Arbitration Through the Arbitrator's Eyes: Role and Strategic Positioning of the Arbitrator

This blog is the first in a seven-part series which is designed to provide insight into how arbitral tribunals approach their work: from appointment to award.  The starting point of this series is to analyse the decision-making and reasoning process behind the arbitral award.  To best represent clients in an international arbitration, practitioners ought to understand how arbitrators think.

Professor Strong’s research

It is helpful to examine empirical evidence with respect to the decision-making process.  Professor SI Strong has recently undertaken a detailed study of legal reasoning across commercial disputes, including that pertaining to domestic and international arbitration.  This blog will address the methodology behind that research to enable the reader to fully appreciate the relevant findings and conclusions.  The research can be accessed here.

There are three main parts to the empirical research.

First, Professor Strong conducted a comprehensive survey of 465 practising judges and arbitrators from 41 different countries and included 73 different questions delving into how decision-makers approach the reasoning process; their use of legal and factual authorities; how they apply fact to law and the way that policy and considerations of fairness influence that process; how decisions are drafted; who the decision maker has in mind when decisions are made and written; and how decision makers educate themselves and work to perfect their craft.

Secondly, and to corroborate the quantitative statistics above, Professor Strong undertook a series of hour-long semi-structured interviews of 20 judges and arbitrators from around the world.  The interviews covered 27 different questions (not including sub parts) exploring the same issues as the survey, including the use of legal authorities, evidence, the reasoning and drafting processes and legal education.

Thirdly, Professor Strong analysed judgments (including 28 decisions from first instance courts in Quebec, Canada; 92 decisions from English Commercial Courts and 7 trial level decisions from US state and federal courts) and awards (including 22 awards rendered in domestic commercial arbitrations seated in the US and 32 awards rendered in international commercial arbitrations seated in 8 different countries).  This analysis tested the validity of results generated from the survey and interviews.

All three parts of the research compare approaches and test certain theoretical assumptions regarding legal reasoning as undertaken across arbitrators and judges; international decision makers and domestic decision makers; and common law and civil law practitioners.

The first conclusion: similar approach taken by all decision makers

Professor Strong’s research concluded, with compelling evidence, that judges and arbitrators approach commercial dispute resolution in a very similar manner: both groups have legal authority, evidence and the reasoning process (ie application of fact to law) as the very foundation of their decision making.

Three conclusions may be drawn from this. 

First, Professor Strong’s research refutes the myth that arbitral justice is somehow inferior in that arbitrators simply “split the baby”, unfairly favour repeat users, rely exclusively on facts to the detriment of applicable law, or that they vaguely consider “fairness and equity” in determining disputes.

Second, the research suggests that international commercial arbitration has produced a blending of common law and civil law traditions both with respect to reasoning and drafting. For example, despite the traditional view that common law practitioners prefer oral testimony and rely upon inductive and analogical reasoning - in contrast with the civil law reliance on documentary evidence, and deductive and rules-based reasoning - Professor Strong’s research shows that these differences may not be as profound as some may have thought.  Ultimately, decisions for both sets of practitioners are derived from the application of fact to law.

Third, Professor Strong concluded that decision makers generally do not change their approach to decision making and reasoning based on their experience.  Having grey or no hair may not necessarily be a mandatory precondition when parties or institutions select arbitrators.

The second conclusion: the facts matter

Traditional research has focused almost exclusively on judicial or arbitral treatment of legal authorities without analysing how judges and arbitrators analyse factual matters.

While it can be challenging at times to determine whether an issue is a question of fact, law or both, Professor Strong’s analysis addressed how the decision makers - whether trial judges or arbitrators - approach the relevant evidence in a case.

Many of those interviewed commented that each case was different and highlighted how important facts were to the final disposition of commercial disputes.  The research confirmed that trial judges and arbitrators regard one of their paramount tasks as being the ascertainment and determination of the relevant facts.

Accordingly, to effectively convince a judge or arbitrator, counsel must get on top of the relevant case, and especially the facts, at an early stage and undertake the same thought process that the arbitral tribunal will embark upon.  It is imperative for counsel to prepare diligently before formalising their client’s position.  This preparation includes interviewing witnesses, taking statements, testing those witnesses, engaging with experts from relevant disciplines, sourcing and reviewing the contemporaneous documentary evidence, and determining the relevant facts and legal principles.  There are no shortcuts.

There are other advantages to undertaking thorough case preparation before the commencement of an arbitration.  Weaknesses in a party’s position will be exposed which can lead to objective decision making as to whether to pursue a claim or defend a position.

In practice, in the experience of the authors of this blog, arbitrators tend to review and analyse in detail the parties’ submissions and evidence within a relatively short timeframe - typically a few weeks before the hearing and shortly after final closing submissions are exchanged.  Inconsistencies in a party's case or narrative are easily detected.  Ultimately, the party that prevails is generally the one whose case theory remains accurate, coherent, consistent, and withstands the rigors of a process that is adversarial by nature.  What counsel presents at the beginning of the proceedings ought to be consistent with their submissions 18 months later.

A weak case does not get any better through the passing of time.  The financial costs of a weak case and ultimately losing are generally magnified through the accumulation of costs, including that of counsel and the arbitral tribunal, and potentially the counter-party’s own legal costs, together with the application of pre and post award interest.

Conclusion

The life of an arbitration practitioner is filled with managing risk and forming objective views based on the relevant evidence and law.  The task of ascertaining the facts and applying those to the relevant law ought to be performed upon receiving instructions from a client and guide all major decisions in a case, including what to seek at the first case management conference in terms of the procedural orders that will apply to the case.  Arbitral process is designed to stress test a case theory and assist the arbitral tribunal to get to the bottom of a case and find the relevant truth or truths.

The practitioner will benefit by having in mind the role of the arbitrator, including the implications that one can draw from Professor Strong’s research concerning decision making in commercial disputes, and strategically position one’s client’s case and arbitral tribunal accordingly.