In recent times, the concept of ethics has gained prominence in the deliberations of topical issues in international arbitration. This marks a tremendous development in the regulation of international arbitration as historically, arbitrators only had commonly shared beliefs and tacit understanding of what constituted ethical conduct in arbitral proceedings.¹

The development of ethics in international arbitration has led to considerations of the various conduct and players in the process who ought to be subjected to regulation. Of all the issues considered for ethical regulation, the behaviour of counsel in international arbitration and possible sanctioning by arbitrators has been the most debated.² This is not surprising, the advent of untoward practices which have come to be known as “guerrilla tactics”³ have left so much to be desired in international arbitration. Even though there appears to be a consensus that counsel’s conduct should be regulated or sanctioned in international arbitration⁴, the debate as to who should assume this duty has been an endless one. At the heart of this debate has been the thorny question of whether arbitrators or tribunals have the mandate to sanction counsel or attorney. Could such sanctions also include disqualifications of counsel from appearing before tribunals?

This paper argues that tribunals or arbitrators have an inherent power to sanction counsel in international arbitration in so far as this seeks to preserve the integrity of the arbitral process. Comparatively, arbitrators are better placed to regulate the conduct of counsel in international arbitration for various considerations such as proximity to information on the reprehensible conduct of counsel, time, and convenience. It is therefore submitted that self-regulation of the process by tribunals or arbitrators is the reasonable solution to safeguarding the process.

In making this argument, the paper shall trace the potential challenges which state courts, bar associations, and arbitral institutions are likely to encounter in the sanctioning of counsel in international arbitration thereby making them an undesirable resort. The paper then focuses on the inherent powers entrusted to arbitral tribunals/arbitrators to safeguard the arbitral process. It is suggested that these powers extend to the sanctioning of counsel where the behaviour or conduct of counsel violates the integrity of the arbitral process. The various sanctions arbitrators could utilize in this regard are also considered. The paper shall argue that apart from instances where issues of conflicts of interest arise, disqualification of counsel should be sparingly exercised as it poses a threat to challenges of arbitrators on grounds of bias.

The limitations and disadvantages of the sanctioning of counsel by arbitrators will be looked at. Despite the various limitations and disadvantages which will be identified, the paper shall conclude that the need for the sanctioning of counsel by arbitrators to preserve the integrity and legitimacy of the arbitral process supersedes the disadvantages of sanctioning of arbitrators.

PART A – THE NEED FOR SANCTIONING OF COUNSEL IN INTERNATIONAL ARBITRATION

International arbitration has gained global recognition as the most desirous means for the resolution of complex international commercial and investment disputes.⁵ Compared to litigation in national courts, international arbitration is usually selected as the preferred form of dispute resolution due to the expertise of the tribunal, privacy, neutrality, and speedy resolution.⁶

Despite the relative advantages of international arbitration, there have been growing concerns about the legitimacy of international arbitration as a dispute resolution mechanism for international disputes.⁷ The legitimacy concerns about international arbitration cuts across several aspects of the process. One of the factors which feature prominently in the legitimacy question is the regulation of professional ethics in international arbitration.⁸ In national courts, judges are often deemed to be vested with powers to sanction the conduct of counsel who misbehave or carelessly breach procedural orders.⁹ These powers could include punitive costs against counsel and reprimands.

On the contrary, there have been various debates as to whether counsel’s conduct should be sanctioned by arbitrators.¹⁰ These questions have been intensified in recent times due to the increasing spate of sharp practice and untoward behaviour by counsel in arbitral proceedings which have come to be known as “Guerrilla Tactics”. Practices such as the continuous request for disclosures, persistent breach of procedural orders on timelines and other extreme misconducts of counsel in international arbitration have raised concerns for action.

Even though there appears to be a consensus that misconduct by counsel should be regulated and sanctioned as noted earlier, the most pressing question has been who should mete out such sanctions. This question is not without justification. It is difficult to ascertain the specific set of rules which is applicable to counsel’s conduct in international arbitration due to its multi-faceted nature. As rightly asked by Veeder QC:

The scenario raised above is the dilemma that tribunals are faced with on several occasions. Despite this conundrum, what could be easily said is that the behaviour of counsel in international arbitration must be regulated to ensure that the arbitral process achieves the very reasons why parties resort to it. The regulation of the counsel’s conduct ensures that party representatives do not abuse the process by deliberately subjecting it to unnecessary tactical delays and ensures that the process upholds some form of ethics which promotes its legitimacy.

Cognizant of this, the International Bar Association adopted its Guidelines on Party Representation in International Arbitration in 2013. The guidelines were inspired by the need for party representatives to act with integrity and honesty and avoid conduct which is put up to produce unnecessary delay and expense thereby obstructing the arbitral process.¹²

As commendable as this is, the guidelines are not binding and can only be applied when parties and the tribunal agree on its application to the process. Even more, the guidelines do not answer the question of who has the utmost duty and power to sanction and disqualify counsel/attorneys in international arbitration. Nonetheless, it demonstrates a global recognition of the need to sanction counsel’s misconduct in international arbitration.

