Identifying the Blind Spots: Self Reflection in the Field of International Arbitration

Sophie Nappert, selected lecturer at the 2018 Proskauer International Arbitration Lecture, discusses the tumultuous perception of international arbitration and calls for the industry to look inward

By Sara Higgins

During the 2018 Proskauer International Arbitration Lecture, renowned international arbitrator Sophie Nappert took some of the industry’s leading lawyers to task. Her address, cheekily titled “Disruption Is the New Black”, examined what she identified as “blind spots” in the field of international arbitration (IA). Branding disruptive innovation as the poster child for progress, Nappert opined that it will inevitably impact the legal field, during these times of tectonic change and revolution, in a way that forays the very heart of international arbitration – a self-governed justice system that derives its jurisdiction from party consent.

Nappert opened with the current IA landscape. She painted a rather gloomy picture, revealing the sobering fact that in-house counsel consider external lawyers to be the primary obstacle to achieving collaborative, adjudicative and non-adjudicative dispute resolution.

Nappert also pointed to growing skepticism of the arbitral process around the world. “When the Chief Justice of the UK Supreme Court, in one of the most arbitration-friendly jurisdictions on the planet, bemoans the negative influence of arbitration on the development of English law; when the EU, a behemoth not known for its nimble footing, performs a 180-degree turn in less than a year from its initial, resolutely pro-ISDS stance towards pushing forward a court proposal complete with appellate jurisdiction on fact and law”, it might be time for some self-reflection. Nappert asked us to consider, “whether, heady on its nearly unbounded autonomy, on the vast deference granted to it by state courts and legislation and assisted by the unparalleled ease of enforcement of its decisions afforded by the New York Convention (NYC), the current model of IA has overreached itself at the expense of quality of procedure and output.”

In pondering her own question, Nappert praised the unprecedented expansion of IA into areas once considered non-arbitrable but cautioned that “It has made us oblivious to some substantial blind spots, focused as we are on driving the IA chariot forward towards the next development.” She identified three such blind spots, though undoubtedly there are others: diversity, corruption and artificial intelligence.

Diverse panels increase institutional legitimacy

“Current voices in scholarship posit that the above disruptive phenomena present an important opportunity to address shortcomings, and notably as regards the diversity in composition of panels, as a vector towards a better and more legitimate decision-making in investment and commercial arbitration,” Nappert said.

She shared a number of statistics demonstrating diversity in the field – or rather lack thereof. “At ICSID, 19% of the 195 appointments made in 2017 to ICSID tribunals or ad hoc committees were women. This can be compared with 2016, where 13% of appointees were female. Of the 37 appointments of women in 2017, there were 18 different individuals who were nationals of a dozen different states, thus reflecting some regional diversity.” “The SCC reports 254 appointments for 2017, of which 18% were female. When the appointment was made directly by the SCC, 37% of the appointees were female. When made by the parties – 8%; when made by co-arbitrators – 0%. For regional diversity, 231 of the 254 appointments were from Europe, followed by Australasia and North America with 5 each, I from South America, 3 from Asia and 2 from Africa.”

The 2018 Queen Mary/White & Case International Arbitration Survey showed that respondents were generally ambivalent as to whether there is a causal connection between a diverse panel of arbitrators and the quality of that panel’s decision-making. Nappert argued that this might be the wrong query to make altogether. In her opinion, “At a time where the legitimacy of IA is in crisis, in the eyes of others a more diverse tribunal is a more representative, and thus more legitimate, tribunal; and from the prism of enhanced legitimacy the desirability for diversity in tribunal composition is undebatable.”  She stressed that the quest for more diversity ought not to be made at the expense of quality and competence.

How can IA promote diversity?

Accepting that diversity among panelists is the goal, Nappert believes this issue should be championed at the institutional level. “Institutions have a powerful statement to make by enshrining diversity in their rules as a factor for consideration in the nomination and appointment of arbitrators, alongside and to the same extent as other credentials,” she stated. Chastising the “lip-service” treatment currently afforded diversity, Nappert called for institutional rules to anchor this value in the field. She suggested that institutional rules should consider enshrining diversity as a factor in considering appointment, to the same extent as nationality is currently accepted as such a factor.

