior of some counsel. In one ICC arbitration, one counsel not only used inappropriate words against his opposing counsel, but he also stood up and threw his chair. This was completely unexpected behavior. Dealing with such theatrics and inappropriateness requires the wisdom of a robust, proactive arbitrator.
Once the award is rendered, awards may be subject to challenges on the grounds of serious irregularity amounting to substantial injustice, including the failure of the tribunal to comply with a general duty to act fairly and impartially. These provisions can provide an avenue for further dilatory tactics post-award to delay the enforcement of the award.
WHAT IS TO BE DONE?
1. What Can Arbitrators/Parties Do?
Arbitrators need to be sufficiently experienced and robust in order to counter all of the above tactics. The challenges faced by arbitrators, as Catherine Rogers says, should be seen in a context where as a result of “the difference legal cultures of the participants in international arbitration and the absence of common etiquette rules, arbitrators and counsel find themselves in an ethical no man’s land.” As a result, the role of the tribunal is key and arbitrators need to have the strength and wisdom to discourage tactics that impair the efficiency of arbitral proceedings. It is therefore vital when dealing with guerrilla tactics to have arbitrators who have sufficient experience, who can recognise the subtle demarcation line between circumstances where a party action is genuine and when it is solely aimed at delaying the arbitration and who can make the difficult decisions to preserve the integrity of the arbitral process in a fair manner.
An effective and practical tool to sanction dilatory tactics resides in the allocation of costs in the final award. This is an approach taken by many tribunals. When ruling on costs and exercising their discretion in this regard, arbitrators can and should inform the parties that the parties’ and their counsels’ conduct during the proceedings will be taken into account in the allocation of costs.
Arbitrators should also take care not to have due process paranoia. Although due process is a sacrosanct concept, it does have its limits and arbitrators should not allow an overzealous concern for due process impair their ability to preserve the integrity of the arbitral process. One way to do this, whilst observing due process, is to draft good procedural rules, expanding them using previous cases and previous experience. Through these rules, arbitrators have the tools that they need to dismiss guerrilla tactics and to maintain control of the proceedings.
Arbitrators have the final say on decisions regarding the conduct of proceedings and must always balance issues of party autonomy and the procedural efficiency with due process. It is the duty of a robust, independent and impartial arbitrator to assess when these tactics are justified and when they are used merely as a means to disrupt the proceedings. They should therefore use their case management power to preserve due process and prevent obstruction techniques.
2. What Can Parties Do?
Aside from refraining from engaging in these dilatory/guerrilla tactics, parties can draft precise arbitration clauses. In fact, this is key to avoid misinterpretation, distortion of the will of the parties and a delay in the appointment of the tribunal.
Another preventive measure parties can take before the arbitration starts is to choose the seat of arbitration carefully. There is a distinction between seats that are more friendly to arbitration and those that are less friendly to arbitration. When the seat of an arbitration is in a place such as London, Paris, Geneva or any other friendly jurisdiction, parties will have to think several times before trying to delay the proceedings. Such tactics do occur in arbitrations seated in these places, but Professor Comair-Obeid has faced more guerrilla tactics and challenges in less friendly seats.
Moreover, throughout the process, the parties and the tribunal might agree on an ethical code of conduct. Although this is not a common approach, this has become a necessity nowadays.
3. What Can Institutions Do?
The role of institutions in frustrating dilatory and guerrilla tactics is important, particularly at the stage of the proceedings where the tribunal is constituted. The institution should understand why a party refuses to appoint an arbitrator and why it refutes the concept that both parties will appoint their arbitrator and those two arbitrators will then appoint a presiding arbitrator. In the face of this dilatory tactic, the institution will have to swiftly appoint the tribunal, taking into account, of course, counsel’s indication of the requirements of an arbitrator (e.g., the qualifications that an arbitrator must have).
