Singapore International Arbitration Centre

8 June 2017
SIAC-CIArb Debate

Report by Emmanuel Chua
Senior Associate, Herbert Smith Freehills LLP

This year's edition of the SIAC-CIArb Debate, held on 8 June 2017, at The Westin in Singapore, proved to be a feisty affair. Marked from the get-go by an application from the proposition to remove two members of the judging panel on grounds of apparent bias (subsequently withdrawn), audience heckling and a hung tribunal, four titans of international arbitration (including 3 members of the SIAC Court of Arbitration) argued whether "The Practice of Party-Appointed Arbitrators is a Moral Hazard in International Arbitration and Should be Abolished". With over 250 attendees, comprising private practitioners, in-house counsel, academics and arbitrators, this year’s turnout was the largest to date.

Darius J Khambata, SC, opened the debate for the proposition. Dealing head-on with (and dismissing) the five commonly cited reasons in favour of having party-appointed arbitrators (confidence in the process, inertia, shared outlook between party and arbitrator, subject matter expertise and party autonomy), Mr Khambata argued that it was ultimately crucial that parties can be confident in the neutrality of all the arbitrators rather than just the Presiding Arbitrator.

Expanding on Mr Khambata's views, Toby Landau QC warned of the risk of arbitration degenerating into a contest that rewards the party who identifies and pick the best "gladiator" in the form of a party-appointed arbitrator. Whilst Mr Landau acknowledged the importance of party autonomy, he highlighted that this could equally be achieved without resorting to party-appointed arbitrators, for example by having parties agree to an appointing authority and by specifying in their contracts that only arbitrators possessing specific skillsets or other characteristics may be appointed.

Opposing the motion, Judith Gill QC questioned if it was fair to term party-appointed arbitrators as a "moral hazard" on the basis of anecdotal evidence, often emanating from the unsuccessful party. Even if the risk of bias existed, Ms Gill argued that this was adequately balanced by the presence of the Presiding Arbitrator and the other party's appointed arbitrator. Specific tools, such as the declaration of independence required of arbitrators under the rules of most major arbitral institutions and the IBA Guidelines on Conflicts of Interests, exist to effectively manage the risk of bias. Abolishing the party-appointed arbitrator would therefore be a step too far. Supporting Ms Gill's arguments, the second opposition speaker, Emmanuel Gaillard, highlighted that independent appointments did not necessarily guarantee neutral decision-making, pointing out instances in which national courts had produced unfair or biased results.

The excellent arguments on each side meant that the debate almost proved too close to call. Indeed, the three-member judging panel somehow managed not to arrive at a decision, with Mr Gary Born declaring that he was "in favour of the opposition for the first half and the proposition for the second", after Ms Lucy Reed and Ms Ariel Ye voted for the proposition and opposition respectively. Following a lively audience Q&A session, the matter was ultimately decided by way of a vote from the audience. The moderator, Mr Francis Xavier, SC, declared a slim victory for the opposition with a score of 118 to the proposition's 103.

All in, an excellent evening of excellent advocacy, wine and fellowship in the Singapore arbitration community!