Transparency in International Arbitration

Contemporary Issues inInternational Arbitration and Mediation

The Fordham Papers 2010

333

Transparency in International Arbitration: What Are Arbitrators and Institutions Afraid Of ?

Michael McIlwrath and Roland Schroeder1

What gets measured, gets done. What gets rewarded,gets repeated.—Peter Drucker

This is a fundamental axiom of modern business, and yet one which has yet to find its place in the world of international arbitration. Reducing the time and cost of arbitration has been a central focus of users for years, and yet surprisingly few steps have been taken to measure the performance of arbitration institutions and arbitrators and to make the information avail-able to those who seek their services. Institutions have made commendable efforts to respond to user concerns with initiatives and protocols designed to reduce the time and cost of arbitration, but for these initiatives to realize their full potential, another need must first be addressed: users and practitio-ners require reliable information about whether they are being implemented in actual practice, as well as other, standardized information about perfor-mance that would allow them to choose, and reward, those institutions and arbitrators whose actual conduct of proceedings most closely matches their expectations.2

1 Michael McIlwrath is senior litigation counsel for GE Oil & Gas, a global division of the General Electric Company headquartered in Florence, Italy. Roland Schroeder is senior litigation counsel at the corporate headquarters of the General Electric Company in Connecticut, United States. Their responsibilities include inter-national litigation and arbitration. The views expressed in this note are the views of the authors and are not presented as those of General Electric.

2 See, e.g., G. Born, International Commercial Arbitration, at 1674 (Kluwer Law International 2009) (summarizing various initiatives regarding arbitrator qualifications and performance, and noting that “proposals to increase the amount and accessibility of information concerning international arbitrators offer constructive possibilities . . . This would not constrain the parties’ choice of arbitrators, or offer a means of advanc-ing parochial or entrenched interests, but would instead assist parties in identifying the most qualified, competent arbitrators for their disputes”); M. Mcilwrath, “Grading the Arbitrator,” 73 Arbitration 224, at s227 (2007) (lamenting the quality of information

334 Contemporary Issues in International Arbitration and Mediation

INTRODUCTION

The growing concern of corporate users over the excessive length and cost of international arbitration is well documented. In recent years, these con-cerns have prompted many of the world’s premier arbitration providers to introduce a number of procedural innovations—mainly institutional proto-cols, guidelines and rule changes—all designed to foster greater efficiency in the arbitration process. These innovations have been welcome news to the corporate community.

But as institutions continue to improve their rules and protocols, ques-tions naturally arise as to what is working and what is not, and what may be working better in one area versus another. Commercial parties routinely make considered decisions of which rules and institutions are better suited to resolving their disputes, in the belief that their choice will lead to a more effective process that best meets their needs. Yet when negotiating and draft-ing a dispute resolution clause, it is reasonable for parties to ask: what is the difference, if any, between Institution A and Institution B in terms of time, cost and quality? Is one better suited to the nature of the disputes that might be expected? While anecdotal evidence abounds, there is little in the way of standardized, objective data regarding time and cost by which par-ties can effectively assess the performance of an institution, or compare the performance of different institutions, in order to make useful and practical decisions. This increases the likelihood of a mismatch between a user’s expec-tations/needs and an institution’s performance, creating a greater potential for dissatisfaction, and it also makes it far more difficult for users to sys-tematically select those institutions (and their arbitrators) who have taken concrete steps to better meet party expectations.

Even more needed, and more wanting, is the availability and distribu-tion of accurate information about arbitrators, who remain a predominant factor in the speed and efficiency of the arbitral process even with the many innovative initiatives of institutions. Indeed, while these institutional initia-tives properly seek to encourage more efficient behavior by all participants, most of these initiatives emphasize the authority and responsibility of the tribunal to impose greater control over the process—which, therefore, begs the question, are they doing so? Seasoned users and practitioners have all experienced arbitrators (and institutional case managers) at different ends of

available to parties about arbitrator performance today as equivalent to “what could charitably be called hearsay”, and calling for a more systemic approach to assessing arbitrator performance).

Transparency in International Arbitration 335

the spectrum, from those willing to take a firm hand in the management of the proceeding, to others who are reluctant or even unwilling to act expedi-tiously where one of the parties seeks to delay the process. Innovative initia-tives will only make a difference in the hands of those willing to embrace them. Yet, useful information on arbitrator performance remains an imper-fect, anecdotal, word-of-mouth experience, and varies widely among users and practitioners.3

The availability of standardized data must therefore accompany these other initiatives if we are to experience dramatic improvement in the time and cost of arbitration. Parties with access to meaningful data will not only make more informed choices, they will also have greater confidence in the overall process and in its predictability. This may be especially true of parties with little previous experience with international arbitration—for example those in developing nations—who are likely to feel less suspicious about the process or concerned that they are at an information disadvantage. An equally important benefit of transparency is the impact it would have on the ability of arbitrators and institutions to align themselves with party expecta-tions of how proceedings should be conducted.4 Arbitrators and providers who deliver quality awards in a timely and efficient manner should be rec-ognized as such and will undoubtedly be rewarded with more business, and those who do not will undoubtedly work much harder to do so.

3 As the highly regarded Professor Catherine Rogers has commented: “[T]ypi-cally information about an arbitrator’s conduct and decisional track record (as well as anecdotal information that might be useful in the selection process) is available to a relatively closed circle of arbitration insiders who treat such information as propri-etary,” which adds to “significant information asymmetries that impair parties’ ability to make fully informed decisions in selecting arbitrators.” “Emerging Dilemmas in International Economic Arbitration: The Vocation of the International Arbitrator,” 20 Am. U. Int’l L. Rev. 957, at 969 (2005).

4 As a matter of standard practice, the authors routinely ask arbitral tribu-nals at the outset of proceedings if they would be interested in hearing both sides’ expectations of how long the entire arbitration should last. While some chairs have been receptive (with interesting results), others have been reluctant to allow par-ties’ expectations of an “ideal length of the proceeding,” for example, even if non- binding, to be introduced into the proceedings, perhaps knowing even early on that they are bound to disappoint such expectations. The willingness or reluctance to face this question, however, already speaks volumes about the divergent levels of interest and concern over time that may exist among arbitrators.


