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Arbitrator Independence and Academic Freedom

Published on May 30, 2014        Author: 

In international law, members of the discipline often fill a variety of professional roles. Many are scholars and practitioners at the same time; some even act in capacities that are mutually incompatible at the domestic level, such as being counsel and decision-maker at the same time – albeit in different proceedings. Investment arbitration is an area where this “double-hat problem” is vividly discussed. The main concern is the independence of arbitrators in light of interests that that individual may have in fulfilling other professional roles. What is less debated is how practice involvement can affect the role of the international lawyer as academic and how practice affects, and risks compromising, the independence of international law as an academic discipline. This is the theme underlying the following discussion of a recent challenge in CC/Devas and others v. India, which was decided by ICJ President Peter Tomka in an UNCITRAL arbitration under the Mauritius-India bilateral investment treaty (BIT). It is an abbreviated version of my thoughts from the first Editorial of the new Journal of World Investment and Trade that just came out.

Challenge in CC/Devas and others v. India

In CC/Devas and others v. India, two arbitrators, Francisco Orrego Vicuña and Marc Lalonde were challenged because they had, in the Respondent’s view, prejudged the meaning of the essential security-clause in the applicable BIT: Mr. Lalonde because he sat in both CMS v. Argentina and Sempra v. Argentina where a similar essential security-clause from the US-Argentina BIT had been an issue; and Prof. Orrego Vicuña because he sat, together with Mr. Lalonde, in the same two arbitrations, as well as in Enron v. Argentina, which also involved the US-Argentina BIT. On top, Prof. Orrego Vicuña had written a chapter on ‘Softening Necessity’ in the Liber Amicorum for Michael Reisman, in which he analyzed the tribunals’ approach to the necessity defense under customary international law and to the essential security-clause.

While ICJ President Tomka rejected the challenge against Marc Lalonde, stating that merely expressing prior views on an issue in an arbitration did not result in a lack of impartiality or independence, he upheld the challenge against Francisco Orrego Vicuña, because the latter had stuck to his approach to interpreting essential security-clauses through three arbitrations and in the academic article in question, although all three awards had been partially or totally annulled precisely on that point. Comparing the two challenges, the article written by Prof. Orrego Vicuña made all the difference. The case may therefore be read as boiling down to upholding a challenge of an arbitrator based on a view he or she has taken in academic writing. This decision is alarming, in my view, not only for investment arbitration, but for scholarship in the field.

Tension with earlier decision in Urbaser v. Argentina

To start out, the decision in CC/Devas parts with an earlier decision on a similar issue. In Urbaser v. Argentina(see paras. 20‑26), the respondent-appointed arbitrator Campbell McLachlan was challenged for lack of impartiality because he had expressed views on the application of most favored nation (MFN) clauses to questions of arbitral procedure in an academic treatise on investment law, criticizing the landmark ruling in Maffezini v. Spain as “heretical” and stating his strong preference for a competing line of jurisprudence. Secondly, in an article in ICLQ Prof. McLachlan had discussed the defense of necessity and criticized the way the tribunal in CMS had handled it. Since both issues played a role in the Urbaser arbitration, the claimants challenged Prof. McLachlan for having prejudged the case in important regards.

This challenge was, in my view rightly, rejected by his co-arbitrators. They stressed the difference in the roles of a scholar, on the one hand, and an arbitrator, on the other, and emphasized Prof. McLachlan’s ability to reassess his views in light of novel arguments of the parties relating to the specific wording, circumstances, and negotiation history of the treaty clauses at issue (see paras. 38‑58). For them, “[t]he requirement of independent and impartial judgment means that an arbitrator’s previously adopted opinion, whether published or not, shall not be of such force as to prevent the arbitrator from taking full account of the facts, circumstances, and arguments presented by the parties in the particular case” (para. 49).

Distinction between Law and Facts

The result reached in Urbaser is convincing, but the reasoning misses an important distinction between law and facts. In my view, an arbitrator has to be removed if he or she has expressed views in prior academic writing that are fact-specific to the case at hand. Having formed an opinion, for example, on whether Argentina was in a state of emergency during its 2001-2002 financial crisis, disqualifies an arbitrator from sitting in a case concerning that crisis because of an inability to assess the parties’ submissions on questions of fact. The arbitrator would not, however, be prevented from deciding whether Greece could invoke necessity due to its recent financial crisis.

