REUTERS |

When an arbitrator and party representative are from the same set – conflict in Chambers?

It is common for an arbitrator and party representative to be from the same set of chambers, particularly if the dispute relates to a specialist area of law where there may be a small pool of arbitrators and counsel from which to draw. Is it an issue? And if it is, what should be done?

Two fundamental principles

First, unlike solicitors and lawyers practising in many foreign jurisdictions, chambers are not structured as a partnership; barristers are self-employed. In Laker Airways v FLS Aerospace and another, Rix J dismissed an application to remove an arbitrator, emphasising that:

  • The barristers were not in a partnership. There was no sharing of income or profits.
  • It was common for members of chambers to appear on different sides in the same litigation, as was the case with all large sets of specialist chambers.
  • The arbitrator and barrister were clerked by different teams and their administrative staff were experienced in ensuring there was no leakage of information.
  • Arbitration would become impossible if one party could require an arbitrator to retire by making unjustified allegations about impartiality or bias.

Second, a party’s freedom to choose the advocate of their choice ought to be paramount. Section 36 of the English Arbitration Act 1996 (AA 1996) provides that “Unless otherwise agreed by the parties, a party to arbitral proceedings may be represented in the proceedings by a lawyer or other person chosen by him”. Similarly, Article 26(4) of the International Chamber of Commerce (ICC) Rules 2017 provides that “parties may appear in person or through duly authorised representatives. In addition, they may be assisted by advisers”, and Article 18.1 of the London Court of International Arbitration (LCIA) Rules 2014 provides that “Any party may be represented in the arbitration by one or more authorised legal representatives …”. This principle is reinforced by the cab rank rule, which is designed to ensure that any client is entitled to obtain the services of the advocate of their choice (Conduct Rules, rC29).

Arbitrators

In the domestic setting, it is clear that, generally, there is no objection to an arbitrator being from the same chambers as a party representative (also, see the Bar Council Information Note regarding barristers in international arbitration). Rather, it is necessary to consider whether “circumstances exist that give rise to justifiable doubts as to his impartiality” (section 24(1)(a) of the AA 1996). In doing so, the court will consider “whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased” (Porter v Magill). Relevant considerations include:

  • Whether the arbitrator has promptly and fulsomely disclosed their interest (Jones v DAS Legal Expenses Insurance Co; Cofely Ltd v Bingham and another).
  • That the notional “fair-minded and informed observer” is taken to know about the professional standards the Bar must adhere to and that those standards are part of a legal culture in which ethical behaviour is expected, and reinforced by fears of severe criticism by peers and potential disciplinary action (Taylor v Lawrence).

Where the arbitral tribunal is asked to consider a potential conflict, institutional guidelines are instructive. Part II of the International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration 2014 comprises three lists: Red, Orange and Green. The Orange List is a “non-exhaustive list of specific situations that, depending on the facts of a given case, may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or independence”, which the arbitrator is required to disclose. Rule 3.3.2 of the Orange List is the “arbitrator and another arbitrator, or the counsel for one of the parties, are members of the same barristers’ chambers”.

As in the domestic court setting, in an arbitration setting, prompt and fulsome disclosure of interests to the tribunal and other parties is important. For example, Rule 3 of the Chartered Institute of Arbitrators’ (CIArb) Code of Professional and Ethical Conduct for Members provides that “Both before and throughout the dispute resolution process, a member shall disclose all interests, relationships and matters likely to affect the member’s independence or impartiality or which might reasonably be perceived as likely to do so”.

Generally, if the interest has been disclosed early, and the relationship is simply membership of the same chambers (without more) it seems unlikely that a court or tribunal would conclude that the arbitrator ought to be replaced.

Counsel

The power to remove an advocate, and the test to be applied, is less clear. Given the paramount importance of a party’s right to choose who should represent them, it might be thought that such choice should trump the tribunal’s appointment. However, where such a representative is appointed late in the process, different considerations may arise.

This difficulty is recognised by institutional rules and guidelines, for example, Article 18.3 of the LCIA Rules 2014 and General Standard 7(b) of the IBA Guidelines.

Much turns on the particular circumstances of each case. Such subtleties are well illustrated by two ICSID decisions. In Hrvatska v Slovakia (ICSID Case No. ARB/05/24A), a member of the tribunal was a door tenant in the same chambers as counsel for the respondent. This was only disclosed two weeks before the substantive hearing. The claimant sought an order that the respondent refrain from using their chosen counsel. The tribunal found:

  • The participation of the respondent’s chosen counsel would create “an appearance of impropriety”.
  • It was a fundamental principle that parties may seek such representation as they see fit, but fundamental principles must give way to overriding exceptions – in this case the immutability of properly constituted tribunals.
  • The respondent was not entitled to “subsequently amend the composition of its legal team in such a fashion as to imperil the Tribunal’s status or legitimacy”.
  • There was no hard and fast rule that barristers from the same chambers are precluded from being involved as counsel and arbitrator. But, here the relevant circumstances included that the London chambers system was foreign to the claimant; the respondent made a conscious decision not to inform the claimant or tribunal; the tardiness of the respondent’s announcement; and the respondent’s refusal to disclose the scope of counsel’s involvement.
  • The tribunal had an inherent power to take measures to preserve the integrity of proceedings and as such the participation of the respondent’s counsel would be improper.
  • But “[t]he position could be different if a party objects, on reasonable grounds, that its opponent’s case has been irretrievably infused with decisive strategic contributions from the counsel in question in memorials and other important written submissions … with the consequence that withdrawal of counsel would not be a complete and satisfactory solution”.

In contrast, in Rompetrol v Romania (ICSID Case No. ARB/06/03), the tribunal refused a similar application and a slightly more cautious approach was taken:

“…Absent express provision, the only justification for the tribunal to award itself the power by extrapolation would be an overriding and undeniable need to safeguard the essential integrity of the entire arbitral process. It plainly follows that a control of that kind would fall to be exercised rarely, and then only in compelling circumstances”.

The take away message

It is important to recognise the well-established structure of the Bar, and to guard against improper arbitration tactics (for example, one party to a specialist dispute having the ability to “conflict out” all barristers practising from a particular chambers by simply seeking advice from one member). The participation of two barristers from the same set, acting as tribunal and counsel ought not, necessarily, to give rise to concern.

That said, to guard against the conflicts that may arise, and to provide a measure of comfort, transparency is key. Both the tribunal and counsel ought to promptly and fulsomely disclose any interests, and chambers should have clear and open procedures to ensure confidentiality is preserved.

Where a conflict does arise, it may be necessary to consider the stage in the arbitral process that the issue emerged. Early on, a party’s right to choose who represents them may be an overriding consideration. In contrast, where counsel has become involved late (perhaps due to a change of team), and their continuing involvement would imperil the propriety of the tribunal, the need to safeguard the progress of the arbitration may, legitimately, prevail.

Keating Chambers Jennie Wild

Leave a Reply

Your email address will not be published. Required fields are marked *

Share this post on: