CIArb’s annual Alexander Lecture and prestigious President’s prizegiving ceremony took place on Thursday 16 November 2017 with Professor George Bermann of Columbia University School of Law delivering a thought-provoking address on what it means to be ‘pro-arbitration’.
Professor George Bermann
The highly-oversubscribed event was opened by CIArb’s President, Professor Dr Nayla Comair-Obeid C.Arb. She was later joined by Professor Bermann in the President’s prizegiving ceremony to honour the top scholars graduating as Fellows of the Institute this year.
Professor Bermann set the context of his lecture by acknowledging that international arbitration as a system has generally been successful and that many jurisdictions seek to be ‘arbitration friendly’ in their policies and practices. However, he highlighted that the term ‘pro-arbitration’ is multi-faceted, subject to contradictions and consequently, required a critical examination.
At its most general level, he defined a jurisdiction to be pro-arbitration “if it sufficiently advanced its purposes” and outlined its various common components, namely whether:
- it promoted international arbitration’s efficiency aspirations in terms of time and cost
- it rendered international arbitration ‘effective’
- it enabled party autonomy and supported the general principle of consent
- it promoted flexibility and allowed the arbitral tribunal procedural discretion
- it reduced as reasonably as possible the intervention of national courts
- it ensured the validity and enforceability of awards
- it maximised the categories of claims that could be considered arbitrable.
He suggested that when considering whether a policy or practice is ‘pro-arbitration’, we often tend to focus on one component over the other and in so doing end up with a trade-off among the values that arbitration aimed to advance. He highlighted the need to critically appraise whether a pro-arbitration policy was indeed one that advanced its cause and pondered over whether, ultimately, asking if something is ‘pro-arbitration’ is even the correct question to be asking.
He illustrated his point with some examples:
- The use of written witness statements in lieu of live oral witness testimony is largely viewed to be pro-arbitration in that it achieves the economies of time and cost. However, he asked whether it’s worth depriving the witness of the opportunity to present their testimony live? Is it at the expense of the tribunal having first-hand observation of the witness giving their account? Is it worth having counsel write the statement themselves?
- Does it save time and costs to use tribunal secretaries to provide a first draft of the award on its merits or would it be better for the arbitrators themselves, entrusted by the parties, to write the whole award?
- On the notion of excess of authority, he asked how would this be deployed in order to produce pro-arbitration results? He further provided examples of cases that may amount to excess of authority, such as exceeding the scope of the arbitration agreement by making an order which has been expressly contracted out by the parties. Looking at the consequences, Professor Bermann made reference to consequential and punitive damages.
- The enforcement of the express waiver in a consumer contract of the right to bring class action arbitration is one that is largely considered a ‘pro-arbitration’ thing to do by the US Supreme Court, however this is at odds with the US Federal Arbitration Act which makes the validity of a contract agreement dependent on the contract law of a state and in the case of California contract law, a class action arbitration waiver in a consumer contact is deemed unconscionable.
- In this instance both the US Supreme Court and California contract law aim to be ‘pro-arbitration’ in their practices but yield diametrically opposing conclusions.
- Citing the US Supreme Court ruling in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995), Professor Bermann asked whether it was pro-arbitration in the interest of expediting the arbitral process to rule that the mere inclusion of a kompetenz-kompentenz clause in the arbitral rules selected by the parties constituted clear and unmistakable evidence of an intention to deprive the courts of the opportunity to rule on gateway issues if asked to do so.
- On arbitrability, Professor Bermann asked, is it really pro-arbitration to treat as many categories of legal claims as arbitrable? He questioned the arbitrability of consumer claims, for example the enforcement of pre-dispute arbitration agreements in consumer contracts, and that of antitrust claims, citing the Mitsubishi and Echo Swiss cases.
- A tribunal may end up granting a procedural request of time extension due to the threat of an annulment of an award on lack of procedural due process grounds but this undermines the goal of time economy. Professor Bermann asked, which is more ‘anti-arbitration’ - to incur a real risk of an annulment of an award or to sacrifice arbitration’s efficiency imperative?
In using these examples, he highlighted the need to consider which value or objective was most at stake in gauging which policy to favour. In pursuing the values and norms intrinsic to arbitration, it was important to take into consideration broader societal values and norms that were extrinsic to arbitration. International arbitrators were bound by professional ethics he said, and when considering whether something was ‘pro-arbitration’, it was necessary to ask whether it jeopardized other values; whether arbitration’s gains outweighed the costs to these other values.
The international arbitration community on top of conducting this comparative impairment exercise would do well to ensure the pursuit of the values and norms that are rightly central to arbitration, we do not fall unduly out of step with other values,” he said.
Ultimately he added, perhaps the question to ask was whether in considering if something was ‘pro-arbitration’, “among all the other things it ought to do, that it ought to promote arbitration’s legitimacy”. This may entail sacrificing one or more of the other values intrinsic to arbitration but perhaps this was the most ‘pro-arbitration’ move to make, particularly in today’s climate when arbitration has been coming under attack as never before.
A question and answer session followed with an evening drinks reception enabling members and attendees who had flown in from afar to meet and network with each other.
For more information please contact Nikki Nang Nilar, 020 7421 7481