The Ethics Conundrum in International Commercial Arbitration

By: Spencer McDuff

“International arbitration dwells in an ethical no-man’s land; where ethical regulation should be, there is only an abyss.”[1]

Ironically enough, the present ethical “abyss” in which international commercial arbitration lingers in, is in fact a product of what makes the process of arbitration so appealing to international commercial parties in the first place. The inherent flexibility associated with International Commercial Arbitration was designed to provide parties with an alternative means of dispute resolution that would avoid the uncertainties of local practices associated with litigation in national courts. The appeal of engaging in international arbitration to avoid national court uncertainties is sustained in great part by the fact that traditionally, arbitration provides a relatively efficient (in terms of time and money) means of obtaining a binding decision from a theoretically unbiased expert in the relevant field.

Additionally, a number of other aspects that help make international arbitration an attractive means of dispute resolution include: the confidentiality of the arbitral process, party freedom in arbitrator selection and design of the arbitration itself, and the relative general enforceability of arbitral awards and arbitral agreements in foreign jurisdictions.[2]

While these and other benefits of international arbitration add to its popularity as a dispute settlement mechanism, there is now the realization that these benefits cannot be achieved without some cost. A cost that has until fairly recently, gone unnoticed. For it is within this substitution of the rigid resolution process in national courts for the more flexible international arbitration option, that the problem and cost of international arbitration is materializing. With the aim of avoiding uncertainty in a national court proceeding, parties that alternatively elect international arbitration as a means of dispute resolution turn around only to find themselves in a battle that is now, for the most part, without ethics regulation.

Today, one great cost of international arbitration exists in the form of mounting ethical concerns pertaining to the conduct of those involved in international arbitration (most notably the arbitrators) and the affect those ethical concerns are having on the legitimacy and fairness of the international arbitral process. Ethical concerns are now of great importance in international arbitration because of the rapidly increasing number of international arbitrators and arbitral proceedings taking place among international commercial parties.[3]

In an attempt to take advantage of the other apparent benefits of international arbitration mentioned, one is faced with another trade-off. While seeking to gain the freedom associated with party determination of the arbitral process, arbitrator selection and confidentiality, one must consider the ethical situation posed in the international arena relevant to these advantages. For example, while parties are free to choose their arbitrators, there is often times no “supranational authority to oversee attorney [and arbitrator] conduct” in the international setting.[4] Also, “local bar associations rarely, if ever, extend their” domestic ethical codes to the international scene.[5] To compound the problem, “arbitral tribunals have no legitimate power to sanction attorneys,” or often times, party appointed arbitrators.[6]

One effect of an absent supranational ethics authority or standard, means that those involved in international arbitration might “rely primarily on their own personal, nationally derived assumptions about what constitutes proper conduct” in an arbitration proceeding.[7] These assumptions derived at a national level “often clash with the rules that apply to participants from other jurisdictions or with prevailing practices in international arbitration proceedings.”[8] With this interplay between and against different domestic ethics standards and the lack of a supranational authority, arbitral participants are “potentially subject to different rules that affect the conduct of arbitral proceedings, [which can result in] an unfair playing field at multiple levels” within the arbitral process.[9]

It is “against this backdrop, [that] a number of leading arbitrators and practitioners have described the current situation as a potential crisis that can threaten the legitimacy of international arbitration and [which] is in need of immediate redress.”[10]

“International arbitration does not have the majestic buildings, the black robes, bailiffs and marshals that promote a sense of legitimacy and ensure compliance with national court decisions.”[11] There is no written supranational code or standard of ethics for international arbitrators to follow or be subject to like there are in many national bar associations. Instead, international arbitration has, in the past, been left to the ethical convictions of its participants by way of self-regulation.

