By Sakshi Agarwal
International arbitration strives to serve an increasingly globalised and ethnically diverse commercial community. However, white male arbitrators from North America and Western Europe continue to dominate most arbitral tribunals, thus limiting its outlook to western cultures. While arbitral women have advocated against this narrowed approach and leading institutions have responded positively, diverse practitioners still remain under-appointed. This paper examines the alarming need for ethnically diverse international arbitration panels by analysing the significance of adopting a diverse approach. Further, it scrutinises the limitations that parties face while appointing arbitrators and recognises the increasing need for rigid support from arbitral institutions in making an ethnically balanced international arbitration a reality.
Introduction
The ‘pale, stale and male’ decision-makers from the western world form a tight homogenous network that dominates international arbitration.[1] The international arbitral community has come down to form a narrow network which makes the need to increase ethnic diversity a valid concern. Gary Benton proposed a new normal to international arbitration, classifying tribunals as ‘defective panels’ in the absence of women and other diverse practitioners.[2] While defective panels often resolve the dispute, it is crucial to recognise that a panel constituted in such a skewed fashion is neither healthy nor normal. Vyapak Desai, during London International Dispute Week in May 2019, coined the term ‘RAGE’ or ‘Race, Age, Gender and Ethnicity’ while highlighting the factors that contribute to efficient adjudication of disputes.[3] While much has been said about the ethnic imbalance that permeates the contours of international arbitration, this imbalance still prevails unabated.
This paper reasons the need to encourage ethnically diverse arbitral appointments. Further, it recognises the problem of arbitrator selection that is the primary factor holding back such progress. Lastly, it appeals to arbitral institutions to lend a helping hand in stimulating ethnic balance in international arbitration.
Significance of Ethnic Diversity in International Arbitration
An arbitrator aims to deliver an accurate arbitral award. In deciding the dispute correctly, what matters the most is the arbitrator’s fact-finding technique which helps him to get as close as reasonably possible to ascertain the correct picture of the disputed events. However, the procedure of perceiving, understanding and applying facts is culturally influenced.[4] This is because facts rise out of ‘cultural interactions.’[5] Therefore, the same set of facts would inevitably be attributed to varied interpretations by people of different ethnicities.[6]
For instance, in Chevron v. Ecuador, the role of a diverse panel was recognised when the issue of environmental pollution was neglected by an arbitral tribunal that could not understand the claims due to lack of tribunal’s indigenous representation.[7] Moreover, in Balraj v. Balraj, the English Court determined a lawsuit of divorce brought by a UK resident Indian man.[8] The Court opined that to understand the hardships of this lady living in Hyderabad with her daughter, the Court would have to exercise a greater insight than any English judge is ideally required.[9]
Arbitration is a social process where arbitrators use their knowledge, experience and unique understanding of justice to interpret facts and reach viable legal reasoning. In international arbitrations, by excluding varied approaches to fact-finding, the parties are deprived of the opportunity to explore potential problem-solving and conflict resolution techniques. On the contrary, the majority of international arbitrators are white men practising western cultures,[10] who are bestowed with the responsibility of handling disputes arising all over the world. In effect, these arbitrators decide large conflicts based on such facts that lose weight when detached from their cultural ethos.
Andrew Morriss, employing his empirical research of judicial reasoning, theorised that an arbitrator could apply different methods for analyses and legal reasoning, thereby rejuvenating the process of deliberation with various styles of reasoning.[11] A multi-ethnic tribunal would have the opportunity to digress from mainstream approaches and materially impact the legal reasoning that derives the ultimate conclusion to the dispute at hand. This is of significance as critics of international arbitrations usually lay stress upon the quality of legal reason in arbitrations.[12] Therefore, a culturally diverse panel would promote better fact-finding approaches, improved legal reasoning and finally reflect the diversity of the parties it aims to serve: culturally and ethnically diverse.
Overriding Ethnicity: The Problem with The Appointment of Arbitrators
If fact-finding is the most important determinant of a dispute and selecting the arbitrator is the most important process of the arbitral proceeding, then by ensuring that the appointed arbitrator is capable of interpreting the fact with precession would help the parties to reach a better product.[13] It is settled law that in international arbitration, the principle of party autonomy prevails.[14] Parties actively participate in the arbitrator’s selection process. In the Berwin Leighton Paisner (‘BLP’) Survey, when asked anonymously, 93% of people thought of an arbitrator’s expertise as an important determinant in the appointment process.[15] However only 54% believed that having a diverse panel is desirable in arbitration. Moreover, 30% noted that ethnicity is not an important factor to consider while appointing an arbitrator.[16] While parties cannot be reasonably expected to appoint an arbitrator they are unfamiliar with, parties’ counsel plays an important role in the arbitrator selection process.
