The duties of lawyers under the Code of Best Practices in Arbitration of the Spanish Arbitration Club

On June 4, 2020, I had the honor of speaking at a webinar organized by the Italian Chapter of the Club Español de Arbitraje (CEA) for the launch in Italy of the Code of Best Practices in Arbitration of the Spanish Arbitration Club (the Code) published in May 2019, of which my team and I contributed to the Italian translation.

The first version of the Code of Best Arbitration Practices was issued in 2005. As the drafters of the Code explain in the preamble, a significant difference between the Code and its previous version of 2005 is that the latter “was aimed exclusively at arbitral institutions while the present CBP [the Code] contains recommendations not only for arbitral institutions, but for all professionals participating in the arbitration process: arbitrators, lawyers, experts and funders” (p. 6, Section 1 of the Code).

At the webinar, I presented the section of the Code concerning the duties of lawyers. This article is an abstract of my presentation and it aims at providing some food for thought on the opportunity and utility to codify lawyers’ duties in international arbitration. It is structured in three sections. In the first section, I will focus on the reasons why lawyers’ duties have been codified. In the second section, I will outline what these duties are and how they coexist with the overarching obligation lawyers have to faithfully defend clients’ interests; if and if so to what extent and how do they interplay with dilatory techniques. Finally, I will draw my conclusions as to the utility of codifications of this kind.

Why is there a need to codify lawyers’ duties?

The Code is not an isolated example of codifications of lawyers’ duty. Other institutions, such as the ICC, the Milan Chamber, the London Court of International Arbitration, and the Swiss Chambers’ Arbitration Institution, have included provisions aimed at regulating counsel’s conduct, also with the view to fostering efficiency and expedience of proceedings.

This shows that the arbitral community felt the need to set some boundaries.

The Code stands out from the other codifications for having dedicated, separate sections to each operator in international arbitrations (i.e. arbitrators, counsel, experts, funders).

As the drafters of the Code pointed out in the preamble “in arbitral proceedings the parties will be represented by lawyers who, particularly in international arbitrations, may be subject to different rules of ethics” (Code, p. 12). This might create asymmetry. Why?

Let’s take, for example, witness preparation. One party may be assisted by a counsel whose ethical rules prevent them from preparing witnesses, and the other party, on the other hand, may be assisted by a counsel who is not subject to such a restriction. Without a clear indication as to which ethical rule should apply to both parties’ counsel, it is unlikely that parties will litigate with equality of arms.

Parties should therefore regulate these aspects in the procedural rules, at the outset of the arbitration, in conformity with their respective counsels’ applicable ethical rules.

The so-called double deontology is another problem caused by the coexistence of a plurality of ethical views, which is not unusual in international arbitrations.

A party’s counsel might be restricted under their ethical rules from disclosing documents or information regarding their client, while under some other ethical rules (e.g. of the jurisdiction of the seat of the arbitration) they might be required to provide these documents and information.

The purpose of the Code’s section concerning lawyers’ duties is to mitigate the asymmetry through the codification of common values, of minimum ethical standards in which lawyers of the vast majority of jurisdictions identify.

What are the duties codified in the Code?

Counsel have an overarching duty to faithfully defend their clients’ interest. Yet, sometimes procedural strategies may frustrate proceedings’ efficiency and expedience. By way of example, the document production phase may turn out to be an extremely and not necessarily useful phase of the proceedings, if lawyers overwhelm the tribunal and the counterparty with a number of requests that do not comply with the IBA Rules on the Taking of Evidence and are irrelevant to their case.

I wonder if the codification of lawyers’ duties may limit this kind of dilatory technique.

Lawyers’ duties, as codified in the Code, rest on two main cornerstones: integrity and honesty. These are two very broad concepts that would remain unheeded had the Code not provided an exhaustive explanation of what lawyers can or cannot do.

I will focus on the set of duties that I find more innovative and interesting because they provide Arbitral Tribunals with practical tools to resolve issues that seldomly have codified norms of reference.

Appointment of lawyers – At Section 2, §111, the Code expressly addresses the situation in which changes in the composition of the legal teams occur after the Arbitral Tribunal has been constituted, providing that the Arbitral Tribunal might “reject those changes in a reasoned decision, with a view of safeguarding the integrity of the proceedings.”

