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American Lawyer Magazine Points to AI to Promote Arbitrator Diversity

July 7, 2015 logo_2

Every two years, American Lawyer Magazine releases a Scorecard on the “Highest Stakes in Arbitration” outlining the world’s largest arbitration cases, the arbitrators who preside over those cases, and the firms who represent parties in those cases. This year, in the Focus Europe section of the Scorecard, veteran reporter Michael D. Goldhaber sets his sights on the fact that, in years of publishing the Scorecard, “the same small group of arbitrators are routinely deciding the world’s biggest disputes.” As Goldhaber points out, this phenomenon has prompted not only international arbitration’s most acerbic critics, but even occasionally scholars and arbitration insiders, to refer to them as a “mafia.”

International arbitration practice has grown more diverse, with parties and counsel arriving from an increasingly broad spectrum of cultural and legal backgrounds. The pool of arbitrators, however, has proven stubbornly resistant to similar expansion. As Goldhaber reports, “The top 18 arbitrators in this [2015 Scorecard] include all of the top 10 from 2013, 2011 and 2009, nine of the top 10 from 2007, and seven of the top 10 arbitrators from 2005.” Additionally, “[t]he top 10 percent of arbitrators in our survey account for 20 percent of contract arbitration appointments, but 36 percent of treaty appointments. The top 20 percent lay claim to one third of contract and nearly half of treaty appointments.”

Some challenge the validity, or at least the most sinister implications of, the “mafia” appellation. Emmanuel Gaillard, for example, notes that “hundreds of occasional players [exist] at the periphery.” Meanwhile, Brigitte Stern, the person designated by the 2015 Scorecard as the World’s Busiest High-Stakes Arbitrator, doesn’t deny the concentration of decisionmaking power in the hands of a few. But she prefers instead to call it a “large family, or even an unorganized nongovernmental organization of arbitrators.” The critical question, however, is: Why is it so difficult for peripheral players to become part of this family of core arbitrators?

Gaillard points out that arbitrators are most often appointed by the parties, which may suggest that the concentrated core is an expression of community consensus. While parties usually do the appointing, according to Brigitte Stern, the “core problem is that parties don’t trust new names because they don’t know them and how they think.” One solution under debate by the European Commission is to judicialize European treaty arbitration. This process, if even feasible, would be many years away. In this context, Goldhaber calls AI‘s project to make information about arbitrators more equally and readily available an “immediate and market-friendly” approach to opening up the pool of arbitrators. AI Founder Catherine Rogers agrees with Stern: “the simple solution is to help parties get to know new arbitrators” so they can make informed, nuanced decisions in the arbitrator selection process.

You can view the full Scorecard here (subscription needed).