Transparency in Arbitration

This article mainly discusses Transparency in Arbitration. Arbitration is the dispute resolution process where the parties agree to submit their dispute to an arbitrator( one or more) in the arbitral tribunal, which is always odd in number to settle their dispute.

The parties agree to settle their dispute in a private, confidential environment through this process. Transparency characterizes openness and a quality of being free from fraud and misrepresentation or mistake. Transparency basically ensures that the rules and procedures are openly accessible to everyone.

Transparency in arbitration would mean open access to all the relevant information relating to the arbitration process, the arbitrator and the organization.

Why is transparency important in arbitration?

1. Transparency builds accountability and diversity in arbitration.
2. Transparency increases the confidence of the parties in the arbitrator and builds trust in the process of arbitration.
3. Transparency warrants that the organization is not fraudulent
4. Transparency warrants that the organization is not misrepresenting anything.
5. Transparency would mean that the parties would be more engaged in arbitration.
6. Transparency would mean that both parties are equally well-informed. This puts the parties being considered on the same pedestal during the preparation of the arbitral award.

Types of transparency

1. Organizational Transparency, as enshrined in Article 11(4) of the ICC Rules, seeks to make the arbitral institutions more transparent in the management of the case and the process of decision-making.
2. Legal Transparency, as may be found in Article 41 of the Rules of Arbitration and Conciliation of VIAC (Vienna Rules) means revealing the legal aspects of making the arbitral award and the use of guidelines for the resolution of the dispute.
3. Transparency of Proceedings which is aimed at making the arbitral proceeding and awards public.

Transparency and confidentiality

Transparency and confidentiality are two sides of the same coin. Both are essential to the process of arbitration. Transparency is important because it builds accountability and diversity, it increases the confidence of the parties on the arbitrator and builds trust over the process of arbitration, it warrants that the organization is not fraudulent and that the organization is not misrepresenting anything. Transparency would mean that the parties are well-informed and ready to make informed choices and represent themselves in the process accordingly.

The parties in a dispute are generally at daggers drawn and any breach of their confidentiality would mean that would further embitter the relations of the parties. An arbitrator should ensure that no relevant information is leaked to a third party. The parties in a commercial dispute have high stakes involved in the process and the breach of confidentiality would result in heavy loss.

Many would argue that by making the process of arbitration transparent, the confidentiality quotient would decrease. However, this is not the case.

The confidential information is always protected and classified. Information relating to the process, budget, award or the background check of the arbitrator is crucial to enhance neutrality in arbitration. The increase in the awareness about the transparency of the procedure would make the parties believe in the process of arbitration and thus consider it as a viable option for dispute resolution.

Steps taken by international arbitration organizations to improve transparency in arbitration.

THE INTERNATIONAL BAR ASSOCIATION

In the year 2004, the Guidelines on Conflicts of Interest in International Arbitration (the Guidelines) were devised. General Standard 3 sets out the standards that reflect on the responsibility of an arbitrator in maintaining confidentiality and neutrality and requires the arbitrator to disclose any information which may be a concern of confidentiality between the parties.

Revealing information is crucial for maintaining the neutrality and increasing confidence of the parties towards the arbitrator.

AAA/ICDR The American Arbitration Association (AAA) and the International Centre for Dispute Resolution (ICDR)

Arbitrator and Mediator Search Platforms were introduced in the year 2013, which allow the user to search for the most suitable arbitrator from a given list of 6000 arbitrators. The feature is devised to ensure efficient search results. The Arbitrator information is available through specialized tabs fashioned to ensure the best search results, thus helping the searcher to find a suitable arbitrator suiting one’s choice.

The ICDR also ensures that gender neutrality is maintained while choosing an arbitrator. One of the most striking features of the AAA and ICDR is that they publish the information regarding the monetary expenditure incurred in the arbitration.

