Examining IBA Guidelines on Party Representation in International Arbitration

Publication November 2013


Introduction

On May 25, 2013, the IBA Council adopted by resolution the IBA Guidelines on Party Representation in International Arbitration. What follows is a summary and a brief analysis of the 27 guidelines, which may yet become de facto reference points for tribunals and counsel seeking to preserve the integrity of the international arbitration process.

The IBA Guidelines

The IBA Guidelines seek to address issues arising from the fact that party representatives in international arbitration will often be governed, guided and constrained by differing ethical norms. The Guidelines contain a preamble, a definitions section and 27 guidelines as well as comments sections (the Comments) to provide further clarification of the Guidelines.

Application and overarching principle

As stated in the preamble, the Guidelines “are inspired by the principle that party representatives should act with integrity and honesty and should not engage in activities designed to produce unnecessary delay or expense.”

Guidelines 1 through 3 address the application of the Guidelines.

The Guidelines apply where the parties agree or where the tribunal determines that it wishes to use them after it has determined that it has the authority to rule on matters of party representation. (The tribunal should give the parties an opportunity to express their views in such circumstances). The Comments to the Guidelines make it clear that “These Guidelines do not state whether Arbitral Tribunals have the authority to rule on matters of Party representation… in the absence of an agreement by the Parties to that effect.”

While it may be obvious to some, it is worth noting that the definition of “Party Representative” is not limited to lawyers.

It includes “any person, including a Party’s employee, who appears in an arbitration on behalf of a Party and makes submissions, arguments or representations to the Arbitral Tribunal on behalf of such Party, other than in the capacity as a Witness or Expert...”.

Party representation

Guidelines 4 through 6 address the conflicts issues that may arise when individuals are selected to represent a party, particularly at a late stage in the proceedings.

Guideline 4 provides that party representatives should identify themselves to the other parties and the arbitral tribunal “at the earliest opportunity.” Moreover, once a tribunal has been appointed, Guideline 5 provides that “a person should not accept representation of a Party in the arbitration when a relationship exists between the person and an Arbitrator that would create a conflict of interest.”

It is interesting to note that Guideline 5 has been drafted to guide the conduct of persons not yet involved in the arbitration. Guideline 5 does not apply if “none of the Parties objects after proper disclosure”.

Guideline 6 grants the tribunal the right, in case of breach of Guideline 5, to exclude the new party representative from participating in all or part of the arbitral proceedings. These Guidelines have been drafted to address situations similar to those which occurred in the two ICSID cases of Hrvatska Elektroprivreda v. Slovenia (where the tribunal ordered the withdrawal of counsel) and Rompetrol Group v. Romania (where the tribunal did not).

Communications with arbitrators

Guidelines 7 and 8 address communications with arbitrators.

Guideline 7 sets out the default rule which is that a party representative should not engage in ex parte communications with an arbitrator “concerning the arbitration”, although the parties are free to agree otherwise.

Guideline 8 provides that a party representative may, amongst other things, communicate with a prospective party-nominated arbitrator on an ex parte basis to determine his or her “expertise, experience, ability, availability, willingness and the existence of potential conflicts of interest”.

Representatives may also, if the parties agree that it is permissible, communicate with a prospective presiding arbitrator to consider those same factors. Representatives may also engage in ex parte communications with prospective arbitrators (and appointed party-nominated arbitrators) for the purposes of selecting the presiding arbitrator.

The Comments to the Guidelines state that representatives should not seek the views of the prospective party-nominated arbitrator or presiding arbitrator on the “substance of the dispute”. What the Comments do not address is the extent to which questions that fall short of addressing the substance may be discussed (e.g. how a prospective arbitrator might approach procedural issues). The Comments do suggest that the discussion of the prospective arbitrator’s publications/conference papers is appropriate, albeit for the purposes of assessing expertise, experience, ability, etc.

Submissions to the arbitral tribunal

Guidelines 9 through 11 address the party representative’s duty of candour.

Guideline 9 prohibits a representative from making a knowingly false submission of fact to the tribunal and Guideline 10 provides for an obligation to correct a submission where it is learned that the representative made a false submission of fact, though Guideline 10 is “subject to countervailing considerations of confidentiality and privilege”.

The Guidelines also emphasise that the duty to the client remains paramount. Guideline 3 states in part, “The Guidelines are… not intended to… undermine either a Party representative’s primary duty of loyalty to the party whom he or she represents or a Party representative’s paramount obligation to present such party’s case to the Arbitral Tribunal.”

A party representative should not submit witness or expert evidence they know to be false (Guideline 11). There are a number of measures which are suggested that a party representative may take in order to follow the Guideline, including “urge the witness or expert to correct or withdraw the false evidence” and even “withdraw as Party Representative if the circumstances so warrant”. However, neither the Guidelines nor the Comments set out a clear line as to when a party representative should withdraw, which is often addressed in domestic regulatory standards for lawyers.

The Guidelines do not address the question of the duty of candour as it relates to binding legal authority. The Comments state that “a Party Representative may argue any construction of a law, a contract, a treaty or any authority that he or she believes is reasonable.”

