Recent developments have attempted to bring international arbitration back from an “ethical no-man’s land”. Mark Hoyle (Partner, Dubai), Kess Dovey (Senior Associate, Melbourne) and Li Li (Associate, Beijing) consider the impact on practice in emerging legal centres.
In May 2013, the International Bar Association adopted the IBA Guidelines on Party Representation in International Arbitration (“Guidelines”). The Guidelines will benefit practitioners – who now have reference to an agreed set of minimum practice standards – and more importantly will strengthen clients’ confidence in the arbitral procedure.
The Guidelines acknowledge that, unlike in domestic litigation, “party representatives in international arbitration may be subject to diverse and potentially conflicting bodies of domestic rules and norms”. While the Guidelines do not replace mandatory or professional domestic requirements, they offer a non-domestic alternative to the choice of ethical rules. They also indicate accepted principles to lawyers handling disputes when multiple jurisdictions are involved.
For example, common law lawyers and civil law lawyers tend to take very different approaches to disclosure. Generally, common law jurisdictions require practitioners to carry out expansive searches for documents to be produced, whereas civil law jurisdictions do not. The Guidelines resolve this conflict by providing that, in cases likely to involve document production, practitioners should “inform the client of the need to preserve, so far as reasonably possible, [d]ocuments … which are potentially relevant to the arbitration”.
As another example, practitioners from different legal cultures often struggle to determine the ethical rules on communicating with witnesses. While lawyers in most common law jurisdictions must not “coach” witnesses prior to a hearing, the situation is different for lawyers in the United States where witness preparation is considered a professional obligation. The Guidelines opt for the less restrictive approach, providing that lawyers “may, consistent with the principle that the evidence given should reflect the [w]itness’s own account … meet or interact with [w]itnesses … in order to discuss and prepare their prospective testimony”.
In addition to document disclosure and communication with witnesses, the Guidelines include provisions on:
- submissions to the arbitral tribunal,
- communication with arbitrators, and
- remedies for misconduct.
The Guidelines are contractual in nature, which means that they do not have automatic effect. The Guidelines will only apply where:
- the parties agree to adopt them, or
- the tribunal decides to apply them (having determined that it has authority to do so).
In China, views differ on the likely take-up of the Guidelines.
For some, the Guidelines do not necessarily reflect Chinese standards. Certainly, the IBA Task Force on Counsel Conduct which produced the Guidelines was dominated by US and European lawyers, and did not give great weight to the Chinese experience. To the extent they conflict with local mandatory laws, the Guidelines are likely to be given short shrift by Chinese courts.
For others, the outlook is more optimistic. “Soft law” attempts at harmonising best practice are slowly working their way into local curricula. The IBA Rules on the Taking of Evidence in International Arbitration, for instance, are increasingly well-recognised by Chinese parties.In any case, the Guidelines do not purport to override local rules – they are explicitly “not intended to displace otherwise applicable mandatory laws, professional or disciplinary rules, or agreed arbitration rules”.
Perhaps the greatest barrier to widespread take-up is generational. While older Chinese practitioners and businesspeople tend to be removed from the intricacies of modern practice, their younger peers are more likely to have been influenced by non-Chinese systems. As a new generation of lawyers shapes China’s rapidly maturing legal system, they will turn more and more to resources like the Guidelines – and will expect a voice in developing them.
In order to understand the Guidelines’ likely impact in the Gulf, it is necessary to step back and consider existing practice in the region (and in Egypt and Lebanon).
Most international arbitrations in the Gulf will have non-Gulf lawyers as advocates and support lawyers. Usually, the arbitrators themselves are not from the Gulf. There are rare exceptions, but in general the international lawyers and arbitrators have no permanent feet on the ground. There is, naturally, a developing cadre of expatriate arbitrators, drawn mostly from the common law jurisdictions (except the United States) and from Egypt and Lebanon.
Increasingly, though, local advocates are taking part in these arbitrations, and there is little doubt that in a short time, and with the expansion of arbitration in the Gulf, there will be an even greater mixture of lawyers, from local civil law backgrounds, blending in with those from common law jurisdictions, and European nations.
