Jurisdiction - Japan
News
ADR In Asia Conference – Debate: Every Arbitral Tribunal Should Have The Power To Remove Counsel When the Integrity Of The Process is Jeopardized.

11 December, 2013

 

Legal News & Analysis – Asia Pacific

 

ADR In Asia Conference

 

International Arbitration In Asia: A Behind The Scenes Review

 

Session I: Debate – Every Arbitral Tribunal Should Have the Power To Remove Counsel When The Integrity Of The Process is Jeopardized

 

Hong Kong Arbitration Week – 23 October 2013

 

The greater right between one’s right to choice of counsel and one’s right to a fair and efficient process is not as clear as it may seem when parties or their counsel seek to abuse the process and derail the arbitration proceedings according the mock debaters at the ADR in Asia Conference.

 

Many existing arbitration guidelines including the 2013 HKIAC Administered Arbitration Guidelines do not expressly provide measures for removing counsel. Should arbitration guidelines include such provisions and who should have this power? This was the topic of a staged debate in which panelists were assigned the task of either arguing for or against the proposition that every arbitral tribunal should have the power to remove counsel when the integrity of the process is jeopardized.

 

The panelists charged with arguing in favor were Teresa Cheng GBS SC JP FICE FCIArb from HKIAC and Elliot Polebaum of Fried Frank. The debaters tasked with arguing against it were Lord Peter GoldsmithQC, PC of Debevoise & Plimpton and Shai Wade of Stephenson Harwood. Michael Hwang, Senior Counsel of the Supreme Court of Singapore and Chief Justice of Dubai International Financial Centre Court, Rt. Hon. Lord Millette of Essex Court Chambers, and Paul Mitchard QC of Skadden, Arps, Slate, Meagher & Flom served as the debate judges and commentators. It was noted that the arguments the panelists were making did not necessarily reflect their personal views on the topic.

 

In support of their arguments in favor of it Polebaum and Cheng collectively made the following contentions: 1. There are circumstances that warrant removal of counsel such as when a conflict of interest is created near the start of the arbitration proceedings with the deliberate intent to derail the proceedings; 2. The arbitral tribunal should have the power to remove counsel versus the courts because they are in the best position to evaluate the parties’ actions; 3. It would cause undue delay to require courts to intervene and determine whether the attorney should be removed; and 4. The right to a fair and efficient process should not be outweighed by the right to one’s choice of counsel.

 

Goldsmith and Wade arguing against it collectively made the following points: 1. It violates the party’s right to choice of counsel; 2. The power is too broad since the terms “integrity of the process” and “jeopardized” are not well defined; and 3. If the power exists then it should not lie with the arbitrator but rather with the courts of seat because of the risks of a conflict of interest between the arbitrator and the parties.

 

Are There Circumstances That Warrant Removal Of Counsel?

 

In arguing his first point, Polebaum stated, “Point one assumes that integrity of the arbitration system is important. It enjoys confidence by the user community.” He noted that there are tools available to the arbitrator for attorneys who act inappropriately such as admonishments, adverse remarks, and cost shifting, but he went on to assert “on occasion a stronger medicine is needed.” To best exemplify just such an occasion, he cited to the case of Hrvatska Elektroprivrede v. The Republic of Slovenia. In Slovenia, after the arbitral tribunal had already been constituted the respondent’s counsel gave notice to the claimant two weeks prior to the first hearing that they were adding an attorney who was a door tenant in the same chambers as the president of the arbitral tribunal, thereby arguably creating a conflict of interest and the risk of the appearance of impropriety on the part of the tribunal. In its ruling, the Tribunal adjudicating this issue specifically stated, “to be concrete: although the respondent in this case was free to select its legal team as it saw fit prior to the constitution of the Tribunal, it was not entitled subsequently [to] amend the composition of its legal team in such a fashion as to imperil the Tribunal’s status or legitimacy.” The end result was removal of the attorney that respondent attempted to add rather than the president of the tribunal.

 

Interestingly, neither side conceded that there would never be an instance in which counsel should be excluded. Rather, those arguing against the proposition focused more on if the power exists then it should be within the courts of seat to decide rather than the arbitrator.

 

Does Authority Already Exist Allowing Removal Of Counsel?

 

It is arguable whether authority exists as there are a number of institutional arbitration guidelines that do not contain an express grant of power to exclude counsel. However, Polebaum & Cheng both in turn argued that there is legal authority to support the idea that arbitrators already inherently have the power to do so. Polebaum & Cheng both referred to the Slovenia case, and in that case the tribunal concluded that “…the Tribunal has an inherent power to take measures to preserve the integrity of the proceedings.” Polebaum also contended that HKIAC Articles 13.5 & 13.6 also provide the same inherent authority.

 

Should It Be The Arbitral Tribunal Or Some Other Governing Body With The Power To Remove Counsel?

 

Polebaum noted that the tribunal is in the best position to determine whether an attorney should be excluded from the case. He stated, “The arbitrator knows the case and is in the best position to evaluate whether counsel’s conduct affects the integrity of the process.” Cheng, in her argument expressed that “As a matter of practicability and balancing of rights, the arbitral tribunal should have the power to exercise such power to deal with the matter.”  

 

Polebaum also raised the concern that allowing someone other than the arbitrator to decide whether an attorney should be excluded can bring about negative consequences such as increased costs and a complete halt to the arbitration process. Also, by allowing parties or their attorneys to continually abuse the process by intentionally creating a last minute conflict of interest with a member of tribunal, it might incentivize use of this “guerilla tactic” in an effort to derail the proceedings.

 

Cheng contended that it is a fundamental right to have a dispute fairly and efficiently resolved. She argued that this right would be violated if opposing counsel was acting inappropriately and allowed to engage in tactics that would cause undue delays to the proceedings.

 

In response to Polebaum and Cheng, Wade argued that the power should not rest with the arbitral tribunal because they are appointed privately by the attorneys and thus have a financial interest at stake. He proffered that perhaps the Courts should be the ones with the power to remove an attorney. However, as Polebaum and Cheng pointed out, requiring the parties to pause the arbitration proceedings to seek redress on the issue of removal of an attorney could cause a serious delay in the arbitration proceeding, thereby arguably violating that party’s right to fair and efficient proceedings.

 

Goldsmith, also arguing in the negative, noted that since there is no clear definition of “integrity of the process” or “jeopardize,” the power to exclude would to be broad for an arbitrator to manage. This would in effect rob a party of a fair process.

 

 Would An Exercise Of Such Power Encroach Upon A Party’s Fundamental Right To Counsel?

 

Polebaum contended that the right to one’s choice of counsel is already limited. Take for example the Slovenia case where the tribunal made it clear that while a party’s right to choose his counsel is a fundamental principle, “even fundamental principles must give way to overriding exceptions.”

 

While both sides presented compelling reasons in support of their arguments, the debate seemed to boil down to a few main issues: if the power to remove does not already inherently exist should it, and a balancing of rights: the right to choice of counsel versus the right to a fair and efficient resolution of the case. While it is arguable as to which right is paramount, it is clear that precedence is growing and this issue is unresolved in the world of arbitration.

 

Overview

 

Session I: Debate – Every Arbitral Tribunal Should Have the Power to Remove Counsel When the Integrity of the Process is Jeopardized

 

Session II: Emergency Arbitrator Application, Expedited Procedures, and Joinder and Consolidation

 

Session III: “Follow the Money” – Third Party Funding

 

Session IV: In-House Counsel Session

 

Official Logo

 

For further information, please contact:

 

Tara Shah, Reporter, Conventus Law

[email protected]

Comments are closed.