Thanks to Professor Louise Ellen Teitz, and to the ILA and ASIL for initiating this joint study panel. Our topic brings to mind the tale of the blind men and the elephant

Crook, John R.

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JOINT STUDY PANEL ON TRANSPARENCY ININTERNATIONAL COMMERCIAL ARBITRATIONJohn R. Crook*I. ARBITRATION ....................................... 362II. INTERNATIONAL ..................................... 362III. COMMERCIAL ....................................... 362IV. TRANSPARENCY ..................................... 363REMARKSThanks to Professor Louise Ellen Teitz, and to the ILA and ASIL forinitiating this joint study panel.Our topic brings to mind the tale of the blind men and the elephant. Themost reliable of all sources, Wikipedia, attributes the tale variously to Sufis,Jainists, Buddhists, or Hindus. Whoever created the tale, we all know it. Agroup of blind men, or men in the dark, encounter an elephant. It is not apresidential election year, so the elephant is in a mellow mood. It stands bywhile the blind men examine it to ascertain its true character. Each manexamines one different part-the leg, the tail, the trunk, the ear, and so on.They then compare notes. Each insists on a different vision of the elephant-asa tree, a rope, a hose, and so on.My task today is to try to describe the parts of the elephant. What are theelements involved in thinking clearly about transparency in internationalcommercial arbitration?* John R. Crook is an arbitrator on the Eritrea-Ethiopia Claims Commission and under NAFTA,advises parties on international law and procedure in ICSID and other matters, and teaches internationalarbitration at George Washington University Law School. During three decades as a U.S. State Departmentlawyer, Crook served as the U.S. Agent at the Iran-U.S. Claims Tribunal in The Hague, appeared in severalcases before the International Court of Justice, and was deeply involved in creating the U.N. CompensationCommission in Geneva. He later became General Counsel of the Multinational Force and Observers, whichoperates an 1800-soldier peacekeeping force in the Sinai Desert. Crook has written widely on internationalarbitration and dispute settlement. He is a Counsellor of the American Society of International Law, amember of the Board of Editors of the American Journal of International Law, and editor of AJIL's sectionon contemporary U.S. practice in international law. He received his B.A. summa cum laude from WabashCollege and his J.D. from Yale University.ILSA Journal of International & Comparative LawI. ARBITRATIONLet's begin with "arbitration." As you know, the essential concept is thatparties agree to authorize an independent, impartial third party to render alegally binding decision in a dispute. The legal systems of many countriessanction, indeed encourage this, and they have adopted supportive laws andpolicies. They do this in various ways, both positive and negative. In a positiveway, their courts will enforce agreements to arbitrate and the awards resultingfrom a properly conducted arbitration, following some limited review aimed atmaintaining the integrity of the process. In a negative way, courts will nototherwise intrude deeply into the process or review the merits of arbitrators'decisions.There is great controversy in this country about the widespread use ofboilerplate arbitration clauses in some types of domestic relationships, such asemployment contracts, consumer credit, nursing homes, and securitiestransactions. The controversy reflects concerns that these clauses do not reflectinformed agreement, involve parties of unequal bargaining power and that themechanisms for arbitrating such claims are defective. These domestictransactions are not what we are discussing here. We are concerned withagreements to arbitrate growing out of international transactions, typicallyinvolving sophisticated businesses, investors and governments.II. INTERNATIONALWe are also concerned only with arbitration involving internationaltransactions. Given this audience, I think I can safely assume that everyone hasa general idea of what "international" means, although you should be warnedthat the concept sometimes causes difficulties.m. COMMERCIALNext, what do we mean by "commercial?" Here things begin to getcomplicated. We risk serious muddle if we don't keep some distinctions inmind.A few decades ago, international arbitration mostly involved disputesbetween private parties growing out of commercial relationships. It involveddisputes concerning the sale of goods, construction projects, ship charters,franchises and the like. The rules applied were drawn from national law or thelaws and customs of merchants engaged in a particular line of commerce. Mostinternational commercial arbitration is still between private parties and growsout of these sorts of transactions.But now, a new type of arbitration has developed in parallel with olderforms of commercial arbitration. Over the last two or three decades, there has[Vol. 15:2Crookbeen dramatic growth in international arbitrations involving disputes betweeninvestors and foreign governments, where claimants assert rights based uponpublic international law-often a bilateral investment treaty (BIT) or othersimilar public law instrument.These investment arbitrations clash with the notion of arbitration as thefruit of agreements between private actors. One of the parties is a State. It hasimportant responsibilities and legal obligations to its citizens. These casesoften involve attacks on important policies and practices of the hostgovernments and claims for a great deal of money. This has led some arbitraltribunals to call for much greater transparency in these proceedings, to muchcritical discussion, and to significant changes in some settings, notably NorthAmerican Free Trade Agreement (NAFTA), aimed at encouraging transparencyin investment cases.IV. TRANSPARENCYNow comes the biggest piece of the elephant. What do we mean bytransparency? There is no single definition for these purposes, and people oftenmean very different things when they talk about transparency. You need tolisten carefully, to be sure what is being talked about. There are many relevantquestions.1) Who should be able to know whether there is even a disputebeing arbitrated?2) Should parties be able to provide information about cases underarbitration to their stockholders? Should they discuss them inthe press or before governmental bodies?3) Should outside persons be