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Diversity - or a lack of it - in the Arbitration World

by JAMS International on 30 Nov 2017
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This post was co-authored by Matthew Rushton and Natasha Mellersh

Lack of diversity is no secret in the arbitration world. It is regularly discussed at conferences, cast into the spotlight by organisations like Arbitral Women, users of arbitration and practitioners themselves. If the first step towards recovery is acknowledging the problem, that step has been taken and measurable, if modest, progress has been achieved. Furthermore, the focus has moved from accepting the problem to identifying the causes and looking at possible solutions.

The heart of the matter

New entrants into the arbitration market face numerous challenges, among them the near-ubiquitous problem in the law of the desirable few taking a disproportionate market share. It’s nothing new: F E Smith (later Lord Birkenhead) described the English Bar in the 1930s as a profession of 2,000 with work for 1,000 being carried out by 500. Concerns about over-trading in the international arbitration market are similarly well-known and well-founded, and even more acute than F E Smith’s characterisation of the Bar.

The second challenge highlights a fundamental, perhaps even existential, flaw in the arbitration process. An overriding concern of parties entering arbitration is the time and cost of proceedings. This seems to take precedence over concerns to appoint industry or practice-area experts, rather diminishing arbitration’s promise of an expert tribunal. Those best placed to handle “due process paranoia” are deemed to be those with the most tribunal experience. Thus, fear of the unknown is a more powerful driver in the appointment process than fear of a “wrong” result. This can't be right.

For this reason, the market should greet with enthusiasm those initiatives that aim to make available better information about arbitrators’ soft skills and procedural preferences. But the market should also exercise caution: such initiatives may entrench the supremacy of procedural expertise over industry and sector expertise, and at the same time further entrench the existing hierarchy, counter to its original objectives.

Thus the “IBM factor” remains the hallmark of an essentially conservative arbitration appointment process. No less harmful and equally unattractive is the cycle of reciprocity that dominates the appointment of arbitral chairs. “Once the identity of the party appointees is known, I can predict with near certainty who’ll be the chair,” said one institutional old hand, before noting, “that is a real problem.” The tacit assumption, naturally, is that one appointment as chair deserves another.

All of the above militate against new market entrants of any gender or ethnicity. So, what can be done?

Somewhat prosaically, we just need to try harder, but critically, recognise that doing so is in everyone’s best interests. Any candidate list that excludes representatives of 50% of the population is by definition inadequate and inferior and should be rejected. Proponents of diversity also need to be more vocal in challenging assumed notions of meritocracy.

A vast caseload is no guarantee of quality, and indeed over a certain level, the reverse becomes unavoidable. There are busy arbitrators, for example, who are unable to manage email communications without secretarial support. Parties appointing such arbitrators should not expect prompt responses but should expect to pay for unnecessary duplication of effort.

It is arguable that in many, perhaps even a majority of disputes, that parties will get better service, and enjoy a better experience of arbitration from hungrier, newer, lesser-known arbitrators to whom a new appointment is a big deal. The time, attention and care those individuals commit to such a dispute in most cases more than offsets perceived benefits of appointing a grandee. Such arguments merit greater prominence in the debate.

Breaking down barriers

There is still a lot of work to be done in terms of improving the level of diversity in the field of dispute resolution. There is no single cause and no all-encompassing solution.

One must also look at the nature of arbitration - and the importance of experience. This is not only a barrier to women and candidates from more diverse backgrounds, but also to young arbitration specialists. Without getting appointed, there will be very little experience to build on - this in itself becomes a vicious cycle. If there is wider support in providing equal opportunities to the next generation of arbitrators - the effect of real change will only be a matter of time.

Several initiatives such as the Equal Representation in Arbitration Pledge spearheaded by Arbitral Women, have been very effective in providing greater awareness in each part of the process. However, there is also a need for meaningful change in practice.

It is important to stress that greater diversity provides a wide range of practical benefits. However, how can in-house counsel, as users of dispute resolution make a more informed choice about an arbitrator on the basis of their background and expertise? And how can an external counsel research the background of an arbitrator more effectively? This is an area which lacks transparency.

The role of institutions

Of course, the effect of mentoring programmes such as that created by Arbitral Women, have a key role to play in promoting and supporting women in dispute resolution. The challenges faced by minorities and women in this area are not to be underestimated nor should they be ignored.

However, it is crucial to recognise that greater diversity is beneficial. Providing a wider pool of arbitrators to choose from, along with greater transparency and access to information, is a welcome step - not in the name of diversity but in the pursuit of better quality.

The number of women arbitrators nominated by parties or co-arbitrators or appointed by the Court has doubled in the past seven years from 7.2% in 2010 to 14.8% in 2016. All progress is to be applauded, but if parity is the goal, more radical action is evidently required. Institutions alone cannot drive the necessary change. We all have a role, and if you’re wondering where to start, a hard look in the mirror might be as good a place as any.

Litigation in review

Topics: Arbitration

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