Innovative solutions for an age-old issue: How transparency and data analytic tools can improve diversity in international arbitration

Abstract

International arbitration is an inherently diverse field. The disputing parties and their counsel come from all over the world, but the arbitrators selected by these same parties and their counsel rarely reflect their diverse backgrounds. Although the arbitration community largely supports diversity initiatives and the goal of making arbitral tribunals more reflective of the parties and the global community, the available studies that parties and their counsel continue to appoint a small number of repeat players to the tribunals. This paper traces the diversity deficiency to its roots in the lack of available information about diverse arbitrators and the cognitive biases that perpetuate the vicious cycle of repeat appointments. The paper then turns to potential solutions in the form of data analytic tools, that would collect, analyze and provide information on the case management and decision making of arbitrators.

Introduction

There are many ways to describe tribunals in international arbitration, but “diverse” would not be an attribute that would readily come to mind (Nathan, 2000). Instead, arbitrators, as the central figures in international arbitration tend to be “from a certain region, a limited age group, one gender and limited ethnicity” (Bjorklund et al., 2020). Comments such as “pale, male and stale,” the “old boys club” or the “invisible college of arbitrators” (Franck, 2015b) have gone from criticism to a matter-of-fact remark describing the typical constitution of the arbitral tribunal in international arbitration. The pool of arbitrators who are appointed to the tribunals in arbitral disputes remains shallow and persistently homogenous. From a purely logical and practical perspective, it is difficult to reconcile this homogeneity among arbitrators with the mosaic of diverse backgrounds of the arbitration practitioners and disputing parties in international arbitration.

The obvious lack of diversity is not only puzzling, but it is also contrary to the nature and guiding principles of international arbitration (Veeder, 2015). It is also difficult to reconcile with the almost universal recognition of the need to improve the inclusiveness and diversity of arbitral appointments. A significant number of respondents of the most recent international arbitration survey even argued that the issue of diversity is so inherently important and universally accepted, that the mere question of its benefits is redundant. (QMUL-White and Case, 2021). However, a recent analysis of International Centre for Settlement of Investment Disputes (ICSID) arbitrations showed that, of a total of 951 appointments to ICSID tribunals between 2012 and 2017, only three were female, non-white, and from a developing State (Bjorklund et al., 2020). This is only a snapshot from one institution which is only visible because of the transparency of the information on ICSID appointments. Given that information on many investments and most commercial arbitrations is not public, there may be even more troubling statistics hidden behind the veil of confidentiality.

There have been some attempts to attribute the lack of diversity to the so-called “pipeline leak” among arbitration practitioners, which basically means that there are not enough qualified candidates from diverse backgrounds who make it to the positions in the profession which would make them visible and eligible for arbitral appointment (Greenwood and Baker, 2015). Although the premise of this hypothesis is true, it should not be accepted as a barrier for further efforts to create a platform which would place diverse arbitrators under the same spotlight as their more prominent colleagues.

In reality, there is an abundance of talented and highly qualified candidates of various backgrounds who would be well suited for appointments to any given tribunal (Paulsson, 2012). Therefore, contrary to the frequently cited justification of the lack of qualified, diverse candidates, it can be argued that the market for arbitrators actually consists of two distinct groups—the overly exposed college of arbitrators who obtain the vast majority of party appointments, and the aforementioned “invisible college,” which arguably outnumbers the well-known cohort of repeat players (Greenwood, 2017).

Over the past decade, significant efforts have been invested in the promotion and improvement of diversity in international arbitration—from voluntary pledges to institutional rules and guidance aimed at ensuring increased representation of women and minorities among arbitrators. However, as it is elaborated further in this paper, the trends in arbitrator appointments still do not match the professed enthusiasm and universal calls for greater diversity in international arbitration. Although the statistics show gradual improvements in the percentage of female appointments, there is still significant room for the improvement of geographical, racial, ethnic, cultural, and age diversity (QMUL-White and Case, 2021).

The progress which has been made was mainly driven by arbitral institutions, which have diversified their arbitrator lists and appointed diverse candidates when they acted as the appointing authority in a specific case. However, the majority of the arbitrator appointments are made by the disputing parties and their counsel, which means that significant improvements can only be made if the parties make a conscious effort to look beyond the well-known repeat players on the market for international arbitrators and appoint arbitrators from more diverse backgrounds (QMUL-White and Case, 2021). Although this seems like a logical and straightforward solution for the diversity deficit in international arbitration, there are some persistent obstacles which are deeply rooted in the arbitration community. One of them is the lack of available information about diverse arbitrators with the requisite qualifications and expertise which created a perpetual loop of repeat appointments of the familiar candidates (Franck, 2015a). Even though international arbitration is a flexible, modern, and dynamic dispute resolution mechanism, the process of selecting and appointing arbitrators is woefully outdated and inadequate (Rogers, 2017).

