Mr. Ashford, welcome to the Arbitration Workshop! Firstly, we are highly honoured to have you agree to give us your interview. Secondly, we appreciate your initiative to share your perspective with our readers.
Q. Before we delve in, may we request you to kindly introduce yourself and tell us about the origins of your interest in the field of arbitration?
A. I am a Partner and the Co-Head of International Arbitration at Fox Williams LLP. I was formerly a disputes partner at the firm now known as Cripps Pemberton Greenish. I am a Fellow of the Chartered Institute of Arbitrators. I am regularly appointed as arbitrator alongside my practice as counsel and I have current appointments in ICC, LCIA and LCAM arbitrations. I have been working in international arbitration for around 20 years, before which I was a general commercial litigator doing a fair amount of domestic arbitration. I am a widely published author, commentator and lecturer, including the Handbook on International Commercial Arbitration published by Juris Publishing of New York in 2014; the Guide to the IBA Rules on the Taking of Evidence in International Arbitration and the Guide to the IBA Guidelines on Party Representation in International Arbitration, both published by Cambridge University Press in early 2013 and mid-2016 respectively. I am writing A Guide to the IBA Guidelines on Conflict of Interest in International Arbitration, with publication anticipated in 2022.
Q. What discernible trends in commercial and investment arbitration do you see emerging due to the COVID-19 pandemic? What considerations do you think future Claimants should take into due notice before initiating arbitrations?
A. The pandemic has affected us all but whatever deprivations we have each suffered, the pandemic has changed, and possibly for the better, arbitration procedure.
The pandemic has shown the arbitration community that life can go on much as it did before albeit with virtual, rather than in-person, conferences and hearings. After an initial thought of whether hearings could simply be adjourned until ‘better times’ it became apparent that these better times were some way off and we ought simply to get on with things. I think these changes reflect a permanent shift in the way that things are done and will influence how we do things long after the pandemic. That is not to say that we will remain as we are doing nearly everything virtually. Equally, we will not go back to doing everything in-person: the best of both will be retained.
Time zones have been a relatively minor issue. Advance thought needs to be given to local times for all participants. The most extreme example I have experienced has been a 13-hour time difference between participants on an evidentiary hearing but in the end it worked well.
The fundamental thing for Claimants remains that they must have confidence that they are pursuing a respondent that will be able to meet any award, or substantial part of it. That has only become a more important factor in light of the pandemic when the fortunes of companies have either improved or deteriorated depending on their sector and other factors.
Q. How important do you think it is to arrest arbitrator bias? How are you advising your clients to arrest arbitrator bias in light of Halliburton v Chubb?
A. It is a fundamental issue. Justice must not only be done, it must be seen to be done. Of course, we very rarely see, or even suspect, actual bias, it is apparent bias that invariably is the issue. The word ‘biased’, has, in other contexts, a far more pejorative connotation, but we use it to mean an absence of demonstrated independence or impartiality (Yiacoub v The Queen [2014] UKPC 22). The objective is to exclude any legitimate doubt as to the tribunal's independence and impartiality.
The key to this is enquiry and disclosure: the parties must tell the arbitrator about themselves, their counsel, witnesses, experts and perhaps funders or others with a financial interest. The arbitrator must then make all appropriate enquiries and make consequential disclosures. If conducted properly, this exercise should bring everything into the sunlight and permit the parties to decide whether to accept the position, or whether to object.
Q. In India, the Indian Arbitration Act, 1996 addresses issues of arbitrator bias in two schedules 5 and 7 – if the situation is caught under the ambit of schedule 7, then that would lead to an automatic exclusion of the impugned arbitrator. On the other hand, if it comes under the purview of schedule 5, then there would be a challenge proceeding before the tribunal etc. Internationally, do you think a similar system must be put in place either in UNCITRAL Model Law or a similar instrument that is not soft law (IBA) to combat the issue of arbitrator bias?
A. I would hope that the international arbitration community can get its own house in order without the need for legislation or other hard law. Consent is fundamental, if the parties are happy with an arbitrator who, whilst impartial, is not, say, independent, then that is a matter entirely for them: a village elder is a classic example and works well as everyone knows that the village elder has connections and relationships such that he (or she) cannot claim to be independent but the parties trust the impartiality.
