Wednesday, March 19, 2014

LEGAL PROFESSIONALISM IN JEOPARDY: THE NEED FOR A LEGITIMATE AND ENFORCEABLE SYSTEM OF ETHICS RULES IN INTERNATIONAL ARBITRATION

It cannot be denied that there are many perks and benefits that quarreling parties can collectively gain in choosing to resolve their transnational legal disputes through international arbitration proceedings as opposed to domestic-court-based proceedings. Among others, some of the more significant advantages that can come with such parties selecting international arbitral tribunals instead of national courts for dispute resolution purposes include wholly neutral venues, shorter proceedings, cheaper legal costs, confidentiality and, of course, "party autonomy" (which, as I defined in my previous blog post, is the notion that such parties are entirely free to agree on the procedure to be followed by the international arbitral tribunal in conducting the applicable proceedings).

Most importantly of all, it is because of these very same comparative conveniences that international arbitration in general has become such a widely-adopted and formally-institutionalized means of interstate dispute resolution, one which is universally regarded to be highly reliable and which continues to readily grow in popularity worldwide.

Nevertheless, in spite of the relative pluses of international arbitration mentioned above that have so effectively served to foster its widespread and ever-increasing demand among foreign parties, it also entails a much less desirable trait that, if left unchecked, may very well jeopardize not only its global acclaim, but also its legitimacy as a dependable method of dispute resolution: That is, the increasing utilization of seemingly unprofessional, unethical and unscrupulous tactics by counsel purely to gain competitive edges over opposing counsel in the context of international arbitration.

Having since acquired the label of so-called "guerilla tactics" over the past several years within the overall international arbitration community, such unprincipled methods have comprised a wide variety of behavior that has ranged from marginally-underhanded activity to what could even be deemed to be outright criminal conduct under most legal systems.

Indeed, as Santiago Cueto, an esteemed practitioner of international arbitration who is based in Miami, FL, states in his December 2013 blog post "Guerilla Tactics in International Arbitration: The New Normal in 2014?" on his official Cueto Law Group, PL Blog (found here: http://internationalarbitrators.com/guerilla-tactics-in-international-arbitration-the-new-normal-in-2014/), a handful of "guerilla tactics" that he himself has personally observed during the course of his practice of international arbitration over the years include the following: "Intimidating an arbitrator to go home rather than attend deliberations; changing counsel mid-proceedings to create a conflict [of interest]; wiretapping opposing counsel's conference rooms, withholding damaging documents that were ordered to be disclosed; raising multiple challenges to a single arbitral tribunal; raising excessive frivolous objections to 'run the clock' at an evidentiary hearing; sifting through an adversary's trash; threatening a witness with physical harm to dissuade him from testifying; absurdly excessive document disclosure requests; hiring private detectives to follow and observe arbitrators; and pulling a fire alarm to prevent a hearing form going forward." It is of course even more disheartening to know that the foregoing list is by no means an exhaustive one.

Outrageous real-world examples of such "guerilla tactics" aside though, one of the main reasons as to why such objectively-shady conduct has been able to gradually take root and so frequently occur within the realm of international arbitration is largely due to the fact that, as of right now, there still exist no concrete, enforceable systems of universally-applied ethics rules among the various institutions of international arbitration (such as the London Court of International Arbitration, the ICC Court of International Arbitration, the Permanent Court of Arbitration, etc.) dotted throughout the globe.

That is not to say, however, that at least some of these institutions of international arbitration are not presently trying to tackle this ethics-based issue head on in some capacity. For example, the International Bar Association recently issued its IBA Guidelines on Party Representation in International Arbitration in 2013 (found here: http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx#partyrep); as such, these guidelines were inspired by the principle that the representatives of parties should act with honesty and integrity and, in addition, should refrain from engaging in behavior designed to produce any unnecessary delay or expense, including methods having the purpose of obstructing the arbitral proceedings. Much more recently, in February of 2014, the London Court of International Arbitration, per the circulation of a final draft of its revised arbitration rules, unveiled a set of new draft guidelines concerning the ethical conduct of counsel; in particular, the London Court of International Arbitration's final draft includes a new guideline-based requirement on each party to ensure that its representatives comply with the IBA Guidelines on Party Representation in International Arbitration, as well as a new mechanism through which complaints in relation to alleged breaches of those guidelines may be resolved (an intriguing article that goes into much greater detail on this topic and that also has a link to the full text of the final draft in question can be found here: http://www.out-law.com/en/articles/2014/february/lcia-proposes-guidelines-for-arbitration-parties-legal-representatives-as-part-of-revised-rules1/).

Having said that, it therefore appears that at least a few international-arbitration-affiliated organizations and institutions such as the International Bar Association and London Court of International Arbitration in particular are certainly taking active steps towards curtailing the use of "guerilla tactics" in international arbitration to some meaningful degree.

At the end of the day however, the sets of guidelines regarding the conduct of counsel in international arbitration discussed above are only just that: guidelines. Consequently, unless the parties to a given international arbitral proceeding jointly agree to adopt these guidelines or unless the relevant arbitral tribunal unilaterally chooses to apply these guidelines (provided that such an arbitral tribunal has made a prior determination that it actually has the authority to do so of course), then these guidelines would not have any legal effect or degree of enforceability with respect to the conduct of the representatives of the parties involved; that is, guidelines such as these, unlike rules, would not automatically be applied to relevant arbitral proceedings.

With that in mind, I am strongly of the opinion that the various institutions of international arbitration should seriously consider drafting and systematically implementing new counsel-conduct-based rules (which by their very nature would necessarily have to be regarded and adhered to by representatives of parties in international arbitration, no matter what) that largely incorporate the type of language found within currently-existing guidelines such as those proffered by the International Bar Association and the London Court of International Arbitration. In doing so, the chances of "guerilla tactics" being allowed to occur in the first place would be significantly reduced; in turn, this would not only greatly mitigate the resulting costs and delays stemming from such unethical practices in general, but would also serve to further enhance and solidify the already-considerable appeal of international arbitration as a legitimate, reliable, respectable and preferable method of effectively resolving transnational legal disputes.

Nevertheless, due to the nonexistence of rules concerning the ethical conduct of counsel within the international arbitral realm as it currently exists, "guerilla tactics" are going to remain an unfortunate aspect of international arbitration for the foreseeable future, and I can only hope that such unprincipled methods do not become more commonplace.

As to whether or not we will eventually witness the widespread blossoming and proliferation of such institutional rules farther down the road, however, we will just have to wait and see.

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