The first section of this paper provides an overview of the status quo of diversity in international arbitration and the incremental growth rate of diverse appointments over the past decade. This section further explores the causes and effects of the information asymmetry in the arbitrator appointment process which has fostered a reluctance on the side of parties and their counsel to place the destiny of their claims into the hands of a less-known arbitrator, regardless of their objective qualities.

Section two offers several options for meaningful changes on the marketplace for arbitrators, proposing that the availability of robust information on arbitrators and their track records could enable inclusiveness and break the cycle of repeat appointments. Furthermore, this section presents several data analytic tools which are already available for arbitration practitioners, and which could be employed to foster diversity in arbitrator appointments. After laying out the role of data analytic tools in the pursuit of inclusiveness and diversity in international arbitration, the paper outlines some potential issues and factors which may determine the impact of such innovations in practice.

The paper concludes with the assertion that the increased transparency of information on arbitrators generated through party feedback, and the consistent use of data analytics tools in the arbitrator appointment process can provide greater visibility to diverse arbitrators and foster true inclusiveness on the market of arbitrators.

The analysis of the state of diversity in international arbitration is based on the statistics reported by the leading international arbitral institutions (including the International Chamber of Commerce International Court of Arbitration (ICC), Singapore International Arbitration Centre (SIAC), London Court of International Arbitration (LCIA), Hong Kong International Arbitration Centre (HKIAC), and ICSID) in their annual case reports, as well as empirical studies conducted by scholars. Since most of the available empirical and scholarly data relates to gender diversity, it will also be covered in most detail throughout this paper. Geographical diversity, which is often used as a surrogate for racial, ethnic, and cultural diversity in the available resources, will be addressed to the extent to which the available data can help inform the reader about the progress in this area. In the sections analyzing the available data analytic tools, the author will draw from her own experience in Arbitrator Intelligence (AI), as well as external research.

Section 1—The status quo of diversity in international arbitration

Before delving into an analysis of the most recent statistics on diversity in international arbitration, it should be noted that the mere fact that such statistics are being published by arbitral institutions is notable progress. In the past, the analysis of these issues largely relied on data collected through questionnaires and surveys distributed by prominent arbitration scholars and practitioners who were determined to establish a baseline of the state of diversity in international arbitration, in the absence of data disaggregation by arbitral institutions based on various diversity indicators (Franck, 2015b).

The situation has improved significantly in the recent past, with arbitral institutions recognizing the importance of maintaining and publishing data on the gender, nationality, age, and frequency of appointments of the arbitrators sitting in arbitrations administered “under their roof” (including ICC, SIAC, LCIA, HKIAC, ICSID, etc.). Some leading international arbitral institutions provide diversity statistics in their annual case reports and/or maintain publicly available lists of all arbitrators who are appointed to arbitrations under their administration (see ICC, 2019; ICSID, 2020; LCIA, 2019; SIAC, 2019). In addition, the leading arbitral institutions have openly expressed their intention to place the improvement of diversity in arbitration at the forefront of their operations and strategies for the years to come.

Nonetheless, the data on diversity in international arbitration remains incomplete and asymmetrical. The most consistent statistical analysis is conducted for gender diversity, while the metrics on other categories of diversity are either incomplete or non-existent. For example, the analysis of geographic, regional, ethnic, and racial diversity is often convoluted and treats these terms interchangeably (Bjorklund, 2018). However, such casual references turn a blind eye on the complexities of intersectionality, especially in a global field such as international arbitration. In addition, the place of residence or nationality cannot be used as surrogates for race or ethnicity in the studies of representation in international arbitration. Thus, the findings in this regard are not precise or representative, in addition to being scarce (van Haersolte-van Hof, 2018). This paper refers to geographic and national representation, as provided in the available reports, in absence of a more nuanced categorization. Comprehensive statistics on age diversity are also largely unavailable. Until there is sufficient data for a more sophisticated analysis, the following sub-sections will reflect on the status of gender diversity and the various indicators related to geographical, regional, ethnic, and racial diversity.

Gender diversity

Gender diversity in international arbitration has seen the most significant progress in over the past decade, which is a direct result of a sustained and consistent effort of arbitral institutions and international organizations in this field. The initiative which gained the most traction and yielded the most results on the global level is the Equal Representation in Arbitration Pledge (the ERA Pledge). The ERA Pledge was drawn up by various stakeholders from the international arbitration community with the goal of enhancing the visibility of women in international arbitration and increasing the number of women appointed to arbitral tribunals. The ERA Pledge now has 4834 signatories, which include lawyers, arbitrators, and other professionals and a variety of organizations and most of the leading international arbitral institutions.