Allegations of corruption

Nappert next considered IA’s approach to allegations of corruption in the field, calling for greater self-reflection in the wake of Belokon v Kyrgyzstan, where the Paris Court of Appeal famously annulled an Award as infringing public policy, after reconsidering the case on its merits and finding  sufficient evidence of money laundering. She warned, “That a state court in a country famous for its respect for, and deference to, arbitration tribunals should consider it necessary to reopen the merits of a matter should be a cause for concern, and immediate action on our part, lest we are failing to put our house in order in the eyes of others.” She added that between the ICCA, the IBA, and the ILA, there is no lack of fora to host an open discussion about corruption in the field. Nappert seemed to imply that in failing to have such a discussion with the goal of establishing best practices, IA is missing an opportunity to improve public perception and strengthen its legitimacy.

The rise of artificial intelligence

The final blind spot that Nappert addressed in her lecture was artificial intelligence. Arbitral outcomes can be computed using a series of algorithms that, to whatever degree of certainty, offer parties a predictable outcome that might be seen as mitigating some of the risks of dispute resolution. “Scientists and suppliers of algorithms,” observed Nappert, “are currently warning litigation and arbitration users that human decision-making as we exercise it on a daily basis is no better than a lottery. In addition to being costly, time-consuming, and resource-depleting, it is unpredictable and inevitably subject to bias.”

Though not claiming to be a computer scientist, Nappert spoke on the importance that IA query “how algorithms come to their decisions; where the boundary lies between the machine’s capacity for predictive and prescriptive analysis and the human decision-making mind; [and] the public policy implications of robot-assisted justice and how these awards are reviewed by state courts, notably under Article V of the New York Convention.”

She postured that the introduction of AI into IA could create a dispute settlement system tendering predictability and speed for users, and even the ability to suggest commercial solutions to their disputes to prevent reoccurrence — a tool she ventures would speak powerfully to users.

Preserving the “human element”

If this is the inevitable future of dispute resolution, how can IA fight to stay not only relevant, but valuable? To no one’s surprise, IA’s strongest asset is its fundamental value – the notion that parties have a stake in selecting the decision-makers who will ultimately decide their fate. Though an algorithm could eliminate human unpredictability, the ability to select the decision makers in one’s own dispute is what makes arbitration appealing at a basic – and yes, emotional – level.

Nappert discussed briefly the role of human emotion in arbitration and seemed to defend it as an inherent, underlying thread of dispute resolution. She called for “arbitral institutions proactively to dialogue with AI scientists and providers to ascertain in an ethical manner, how lawyers are made to understand the way algorithms work, how exactly machine speak translates into the human language, and how we can carry on selling the human values underpinning decision making, so that we have an economically competitive and intelligible answer to give to scientists, suppliers of algorithms, and users.”

IA must put its house in order

Nappert ceded that these blind spots – diversity, allegations of corruption and artificial intelligence – are not the only ones IA possesses. But, while they need to be addressed as soon as possible, reacting to these blind spots is no longer enough, in Nappert’s opinion. “In the face of rapidly-paced and seismic disruption, we need to be proactive lest we become the Kodak and Blockbusters of dispute resolution,” she cautioned.

The IA community is largely governed by its own practitioners serving on boards and steering committees, including in arbitral institutions. This close relationship should be taken advantage of to show the rest of the legal community, and the world at large, that IA can keep its own house in order. Nappert concluded, “If we show that this closeness can deliver the benefit of building consensus on best practice and policing our own terrain in a forward-looking manner, we will make strides towards the continued legitimacy and relevance of IA in the face of disruption.”