Information exchange and disclosure

Guidelines 12 to 17 address questions relating to document production, a matter typically addressed in procedural rather than ethical rules. (See, for instance, the IBA Rules on the Taking of Evidence in International Arbitration.)

Guidelines 12, 14, 15, 16 and 17 concern the relationship between the party representative and the party in relation to document production, the party’s obligation to preserve, search for and produce documents and the consequences of failing to produce.

Guideline 13 provides that “A Party Representative should not make any Request to Produce, or any objection to a Request to Produce, for an improper purpose, such as to harass or cause unnecessary delay.”

Witnesses and experts

Guidelines 18 to 25 relate to the conduct of party representatives in respect of witnesses and experts, both at a hearing and in preparation for a hearing.

Guidelines 18 and 19 address the conduct of party representatives when communicating with “potential witnesses” and potential experts.

Representatives are permitted to assist in the preparation of witness statements and expert reports (Guideline 20) and may assist witnesses and experts as they prepare to give testimony at a hearing (Guideline 24) “including through practise questions and answers” (Comments).

The Guidelines also provide that the representative should ensure that a witness statement submitted in favour of the party’s case reflects the witness’s “own account of relevant facts, events and circumstances” (Guideline 21) and that an expert report submitted in favour of the party’s case “reflects the Expert’s own analysis and opinion” (Guideline 22). Guideline 23 provides that a party representative should not invite or encourage a witness to give false evidence.

A party representative may pay, offer to pay, or acquiesce in the payment of reasonably incurred expenses for experts and witnesses (Guideline 25).

Remedies for misconduct

Guidelines 26 and 27 address the possible remedies that may be granted by the tribunal in the event of representative misconduct. Potential remedies include (Guideline 26):

  • admonishing the representative
  • drawing adverse inferences in the evidence or the legal arguments
  • considering the misconduct when apportioning costs
  • “tak[ing] any other appropriate measure in order to preserve the fairness and integrity of the proceedings”.

In addressing misconduct, Guideline 27 sets forth a number of factors that the tribunal should take into account, including:

  • the need to preserve the integrity and fairness of the arbitral proceedings and the enforceability of the award
  • the potential impact of a ruling on the rights of the parties
  • the nature and gravity of the misconduct, including the extent to which the misconduct affects the conduct of the proceedings
  • the good faith of the party representative
  • relevant considerations of privilege and confidentiality
  • the extent to which the party represented knew of, condoned, directed, or participated in, the misconduct.

The Comments note that these factors are neither exhaustive nor binding.

Misconduct is broadly defined. It includes not only a breach of the Guidelines, but also “any other conduct that the Arbitral Tribunal determines to be contrary to the duties of a Party Representative”.

What will be immediately apparent is that, other than the sanction of admonishment, most of the remedies will affect the parties as opposed to the representatives themselves. At first glance there would appear to be an asymmetry in respect of who owes the duties under the Guidelines – namely, the party representatives – and who would suffer the repercussions of any violation of the Guidelines – namely, the parties. However, this is a natural result of the contractual nature of the Guidelines. As stated in the preamble, “The use of the term guidelines rather than rules is intended to highlight their contractual nature.” If it is the parties who agree to the Guidelines, it is for the parties to face the consequences of the Guidelines.

This is also the result of the limited powers the tribunal has over representatives (in contrast to a domestic legal regulatory authority). This begs the question,however, of whether in cases of egregious counsel conduct, the tribunal may have other means to hold a party representative accountable. For instance, a tribunal might – without the authors in any way suggesting that it should − consider awarding costs against the party representative personally, as exists in some domestic jurisdictions, or lodging a complaint to the party representative’s regulatory authority.

The other apparent consequence of this section of the Guidelines is that all responsibility with respect to remedies lies with the tribunal. On the one hand, this makes practical sense as it is the tribunal which is most likely to be familiar with the factual circumstances and context in which it may be alleged that a party representative may have committed misconduct. On the other hand, by tasking the tribunal with addressing issues of representative misconduct, it adds another possible layer of dispute to the arbitral proceedings.

Parting thoughts

The Guidelines reflect the premise that international arbitration should contain a means of sanction for counsel misconduct. They address a number of issues in international arbitration where parties and/or their representatives can find themselves in ethically ambiguous situations. But they are not intended to limit the flexibility of international arbitration – a point reinforced in the preamble. Even if parties agree to use the Guidelines in an arbitration, they are not a panacea. The Guidelines are only that: guidelines. It is up to practitioners, tribunals and institutions to decide their applicability (and its full extent).

Authors: Pierre Bienvenu is co-head of international arbitration and a senior partner with Norton Rose Fulbright. He is based in Montréal. Michael Kotrly was, until recently, an associate with Norton Rose Fulbright in the Dubai office.

Return to the full report.

The original, 20-page analysis by Pierre Bienvenu and Michael Kotrly on which this summary article is based was published in The Tribunal (issue 3, summer 2013) by Toronto-based Arbitration Place and is available at arbitrationplace.com.

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