The Arbitrator’s Pledge

Arbitration, as any other human “product,” may have defects, but this is not necessarily frequent. In other words, this does not mean in the least that arbitration is by itself always defective.

It is not rare for users to complain about the arbitrator, or the arbitral institution.

Much depends, of course, on how their arbitration was conducted.

I. PARTIES COMPLAINTS AS TO THE ARBITRATOR OR AS TO THE ARBITRAL INSTITUTION

Users who are unhappy with the results of an arbitral proceeding should sometimes blame their own case for not being sufficiently grounded, in which event they are not really entitled to complain about its consequences.

On other occasions their complaint may be justified. That may be the case if the proceedings last many years, or if a party feels that it has not been allowed to present its case or to prove it, or because the arbitrator has committed an error of law (such as the application of the wrong substantive law) or of fact.

A party may also feel – rightly or wrongly – that the arbitral institution has not properly selected the chairman of the arbitral tribunal or has not well administered the proceedings.

These complaints have already been addressed by several writers.1

II. PARTIES’ COMPLAINTS AS TO THEIR COUNSEL AND AS TO HIS/HER FEES

On other occasions a party may complain about the way its counsel has argued its case. In this event, counsel’s behavior, which has produced such unhappiness, may be the same as his/her behavior in court proceedings.

Even a party’s possible complaint for excessive costs of the arbitral proceedings may be the same as heard with regard to court proceedings. However, this specific issue may deserve to be addressed, since the parties generally refer their dispute to arbitration because they expect arbitral proceedings to be less expensive than court proceedings.

If counsel fees in arbitral proceedings are the same as for court proceedings, this is a good reason for a party not to be happy, because cost-wise it has not produced a better result.2

High fees may be due to the complexity of the case, such as in construction disputes which frequently are not one case but a bundle of claims and counterclaims. In this event, there may be a good reason for high fees.

On other occasions, this may be due to counsel having raised many unnecessary arguments, which sometimes are doomed from the start. Critics of the attitude of counsel say that this is due to their wish to increase their fees. It is suggested that it is preferable not to accept this explanation, because this conduct would not be proper, being in breach of counsel’s duty to put his/her client’s interest above his own, and it is hoped that it rarely happens.

A more positive explanation for excessive fees, when due to a great number of manifestly ungrounded arguments, is the understandable wish of counsel to raise any possible argument due to an excess of pride or to the concern that the client may later complain about his/her not having raised all of them.

A great number of hopeless arguments, claims or defenses, will tend to produce other negative effects, such as on the one hand a considerable increase in the duration of the proceedings, and on the other hand absorbing too much of the attention of the arbitrator, with the result that, when he/she has to face the decisive issues, he/she may have exhausted too much energy.

A further possible reason for such costs is the excessive number of documents which are produced or indulging in too long and largely excessive discovery proceedings.

The combined result of these and possible other factors is that in some arbitral proceedings counsel fees are not only the highest item of the global costs of such proceedings, but are extremely high in and of themselves. Fees even in excess of U.S.$10 million have been claimed and granted and in the recent Yukos arbitration, this was in the area of U.S. $50 million.

Excessive fees damage even the very image of arbitration. Various ways to control them have been explored by arbitration scholars and practitioners. Let us try to contribute to that by a couple of items.

III. THE ARBITRATOR’S PLEDGE

An Arbitrator’s Pledge should perhaps be made available to the parties by potential arbitrators. The attached Arbitrator’s Pledge has been approved by the European Court of Arbitration in order to protect the parties and the image of arbitration.

IV. THE ARBITRATOR’S CONDUCT OF THE PROCEEDINGS

To begin with, a pledge by the arbitrator may be of comfort to the parties, in deciding whether to refer a dispute to arbitration, when they see that the potential arbitrator has undertaken to act in a certain way – for example to bear in mind at all times that his/her fundamental task is to render justice and not to write a brilliant intellectual essay; to invite the parties to enter into a stipulation covering procedure, time and cost; to ask the parties to express what they expect from the arbitrator; to undertake to act with diligence and expedition; to devote to the proceedings all the time which they require and to ensure that the parties’ right to prove their case be strictly respected.

An easy example of lack of respect of such right is provided by the frequent shortening by the arbitrator of the list of witnesses before the evidentiary hearing, at a time when he/she is very frequently not yet in a position to know how many witnesses will be necessary (which frequently may become clear only when several witnesses have already been deposed on a specific issue).

The Arbitrator’s Pledge may deal also with the issue of excessive legal fees by including the arbitrator’s commitment not to tax counsel’s fees for an amount in excess of a given multiple of the fees of the arbitral tribunal, dividing those which will be established by the parties (or by the arbitral institution) by the number of its members. In very special cases, to be fully justified by the arbitrator, the taxation of such fees might go up to a higher multiple of the arbitrator’s fees.

 

 

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