 

Sophie Nappert is a dual-qualified lawyer in Canada and the UK. She is an arbitrator in independent practice based in London, specializing in international disputes. Sophie is ranked in Global Arbitration Review’s Top 30 List of Female Arbitrators Worldwide and is commended as a “leading light” in the field by Who’s Who Legal. She won the 2016 Global Arbitration Review Award for Best Speech for her address at the EFILA Annual Lecture, International Investment Arbitration: Escaping from Freedom? The Dilemma of an Improved ISDS. http://www.3vb.com/our-people/arbitrators-associate-members/sophie-nappert

Sara Higgins is a legal intern at CPR and a third-year law student at Northeastern University School of Law. Sara recently completed the New York State Bar Association Commercial Arbitration Training for Arbitrators and Counsel and previously worked for the United States Attorney’s Office in Boston, Massachusetts.

CPR Philadelphia Regional Meeting at Stradley Ronon on Effective Mediation Strategies for Client and Counsel

phillymtg

By Anna M. Hershenberg, Esq., Vice President, Programs and Public Policy, CPR

On April 10, 2018, the International Institute for Conflict Prevention and Resolution (“CPR”) held its first Philadelphia regional meeting at the offices of Stradley Ronon Stevens & Young, LLP, a long-standing CPR member and first recipient, more than a decade ago, of CPR’s “Law Firm Award for Excellence in Alternative Dispute Resolution” for the firm’s commitment to principled and creative conflict management and resolution.

The meeting drew more than 130 people, with the attendees split evenly between in-house counsel from Fortune 500 companies, trial attorneys from the nation’s top law firms, and highly sought-after neutrals. The prominent attendees included 15 former judges and general counsels and chief legal officers from Aetna Inc., Comcast Corp., Deloitte, General Motors Corp., GlaxoSmithKline, Hewlett-Packard Co., Independence Blue Cross, Johnson & Johnson, KPMG LLP, Merck & Co., Monsanto Co., Pfizer Inc., TE Connectivity Ltd., Triumph Group. Inc., and Verizon Communications Inc., among others.

The program, “Effective Mediation Strategies for Client and Counsel,” was divided into three parts.  Bennett G. Picker, Senior Counsel at Stradley Ronon, CPR neutral and member of CPR’s Council, and Noah Hanft, President and CEO of CPR, kicked off the meeting with welcoming remarks.

Wharton School lecturer and mediation trainer Eric Max then led the first part of the program, “Negotiating Strategies for Clients and Counsel,” by facilitating an interactive discussion among the in-house counsel, outside counsel and mediator audience members.  Professor Max outlined the multiple layers of negotiation occurring at any given time during a mediation.  He challenged the audience with provocative questions, such as pressing each stakeholder to reveal if they lie to each other during the course of a mediation and exploring the reasons for their conduct.

After a networking coffee break, the program resumed with Sophia Lee, Partner at Blank Rome and former Chief Litigation Counsel at Sunoco Inc., skillfully moderating a panel discussion on the keys to effective preparation and advocacy with panelists Francine Friedman Griesing, Managing Member of Griesing Law; Scott S. Partridge, Vice President of Global Strategy at Monsanto and a member of CPR’s Board of Directors; and John Wright, Senior Vice President and General Counsel of Triumph Group.  Of particular interest to the attendees was Mr. Partridge’s explanation of how he created a relationship-based conflict identification and resolution process to shrink Monsanto’s – and then the entire industry’s – litigation portfolio.

The highlight of evening came when the Honorable Timothy K. Lewis (Ret.), Counsel at Schnader Harrison Segal & Lewis LLP, former federal circuit and district court judge and Chair of CPR’s Diversity Task Force, and Mr. Picker led the third part of the program, “Promoting Diversity in Mediation.”  Mr. Picker – who has been championing diversity and leading by example for decades – provided concrete steps that in-house counsel, outside counsel and mediators can take to drive diversity and inclusion in the dispute resolution field.  Judge Lewis then delivered deeply moving and personal remarks on his experiences as a black attorney and federal court judge in a predominately white legal world.  He challenged the audience to mentor colleagues from historically disadvantaged backgrounds, reminding them that everyone got to where they are by standing on someone else’s shoulders, and “that talent is distributed equally across all races and ethnicities and genders and identities. Opportunity is not.”