THE ICC The International Chamber of Commerce (ICC)

The ICC, in the year 2016, started publishing the arbitrator’s bio in cases of pending status. The information includes all the intricacies of the professional life of the arbitrator. Recently in the year 2019, ICC discussed the issue of transparency in the ICC MENA conference in Abu Dhabi.

has similarly increased transparency in arbitration was increased by the efforts of The International Institute for Conflict Prevention and Resolution (CPR).

Through the due diligence report, the lawyers can ask questions about the arbitrator handling the case. The arbitrators in CPR are listed in ranks according to the rates and the successful closures. Through the Equal Representation in Arbitration Pledge, CPR ensures the recruitment of diverse arbitrators.

London Court of International Arbitration (LCIA)

In the year 2006. LCIA became the first arbitral body to prepare rules regarding the problems faced by arbitrators. The Singapore International Arbitration Centre (SIAC) Rules of 2016 mention that on any challenge to an arbitrator under this Rule, 16 shall be reasoned unless otherwise agreed by the parties[1]. Several organizations prepare charts of the costs and the amount spent in arbitration procedures. Some such organizations are LCIA, SCC ( Stolkhome Chambers of Commerce), the HKIAC and the SIAC.

“The United Nations Commission on International Trade Law (UNCITRAL)” in the year 2014 adopted the Mauritius Convention on Transparency. Under Convention, the transparency Registry is used in certain investment arbitrations where the agreement requires one to use the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration. The transparency registry contains all the relevant documents crucial to maintain transparency in the arbitration procedure.

Confidentiality in the arbitration is extremely required to ensure the confidence of the parties. therefore, The UNCITRAL Transparency Rules have important “exceptions to transparency” with regards to“confidential or protected information” and are intended to ensure the “integrity of the arbitral process.”.

As part of its ongoing efforts to respond to the needs and concerns of users, the ICC in 2019 has recently adopted even more initiatives to improve efficiency, transparency, and diversity. In this particular scheme, there would be deliberations on the publication of the arbitral awards of the parties. The parties would be given the option of not agreeing to the publication of their awards. The ICC would even come up with a list of arbitrators to make ensure the efficient selection of the arbitrators.

Steps to be taken to improve transparency

• Arbitrator selection process

The specialized organizations that appoint arbitrators should ensure that the selection procedure of arbitrators is based on the merit of the arbitrator. The parties should be given the opportunity of expressing their choice of arbitrators. A proper way of selecting of the arbitrator would increase the confidence of the parties on the process. The background of the arbitrator, including his possible links with the disputed matter should be enquired of.

A thorough check of the background of the arbitrator would qualify the arbitrator as an eligible neutral third party. The arbitrator acts as a judge and hence any incident in his life that would be detrimental to his stand as a neutral third party should be discussed with.

• Publication of the arbitration awards

The arbitration procedure is a private, confidential process. Confidentiality of the process cannot be bartered with, but the non-existence of a proper method for publication of awards makes the process opaque and questionable. Proper publication of the records would ensure that a fallacy in the arbitration process is exposed. It would also open the stage for research over the arbitration awards, and the laws involved and ensure that no party is relegated to a subjugated position because of the award.

• Revealing the procedure of arbitration

Unlike other methods of Alternative Dispute Resolution, arbitration is a law-driven process. The arbitrator is bound to follow guidelines laid by the organization under which the arbitrator works. Since the position of an arbitrator is decided by the guidelines, the arbitrator should use the guidelines to dictate the arbitration procedure to him. The parties should be given a brief introduction, like a demo of the guidelines to be followed in the arbitration process.

The organization should also ensure that the parties have full knowledge of the allied sections related to the arbitration procedure such as the amount of money spent, the background of the arbitrator, the qualification of the arbitrator, arbitrator fees, etc.

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[1] (SIAC Rule 16)

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1. Alternate Dispute Resolution – ADR(Opens in a new browser tab)
2. Advantages and Disadvantages of Arbitration(Opens in a new browser tab)