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Considering that parties to an international arbitration often come from different legal traditions, it is no surprise that party representatives are regularly hampered by conflicts between rules of conduct. Conduct that may seem reasonable in one jurisdiction may be considered unacceptable in another. As a result practitioners have long called for guidance on accepted practice.
In response, on 25 May 2013, the International Bar Association (IBA) adopted the IBA Guidelines on Party Representation in International Arbitration (Guidelines). The Guidelines provide a uniform set of ethical standards and rules of professional conduct that can be applied to international arbitrations and form part of a collection of IBA Guidelines that promote the economy, speed and fairness of international arbitrations.
Overview of the arbitral process
The basic foundations of international arbitration are no doubt familiar, but it does not hurt to remind ourselves of them.
Arbitration is primarily consensual in nature. Arbitral awards are enforced by courts because parties, by voluntary agreement, refer certain matters to one or more arbitrators who make a binding decision on the dispute. Arbitration is also highly flexible in nature, allowing parties to choose the procedure to be followed in accordance with their needs and nature of the dispute. If performed and guided properly it should be more time and cost effective than litigation through the courts.
For parties to international agreements, arbitration ought to be the dispute resolution process of choice. The United Nations Commission on International Arbitration Trade Law Model Law (Model Law) has now been adopted as the backbone of International Arbitration Legislation in almost 60 jurisdictions (including Australia), with the consequence that the danger of unwanted legal surprises in a foreign jurisdiction is reduced. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) has the effect that an arbitral award made in one contracting State is enforceable in another contracting State. In 2013, 148 countries were signatories to the New York Convention meaning that most arbitral awards are readily enforceable outside the jurisdiction in which they are made.
Application of IBA Guidelines
Reflecting the consensual nature of arbitration, parties may adopt the IBA Guidelines on Party Representation in International Arbitration in whole or in part by agreement. Arbitral tribunals may also apply the Guidelines at their discretion after consultation with the parties.
It is not intended that the IBA Guidelines displace otherwise mandatory laws, professional or disciplinary rules of conduct or agreed arbitration rules. Where adopted by the parties the Guidelines do however, impose obligations of conduct on party representatives and serious consequences can apply where a party representative does not comply with these obligations.
Guidelines – a brief summary
The Guidelines provide a set of conduct rules relating to:
- party representation
- communications with arbitrators
- submissions to the Arbitral Tribunal
- information exchange and disclosure
- witnesses and experts, and
- remedies for misconduct.
The Guidelines relating to party representation seek to prevent conflicts of interest that may arise due to changes in party representation after the Arbitral Tribunal has been constituted. Where such a conflict arises, the Arbitral Tribunal is empowered to take measures appropriate to safeguard the integrity of the process. In the absence of the IBA Guidelines there is no explicit right to challenge a party’s representative.
Communications with Arbitrators
With the exception of the limited circumstances outlined below, ex-parte communications between a party representative and an arbitrator concerning the arbitration are not permitted under the Guidelines unless the parties have agreed otherwise. A party representative may communicate with a prospective or appointed party-nominated arbitrator to determine the prospective or appointed party-nominated arbitrator’s expertise, experience, ability, availability, willingness and the existence of potential conflicts, for the purpose of the selection of the presiding arbitrator or to give a general description of the dispute. A party representative must not however, seek the views of the prospective party-nominated arbitrator or presiding arbitrator on the substance of the dispute.
Submissions to the Arbitral Tribunal
Party representatives owe a duty of candour or honesty to the Arbitral Tribunal when making submissions and tendering evidence.
Information Exchange and Disclosure
Personal obligations on party representatives to ensure that a party complies with their disclosure obligations often differ from jurisdiction to jurisdiction. As a result, party representatives to the same arbitral proceeding sometimes apply different standards to disclosure. The IBA Guidelines provide welcome clarity to this area by providing that party representatives should inform the client of the need to preserve, search for and produce documents that are required to be disclosed.
Witnesses and Experts
The Guidelines relating to witnesses and experts are intended to reflect international arbitration practise with respect to the preparation of witness and expert testimony and will be familiar to most practitioners. However, it is worth noting that the Guidelines provide that a party representative should make any potential witness aware that he or she has the right to inform or instruct his or her own counsel about the contact and to discontinue the communication with the party representative.
Remedies for Misconduct
Where there is a failure by a party representative to comply with the Guidelines and the Guidelines have been agreed to by the parties, the Arbitral Tribunal may:
- admonish the Party Representative
- draw appropriate inferences in assessing evidence relied upon or legal arguments advanced
- consider the misconduct in apportioning costs of the arbitration, and
- take any other appropriate measures to preserve the fairness and integrity of the proceedings.
Although the Guidelines refer to obligations on party representatives it should be borne in mind that an obligation on a party representative extends to the represented party, who may in the end bear the consequences of the misconduct of the representative.
The IBA has previously released Guidelines relating to the Taking of Evidence in International Arbitration and Conflicts on Interest in International Arbitration and these are now considered to represent globally accepted standards. The Chartered Institute of Arbitrators Protocol for the Use of Party-Appointed Expert Witnesses in International Arbitration also provides a useful point of reference as it expands and builds upon the IBA Guidelines on the Taking of Evidence in International Arbitration by giving greater detail as to what should and should not be in an experts’ written opinion and deals with independence and privilege. The IBA Guidelines on Party Representation are likely to gain similar recognition internationally and will come to inform best practice behaviour expected of all party representatives in international arbitration.
Parties who incorporate these Guidelines into their arbitral agreement either before or after a dispute has arisen may have greater confidence that the arbitral procedures adopted will promote the economy, speed and fairness of the arbitration and will be in line with international best practice.
Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.