CURRENT EFFORTS TO ADDRESS THE TIME AND COST CONCERNS OF THE USER COMMUNITY

Two years ago, the General Counsel of General Electric declared at an annual meeting of the International Institute for Conflict Prevention and Resolution (CPR) that “arbitration is no longer fulfilling the basic needs of business cus-tomers for early and efficient resolution of disputes.” He went on to explain that corporations and business people live in an age where events move at lightning speed, where the world changes and evolves literally on a daily basis, and where markets have a laser-like focus on short-term results, and that in this environment businesses need to be able to resolve their disputes quickly and efficiently—but that international arbitration has increasingly failed to meet this fundamental need causing many companies to look else-where for solutions.

GE’s General Counsel is far from alone in this view. The last few years have seen an increasingly vocal corporate community, willing to express its dissatisfaction with the status quo in articles, speeches, conference presenta-tions and communications,5 as well as similar expressions by practitioners reflecting the views and experiences of their clients.6 This volume of the

5 See, e.g., A. Clarke, “Presentation to the ICC Commission on Arbitration, International Arbitration: Current Corporate Concerns” (April 2009) (discussing concerns of the business community regarding the delay and expense increasingly associated with international arbitration and potential solutions); “Report of Round Table Discussion in Paris,” Global Arbitration Review, vol. 4, no. 2 (Jan. 2009) (active discussion of corporate counsel concerns regarding time and cost in international arbitration); Jean-Claude Najar, “Inside Out: A User’s Perspective on Challenges in International Arbitration,” 25(4) Arbitration International 515 (2009) (same); 11(2) P. Hoebek, V. Mahnken and M. Koepke, “Time for Woolf Reforms in International Construction Arbitration,” International Arbitration Law Review (2008) (outlining user concerns and advocating various steps to streamline and shorten arbitration proceedings); M. McIlwrath and R. Schroeder, “The View from an International Arbitration Customer: In Dire Need of Early Resolution,” 74 Arbitration 1 (2008) (advocating an increased focus on resolving key issues earlier in the arbitration pro-ceeding to address the business community’s need for more expeditious decisions); C. Drahozal, “Disenchanted? Business Satisfaction with International Arbitration,” 5(2) World Arbitration and Mediation Review, 1 (2008) (examining business disen-chantment with the length and cost of international arbitration).

6 See L. Reed, “More on Corporate Criticism of International Arbitration,” Kluwer Arbitration Blog (July 16, 2010) (discussing the “growing discontent of corporate users” with the cost and efficiency international arbitration”; D. Rivkin, “Towards a New Paradigm in International Arbitration: The Town Elder Model Revisited,” Arbitration International, vol. 24, no. 3, at 375 (2008) (proposing that arbitrators return to the more flexible and assertive “town elder” model in response


Fordham Papers contains a number of good articles mirroring this funda-mental dissatisfaction with the time and cost of international arbitration.7 There may be those who continue to doubt the breadth or conviction of these concerns, but such individuals increasingly are in the minority, out of touch with the perceptions of their clients.8

A common theme expressed in these articles and presentations is a desire for institutions and arbitrators to place greater emphasis on speed and efficiency, and for arbitrators to take a more proactive role in shaping the proceedings and to apply a much firmer hand in their case manage-ment responsibilities.9 In an informal survey conducted by the CCIAG of

to user concerns regarding the expense and length of time to resolve disputes); 23(6) R. Davidson, “The Pressing Need to Do Something About Excessive Time and Cost in Commercial Arbitration,” Mealey’s International Arbitration Report (2008) (discussing potential remedies for user complaints “that the system is fast losing its fundamental and historical advantage” as being “faster and cheaper”); 22(3) A. Marriott, “Breaking the Deadlock,” Arbitration International 411 (discussing the increased time and expense of international arbitration and the challenges it poses for companies, particularly smaller and medium-sized companies and companies from emerging countries).

7 See [Steven Smith’s article]; S. Elsing, On Babies and Bathwater, Keeping the Good (and Getting Rid of the Bad) From the Company’s Perspective (2010); T. Hen-nike, International Arbitration: A Vexing Solution (2010).

8 They say that actions speak louder than words, in which case no action speaks more loudly about the growing concern of the user community regarding the time and cost of international arbitration than the formation by many of the world’s largest users of international arbitration of an organization, the Corporate Counsel International Arbitration Group (CCIAG), devoted to driving reform in international arbitration. See http://www.cciag.net/.

9 See, e.g., A. Clarke, “Presentation to the ICC Commission on Arbitration, International Arbitration: Current Corporate Concerns,” at 22 (citing a need for “robust case management by arbitrators” and “tighter control . . . from institutions”); P. Hoebek, V. Mahnken and M. Koepke, “Time for Woolf Reforms in International Construction Arbitration,”11(2) International Arbitration Law Review at 9 (2008) (advocating as a key element of reform that arbitral tribunals take a “much stron-ger case management role”); M. McIlwrath and R. Schroeder, “The View from an International Arbitration Customer: In Dire Need of Early Resolution”, 74 Arbitra-tion at 11 (2008) (pressing arbitration institutions to “use their monitoring role and authority to ensure that tribunals are being proactive in managing the arbitration”); R. Davidson, “The Pressing Need to Do Something About Excessive Time and Cost in Commercial Arbitration,” 23(6) Mealey’s International Arbitration Report at 2 (advocating arbitrators to be more “courageous” in imposing controls on the pro-ceedings); D. Rivkin, “Towards a New Paradigm in International Arbitration: The Town Elder Model Revisited,” 24(3) Arbitration International at 385 (“ arbitrators must be more proactive and willing to take control”); J. Najar, “Inside Out: A User’s Perspective on Challenges in International Arbitration,” 25(4) Arbitration


its corporate users,10 nearly all respondents identified arbitrator availability and performance as among the strongest contributing factors to the increased costs and delays associated with international arbitration, and strongly favored more active case management by arbitrators and earlier, deeper familiarization of the issues by arbitrators to drive greater efficiency in resolution.

Corporate users also recognize their own role and responsibility as parties to influence the efficiency of the proceedings, most particularly by exercising control over external advisors.11 But the efficiency concerns heard from sophisticated users are generally not about those proceedings where both parties engage in scorched earth tactics. Rather, they are aimed at situations where one party seeks a prompt and efficient resolution and the other demands lengthy time periods, substantial documentary disclosure, or a lengthy, multi-week hearing to achieve a reasonable result. In those cir-cumstances, the party seeking a timely and efficient proceeding necessarily must look to the tribunal and institutional rules for satisfaction because only the arbitrators and institutions can impose reasonable controls on the excesses demanded by one side. Alternatively, these concerns are aimed at situations where the arbitrators themselves do not proceed with reasonable diligence.