Arbitrator’s soft and technical skills such as, case specific strategies, case management skills, flexibility, willingness to adopt certain procedures (such as joinder of third party, interim relief, document disclosure, witness examination, etc.) play a vital role in its selection process.[17] However, due to reasons of confidentiality, such information is not available for public view. Therefore, to assess an arbitrator’s abilities, legal counsels conduct inquires via ad hoc research or personal inquiries.[18] Counsels carrying out such research hope that the individuals they contact would provide case-specific feedback, which would aid them in assessing the concerned arbitrator’s approach for the case at hand. Other sources like academic works, journal articles and rarely available arbitral awards provide limited knowledge about the concerned arbitrator’s decision history, intellect and temperament are utilised for research purposes. However, the accuracy of this crucial information can differ depending upon the person inquiring, the person responding, and the arbitrator in question.[19]
As these opinions upon the concerned arbitrator are subjective, they could be outdated. Furthermore, the individual’s candidness to share this kind of sensitive information might depend predominantly upon how well he knows the person making such an inquiry. This is because in disclosing any unflattering details relating to the arbitrator, the individual would naturally feel more comfortable around someone he knows well.[20] Therefore, given the gravity of the matter, relying upon such a low-tech process is inevitably problematic.
The problem of diversity escalates when counsels are faced with the conundrum of ‘the best chance to succeed.’[21] In such a case, a counsel wanting to promote diversity is faced with the ultimate diversity paradox.[22] The counsels would naturally want to choose the ‘best’ arbitrator for their clients. While ‘best’ could entail varied parameters, it is favourable for the counsel to select a well-known big-name who could influence the outcome of the proceeding. Counsels intentionally favour ‘old boys’ when advising clients about potential arbitrators.[23] This is illustrated via an account of an anonymous commentator in the international survey, who mentioned that when asked by a client to select an arbitrator, promoting diversity is the last feature on anyone’s mind.[24]
Thus, if not diversity, what do parties prioritise while choosing an arbitrator is vital to address to increase ethnic diversity. As mentioned earlier, 93% of people prioritised expertise and 91% preferred efficiency as crucial deciding factors in appointing the arbitrator. But again, finding the ‘best person for the job’ is difficult for the reasons mentioned above, and the same procedure lacks a diversity driven approach. Therefore, we need a reliable mechanism to search for a suitable arbitrator, keeping in mind long-neglected factors like gender diversity and multi-ethnicity.
Do Arbitral Institutions Possess the Ability to Step Up Ethnic Diversity?
In recent years, developed jurisdictions have switched from an ad-hoc arbitrator appointment systems to a more sophisticated arbitral institution-based mechanism. Arbitral institutions’ role mainly includes resolving procedural difficulties such as ensuring an unbiased and confidential bound arbitral proceeding and aiding the clients in constituting the arbitral tribunal.[25] Naturally, this development puts arbitral institutions in a significant position to lead the way to a more diverse international arbitration.[26]
Arbitral institutions should adopt a dynamic approach by publishing relevant information such as qualifications, decisions, related material regarding arbitrators to promote a transparent appointment system. This will immensely aid parties in making their appointment decisions by choosing amongst the best candidates. As arbitral institutions possess more material knowledge about arbitrators and related matters than any other stakeholders in the arbitral community,[27] they ought to improve information dissemination by forming resourceful platforms and networks. This would mitigate the limitations that international arbitration faces today created by repeated appointments of ‘old boys’, barriers to entry for upcoming diverse experts, word of mouth inquiries, etc. This mechanism can replace the mainstream approach to arbitration, which stands on limited assumptions and subjective inquiries. Studies suggest that decision-makers often rely on illicit subjective input in the absence of qualitative and quantitative data.[28] Therefore, carefully curated information networks are quintessential for parties and legal counsel to make an informed decision while selecting the most suited arbitrator for the case at hand.
