Kluwer Arbitration

Arbitration Can Be Quite an Exotic Affair

May 27, 2019

Melanie van Leeuwen just got out of a meeting with a software developer. Topic of conversation: the application of Artificial Intelligence in arbitration. Smart software applications and technological development are likely to enhance cost efficiency, a much-debated subject in the world of international arbitration. However, the use of such features must be carefully assessed in light of the parties’ fundamental due process rights. Arbitrators and counsels will surely discuss these topics during Paris Arbitration Week, predicts Van Leeuwen.

‘Imagine this’, the international arbitrator and counsel says via Skype from her office at Derains & Gharavi in Paris, ‘in the future arbitral hearings may take place virtually, while each of the participants will be sitting behind his or her desk. If witnesses don’t have to travel anymore all over the world to attend hearings, the potential cost saving will be very substantial, as would be the reduction of arbitration’s carbon foot print.’

International arbitration, the private and internationally enforceable alternative to court litigation, is often being criticised for being a (too) costly affair. Parties pay for and rightly expect a high level of service. Not only do large complex cases require participants (representatives of states, multinationals, their counsel and the honourable members of the tribunal and staff) to travel but they typically also involve voluminous submissions and evidence, which need to be accessible to all those involved.

War stories

As cyber attacks become more and more frequent, parties, law firms, institutions and arbitrators are focussing on ensuring robust security of their communications and IT-systems. In arbitration, it can get quite adventurous in more than one way. ‘The reality goes beyond our wildest imagination,’ says Van Leeuwen.

The war stories professor Albert Jan van den Berg told her when teaching arbitration law at the Erasmus University in Rotterdam, is one of the reasons why she decided to enter the field of arbitration. ‘Every case has a unique set of actors, factual and legal issues. International arbitration can be quite an exotic affair. The subject matter is always different and the cultural background of the people involved varies greatly. It is one of the last truly general practices,’ she claims. ‘Not one case is the same.’

The forward thinking female leader in the world of international arbitration, who acts both as counsel and as arbitrator, has had an impressive career. During an internship at the end of her studies she noticed Van den Berg, one of the best-known arbitrators in the world, in the office cafeteria of Dutch law firm Stibbe. She recognized him from her classes, started working for him and landed a job as his junior associate. After formally qualifying as a lawyer under Van den Berg’s supervision she followed him to Freshfields in Amsterdam. Later she transferred from the Amsterdam to the Paris office, and in 2011 joined Derains & Gharavi as a partner. Nowadays she works mostly as an arbitrator, one of the few female arbitration practitioners to do so.

Mind the gap

Diversity adds something to a tribunal, explains Van Leeuwen. ‘Of course technical skills and legal knowledge are key in this highly specialized practice but the human factor is equally important. Arbitration is a peoples business. The stakes are often high in commercial and investment arbitrations. The higher the stakes, the higher the pressure on the witnesses presented by corporates or sovereign states. In addition to the normal stress that comes with testifying before a tribunal, it is not uncommon that witnesses are terrified by the prospect of a negative decision for the party presenting them as a witness, based on their testimony. When your job is at stake or criminal proceedings are looming in case the arbitration is lost, it is understandable that witnesses stone wall. In those situations empathy and out-of-the-box thinking are necessary to extract the relevant information from the witness.’

That is why it is so important that the gender imbalance is further redressed, says Van Leeuwen, who’s firm co-signed the recent pledge on equal representation in arbitration of 2015. Despite the recent increase in appointed female arbitrators from 5 to over 20 per cent and important initiatives like the decision of the International Chamber of Commerce in Paris to appoint 50 per cent female court members, female arbitrators remain terribly underrepresented in the field of international arbitration as a whole.

Van Leeuwen stresses that it is not only a matter of gender equality, but also of geographical diversity. ‘We should also have more arbitrators from outside the EU and the United States. Why not appoint more arbitrators from other parts of the world? Especially, in a globalized world economy, where the users of arbitration are also located in Asia, the Middle East, Africa, etc. legitimacy requires that arbitral decisions are made by a diverse pool of arbitrators, also comprising arbitrators from those regions,’ says Van Leeuwen.

The international arbitrator, who was born and raised in the main port and second city of The Netherlands, Rotterdam, has always been a firm believer in ‘changing by doing’. ‘I think your experience and output in prior cases are the best testimony of the service you provide,’ says Van Leeuwen. ‘Quality sells. That is the reason a client, counsel and parties come back to you. Positive discrimination will not help you establish a career in the long run, but it can certainly help kicking it off.’ At the same time she acknowledges that female solidarity is also important to solve the gender gap. ‘Women should become more comfortable in passing each other the ball, men are less afraid to do so. When in house counsels (often female) are presented a list of potential candidates for a tribunal by their external counsel, they should also ask themselves: ‘is this a diverse list’? I simply believe that a diversely composed tribunal will render a better decision.’

Personal data and privacy issues

The number of arbitrations is on the rise, and arbitration is facing several modern day-challenges. Van Leeuwen is co-heading the task force to provide guidance on the implications of data protection on international arbitration. The new European directive imposes strict rules on the processing of personal data. While the GDPR-regulation provides a carve out for national courts, it remains to be seen how arbitration will be treated. Tribunals need to raise and record compliance with privacy principles in the processing of personal data of all those involved in every arbitration. Moreover, a potential danger lurks in the data subjects’ right to request access to information, in which his personal data are processed. What if a witness would abuse this right in order to gain access to confidential documents?’ ‘Solutions must be identified, which on the one hand ensure that data subjects’ rights are respected, while at the same time safeguarding fundamental principles of due process and confidentiality of the tribunal’s deliberations,’ says Van Leeuwen.

Related subjects, such as technological developments and cyber security pose other challenges. Arbitrations and the documents that form part of the arbitration record are hard to standardize. ‘The great variety in documentation and subject matter renders the use of technologies such as AI (Artificial Intelligence) less obvious than in corporate cases, for example for due diligence projects’ says Van Leeuwen. But she does see a role for other technologies such as VR (Virtual Reality) during hearings. ‘Perhaps we will be able to conduct virtual site visits and meet the other individuals involved in an arbitration from the comfort of our office seats in a virtual hearing room’ muses Van Leeuwen. ‘Or see the story unfold before our eyes. The future of arbitration is equally fascinating as it is challenging.‘

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