ARBITRATION AND PSYCHOLOGY

Me Matthieu de Boisséson

Introduction

  1. Arbitration is a contractual relationship under which the parties agree to submit their disputes to arbitrators who are appointed by the parties themselves. The arbitrators are neither mediators nor facilitators, but rather private judges rendering awards, which are enforced in various countries, pursuant to Conventions on arbitration, especially the New-York Convention of 1958.
  1. In order to deal with the complex subject of the relationship between arbitration and psychology, it is important not to lose sight of the essential features of arbitration:

-Existence of an arbitration agreement;

-Parties autonomy in determining the procedural rules applicable to the arbitral proceedings;

-Temporary mission granted to the arbitrators for rendering a decision;

-The important part played by the witnesses or the experts within the frame work of the proceedings.

  1. Consequently, in my view, the real issue at stake for our meeting is the analysis of the psychological events which may occur during the proceedings and the types of affects involved in experiencing arbitration; otherwise we run the risk of missing the point and making statements outside the scope of the present matter.
  1. Within the framework of arbitration, there are various actors who take part, in one way or another, in the arbitral proceedings:

-The parties (specially the general counsel or either executives of the company);

-The lawyers;

-The arbitrators;

-The arbitration centers; and of course,

-The witnesses and the experts who will be examined throughout the procedure.

  1. The actors are faced with various affects typical of arbitration (I). They also enter into explicit or implied conflicts between them because their targets, their wishes or their strategies may turn out to be different from one another (II). Beyond an analyze of psychological motivations, the actors in, what we might call, the arbitral theatre, do have a strange dialogue with psychology itself, that is to say the intellectual tools to construe the other party behavior. To a certain extent, the psychological approach is misleading for understanding the events which eventually occur in arbitration (III).
  1. Arbitration is directed towards the past
  1. Arbitration allows the parties, in particularly complex cases, to obtain a binding decision in light of a fact-finding process, which could not be easily used in proceedings before a state court. This is a reason why, arbitration is above all, a legal “exploration” of past.
  1. This relationship with the past is something that is, to a certain extent, common between litigation and arbitration, since arbitration is only a specific form of litigation. But the legal tools provided to parties and arbitrators in order to carry out the fact-finding process are often more efficient and powerful in arbitration.
  1. For a company, a merger or an acquisition is a futureoriented transaction. Arbitration is a past-oriented operation. It means, in my view, that this operation consists in bringing out forgotten, blurred or hidden events or facts in the past life of a company. What was the situation many years ago? What was the role really played by such or such executive? Behind the scene of past events or legends, what has really happened?
  1. This expression of recollection is often full of sorrow, foreboding, and guiltiness. It is not the content of recollection which is necessarily painful. Recollection itself, by nature, is a pain.
  1. In this respect, arbitration often presents itself as an occasion to find “skeletons in the closet”. We may refer on this matter, by analogy, to the works of Abraham and Torok and their theory of “Crypt”.
  1. In the “family romance” one may bring out the ghost entombed in the crypt to give voice to them and amend or rebuild the family romance. To a certain extent, there is also a company romance, with its legends and hidden facts as it has been shown by various works devoted to the history of companies (we refer, for instance, to the various books devoted to the history of the Rio Tinto group). The lawyers and their clients, and at the final stage, the arbitral tribunal when rendering an award take the companies Crypt on their shoulders and become the voice of past events.
  1. Tensions and conflicts between the actors to arbitration
  1. Tensions may be defined as implicit disagreements, misunderstandings, secret resentments and underlying strategy. These affects arise when the arbitral proceedings really start and the relationships between lawyers and their clients (i), arbitrators and the parties (ii) or between lawyers (iii) are tied.
  1. Relationships between lawyers and their clients
  1. Tensions between lawyers and their clients may occur, generally for at least two reasons; Misinterpretations of the circumstances surrounding the dispute, but also as a result of the promptness with which the arbitration proceedings are conducted. These two sources of conflict come from the gap that may exist between the expectations of the parties to the arbitration proceedings which are often very high and the reality of the arbitral practice by international lawyers.
  1. Regarding the misunderstandings between the lawyers and their clients as to the interpretation of events, these are mainly due to the way each of these two categories of people apprehend the events that may occur. Where the parties wish to react rather excessively to each of their opponents‘ attacks, international lawyers, prepared in arbitral practice, will have much more nuanced reactions, out of step with the expectations of their clients.
  1. As regards the conduct of the procedure, again there are conflicts that may arise due to the gap between parties who generally want to be quickly done with the painful experience that may result from arbitration and international lawyers, who have many other pending cases, do not always have the time to satisfy their clients’ requirements for swiftness.
  1. Relationships between arbitrators and parties

(See my article, New Tensions between Arbitrators and Parties in the Conduct of the Arbitral Procedure, in International Arbitration Law Review, Vol. 10, Issue 6)

  1. Arbitration is a tailor-made procedure in which parties are at liberty to set up procedural rules. We can undoubtedly say that the tension which may occur between arbitrators and parties arises with regards to the conduct of the proceedings. Indeed, it is indisputable that parties have the choice of which rules to apply for the proceedings. They can choose between existing procedural rules such as IBA rules, ICC rules or UNICITRAL rules or directly set up their own rules. This choice is binding on the arbitrators. Nevertheless, the arbitrators do retain discretion with regards to how to conduct the case referred to them.
  1. Relationships between lawyers
  1. Conflicts between lawyers of both parties occur regularly indeed systematically about the interpretation of events that led to the dispute. No wonder, it is the normal game of the arbitration battle.
  1. However, another type of conflict may arise, this time due to cultural differences that may exist between the various lawyers who sometimes defend the same party. This may not only cause conflicts about the strategy to be adopted but also ego conflicts fueled by competition established by the clients between their lawyers.
  1. The ambiguous psychological approach of arbitration
  1. Psychological motivations, or the use of psychology, may play a part in the procedural strategy engineered by the parties, in different fields:

•Appointment of arbitrators when the parties try to take into account the individual personality of a potential arbitrator, in view of how he might react, given a precise situation, his personal or cultural background.

•Appointment of witnesses or experts, process of examination, when the parties explore in advance the questions to be put to the witnesses, according to the background, mood and nature of this person.

  1. Of course, this kind of projection may turn out to be efficient in certain cases, but is also misleading, to a certain extent, because the development of an arbitral proceedings cannot be reduced to psychological motivations. The psychological motivations are pure fantasies, imagined by the parties, which may be inaccurate or irrelevant for the understanding of a legal or procedural situation.