The popularity of international commercial arbitration continues to grow. Not surprisingly, in our global business environment, shifting international alliances and concerns about the unreliability or jurisdictional hurdles of various legal systems increase the appeal of established arbitration organizations. Recently, these international bodies have demonstrated their adaptability and friendliness with hybrid formats meeting pandemic and carbon reduction needs, increased possibilities for joining and consolidating cases, stricter and more compressed deadlines, increased transparency regarding potential conflicts and easier electronic filing, to name but a few advances.
Given the attention of international arbitration institutions to opportunities for reform, it is remarkable how slow arbitration has been to improve the diversity of its arbitrator appointments. Diversity trends among international referees in terms of gender, ethnicity and geographic origin are indeed on the rise. However, the recent improvement has not kept pace with other institutional reforms. Focusing here on the gender disparity, in the main arbitral panels in 2019, only 21% of international arbitrators appointed were women. In 2020, the ICC reports only 23% women among international arbitrators appointed by the ICC. These numbers are more reflective of US law school enrollments and law firm employment rates of the 1970s and 1980s than other current trends. Looking at the practice of law around the world, at the end of the 2000s, women made up at least 50% of practicing lawyers in Poland, Latvia and Romania; around 35% in Kuwait, Jordan and Turkey; and just over 30% in Norway, Germany, Denmark and the United States. United Nations statistics indicate that as 2020 approaches, women make up 40% of the global judiciary, up from 35% 10 years earlier. Notably, the percentage of women arbitrators currently appointed for international cases worldwide (approximately 21%) matches the percentage of women who are partners in law firms in the United States. As the business community embraces arbitration, as arbitration institutions and users strive for greater accessibility. , adaptability and acceptance, how can these percentages be improved?
Undoubtedly, increasing gender diversity among appointed arbitrators is a priority for arbitral institutions. Around 5,000 organizations and individuals around the world have signed the Equal Representation in Arbitration Pledge, which was introduced in 2016. Major international arbitration bodies including the ICC, LCIA, SIAC, JAMS, the WIPO Arbitration and Mediation Center, ICDR and LCDR, have devoted resources and public relations campaigns to increasing the proportion of women appointed as international arbitrators. Even with these efforts, they seem unable to translate attention to the imbalance in gender representation into a material increase in the effective appointment of women to serve, particularly in international arbitrations. At least so far.
Thus, the key to restoring the balance is that the participants pay particular attention to the prerogative conferred on them by an arbitration principle: the autonomy of the parties. One of the reasons for the disconnect between institutional good intentions and results is that while arbitral institutions play an important role in the appointment of arbitrators, the largest proportion of sole arbitrators and panel members are appointed and selected. by the parties and counsel.
This principle, that arbitration is a contractual relationship controlled by the parties, is a fundamental feature of arbitration agreements. This is an important reason why arbitral dispute resolution is preferred over the court system to protect the interests of international parties in many jurisdictions.
The autonomy of the parties, the freedom to contract, allows the parties to an arbitration agreement to choose the applicable substantive law. They can choose the place of arbitration, the language of arbitration and the composition of the arbitration panel or the desired expertise of a sole arbitrator, as well as the applicable procedural law and the methods of collecting the facts and exchange of information. We recently found that because of the autonomy of the parties, arbitration provides an ideal mechanism for companies to follow best practices in designing technological support for the resolution of their disputes.
The main possibility for the parties to exercise party autonomy lies in the choice of the arbitrator. This is in stark contrast to court litigation. Litigants may have a single peremptory challenge or occasional opportunity to disqualify a judge (with the attendant risk when a DQ motion fails). On the other hand, except in special circumstances, arbitration is structured on the principle that the parties can choose a decision-maker or a panel with whom they (or their delegates) are comfortable.
What motivates the parties’ choice of arbitrator?
Typically, the arbitrator is chosen by the parties (and attorneys) negotiating from their own list of known entities. Other times, the arbitration body gives lawyers a strike list that they can research and add to. Often in international arbitration, in-house counsel have the final choice among potential arbitrators.
As a result, a high percentage of male referees are chosen. The parties’ choices depend on the professional contacts of colleagues and attorneys, as well as the individuals’ experiences with an arbitrator. Inevitably, this makes changes slow. Adding names to the list requires the same conscientious effort on the part of the lawyers involved that arbitration organizations now use to compile strike lists.
Is there a link between diversity and impartiality? Between diversity and quality leads to particular trade-offs? Between diversity and reliable practice of arbitration? These are not rhetorical questions.
When asked, the participants affirm that the diversity among the arbitrators offered by the institutions and the diversity within the arbitration committees have a positive effect on their perception of the impartiality and independence of the arbitrators. This perception is important. This is essential for the parties to be comfortable with arbitration as a forum for resolving disputes and to help the parties come to terms with the arbitrated awards. And the diversity of choices is fundamental to building trust in a process that promotes the autonomy of the parties.
Ultimately, the requirements of the case determine the choice of arbitrator. No one is asked to sacrifice the choice of the best arbitrator available for their case to the short or long term reform needs of the institution. Instead, lawyers and parties should take seriously the responsibilities and benefits of party autonomy and increase their selection for the best of the practice on which they rely. Choose refereeing organizations that support the advancement and training of diverse international referees. Look at your own pipelines for sustainable diversity. Find new ways to bring visibility to women from diverse backgrounds in your practice and valuable referrals. Start a conversation with customers about the advantages of diversity for them and for decision-making processes (and the disadvantages of homogeneity). Push by organizations for diverse selection must be matched by vigorous efforts by lawyers and parties to ensure sustained participation in the benefits of diversity across the profession.