The good news is that this message has begun to resound with the major arbitration institutions, which in the past two years have introduced an array of initiatives designed to improve the time and cost of arbitration in response to user concerns. These include:

• The 2007 Report from the International Chamber of Commerce (ICC) Commission on Arbitration: Techniques for Controlling Time and Costs in Arbitration (2007),12 and the 2010 revisions to the ICC’s Arbitrator Statement of Acceptance, Availability and Independence.13

International at 523 (“arbitral tribunals should be assessed on the robustness of their cost-saving procedures”).

10 See note 6. In the interests of full disclosure, one of the authors is a member of the CCIAG.

11 The CCIAG survey referenced above reflects corporate users’ recognition of the responsibility that parties bear in determining the efficiency of the process.

12 ICC Publication 843 (2007), available at http://www.iccwbo.org/uploaded-Files/TimeCost_E.pdf.

13 The revised Statement of Acceptance, Availability and Independence requires nominated arbitrators to identify other matters that they are currently handling, to acknowledge the importance of completing the arbitration “as promptly as reasonably practicable,” and to affirm that they can “devote the time necessary


• The International Center for Dispute Resolution (ICDR) Guidelines for Arbitrators Concerning Exchanges of Information (2008).14

• The German Institution of Arbitration (DIS) Supplementary Rules for Expedited Proceedings enacted in 2008.15

• The Centre for Effective Dispute Resolution (CEDR) Rules for the Facilitation of Settlement in International Arbitration (2009).16

• The CPR Global Rules for Accelerated Commercial Arbitration enacted in 2009.17

• The 2010 College of Commercial Arbitrators (CCA) Protocols for Expeditious, Cost-Effective Commercial Arbitration.18

• 2010 amendments to the Singapore International Arbitration Centre (SIAC) Rules providing expedited arbitration procedures and a more general mandate for tribunals to conduct expeditious and economical proceedings.19

Even one prominent international law firm, Debevoise & Plimpton, contrib-uted to the drive for greater efficiency with its recently announced Protocol to Promote Efficiency in International Arbitration, in response to concerns expressed by the firm’s corporate clients “about the increased length and cost of the arbitration process.”20

to conduct this arbitration diligently [and] efficiently.” The Statement also provides that the ICC Court will “consider the duration and conduct of the proceedings” when fixing the arbitrators’ fees, but there has been no public evidence of such fee reductions where proceedings ran unduly long and the ICC has not issued any more specific guidelines that might inform users as to whether there are any teeth to that provision. See http://www.iccwbo.org/uploadedFiles/Court/Arbitration/News/2010/January_SAAI.pdf.

14 See http://www.adr.org/si.asp?id=5288.15 See http://www.dis-arb.de/download/2008_SREP_Download.pdf.16 See http://www.cedr.com/about_us/arbitration_commission/Rules.pdf.17 See http://www.cpradr.org/CPRStore/tabid/67/ProductID/159/Default.aspx.18 See http://www.thecca.net.19 See http://www.siac.org.20 See http://www.debevoise.com/arbitrationprotocol (outlining specific steps

on how the firm’s lawyers will conduct themselves at each phase of an arbitra-tion proceeding); see also M. McIlwrath, “Faster, Cheaper: Efficiency Initiatives in International Arbitration,” 76 Arbitration 532 (Aug. 2010) (commenting on the Debevoise Protocol).


THE MISSING LINK: THE NEED FOR GREATER TRANSPARENCY REGARDING PERFORMANCE OF ARBITRATORS AND INSTITUTIONS

All of these protocols, guidelines and rule changes represent welcome prog-ress, and we hope that time and cost initiatives will remain an area of priority and focus for institutions.21 But unless they are actually put into practice by arbitrators and institutions, they remain good intentions only.

The ICDR Guidelines, for example, do not shy away from the real chal-lenge, noting that, “The purpose of these guidelines is to make it clear to arbitrators that they have the authority, the responsibility and, in certain jurisdictions, the mandatory duty to manage arbitration proceedings so as to achieve the goal of providing a simpler, less expensive, and more expeditious process . . .”22 Many of the other initiatives described above similarly empha-size stronger, more proactive case management by arbitrators as a critical element to more efficient proceedings.23 In short, even the various efficiency

21 By way of example, there is an ICC Task Force currently reviewing poten-tial revisions to the ICC Rules, with participation from corporate users, and it is the hope of the authors and the corporate community that their concerns will be reflected in various enhancements to the ICC Rules.

22 See, e.g., ICDR Guidelines for Arbitrators Concerning Exchanges of Informa-tion, note 12.

23 See SIAC Arbitration Rules, Rule 16 (“The Tribunal shall conduct the arbi-tration in such manner as . . . to ensure the fair, expeditious, economical and final determination of the dispute” and may “direct the order of proceedings, bifurcate proceedings, exclude cumulative or irrelevant testimony or other evidence and direct the parties to focus their presentations on issues the decision of which could dispose of all or part of the case.”); ICC Techniques for Controlling Time and Costs in Arbitration, Art. 33 (“The arbitral tribunal should consider informing the parties that it will proactively manage the procedure throughout the arbitration so as to assist the parties in resolving the dispute as efficiently as possible.”); ICC Statement of Acceptance, Availability and Independence (requiring arbitrators to affirm that they will conduct the arbitration “diligently and efficiently” and complete the proceeding “as promptly as reasonably practicable”); DIS Supplementary Rules for Expedited Proceedings, Rule 1.4 (“The arbitral tribunal shall at all times exercise its discretion to determine the procedure . . . in the light of the parties’ interest in expediting the proceedings”); CPR Global Rules for Accelerated Commercial Arbitration, Rule 1.6 (“The Arbitral Tribunal is actively to manage the arbitration proceeding and may limit the evidence presented at the proceedings, impose time limits on each party’s presentation of testimony or otherwise control the proceedings as is necessary in the discretion of the Arbitral Tribunal to arrive at a speedy, just Award. The Arbitral Tribunal may also proceed simultaneously with different phases of the arbitration, and otherwise exercise discretion to manage the proceedings to conform to the overall time limit.”).


initiatives that have been introduced ultimately recognize that their chances of success still lie to a considerable degree in the hands of the tribunal.

