Set in our ways?

In the UK lawyers and clients are familiar with the concept of ­barristers being grouped together in sets of chambers while at the same time operating ­independently of one another. Indeed, in High Court actions this can mean counsel for both ­parties coming from the same set of ­chambers and even appearing before a judge who, before their elevation to the bench, was a member of that set.

In international arbitration, however, this sort of arrangement is causing increasing concern.

The same, but different

What may seem normal to English lawyers and to parties familiar with the English legal system can seem alien to lawyers and clients from other jurisdictions. Not ­infrequently they express concern when they find that their opponent has appointed as counsel a member of the same set of chambers as one of the arbitrators, or when they find that an arbitrator has been appointed after counsel has been retained from the same chambers. They observe that this would clearly be inappropriate if both individuals belong to the same law firm, so why should it be any different when they are members of the same chambers?

The position under English law is that, in order to challenge an arbitrator who is from the same chambers as counsel, circumstances must exist that objectively justify doubts about the arbitrator’s impartiality. For ­example, in the Laker Airways v FLS ­Aerospace & Another (1999) decision, Mr Justice Rix (now Lord Justice Rix) concluded that the fact both counsel and arbitrator came from the same chambers presented no ­difficulties.

A recent 2009 decision of an ­International Centre for Settlement of Investment ­Disputes (ICSID) tribunal, however, took a different view in Hrvatska Elektropriveda (HEP) (Croatia) v Republic of Slovenia. At a late stage in the proceedings one of the ­parties appointed as counsel a barrister from the same set of chambers as the president of the tribunal. The president was simply a ‘door tenant’ (he did not work from the same premises as the other members of the ­chambers) and there was no evidence of any bias whatsoever.

Nevertheless, the tribunal was concerned that it should avoid the appearance of any impropriety. Neither side wished the ­president to retire and so the tribunal ­decided that, although there was no hard and fast rule that barristers from the same chambers are always precluded from being involved as counsel and arbitrator in the same case, there was equally no rule to the opposite effect. On the facts of the case an atmosphere of apprehension and mistrust had been created, in part by the very late ­disclosure of the counsel’s involvement. The tribunal therefore ruled that the barrister in question could not participate further as counsel in the case.

The tribunal suggested that their ruling might have been different had they and counsel for the other party been informed at an earlier stage about the involvement of the barrister at the centre of the storm. Whether or not that would indeed have made a ­critical difference is very much a matter for debate.

The shape of things to come?

It may be said that law firms participating in international arbitration proceedings should educate their clients as to the ­conventions that apply in this jurisdiction if English ­counsel are involved. However, this ruling could well be a sign of things to come. As clients and the lawyers involved in cases increasingly become more international, and as sets of chambers seek to grow internationally, their attitudes towards conflicts are likely to become more important.

Our peculiarly English approach to ­barristers’ conflicts, which relies on ­gentlemanly assumptions, is one area where the views of the tribunal in the HEP decision may force a change in thinking. This, ­combined with the moves to open up the courts to a wider range of legal advisers, could have a profound effect on chambers that are not used to having to manage these types of issues.

Nic Fletcher is a partner and head of ­international arbitration at Berwin Leighton Paisner