REUTERS | Neil Hall

Due process: of swords, shields and warriors

Two recent lectures by prominent arbitration practitioners revisited the issue of due process in international arbitration. In her Freshfields lecture, Professor Lucy Reed noted a recent trend to use due process as a sword rather than a shield. She gave a number of examples where a party sought to elevate a mere procedural complaint to an allegation of due process violation, including through repetition, amplification, sheer number and unrelenting tone of due process challenges.

Whilst drawing a distinction between garden variety procedural complaints and more typical due process violations, she observed that arbitral tribunals suffering from “due process paranoia” may grant procedural applications under the heading of due process in order to protect their awards. She suggested that arbitral tribunals faced with such abuses of due process should clearly delineate procedural complaints from genuine due process objections, hold their nerve, and trust that the courts will back them up.

Echoing Professor Reed’s remarks, Bernardo Cremades noted that:

“…in many arbitral situations, ‘due process’ has today become a real threat to the arbitral tribunal” and that due process now is used as an “aggressive sword” deployed to “force the tribunal to accept certain procedural claims”.

At the same time, Mr Cremades suggested that arbitrators are criticised excessively for the failings of the arbitration industry as a whole, and in particular those of party counsel who abuse due process.

That the problem of abuse of due process in not entirely new is evident from the evolution of international arbitration instruments. In demonstrating this point, Professor Reed lucidly traced a narrowing of the language concerning due process in such instruments, including the UNCITRAL Rules.

So what is it that is different today and which has led to the reported increase in abuses of due process? As is often the case, a number of factors are likely to have contributed to the trend:

  • Increasing complexity of rules, codes and other soft law, such as the IBA Guidelines on Conflicts of Interest in International Arbitration or the Rules on the Taking of Evidence in International Arbitration. This point was made, for example, by Mark Baker at the 2009 IBA International Arbitration Day, where he suggested that there was an undeniable connection between the proliferation of soft law and an increase in the number of arbitrator challenges. The point is of wide application: more soft law creates more incentives and opportunities for parties to deploy it as part of their arbitration tactics.
  • On a similar note, whilst the arbitration community continues to grow, at its core it remains a relatively closed club often riddled with conflicts of interest issues. The professional arbitrator, often overbooked and often with years of experience as counsel representing numerous clients, is an easy target for a party (or counsel) aggressively pursuing arbitrator challenges or raising due process objections.
  • The data revolution in the last 10 to 15 years, including the exponential growth in the use of emails, social media and other electronic data, coupled with rapidly decreasing costs of information processing and the emergence of specialist e-disclosure providers, resulted in the “documentary tsunami”. This is a phenomenon well described by Michael Schneider at the 2009 IBA International Arbitration Day. This, of course, is one of the most fertile grounds for abuses of due process, as parties make use of almost endless opportunities to complain about disclosure and production of documents.
  • It is perhaps also true that the cases that come before arbitrators today are increasingly complex and multifaceted. For example, the calculation of damages is a whole industry in its own right, with the quantum expert being an ubiquitous presence in the arbitration proceedings. Naturally, the more complex the issues and the more detailed the presentation of those issues are, the more opportunities for a party to raise multiple procedural objections.
  • Then there is the economics of arbitration. Typical costs of a full-length institutional arbitration, in a major arbitration centre, are such that it makes no economic sense to bring a claim unless it is for a sum at least in the low millions of pounds. The result is that arbitration is effectively a premium service, where the parties, having decided to commit a small fortune to pursuing a claim, will want, and expect, to have all the opportunities to advance their case.
  • Where tens or hundreds of millions of pounds are at stake, the imperative (and perhaps even duty on the part of counsel) to use all means at a party’s disposal becomes especially acute, whilst the cost of pursuing a very aggressive tactic proportionately diminishes.

The above list is by no means exhaustive, and other factors might also be at play. The point is that in order to deal with the problem of abuse of due process, insofar as it exists, it is necessary to address the underlying issues where possible, rather than simply appeal for more robustness from arbitrators. Viewed from this perspective, a more efficient arbitral process might well prove to be a cure (or at least a palliative) for due process abuses, rather than being its victim.

King & Spalding Grigori Lazarev

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