The question facing parties, however, is which arbitrators are inclined to implement these procedures so that they become more than just good intentions? Which arbitrators have a track record of strong case manage-ment? These are questions that should be highly relevant both to the provid-ers of arbitration services (institutions and arbitrators) and to the users of the same. We expect that institutions and arbitrators with a strong track record of delivering timely awards would wish a better way to communicate and demonstrate their success to parties. Similarly, parties choosing institutional rules want to know which institution’s rules may be more advantageous for the types of disputes they anticipate may arise, and which arbitrators are most likely to deliver an award consistent with their expectations of how the proceedings should be conducted.

These questions cannot meaningfully be answered without better and more standardized metrics and information transparency in at least two funda-mental areas: (1) institutional performance, and (2) arbitrator performance.

Institutional Performance

We address institutional performance first because this really should be the low hanging fruit easiest to harvest. Institutions already maintain data regarding the length of their arbitration proceedings, and several publish their statistics annually. But the data typically is geared toward overall trends and does not contain details regarding the actual performance of the insti-tutions.24 Moreover, because the data is not standardized from one institu-tion to another, it is difficult (if not impossible) to compare how institutions perform relative to each other.

For example, there is not even consistency across institutions on what qualifies as an “international arbitration.” The Chamber of Arbitration of Milan publishes an annual report that sensibly indicates the number and

24 The ICC, for example, publishes statistics annually concerning its caseload, revealing such information as the number of new matters filed, the geographic dispersion of these matters, as well as the geographic dispersion of the parties and arbitrators, the number of arbitrator challenges made and decided, and similar top-level figures regarding overall claim filings. While informative and instructive with respect to broader trends, the data typically does not reveal information concerning the duration of the matters before the ICC, nor the kind of detailed breakdown discussed below.


percentage of proceedings with a “degree of internationality” (defined as at least one foreign party) as compared to those considered to be purely “domestic” arbitrations.25 By contrast, the AAA considers as “international” those arbitrations which it chooses to have managed by its international branch, the ICDR; this decision is based on an internal ICDR assessment of whether the dispute involves international interests that would benefit from international case management (even though the parties may all be from the same country).26 The ICC simply reports the number of all arbitrations that it conducts, without distinguishing whether they are international or domes-tic (and even though a sizeable percentage are between parties of the same country, most frequently France).27

We address below exactly what sort of standardized data we believe institutions should be reporting, but all should have a common baseline that defines that which is ultimately being measured. For information about insti-tutions to be usefully compared, the measurements should be standardized and consistently reported (and potentially even audited). We believe the data is already available to the institutions, and its standardization and publica-tion would greatly facilitate user choice of institutional rules and protocols, allowing them to choose rules and procedures that tend to best facilitate the types of disputes they anticipate may arise and best meet their expectations overall.28

Perhaps more importantly, the availability of standardized comparative information should assist institutions in being more competitive, and under-standing the rules and procedures that increase the likelihood of a quicker and more efficient resolution, particularly as they are able to observe changes over time. The same could be said of the assistance such standardized data

25 The Chamber of Arbitration of Milan’s annual statistics are available at http://www.camera-arbitrale.it/Documenti/arbitration_stat_2009-en.pdf.

26 In episode 59 of the CPR Podcast Series, International Dispute Negotiation, ICDR solutions manager, Christian Alberti, explained how the ICDR receives cases based on an internal AAA determination of international aspects of the dispute. See http://www.cpradr.org/NewsArticles/Podcasts/tabid/319/Default.aspx.

27 See “Facts and Figures on ICC Arbitration—2009 Statistical Report” (Feb. 2010), http://www.iccwbo.org/court/arbitration/index.html?id=34704.

28 For example, a party may have a preference for rules, such as those of SIAC or the ICC, which provide for institutional scrutiny of the tribunal’s award before it is issued, but not if this causes a substantial delay in the final issuance of the award. While a common reaction might be to expect that such scrutiny would cause SIAC and ICC arbitrations to be slower by adding an extra step in the process, there currently is no data for a party to make an objective assessment of whether, in fact, this is the case or how much additional delay the scrutiny process is likely to introduce.


could provide tribunals when considering whether to adopt certain case management techniques.29

Procedures that are shown to be successful will be adopted more vigor-ously. Parties will be better able to reward with their business those institu-tions that can demonstrate that they can better meet user expectations with respect to efficiency and cost. Institutions that underperform (in users’ eyes) will be motivated to improve and will better understand where and why improvement is needed. Just as 94% of university professors surveyed in one study felt they were better than the average faculty member at their univer-sity, most institutions appear to believe they deliver efficiencies over other institutions, and may fail to recognize their failure to genuinely meet user needs.30 If that is the case, then institutions should be willing to embrace data that demonstrate any competitive advantages.

Finally, greater transparency and openness will only enhance the stand-ing and reputation of international arbitration with users, particularly those with no experience, or whose perceptions may have been formed through anecdotal war stories or a first bad experience.

As for what data should be made available, we believe parties wish to have concrete answers to questions such as those below with respect to indi-vidual institutions, and also in a form that can be compared with similar data reported by other institutions:

• Domestic vs. international arbitration. Parties to international com-mercial contracts will want to know the average length of time of dis-putes that will be similar to their own disputes. For this, the concept of “international arbitration” should be defined so that the reported data can be fairly and accurately compared.

• Average start to conclusion. Institutions should report data that would allow parties to assess the average resolution time of an

29 There is a well-worn debate, for instance, on whether bifurcation tends to save time and cost or add time and cost. While the answer will inevitably vary to some degree depending on the case, an objective analysis based on standardized data provided by different institutions, rather than on anecdotal experience shared by practitioners with potentially very different practices, would undoubtedly help to answer that question or give greater insight into the types of cases where bifurcation makes sense and where it may not.

30 Also referred to as the “Dunning-Kruger Effect,” after the authors of the Cornell university study of professor self-assessments. See J. Kruger and D. Dun-ning, “Unskilled and Unaware of It: How difficulties in recognising one’s own incompetence lead to inflated self-assessments,” Journal of Personality and Social Psychology, 77 (1999).


institution’s case, from request to arbitration to the issuance (physi-cal delivery to the parties) of the final award. To be truly useful, this data should be broken into detail based on claim amounts at issue (e.g., under $1 million, $1 million to $10 million, $10 million to $50 million, etc.), and the type of disputes (e.g., construction disputes vs. intellectual property disputes).31

• Length of stages of proceedings. Similarly, institutions should pro-vide data on how long each stage takes, such as the length of time from confirmation of the tribunal to the completion of the hearing, and from completion of the hearing to issuance of the award, using a similar breakdown based on claim amounts and dispute types.