By contrast, a challenge should not be successful if an arbitrator has expressed abstract views on how the applicable law in an arbitration must be understood and interpreted, for example, whether umbrella clauses only protect against breaches of sovereign contracts or of any contractual undertaking of states, or how the standard of fair and equitable treatment should be applied. This concerns objective, even if often contested, questions of law that are, and this is crucial, outside the disposition of the disputing parties – an investor and a state. Arbitrators have to decide on these questions of law based on the principle iura novit curia, and hence can and need to be “partial” towards the legal submissions of the parties.

Having expressed views on abstract questions of law, no matter how firm that view is, does not reduce an arbitrator’s ability to exercise “independent judgment” (Art. 14 of the ICSID Convention) nor does it affect his or her “impartiality or independence” (Art. 11 of the UNCITRAL Arbitration Rules), because there is no predisposition to the detriment of a party and its factual submissions. An arbitrator should always hear the parties’ legal arguments and consider reassessing his or her views on matters of law, but he or she would not be challengeable based on holding even firm convictions on matters of law.

The decision in CC/Devas, then, is highly problematic, if the decisive point was that Francisco Orrego Vicuña lacked the necessary impartiality and independence because he had set out and defended his view on the application of essential security-clauses in academic writing. One may criticize him for having a wrong understanding of the international law at stake, but because of this he does not lack, in my view, the necessary impartiality and independence to sit as an arbitrator in a case involving similar or identical questions of law.

CC/Devas’ Effect on Investment Arbitration

Elevated to general policy, the challenge in CC/Devaswould exclude from the pool of arbitrators all those who have actively contributed to investment law scholarship. For want-to-be arbitrators, in turn, CC/Devas would chill meaningful writing, as scholarship would not be a way to develop and show expertise. On the contrary, it would kick authors out of the pool. The resulting chill on scholarship would also make it more difficult for parties and appointing authorities to make informed choices on arbitrators. This can affect the outcome of individual cases, given that central notions of substantive and procedural law are highly elastic and may depend crucially on who is appointed as arbitrator. On a systemic level, this can compromise the development of investment law and the ability of participants, including states, to steer that development in a certain direction by appointing individuals who have expressed certain views on investment law in academic writing rather than others. CC/Devaswould therefore decrease the transparency and predictability of a system that is often criticized for a lack thereof because it disincentivizes meaningful writing on how investment law should be applied.

CC/Devas’ Chilling Effect on Academic Writing

Finally, what concerns me as an academic in investment law is the systemic effect such challenge decisions have on scholarship in the field. The challenge in CC/Devas, if considered good law, will disincentivize already established actors in the field to make meaningful contributions to investment law scholarship as writing a law review article may have the effect of costing future appointments. At the most, it would produce largely descriptive accounts of existing practice, while stifling normative arguments and discussions of yet-to-come disputes. This is usually –there will be exceptions– not the type of writing that advances our knowledge and brings about innovation.

CC/Devas rationale would leave investment law scholarship for people who only understand themselves as critical observers, who have no intention, nor in fact the opportunity, to become future actors in practice. Having such scholars is, of course, not the problem. On the contrary, independent observers often make the most important contributions because of the distance they have to practice. What concerns me is the absence of scholarship that could have great importance for the field, but that is not produced because the author may harvest ambitions for a practical career. The challenge in CC/Devas, if adopted generally, could therefore compromise the proper functioning of an independent academic discourse and indirectly restrict academic freedom of investment law scholars. Challenge decisions should not have such an effect. On the contrary, they should respect the freedom of legal academia and not indirectly create rules for professional ethics in academia.

In sum, I think that decisions like that in CC/Devas are bad for both investment arbitration practice and scholarship. Much better are decisions like that in Urbaser, or the very recent challenge in Repsol v. Argentina (para. 79) that concerned the very same issue and arbitrator as CC/Devas without finding a lack of independence. I can only hope that the decision in CC/Devas remains an outlier. Its continued endorsement in future challenges would not only be harmful to investment arbitration, it would have detrimental effects on scholarship in international investment law.

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