Who polices international arbitration?

I begin by saying that I know next-to-nothing about international arbitration. I always say that at the outset of discussions on the topic. I have come to learn that there are advantages in being an innocent abroad, asking the most basic questions which make lawyer-arbitrators shudder. 

It is important to ask who is in charge of the overall policing (or oversight or regulation) of international arbitration because of a number of interlocking factors.

The first is that international arbitration plays an outsize role in what has come to be seen as one of the UK’s economic success stories. Legal services is now one of the handful of frontier industries (UK government’s 2025 trade strategy), turning the UK into a services superpower (UK government’s 2025 services strategy). Part of this arises from the transactional and other work of the big City firms. But part also arises from London being the centre of an enormous volume (in number of cases and value) of international arbitrations.

There will soon be new statistics on exactly what this means. Every year in September, the Law Society publishes its International Data Insights Report, the fourth edition due next month. This article is my trailer for the coming new version, which deserves to be read and the consequences pondered. But the statistics from 2024 already give the picture, by reference to data provided from various sources.

Of course, there are the courts and the arbitral institutions like the London Court of International Arbitration, which are global success stories. But there are other UK fora involved.

For instance, London is a centre for maritime and for trade in commodities such as grains; oils, seeds and fats; refined sugar; and metal. Each category has its own trade association. Trade in maritime and commodities runs into the tens of billions of pounds, and in the case of metals into the thousands of billions. Their trade associations – an important point – run their own arbitrations with their own arbitration procedures. Most arbitrations seated in London are not handled by arbitral institutions but by arbitrators affiliated with specialist trade bodies, such as the Grain and Feed Trade Association (GAFTA) and professional associations like the London Maritime Arbitrators Association (LMAA).

For maritime arbitration alone (statistics from 2021), London deals with a total value of cases of around £11.5bn annually. It is estimated that 80% of the world’s maritime arbitrations are dealt with in London.

Who oversees this vast area of work of such key importance to the UK economy? Judges and the courts are highly regulated, but this area largely escapes.

I said at the outset that there was a number of interlocking factors which made the answer to this question important. The second factor is that, wherever arbitrations take place in the world, the bars or other lawyer regulators know next-to-nothing about what happens and take no interest in it. It is true that not all arbitrators are lawyers. Indeed, the UK-based trade associations mentioned above, which undertake so much valuable arbitration, do not allow lawyers to represent parties at hearings. But there are many, many lawyer arbitrators elsewhere. And the whole activity comprises legal services. The bars should know more about it.

The third and final interlocking factor is the answer to why bars should care: there are serious ethical challenges arising, which no-one is policing overall.

Each of these ethical issues deserves a lengthy tome to itself, and I will summarise only some of them as bullet points.

One, there is no uniform ethical code across jurisdictions and institutions. This leads to fragmented ethical standards, where counsel and arbitrators often operate under overlapping or conflicting bar rules due to differing national origins, qualifications, or dual memberships. It may be difficult to say which prevails, and divergences in practices like expert instruction, document production, and witness statements can raise ethical dilemmas.

Two, ethical duties for disclosure of conflicts and ensuring arbitrators devote sufficient time are inconsistently enforced. There are ethical dangers when arbitrators themselves decide on matters of conflict of interest rather than the decision being taken by a disinterested third party.

Three, major ethical discussions within the arbitration world often exclude the trade association arbitration bodies, like GAFTA and the LMAA cited above, despite the latter handling a large volume of cases. There are existing guidelines, for instance promoted by the International Bar Association, but they are criticised for lacking input from key sectors like insurance, commercial traders, developing-country institutions and non-lawyers.

And, four, the appointment of arbitrators is a well-known ongoing concern, such as repeat appointments from the same chambers or networks, or a startling lack of diversity of arbitrators.

I could go on. 

No-one is looking at the overall nature of these issues, and certainly not the bars in relation to lawyer-arbitrators.

My preliminary request is that the bars take more interest. Second, although arbitration gains its popularity precisely because it is outside formal court procedures, I wonder whether it is right that there is no unified oversight over the whole sector.

Jonathan Goldsmith is Law Society Council member for EU & International, chair of the Law Society’s Policy & Regulatory Affairs Committee and a member of its board. All views expressed are personal and are not made in his capacity as a Law Society Council member, nor on behalf of the Law Society