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30 November 2017

BCDR-AAA CEO Discusses Current State of International Arbitration in Closing Remarks at the Fourth Conference of the Euro-Mediterranean Community of International Arbitration

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In his concluding remarks at the fourth annual conference of the Euro-Mediterranean Community of International Arbitration, which took place in Bahrain on 19 November 2017, BCDR-AAA’s CEO Nassib G. Ziadé took a critical look at the state of international arbitration today.

Ziadé observed that the international arbitration system is facing serious problems with respect to conflicts of interest. He pointed out that while the system is fine in the eyes of many arbitration practitioners who are able to obtain lucrative assignments, this view is not shared by all arbitration practitioners, nor by many outside observers, academics and judges. In Ziadé’s eyes, the international arbitration system needs substantial revamping, not just cosmetic changes. While acknowledging that the IBA guidelines on party representation and conflicts of interest in international arbitration may be useful in establishing a rigorous ethics regime, he noted that they are written in permissive rather than restrictive terms as the “vast majority of the subcommittee members who drafted the guidelines belong to the community of practitioners for whom the guidelines are intended.” He called for arbitration institutions not to shy away from enacting internal codes of conduct applicable to their staff and procedures, and external codes applicable to the arbitrators and counsel who act in the cases they administer.

Ziadé reiterated a proposal he had made in the past, namely that in commercial arbitrations the names of arbitrators, party representatives and – unless there are compelling reasons not to do so – parties should be made public. He commended the ICC International Court of Arbitration, the Milan Chamber of Arbitration and the Vienna International Arbitration Centre for having started publishing the names of arbitrators in cases they administer, and hoped that this would be but a first step towards publishing the names of counsel and, barring exceptional circumstances, the names of parties.

Ziadé expressed surprise that some arbitration specialists support the establishment of a permanent multilateral investment court “not necessarily for its own merits but sometimes in the hopes of stopping the controversy surrounding investment arbitrations from spilling over into commercial arbitration.” Ziadé dismissed such hopes as illusory, since the “controversy cannot be confined to investment arbitration but will inevitably contaminate commercial arbitration.”

With respect to investment arbitration, Ziadé refused to see the choice as being between “unconstrained, self-regulating investment arbitration, exposed to the vagaries of arbitration practitioners, and a permanent investment court with ill-defined boundaries and a hastily adopted statute.” For Ziadé, the solution lies rather in “carefully circumscribing investment arbitration and preventing specialized arbitration institutions from delegating their regulatory role to arbitration practitioners.” He urged that once investment arbitration has been reformed in this way, it should be given a chance to prove itself.