The IBA Guidelines on Party Representation in International Arbitration: levelling the playing field?

Tom Cummins, senior associate, London

Speedread

Ethics in international arbitration, and in particular, the different ethical standards that apply to lawyers from different jurisdictions, is a source of much debate. Many have called for global standards to apply so that all counsel are subject to the same rules. The International Bar Association on 25 May 2013 published the IBA Guidelines on Party Representation in International Arbitration. This relatively short document responds to the increasingly frequent pleas made by practitioners for guidance on the ethical standards applicable to party representatives in international arbitration. But is it the solution everyone was hoping for?

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Background

Ethics in international arbitration, and in particular, the different ethical standards that apply to lawyers from different jurisdictions, is a source of much debate. Many have called for global standards to apply so that all counsel are subject to the same rules. The International Bar Association on 25 May 2013 published the IBA Guidelines on Party Representation in International Arbitration. This relatively short document responds to the increasingly frequent pleas made by practitioners for guidance on the ethical standards applicable to party representatives in international arbitration. But is it the solution everyone was hoping for?

The source of the problem: different ethical standards

Whereas domestic dispute resolution proceedings are generally conducted by counsel who are subject to the same code of ethics, international arbitration is populated by counsel who derive their experience from different backgrounds and are subject to ethical rules which may differ significantly. So, for example, in an arbitration seated in The Hague, with representatives of the parties from the United States and from Spain, those representatives may feel obliged to act in accordance with different ethical considerations. The party represented by counsel who take a more restrictive approach to an element of procedure, such as the preparation of witnesses for testimony, may find itself at a disadvantage.

How does this potential inequality sit with the emphasis in international arbitration of ensuring that there is equality between arbitrating parties? And how can equality be ensured if the intermediaries between arbitrants and Tribunal, the parties' representatives, are subject to different ethical requirements?

The IBA tackles the issue

In 2008, the IBA's arbitration committee established a task force to focus on the issue of ethics in international arbitration. In 2010, the task force circulated a survey seeking views on the impact of ethical constraints on arbitral proceedings. Respondents expressed support for the development of international guidelines. On 25 May 2013 the IBA published its Guidelines on Party Representation in International Arbitration (the Guidelines). This relatively short document, comprising 27 guidelines, seeks to address the need for guidance on the ethical standards applicable to party representatives in international arbitration.

The Guidelines

The first point to note is that these are "guidelines". They are not rules. In that regard they are closer in architecture and spirit to the IBA Guidelines on Conflicts of Interest in International Arbitration than to the IBA Rules on the Taking of Evidence in International Arbitration (the IBA Rules). They consist of a series of statements, (a guideline), followed by explanatory text (comments).

As guidelines, they are contractual in nature. They will therefore only apply where either:

• the parties agree to adopt them in whole or in part, or
• the tribunal decides to apply them (having determined that it has the authority to do so).

The Guidelines provide as follows:

• Once an arbitral tribunal has been constituted, counsel should not accept an instruction where a relationship exists between that counsel and one of the arbitrators that could create a conflict of interest. If a conflict exists, the tribunal can take "measures appropriate to safeguard the integrity of the proceedings", including the exclusion of the new counsel from the case.
• Unless otherwise agreed by the parties, party representatives should not engage in any ex-parte communications with arbitrators, subject to limited exceptions covering pre-appointment contact.
• Party representatives should not make any "knowingly false submission of fact" to the tribunal and should promptly correct such a submission, "subject to countervailing considerations of confidentiality and privilege"
• Party representatives should not submit witness or expert evidence that they know to be false.
• In cases likely to involve document production, party representatives have a duty to inform the client of the need to preserve potentially relevant documents they might otherwise destroy. Document production requests, or objections to such requests, should not be made "for an improper purpose, such as to harass or cause unnecessary delay".
• Party representatives should identify themselves and the party they represent before seeking any information from a potential witness or expert.
• Party representatives may assist witnesses in the preparation of their statements but must seek to ensure that the statement reflects the witness's own account. Witnesses can be offered payment for "expenses reasonably incurred" in preparing to testify and for "loss of time".
• Party representatives may meet or interact with witnesses and experts in order to discuss and prepare their prospective testimony.

Are the Guidelines a solution to the problem?

There is a long history of attempts to record ethical principles which are to guide counsel in international arbitration proceedings. Draft checklists and rules have been prepared by leading practitioners in the past. Much debate has been stimulated

The Guidelines represent an attempt to codify best practices in international arbitration and to enable the parties, and their tribunal, to adopt, amend and utilise them as they best see fit.

Given that, the Guidelines have some practical limitations. The Guidelines will only be used if the parties agree or the tribunal considers it appropriate. In the event they are breached the tribunal's powers to penalise the party in breach are fairly limited. The tribunal can "admonish" the party representative; draw appropriate inferences; consider the misconduct when dealing with costs; and "take any other appropriate measure" to preserve the integrity of the proceedings. Each of these remedies is essentially directed at instructing parties, not at their representatives, and the Guidelines make clear that it is ultimately the represented party which bears the consequences of representative misfeasance.

Another limitation on their impact is the fact that the Guidelines do not - and could not - displace otherwise applicable mandatory laws or rules or legal representatives' duties as imposed by national organisations and laws. The different ethical standards will still apply. Having said that, adopting the Guidelines may go some way to "levelling the playing field" particularly in circumstances where there is a significant difference in applicable ethical standards on particular issues. If nothing else, it gives the parties and the tribunal an opportunity to address the issue at the start of proceedings and, by doing so, enhance the confidence which participants in international arbitration have in the process.

Please click on the links below for the other articles in the July 2013 Arbflash:

• English courts can protect agreements to arbitrate even where arbitration not commenced or contemplated
• High Court upholds Australia's international arbitration laws
• Interim relief in support of arbitration in court other than court of seat: drafting implications of the Konkola decision
• Disclosure of overseas assets permitted in the English courts
• New arbitration rules for HKIAC
• New governance structure and revised rules for SIAC
• PwC and Queen Mary 2013 survey on industry perspectives on international arbitration
• Paris launches Paris Arbitration Rules
• CIETAC update
• SIAC sets up in Mumbai
• New international arbitration centres in New York, Seoul and Karnataka
• Myanmar accedes to the New York Convention