One Small Step for Arbitrators, One Giant Leap for Arbitration: Drafting the Code of Conduct for Adjudicators

On 1 May 2020, the ICSID and UNCITRAL Secretariates have published the first draft of the Code of Conduct for Adjudicators in Investor-State Dispute Resolution ('the Code'). The main aim of the Code is to prescribe important ethical rules and rules of conduct for adjudicators during the arbitral proceedings. The arbitration community has welcomed this news ambiguously and started an active discussion of the Code during arbitral webinars. Here the question arises: are there any real problems with such an innocuous Code?

Adopting the Code is one of the main requirements for the massive reform of the investor-state dispute settlement mechanism. Notice that this draft Code is not the first document that will envisage rules of conduct for arbitrators. Such rules of conduct already exist in arbitration rules of different arbitration institutions. Nevertheless, this draft Code is the first binding act that gathers all crucial ethical regulations for arbitrators, such as impartiality and fairness.

Why is this Code necessary?

As was mentioned above, States delegates to UNICITRAL are actively discussing the idea to reform the Investor-State Dispute Settlement mechanism. Remarkably, delegates propose such reforms to establish a multilateral court for investment disputes with appeal mechanisms. The idea to adopt the Code emerged in 2015 within the UNCITRAL Commission as part of the Investor-State Dispute Settlement reform. The UNCITRAL Working Group III, as an authorized body, started the working process and considered proposals regarding future Code. Remarkably, the UNCITRAL Working Group III was firstly considered to work over the ethical rules for arbitrators only. However, delegates agreed to expand the research scope and elaborate a complex set of rules of conduct overall. The rationale behind such a decision is an absence of a common act that can regulate proceedings with arbitrators, counsels, and lawyers from different jurisdictions, different legal education, and different legal culture. That is why this Code has to clarify all the rules of conduct to conduct impartial and fair arbitral proceedings.

Content of the Code

The Code contains 12 articles supplemented by the comments for future discussion with delegates within UNCITRAL Working Group III. All these articles address the duties and responsibilities of adjudicators that are divided into three main sections:

Looking through the content of the Code, it became evident that authors decided to include well-recognized ethical rules for lawyers. For instance, the International Bar Association Principles on Conduct for the Legal Profession contain similar to the Code rules of conduct. These well-recognized ethical rules include the rule of integrity, fairness, competence, diligence, and confidentiality. Moreover, the Code contains essential rules on the impartiality of arbitrators and avoidance of the conflict of interest.

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It is also worth noting that the Code will be binding not only for adjudicators but also for adjudicators' assistance and candidates to become adjudicators. Also, practitioners are discussing that the Code should regulate counsels and other actors in the Investor-State proceedings.

Vulnerabilities of the Code

Unfortunately, the drafting process is not so smooth as it seems at first glance. The Code contains three sensitive articles that met a wave of critique and debates. These articles relate to repeat appointments, conflict of interest, and double-hatting. These very articles contain an option that enables States delegates to discuss the appropriate wording of the item.

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Article 5 envisages repeat appointments and issue conflicts since both rules relate to the conflict-of-interest rule. Repeat appointments rule obliges adjudicator to disclose all cases in which he served as an arbitrator, counsel, or another capacity. This rule helps to eliminate all the possibilities in the conflict of interest. The main argument against insists that this rule will create obstacles to the entry of new adjudicators and create a lack of diversity among arbitration. On the contrary, this rule on disclosure will facilitate overcoming bias and conflict-of-interest concerns in arbitration. Moreover, a similar law on the impossibility of participation in the case due to previous involvement in another role is prescribed in national Codes of Conduct in Canada, the United Kingdom, and France.

Another part of this article, namely issue conflicts, raises more questions. To be more specific, the Code obliges adjudicators to reveal a list of all publications and public speeches. On the one hand, such a comprehensive disclosure requirement allows parties to the dispute to assess any possible conflicts of interest and prevent them. On the other hand, the value of the requirement concerning publications disclosure is questionable since parties rarely challenge adjudicators on issue conflicts. Anyway, authors of the Code have foreseen a wave of disagreement regarding this article. That is why they allow State delegates to determine the scope of the disclosure for the final version of the Code.

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The double-hitting issue is connected with the aforementioned cases since it prevents adjudicators from settling the dispute between the same parties in which he previously served as counsel, judge, expert, and so forth. This rule of conduct also somehow undermines the diversity among arbitrators since this rule can limit the entrance of new adjudicators into proceedings. Moreover, this rule of conduct also affects one of the cornerstones of arbitration – party autonomy. That is because the regulation restricts the party's right to appoint desirable adjudicators. Nevertheless, these concerns can also be settled by the States delegates since the authors gave the discretion to determine this article's scope.

Further stages in the drafting process

The ICSID and UNCITRAL Secretariates allowed States delegates to submit their comments concerning the context of the Code till October 2020. Later the deadline of the submission was extended to 30 November 2020. It can be presumed that UNCITRAL Working Group III is processing all the comments to organize a public discussion with all the delegates. However, the process of comments processing is probably delayed due to the COVID-19 situation. That is why the date for public debate is still unknown. In any event, it is expected that after all rounds of discussions and clarifications, the UNCITRAL Working Group III will adopt the binding Code of Conduct for Adjudicators; it is just the question of several years.

Conclusion

Notwithstanding that the 2020 draft Code can be considered as the pre-final version of the Code, there are still some concerns with the Code that should be resolved. First of all, state delegates have to reach an agreement on all the vulnerable articles of the Code. There is a severe possibility that the representatives will not get a deal quickly. However, such fruitful discussion will help to elaborate specific provisions of the Code. While elaborating on the content of the Code, the UNCITRAL Working Group III also should pay attention to the issue that determines the success of the Code. This issue relates to the enforcement of the Code and its adoption by the States. There is no doubt that the enforcement stage may raise concerns among States because of the active discussions by the State delegates of the Code. The only what we have to do is wait for the results of active negotiations regarding the Code of Conduct for Adjudicators.

Written by Valeriia Yakimova, Kyiv-Mohyla Academy (Ukraine), Degree in Law