• Number of arbitrations referred to mediation and number of cases settled before an award was issued. Institutions should be mindful that parties want resolution, and if an institution reports that, for example, 50% of its cases settled through mediation sponsored by the institution within the first six months of the request for arbitration, this would be a statistic that would draw attention.

• Costs. Institutions should also be able to report objective data about the costs charged by the institution and the arbitrators in the proceed-ings, broken down by the type of dispute and amount in dispute.

There are other data points that, if readily available, would certainly inform our advice when we are asked, as company litigators, to suggest which insti-tutions the company should prefer or accept in our contractual dispute reso-lution clauses, and would provide us with useful support for decisions to propose one institution over another to counterparties in contract negotia-tions.32 Again, institutions already have this data: making it publicly available

31 A statistician would tell us that time to resolution should not only be reported as an average, but should also be reported as a mode and range, or using other statistically appropriate means to normalize the data to account for substan-tial outliers (e.g., 25% resolved within 1 year, 60% within 2 years, etc.). But even average time to resolution based on amount at issue and case type would be highly useful data.

32 Above we have set out what we consider to be the bare minimum data that should be provided. Undoubtedly, there are other types of data that would also be highly useful, not only for users, but also for practitioners and the institutions themselves. For example, data on the percentage of cases utilizing certain procedural techniques (e.g., bifurcated cases v. non-bifurcated cases, or cases where some form of early disposition of key issues was used), or resolution time using such techniques. Data showing resolution times based on the nationality of the parties might also be highly informative, showing for example, the impact on resolution time (if any) if both parties are from common law jurisdictions or civil law jurisdictions.


in a more meaningful, standardized (and, of course, anonymized) format for purposes of comparison would assist parties in selecting the appropriate institution for their contractual disputes (i.e., perhaps in some cases hourly fees for tribunals would make more sense than ad valorem fees, or vice versa).

Arbitrator Performance

While the ability to assess and compare institutional performance through standardized metrics will, we believe, lead to a greater degree of user satis-faction with international arbitration, the greatest benefit will come from the availability of standardized information about arbitrator performance. We are relatively optimistic that it is not a question of whether such information will eventually be available, but when this will happen and the form it will take—and whether arbitrators and institutions will play a meaningful role in the development of performance measures for arbitrators.33

Indeed, it is striking that such information is not available already.34 We live in an age when business transparency is both expected and demanded, and where unprecedented amounts of information are available at our fin-gertips through the Internet—in fact, on our cell phones. And yet when it comes to obtaining information about the actual performance of arbitrators and how they conduct proceedings, little useful information is publicly avail-able. As a result, parties inevitably resort to the same method that is as old as mankind—word of mouth. Send out an email or make phone calls: “does anyone know this arbitrator, what has your experience been?”

Even at large companies with extensive experience in arbitration, it is often difficult to determine reliably the competency and suitability of the arbitrators we would like to appoint or are asked to consider. If that is the sit-uation with sophisticated users, then it is fair to assume that there is indeed

33 The demand for this information in a web-based, information-driven, “twit-tering” world is inevitable. For example, the on-line rating of lawyers is already a reality in the U.S. where the Association of Corporate Counsel (ACC) has created a Counsel Value Index to assemble and make available to ACC members evalu-ations of law firms by corporate counsel. The creation of client review ratings by Martindale-Hubbell is another example. See “Grade Anxiety: Firms fret about clients rating their work,” Am. Bar Ass’n Journal, at 49 (Feb. 2010).

34 We are aware of one nascent initiative, “Positively Neutral,” that was announced late last year by CPR, but are unaware of the degree to which this initia-tive has taken hold. See http://www.cpradr.org/CPRNeutrals/NEWPositivelyNeutra-lEvaluations/tabid/434/Default.aspx.


a broader and even desperate need for improved information and transpar-ency among most other users.

As Professor Catherine Rogers has noted:

The proliferation of directories and rosters of potential international arbitrators undoubtedly have salutary side-effects in increasing the public availability of the identity of potential candidates. To provide a true quality control function or shed real light on the otherwise opaque market, however, they must do something more than simply provide access to international arbitrators’ self-crafted and self-serving pro-files. Currently, none of the information resources appears to collect, either independently or through voluntary disclosure from participat-ing candidates, information about whether those arbitrators listed have ever been challenged for bias or whether any of their awards have been refused enforcement. In addition, these factual profiles could be supple-mented with feedback from former parties or other arbitrators regard-ing their past experiences with particular candidates. While relatively modest proposals, creating public access to such information would go a long way toward overcoming the inadequacies of the current situation in which the most valuable information is available only anecdotally and is not cost effective to obtain.35

There are presently no effective feedback mechanisms among parties, institu-tions and arbitrators during and after arbitration proceedings. While certain institutions do solicit feedback from users following the completion of pro-ceedings, we are not aware of any institutions that do so effectively or that give sufficient emphasis to arbitrator performance.36 The data that is elicited by institutions is not standardized among them, and even more problematic, the data is not made available (that we know of ) to anyone outside the con-fines of the institutions that gather it—not even with the arbitrators them-selves. One can only ask, if the feedback is not shared with arbitrators, how does it affect their performance? If it is not available to parties and counsel, how can it affect future appointments at all?

35 “The Vocation of the International Arbitrator,” 20 Am. U. Int’l L. Rev. at 1009-1010 (2005). In her 2005 article, Professor Rogers was perhaps the first to call for a comprehensive arbitrator information resource, among other reasons, to reduce information asymmetries among parties, in turn making international arbi-tration more transparent and broadly accessible.

36 For example, the ICC feedback form assesses, for the most part, the perfor-mance of the institution’s case managers.


Institutions often claim that arbitrations would move more quickly if parties allowed the institution to appoint the panel, both because this would shorten the appointment and confirmation process and because the institu-tions could use their knowledge and experience to chose suitably experi-enced arbitrators. While this may be true, the simple fact is that parties will always be reluctant to consign appointment power to the institution until the institutions share with the parties far more comprehensive information about the pool of arbitrators from which the institution will draw, including information that better defines the expected level of performance of these arbitrators.