He set out his vision for what true workplace inclusion should look like and how to achieve it: “The goal here is not to be included simply because of race or gender; the goal is not to be excluded simply because of these qualities. But in order for us to get there, we have to make a concerted effort, and we must challenge ourselves, our assumptions, and sometimes each other.”  Judge Lewis’s remarks, which received a standing ovation, will appear in Alternatives to the High Cost of Litigation, CPR’s monthly international newsletter (see altnewsletter.com).

benandtimlewis

Pictured: Bennett G. Picker and Honorable Timothy K. Lewis (Ret.) 

The evening concluded with closing remarks by Thomas J. Sabatino, Jr., CPR Board Vice Chair and Senior Vice President, General Counsel, Law & Regulatory Affairs at Aetna and a networking cocktail reception.

In short, the CPR Philadelphia Regional Meeting introduced attendees to what CPR does best: create opportunities for high-level conversations between inside and outside counsel and provide businesses with the tools to cultivate a corporate culture that embraces diversity of perspective, and early and creative ways to prevent and resolve business disputes.

 

About CPR

CPR is an independent nonprofit organization that, for more than 40 years, has helped global businesses prevent and resolve commercial disputes effectively and efficiently. CPR’s membership consists of top corporations and law firms, academic and government institutions, and leading mediators and arbitrators around the world. CPR is unique as: (1) a thought leader, driving a global dispute resolution culture; (2) a developer of cutting-edge tools and resources, powered by the collective innovation of its membership; and (3) an ADR provider offering innovative, practical arbitration rules, mediation and other dispute resolution procedures, and neutrals worldwide. For more information, please visit www.cpradr.org.

 

About Stradley Ronon

Stradley Ronon attorneys have served with distinction as neutrals, both independently and under the auspices of ADR provider organizations such as the American Arbitration Association, the International Centre for Dispute Resolution, and the International Institute for Conflict Prevention & Resolution (CPR). Stradley Ronon attorneys have built a reputation for fairness and creative problem solving and are highly regarded for their ability to understand complex commercial transactions and cutting-edge technologies. In recognition of its commitment to principled and creative conflict-management and resolution, Stradley Ronon’s ADR practice group received CPR’s inaugural Law Firm Award for Excellence in Alternative Dispute Resolution. For more information, please visit https://www.stradley.com/

CPR, LCLD & FINRA Program Aims for Actual Selection, Not Just Training, of Diverse Neutrals

CPR’s Diversity Task Force, in collaboration with Leadership Council on Legal Diversity (LCLD) and Financial Industry Regulatory Authority (FINRA), have been hard at work on a program that aims not only to train diverse candidates to become mediators and arbitrators, but provides meaningful opportunities to position participants to ultimately become selected as neutrals—the only thing that will ultimately have an impact on diversity in ADR.

As Noah Hanft, CPR’s President & CEO, has stated, “Diverse neutrals need experience to show quality, build their reputations and earn their selections—but, in order to gain that all important experience and develop their skills, they first need to get selected. The riddle is circular but not impossible to solve, and those who prevent, or at least fail to support, the latter cannot in good conscious unequivocally demand the former. We can, and must, do better. This next generation of talented individuals is poised to make a real difference, if we will only recognize our roles and do our part.”

The program, which launched last year in a pilot phase, provides participants with early skills development and unique access to professional development opportunities in dispute resolution through: (a) formal training in mediation and arbitration skills and practical observational experience; (b) mentoring by skilled neutrals; and (c) networking opportunities within CPR’s commercial dispute resolution community via attendance at these organization’s events at no cost or at a discount. Last year’s program produced six neutrals, and this year we have five participating—a wonderfully diverse and talented group hailing from New Jersey, Chicago, Houston, Miami and Atlanta.

joehanna.jpgAccording to Joseph M Hanna (pictured left), a Partner at Goldberg Segalla and a participant in last year’s program, “Even if you’re not engaged in arbitration or mediation, you will use the techniques and the ‘soft processes’ that you pick up during this training and from your mentors every day—whether you are practicing law, litigating cases, working with colleagues, mentoring young associates or even dealing with your family.”