able to see the pleadings, theevidence and the arguments? If so, which outside persons?4) Should outside persons be able to attend or view the hearings?What about presenting arguments in them? In this regard, somewriters see an important distinction between "privacy" ofarbitral proceedings, and "confidentiality." Is this a cleardistinction? Is it useful?5) Should outside persons be able to file materials to be consideredby the arbitrators? Which outside persons? Who decides?What standards should guide the decision?6) And, if outside persons are allowed to make filings, what canthey file? Who should bear the parties' additional costs ofresponding? An extra round of briefing in a big investment casecan be very expensive.7) Who should be able to see the eventual award? All of it? Orjust some? If only part, how much? Just the result? The rea-soning? What about the identities of the parties and arbitrators?2009]ILSA Journal of International & Comparative Law8) Are things different if the parties have included provisionsexplicitly regulating any of these matters?For a long time, many people thinking about these sorts of issues tendedto do so in light of the fundamental character of international commercialarbitration as a private system for settling disputes. States allowed privateparties to settle their disputes through mechanisms they selected or created.They did not regulate parties' choices regarding matters like confidentiality.Indeed, for a long time, it was widely assumed that confidentiality was aninherent aspect of arbitration-that every agreement to arbitrate included animplicit confidentiality provision. The rules of international arbitral institutionstended to assume that proceedings were private, although the eventual awardmight become public in enforcement proceedings under the New YorkConvention or otherwise.'In recent years, courts in some important countries have rejected the notionthat confidentiality is an implicit element of agreements to arbitrate. Thehighest courts in Australia and Sweden have said that it is not, as have someU.S. courts.2  Other courts-in the United Kingdom, France and otherjurisdictions-continue to see confidentiality as inherent.3 And, as I noted aminute ago, there have been significant developments aimed at increasingtransparency in investment arbitration.In considering these questions today, we should ask, "Who are the relevantstakeholders?"The parties to the arbitration have a stake. Parties may have very soundreasons for desiring confidentiality. Confidentiality is not necessarily a dirtyword. Parties may want to protect business practices, industrial processes, tradesecrets, to shield a valued ongoing relationship, or to prevent public posturingthat may worsen matters. Particularly in arbitrations involving states,confidentiality may relieve pressures for States to take and maintain extremepositions. Writers sometimes imply that parties seek confidentiality primarilybecause someone has fouled up and wants to avoid embarrassment. Thatsometimes may occur, but it is not a fair or sufficient description.How important is confidentiality to arbitrating parties? The few studiesthat have sought to collect hard data give inconsistent answers. A 2006 surveyof numerous arbitration practitioners by PricewaterhouseCoopers and theSchool of International Arbitration at Queen Mary College of London foundthat privacy was quite important to those surveyed, ranking a close second1. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10,1958, 330 U.N.T.S 38.2. Cindy G. Buys, The Tensions Between Confidentiality and Transparency in InternationalArbitration, 14 Am. REV. INT'L ARB. 121, 129-30 (2003).3. Id. at 130.[Vol. 15:2(surpassed only the by the enforceability of arbitral awards) as a key value.'However, in another study of international cases administered by the AmericanArbitration Association (AAA), fewer than ten percent of participants identifiedprivacy as one of the most important attributes of arbitration.' Other studiesreflect similarly varying perspectives.The public at large? Or "civil society," to use the more politically currentterm? Here, I expect Dan Magraw will have some views, particularly withreference to investment arbitrations or other cases involving issues ofpotentially large public significance.The College of International Lawyers? Many of you know of OscarSchacter's wonderful notion of "the Invisible College of InternationalLawyers."6 There's a good case that the "Invisible College" is also a stake-holder. Important commentators remind us that international arbitration hasbecome an important generator of public and private international law. Giventhis, they argue, there is a broad community interest in open access to arbitralawards, to permit analysis, criticism, and growth of the law. Commentatorsalso have noted that publication will enhance predictability and reduce erraticor unpredictable outcomes. They also suggest that greater visibility will contri-bute to the continued acceptance, credibility, and legitimacy of arbitration.As we proceed with our inquiry, I suspect that we will find that there is noone-size-fits-all answer to any of these questions. Answers may be shaped byvariables such as the subject matter, the characteristics of the parties, the typesof information involved, and the legal basis of the claims.And so, we return to the blind men and the elephant.Like the elephant, our subject has many related parts, all playing animportant and legitimate role. It will be our challenge to try to assemble theminto a coherent whole.4. PricewaterhouseCoopers & Queen Mary College of London, International Arbitration:Corporate Attitudes and Practices 2006 2 (2006), available at http://www.pwcadvisory.co.jp/common/media/InternationalArbitration.pdf (last visited Feb. 22, 2009).5. Richard W. Nainark & Stephanie E. Keer, What Do Parties Really Want From InternationalCommercialArbitration, AAA DisP. RESOL. J. 78,80 (Nov. 2002/Jan. 2003). See also Richard W. Naimark& Stephanie E. Keer, Expectations and Perceptions of Attorneys and Business People: A Forced-RankAnalysis, 30 INT'L BUS. L. 203, 204 (2002).6. See Oscar Schachter, The Invisible College oflInternational Lawyers, 72 NW. U. L. REV. 217(1977).2009] Crook

Joint Study Panel On transparency In International Commercial Arbitration

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Joint Study Panel On transparency In International Commercial Arbitration

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