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Issue 2

Focus on the Draft Code of Conduct for Adjudicators in Investor-State Dispute Settlement

Part Two: Is There a Problem with Wearing Multiple Hats?

Speaker: Chiara Giorgetti

When trying to address double-hatting in a code of conduct, two particular questions arise:

  1. Which “hat” matters? Which roles are the ones problematic? And this is linked to a scope issue. Is double-hatting problematic only for cases under the same treaty or is it problematic for all ISDS or for all international cases, like before the ICJ?
  2. How to address this issue? A total ban (CETA posture) or limited (on what ground, temporarily or treaty-based)?

Speaker: Lucinda Low

There are real issues and perception issues. The perception of the problem might be bigger than the problem itself. There’s not much data regarding the extent of double hatting and even less data on whether it really creates a problem. But such available data seems to show that multiple hatting is relatively prevalent in a small group of individuals that are highly successful in securing both appointments as arbitrators and counsel.

These problems are not easy to identify. They are subtle and therefore, harder to police. There are mutual backscratching revolving door situations in which professionals go back and forth between counsel and arbitrator roles through reciprocal appointments, and these situations are more troubling from a perception point of view. These perceptions, irrespective of whether there is a real conflict or not, are the ones that can undermine the legitimacy of ISDS. So, much of the problem comes from the perception that there is club that dominates the game and that these players can somehow use their dominant position to their advantage.

Speaker: Bart Legum

A prohibition on double hatting would not only affect adjudicators. It would affect the parties right to select the arbitrators that are best situated or prepared to resolve their specific conflict. This is a fundamental difference and feature against ordinary courts, where you do not pick your judge, in arbitration: you do.

Being an arbitrator is and always has been, traditionally, a part-time job. Only a small group can do it as a full-time profession. These tend to be older arbitrators and from a generation when there was less diversity in the field.

Speaker: Lucinda Low

A disclosure solution may derive in additional and costly challenge proceedings and, in rules where the co-arbitrators are the ones that decide the challenge, this may feed in the perception that there is a “club” in which their members cannot properly police each other. Therefore, the disclosure option might need an independent mechanism that could decide these issues quickly and bring consistency.

When the problem is “perception”, a total ban may have worst consequences than the problem itself and this will only increase the unintended consequences. Hypothetically, if the real problem with multiple hatting is the concentration of power in a small group of people, then maybe a solution would be to have a ban on multiple hats only when someone reaches that position of outside influence, to be measure by the numbers of arbitral appointments that they have.

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