UNION INTERNATIONALE DES AVOCATS 2015 annual congress -Valencia, Spain International Arbitration Commission session 29 October 2015 Arbitrators and Tough Choices Panel 1 : Framework and procedural issues

Independence and disclosure: Do waiver letters provide a solution for global law firms? María Beatriz Burghetto Hughes Hubbard & Reed LLP Paris

Roadmap I.Definition of terms: Independence / Impartiality / Disclosure / (Advance) waiver II.Advance conflict waivers in the client-attorney relationship III.Points of comparison with the arbitrator-party relationship IV.Validity and efficacy of advance conflict waivers in international arbitration V.Advantages and disadvantages / Conclusion

Arbitrators’ Independence Absence of links between the arbitrator and a party (or its lawyer) that provide an economic or emotional stake in the outcome of the case. « Problematic relationships »: e.g.: Non-waivable red list (IBA Guidelines) Required both at the time of accepting the appointment and through to the end of the arbitral proceedings.

Arbitrators’ Impartiality Absence of influence on the arbitrator, when reaching decisions, of factors other than the merits of the case as presented by the parties Absence of prejudice / prejudgment If doubts about his own impartiality, the arbitrator must not accept the appointment. To be kept through to the end of the arbitration

Arbitrator’s independence and impartiality are cornerstones of arbitration Independence without impartiality = resulting arbitral award may be set aside or be unenforceable (Relative) lack of independence ( even with impartiality) = justifiable doubts in the parties’ minds as to arbitrator’s impartiality Parties may nevertheless accept a certain measure of arbitrators’ lack of independence Parties must be informed of all facts and circumstances that may, in their eyes, give rise to doubts as to the arbitrator’s impartiality or independence

Arbitrator’s duty of disclosure All arbitrators need to show they are independent (and impartial). Arbitrators practising in « global » law firms = greater likelihood of contact with parties / counsel. All arbitrators must disclose all relationships between them (and their firms) and parties / counsel that are likely to generate justifiable doubts as to their independence or impartiality. Ultimate judgment to be made by the parties / state courts Standard for disclosure: subjective « reasonable party » IBA Guidelines – effort to create consistency

(Advance) conflict waivers Lawyer’s conflict of interest = situations when he cannot give loyal service to a client because of obligations to others (including obligations to other clients), or because of the lawyer’s personal interests (such as the lawyer’s ownership of a property interest that might be affected by the transaction for the client). Lawyers’ obligation to avoid conflicts derives from lawyers’ duties of independence, confidentiality and loyalty to clients. Clients may waive their right to have the lawyer disqualified in case of a conflict of interest (subject to the « informed consent » standard). Conflict-check can be more difficult to implement in global law firms / not error-proof. Advance conflict waivers encompass conflicts that currently do not exist and are not readily foreseeable (e.g.: adverse representation to a client corporation in an unrelated matter).

Advance conflict waivers in the client-attorney relationship Key issues: (1) whether the future “unrelated” matter is adequately identified, (2) whether the party giving the waiver is adequately sophisticated, (3) whether the waiver is recent enough, and (4) in some cases, whether the waiving party had an opportunity to seek independent counsel’s advice on giving the waiver.

Points of comparison with the arbitrator-party relationship Arbitrator’s role as decision-maker is different from attorney’s role (greater public policy component). Arbitrator’s work product (procedural order / award) is of different nature and purpose from that of the attorney. Requirements should therefore be more stringent?

Validity and efficacy of advance conflict waivers Fact-specific nature of conflicts (no possibility of exhaustive guidelines). Potentially differing applicable rules / laws. Discouraged by institutional arbitration rules and guidelines.

Advantages and disadvantages For: -Access to competent arbitrators capable of handling document-intensive cases; -Elimination of unrealistic daily conflict-check updates; -Reduction of possibility to challenge the award. Against: -« Blanket approval » for any future conflict of interest; -Uncertainty about its validity – efficacity; -Possible additional source of litigation.

Key questions May advance conflict waivers effectively exonerate arbitrators from: Duty of disclosure ? of future conflicts of interest, or of future situations where there is no conflict, but that may give rise to justifiable doubts Promise not to engage in « conflicting » work? Liability if award is successfully challenged based on arbitrator’s firm doing work for/against any of the parties? « Unrealistic » periodical conflict monitoring ? (Adjustment of the « subjective » standard?)

Conclusion: Advance waivers of arbitrator conflicts of interest are of limited and uncertain value. Thank you for your attention! María Beatriz Burghetto