In England, Halliburton and another case, Newcastle United Football, have dented my confidence that we are sorting this out properly. There is no doubt that the arbitrators in Halliburton and Newcastle did things that ought not to have been done. All courts found as much. Yet both arbitrators were able to continue, their behaviour criticised and yet forgiven by the courts. A large part of that forgiveness was centred on their repute – there was confidence that they would render a fair decision in the end. That is simply not good enough if justice must be seen to be done as we cannot look inside the minds of an arbitrator to see what might have, subconsciously, affected the decision and/or the decision-making process. I prefer the approach in Almazeedi: non-disclosure is a flaw in an arbitrator’s independence which makes him unsuitable – it is that simple.
It must be recalled that bias is the absence of demonstrable independence – by failing to make the disclosures that they were obliged to make, the arbitrators failed to demonstrate the very independence that was required of them. At the very least, there was an asymmetry of information such that the party with less information may always feel aggrieved.
Q. What is your take on third-party funding in commercial arbitration? Do you think third-party funders should be joined to arbitration proceedings given their alleged influence on arbitration proceedings?
A. Funding is inevitable and may well see an uptick in light of the pandemic. Claimants will see the benefit of de-risking and taking off balance sheet the costs and risks of the dispute. Claimants will use funding for that process especially when funding arbitrations themselves will divert valuable resources from the recovery post-pandemic. It should not be forgotten however, that funding is not a panacea: it is very expensive money and a well-resourced and capitalised company may well choose to either fund itself or take one of the very many insurance products that are available and which can achieve much the same result with a lower cost.
No, I don’t think that funders should be parties, they are strangers to the underlying contract under which the dispute has arisen. The parties have not agreed to arbitrate with a funder who has come into the dispute at a relatively late stage. Some solution may need to be crafted to ensure that a funder of an unsuccessful claimant might be held responsible for costs but there are other routes to do that.
Q. Commercial arbitration entails strict adherence to the contract, however, there might be occasions wherein specific terms of the contract are unconscionable or not in line with the Contract law of the country. How do you deal with such clauses in arbitrations where the tribunal itself is a feature of the contract and might not be inclined to decide the dispute dehors the provisions of the contract itself?
A. A lot will depend on the governing law. English law, for example, has a key characteristic that the courts will normally uphold what the parties agreed, subject to some basic principles of contract. For example, in the classic Monday/Friday case of The Laconia, the hire fell due on a Sunday; so, the charterer paid on Monday. The money was sent back and the ship repossessed on Monday. The hire was payable in advance so it should have been paid on Friday. It was held by the House of Lords that the shipowner was entitled to repossess.
That gives certainty and predictability even if the result can appear harsh. Those same consistent results do not seem to be available in the case of, say, French, German or even New York law. They all have statutory overrides for ‘good faith’ and to override their disclaimers. French contract reforms from 2016 require parties to disclose any information that is ‘essential’ for the other contracting part. In the US, juries impose their own idea of fairness. However, if parties wish the deal that they negotiated to be upheld, then the English courts will normally honour that objective, an objective that the courts consider to be not unreasonable between commercial parties in their business dealings in the absence of some manifest vitiating factor.
If parties choosing English law prefer that good faith should apply in their contract to potentially override its terms, then they can insert a good faith clause and other provisions for mediation, cooling-off, grace periods, notices of action and the like. The English courts respect good faith clauses: the difference is that in the case of English law, it is the parties themselves who are trusted to decide the ideology.
Q. Most Commercial arbitrations would deal with the contract between the parties and extensive evidence including letters and other related communications written to each other during the execution of contracts. How necessary do you believe oral evidence is in such commercial arbitrations?
A. Far less than we probably imagine. In England April 2021 saw the implementation of the recommendations of the Witness Evidence Working Group (reporting to the Business and Property Courts Board) with a radical approach to the gathering and content of witness evidence. In 2020 the ICC Commission reported on The Accuracy of Fact Witness Memory in International Arbitration and cautioned the reliability of witness evidence and made recommendations for the future.
