27 September 2018
YSIAC Lunchtime Chat with Gary Born

By Tan Jun Hong, Supreme Court of Singapore

On 27 September 2018, YSIAC held a lunchtime fireside chat with Mr Gary Born (President, SIAC Court of Arbitration; Chair, International Arbitration Practice Group, Wilmer Cutler Pickering Hale and Dorr LLP) on a wide range of topics including guerrilla tactics, arbitrator challenges, and the management of non-responsive respondents.

Mr Harpreet Singh, SC (Partner, Clifford Chance) delivered the opening remarks and Ms Lijun Chui (Counsel, Clifford Chance) moderated the session.

Guerrilla tactics

Ms Chui began by inviting Mr Born to comment on a speech by Justice Steven Chong, wherein he observed that the flexibility and informality of arbitration have led to an increase in the use of guerrilla tactics to derail arbitration proceedings. Mr Born downplayed this, noting that guerrilla tactics are employed only in the minority of cases. Furthermore, an experienced tribunal would be able to turn the guerrilla tactics against the counsel that employed them.

Mr Born also addressed the concern that arbitrators give parties too much leeway (for example, by allowing them to file submissions out of time, or to make amendments at a late stage) out of fear that the award would be set aside subsequently for the denial of the parties’ right to be heard. While there is some truth to this concern, Mr Born noted that arbitral tribunals not infrequently deny such requests or allow such requests only in part. Arbitrators are also mindful of the parties’ desire to have their dispute resolved efficiently and expeditiously. They do not want the reputation of being afraid of due process and natural justice challenges. Increasingly, arbitrators are being assessed on how quickly they can resolve disputes. On a separate note, one’s freedom fighter is another person’s guerrilla. There may be a legitimate need to employ what the other side may regard as guerrilla tactics (for instance, when there is newly-emerged evidence). Hence, a decision to accede to an application does not necessarily mean that the arbitrator is caving in.

Mr Born gave the following advice to counsel and arbitrators dealing with a party that has employed guerrilla tactics. First, it would be best for counsel to simply ignore or even dismiss such tactics (if possible) to avoid being drawn into satellite disputes over procedural matters that distract from the main substantive dispute. Second, arbitrators should try to defuse any conflict and create a collegial atmosphere as this might help dissuade parties and counsel from employing guerrilla tactics.

The non-responsive respondent

Mr Born expressed the view that non-participation in general is a bad idea as it exposes a party to a default award and the full measure of damages. If the motivation for non-participation is related to jurisdiction reasons, a better option would be to participate and to maintain jurisdictional objections.

From the perspective of the claimant and tribunal, it would be good practice to make every effort to obtain the participation of the respondent. For claimants, making sure that they can subsequently demonstrate that notice of the various stages of the proceedings was given to the respondent is important in order for the arbitral award to be recognised and enforced. Tribunals on the other hand have an obligation to afford the parties an opportunity to present their case. Unless a tribunal is convinced that the defendant has had notice, the obligation would not have been fulfilled. The tribunal should also put the claimant to proof. The tribunal should not make default awards simply based on what the claimant has asked for; instead it must examine the case presented by the claimant and issue a default award based on that.

Members of the audience Gary Born and Lijun Chui
Members of the audience

Left to Right: Gary Born and Lijun Chui

Arbitrator challenges

Mr Born advised challenged arbitrators to remain objective and to keep a cool head even though he acknowledged that such challenges can be quite personal as the allegation is that the arbitrator lacks the essential moral qualities of independence and impartiality, and has therefore violated his or her mandate. In an appropriate case, if the arbitrator realises he or she is personally engaged, he or she should resign.

Mr Born’s advice for parties who have unsuccessfully challenged an arbitrator is to treat such challenges as water under the bridge and to focus on the substance of the dispute. The usual reaction of the arbitrator to a failed challenge is also to forget about the challenge, especially if it was mounted at an early stage of the proceedings. In any case, even if the arbitrator continues to hold a grudge, there is little that can be done.

Regulation of ethics

Mr Born likened the current world of ethics in international arbitration to a teenager’s bedroom. In an arbitration, there may be competing sets of rules: counsel may be qualified in different jurisdictions, the arbitration may be seated in yet another jurisdiction, and the arbitration may be administered in accordance with an arbitral institution’s rules. By default, everybody’s home ethical rules would apply. Different counsel in the same proceedings may therefore be bound by different ethical rules. This can potentially lead to an unequal playing field as different approaches may be adopted as regards areas such as witness preparation and disclosure.

How then should this problem be addressed? Ms Chui raised Chief Justice Sundaresh Menon’s proposal for a code of conduct to guide international arbitrators and counsel. But Mr Born noted that the difficulty with such a regulatory framework is that any guidelines issued would sit on top of national ethical standards that are applicable to the parties. It is therefore unclear whether another set of guidelines would clean up the teenager’s bedroom or whether it would simply add noise to it. Instead, Mr Born opined that the better way is for bar associations and bar regulatory authorities to reach some form of common agreement on ethics in international arbitration. Bar associations have regulatory impact and they can amend their rules to include specialised rules on arbitration.

While this may seem difficult to implement at first blush, it may not be so if one bears in mind that the focus is solely on ethics in international arbitration and only leading jurisdictions would be involved at least as a first step. And while uniformity may not be achieved, it would be possible to at least achieve some measure of agreement. Mr Born posited that this would be a suggestion well worth the political effort it would take, and expressed hope that Singapore would take the lead.

Concluding remarks

The session closed on that note. The practical tips and insights shared during the session were invaluable, and they related to fertile areas of arbitration law that guerrillas and freedom fighters ought to keep abreast of. In fact, guerrilla tactics were considered for the first time by the Singapore courts in April 2018, when the Singapore High Court in China Machine New Energy Corp v Jaguar Energy Guatemala LLC and another [2018] SGHC 101 considered whether an award should be set aside on the basis that the respondent had employed guerrilla tactics and had thereby breached an implied duty to arbitrate in good faith. Further developments await.
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