2014 saw a wave of developments in the field of ethics in international arbitration, including the new LCIA Rules 2014 which incorporate guidelines on ethical conduct (the “LCIA Guidelines”) and the new IBA Guidelines on Party Representation in International Arbitration (the “New IBA Guidelines”). The IBA has also revised its Guidelines on Conflicts of Interest (the “Conflicts Guidelines”). At a time when the increasing popularity of international arbitration shines a spotlight on the industry, these advances should bring greater certainty to the conduct expected of counsel and reassure parties of the tribunal’s impartiality.
What has happened?
One perpetual question in international arbitration is what ethical standards apply to the parties’ legal counsel. It is not difficult to see why it arises: English law qualified lawyers might represent a claimant in an arbitration seated in Geneva, with US-qualified counsel representing the respondent. The lawyers’ professional conduct will be regulated by their home regulatory bodies, but the national regulatory bodies can have different standards of conduct. In particular, counsel can approach document production and witness preparation in very different ways. Consequently, parties and arbitrators can have different expectations as to counsels’ conduct. Some commentators believe that the playing field can be skewed in favour of the party in the arbitration with counsel from a jurisdiction with a more relaxed approach to these issues.
What are the key points?
The LCIA Guidelines apply to all arbitrations where the parties have agreed to use the LCIA Rules 2014, although they will not replace any national rules concerning lawyers’ professional conduct.
The LCIA Guidelines prohibit counsel from:
- knowingly making false statements, relying on false evidence or assisting in the concealment of any document ordered to be produced; and
- engaging in activities intended to obstruct the proceedings, including repeated (unmerited) challenges to jurisdiction or an arbitrator’s appointment.
Under the LCIA Guidelines, the tribunal must approve any intended changes to a party’s legal team after the formation of the tribunal. The tribunal can withhold approval if the change would jeopardise the composition of the tribunal or the finality of the award.
The New IBA Guidelines are broader than the LCIA Guidelines and include guidance on the preparation of witness and expert evidence, document production and submissions. Like the LCIA Guidelines, they require that all members of a party’s legal team are identified and the tribunal can exclude a new legal representative from the proceedings if a conflict exists.
Parties can agree to adopt the New IBA Guidelines in whole or in part or the tribunal may decide that it has authority to apply them.
The New IBA Guidelines refer to the Conflicts Guidelines, which were revised last autumn. The Conflicts Guidelines now apply to an arbitrator’s administrative secretary, third party funders and insurers. They also highlight that parties must identify their legal counsel and notify any changes at the earliest opportunity.
Both sets of guidelines allow the tribunal to decide if there has been any misconduct. Sanctions under the New IBA Guidelines include drawing inferences when the tribunal assesses the evidence and submissions and financial sanctions when apportioning costs. Sanctions under the LCIA Guidelines include a written reprimand or caution. Both guidelines give the tribunal flexibility to invoke any other measure as necessary.
How will this affect me?
Although the New IBA Guidelines and LCIA Guidelines are directed primarily at parties’ counsel, both require parties to identify their legal team and notify the tribunal and their opponent of any changes. A tribunal might prohibit a new representative from participating in the proceedings, for example, if their inclusion results in a conflict of interest with the tribunal. If either set of guidelines applies to your arbitration, you should consider any necessary changes to your legal team at an early stage.
You may face adverse cost consequences if the tribunal finds that your legal representatives have engaged in unethical conduct. The New IBA Guidelines specifically provide that tribunals should take into account the extent to which a party directed or condoned the representative’s misconduct.
Although the New IBA Guidelines and LCIA Guidelines could be seen to only add another layer to the rules governing lawyers’ ethical conduct, where they apply, they might provide arbitration users with more confidence and trust in the process. They should go some way to address concerns that the playing field may be skewed between opponents whose counsel draw from different jurisdictions.
Although the guidelines generally do not go beyond what is expected of lawyers by most developed legal systems’ national professional conduct rules, they do provide transparency and certainty as to the level of conduct expected. They also provide tribunals with a yardstick by which to measure counsel’s conduct.
This, coupled with the publication of the revised Conflicts Guidelines, should give users confidence that arbitration will resolve their disputes fairly and impartially.