Four Dimensions of Diversity in International Arbitration

Four Dimensions of Diversity in International Arbitration

Joshua Karton*

In the past decade or so, the topic of diversity has, justifiably if belatedly, received significant attention from the international arbitration community. This is all to the good. However, for some time, I have been dismayed by the frequently one-dimensional nature of discussions of diversity, which have dwelled on the need to diversify the ranks of international arbitrators and counsel in order to provide more equal opportunities to younger lawyers coming up through the ranks. This goal is important, but it is only one way in which diversity matters, and perhaps not even the most important way. If we are to make progress, we must not merely repeat platitudes but instead think seriously about what we want diversity for.

As I see it, greater diversity in the field—not just among arbitrators but up and down the entire profession—presents four distinct categories of benefits, with four different kinds of diversity that serve those benefits. In this post, I set out the four dimensions of diversity, each of which is important to international arbitration for a different reason. My hope is that this will serve as a framework to enrich and expand debates in the profession about what diversity is, whether and how it matters, and how to achieve it. I cannot necessarily offer solutions to problems that are woven into our social fabric. Hopefully, however, the framework advanced here will help others develop those solutions.

The First Dimension: Diversity in the Service of Fairness to the Parties

The first way to think of diversity as beneficial is that is provides greater fairness to disputing parties. Arbitrants are often left out of the debates on arbitrator diversity, which is frustrating and curious, since arbitration is literally for the parties. Simply put, the commercial parties who use arbitration are entitled to their arbitrators of choice. This means not only that they are entitled to appoint or to negotiate for an arbitrator who is sympathetic to their point of view, but also to define for themselves what that means.[1] If they cannot find an appropriate arbitrator because the pool of arbitrators lacks diversity, they do not in practice have the autonomy to appoint an arbitrator of their choice. 

I can illustrate this point by referring to a lawsuit that arose out of an arbitration involving Sean Carter—better known by his stage name, Jay-Z—and Iconix, a brand management agency to whom Carter had transferred IP relating to his Roc-A-Fella clothing brand.[2] The contract contained a AAA arbitration clause. Carter sought a court order declaring the arbitration agreement void on the basis that he was unable to find an African-American arbitrator with the requisite expertise from within the AAA’s “Large and Complex Cases” roster of arbitrators. He argued that this deprived him, and other African-American arbitrants, of a meaningful opportunity to have their claims heard by a tribunal that reflects their background and life experience. A New York court refused to dismiss the claim and set it down for a hearing.

One might dismiss Carter’s claim as frivolous—why should it matter for an IP dispute whether the arbitrators understand the role of clothing and hip-hop in African-American culture?—and one might dismiss it as a cynical tactic to derail the arbitration. (Carter withdrew his claim before the hearing because the case settled, so it was never really litigated.) But a lack of understanding across cultural divides is a pervasive problem in the highly globalized field of international arbitration. Promoting a more cosmopolitan professional culture, with greater cross-cultural understanding and sensitivity to cultural differences, is doubtlessly part of the response to that problem. However, it cannot be a complete response because no one should be making those kinds of decisions for the parties. It’s their decision, for themselves, according to their own needs and circumstances. A homogeneous pool of arbitrators deprives parties of the opportunity to determine their own criteria for arbitrator qualifications. It deprives them of their full measure of autonomy.

This, then is the first goal of diversity: greater fairness to arbitrants, by assuring them a genuine opportunity to find arbitrators who are suited to the particularities of their transaction and their dispute. I have listed it first because I believe it to be the most underappreciated aspect of diversity in the existing discourse within the field. To achieve this goal of diversity, we need a pool of arbitrators that corresponds as much as is reasonably possible to the diversity of the pool of arbitrants. The one should reflect the other. Every dimension of diversity matters: demographic characteristics like race, gender, religion, and national origin, but also professional background, native language, and so on. Historically, the field has naturally accepted this need for diversity, but only with respect to industry experience and legal background. We need a broader understanding of "expertise".

 

The Second Dimension: Diversity in the Service of Equity and Equality Within the Profession

The second benefit of diversity is that it is more fair to people working within the profession or seeking to enter it. This dimension get by far the most attention, perhaps because people are seldom more heated than when the discussion affects their own career prospects.[3] Existing efforts to increase diversity among the pool of arbitrators are extensive, and I will not attempt to recapitulate them here. All of these initiatives are worthwhile, but all are incomplete. For example, for several years these efforts were dominated by projects that focus on gender equality, a laudable goal but only one piece of the puzzle; such initiatives tended to have the effect of increasing opportunities primarily for white, western female arbitrators. More recent initiatives have broadened the focus include diversity of race and national origin, a salutary development but still an insufficient one.

For this aspect of diversity, what is most important is that all lawyers have fair and equal access to the opportunities that will allow them to build their skills, their resumes, and their networks, so that they can advance within the field. For at least the medium-term, it will likely require initiatives to actively promote opportunities for arbitrators from groups that historically have been—and continue to be—underrepresented in the field. Paradoxically, the actual diversity of the existing arbitrator pool is of secondary importance in achieving this goal of diversity, although it still matters so that young lawyers from diverse groups can see people like them among the senior figures, the eminences grises of arbitration, so that they are not discouraged or sidelined.

Too often, those seeking to increase opportunities from lawyers from outside the groups that have traditionally supplied the bulk of international arbitrators (so-called “pale, stale, and male”) are accused of trying simply to get a bigger slice of the pie for themselves, perhaps at the cost of the overall quality of the justice provided by international arbitration. But lack of fair opportunities is a problem for all of us. I am a member of what is likely the single most overrepresented group within the legal profession—English-speaking, Western-educated, white, Jewish, men—but I am convinced that I personally would benefit from a greater range of opportunities for people who do not look or sound like me, and who think differently from me.

