As the economy of the world is rebalancing, so is the world of international commercial arbitration. Some twenty five years back, none of the four BRIC (Brazil, Russia, India and China) countries had an effective international commercial arbitration national law, national arbitration institution with a significant number of international cases, or an international arbitration bar. Now, with the notoriety of the internet and the availability of the international arbitration rules, awards, treaties and other materials, some of the barriers to entry into the field for practitioners, teachers and students of the subject have been significantly eliminated. However, there are some contemporary barriers to entry into the field of arbitration. One of them is lack of diversity in the international arbitral community, especially relating to the distribution of arbitrators appointed in international arbitration.
The issue of diversity in international arbitration was the crux of a panel discussion in the recently concluded 2nd ICC Africa Regional Arbitration Conference in which I was opportune to be a speaker. I began my presentation by considering whether per se, it is a problem to have the same arbitrators decide most international disputes. The answer to this question is now apparent, as it is generally acknowledged that new arbitrators- younger, women or minorities, are needed in order to build the community, as the repeat-players are aging or becoming too busy to take on more appointments. Diversity in all its forms cannot be set aside when discussing the future of arbitration.
A recent analysis was conducted by Robert Kovacs and Alex Fawke on Diversity in Investment Arbitration. They examined the backgrounds of the most frequently appointed Investor State Dispute Settlement (ISDS) arbitrators to assess the diversity of the group in seven areas: gender, nationality, legal tradition (civil or common law), university, professional experience, languages and public international law expertise outside of investment law. Their analysis was based on the claim that the key actors in Investor State Dispute Settlement – the arbitrators, are drawn from a narrow pool of essentially male western corporate lawyers. They created a database of the vast majority of the publicly available investment treaty cases as of December 2014. These were obtained from three sources: International Centre for Settlement of Investment Disputes (ICSID), ITA Law and the Permanent Court of Arbitration (PCA). This totalled 667 cases, with 499 different arbitrators and 1,969 individual appointments. They then listed all of the arbitrators appointed in these cases and the number of times that each had been appointed. They found 52 persons with 10 or more appointments each, with a total of 1,072 appointments between them, representing 54% of appointments. Inter alia, their research revealed as follows:
- Gender: 21% of the tribunals included at least one female arbitrator. Whilst this figure shows that progress is being made, it hides the fact that the female tribunal member in the majority of the cases tends to be either Prof. Bigette Stern or Prof. Gabrielle Kaufmann-Kohler; Professor Stern is most frequently appointed arbitrator while Prof. Kaufmann-Kohler is the sixth most appointed. No other women appear in the sample of 52, and only 2 more (Teresa Cheng and Yas Banifatemi) appear in the top 100. Out of the entire 499 arbitrators, only 25 were women. In other words, 95% of the arbitrators were men.
- Nationality: When the figures were broken down into regions, they read thus: 54%- European, 18%- US and Canada, 14%- Asia-Pacific, 11%- Latin America and 3%- Middle East and North Africa. In reference to economic development of the arbitrators’ countries, the percentage would be: 82% of the arbitrators were from high income countries, 16% were from middle income countries and 2% were from low income countries.
- Legal Tradition: 50% of the arbitrators were qualified in civil law, 42%- common law, 6% qualified in both civil and common law and 2 % were qualified in a hybrid system.
- Professional Experience: there are typically no strict requirements as to qualifications to be appointed as an ISDS arbitrator, although the ICSID Convention states that arbitrators should be “persons of high moral character and recognized competence in the fields of law, commerce, industry or finance (Art. 14). The research revealed thus: 47% of the 52 arbitrators had professional experience in academia, 33% had professional experience from commercial law firms, 12% had professional experience in the judiciary, 28% had professional experience in Government Regulation, 45% had professional experience in all aforementioned areas and only one person had worked in commercial law firms only. The analysis reveals that majority of ISDS arbitrators have experience in commercial law firms.
- Languages: according to the research, majority of the arbitrators spoke French, English, German and Spanish.
Further studies on the issue of ethnic diversity shows that, despite 32.3% of the parties to the International Chamber of Commerce (ICC) Arbitration in 2013 being from Africa, Asia and the Pacific, less than 15% of the Arbitrators appointed in 2013 were from these geographical regions (See 2013 Statistical Report published in August 2014 in the International Chamber of Commerce International Court of Arbitration Bulletin, Vol. 25, No. 1). This underscores the need for rebalancing, especially where as in this case, there is a pool of very qualified arbitrators from the region.
Some have argued that since the parties’ freedom to select any individual for appointment as arbitrator is relatively unfettered, then, if repeat-players are chosen, no one is to blame. Despite the fact that this is a given, statistics still prove that even when it is an institution making the appointment, they still choose the same repeat-players.
It is understandable that, as service providers, bringing in new disputes may be the institutions’ main source of income, and thus, maintaining one’s reputation is paramount. To propose an ‘untested’ newcomer may be seen as dangerous for an institution. However, this approach is unsustainable in terms of continuity of arbitration years from now. From a deeper look at the current state of affairs and the typical profile of the most patronized arbitrators, especially their age, there is no doubt that now is the time to add new members to the arbitrator pool. The obvious lack of statistics that show the number of young people on panels goes to show that young people are possibly not even being considered at all. Also, there is the matter of the increase in arbitration matters and how available these overly patronized arbitrators will be in the long run; bearing in mind that the varied experiences of people from different backgrounds in tribunals could translate to different perspectives hence, richer awards.
DEALING WITH LACK OF DIVERSITY
- Arbitration counsel can advise their clients to consider more diverse candidates for appointment;
- Arbitrators in the underrepresented groups may make effective use of mentorship and pro bono services to gain experience and/or recognition. They may play the roles of Registrars in arbitration proceedings. Networking is also key in curing lack of exposure.
- Arbitral institutions responsible for selecting arbitrators when parties are unable to agree or where otherwise required to do so are best positioned to take the lead on ensuring underrepresented groups are represented on lists and in tribunals.
- Self-improvement: Learning other languages- proficiency in some or all of the four major languages of International Arbitration: French, English, German and Spanish is an advantage. Training and certifications (domestic and international), amongst others.
- If institutions are not convinced of the importance of introducing new voices into the system out of concern for their own reputations, then they should be convinced on the basis of an even more basic need: survival and success of the system. Such institutions will not be taken seriously if they do not produce tribunals or lists of possible arbitrators that are representative, available and credible. Institutions need to take a systemic view because their continued existence is based on the existence of the system. The ‘risks’ for institutions must be outweighed by the advantages to the system. By changing their approach this way, institutions may be able to achieve the appearance of diversity for the system, giving it ‘symbolic’ legitimacy of sort.
Arbitration by its unique nature relies heavily on perception, therefore appearances matter. Thus, for the international arbitration system to maintain legitimacy in the eyes of the public, the appearance of representativeness must be preserved so that the users of international arbitration are able to see arbitration from the perspective of representativeness. To achieve such representativeness, emphasis must be placed on addressing barriers to entry. Institutions should recognize that their very existence is premised on the system’s legitimacy and the perception that arbitration is an extension of a public system with public values.
I conclude with the words of Jan Paulsson in The Alexander Lecture at the Chartered Institute of Arbitrators: Universal Arbitration- What We Gain, What We Lose (November 29, 2012), “the process will be rejected if it is perceived that… the power to decide [is] reserved to mandarins or high priests operating in a few dominant cities”.