However, self-regulation as a means to curtail ethical dilemmas in International Arbitration is becoming increasingly less effective because of “the international communities’ inability to think beyond its present situation, to future generations and future developments in an ever-more globalized legal world.”[12]

Unfortunately, for as long as there is this lack of common understanding among international arbitrators from different cultures as to what it means to be ethical and a decrease in the ability of the international arbitration community to self-regulate, international arbitration is destined to remain in the “abyss” of the “ethical no-man’s land.”[13]

Spencer McDuff is a 3L at the Pennsylvania State University-The Dickinson School of Law, an LLM student at the Radboud School of Law, and a Resident Student Blogger for the Journal of Law and International Affairs.


 

[1] Catherine A. Rogers, Fit and Function in Legal Ethics: Developing a Code of Conduct for International Arbitration, 23 Mich. J. Int’l L. 341 (2001-2002). Available at: http://www.transnational-dispute-management.com/article.asp?key=1651

[2] Id.

[3] Cárdenas, Emilio; Rivkin, David W., A Growing Challenge for Ethics in International Arbitration, Global Reflections on International Law, Commerce and Dispute Resolution: Liber Amicorum in Honour of Robert Briner, 191 (2005).

[4] Id. Rogers at notes 261-264.

[5] Ivo G. Caytas, Transnational Legal Practice: Conflicts in Professional Responsibility. New York: Commonwelth Press (1992).

[6] Catherine A. Rogers, Context and Institutional Structure in Attorney Regulation: Constructing and Enforcement Regime for International Arbitration, 39 Stan. J. Int’l L. (2003).

[7] Catherine A. Rogers, Ethics in International Arbitration, 3 (2012).

[8] Id.

[9] Id.

[10] Charles N. Brower & Stephan W. Schill, Regulating Council Conduct Before International Arbitral Tribunals in Making Transnational Law Work in a Global Economy: Essays in Honor of Detleve Vagts, (2010); Id at 4.

[11] Michael Richard Dimino, Sr., Counter-Majoritarian Power and Judges’ Political Speech, 58 Fla. L. Rev. 53, 63 (2006).

[12] Id.

[13] Rogers, supra note 1 at 342.

Is UKIP Here to Stay?

By: Hilary Flack

The United Kingdom Independence Party, more commonly known as UKIP, is a minority party in the United Kingdom. Despite being known as a radical right-wing party, UKIP has experienced increased support in recent years. The party is currently led by Nigel Farage, a former Tory who left the Conservative Party in the early 1990s due, in large part, to his dislike of the restrictions EU membership placed on the UK.[1] UKIP’s political positions haven’t changed much since its formation in 1993. The party remains staunchly anti-Europe and right-wing.

UKIP is easily one of the farthest right political parties in the UK. It is therefore surprising that UKIPs membership and share of the vote has risen in recent years. Since 2002, UKIP membership has grown from 2,000 people to almost 50,000. In the 1997 general election, UKIP received only 105,722 votes, representing 0.3% of the overall vote. In the 2010 general election, UKIP received 919,546 votes, representing 3.1% of the overall vote. Though UKIP did not take any seats in the 2010 election, they received the 4th largest share of the vote, only behind the well-established Conservative, Labour and Liberal Democrat Parties.[2]

As the 2015 election approaches, analysts are predicting that UKIP’s support will continue to grow. Professor Bogdanor of Kings College London, who specializes in British politics and constitutional issues, informed the BBC in a recent interview that he does not expect UKIP to fade away any time soon. Professor Bogdanor believes the growing popularity of UKIP “reflects changes in British Society” as the party is “more working class” than the other major parties.[3] As Europe’s economy continues to decline, it is not hard to see why more British citizens are attracted to a party that advocates severing economic ties to the EU.

