At the 31st lecture in the Freshfields arbitration lecture series held in conjunction with Queen Mary University of London, Professor Lucy Reed delivered a wake-up call with her speech entitled: “(Ab)Use of Process: Sword or shield?“
In answering the following five questions, Professor Reed presented an insightful and disturbing overview of the development of the use of due process in arbitration:
- What is due process?
- Why and how did it get transplanted into international arbitration?
- What is the boundary between procedure and the higher level of due process?
- What is an abuse of due process?
- Why should we be concerned?
Due process, the “procedural cornerstone of the rule of law” designed to defend fundamental procedural rights, remains simple and unchanged. The concept of due process was incorporated in arbitration as a matter of course because tribunals render binding decisions.
However, Professor Reed contended that the increasingly frequent use of procedural complaints dressed up as due process complaints has led to due process being used as a sword rather than a shield. She surmised that it is perhaps the simplicity of the concept of fundamental procedural fairness that has rendered it susceptible to abuse. The audience was reminded that at its core, due process guarantees that a party:
- Has notice of the case against it.
- Has an opportunity to present its case and to respond to the case against it.
- Has its case heard before an impartial tribunal.
- Is treated equally.
Professor Reed noted that in reality in the vast majority of cases, these immutable primary rights are not threatened by run of the mill procedural disputes.
By tracing the evolution of due process guarantees in key arbitral instruments – an evolution that speaks more to the abuse of the concept rather than to any change in the concept itself – Professor Reed demonstrated that legislators have been sufficiently live to abuse or to potential abuse to seek to curtail it. For example, the UNCITRAL Rules 1976 at Article 15(1) used to provide that parties would be given a “full” opportunity of presenting their case “at any stage of the proceedings” whereas the UNCITRAL Rules 2010 provide at Article 17(1) that the parties are given a “reasonable” opportunity of presenting their case at “an appropriate stage”. These changes were not intended to reduce the scope of due process but rather to avoid abuse of these guarantees.
Professor Reed averred that tribunals bear the primary responsibility for policing the boundary between “garden variety” procedural disputes and the higher level of due process violations. However, notwithstanding the various legislative and rule amendments effected to limit unreasonable demands in arbitration, “due process paranoia”, as it is often referred to, continues to infect tribunals leading them to accept any application entitled “Due Process Violation”.
Issues clearly falling outside the scope of due process were said to include a tribunal’s refusal to grant an extension of time, admit the filing of late evidence, admit late claims, accept unscheduled briefs or reschedule a hearing. However, courts do refuse to enforce an award where there has been a true violation of due process for example, where a tribunal has refused to hold a hearing at all, has failed to give notice of a hearing, has held a hearing in the absence of a party, or where an arbitrator has been biased.
Interestingly, Professor Reed queried whether a large number of refusals regarding “garden variety” procedural requests can cumulatively constitute a violation of due process. While some players take the view that it can (and I suspect Venezuela is working up to this in its repeated challenges to the same arbitrator in a couple of arbitrations against it), Professor Reed was clear that it cannot and should not. She was of the view that parties who play this game are simply seeking to intimidate the tribunal, gain advantage over a party or delay proceedings. Indeed, Professor Reed said she was not aware of a refusal to enforce based on a collection of minor infractions.
However, she warned that the subliminal success that these new tactics have means that the arbitral community should be concerned because this strategy harms the proceedings by causing delay. Even arbitrators who appear to be immune to due process paranoia nonetheless often feel the need to deal with every single issue that comes before them so as to remove any possibility that a due process violation allegation might be brought.
Professor Reed’s canter through the basics of one of the fundamental rules of law throws into stark relief how far current tendencies have deviated from solid tenets of good practice in arbitration. She concluded by underlining the need to secure due process as a shield against fundamental procedural unfairness to protect the integrity of the proceedings. To use alleged due process violations as a sword is to undermine and cheapen due process in arbitration – a warning all the more notable for emanating from an arbitrator raised in the corridors of US litigation!