PART B – WHO COULD POSSESS THE POWER OF SANCTION?

Before ascertaining whether tribunals should possess powers of sanctions, there is the need to recognize that the multi-faceted nature of international arbitration could see the players such as local courts, arbitration institutions and bar associations exercising sanctioning authority over counsel.

International Arbitration is a subject of competing theories. There is the nationalist or territorial theory¹³, which considers arbitration to be rooted in the legal regime of the seat of arbitration. Transnational theorists like Gaillard have however regarded arbitration as not linked to any specific national legal order but possibly subject to different rules of law.¹⁴

These competing theories trickle down to the question of who has the ultimate duty to sanction attorneys/counsel in international arbitration. When one views international arbitration as rooted in the national legal regime, it follows that the whole arbitral process is seen considering the legal framework of the seat of the arbitration. In this regard, careful consideration is given to the laws of the seat and the role of the national courts in supervising arbitration as a primary option.

National Courts?

For those who view arbitration with respect to the nationalist theory, it is not difficult to accept that national courts should have the power to sanction counsel. This view is anchored in the perception that the regulation of international arbitration is rooted in the national legal regime and consequently any aspect of the process must be subject to the regulatory enforcement of the national court.

There are various reasons why the sanctioning of counsel in international arbitration by the national courts would seem a far-fetched idea. The main reason is the issue of the enforceability of such sanctions. The transnational nature of international arbitration admits counsel of different jurisdictions who appear before arbitral tribunals. In this regard, an arbitration seated in England may have parties represented by lawyers from New York with others from Sau Paulo. These lawyers may neither be citizens nor residents of the seat of arbitration. How then will a national court of the seat of arbitration exercise its powers of sanctions coercively against such errant counsel? If a national court were to award cost against counsel in International Arbitration for failing to comply with the orders of a tribunal, how could such a court enforce its orders in the jurisdiction of the errant lawyer who does not practice or have any asset in the jurisdiction of the national court?

A resort to the legal framework of the New York convention will not suffice as that relates only to arbitral awards and not orders made by domestic courts which are seats of arbitration. Also, states in making their seats attractive for international arbitration have ignored the extension of their ethical rules to counsel in international arbitrations.

For the foregoing reasons, it is highly challenging for national courts to exercise powers of sanctions or disqualification against counsel or attorneys in International Arbitration.

National Bar Associations or Law Societies?

As already indicated above, lawyers who appear before arbitral tribunals could be members of the different national bar associations or law societies.¹⁵ These associations or societies do have unique codes of ethics which regulate the practice of their members. Should these associations or societies be given the mandate of sanctioning?

Aside from the fact that granting such powers of sanctions to National Bar Associations will lead to undue delay in the arbitration process¹⁶, there is also a tendency for disagreement on what will constitute misconduct. Legal cultures vary from jurisdiction to jurisdiction. What constitutes misconduct in one jurisdiction may not necessarily be viewed as such in another jurisdiction. Additionally, even though some bar associations may specify codes of conduct of counsel behaviour, these may be limited to domestic arbitration and may not extend to International Arbitration.

Perhaps the most critical obstacle to exercise of sanctions by bar association will be that of confidentiality. Bar associations are not parties to arbitration agreement and as such are excluded from obtaining any information relating to an arbitral process. A counsel or party who has been a victim of a guerrilla tactics employed by an opposing counsel cannot report such misconduct to the bar association in a vacuum, they would have to disclose the existence of the arbitration, names of parties, and give some factual background. This will clearly be in breach of the duty of confidentiality. As Hanns-Christian Salger notes, aggrieved parties who are affected by guerrilla tactics will think twice before reporting such conduct to bar associations due to the usual confidentiality obligations imposed on the parties, arbitrators and their counsel.¹⁷

Arbitration Institutions

The influence of Arbitration Institutions in international arbitration cannot go without mention. They provide immense support for the arbitration process by offering parties the necessary avenue and tools to regulate proceedings. One of such areas of support is the possibility of incorporating rules of ethics and possible sanctions into the rules of an arbitration institution.¹⁸

In this case, when parties elect to resolve their dispute through a designated arbitration institution, their legal representatives would be deemed to be subject to any rules of conduct set by the Arbitration Institutions. The LCIA for instance has incorporated some guidelines on the conduct of legal representatives in the index of its Rules.¹⁹

The regulation and sanctioning of counsel by the Arbitration Institutions take away the challenge of confidentiality as Arbitration Institutions by virtue of the role they play are caught within the circle of disclosure of information relating to the arbitration.

However, entrusting the duty of sanctions to arbitration institutions defers the urgent need for control of counsel behaviour. Thus, until the institution’s court or designated body investigates a complaint by an aggrieved party of misconduct, the perpetrator of the misconduct is motivated to persist with their action.

