On Thursday, 22nd of September, the ICC’s Young Arbitrators Forum and Castaldi Mourre & Partners co-organized a round table to discuss two hot topics related to international commercial arbitration. The discussion with worldwide practitioner’s, focused on the application of “Jura novit curia” to international arbitration and the eventual creation of a code of ethics specific to the field of arbitration.
This event, which specifically concerned the ICC’s European and Latin American group, was simultaneously retransmitted by videoconference in Mexico DF, Barcelona, Madrid and Sao Paulo. Fernando Mantilla Serrano (Partner at Shearman & Sterling) was the moderator of the round table.
First Panel: Jura novit curia: overview, scope and recent developments
Jura novit curia is a Latin aphorism expressing the principle that “the court knows the law”. In other words, this means that the parties to a dispute do not need to plead or to prove the law that applies to the case. In arbitration the principle is that the parties must bring forth in their submissions the legal arguments that will allow the arbitrator to ascertain the applicable law and prove them. Hence, the application of this principle to international arbitration raises the question whether or not arbitrators should act beyond the parties’ submissions. Many issues should be considered, among which, three must be highlighted.
The first issue concerns the authority of the arbitrators. The application of such maxim to arbitration would mean that the arbitral tribunal is sole responsible in determining which law applies to a specific case. The arbitrator alone would have the duty to ascertain the applicable law and apply it ex officio, that is to say, regardless of the legal arguments the parties may have advanced.
It is therefore legitimate to ask if such principle is really consistent with the nature and purpose of international arbitration. Isn’t arbitration first and foremost a procedure that supposedly belongs to the parties? The contractual nature of arbitration would indeed suggest that it is the willingness of parties alone that should determine the proceedings, the conduct of the inquiries, and of course, the applicable law.
However, in practice, the problem remains that the parties often do not advance sufficient evidence. It is therefore impossible for the arbitrator to determine the applicable law within the limits of the arguments raised by the parties.
And, even when there is no doubt in determining applicable law, the problem remains on the interpretation that it must be given. Recurrently, parties have different approaches on how arbitrators must construe the law. Should they interpret the applicable law in the same way a national judge would do so? Or should they do it with regards to other legal provisions (and which ones)?
The second issue concerns the many infringements to the principle of due process that may fallow the application of Jura Novit Curia.
First of all, it may compromise the arbitrator’s impartiality. If an arbitrator is not bound by the arguments raised by the parties and has the freedom to decide elements of the arbitration, it is hard to believe he will remain impartial. As it is a discretionary decision, it is legitimate to fear that the arbitrator may rely on biased and personal grounds. Also, Jura Novit Curia supposes that every arbitrator has the same level of knowledge of the law, which, needless to say, is impossible. The less the arbitrator is familiarized with the governing law, the higher the risk of misunderstanding and misapplying its content.
Secondly, ex officio application by the arbitrator would necessarily have an impact in the standards of proof. By advancing elements the parties had not raised, the arbitrator would be helping one party to administrate evidence at the expense of other one.
The third issue concerns the duty of the arbitrator. What is the real duty of an arbitrator? Is it to render a decision within the parties’ submissions or is it to render a fair decision? And, in that event, what is a fair decision? In other words, what is to prevail in arbitration, facts or law? Are facts to be proved or law to be applied?
It must be stressed out that in any case the arbitrator is allowed to act ex officio, he will necessarily have to identify legal issues from a foreign law. This, again, raises the question not yet resolved, of what is foreign law in international arbitration.
It is clear from the discussions that there is no consensus on the matter. However, some recent ICC’s court decisions suggest that the trend is to refuse arbitrators to venture beyond the parties submissions.
Second Panel: Ethics in international arbitration
The issue of Ethics is definitely among the most important questions discussed in relation to the future development and practice of international arbitration. Historically, arbitrator’s conduct has always relied on personal ethics and social values. However, the growth of international business and the development of international arbitration have made it necessary to establish common ethic standards.
In terms of ethics, the issue of impartiality, independence and predictability remain the most recurrent. As arbitrators are asked to solve a large number of significant and high value disputes, it is very important that their integrity is maintained. They must undertake serious ethical obligations towards the public as well as the parties. Is it therefore necessary to establish binding ethical rules? Is there a need for a Code of Ethics in international arbitration?
Many recent and much publicized cases have risen important debates on the matter. Currently, there are already a large number of codes of ethics that have been established . To name a few, there is the ICDR code of ethics, the Cairo code of ethics, the guidelines published by the Milan and Argentina Chamber of Commerce.
While some are very general as to the moral obligations incumbent to arbitrators, other give a descriptive and innovating approach of their duties. It is possible to see that some obligations, essential to the effectiveness of arbitration, are common to all publications and guidelines. Such is the case of the duty to disclose, the duty of impartiality and of course the duty of due process.
However, each code takes into account the particularities of the different cultures it embraces and proposes the creation of new duties in accordance with problems that are to be solved in that specific culture. Practitioners from Latin America emphasize the need for binding provisions on confidentiality. This matter that was long discussed during the passed Young Arbitrator’s Forum conference in Miami in November 2009, does not seem to have the endorsement of the majority of practitioners. It was also clear from the discussion that the future ICC rules won’t endorse such proposition.
The creation of a code of ethics that would gather disciplinary rules, necessarily supposes to investigate the contrasting moral and cultural standards that may apply to arbitrators. It also supposes to establish effective and appropriate sanctions, such as the replacement of the arbitrator (if institutional) or the challenging of the award.
But, will the creation of binding ethical rules be sufficient to protect arbitration from the many complaints it is addressed to? Most of them are related to the cost and effectiveness of arbitration, rather than to ethical problems. Creating a code of ethics to solve a problem that isn’t a real one will actually create new and bigger problems. At the very least it would give national courts new means to challenge arbitral awards….
Marièle Coulet Diaz