ICC Canada’s 2021 Annual International Arbitration Conference
The final day of CanArb Week 2021 opened with the International Chamber of Commerce Canadian Committee’s 2021 Annual International Arbitration Conference, Leaning into the Future. Paul Tichauer, CanArbWeek Co-Chair welcomed the attendees and thanked the many generous sponsors. Janet Walker, of the other CanArbWeek Co-Chair and ICC Canada Chair, introduced the moderator for the first panel, Martin Doe, Senior Legal Counsel at the Permanent Court of Arbitration in The Hague.
First Panel: Guardians of the Arbitration Universe?
The Conference kicked off with a discussion of international arbitration as a transnational system of justice with arbitral institutions as its backbone. Doe opened with the disclaimer that what the panelists say may not reflect their institutions’, law firms’, or even their own opinions, as they were encouraged to be provocative in their statements.
Doe started by asking George Vlavianos, Partner at DLA Piper (Doha) about the problems and looming threats currently facing arbitration. Speaking from the Middle East, Vlavianos emphasized that the main threats to international arbitration include the growing absence of a transnational ethos as regional centres compete with one another and the legal and criminal threats that arbitrators face themselves.
Commenting on Vlavianos’ answer that there is an absence of transnational ethos, Alexander Fessas, Secretary General of the ICC Court of International Arbitration Paris, questioned whether there is a shared understanding of international arbitration. He highlighted that there are plenty of examples of interventionism from states and breaks in the multilateral system that have a resounding effect on the way that international arbitration functions. Fessas suggested that this does not come from the international arbitration community failing to self-regulate but from outside intervention.
Dr. Patricia Shaughnessy, Professor at Stockholm University, commented that there is a growing number of arbitral institutions that are attempting to “do everything” and are moving away from their purpose of serving businesses. She suggested that this is causing a real crisis of user trust and institutional credibility. The proliferation of arbitration institutions that are not fully functional, not fully staffed, and not observing good practices makes it difficult for highly functional arbitral institutions to ensure that the global market does not get a “bad rap”. She urged that this growing divergence needs to be managed in a responsible way.
Tina Cicchetti, Independent Arbitrator, responded to Fessas’ question of whether there is a shared understanding of international arbitration, by suggesting there is in fact a shared misunderstanding. She commented that the field needs to go back to first principles and ask ourselves what the goal of arbitration is. Arbitration is supposed to be an efficient way to solve problems within a group of people who have similar backgrounds. That system has changed and developed as its users have changed and developed. As practitioners, Cicchetti stated that we must be open-minded in looking at the criticisms that have come as a result of arbitration’s expansion. We are service providers, and we must provide what the market needs. Cicchetti suggested that there must be more attention paid to what the core non-negotiable needs of these users are, like the rule of law. Relating this point to the debate on diversity of institutions, Cicchetti stated that the rule of law has different conceptions around the world. Hence, we must open up and include more diverse players, as we need different skill sets to capture the diversity of perspectives. We must absorb all views, rationalize them, take them, and use them to set the field on a better course.
Shifting the conversation away from the “doom and gloom”, Doe asked the panelists to suggest the path forward. Fessas commented that the ability to publish arbitral awards for parties that want that to happen, where they have been administered by a reputable institution, is hugely important in establishing trust. The ability of the tribunals and, collectively, the institutions to reason and communicate their decisions is imperative.
Cicchetti partly disagreed. While she acknowledged that transparency is, in most situations, a laudable goal, an over-reliance on precedents would distract from arbitrators’ focus on what the actual dispute is in any given arbitration. Arbitrators and counsel should tailor the process to what the parties need. Cicchetti suggested that a proliferation of precedents would recreate a system where litigation counsel are more comfortable. While not disagreeing that access to reasoned awards is useful, she worries about the potential “erosionary” effects on the arbitration system.
Shaughnessy suggested that moving forward, we need to go to the core of what arbitration is. That core is having a predictable, reliable, efficient, and credible way of serving businesses by resolving their disputes. That service includes enforceable awards so that parties can move forward from those disputes. She advocated that arbitration institutions are essential to achieving this goal, since they are the ones doing the majority of the work and shouldering the responsibility of fulfilling the promise that all participants will benefit from their experience in arbitration.
Vlavianos suggested the hubris that we see currently in international arbitration is that we try to do too much. Agreeing with the other panelists, he suggested part of the solution is going back to the basics and doing what we do in a way that makes the system credible. That includes administering arbitrations becoming more aggressive about quality control and efficiency. In doing so, order will emerge from the chaos.
Doe concluded by asking the provocative question of whether, based on the panelists’ recommendation that institutions should get back to basics, the ICC (and other institutions whose roots are in commercial arbitration) should get out of the business of investor-state dispute settlement (ISDS). Cicchetti said that users of ISDS and commercial arbitration are different, so it would be better if there was a way to separate the two institutionally as well. Shaughnessy stated that institutions cannot be the same thing to everyone. Vlavianos acknowledged that it’s a balancing act; diversity is important, but it needs to be incorporated into a system that issues fair and just decisions by unbiased people, in a cost-effective, quick way. As an institutional leader, Fessas was given the final word, and he commented that an arbitral institution is not there just to manage cases. Institutions build capacity and assist an increasingly global community in embedding the rule of law. There is a lot that can be done through knowledge-sharing, including among institutions.