Additionally, even if arbitration institutions provide guidelines regulating counsel behaviour and stipulating sanctions, parties may agree not to be bound by these guidelines due to the concept of party autonomy. Indeed, the LCIA guidelines for party representatives do not appear to be absolute in themselves. Paragraph 1 of the said guidelines provides emphatically that the guidelines are not intended to derogate from the arbitration agreement or the counsel’s duty to the party they represent in the arbitration.²⁰

Some scholars and commentators have expressed doubts about whether Arbitration Institutions should concern themselves with the sanctioning of counsel. Carlevaris notes that it is not the role of arbitral institutions to regulate ethics by adopting a code of conduct for counsel.²¹ In his view institutions are to rather play an indirect role by using their various tools to influence ethics.

Arbitral institutions however remain instrumental in the quest for ethical practice in international arbitration by counsel. They can be effective as an enforcing agent of arbitrators or tribunals when the latter issues sanctions to counsel. This calls for an examination into the scope of arbitrators’ powers to sanction counsel or attorneys.

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Footnotes

1. Rogers, C., Ethics in International Arbitration, 2014, Oxford University Press, at para 1.03, pg. 18

2. Wilske, S., “Sanctions Against Counsel in International Arbitration – Possible, Desirable Or Conceptual Confusion?” Contemporary Asia Arbitration Journal, Vol. 8, No. 2, pp. 141-184, November 2015

3. “Arbitration Guerrillas” was a term introduced by Michael Hwang to described parties that “try and exploit the procedural rules for their own advantage, seeking to delay the hearing and (if they get any opportunity) ultimately to derail the arbitration so that it becomes abortive or ineffective.” See, Niyati Karia, Ethical Warfare: Guerrilla Tactics in International Arbitration, accessed at https://nliu-cril.weebly.com/blog/ethical-warfare-guerrilla-tactics-in-international-arbitration

4. Rogers, C., supra, at para. 6.128, pg. 261

5. See, Queen Mary University of London, White & Case 2021 International Arbitration Survey: Adapting Arbitration to a Changing World. Accessed at 90% of Respondents in this survey indicated international arbitration as the preferred method for resolving cross-border disputes. Accessed at https://arbitration.qmul.ac.uk/media/arbitration/docs/LON0320037-QMUL-International-Arbitration-Survey-2021_19_WEB.pdf

6. Born, G., International Commercial Arbitration, 3rd Edition, Wolters Kluwer, 2021 at pg. 71

7. Strong, Legitimacy and International Arbitration: An Alternate view, University of Misouri Law School, Available at http://arbitrationblog.kluwerarbitration.com/2017/10/04/legitimacy-international-arbitration-alternate-view/

8. Schill, S. Conceptions of Legitimacy of International Arbitration, ACIL Research Paper, 2017-14, Available at https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2932147_code1636539.pdf?abstractid=2932147&mirid=1

9. Crowell, M. The Court’s Inherent Authority to Discipline Lawyers, University of North Carolina School of Government, May 2011, available at https://www.sog.unc.edu/sites/www.sog.unc.edu/files/course_materials/Court%20Authority%20to%20Discipline.pdf

10. Wilske, S, “Sanctions Against Counsel in International Arbitration – Possible, Desirable or Conceptual Confusion?”, 8(2) CONTEMP. ASIA ARB. J. 141

1.1 Veeder., V.V., The 2001 Goff Lecture: The Lawyer’s Duty to Arbitrate in Good Faith, 18(4) ARB. INT’L 431, 433 (2002)

12. International Bar Association, Guidelines on Party Representation in International Arbitration, Adopted by a resolution of IBA Council on 25 May 2013, at pg. 2

13. Mann, F.A., The UNCITRAL Model Law: Lex Facit Arbitrum, 2 Arb. Int,l 241–60 (1986).

14. Gaillard, E., Theory of International Arbitration, 2010

15. Catherine Rogers, “Lawyers without Borders”, 30 U.Pa.J. Int’l L 1035-1050

16. Rowley, W. S. J. Guerrilla Tactics and Developing Issues, In GUERRILLA TACTICS IN INTERNATIONAL ARBITRATION

17. Hanns-Christian Salger, The Role of Bar Associations, in “Guerrilla Tactics in International Arbitration”, at pg. 296

18. Wilkse, S, “The Duty of Arbitral Institutions to Preserve The Integrity Of Arbitral Proceedings,” (2017) 10(2) CONTEMP. ASIA ARB. J. 201, at pg. 205

19. LCIA Arbitration Rules, Effective 1 October 2020, Available at https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2020.aspx

20. Ibid, para.1

21. Anrea Carlevaris, Secretary General of the ICC Court of Arbitration, made this remark at Queen Mary University of London’s Institute for Regulation and Ethics on 11 September 2014.