Ercüment Erdem Att. Ezgi Babur von Schwander

Diversity in International Arbitration

July 2018

Diversity in international arbitration is one of the key areas of development in the past few years. While arbitral institutions are willing to contribute to diversity through promoting underrepresented groups in arbitrator appointments and publication of data related to arbitrators in the past few years, academic institutions and law firms conduct surveys with respect to conceptions on this issue, as well as the paths to be followed to enhance diversity. The current status on diversity across arbitral tribunals shall be analyzed in this article.

In General

The notion of diversity may be defined as the fact of many different types of things or people being included in something; a range of different things or people[1]. In terms of diversity in arbitration, diversity can be reviewed under different groups, such as gender and age diversity, or geographic, cultural, and ethnic diversity.

As arbitral tribunals are decision-making authorities, the importance of diversity across arbitral tribunals cannot be underestimated. International arbitrations involve parties having different nationalities, cultures and backgrounds. This diversity in backgrounds of the parties should be supported and enhanced by different perspectives presented by the members of the arbitral tribunal, as well. If diversity in arbitral tribunals can be assured, each member would bring a different perspective to the table, which in turn would be beneficial towards resolution of the dispute.

Diversity in the composition of arbitral tribunals would be ensured in the phase of appointment of arbitrators; therefore, any party having an effect on the appointment, such as arbitral institutions, parties and co-arbitrators all play an important role in ensuring this diversity.

When it comes to arbitral institutions, we conclude that there is a will in taking necessary measures in this aspect. For instance, the International Chamber of Commerce (“ICC”) introduced a policy in 2016 to publish information relating to arbitrators sitting on ICC cases, with an aim to provide incentives to promote regional, generational, as well as gender diversity in the appointment of arbitrators[2]. Again, the London Court of International Arbitration (LCIA) regularly publishes casework reports, including detailed information about gender diversity[3].

Gender Diversity

Among the various components of diversity in arbitration, gender diversity attracts considerable attention. It would be safe to conclude that efforts are being made as to gender diversity coming from different actors taking part in arbitration. A recent survey conducted on current issues in arbitration set forth that almost half of the users taking part in the survey stated that progress has been made in gender diversity in arbitral tribunals over the past five years[4].

On the other hand, even though many efforts have been made in this issue, women continue to be underrepresented in international arbitrations.

As stated, above, arbitral institutions are making considerable strides to increase diversity, as well as to promote transparency by publishing data on the specifics of arbitrator appointments. The latest data published by the ICC for 2017 reveals that among 1.488 arbitrators, 249 were women, which represents a percentage of 16.7% of all arbitrators nominated or appointed[5]. Among these appointments, the ICC Court appointed a higher percentage with 45%; whereas, the parties appointed 41%, and co-arbitrators, 13.7%[6].

When it comes to Turkey, the percentage of appointment of female arbitrators through the Istanbul Arbitration Center (ISTAC) arbitrations reveals that the participation of women arbitrators is above the numbers revealed by the ICC statistics. Accordingly, in ISTAC Arbitrations, 30% of arbitrations have been conducted with a female chairman and, again, in 30% of the cases, the majority of arbitral tribunals were composed of female arbitrators[7].

Another development on gender diversity across arbitral tribunals is the Equal Representation in Arbitration Pledge (“Pledge”). As of July 23, 2018, there are 2,926 signatories to the Pledge, including many arbitral organizations, academic institutions, as well as individuals. It is also worth mentioning that the Pledge has been awarded as the best development in arbitration by the Global Arbitration Review (GAR) Awards in 2017.

The Pledge seeks to increase, on an equal opportunity basis, the number of women appointed as arbitrators in order to achieve fair representation as soon practically possible, with the ultimate goal of full parity[8]. The solution proposed by the Pledge on equal representation of women is worth analyzing. Firstly, it is stated that the Steering Committee and the consultants discussed the possibility of setting a quota or target to ensure equal representation; however, this proposition has not been adopted. Instead of a quota, a more flexible standard acceptable to all stakeholders[9] has been adopted, which is based on the standard of equal opportunity, which provides that arbitral appointments should be based on equal qualifications. This standard of fair representation requires fact-specific determination, which depends on the context of the opportunity.

Geographical Diversity

This type of diversity may be ensured through the appointment of arbitrators from various geographical areas, with different legal backgrounds. However, it should also be considered that the appointment of a certain arbitrator from a certain country has to do with the education and legal background of the arbitrator. For instance, in accordance with the ICC statistics, cases filed in 2017 involved 2.316 parties, and 784 of these parties were from North and West Europe. Accordingly, the nationalities with the most arbitrators taking a role in ICC proceedings are British and French arbitrators, followed by Swiss, US and German arbitrators[10], which probably has to do with the specifics of the cases filed.

Diversity and Quality of the Arbitrators’ Decision-making

The efforts to ensure diversity, especially coming from the users of arbitration as a dispute resolution mechanism, depend largely on whether they see diversity as a factor contributing to the quality of decisions. A recent study reveals that there are different views concerning the causal relationship between the diversity in a panel of arbitrators and the quality of its decision-making[11]. More specifically, one quarter of the users taking part in this study stated that this issue depended on the particularities of the dispute in question; whereas, 40% of the users stated that there was some, or even significant, improvement in quality with diversity. Again, approximately one-fifth of the users see this effect as irrelevant, since diversity is inherently valuable, and 13% believe that there is no appreciable difference in quality.

Conclusion

Diversity in arbitration is among the issues within the realm of debate in international arbitrations. The efforts of arbitral and academic institutions, as well as arbitration practitioners and users, cannot be underestimated. There are many efforts being made to promote diversity, which show that the participation of some underrepresented actors, such as women arbitrators, is gaining momentum. However, it would not be realistic to conclude that the diversity goal has been reached in arbitration. Keeping this in mind, there should be more collaborative efforts among various actors taking part in international arbitration; such as parties, their counsel, arbitral institutions, corporate entities, states, academics, and members of arbitral tribunals. We are hoping that these collaborative efforts will contribute to the diversity goal in arbitration.

[1] Definition of diversity, Cambridge Dictionary, https://dictionary.cambridge.org/dictionary/english/diversity.

[2] “Diversity in Arbitration,” official website of the ICC. Source: https://iccwbo.org/global-issues-trends/diversity/diversity-in-arbitration/.

[3] “LCIA Releases 2017 Casework Report,” official website of the LCIA. Source: http://www.lcia.org/News/lcia-releases-2017-casework-report.aspx.

[4] 2018 International Arbitration Survey: The Evolution of International Arbitration. (“Arbitration Survey”), p. 18. Source: https://www.whitecase.com/sites/whitecase/files/files/download/publications/qmul-international-arbitration-survey-2018-18.pdf.

[5] ICC Announces 2017 Figures Confirming Global Reach and Leading Position for Complex, High-Value Disputes, (“ICC Figures – 2017”). Source: https://iccwbo.org/media-wall/news-speeches/icc-announces-2017-figures-confirming-global-reach-leading-position-complex-high-value-disputes/.

[6] ICC Figures – 2017.

[7] Umut Kolcuoglu, Sayilarla Istanbul Tahkim Merkezi (Istanbul Arbitration Center with Numbers), Source: https://www.dunya.com/kose-yazisi/sayilarla-istanbul-tahkim-merkezi/423171.

[8] Commentary to the Equal Representation in Arbitration Pledge. Source: http://www.arbitrationpledge.com/about-the-pledge.

[9] Commentary to Equal Representation in Arbitration Pledge.

[10] ICC Figures – 2017.

[11] Arbitration Survey, p. 16-17.