This article is written by Dharmender Pandey pursuing Certificate Course in Arbitration: Strategy, Procedure, and Drafting from LawSikho.
Table of Contents
Being legal professionals, we are very familiar with ethics. But it is not the legal professionals only to whom the ethics are required but it is also important for all the individuals, professionals, and corporations in each society. In international arbitration apart from the arbitrators and counsels there are the disputed parties also involved. The ethics are not only necessary for the arbitrators and counsels only but it is very important to be followed by the disputed parties too.
Dictionary meaning of ethics: Ethics as per Black Law of Dictionary is known as; what is generally called the “ethics” of the profession is but the consensus of expert opinion as to the necessity of professional standards.
- The word ethics evolved from the Greek word ethos, which means “character” and from the Latin word mores, which means “customs”. As the first great philosopher Aristotle, he said in order to determine what is ethically good for an individual and for the society, it is necessary that it should contain three qualities: temperance, courage, and justice.
- We all are aware that for every organisation, small or big needs morals and principles which are known as ethics of that organisation In any of these organisations when all or some of the stakeholders are not aware of the Ethics or knowingly not following the same. Ethical issues arise during the course of business and impact the reputation of it. To know the importance of ethics and its impacts when it is not followed in international arbitration we have to go through the article.
- With the passage of time, the stakeholders of international arbitration increase rapidly in comparison to the past due to globalization. As the stakeholders are from different cultures and legal traditions it is very important to set some common rules and regulations to avoid any future conflict and flourish harmony among all stakeholders. Some of the ethical issues are impartiality, independence, and disclosure, and more we will discuss later in the article.
- The ethics are different for different stakeholders i.e. international institutional arbitration center, arbitrator, counsels, and the parties involved in international arbitration. I would like that by reading this article all the readers will come to know what is ethics, who all are required to follow these ethics, and what role it plays in international arbitration.
- International arbitration is the process where different individuals or companies from different sovereign state present their dispute to the independent sole arbitrator or arbitral tribunal comprising of odd numbers of arbitrator through ad-hoc or by International Institutional Arbitration Center (mostly), in case of the dispute arises out of a provision of existing contract or all the parties of the dispute agree for the same after the dispute arises for the arbitration in writing. The international arbitration can be traced back to the Jay Treaty (1794) between the United States and Great Britain, for dispute resolution arising out of the American Revolution. To know more about the International commercial Arbitration we could refer to Section 2(f) of The Arbitration and Conciliation Act, 1996 and the case of Dominant Offset Pvt. Ltd. v. Adamovske Strojirny A.S., 1997(2) Arb LR 335.
- During the 19th century, it has been seen that various commissions which include equal members from all the disputant countries (mixed arbitral commissions) were used to settle pecuniary claims for the compensation of injuries to aliens for which justice could not be obtained in foreign courts. The 1868 convention between the United States and Mexico which helped to settle disputes arising from the Civil War for citizens of the disputed countries was also settled by arbitration.
- The Hague Convention played a very important role in recognizing international arbitration as a more permanent basis which was adopted during the Hague Conference of 1899 on the pacific settlement of international disputes, which was revised by a conference in 1907. The Convention stated; international arbitration has its object for the settlement of disputes between the Sovereign States by judges of their own choice and based on respect for the law. Recourse to arbitration implies an engagement to submit in good faith to the award.
A Permanent Court of Arbitration, composed of a panel of jurists appointed among the member governments, from which the litigant governments select the arbitrators, was established at The Hague in 1899.
Ethical issues in international arbitration
With the popularity of international arbitration, the number of arbitrators and counsel expanded exponentially. This growth had included the participation of arbitrators, counsels, and parties from different cultures and legal traditions. With the increasing trend of differ/ent cultures and legal traditions coming into conflict, there was a great demand for guidelines or rules, should govern international arbitration. Keeping this in view lots of rules and regulations are made for arbitrators, counsels, and parties. Although in most of the arbitration centers in the world there are well-established rules by which the arbitrators are bound but for counsels and parties only some guidelines are issued by some of the institutions but in my opinion, there must be some set of rules for them too. Most of the ethical rules discussed are based on the International Bar Association (“IBA”) which will make the work of the International Arbitration very smooth.