The international arbitration community professes to be a meritocracy—not a perfect one perhaps, but a meritocracy nonetheless. (Indeed, the need to ensure a consistently high quality of arbitration services is one of the arguments often raised against diversity initiatives.) That self-image is hollow, just us patting ourselves on the back, if good young lawyers abandon the field or never enter it in the first place because they do not see a place for themselves in it. No one would doubt that the calibre of athletic competition today is an order of magnitude higher than in earlier eras of “gentlemanly amateur sport” (read: closed to outsiders and those who need to work for a living). The same is true of other forms of competition, which very much includes the market for arbitration services. Perhaps the greatest loss to international arbitration from a lack of diversity is the loss of talent, of energy, and of the fresh ideas we never hear because the people who could bring those virtues to international arbitration never get an opportunity to do so.

To address this goal of diversity—fairness to the profession—we do not need diversity per se; what we need is equity, to break down the barriers that hinder women, people of colour, people from the global South, and other underrepresented groups such as Indigenous peoples from rising within the ranks and assuming leadership roles in the field.

 

The Third Dimension: Diversity in the Service of Legitimacy of the Arbitration System

The third benefit of diversity is that it improves the legitimacy and the perceived legitimacy of the system. This is more important for investor-state than for commercial arbitration, since investor-state arbitration deals with issues of broad public interest and is more directly political. But all arbitrations are dependent on the continued favour of parties—on their affirmative choice to arbitrate—so perceived legitimacy matters and “actual” legitimacy cannot be cleanly separated from it. Commercial disputes regularly entail a range of issues on which perspectives differ, and sometimes differ in predictable ways across legal and cultural communities. For example, even lawyers from the same legal system may disagree on what constitutes commercially reasonable conduct or good faith, on the scope of anti-competitive behaviour, or on the enforceability of arbitration agreements against weaker contracting parties. (These are just some examples from substantive law; there are far more examples on issues of procedure.) If only a narrow segment of society provides the adjudicators who decide on these issues, their narrow perspective will become the benchmark, with any other (perhaps equally valid) perspective seen as an affront to the status quo.[4]

Nothing is more harmful to the perceived legitimacy of any system of dispute resolution than the feeling that some participants will not get a fair shake from it. The sense that (especially investor-state) arbitration is an oligopoly, presided over by servants of a kind of mercantilist neo-colonialism, is corrosive. This is an extreme characterization, a caricature, but that sensation is behind much of the backlash to investment arbitration. Even the softer criticism that international arbitration is a club for business lawyers with a shared perspective informed by their common professional formation, still less a venue for exchanging professional favours within a cozy in-group, rife with conflicts of interest—that is corrosive enough!

To achieve the goal of preserving and reinforcing arbitration’s legitimacy, we need a diverse pool of arbitrators and a diverse profession more generally, so that anyone can see that the field is not oligopolistic or some kind of soft form of neo-imperialism, or even just that it is not narrow-minded. The kind of diversity needed to address this goal is representation. The international community needs to be able to see itself represented within the field. As a side benefit, it would also help to reduce conflicts of interest within the community by expanding it and making it less “club-like”.

 

The Fourth Dimension: Diversity in the Service of Higher-Quality Decisions

Finally, diversity is important because it makes decision-making better. Arbitration is, at its heart, a service business, and we should seek to provide the highest quality service, even where doing so requires some painful introspection. There is a real risk of groupthink in arbitral decision-making. When everyone on a tribunal comes from a similar background, their shared assumptions mean that they also share blind spots. Their expertise means they will get most things right, but when they do make a mistake, it will be a big one, a disaster they won’t see coming. The best way to avoid this kind of groupthink problem is to disrupt the group. Adding just one person to a collective decision-making process who questions assumptions, provokes second thoughts, requires others to justify their conclusions—without just being a troll—does the group an enormous service. That is where the concept of the devil’s advocate comes from: in the medieval church, an inquiry into a purported saint’s miracles always included one advocate assigned to argue against sainthood, in order to temper the enthusiasm of believers by making them prove it.

How, then, can we introduce this disruptive force into arbitral decision-making, without disrupting the process and thereby destroying its efficiency and effectiveness? In a forthcoming article, Catherine Rogers proposes that party-appointed arbitrators perform this “devil’s arbitrator” function.[5] There is no doubt that the potential for internal dissention in a three-member tribunal is increased by the presence of arbitrators appointed by the opposing parties. However, if the three members of the tribunal lack diversity in any aspect other than who appointed them, disagreements within the tribunal are likely to remain within a narrow band, since no arbitrator will think to question more fundamental (and possibly flawed) shared assumptions. Moreover, if the pool of arbitrators were truly diverse, such “devil’s arbitrators” would be unnecessary.

The fourth benefit of diversity is superior decision-making, not so much through the discovery of “better” decisions as through the avoidance of disastrous ones. To achieve this goal of diversity, we need diversity of perspective: people on tribunals who think differently from the arbitration mainstream. Demographic diversity, the stuff of gender, race, and national origin, can be a proxy for diversity of perspective. Sometimes, it is an excellent proxy, since all of our perspectives’ are shaped by our lived experiences. But in the end, it is only a proxy. That is the greatest challenge for us as a professional community: even as we uphold high standards of ethics and competence, we must learn not just tolerate iconoclasts and rebellious spirits, but to embrace them.