Transparency in International Commercial Arbitration: The Road Ahead

By Sarthak Malhotra 

In 1995, a former Secretary General of the ICC International Court of Arbitration, Stephen R. Bond, in an article, noted that the users of international commercial arbitration “almost invariably” mentioned the fact that the arbitral proceedings and the resulting award do not enter into the public domain as a feature which attracted parties to it.[1] Whether confidentiality is an essential feature of international arbitration cannot be stated with certainty, considering how the New York Convention and the UNCITRAL Model Law on International Commercial Arbitration do not expressly recognize it. Nevertheless, twenty years later, the 2015 International Arbitration Survey conducted by Queen Mary University of London School of International Arbitration (QMUL Survey) also showed that corporate counsels around the world regard  confidentiality and privacy as the second most valuable characteristic of international arbitration.[2] It also showed that the users are still not satisfied with the degree of transparency in arbitral institutions.[3]

Nearly all arbitral institutions are actively taking steps to improve the transparency of the arbitral process as well as their decision making while ensuring that the delicate balance between ‘transparency’ and ‘confidentiality and privacy’ is maintained. For instance, the International Chamber of Commerce International Court of Arbitration (ICC Court) announced in January 2016 that it will publish the details of arbitrators sitting in ICC cases and how the appointment was made.[4] However, the parties will have the option of opting out of this disclosure requirement. The Stockholm Chamber of Commerce (SCC) recently published a report which contained details of the disputes such as size, length, costs, apportionment of costs by the tribunals. A similar report was also released by London Court of International Arbitration (LCIA) last year.[5] The report provided significant information about the disputes and the claims themselves without affecting the confidentiality of such disputes.[6] In words of a commentator, “le conflit entre transparence et confidentialite ne peut done conduire a la victoire totale de I’une sur I’autre, et leur conciliation s’avere necessaire“.[7] Other institutions like London Court of International Arbitration (LCIA), Stockholm Chamber of Commerce (SCC) and Hong Kong International Arbitration Centre (HKIAC) are not far behind in promoting transparency and efficiency in arbitral process. Such information makes the decision making of institutions more transparent and limits frivolous and non-meritorious applications.

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This growing determination to make international commercial arbitration more transparent is no ordinary development. Surveys such as the QMUL Survey have shown year after year that users of international commercial arbitration value ‘privacy and confidentiality’ to a great extent. The growing demand for transparency in commercial arbitration may put some stakeholders in a fix. Apart from the procedural deficiencies in international tribunals and the difficulty in regulating the multinational companies[8], another factor that is shaping this debate is the promotion of transparency as an ideal in investor-state arbitration. This may not be desirable as unlike commercial arbitration, the presence of the element of ‘public interest’ in investor-state disputes may conflate the concepts of ‘transparency’, ‘public access’, and ‘disclosure’. As noted arbitrator Prof. John Crook puts it, “[Y]ou need to listen carefully, to be sure what is being talked about.[9] It is because of this distinction between commercial and investor-state arbitration that extending the application of the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration to commercial arbitrations is not desirable. Hence, the reforms suggested for promoting transparency in commercial arbitration should be examined in light of its ‘private’ nature and the necessity of preserving parties’ confidential information.

Implementing broad and systemic transparency reforms, as has been suggested by the transparency advocates in the past[10], may not be the ideal solution as such broad obligations may lead to arbitral proceeds doing more harm than good in disputes where there is a genuine need for keeping the proceedings ‘private’. Further, such obligations could easily be evaded by choosing other favourable arbitral institutions or resorting to ad-hoc arbitration which is still the practice in developing countries like India. Another limitation is the lack of consensus on which set of cases are of ‘public interest’. A vague expression like ‘public interest’ is subject to public perception- a notion which is influenced by the culture, values and the contemporary trends prevailing in the society. For instance, lack of democratic decision making may not amount to government misconduct in countries like China where the ideals of political culture are perceived differently.

From a normative perspective, the concerns voiced by the transparency advocates reflect the growing public discourse on the growing phenomenon of multinational corporations’ “liftoff from the terrain of national regulation”[11] and the expansion of non-state rules in private international law, especially through promotion of international arbitration. While the importance of promoting international commerce and the role of arbitration in it cannot be denied, the regulatory function of private law which is often clouded by the facilitative function cannot be ignored. Further, maintaining the status quo that is giving deference to ‘party autonomy’ shall be nothing less than turning a blind eye to the obvious need of promoting transparency in international arbitration. This, coupled with the limitations of systemic reforms, presents a situation where internationalist reforms may not be the right solution. Could this conundrum instead be resolved by strengthening national disclosure obligations?

It can be said without any doubt that those seeking information generated in a commercial arbitration shall enjoy more political strength and credibility at the national level. The regulatory authorities at the national level often, if not always, take into account the interest of the public and the national policy objectives while drafting and enforcing the disclosure obligations.  For instance, many national securities laws have imposed an obligation on listed companies to disclose any material legal proceedings. In India, the Equity Listing Agreement, which lays down the listing requirements and conditions, imposes an obligation on the listed companies to inform the stock exchange of the developments with respect to any arbitration  proceedings “which can reasonably be expected to have a material impact on its present or future operations or its profitability or financials”.[12] Additionally, it is an internationally acceptable practice to impose an obligation on companies to disclose contingent financial liabilities in their financial statements.[13] Further, the ability to secure compliance also ensures that companies follow such obligations which are, albeit, vaguely phrased.