The institution must also support the tribunal during the arbitral proceedings. Challenges sometimes occur, attacking the independence and impartiality of the tribunal. Institutions should deal with and settle this as soon as possible and should support the tribunal if a challenge is brought against it during the proceedings. It is useful for the institution to have a list of cases where there were challenge and whether the challenge was accepted or rejected. This way, the institution can draw the attention of the tribunal to how to deal with the challenge. Professor Comair-Obeid has dealt with international institutions when she has faced such problems and has found them to be knowledgeable about ways to deal with dilatory tactics and able to support tribunals in these circumstances.
4. What Can Local Courts Do?
All robust arbitrators and courts complement each other to preserve the integrity of arbitration as a reliable mode of dispute resolution. It is with this dual approach that dilatory and guerrilla tactics can be resisted, addressed efficiently and perhaps discouraged. Robust courts must dismiss unfounded challenges against arbitrators. When courts do this and the seat is friendly to arbitration, the integrity of the arbitral proceeding is protected and strengthened.
It is likely that, as a result of the financial crisis stemming from COVID-19, there will be more incentives to employ dilatory/guerrilla tactics, especially since parties may no longer be able to pay the costs of arbitration. In fact, this has already started, with parties requesting the suspension of proceedings for bankruptcy. Moreover, since virtual hearings are now becoming the norm, not only because of COVID-19, but also because we live in an age of new technology and big data, arbitrators will have to deal with newer, more sophisticated and more frequent guerrilla tactics such as cyber-intrusion and illegally obtained evidence. Specific guidelines should be adopted in this respect and urgently.
However, the key to dealing with all of the dilatory and guerrilla tactics detailed above is a robust arbitrator, who has the experience and the confidence to frustrate any party’s attempt to delay and disrupt arbitral proceedings. This involves balancing parties’ due process rights with parties’ right to a smooth and efficient arbitral process. This can be a fine line to walk, but arbitrators who have the appropriate wisdom can do so.
 Nayla Comair-Obeid, Robust Arbitrators: How to Deal with Dilatory/Guerrilla Tactics During the Course of the Arbitral Proceedings, TagTime (Oct. 21, 2020), available at https://member-delosdr.org/video-tagtime-prof-nayla-comair-obeid-on-robust-arbitrators-how-to-deal-with-dilatory-guerrilla-tactics-during-the-course-of-the-arbitral-proceedings/.
 Arbitration Act 1996, c. 23, § 68 (UK) (“(1) A party to the arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award . . . (2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—(a) failure by the tribunal to comply with section 33 (general duty of tribunal)[.]”).
 K v. S  EWHC 2386, [39(4)] (Comm).
 Id., [39(3)].
 N.Y. Rules of Pro. Conduct r. 1.16(d) (N.Y. State Bar Ass’n 2009, as amended 2020) (“If permission for withdrawal from employment is required by the rules of a tribunal, a lawyer shall not withdraw from employment in a matter before that tribunal without its permission.”).
 In her TagTime episode, Catherine Amirfar spoke at length about cybersecurity. See Dominique Jones, TagTime with Catherine Amirfar – Cybersecurity and International Arbitration: A Wake-up Call, Am. Rev. Int’l Arb. Blog (Mar. 29, 2021), http://blogs2.law.columbia.edu/aria/tagtime-with-catherine-amirfar-cybersecurity-and-international-arbitration-a-wake-up-call/.
* This post is part of a series summarising Delos Disputes Resolution’s 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. Claire is Co-Student-Editor-in-Chief of the American Review of International Arbitration. The views expressed in this post do not necessarily reflect the views of the Review.
† Professor Comair-Obeid is a Founding Partner of Obeid Law Firm. She has been repeatedly recognized as one of the world’s leading business lawyers by the Who’s Who Legal Guides. She specializes in international business law and Middle Eastern legislation and is often called upon as a legal expert on numerous aspects of Lebanese law in foreign courts and arbitral proceedings. She is a member of both the Beirut Bar and the Paris Bar. In addition, Professor Comair-Obeid is a professor of international commercial arbitration at the Lebanese University and alternative dispute resolution at the Lebanese Judicial Institute.