While most international arbitral institutions have accepted the concept of ‘RAGE’, they lack an appropriate system to vocalise the cause via publishing of relevant arbitrators’ details and the same needs to be developed. In 2016, the International Chamber of Commerce initiated the process of publishing information about the arbitrators appointed.[29] Earlier it used to provide statistics only relating to the balance of the tribunals constituted by the institution. Similarly, other institutions, such as the Hong Kong International Arbitration Center and the Singapore International Arbitration Centre, publish such statistics.[30] However, these institutions do not maintain depositories where data regarding background, skill-set and expertise of the arbitrator could be accessed. To fully achieve the representation of diverse candidates, arbitral institutions should commit themselves to publish information and overthrow the traditionally prevalent informal networks that dictate the current appointment system.
However, arbitral institutions are responsible for only a fraction of all appointments.[31] Therefore, there exists a possibility that parties themselves are unable to increase ethnic diversity. In such a case, institutional rules can be amended to provide an optional mechanism (due to party autonomy) that ensures that on a three-member/sole tribunal, at least one appointment happens in accordance with the ‘RAGE’ concept. A hybrid approach could be adopted according to which a roster of diverse practitioners is provided to the parties to choose their arbitrator from. Another solution could be by keeping the name, age, ethnicity and gender of the arbitrator undisclosed so that the nomination is primarily based on factors of qualification and other eligibility requirements. All these approaches strive to achieve the same goal of ‘diversity in international arbitration’.
Conclusion
A significant technology-based contribution to ameliorate the diversity in international arbitration — Arbitrator Intelligence using the Arbitrator Intelligence Questionnaire has emerged in recent years. However, it is heavily dependent upon arbitral institutions for gaining consideration and finding an appropriate way for actual implementation. The efforts of arbitral institutions in disseminating pertinent information regarding the best arbitrators would go a long way in promoting transparency in arbitrator’s appointment. It would help level the playing field for diverse arbitrators who had remained invisible to the parties and counsels for so long. While calling out the ‘big boys’ network as a defective panel is revolutionary, it still remains utopian. Even though achieving an ethnic balance in international arbitration seems a long way, once it becomes a reality, it would improve not only the outlook of the international arbitral community but also the quality of decision making by shifting from the mainstream to a more broad-based legal reasoning. Hence, promoting ethnic diversity in international arbitration remains a concern that has to be resolved by stimulating RAGE at the heart of international arbitration.
The author, Sakshi Agarwal, is an undergraduate law student at the West Bengal National University of Juridical Sciences (NUJS), Kolkata.
[1] Susan D. Franck, James Freda, Kellen Lavin, Tobias A. Lehmann & Anne van Aaken, The Diversity Challenge: Exploring the ‘Invisible College’ of International Arbitration, 53 COLUMBIA JOURNAL OF TRANSNATIONAL LAW 429 (2015).
[2] Gary L. Benton, Let’s Stop Talking About the Arbitrator Diversity Problem, January 14, 2018, available at http://arbitrationblog.kluwerarbitration.com/2018/01/14/post/ (Last visited on June 17, 2021).
[3] Payel Chatterjee & Vyapak Desai, Is Increasing Gender and Ethnic Diversity in Arbitral Tribunals a Valid Concern?, March 1, 2020, available at http://arbitrationblog.kluwerarbitration.com/2020/03/01/is-increasing-gender-and-ethnic-diversity-in-arbitral-tribunals-a-valid-concern/ (Last visited on June 17, 2021).
[4] Won Kidane, Does Cultural Diversity Improve or Hinder The Quality of Arbitral Justice?, March 31, 2017, available at http://arbitrationblog.kluwerarbitration.com/2017/03/31/does-cultural-diversity-improve-or-hinder-the-quality-of-arbitral-justice/ (Last visited on June 17, 2021).
[5] Id.
[6] Douglas Pilawa, Sifting Through the Arbitrators for the Woman, the Minority, the Newcomer, 51 CASE W. RES. J. INT’L L. 395 (2019).
[7] Chevron Corporation (USA) and Texaco Petroleum Company (USA) v. The Republic of Ecuador, UNCITRAL, PCA Case No. 34877, Interim Award, ¶¶¶3.21, 3.22, 3.181.
[8] Balraj v. Balraj, (1981) 11 Fam Law 110.
[9] Id.
[10] Pilawa, supra note 6, 428.