Another source of such case-specific disclosures is the judicial proceedings related to arbitration such as interim reliefs, assistance in taking evidence, enforcement related proceedings. The parties are increasingly approaching courts for such assistance which is leading to information becoming public. However, the emphasis of courts on disclosure of details of an arbitration and the reasons for an award is presumably not for promoting transparency in international commercial arbitration but rather to promote the “transparency and legitimacy of their own judicial processes[14]. It is suggested that transparency in international commercial arbitration could further be improved by making rendering awards with reasons necessary. The reasoned awards would allow the judiciary to gauge the regulatory interests and the general public’s stake more clearly.

Over the time, there have been some laudable efforts by the arbitration community itself such as Arbitrator Intelligence[15]. Founded by Professor Catherine Rogers, whose scholarship has influenced how the community characterizes and approaches the issue of transparency in international commercial arbitration, Arbitrator Intelligence’s mission is to promote transparency in selection of arbitrators by collecting information about arbitrators. It is collecting published and unpublished awards and procedural orders and quantitative feedback from users and counsel, thus providing helpful information about arbitrators’ past decision making. Such a database of information about arbitrators will also go a long way in increasing the visibility of newer arbitrators. It also evidences the importance arbitration community attaches to the need to promote transparency in international commercial arbitration. Arbitrator Intelligence is a collaborative effort and its growing community includes members from more than 170 jurisdictions. Another such initiative is the “Arbitration Scorecard”, published in American Lawyer magazine’s “Focus Europe” column which aims at giving insight into world’s biggest arbitration disputes. Expressing as capturing the “political and economic crosscurrents of our time”[16] the Scorecard is an important source of information about large arbitrations, global trends and appointment of arbitrators. Such initiatives demonstrate that the alternatives to systemic and fundamental reforms do exist which would not disturb the balance between ‘privacy and confidentiality’ and ‘transparency’.

The need for greater insight into the arbitral institutions’ decision making is another matter of concern amongst the users of the process, as evidenced by the QMUL Survey. The arbitral institutions should strive to publish the collections of their administrative decisions, guidance notes, decisions in arbitrator related challenges, reasons for consolidation related decisions regularly. Major arbitral institutions such as ICC, LCIA and SIAC are leading this movement. Apart from helping the parties make an informed choice about which institution they wish to opt for, this would reaffirm the institutions’ commitment to integrity in decision making and transparency.

While there is no denying that the international commercial arbitration community has made huge strides towards transparency, thus showing its commitment towards preserving the legitimacy of the system, there is still the need for further progress. The cooperative and competitive efforts that ultimately lead to greater transparency should therefore continue until the international commercial arbitration’s transition from a dispute resolution system to a system of justice is complete when seen through the eyes of the public.[17]

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[1] Bond, Stephen. “Expert Report of Stephen Bond Esq (in Esso/BHP v. Plowman)” (1995) 11 Arbitration International 3: 273-281.
[2] “2015 International Arbitration Survey: Improvements and Innovations in International Arbitration.” London, Queen Mary School of Law, School of International Arbitration (2015).
[3] Ibid
[4] “ICC Court announces new policies to foster transparency and ensure greater efficiency”, 05 January 2016, <http://www.iccwbo.org/News/Articles/2016/ICC-Court-announces-new-policies-to-foster-transparency-and-ensure-greater-efficiency/&gt;
[5] “LCIA releases data on average costs and duration of LCIA proceedings”, November 4, 2015. Available at <http://uk.practicallaw.com/9-619-9896&gt;
[6] Quero, Celeste E. Salinas, Costs of arbitration and apportionment of costs under the SCC Rules, 2016. Available at <http://www.sccinstitute.com/media/93440/costs-of-arbitration_scc-report_2016.pdf&gt;
[7] Fages F., La cartfidentialite de l’arbitrage a l’epreave de la transparence financiere. Revue der Arbitrage, 2003, I, 5-39.
[8] Rogers, Catherine A. “Transparency in International Commercial Arbitration.” Kansas Law Review (2006) pp. 1301,1306
[9] Crook, John R. “Joint Study Panel on Transparency in International Commercial Arbitration.” ILSA J. Int’l & Comp. L. 15 (2008): 361.
[10] Buys, Cindy G. “The Tensions Between Confidentiality and Transparency in International Arbitration” Am Rev Int’l Arb (2003):14-121; Gruner, Dora Marta. “Accounting for the Public Interest in International Arbitration: The Need for Procedural and Structural Reform.” Colum. J. Transnat’l L. 41 (2002): 923.
[11] Wai, Robert. “Transnational Liftoff and Juridical Touchdown: The Regulatory Function of Private International Law in an Era of Globalization.” Colum. J. Transnat’l L. 40 (2001): 209.
[12] Clause 36, Equity Listing Agreement, Bombay Stock Exchange and National Stock Exchange of India.
[13] International Accounting Standard 37.86 (Disclosure), International Accounting Standards Board. Overview available at http://www.iasplus.com/en/standards/ias/ias37
[14] See Rogers, supra note 6, at 1330
[15] See http://www.arbitratorintelligence.org (website)
[16] See Arbitration Scorecard 2013, Focus Europe, June 24, 2013. Available at <http://www.americanlawyer.com/id=1202608198051/Arbitration-Scorecard-2013&gt;
[17]See supra note 12, at note 153.
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One thought on “Transparency in International Commercial Arbitration: The Road Ahead

  1. Great, lucid work! One could also draw an analogy with the ISDS regime which is also slowing moving towards greater transparency at both the domestic level (e.g. with providing access to documents regarding such proceedings) and at the International Level with initiatives like the Mauritius Convention (2014).

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