The International Bar Association ("IBA") was founded in 1947 with the stated aim of supporting the establishment of law and administration worldwide. It now has in excess of 50,000 individual lawyers and 200 bar associations and law societies as members.
In this newsletter we will outline the key principles from the recently released IBA Guidelines on Party Representation in International Arbitration (the "Guidelines").
Role of the IBA in international arbitrations
The IBA is perhaps best known for producing rules and guidelines to assist the effective conduct of international arbitrations.
The suite of rules and guidelines include the following:
- IBA Guidelines on Conflicts of Interest in International Arbitration (2004);
- IBA Rules on the Taking of Evidence in International Arbitration (2010; currently under review); and
- the recently published Guidelines (May 2013).
Such rules and guidelines are useful tools in international arbitrations:
- They provide appropriate procedures that parties may wish to adopt in the absence of specific guidance in institutional rules. For example, while institutional rules provide general guidance as to the conduct of proceedings, they are typically silent or lacking in detail on how evidential issues such as document production should be approached.
- They help establish best practice or minimum standards of universal application. This is useful because as the Guidelines note in the preamble, "party representatives in international arbitration may be subject to diverse and potentially conflicting bodies of domestic rules and norms." Common areas of divergence include the degree to which witnesses can be prepared for trial, the scope and application of concepts such as privilege, and approaches to document production.
IBA Guidelines on Party Representation in International Arbitration
The Guidelines1 were approved on 25 May 2013. They were developed by an IBA committee of expert practitioners that sought to "determine whether such differing norms and practices may undermine the fundamental fairness and integrity of international arbitral proceedings and whether international guidelines on party representation in international arbitration may assist parties, counsel and arbitrators."
The parties are free to agree to adopt the Guidelines in whole or in part – this is in keeping with the contractual nature of arbitration. The Tribunal, if it has jurisdiction to do so and after consultation with the parties, may also determine that they should apply.2 Importantly, the Guidelines are not intended to displace otherwise applicable mandatory laws, professional or disciplinary rules, or agreed arbitration rules, in matters of party representation.3
The Guidelines set out the following key principles:
- Party Representation (Guidelines 4 to 6): Following the constitution of the Tribunal, unless none of the other parties objects after proper disclosure, a party should not appoint a representative who has a relationship with an arbitrator that which would create a conflict of interest. If, contrary to the Guidelines, such a situation arises then the Tribunal is empowered to "take measures appropriate to safeguard the integrity of the Proceedings." The commentary to the Guidelines suggests that an 'appropriate measure' could include the exclusion of the new representative from the proceedings if the Tribunal has found that it has authority to do so and there are compelling circumstances to justify the exclusion.
- Communications with arbitrators (Guidelines 7 and 8): Save for a limited number of circumstances (including initial discussions on conflicts of interest and the arbitrators' availability and expertise), party representatives should not communicate with the arbitrators without the presence or knowledge of the other parties to the proceedings (i.e. ex parte communications).
- Submissions to the Tribunal (Guidelines 9 to 11): Party representatives should not make any knowingly false submissions of fact to the Tribunal, nor submit any witness or expert evidence that he or she knows to be false. "Knowingly" is defined in the Guidelines as actual knowledge (it therefore follows that a mere suspicion would not be sufficient to activate the obligation). Party representatives are further obliged to correct any submission made to the Tribunal in the event they subsequently learn it was false (subject to countervailing considerations of confidentiality and privilege). This is consistent with the principle that party representatives owe the Tribunal a "duty of candour or honesty".
- Information exchange and disclosure (Guidelines 12 to 17): This issue is a key concern in many arbitrations, and as the comments to the Guidelines note: "the disparity in access to information or evidence may undermine the integrity and fairness of the arbitral proceedings." The Guidelines provide that where document production is likely, party representatives should advise their clients about their obligations to preserve documents that may be relevant to the arbitration, including documents that would otherwise be destroyed or deleted under the clients' document retention policy. The Guidelines further provide that document production should not be used as a means of harassing or causing unnecessary delay, and parties should not attempt to conceal documents or fail to reasonably ensure all responsive documents are produced (subject to privilege restrictions).
- Witnesses and experts (Guidelines 18 to 25): Party representatives may assist witnesses and experts with the preparation of their evidence, including through practice questions and answers, but should ensure that the evidence produced reflects the witnesses' own account of relevant facts, and the experts' own analysis. Further, witnesses should not be encouraged or invited to give false statements (consistent with Guideline 11).
- Remedies and Misconduct (Guidelines 26 and 27): The Tribunal is granted a wide discretion when considering how to deal with misconduct for breach of any of the Guidelines. Potential outcomes include: (i) admonishing the party representative; (ii) drawing adverse inferences when assessing the evidence and legal submissions; and, more broadly (iii) taking steps to "preserve the fairness and integrity of the proceedings". Importantly, Guideline 26(c) also allows a Tribunal to consider a party representative’s misconduct in apportioning costs and state what the costs may have been if not for the misconduct. This is likely to be popular with arbitration users, given that 96% of respondents to the 2012 "International Arbitration Survey", conducted by the School of International Arbitration, believed that such a measure was necessary.
The Guidelines offer a welcome and robust solution to the challenge of establishing a universal code of ethics and professional conduct for party representatives to "accommodate the legal and cultural differences among participants and the complex, multinational nature of the disputes." However, it remains to be seen to what extent the Guidelines will be adopted4 in international arbitrations and how they will be employed in practice given that party representatives will remain subject to ethical obligations imposed by their national bar associations.