The institutions already have extensive knowledge concerning which arbitrators are and are not meeting expectations. One of the authors was struck by a recent conversation he had with a well-known representative from a leading arbitration institution, in which this representative com-mented that there were certain arbitrators he/she would be certain “never to use” when he/she returned to private practice. Such information should not be a secret known only to privileged insiders.

As with institutions, we believe the following information should be available about arbitrator performance, and we divide this information into three categories: information already in possession of the arbitrators them-selves, information that institutions could provide and, finally and most con-troversially, information based on party assessments of arbitrators harvested at the conclusion of the proceedings. We note, again, that much useful infor-mation is purely objective data that is already in the hands of arbitrators and institutions. They would merely need to make this information available in a standardized form so that parties could compare the performance of dif-ferent candidates.

Information that Arbitrators Could Provide

• Domestic vs. international arbitration experience. Again, parties will certainly want to know whether the arbitrator they are nomi-nating has the appropriate type of experience. For example, is this an arbitrator whose experience is mainly as an arbitrator sitting in domestic Indian arbitrations, or an Indian-trained arbitrator whose experience is mainly in international proceedings located outside of India? Often, arbitrator biographies do not make such important dis-tinctions, and just claim number of proceedings, without regard to whether they are domestic or international.

• Statement of case management philosophy. Arbitrators are properly expected to maintain flexibility in their approach, so that they can


adapt to the particular circumstances of a case. Nonetheless, a state-ment prepared by each arbitrator setting forth his/her general views and philosophy with respect to case management, including any ini-tiatives or procedures they have used in the past, would be useful to parties during the selection process and in setting their expectations. We can imagine a method by which arbitrators could also choose a box or range that best describes their approach. For example, on a scale of 1-5, does the arbitrator believe a tribunal should defer to party autonomy (1) or exercise a firm hand in moving the proceed-ings (5)? A self-description of this type would help a party better match the arbitrator to their particular expectations, by providing one indication of whether the arbitrator will tend to be passive or active in directing the argument and evidence, receptive to considering pro-posals for early resolution of certain threshold issues, etc.

• List of previous arbitrations in which the arbitrator has been appointed, without identifying parties, and as to each providing:- Whether acted as sole arbitrator, chair or party-nominated co-

arbitrator.- Country of origin of parties.- Amount of dispute, and general nature of claims (intellectual prop-

erty, construction, etc.).- Whether case settled before award was rendered.- Time from constitution of tribunal to issuance of award by tribunal - Whether the tribunal took steps to simplify the arbitration, and

shorten the time and cost, for example by bifurcating the pro-ceedings to hear potentially dispositive preliminary issues first, or conducting hearings via videoconference (or telepresence, a more recent and more reliable technology).

- Identification of any awards to which the arbitrator was a signatory that have been challenged, the courts in which the challenge took place, and the result of the challenge (if available).

- Dissenting opinions. We believe parties will also wish to know whether the arbitrator has authored any dissenting opinions in the past and, if so, the ratio vs. the number of unanimous awards.

• References. A list of any in-house or external counsel in those arbitra-tions whom they have confirmed are willing to be identified (without connection to any particular dispute) and serve as a reference, along with a stated confirmation that they have not sought to determine or influence the feedback that such counsel might provide.


Information that Arbitral Institutions Could Provide

• Resolution times for disputes heard by the particular arbitrator, as reported by the institution and parties. Arbitration institutions should systematically disclose the length of time arbitrators took to reach resolution in past proceedings (and also the aggregated aver-ages), from time of confirmation to close of hearings, and from close of hearings to the issuance of an award (or draft award in the case of the ICC).

• Role of the arbitrator. In reporting both individual case statistics and averages, institutions should distinguish among arbitrators acting as sole arbitrator, chair of three-member tribunals, and wing arbitrators in three-member tribunals.

• Arbitrator costs. Some institutions, such as the ICDR, already pro-vide the proposed arbitrators’ hourly rates when proposing candi-dates. Others do not, especially those that calculate arbitrator fees on an ad valorem basis, assuming that the hourly fee charged by the arbitrator for other matters is therefore irrelevant. From a party per-spective, it is not, as there may be justifiable concern as, for example, over how much time an arbitrator who charges a high hourly rate on other matters may be willing to devote to a relatively small case charged on an ad valorem basis.

Information that Parties Could Provide through Feedback to Institutions or Other Third-Party Organizations, with Respect to Proceedings in which the Arbitrator Appeared

In providing these areas of assessment, we largely follow the results of a project carried out in 2006 at the behest of the late Thomas Wälde to develop a standardized “arbitrator evaluation form.”37 We do so because the result-ing template was developed jointly by representatives from all constituencies in the arbitration process—in-house counsel, law firm counsel, academ-ics, arbitrators, and institutional representatives—and included significant input also from a good number of subscribers to OGEMID (Oil Gas Energy Mining Investment Disputes), a highly active on-line discussion forum for

37 See “Form for Submission to Parties at Conclusion of Draft Proceedings (Following Settlement or Final Award),” Transnational Dispute Management (TDM 2007). Professor Wälde was a highly respected and inspirational thought leader in many areas, including international investments and dispute resolution.


international arbitration professionals.38 Consequently, we believe it repre-sents a thoughtful and balanced assessment template.

Specifically, the proposal calls for a simple arbitrator evaluation form to be submitted to parties and their counsel following the issuance of a final award or other conclusion of the proceedings. The form identifies the role of each arbitrator as sole arbitrator, chair or party appointed wing arbitrator, and then asks respondents to rate the tribunal and individual arbitrators on a simple scale of 1-5 (with 5 representing the highest mark) in the following areas:

• Meeting party expectations: whether the proceedings were conducted and concluded in a manner consistent with the party’s expectations with respect to time, cost and efficiency.

• Firm and fair hand: whether the tribunal dealt promptly and fairly with difficult issues.

• Simplification: whether the tribunal took steps to simplify the arbi-tration, for example by deciding issues early and/or issuing interim awards on critical matters.

• Reasonable limitations on procedure: whether the tribunal reason-ably limited the number of submissions, evidence, and hearing dates, and fairly prevented either party from engaging in tactics that would have been an unreasonably wasteful of resources or disproportionate to the amount in dispute.