What issues of ethics and practice will all this bring? Even with a standard arbitration, where there might be one common law lawyer from England, an academic civilian from France, and a practising lawyer from Germany, making up the tribunal, and then a barrister from England and a New York attorney, as advocates, there is a true mix of Bar obligations, Codes of Ethics, and Rules and Regulations. If all parties behave in a sensible way, all is well. But what is sensible to the client? If a common law lawyer has an obligation to advise his client to produce a document, but the client refuses, does that lawyer retire? A civil law lawyer may have an obligation not to produce a document. Whose ethics are right?
The only major jurisdictions that have an organised Bar in the Arab world are Lebanon, Egypt and Jordan. Other countries have support groups, and licensed practitioners. The Gulf States require educational admission rules, but do not have a similar set of conduct rules as, for example, England.
Add to the mix the obligations that come from local laws. A significant bear trap is the oath. Fairly rarely in arbitrations outside the Gulf is a witness requested to swear an oath supporting his or her evidence. In most Gulf States, swearing an oath by God is a mandatory rule emanating from public order. There is no point in a witness saying that he does not believe in God; either he swears by the wording of the Evidence and/or Civil Procedure Code or he is not allowed to give evidence.
As an illustration, then, let us see what happens if a lawyer knows of the rule about an oath, but allows it to be ignored, and his client loses, and he then challenges the arbitral award precisely because of the public order rule that has been ignored. In most Gulf States the award will, as night follows day, be invalidated. The opposing party, ignorant of the rule, may well feel cheated. Does the silent lawyer have an obligation to remind his opponent of the public order rule?
In the Gulf there are no sets of rules akin to those, for example, of the Bar Code of Conduct Rules in England, or the Rules (through the SRA) under which solicitors practice. The obligations and responsibilities of, say, a French lawyer, differ in form and substance from those of an Italian lawyer or an English Barrister. No set of lawyers’ rules in the Gulf cover the width and breadth of, for example, the Bar Code of Conduct.
It is therefore not surprising that in the melting pot of Gulf arbitration there is a good deal of argument about what are the “ethics” that should be sustained. In our experience, tribunals often have to deal with conduct which one side says is egregious, and which the opposing side says is normal for them. Without an overall set of rules it is a “free-for-all”. That is not to say that most arbitrations in the Gulf suffer from guerrilla tactics. However, the spurious challenge, the attack on a tribunal member, the challenge of the opposing advocate, can all be measured in greater volume than in other areas. That said, because of the paucity of arbitration rules in many of the applicable Codes it is hardly surprising that clients demand of their lawyers a robust and vigorous attitude.
What can be done? Many say that it is a question of education and Court control. Lawyers practising in the Gulf are usually well educated. The Courts do not set out to decide ethical questions; they decide legal issues. The answer, it must be said, is not to take years to persuade lawyers’ groups to adopt new rules covering ethics and duties to the tribunal and hope that an ethos will pervade, nor to seek judge control over lawyers’ ethics. It is likely that such a course will take too long.
The simple solution, rarely found as yet in the Gulf, is to include the imposition of a selected set of rules in the Terms of Reference or other similar contractual document. They need not be long, and they can be bespoke. After all, arbitrators know what they face, and what they would wish to curtail. The Guidelines are a very good start. There can be no reason why they cannot be taken as a base, and amended by agreement with the parties and the tribunal.
Where to from here?
Being contractual in nature, the success (or otherwise) of the Guidelines will depend on their use by parties and tribunals. In particular, it will depend on their take-up in emerging legal centres, such as China and the Gulf.
It would seem that there is reason to be optimistic. Not just because ethical conundrums cause headaches for advocates, but because, ultimately, it is in their clients’ best interests to avoid them. As our illustration from the Gulf shows, inconsistent domestic standards have the potential to inject great uncertainty into the arbitral process. A “free-for-all” benefits no one. Parties need to be alive to the risks and their advocates (and tribunals) should explore using “soft law” such as the Guidelines, even if only as a solid base from which to craft something more exhaustive.