The general point is that, assuming that they are not forgeries, the documents do not lie. They might not tell the whole story and may need some supplementation by oral testimony, but they are generally the most reliable source of the truth.
The most famous critique of witness evidence is that of Leggatt J (as he then was) in Gestim v Credit Suisse. Leggatt J said the following about the approach to witness evidence:
“…place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.”
Witness Statements are, at least supposed to be, a reflection of the witness’ recollection or memory of the events that they can speak to. That is often not the case, rather they were lawyer crafted aspirational accounts of what the lawyers would like the witness to say. We lawyers ensure that the witnesses speak to events about which they might never have been involved and, even if they were, have little or no recollection of. The result was overly long, largely inadmissible accounts where the witness appeared to recall events with the utmost clarity.
With that criticism, it is nevertheless important that there is a forum for the party to put over its case and tell its story to the tribunal. The witness statement is a convenient place for that to happen but the two purposes need to be borne carefully in mind.
Q. The (Indian) Arbitration and Conciliation Act, 1996 has a provision on the settlement between the parties, which encourages the arbitrators to attempt settlement of the matter between the parties and if the parties come to a consensus, a consent award is passed. As a Lawyer, how do you advise your clients regarding their options to settle the matter prior to initiating or during the arbitration? Are such negotiated settlements a realistic option in high-profile arbitrations?
A. Arbitrators are wary of entering into the settlement arena for fear of being accused of pre-judging and hence appearing to be biased. Some laws, as you point out, expressly permit or encourage the tribunal to descend into the settlement arena, but absent that, most arbitrators will avoid any participation in settlement discussions. They may ask the parties whether they have or wish to discuss settlement but will rarely go further than that and will certainly not be involved in settlement discussions.
The settlement rate in international arbitration is lower than in many domestic disputes before national courts. Quite why that is, is not clear but I suggest two causes: firstly, the amounts involved can be very large and the costs a relatively small proportion and hence it is worth, ‘rolling the dice’ to try and get a win. Secondly, there are cultural barriers and parties do not know how to broach settlement when there may be language barriers and different approached to without prejudice discussions. More work needs to be done in this area and it may be that a specialist type of mediator, experienced in international arbitration, needs to come to the fore.
Q. Are there any specifics of arbitral practices that you particularly enjoy? What practices do you employ to engage and keep up with the recent trends in arbitration? Is there any particular practice you would recommend young lawyers to regularly engage in to become better in the field?
A. I love a good Redfern Schedule! As counsel it permits written advocacy outside of pleadings or memorials and it gives a chance to summarise your case (and your opponent’s) in a less formal environment and to request or resist documents based on what is truly in dispute.
As the question acknowledges, there is always something new in international arbitration. There is no substitute to having a voracious appetite for reading, reflecting on and debating current issues. Those debates do not have to be formal and chatting with a colleague over a coffee can be very informative.
My top tip would be get your narrative right and get it simple: ideally capable of expression in 3 sentences. We start off in the law thinking that the law reports will have all the answers. But the biggest task of a disputes lawyer is to take the information from the client and turn it into a persuasive narrative. Everything else is easy. Practice and practice that skill. You can start by describing your home, family or holiday. If you can master that 3 sentence narrative, try explaining a case you are working on in that way and build from there.
Q. What would be your word of advice to the readers trying to make a name for themselves in the transnational practice of international arbitration? What books are a part of your library that is a must-have for a commercial arbitration practitioner (Counsel and Arbitrator)?
A. There will be no substitute for hard work and challenging or critical thinking: do not accept the orthodoxy - it might not be right. Try and be as international as possible and do not expect your domestic norms to be carried over into international practice. The answer should be the most efficient way that something can be done, not what has been done before.
Needless to say, all of my own books are on my shelf! But probably don’t get too constrained by what others say. By all means look at what, say, Gary Born has to say on a particular subject. Then consider whether you agree and why. The wonderful thing about international arbitration is that in many things there is no doctrine of precedent and your tribunal can probably do what it likes.
The Editorial Team at the Arbitration Workshop would like to thank Mr. Peter Ashford for taking out time from his busy schedule and for sharing his perspectives with us!