• Schedule/Time extensions: whether the tribunal kept a schedule that was appropriate considering the amount in dispute and the complex-ity of the issues to be decided, and whether the tribunal asked the parties or arbitration institution to grant extensions of time to render an award.

• Availability: with respect to each arbitrator, whether their personal schedule was a cause of unreasonable delay of the proceedings.

• Fees: whether the fees of the tribunal were reasonable considering the amount in dispute and complexity of the issues.

• Party-appointed arbitrators: with respect to each of the party-appointed arbitrators, whether the arbitrator added value to the man-agement of the proceedings, and whether the arbitrator appeared at all times to be neutral and independent, such that the party would feel comfortable appointing them as sole arbitrator in a future proceeding.

38 See E. Eftekhari, “The Development of a Template Form for Providing Party Feedback to Arbitrators,” Transnational Dispute Management (March 2009).


• Overall rating: an overall judgment of each arbitrator’s performance on a scale of 1-5 from poor to outstanding.39

This evaluation form is simple, would not take much time for parties or their counsel to complete, and could easily be administered through an on-line survey. Moreover, all of this information—from arbitrators, institutions and party feedback—could be readily provided to parties and practitioners through an on-line resource to enhance their ability to make informed deci-sions and to select arbitrators that most closely align with their expectations. These measures would also assist arbitrators and institutions in improving their services.

Arbitrator Performance: Responding to Potential Objections

There undoubtedly will be those who argue against creating standardized assessments of arbitrator performance or who claim that it is just too difficult to do, and others who simply fear such change. However, we do not find their arguments compelling. While transparency of arbitrator performance does raise certain challenges and legitimate concerns, these challenges and concerns are readily manageable and do not represent intractable obstacles that should prevent us from achieving the many benefits that increased transparency would bring.

The concern that we have most often heard expressed is a fear as to the objectivity and accuracy of the data that would be collected and shared. Arbitrators are understandably concerned that parties or lawyers who lose an arbitration will inevitably give them bad marks. This concern is legiti-mate, but it is also one that exists already, without publicly available informa-tion about performance. Parties that believe they have unjustifiably lost may freely give bad marks to the arbitrators who ruled against them when asked for comment or referral of names for future arbitrations. But because this word of mouth is unlikely to reach the arbitrators, they may never know of it or have the opportunity to address any legitimate complaints that might be raised. One of the authors once noted an audience’s vocal skepticism towards transparency at an arbitration conference. He responded by noting that he already had a number of e-mails from other practitioners that were critical of at least half a dozen of the arbitrators present, but that they would never

39 As discussed below, we would add to this a question asking respondents to identify whether in their eyes they won or lost the arbitration or obtained a mixed result.


know what these e-mails said about them. Interestingly, the skepticism in the room was quickly transformed to acute curiosity.

Which really begs the question: does today’s approach of opacity instead of transparency truly offer any advantages? The countervailing assumption seems to be that, when users ask their colleagues or counsel for their expe-rience with certain arbitrators, the information received will necessarily be an unbiased reflection of the arbitrator’s performance. But as always, the real world is far messier. Word-of-mouth feedback can be rife with unstated biases, expectations and experiences. It can come from losing parties with an axe to grind. And rarely is it uniformly positive; indeed, many arbitrators might well be shocked to hear what is said about them that is influencing users and practitioners in their appointment decisions.

In short, the system we have today that relies almost exclusively on ad hoc, word-of-mouth experience should give rise to the same concerns by arbitrators regarding the reliability of the feedback that is being provided to users about their performance. After all, it is far easier for a losing party to be unfairly critical in the confines of an email or a phone call that no one else will ever see or hear. And yet the current system also has the added disadvantages that the information is not uniformly accessible to all users and denies arbitrators themselves access to what is being said about them. A more systematic evaluation system that incorporates both objective measures and user feedback would create a more level and transparent playing field against which more objective assessments can be made and shared with users and arbitrators alike. It can incorporate safeguards against the dissemination of false information or unfair comment, and just as importantly, it would allow arbitrators themselves a role in defining the process by which they are assessed.40

The model employed by the International Mediation Institute (IMI) offers one possible route to address concerns over potential biases injected by parties who feel they received a bad or unfair result. For those not famil-iar with IMI, it is an international organization formed in 2007 through the cooperation of several prominent mediation providers and well-known mul-tinational companies, with the aim of driving greater transparency and high competency standards in the global mediation profession. A vital component of the IMI offering is the collection and dissemination of comprehensive information regarding mediators who participate in the IMI certification process, in the form of a publicly available, and fully searchable, web “ portal”

40 For example, IMI consulted with a large number of mediators in developing its performance assessment process.


that contains each mediator’s full profile.41 One section of each profile is the mediator’s own description of their approach and “style” towards dispute resolution, for example whether they consider their approach to be “facilita-tive,” “evaluative”, or “transformative”, information that parties will want to know before appointing a mediator.

More significant (and, at least initially, controversial) is the section of each IMI profile devoted to providing party feedback about how the media-tor handled previous disputes, including whether the parties were satisfied with the services provided. The party feedback is collected from parties by an independent “reviewer” appointed by the mediator who synthesizes the data into a “feedback digest” that accompanies the mediator’s full profile on the IMI web portal.42

For negative feedback that occurs more than three times, the reviewer must go back to the party who provided the comment and the mediator to seek an explanation as to what led to the poor review before reflecting it in the feedback digest. Experience has now shown that, when handled and reported in such a professional manner, the occasional negative feedback will not only enhance the credibility of a mediator’s profile but can also make the mediator more attractive to parties. For example, the feedback digest in the IMI profile of one well-known mediator states that it was compiled on the basis of feedback from parties to over 40 past mediations. The digest notes the praise given about the mediator’s skills in the large majority of the cases, but also mentions that in a minority of cases there was some criti-cism of how the mediator handled the dispute. The reviewer states that he discussed these cases with the mediator, who provided his views about the negative comments, and also indicated that he was working to address one of the concerns expressed.

We offer up the example of the IMI simply to demonstrate that con-cerns over the objectivity and accuracy of user feedback can be overcome. While many mediators initially shared similar concerns and skepticism about the collection and dissemination of user feedback, over 900 leading

41 See http://www.imimediation.org. The feedback solicited by the IMI and IMI-certified mediators is relatively simple, and generally asks each participant in the mediation to rank their level of satisfaction with the mediator in several respects on a scale of 1 to 5. See http://www.imimediation.org/feedback-request-form. The IMI model also demonstrates that feedback can be usefully solicited regarding a confidential process.

