Ulpianus

How Can Having a Partisan Arbitrator Be Common Practice in the United States?

When Professor Sheppard[1] gave us a lecture about the great advance in arbitration ethics experimented in 2004, I was confused. The big change in ethics came through the 2004 Revision to the AAA/ABA Code of Ethics for Arbitrators in Commercial Disputes, specifically in the presumption of neutrality to all arbitrators, including party-appointed.[2] Before this revision, the Code of Ethics established a presumption of non-neutrality for party appointed arbitrators.

My confusion came because I assumed that arbitrators were supposed to be always neutral; but as Professor Sheppard explained, it was customary practice in domestic arbitrations for parties to appoint their arbitrators as partials advocates of their cases. This has never been the practice in international arbitration, nor in the jurisdiction where I previously practiced law.

Why would the Americans want to have non-neutral arbitrators in the first place? I understand a party’s desire for an advocate for their cause sitting in the arbitral tribunal, but if their counterparty had the same power and desire, this power is annulled. The work that a partial arbitrator for Party A does as a member of the arbitral tribunal, ends been nullified by the actions of Party B’s appointed arbitrator.

Arbitrators are similar to judges in that they settle disputes through binding decisions. But we could hardly imagine a three-judge panel where two of them were partial towards each party. That would be a mimic of justice, not justice. In my opinion as an outsider, I see the same situation applicable to arbitrators.

But the important point is that the Revision of the Code of Ethics gives the first step towards homogenization with international and foreign arbitration, establishing a presumption of neutrality for all arbitrators, including party-appointed.

The desirable next step will be a new revision –probably in the next decade- to mandate neutral arbitrators in all situations. But for now, the step taken is important enough to be proud of the development in domestic arbitration.

As Professor Sheppard said in his article, foreign colleagues would have to choose another topic to recriminate to their American counterparts.[3]

Footnotes:
[1] Ben H. Sheppard, Jr. is a Law Professor at the University of Houston Law Center and Partner at Vinson & Elkins LLP.
[2] Ben Sheppard, A New Era of Arbitrator Ethics for the United States: The 2004 Revision to the AAA/ABA Code of Ethics for Arbitrators in Commercial Disputes, 21 Arb. Int’l 91 (2005).
[3] Id. at 97.

posted by Mastropiero @ 10:06 PM