[11] Gregory Sisk, Michael Heise, & Andrew Morriss, Changing the Influences on the Judicial Mind: An Empirical Study of Judicial Reasoning, 93 N.Y.U. L. REV. 1377, 1380-488 (1998).
[12] Naimeh Masumy, Is Increasing Gender and Ethnic Diversity in Arbitral Tribunals a Valid Concern and Should Arbitral Institutions Play a Greater Role Ensuring Diversity?, November 23, 2020, available at https://www.fordhamilj.org/iljonline/2020/11/23/is-increasing-gender-and-ethnic-diversity-in-arbitral-tribunals-a-valid-concern-and-should-arbitral-institutions-play-a-greater-role-ensuring-diversity#_ftn11 (Last visited on June 17, 2021).
[13] Pilawa, supra note 6, 429.
[14] MV Lupex v. Nigeria Overseas Chartering & Shipping Ltd., (2003) 10 SCM 71 at 79; Sunday A. Fagbemi, The Doctrine Of Party Autonomy In International Commercial Arbitration: Myth Or Reality?, 6 AFE BABALOLA UNIVERSITY: J. OF SUST. DEV. LAW & POLICY (2015).
[15] Berwin Leighton Paisner (‘BLP’), Survey on International Arbitration Survey: Party Appointed Arbitrators, 5, available at https://www.bclplaw.com/images/content/1/4/v2/147194/BLP-Arbitration-survey-2017.pdf (Last visited on June 17, 2021); White & Case, 2021 International Arbitration Survey: Adapting arbitration to a changing world, May 6, 2021, available at https://www.whitecase.com/publications/insight/2021-international-arbitration-survey/diversity-arbitral-tribunals (Last visited on June 17, 2021).
[16] Id.
[17] Catherine A. Rogers, The International Arbitrator Information Project: An Idea Whose Time Has Come, August 9, 2012, available at http://arbitrationblog.kluwerarbitration.com/2012/08/09/the-international-arbitrator-information-project-an-idea-whose-time-has-come/?_ga=2.39197859.1678071588.1623389203-1154087089.1619672122 (Last visited on June 17, 2021).
[18] Id.
[19] Rogers, supra note 17.
[20] Masumy, supra note 12.
[21] Lisa Bench Nieuwveld, Choosing the Weathered Veteran or the Young Buck, January 8, 2011, available at http://arbitrationblog.kluwerarbitration.com/2011/01/08/choosingthe-weathered-veteran-or-the-young-buck/ (Last visited on June 17, 2021); Catherine A. Rogers, The Key to Unlocking the Arbitrator Diversity Paradox?: Arbitrator Intelligence, December 27, 2017, available at http://arbitrationblog.kluwerarbitration.com/2017/12/27/on-arbitrators/ (Last visited on June 17, 2021).
[22] Id.
[23] E. Oger-Gross, Gravitas: Persuasion And Legitimacy, 4 TDM 78 (2015).
[24] Lucy Greenwood & C. Mark Baker, Getting a Better Balance on International Arbitration Tribunals, 28 J. OF THE LONDON COURT OF INT’L ARB. 653, 661 (2012).
[25] Janice Lee, The Evolving Role of Institutional Arbitration In Preserving Parties’ Due Process Right, 10(2) CONTEMPORARY ASIA ARBITRATION JOURNAL 235-256 (2017).
[26] GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 2606 (2nd ed., 2014).
[27] David Gaukrodger, Appointing Authorities and the Selection of Arbitrators in Investor-State Dispute Settlement: An Overview by OECD, (March 2018), available athttps://www.oecd.org/investment/investment-policy/ISDS-Appointing-Authorities-Arbitration-March-2018.pdf (Last visited on June 17, 2021).
[28] JAY LIEBOWITZ, BUSTING THE BIG DATA BUBBLE: THE CASE FOR INTUITION-BASED DECISION MAKING 73, 79-85 (2014).
[29] International Chamber of Commerce, ICC beings Publishing Arbitrator Information in Drive for Improved Transparency, June 27, 2016, available at https://iccwbo.org/media-wall/news-speeches/icc-begins-publishing-arbitrator-information-in-drive-for-improved-transparency/ (Last visited on June 17, 2021).
[30] Hong Kong Arbitration Center, Statistics 2019, available at https://www.hkiac.org/about-us/statistics (Last visited on June 17, 2021).
[31] Desai, supra note 3.
The Journal of Indian Law and Society 