42 Appointment of the reviewer and preparation of the feedback digest must be done accordance with specific IMI guidelines, and are subject to review and approval by IMI once completed to ensure conformance with the requisite guidelines. See http://www.imimediation.org/feedback-digest-guidelines-for-reviewers.


mediators around the world have been convinced by the procedures and safeguards employed by IMI and have registered to become IMI-certified. And hundreds already have made their profiles available on the IMI portal, each with party feedback digests. Many prominent mediation institutions likewise have embraced the model and have chosen to participate actively in IMI, including arbitration institutions such as ICDR and ICC that also provide mediation services.43 Other potential models also exist.44 One simple safeguard might be disclosure of whether a performance assessment was made by a party that indicated it had “won” or “lost” the arbitration. High marks from a party that perceived itself as having “lost” would undoubtedly be the highest form of praise, while lower marks from a losing party might appropriately be viewed with that context.

Moreover, we firmly believe that the majority of users and practitio-ners will be able to distinguish between thoughtful evaluations and vengeful evaluations produced by parties who are sore losers, with the vast majority of feedback likely to be insightful and highly useful. In this regard, we must emphasize that we are not advocating the collection of feedback concern-ing the perceived quality of the decision rendered, which inevitably will be subject to perceptions of winning and losing, but only the manner in which the case was managed. We are confident that the majority of practitioners are willing to recognize good case management even if they disagree with the award rendered.

Ultimately, of course, any system is going to yield both positive and negative feedback, and that must be accepted and even valued as part of any performance evaluation program. Few of us receive uniformly positive eval-uations, and negative or critical feedback, while uncomfortable to receive, allows each of us to understand how we are being perceived and to improve on those identified areas of weakness. No one can doubt the effectiveness of feedback as a mechanism to rapidly improve performance, regardless of whether the subject is an entire business or an individual, and we would expect that many arbitrators seeking to expand their practices would wel-come both client feedback and a mechanism for demonstrating their success in satisfying parties’ case management expectations.

43 ICDR is represented on the IMI Board of Directors and ICC has a represen-tative on IMI’s Independent Standards Committee.

44 For example, a for-profit, on-line attorney rating system established in the U.S. by a former Expedia.com executive, which receives millions of inquiries a year, allows lawyers to challenge a review and if the reviewer does not respond when ques-tioned by the site, the review is removed. It is reported that sometimes the challenge prompts the reviewer to modify his/her review. See note 27.


Another argument that we have heard expressed is that the sharing of information regarding arbitrator performance invades the confidentiality of the arbitration process. But none of the information or data that we advocate be shared invades any reasonable definition or concept of arbitral confidenti-ality. While the substance of the parties’ dispute may be confidential,45 there is nothing confidential about the speed of the process or the parties’ satisfac-tion with the manner in which the case was managed.

Some have argued that European privacy laws limit a provider’s abil-ity to collect and disseminate feedback on arbitrator performance. The IMI model clearly shows this argument to be unfounded. While a complete review and analysis of privacy law requirements is beyond the scope of this article, it bears noting that any rational model would naturally meet some of the more prominent requirements of European privacy law, such as the right of arbitrators to have access to, and to challenge, objectively false data. As discussed, one of the goals of any performance evaluation system should be to make the information readily available both to users and to arbitra-tors, and arbitrators unquestionably should have the right to challenge any objectively false data submitted about them. Additionally, institutions could certainly require arbitrators to consent to an evaluation process as part of the appointment process, much as the IMI encompasses the feedback digest process when mediators apply for IMI certification.

Lastly, we have been told by some that no standardized form of per-formance measurement is needed because experienced arbitration practitio-ners already know who the “good” and “bad” arbitrators are, and therefore parties need merely employ experienced counsel. While there is certainly some legitimacy to the point that seasoned practitioners can draw upon their extensive experience in choosing arbitrators, this has a tendency to result in the same arbitrators being appointed time and again, which in turn leads to them becoming over-booked and unable to move proceedings along expedi-tiously (and contributes to the perception of an arbitration “mafia”). Greater access to information will help widen the circle of “good” arbitrators who are routinely appointed. Moreover, in this age of information transparency,

45 Of course, even the substance of the proceedings may not be as confidential as one might believe. While some institutional rules may limit what arbitrators can disclose publicly about the proceedings, there is generally no such limitation on what parties may divulge and, even when there is, the ability to enforce confidentiality is limited (at best). And, of course, confidentiality may be entirely lost when another party applies to the courts, for example to enforce or challenge an award. In many instances, the party seeking to enforce or challenge the award will not only need to produce the award itself (rendering it immediately public) but may also be required to re-litigate a number of issues in the court.


information about arbitrator performance should be readily available to all parties and not a guarded secret limited to a privileged few.

CONCLUSION

There are many ways in which performance measures for institutions and arbitrators could and may be developed and implemented. Data could be assembled and made accessible for a fee by a profit-making company like one of the leading publishers of international arbitration resources. An orga-nization representing corporate interests might develop such measures, simi-lar to the initiative of the Association of Corporate Counsel in the U.S. with respect to the rating of lawyers. Arbitration institutions could take the lead in developing and sharing such performance measures, or an independent body such as the IMI could be created with representation from all interested stakeholders. However the accomplished, the creation and dissemination of standardized performance measurements for arbitrators and institutions will fill a critical void and benefit all stakeholders in the arbitration process, as well as the profession of arbitration as a whole.

The disclosure of such information will substantially enhance the value proposition of arbitration to users by allowing them to identify much more readily those arbitrators and institutions which best suit their needs and desires, thereby improving users’ sense of satisfaction with the process. It will enhance the ability of institutions to deliver results that meet the expec-tations of their customers, and reward those most successful in doing so, while giving guidance to improve each institution’s competitive position. For arbitrators, it will not only reward those who meet or exceed parties’ expectations—including lesser known arbitrators whose names are not rou-tinely among those considered, but should be—but will allow those who do not meet expectations to understand that they have not done so and for what reasons, so that they can improve the service offering they provide. Perhaps most important, this increased transparency will enhance the repu-tation of international arbitration to the benefit of all concerned, by making the process more open, efficient and predictable (and therefore acceptable) for parties, and better satisfying their expectations for international dispute resolution.

Transparency in International Arbitration

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