The 2015 general election is scheduled to be held on May 7th. Though many commentators are predicting that no real change will occur in terms of party control, polling data suggests that UKIP will gain an even larger share of the vote than in the 2010 election.[4] Recently, voters dissatisfied with their parties have shifted increasingly towards smaller parties, instead of between the larger parties in the UK. While it may be unsurprising that some defecting from the Conservative party have joined UKIP, it is also true that UKIP has gained support from former Labour, and even Green party members.[5] The 18-24 year old voting block, termed ‘Generation Y’, has experienced a significant shift towards UKIP. Traditionally, this voting block is firmly held by the Labour party. However, Labour is slowly losing its majority to minority parties. It is highly significant that some Generation Y voters are leaving Labour not to join another liberal party, but instead to join UKIP. This indicates that UKIP’s conservative and nationalistic positions are appealing not only to their traditional base of older middle class voters, but across the board.

It is clear that UKIP will not be forming a government in the UK any time soon. However, UKIP’s growing popularity may serve to disrupt the hold the three largest parties have on the voters in the UK. UKIP’s numbers and popularity are still increasing, reflecting both the UK electorate’s dissatisfaction with the EU and the slow decline of the two party system in the UK.  Though the question of its overall success in coming elections remains to be seen, it does seem that UKIP is here to stay.

Hilary Flack is a 3L at The Pennsylvania State University–The Dickinson School of Law, and a Senior Editor on the Journal of Law and International Affairs.


 

[1]  http://www.bbc.com/news/uk-politics-20543513

 

[2]  http://www.theguardian.com/news/datablog/2015/mar/04/election-2015-support-for-ukip-among-gen-y-voters-doubles-in-a-year

 

[3] http://www.bbc.com/news/uk-politics-31066643

 

[4] http://www.theguardian.com/politics/2015/jan/01/ukip-snp-greens-labour-conservatives-2015-general-election

 

[5] http://www.theguardian.com/news/datablog/2015/mar/04/election-2015-support-for-ukip-among-gen-y-voters-doubles-in-a-year

Turkey/Cyprus Dispute

http://www.theatlantic.com/international/archive/2012/06/picturesque-little-cyprus-sparks-yet-more-conflict-this-time-over-oil/258545/
http://www.theatlantic.com/international/archive/2012/06/picturesque-little-cyprus-sparks-yet-more-conflict-this-time-over-oil/258545/

By: Daniel Mengisteab

In 2011 the discovery of a substantial natural gas reserve off the coast of Cyprus was thought to have brought renewed hope in the reunification of the island of Cyprus as well as Turkey’s ascension into the European Union.[1] However the Republic of Cyprus canceled all talks in October 2014 as the parties involved couldn’t be further apart.

The Turkish Republic of Northern Cyprus, which is only formally recognized by Turkey, insisted that they too have rights to the reserve. Turkey dispatched a research vessel accompanied by navy warships in the Republic of Cyprus’ exclusive economic zone (EEZ) in an effort to prevent any drilling until a deal has been made. Turkey does not recognize the Republic of Cyprus nor their jurisdiction over the reserve.

Turkey’s ‘provocative actions,’[2] are what led to the Greek Cypriots canceling all talks and instead moving to gather support from other nations in the region. The gas reserve also falls within Israeli jurisdiction, leading Israel to condemn Ankara’s infringement on Cyprus’ rights.

It is estimated that there are up to 5 trillion cubic feet of natural gas in the Cypriot jurisdiction[3] and up to 21 trillion cubic feet in Israeli jurisdiction.[4] Given the rising energy needs in Europe[5] as well as the recent economic struggles of the Republic of Cyprus,[6] it is no wonder why the stakes are so high. Turkey’s research vessel and naval ships were scheduled to leave the area on December 30th and did so for a brief period. During this period, representatives of the UN attempted to bring all the parties back to the negotiating table, with President Anastasiades publicly raising the possibility of negotiating the proceeds of the natural gas with the Turkish Cypriots.[7]

This mild concession was only meet with a new directive from Ankara for the Turkish Vessels to remain until April 6th.[8] Since the return of Turkish vessels in Cyprus’ EEZ, the UN Secretary General’s Special Adviser Espen Barth Eide has admitted that “right now there are no prospects for an immediate meeting and I think that will be the [case] for quite a while.”[9]

Turkey’s willingness to play a zero-sum game in the negotiation process has destroyed all hope of bringing the 30+ yearlong Cyprus dispute to an end any time soon. Despite the complex scenario, the appropriate deal would see all parties benefit. It will be interesting to see how Turkey will handle the situation after April 6th when the Turkish vessels are scheduled to leave again.

