Summary of: “Common Law vs. Civil Law in International Arbitration: The Beginning or the End?”[1]

Mari Vanhanen

L.L.M. Candidate, Moritz College of Law 2020

The Rules on the Efficient Conduct of Proceedings in International Arbitration (the “Prague Rules”) were made available for signing on December 14, 2018.[2] In Common Law vs. Civil Law in International Arbitration: The Beginning or the End?, Professor Klaus Peter Berger explores whether the Prague Rules mark the end of a global consensus—one where international arbitration is viewed “largely detached from domestic laws,” representing neither common or civil law traditions but rather “a category of its own.”[3]

The Prague Rules, according to their preamble, “are intended to provide a framework and/or guidance for arbitral tribunals and parties on how to increase efficiency of arbitration by encouraging a more active role for arbitral tribunals in managing proceedings.”[4] As a backdrop to the Prague Rules, Professor Berger refers to the growing concerns voiced by arbitration users on the time and costs involved in arbitration proceedings and the ongoing debate on efficiency. Arbitration stakeholders face increasing pressure with the rise of alternative forms of resolving disputes (ADR) and are forced to address user concerns to maintain interest in arbitration.[5]

 

The launch of the Prague Rules created an intense debate in the arbitration community. The International Bar Association (IBA) Rules on the Taking of Evidence in International Arbitration (the “IBA Rules of Evidence”), a body of rules that can be seen to reflect “a transnational procedural template for international arbitration,”[6] have served arbitration users well for more than two decades. With the Prague Rules entering into the arena and suggesting procedures traditionally adopted in civil law jurisdictions to address concerns of the users, Professor Berger asks: “Are we at the beginning of a new retrograde era in the discussion on the transnationalization of arbitral procedure?”[8]

 

Professor Berger identifies two developments that have contributed to the transnational nature of arbitration. First, the gradual development of liberalizing and harmonizing arbitration acts, in which the United Nations Commission on International Trade Law (UNCITRAL) Model Law and its adoption, wholly or in part, in more than 100 jurisdictions around the globe has played a major role.[9] Second, the increasing adoption of best practice standards for international arbitration. Since the IBA Code of Ethics of 1987 and the UNCITRAL Notes on Organizing Arbitral Proceedings of 1996, the IBA has published a number of best practice codifications.[10]

 

Discussing the benefits and disadvantages of soft law rules, Professor Berger first acknowledges their potential for global merger of different legal traditions, predictability in international arbitration, reducing effort needed in deciding procedural matters, and possibility to avoid more legislation by self-regulating first.[11] On the other hand, there is a danger that “best practices,” even if not binding, restrict independent thought by arbitrators and flexibility. Considering the amount of existing guidelines, there is a risk of “over-regulation” with “code-like” instruments, which in turn is seen to drive further judicialization of international arbitration.[12]

 

Do the Prague Rules, then, have what it takes to become new best practice? Proactive case management, starting from clarifying parties’ positions in the case management conference, is a key feature of the Prague Rules. Margin of discretion afforded to arbitral tribunals in procedural matters and acceptance of that margin of discretion by State courts that might later scrutinize the arbitral award are necessary elements for the Prague Rules to work.[13] After all, under the Prague Rules, Tribunals could e.g. express preliminary views and understanding on a number of matters without fear of disqualification,[14] determine certain issues as preliminary matters, impose limitations on submissions,[15] and severely restrict document production.[16] The Prague Rules also give a role to the Tribunal in assisting amicable settlement between the parties, up to the point of allowing arbitrators “to act as mediator.”[17] Traditionally, giving arbitrators a facilitator role has been viewed with reluctance. Professor Berger, however, points out that the view “is in the process of changing” and notes, among others, Article 4(d) of the IBA Guidelines on Conflicts of Interest in International Arbitration which “has elevated the role of arbitrators as mediators to a best practice standard.”[18]

 

Ultimately, as a non-statutory best practice guideline, the effect of the Prague Rules will depend on arbitrators called to apply them. If parties do not adopt the Rules directly, they can serve as sources of inspiration.[19] Professor Berger points out that “common law v. civil law” or similar binary distinctions are not helpful.  One should move beyond such distinctions and take a pragmatic approach that is rooted in seeing international arbitration procedure “as a flexible concept that gains shape through the creative interaction between parties and arbitrators in each individual case.”[20]

 

Professor Berger stresses the importance of innovation, fresh ideas, and mindset of parties and arbitrators. Guidelines should not stand in the way of innovation and ability to change, and the dialogue around the international arbitration process should continue. The Prague Rules simply give arbitration users an additional choice, Professor Berger concludes. “Nothing more, nothing less.”[21]

 

[1] Klaus Peter Berger, Common Law vs. Civil Law in International Arbitration: The Beginning or the End?, 36 J. Int’l Arb. 3, 295–314 (2019).

[2] Rules on the Efficient Conduct of Proceedings in International Arbitration, Note from the Working Group, at 2 [hereinafter Prague Rules].

[3] Berger, supra note 1, at 297–98. Note from the Prague Rules Working Group mentions Professor Berger having made a significant contribution to the draft document. See Prague Rules, supra note 2, at 2.

[4]  Prague Rules, supra note 2, at 3.

[5] Berger, supra note 1, at 298–99.

[6] Id. at 299.

[7] The IBA Rules on the Taking of Evidence in International Commercial Arbitration were adopted in 1999, and further revised in 2010. See Revised IBA Rules on the Taking of Evidence in International Arbitration, at 2–3. https://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx (last visited October 13, 2019).

[8] Berger, supra note 1, at 299–300.

[9] Id. at 300–01.

[10] Id. at 301–05.

[11] Id. at 304–05.

[12] Id. at 305–06.

[13] Id. at 306–07.

[14] Id. at 307–08; Prague Rules, supra note 2, at Article 2.4.

[15] Prague Rules, supra note 2, at Article 2.5.; Berger, supra note 1, at 308.

[16] Prague Rules, supra note 2, at Article 4.

[17] Id. at Article 9. The Prague Rules do require a written consent from all parties at the end of the mediation for the member of an arbitral tribunal that has acted as mediator to continue to act as an arbitrator. Article 9(3)(a).

[18] Berger, supra note 1, at 309 (Noting, however, the requirement of “informed consent” of all parties).

[19] Id. at 310.

[20] Id. at 311–12.

[21] Id. at 312–13.