- Rules of ethics for international arbitrators
- Rules of ethics for counsels
- Rules of ethics for parties involved
Rules of ethics for international arbitrators
- Arbitrators shall give their best to provide the parties with a just and effective resolution of their disputes, and shall be and shall remain free from bias “Impartiality”. (See the Judgement of Diplock J in Margulies Brothers Limited v. Dafnis Thomaides & Co (UK) Limited  1 Lloyds )
- A prospective arbitrator shall accept an appointment only if he is fully satisfied that he can give his best to discharge his duties without any bias.
- A prospective arbitrator shall accept an appointment only if he is fully satisfied that he is well competent to determine the issues in dispute, and has adequate knowledge of the subject matter, and is very well versed with the language of the arbitration.
- A prospective arbitrator should accept an appointment only if he can give sufficient time and attention to the arbitration, which the parties are reasonable, entitled to expect.
- Contacting parties to solicit appointments as arbitrators is inappropriate.
- A prospective arbitrator should disclose all facts or circumstances that may give rise to justifiable doubts as to his impartiality or independence.
- A prospective arbitrator should disclose any past or present business relationship, whether direct or indirect with parties involved or any witness.
- An arbitrator should avoid any unilateral communications regarding the case with any party or its representatives, throughout the arbitral proceedings. But if it is unavoidable then the arbitrator should inform the other party or parties and arbitrators of its substance.
- An arbitrator shall make no unilateral arrangements for fees or expenses unless the parties agree otherwise or a party defaults,
- The deliberations of the arbitral tribunal, and the contents of the award itself, remain confidential in perpetuity unless the parties release the arbitrators from this obligation. An arbitrator should not participate in or give any information for assistance in, any proceedings to consider the award unless, exceptionally, he considers it his duty to disclose any material misconduct or fraud on the part of his fellow arbitrators.
Rules of ethics for counsels
- The counsels should follow the rules of conduct applied before that tribunal.
- The counsels should maintain due regard for the fair conduct of the proceedings.
- The counsels should maintain due respect and courtesy toward the tribunal while defending the client’s interests and doing so without regard to the lawyer’s interests or any consequences to him or herself or any other person.
- Never knowingly giving false or misleading information to the tribunal.
- Counsels should not make contact with the judge without informing the lawyer acting for the opposing party.
- The counsels should not divulge the case and client’s information to anybody else.
- The counsels should be aware of the ethical rules of the seat and the countries involved and abide by them.
Rules of ethics for parties involved
- The parties of the disputes should respect the tribunal and other parties involved.
- The parties should refrain from using vulgar, insulting, or otherwise inappropriate language.
- The parties should refrain from making false statements, the use of false evidence, or the concealment of documents.
- The parties should not disclose any matter regarding the proceedings of the tribunals or anything related to proceedings that are otherwise not present in the public domain.
- The parties should not delay the proceedings unnecessarily.
- There might be more ethical rules which should be followed by all who are involved in international arbitration.
Remedies for ethical issues
There are lots of remedies for ethical issues of International Arbitration and some of them are as follows as per my opinion:
- We must make an Institution in which all of the countries are members of international arbitration.
- Universal ethics must be framed with the consultation of all its member countries.
- Wide publicity of these rules among all the stakeholders of international arbitration.
- The counsels of international arbitration must be certified for such professional conduct and ethical rule.
- Strict implementation of such rules must be followed by all the stakeholders of international arbitration.
- Strict penalties must be levied on the non-followers of these rules in international arbitration.
In my view, ethical issues play a very important role in international arbitration. Ethical issues must be followed by the various stakeholders of the international arbitration to avoid any confusion among them. This will play a very crucial role to maintain the status of the international arbitration institutes, friendly cooperation among the parties and their counsels. Even if all the stakeholders follow these ethical rules I am very sure that it could help during the execution of the arbitral awards.
After reading this whole article anyone could very easily understand the ethical issues in international arbitration, how do these ethical issues impact the arbitration procedures in international arbitration, and what are the remedies to resolve these problems. All the international organisations involved in the process of arbitration, make ethical rules by taking care of the cross cultures of all the stakeholders, and if everyone agrees to follow these ethical rules then a lot of problems of international arbitration will be resolved.
- Gary B. Born, International Commercial Arbitration, 187, 197, 217 (2009); Julian M. Lew, Loukas A. Mistelis & Stefan M. Kröll, Comparative International Commercial Arbitration 1-10 to 1-11, 6-1 to 6-6 (2003)
- Journal of Dispute Resolution, Vol. 2018, Iss. 1 , Art. 10
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