Daniel Mengisteab is a Master’s Degree candidate at Penn State’s School of International Affairs and a Resident Student Blogger for the Journal of Law and International Affairs at Penn State Law.


 

[1] http://www.economist.com/news/europe/21596573-yet-another-round-talks-reunify-divided-island-begins-glimmer-hope

[2] http://www.theguardian.com/business/2014/nov/10/oil-gas-reserves-cyprus-greece-turkey

[3] http://www.cyprusgasnews.com/archives/3503/

[4] http://www.globes.co.il/en/article-1000742906

[5] http://www.renewableenergyworld.com/rea/blog/post/2013/05/rising-energy-dependency-endangers-europes-economy

[6] http://money.cnn.com/2013/03/21/news/economy/cyprus-bailout-ecb/index.html?iid=EL

[7] http://cyprus-mail.com/2015/01/08/turkey-issues-new-navtex/

[8] http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_07/01/2015_546007

[9] http://www.thecypriotpuzzle.org/espenbartheide-is-concerned-about-the-current-impasse-in-cyprus-talks/

Responsibility to Protect: Nigeria

By: Kevin Prucino

In 2001 the International Commission on Intervention and State Sovereignty first articulated the principle of “Responsibility to Protect” (R2P) in its report “The Responsibility to Protect” released in December of 2001.  The report addressed state sovereignty issues raised by military intervention in the humanitarian crises of Bosnia, Somalia, Kosovo, and the lack of intervention in Rwanda. [1] R2P embodies the principle that “sovereignty no longer exclusively protects States from foreign interference; it is a charge of responsibility where States are accountable for the welfare of their people”. [2] In October 2005, R2P was unanimously adopted in paragraphs 138–140 of the UN World Summit Outcome Document. In April 2006, United Nations Security Council reaffirmed the principle in Resolution 1674. [3] R2P is limited to the four crimes of genocide, crimes against humanity, ethnic cleansing, and war crimes.  Fordham Law professor Thomas H. Lee in “The Law of War and the Responsibility to Protect Civilians: A Reinterpretation” interprets the “three pillars” of R2P as:

  1. A sovereign state has a basic responsibility to protect civilians within its borders,
  2. [T]he rest of the world has a responsibility to ensure that every state honors its responsibility to protect, and
  3. [I]f a state fails in its responsibility, then other states may use all necessary means, including armed force, to protect the civilians at risk. [4]

Amongst the worldwide turmoil caused by the acts of ISIS and the Charlie Hebdo massacre, the Boko Haram militant group in Nigeria is receiving international condemnation.  This month, Boko Haram was responsible for the loss of an estimated 2,000 lives during a spree of slaughtering, kidnapping, and burning of Nigerian villages. [5] In April of 2014 Boko Haram kidnapped 276 schoolgirls prompting the “Bring Back Our Girls” awareness campaign. As of October, 219 schoolgirls are still missing. [6] One of the most recent and deplorable means of violence is the use of abducted children as young as 10 for suicide bombing. [5] Since Boko Haram’s inception in 2002 it is estimated the militant group is responsible for the displacement of 1.5 million people in Africa. [5] Additionally, an estimated 10,000 civilians have lost their lives at the hands of Boko Haram, and their militants number around 8,000. [5]  Secretary of State John Kerry described them as “…without question one of the most evil and threatening terrorist entities on the planet today,” during an appearance in Bulgaria.. [7]