Martin Doe concluded by thanking the panelists. The attendees were moved into breakout rooms for networking chats.
Stephen Drymer, Partner at Woods LLP, hosted this Fireside Chat with Claudia Salomon, incoming President of the ICC Court of International Arbitration. In this chat, Salomon shared her plan for the upcoming years at the Court.
Salomon stated that the goal of the ICC Court of International Arbitration is to remain the world’s leading arbitration institute and to be a one-stop shop for global businesses to solve and prevent their disputes. Her focus is on global business needs and integrating in-house counsel as a means of achieving that. She highlighted that the ICC is trusted by businesses because it is an institution that is very focused on them.
When asked about the initiatives that she has spearheaded, Salomon spoke on her creation of a diversity and inclusion task force, as well as an additional task force focusing specifically on disability inclusion. She emphasized that the ICC has made great strides towards gender diversity and gender parity. This shift has created visibility, engagement, and roles for women. The ICC Court now is the most diverse in its history, with 195 members from 120 countries, more women than men, and more members from African countries than ever before. At the same time, Salomon acknowledged that the institution still has a long way to go. For example, with the nomination of arbitrators where parties cannot reach an agreement, 21% of all arbitrators appointed or confirmed were women. Salomon highlighted the role of in-house counsel in insisting that diverse lists be provided. Furthermore, she commented that we are at a pivotal moment emerging out of the pandemic. We have an opportunity to shape the landscape, especially concerning people with disabilities.
Commenting on the changes that the pandemic has brought, Salomon acknowledged that there has been a rapid shift in the way we operate, out of necessity. The use of video technology for preliminary hearings works very well. It allows in-house counsel to participate easily with little cost. When in-house counsel are also on the line, there are some issues that can be addressed very quickly. Moving forward, Salomon suggested that the presumption of having an in-person hearing has shifted, as we now have the choice and can ask what the parties actually need and want.
Finally, Salomon commented on the integral importance of the national committees to the ICC. There are 90 national committees around the globe. The most visible aspects of national committees’ role are to provide members of the ICC Court and to propose arbitrators when requested by the secretariat. However, the national committees have other roles that are less appreciated but at least as important. They have the relationships with their local business communities. The ICC wants to be in the mode of responding to the needs of the business community in each areas utilizing local knowledge. In her first week, Salomon initiated a practice of quarterly calls with representatives of each national committee. She emphasized having open lines of communication, but also strengthening the global community by connecting national committees with the ICC Court and with each other.
Following the Fireside Chat, the event continued with two debates on currently contentious issues.
Debate 1: Our Brave New World – the Artificial Arbitrator
In the first debate, two talented advocates sparred over the role of AI in the adjudication of disputes and its (in)ability to achieve the same or better dispute outcomes as human decision-making.
This debate was moderated by Sarah McEachern, Partner at BLG Vancouver. She started by discussing how technology has been integrated into the arbitration process in many ways. AI is moving into new areas, including the translation of documents, drafting, costs estimations, and picking arbitrators. It is predicted that AI will become even more powerful. Given these developments, we cannot ignore the role of AI in arbitration. What changes are inevitable? Can they help us? Will this adoption show an erosion of trust in the users at a fragile juncture in our profession?
McEachern introduced the two debaters: Todd Wetmore, Partner at Three Crowns in Paris who is a specialist in the technology sector and Sophie Nappert, Arbitrator at 3 Verulam Buildings (London) who is hugely passionate about the use of technology in arbitration and has written multiple articles and conference papers on it.
The stances taken by the debaters were assigned to them and do not necessarily reflect their personal views.
McEachern posed the first question, is human agency necessary to achieve a just resolution of disputes?
Wetmore responded that human agency is always needed, since gaps and deficiencies in the data are a human problem and error that affect the outcome. Computer learning treats all data, even irrelevant and neutral data, in the same way. Computers cannot deal with genuinely novel issues.
Nappert responded that in the quest for cheaper and faster justice, humans are an impediment. Although an algorithm is not perfect, it will still be less imperfect than a biased human decision maker. AI is more reliable and predictable.
Moving on, McEachern asked whether decision makers’ biases can be eliminated altogether through artificial adjudication, or instead whether algorithms too are inherently biased?
Nappert argued that AI is a promising path to shedding layers of biases. Humans have biases and algorithms are coded by humans, so the use of algorithms cannot eliminate bias. However, algorithmic decision-making can lessen their impact. Decisions made by AI can be analyzed and evaluated more easily than decisions made by humans.
