Originally from The American Review of International Arbitration (ARIA)

PREVIEW

For our purposes “Back to the Future” does not refer to the 1985 sci-fi classic. It is a reference—with a question mark—to whether a shift is needed in New York jurisprudence on the regulation of the practice of US-barred attorneys in international arbitration.

Many, if not all, of us here today are members of the New York State bar. And many of us may also be members of other bars throughout the United States and the wider world. As members of the New York bar, we are bound to New York State’s Rules of Professional Conduct, rules which regulate our professional conduct not only within the 50,000 or so square miles of New York State, but anywhere else we may do our work—whether in court or before an arbitral tribunal.

Indeed, as professionals in the field of international arbitration, our obligations frequently extend far beyond New York’s borders and involve the faithful application of law, the zealous representation of clients, and the studied respect for arbitrators and other practitioners who may be geographically and culturally on the other side of the world. So how should we understand the relationship between these two sets of obligations, one local and centralized, and the other anything but?

Allow us to set the stage with a hypothetical example. Party A, the claimant, is an Indonesian telecommunications company, owned by the Spanish subsidiaries of a German corporation. Party B, the respondent, is an Indonesian corporation owned by the government of Indonesia. Party A and Party B entered into an agreement according to which B was to lease to A a mine which held valuable natural resources. Before A was able to begin mining, B terminated the agreement and brought an arbitration.

The contract between A and B contains an arbitration clause providing for arbitration under the ICC rules, with a seat in Jakarta. The dispute is governed by English law. The tribunal consists of a former Justice of the Supreme Court of Indonesia, and two practicing attorneys from New Zealand and England. A is represented by London counsel, while B retained London counsel who is admitted to practice in both England and Wales and New York.

While in Indonesia for an in-person hearing on jurisdiction, B’s counsel sees the tribunal chair, the former Justice, in the hallway and they speak briefly. A’s counsel witnesses the encounter from afar. Concerned that B’s counsel was attempting to speak to the tribunal chair about the case, A petitions the tribunal to disqualify or sanction B’s counsel, citing, say, the IBA Guidelines on Party Representation in International Arbitration.  B, in turn, considers asking a court back in his home state of New York to issue a stay on the arbitration and resolve the disqualification or sanction issue in its favor. The question, then, is will B be able to do so? Will B succeed in dislodging from an Indonesian arbitration a disqualification dispute and bringing it to a New York court whose only connection to the dispute is the bar affiliation of counsel?

The answer, perhaps surprisingly, is yes, for New York is home to a line of state court cases finding that matters of attorney conduct, particularly attorney disqualification, are not arbitrable and must instead be decided by the courts. According to this rule, because B’s counsel is admitted to practice in the state of New York, in addition to England and Wales, B might succeed in taking the decision on disqualification from the hands of the Indonesia-based tribunal and placing it into those of the New York courts ten thousand miles away.

The New York courts’ power to regulate the conduct of New York-barred attorneys is not the difficulty here: the New York Rules of Professional Conduct subject a New York-barred lawyer to the disciplinary authority of the New York courts no matter where the lawyer’s conduct occurs.  And unlike the ABA Model Rules of Professional Conduct, which provide that “for conduct in connection with a matter pending before a tribunal, the rules of the jurisdiction in which the tribunal sits” shall apply,  the New York Rules of Professional Conduct are not so deferential. Under the New York Rules, only “for conduct in connection with a proceeding in a court before which a lawyer has been admitted to practice” will “the rules of the jurisdiction in which the court sits” apply. 

That said, the rationale for divesting the arbitral tribunal of this authority may be a little harder to grasp. To do so, we need to travel back in time, at least back to the 1960s, to the beginning of a line of cases that established New York State’s modern doctrine on attorney ethics in international arbitration.