For R2P intervention in Nigeria, a mandate by the UN is necessary to confer legitimacy to the intervening state, this requirement being an effort to curtail the use of R2P as a political tool.  The UN will mandate the intervention only for the four named crimes of genocide, crimes against humanity, ethnic cleansing, and war crimes.  The International Criminal Court defines crimes against humanity as: ““Crimes against humanity” include any of the following acts committed as part of a widespread or systematic attack directed against any civilian population, with knowledge of the attack.”  Murder, extermination, enslavement and other depraved acts are enumerated in the definition. [8] Boko Haram is committing crimes against humanity in Nigeria with their widespread murder and other inhumane actions.  Considering the massacres this month a strong case can be made that Nigeria is failing in its responsibility to protect the civilians within its borders; the casualties of Nigerian civilians are getting exponentially worse and gruesome in nature.   R2P favors exhaustion of peaceful intervention methods before the use of force; therefore, it is uncertain what the extent of intervention would be if a mandate was granted.  Regardless of the intervention methods, a R2P mandate offers a legitimate course for the United States and other countries to offer substantial assistance and even military force to help those currently dealing with large scale tragedy in Nigeria.

Kevin Prucino is a 2L and a Resident Student Blogger with the Journal of Law and International Affairs at the Penn State University-Dickinson School of Law.


 

  1. ICISS (International Commission on Intervention and State Sovereignty), The Responsibility to Protect, Ottawa (2001) available at http://responsibilitytoprotect.org/ICISS%20Report.pdf.
  2. http://www.un.org/en/preventgenocide/adviser/responsibility.shtml
  3. http://www.insightonconflict.org/2014/07/nigeria-responsibility-to-protect/
  4. Lee, T. H., The Law of War and the Responsibility to Protect Civilians: A Reinterpretation, 55 Harvard Int’l L. J. 251 (2014) available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2378438.
  5. http://www.bbc.co.uk/newsbeat/30777607
  6. http://www.aljazeera.com/indepth/features/2014/10/abandonment-bring-back-our-girls-2014101494119446698.html
  7. http://www.nbcnews.com/storyline/missing-nigeria-schoolgirls/boko-haram-appears-be-using-abducted-girls-suicide-bombers-experts-n284456
  8. http://www.icc-cpi.int/en_menus/icc/about%20the%20court/frequently%20asked%20questions/Pages/12.aspx

Greece Bailout Expiration: No Hopes of Debt Reduction

By: Jonathan Burr

For about five years Greece has been struggling to rebuild its infrastructure and pay its bailout debts, and the bailout program that has been in place is about to expire at the end of this month. Liz Alderman reported in the New York Times that, on Sunday February 1, 2015, French officials publicly stated that they support Greek’s efforts to get the country moving in the right direction. However, with this support came a warning.  French officials said there would be no write down of Greece’s debt. Michel Sapin, the French finance minister made these statements during a visit from the new Greece finance minister, Yanis Varoufakis.

Varoufakis compared Greece’s reliance on funds from the international bailout package as a drug addiction.  To cure this addiction, Varoufakis indicated that Greece would not be seeking its installment payment of the bailout package.  The funds of the international bailout package come with numerous strict conditions of how the payments can be used and development steps moving forward.  It appears that Varoufakis no longer wants to accept the payments because of the conditions that must be adhered too.  According to Varoufakis, Greece is negotiating a new deal with creditors and plans to have it finalized by May.  He told the New York Times that Greece would offer a detailed proposal for reducing the debt burden in the near future.

President Obama reacted to what was occurring in Greece.  Obama stated, “Greece needed to tackle essential reforms, including improving tax collection.  In order for Greece to compete in the world markets, they had to initiate a series of changes.”

Jonathan Burr is a 3L at The Pennsylvania State University–The Dickinson School of Law, and a Senior Editor on the Journal of Law and International Affairs.


Alderman, Liz, France Offers Support, but no Debt Relief, to Greece, NY Times (Feb. 1, 2015), available at http://www.nytimes.com/2015/02/02/business/international/france-offers-support-but-no-debt-relief-to-greece.html.