Wetmore replied that computer learning, whether by algorithm or data mining, will always suffer from the original sin of deriving from human bias. These algorithms will be injected with bias in their coding, and will be fed biased samples of data on which to make decisions, since humans are also creators of the data that these computers use to learn. The difficulty with bias is that leaving it to be resolved by computers is wrong. Computers cannot critically examine the data for received bias, while Humans can recognize when decisions are and are not affected by bias or turn on biased information. For this reason, Wetmore argued, Computers are far more susceptible to bias than humans. After all, bias can resemble legitimate pre-dispositions and computers cannot recognize the difference.
McEachern then asked: would reliance on predictive justice erode user confidence in arbitration?
Wetmore argued there is no doubt that relying on AI will erode user confidence in arbitration and will lead to its demise. Using AI would require arbitrators to jettison everything that they hold dear. Instead, arbitration would be replaced with an antiseptic process that is wilfully blind to context, reasonableness, and good faith.
Nappert argued emphatically that the artificial arbitrator should be the future for certain types of decisions, although not for all of them. As we raise the bar for automated decision making, we raise the bar for the consistent application of due process and compositional fairness. Moreover, there are crippling problems of timing and costs that we have not tackled efficiently. The answer lies in looking to insert AI decision-making in the right type of places, like filtering voluminous documents.
McEachern concluded by thanking the debaters.
Debate 2: Third Party Funding – Show me the Money Trail
The second debate featured two advocates who sparred over the (un)settled status of regulation of third-party funding in international commercial arbitration.
Moderator Geoff Moysa, Investment Manager and Legal Counsel at Omni Bridgeway (Toronto), a prolific third-party funder of arbitrants, introduced the debaters: Andrea Bjorklund, Associate Dean (Graduate Studies) and L. Yves Fortier Chair in International Arbitration and International Commercial Law at McGill University (Montréal), and Wesley Pang, Partner at Eversheds Sutherland (Hong Kong). Again, the stances taken by the debaters were assigned to them and do not necessarily reflect their personal views.
Moysa began with the prompt that existing institutional rules and guidelines, combined with local laws and arbitral powers, adequately address issues raised by third party funding. He then asked whether third party funding be permitted at all in international arbitration.
Pang responded that third-party funding should be available but that there must be parameters for how that funding is provided. A key aspect is disclosure and transparency. Furthermore, tribunals should be on guard against the risk that third-party funding may enable some claimants to pursue frivolous claims.
Bjorklund countered that many claimants would not be able to put forward their claims without funding. As well, arbitrators, like judges, have broad powers and adequate authority to control the arbitration and prevent abuse. Pang replied that while in some jurisdictions there are a well-trodden paths in relation to third party funding, the lack of consistency across jurisdictions can lead to disparities, unfairness, and abuse of the system.
Moysa then asked whether a lack of uniformity is a sign of maturity, simply a reflection of jurisdictions treating third-party funding differently. Pang commented that the system should not encourage forum shopping, and Bjorklund replied that forum shopping can be an asset. In practice, it just reflects competition among arbitration tribunals, arbitral institutions, and national jurisdictions to provide a range of attractive options, from which parties can choose. This is an advantage for parties and for the arbitration system.
Moving on, Moysa asked whether funding arrangements should be disclosed for in order to identify arbitrator conflicts, to determine adverse costs issues (or both or neither).
Pang answered, for the sake of argument, that there is a need for disclosure of funding arrangements for both identifying arbitrator conflicts and determining adverse cost issues. Bjorklund agreed that disclosure of third-party funding to identify arbitrator conflicts is a good idea. It is essential to avoid derailing arbitrations, and the appearance of propriety is important. Conflicts should be avoided and so funding relationships should be disclosed up-front.
The discussion then moved to whether third-party funding should be disclosed to determine adverse cost issues. Bjorklund asked whether the idea is that if an impecunious party that’s funded, the funder can be made liable for posting security for costs? This conflicts with arbitral practice in other areas, as we don’t require parties to disclose their financial means in all cases.
Pang countered that if a tribunal is dealing with an impecunious claimant, ensuring its ability to pay an adverse costs order would be helpful to the overall process. Bjorklund responded by asking why it would be different for a claimant to be funded by a third party and to borrow the money from a bank. Pang agreed with Bjorklund on this point.
Pang asked: If a claimant is being, is it really calling the shots in the arbitration? By having the terms of the funding arrangement made available, we can see who is determining arbitration strategy and making settlement decisions. Bjorklund questioned to what extent the other side should be able to look into the funding terms. She asked rhetorically why we care who controls a party’s arbitration strategy—it should not make a difference to how the tribunal treats the parties.
In the end, both debaters agreed that funding arrangements should be disclosed for the purpose of identifying arbitrator conflicts, but disagreed about disclosure for determining adverse cost awards.
Moysa concluded by thanking the debaters.
Myriam Seers, Vice-Chair of ICC Canada, closed this “informative, thought-provoking, entertaining, and inspirational” conference by thanking the conference co-chairs, Rachel Howie, Partner at Dentons Canada LLP, and Alison FitzGerald, Of Counsel at Norton Rose Fulbright Canada LLP, and “strategic advisor” Stephen Drymer, Partner at Woods LLP.