§112 explains quite well when the integrity is adversely affected, and namely:

• when the party instituting the change is acting with dilatory intent or in abuse of process; or
• when there is a conflict between the new lawyer and any of the arbitrators.

In my view, this is quite an innovative provision that helps arbitrators to sort out the situation – quite common in international arbitrations – when a QC is added to the legal team right before the hearing (mainly for the purpose of handling cross examinations). This might affect the Tribunal’s status of legitimacy, considering that the Arbitral Tribunal was constituted much earlier. Clearly, having a QC on board responds to the duty of better defending the client’s interest. Yet, this is not always compatible with the duty of conducting the proceedings in an effective and expedite manner.

Duties of integrity – One of the merits of the Code is to clearly spell out what the duty of integrity is, and it articulates into a set of rules of conducts in relation to:

the veracity of pleaded facts (Art. 4.1.);

the reasonableness of legal grounds (Art. 4.2.);

the veracity of the evidence (Art. 4.3.); and

production of documents (Art. 4.4. - § 125). With reference to this specific provision, the Code states that “lawyers must refrain from:

• making applications with tortious intent or knowingly pleading false facts;
• making objections to a counterparty’s applications by knowingly pleading false facts; or
• justifying the failure to submit certain documents by knowingly pleading false facts.”

This provision is clearly aimed at preventing the annoying practice of submitting (or rebutting to, as the case may be) redfern schedules that match at least one of the above circumstances.

Witness and expert evidence (Art. 4.5. – §§127 and 128) – In this provision the Code mandates that the lawyers shall refrain from submitting witness testimony or expert report that they know contain false information.

Interestingly, the Code also regulates the topic of witness preparation, stating at §128 that “Lawyers may collaborate with witnesses and experts in the preparation of their testimonies and reports.”

This is a clear attempt to mitigate the asymmetry among parties. Yet, it does not translate into a tangible solution of the double deontology problem. In fact, counsel are still bound to comply with the ethical rules they are subject to. The duties set forth in the Code, in fact, “are additional to those which lawyers may have in accordance with any other ethical standards that may apply to them” (art. 1, §107).

Breaches – ART. 6

The Code provides for a set of measures that the Arbitral Tribunal may adopt – after consultation with the parties and the involved lawyer – if they breached any of the codified duties.

In particular, arbitrators “may adopt any of the following measures:

• caution the lawyer verbally or in writing;
• draw adverse inferences when evaluating the evidence;
• take the lawyer’s conduct into consideration when awarding costs;
• notify the matter to any Bar Associations with which the lawyer is registered, for the determination of ethical responsibilities; and
• adopt any other measure in order to preserve the integrity of the proceedings.”

Needless to say, these are soft norms, whose deterrent impact on lawyers is debatable.

In my view, the measures that are likely to be most effective in practice are:

• the possibility that the tribunal might draw adverse inference when evaluating the evidence; and
• the possible impact of the lawyer’s conduct on cost.

This is especially true if the Arbitral Tribunal’s reasoning is clearly spelled out in the award. By doing so, counsel may be more strongly persuaded to act in compliance with the duties set forth in the Code.

Conclusions

In my view, codifications of this kind do not entirely remove the asymmetry and ultimately do not solve the so-called double deontology problem. To do this, joint efforts at the international and local bar associations levels shall be made in order to set forth appropriate choice of law rules, as it is done in private international law.

Although the Code does not solve these open issues, it certainly contributes to raising awareness, to having more clarity and uniformity, and to providing some tools to practitioners to do some lobbying at international and national levels as to the reforms that should be taken to identify the most appropriate applicable rules of ethics in international arbitrations.

I appreciate that many practitioners might consider these codifications as redundant.

I have met a number of counterparts that have adopted quite aggressive, unmeritorious dilatory techniques that ultimately affected my client and, consequently, their perception of arbitration as an ineffective tool to obtain justice. Whether or not the outcome of the arbitrations I managed would have been different had I had the possibility to rely on the provisions of the Code is hard to say.

I do believe that the fact that in the last five years many arbitral institutions (such as LCIA, the Milan Chamber of Arbitration or SCAI and now the CEA) or associations (such as the IBA) have started to codify these duties and obligations is symptomatic of the fact that some distortions in the performance of the duty to defend clients’ interest have occurred, are still occurring today and, therefore, they shall be remedied.