“I found the program to be quite valuable on a number of levels,” explained Brenda DiLuigi (pictured right), Counsel at Linklaters LLP. brenda“The program provided access to very high-quality ADR training, mentoring by seasoned professionals, and networking opportunities in the ADR community generally. From my perspective (in particular, as counsel to clients facing the significant challenges associated with doing business in a heightened regulatory environment), the FINRA arbitration training program was extremely valuable, and I feel fortunate to have the ability to serve as a neutral in that capacity. I also enjoyed being part of a cohort of program Fellows who are beginning their careers in ADR.”

As a first step in this year’s program, participants were invited to complete the FINRA application to become an arbitrator so that they could become eligible to join FINRA’s roster of neutrals. After indicating their individual areas of interest, participants were assigned to, and have started to meet with their program mentors.

The program’s first official event will be CPR’s Corporate Leadership Award Dinner (including VIP reception) honoring David McAtee II of AT&T. Thereafter, program participants are invited to attend all CPR events that take place during the program, at no cost.

Once applications are approved, participants will be required to take FINRA’s first two training components online at their convenience. FINRA will then hold an in-person training for this group at the CPR offices in early April, following CPR’s annual meeting in Atlanta, GA taking place March 8-10, 2017. There will be no cost associated with any aspect of FINRA’s training and application process.

KristyKristy Offitt (pictured left), an Employment litigator at Ogletree Deakins and a member of this year’s program, signed up after receiving an email from LCLD. She has already been assigned two mentors and has started meeting with them. In addition to feeling that the negotiation and other skills learned in the program will be transferable, generally, to the work she is currently doing, Kristy explained, “I would love to do more mediation and arbitration later in my career, so I saw this as a great opportunity to start building a foundation toward that goal. It’s great to get this mediation experience.”

And do last year’s participants have any parting advice for the current class? As program alum Joseph Hanna aptly summarized, “Take full advantage of your mentors; they are there to help you. Take every opportunity you have to ask questions, meet with them, spend time watching them work. Nobody does it better than the mentors in this program.”

Facebook, Latest Leading Co. to Demand Greater Diversity in Legal Services

We can’t like this enough so we thought we’d share it as well: Facebook is one of the latest well-known companies to make necessary strides in the area of diversity in law, apparently now requiring that women and ethnic minorities comprise at least 33 percent of outside legal teams working on its legal matters.

According to a New York Times article on this development,Numbers alone, however, are not enough, under a policy that went into effect on Saturday. Law firms must also show that they ‘actively identify and create clear and measurable leadership opportunities for women and minorities’ when they represent the company in litigation and other legal matters.” The article also referenced a similar MetLife legal diversity policy to be announced later this month. 

This is great news, but it is still only a start. More needs to be done–not only by other companies large and small, but by all stakeholders to the dispute resolution process. And not only with respect to law firms, but mediators and arbitrators as well.

As CPR President & CEO Noah Hanft noted in his March 20 New York Law Journal Article, “Making Diversity Happen in ADR: No More Lip Service,” there are key roles for just about everyone to play in this process:

In-House Counsel: You are the drivers here.  According to Hanft, “You need to say not only that diversity is important to you, but to show that it is.” Referenced in both the NYT and NYLJ articles, and under the innovative leadership of GC Kim Rivera, CPR member HP announced in February that it would actually withhold fees – a 10% “diversity holdback” with certain conditions – from law firms that failed to comply with diversity requirements. 

Law Firms: “Try to learn of neutrals that you have not used,” Hanft suggests here. “What would be the harm when sending out the typical law firm memo asking whether anyone knows a good mediator in a copyright case, to specifically ask about diverse neutrals in that space? Be brave enough to do what your clients have told you they expect you to do in your own firm.”

Other ADR organizations: In the NYLJ article, Hanft lists education, mentorship and recruitment as important items on his own organization’s To Do list. He concludes, “But, most important, we must utilize our very best efforts to include those diverse candidates on slates; remind decision-makers of the benefits of diversity on the quality of the decision-making process; and then actively encourage the selection of diverse candidates.”

In sum, and in order to for diversity in law and ADR to “go viral,” we all have a social role to play. Tell your friends.