The role and responsibilities of an arbitrator

Audley Sheppard KC
Twenty Essex, London
asheppard@twentyessex.com

The theme of the 10th IBA International Arbitration Day held in Madrid in March 2007, being ‘The Role and Responsibilities of an Arbitrator’, is as relevant today as it was then.

The four sessions examined: the status and duty of an arbitrator; appointment, organization and powers; deliberations and awards; and what makes a good arbitrator. 

These questions continue to be discussed in articles and at many conferences all over the globe. While there have been well-received initiatives, such as the IBA Guidelines on Conflicts of Interest, which has contributed to wide-spread harmonization on the approach to be taken to conflicts, there is no common understanding or settled answers on many of the other matters. That is not necessarily a bad thing: arbitrators should come in different shapes and sizes and the parties can make a choice as to their preference when making their selection. 

At the heart of the discussions and perhaps the most difficult question to answer is what makes a good arbitrator? In Madrid, we heard the perspectives of two institutions (ICC and LCIA), an advocate, an arbitrator and a party. But ask the parties and they may answer differently before and after the final award! 

As counsel, I looked for someone who had the four Cs: conflict-free; clever; conscientious; and collegiate.  

These criteria prima facie speak for themselves. An arbitrator must of course be conflict-free, and if not can be challenged (or worse, the losing party can seek to have the award set aside or enforcement resisted), according to the applicable procedural rules and/or national arbitral law. By clever, I mean an arbitrator who has a good understanding of the subject matter and/or applicable law. An arbitrator should also be perceptive and understand the commercial context of the dispute and human nature. Good intuition and common sense are also desirable qualities. An arbitrator should be conscientious in that she/he will respond promptly to communications, read submissions and evidence thoroughly, be well prepared for the hearing, and write (or contribute to the writing of) the award expeditiously, all which also requires capacity (perhaps a fifth C but possibly of more concern to a claimant than a respondent). And an arbitrator in a tribunal of three should be collegiate and be able to collaborate constructively with the co-arbitrators so that her/his viewpoint is listened to by the others and be persuasive. 

But in reality, counsel and parties are also often looking for something more. Many readers will know and likely agree with Martin Hunter’s comment, based on his many years of practical experience: “When I am representing a client in arbitration, what I am really looking for in a party-nominated arbitrator is someone with the maximum predisposition towards my client, but with the minimum appearance of bias” (Hunter, ‘Ethics of the International Arbitrator’, 53 Arbitration 219 at 223, 1987).  Most commercial cases concern breach of contract and it would be impossible for counsel for a claimant to classify (let alone find) arbitrators who have a disposition in favour of breach of contract. (In some industry-specific disputes, some arbitrators may be perceived to have a predisposition in favour of, for example, the insurer or the insured.)

Most disputes that get to arbitration and a hearing are much more nuanced and require the exercise of judgement as to the meaning of the contract and/or an assessment of conflicting evidence. In these respects, it may be possible to anticipate the likely approach of an arbitrator, based on their legal background, talks and articles, and public awards (if any), for example whether they tend to take a literal or purposive approach to contractual interpretation, but generally one never completely knows. One gains insights into others when on a tribunal with them, however (and it may be trite, but it is nevertheless very true) each case turns on its own facts and circumstances. 

In commercial cases, the four Cs have been given more weight than inferred predispositions. However, that may be changing, due to the influence of the arbitrator selection practices investor-state dispute settlement (ISDS). In ISDS, parties often look for and appoint arbitrators that are known or perceived to have a predisposition, held in good faith, in favour of protecting risk capital from unjustified government interference, on the one hand, or in favour of respecting the right of governments to regulate, even if dome cumbersomely or inconsistently, on the other hand. This is evidenced by the number of repeat appointments of some arbitrators by investors and states, respectively. 

This has caused, in my opinion, a trend for international counsel also to seek to identify predispositions in commercial arbitrators. But background and publications take one only so far.  In talks on this topic, I have said, mainly in jest, that I anticipated that one day counsel would ask potential arbitrators to submit their handwriting for a graphology analysis to help infer character traits and preferences. It has come to pass. I know of one case where short-listed potential arbitrators were asked to do a personality test (similar to the Myers-Briggs test). Will there be a time when CVs will have psychological assessments attached?

There is no doubt that each person’s DNA, upbringing, training and experience, will - mostly unconsciously – filter and colour what they read and hear. Lawyers are no exception (even if they think they can be more objective). Professor Rachel Cahill-O'Callaghan has conducted a study of UK Supreme Court judgments and found that there is discernible evidence that values influence a judge’s decisions when the result is not clearly dictated by statute or precedent (‘Values in the Supreme Court: Decisions, Division and Diversity’, Hart Publishing, 2020). The term ‘values’ covers a wide range of concepts, including belief systems, moral imperatives, political dispositions, societal expectations and institutional norms. Values amount to bias in the scientific sense, but not as encompassed (yet) by the IBA Rules. Professor Stavros Brekoulakis and Anna Howard have done research into contextual biases of ISDS arbitrators ('Impartiality and the Construction of Trust in Investor-State Dispute Settlement' (2023) 38 (3) ICSID Review - Foreign Investment Law Journal 644, 2023). Values also undoubtedly influence each and every commercial arbitrator.

Whether the influence of values on an arbitrator is considered a positive or a negative depends, in part, on whether counsel thinks they can predict the effect of any inherent predispositions. However, accurate prediction is unlikely for many of the more subtle and often invisible values (unless thorough psychological and value testing is introduced, see above). 

Whether a positive or a negative also depends on what we want an arbitrator to be and what makes a good arbitrator. Being a commercial arbitrator in practice is not as simple (by some margin) as determining between two contested factual theories and applying the law. If it is that logical, it might as well be done by an AI algorithm. Determining disputed facts or ambiguous contractual wording requires judgement (and the aforementioned intuition and common-sense). It is said that such judgement is objective, but it isn’t: it is hopefully impartial, but it is influenced by our psychology and values. The human element of judging is in one sense flawed, because of unconscious predispositions. And so say the AI proponents. But AI programming is also partly subjective.

The recent ICCA Congress in Hong Kong was on the topic of ‘International Arbitration: A Human Endeavour’.  Chiann Bao and I, as co-programme chairs, received feedback from several contributors that counsel and parties wanted humans to decide their cases, because it was an essential element of feeling justice had been done.
Justice is served by an experienced and wise decision maker in whom the parties have trust, albeit recognizing that such person will have attitudes and values that are unknown to the parties. But if one such value is a desire to do justice, the parties can consider themselves to be in safe and fair hands, and are more likely to respect an unfavourable outcome. 

Lady Justice has often been depicted in statutes wearing a blindfold. The blindfold was originally a satirical addition intended to show Justice as blind to the injustice carried on before her, but it has been reinterpreted over time and is now understood to represent impartiality (cf. Lady Justice atop the Old Bailey courthouse in London stands without a blindfold). 

The role and responsibility of the good arbitrator is to dispense arbitral justice. That begs the question, what is arbitral justice? Is it applying the contract and/or law irrespective of the outcome, including assessing damages. Is there any role for good faith, equity and proportionality? Answers to these questions will depend in part on the governing law.

But most disputes, whatever the governing law, require a tribunal to assess, with eyes open, the evidence and the consequences and to apply judgement. That concept of arbitral justice is at the core of all IBA Arbitration Days.