The progress made in gender diversity has been well documented in the annual case reports published by the arbitral institutions, which increasingly include specific figures on the gender, geographic, and age diversity of the arbitrators appointed to arbitrations administered by the respective institutions (ICC, 2019). Since 2015, most leading institutions saw an increase in the overall number of appointments, as well as an increase in the number of female arbitrators (ICCA, 2020). For example, in the LCIA and the ICC doubled the rate of female appointments in this period, while the number of female arbitrators appointed to the HKIAC tripled (ICCA, 2020). These improvements can be attributed to the institutional appointments, as the data shows that the parties and co-arbitrators still appoint female arbitrators at a much lower rate. However, a growth of several percentage points on an annual basis, is not a significant improvement, when the baseline values are low across the board. In this sense, some institutions are taking the lead in pursuing more meaningful progress through direct action. This is visible from the annual statistics published by the leading arbitration institutions.

The LCIA won the ERA Pledge GAR Award in 2018 for appointing 43% of female arbitrators and continued this positive trend in 2019 by reporting the appointment of 48% of female arbitrators (which was an increase of 5% from 2018 and 16% from 2017). The parties and co-arbitrators in LCIA arbitrations appointed considerably fewer female arbitrators, although this rate has also seen an increase from 2018 (from 6% to 12% and from 23% to 30%, respectively) (LCIA, 2019).

Other leading arbitral institutions also experienced positive trends in gender diversity with SIAC (2019) appointing 36% of female arbitrators, and the HKCIA (2019) reported an increase in the percentage of female arbitrators appointed by the Center from 18% in 2018 to 2020, 5% in 2019. At the same time, the rate of party-appointed female arbitrators was approximately 16%, which is still lower than the rate of institutional appointments, but an increase from the previous year (up of approximately 5%) (HKIAC, 2019).

The gender disparity is particularly visible in ICSID arbitrations, due to the transparency of the proceedings and arbitral appointments. As a general matter, investment arbitration has been under attack from critics in the ongoing reform process of the investor-state dispute settlement (ISDS) system, and the lack of diversity is one of the main factors perceived as undermining its legitimacy. Under the auspices of UNCITRAL Working Group III, the participating states have expressed their general support for efforts to diversify the pool of available arbitrators for ISDS appointments (UNCITRAL, 2019). In their submissions to the Working Group, some governments have emphasized the importance of ensuring the diversity of the ISDS adjudicators, in all the contemplated reform options, including the potential standing investment court (Government of Thailand, 2019; European Union and its Member States, 2019). The government of Costa Rica went so far as to refer to a “pledge of diversity” as one of its priorities in the reform of the arbitrator appointment process in ISDS (Government of Costa Rica, 2019).

The number of female arbitrators in investment arbitration has increased since early 2000 from approximately 3–7% to 11%. However, 57% of the female appointments in ISDS went to two well-known arbitrators, therefore this improvement can be attributed to the frequency of their appointments and does not reflect a qualitative shift towards increased diversity. Among the 25 top female arbitrators, these two women account for 86% of appointments, while the other arbitrators received more than one appointment (Bjorklund et al., 2020).

Despite the predominantly positive trends, the diverse appointments have been growing at a sluggish rate and are driven disproportionately by arbitral institutions (Behn et al., 2020). Representatives of various arbitral institutions confirmed that the diversity of the tribunals is high on their respective agendas (QMUL-White and Case, 2021). The recent ICCA Report on gender diversity showed that the overall appointment rate of female arbitrators is approximately 21% which means that a lot of work remains to be done in this area (ICCA, 2020). This pertains in particular to the appointments made by the parties and the co-arbitrators, since the number of individual female arbitrators appointed by institutions significantly exceeds the number of such appointed by parties or co-arbitrators (QMUL-White and Case, 2021). In fact, the latest ICSID report showed that co-arbitrators did not appoint a single female arbitrator in 2020, which in and of itself is a troubling fact (ICSID, 2020).

Ethnic, racial, and geographical diversity

The steady progress of gender diversity in international arbitration is a welcome, albeit overdue development. However, it should not lull the arbitration community into complacency or distract from the progress which is yet to be made in relation to geographic, national, racial, and age diversity. This fact was also reflected in the Queen Mary-White & Case International Arbitration Survey (QMUL-White and Case, 2021), in which 61% of the respondents acknowledged the progress in gender diversity, but only 31% thought the same of ethnic diversity (the least of five aspects of diversity that was listed in the survey).

The data on ethnic, racial, and geographic diversity was maintained less systematically and consistently by arbitration institutions in the past, but this practice has improved in recent years. There is a lack of nuance in the way arbitral institutions categorize and record the representation of arbitrators across regions, nationalities, ethnicity, and cultural background. The annual case statistics published by the leading arbitral institutions mostly refer to the nationality and geographical location. However, these statistics can be misleading, as the nationality of a person does not necessarily reflect their ethnicity or race. As these categories are not easy to define, there is no systematic mechanism to track racial representation in international arbitration. However, there appears to be a consensus among arbitration practitioners that there is insufficient geographic, ethnic, and racial diversity in arbitral tribunals, which would reflect the diverse body of parties and practitioners in the field.

In the absence of reliable baseline data, past analysis based on publicly available awards, and the statistics published by the arbitration institutions today show a large disproportion in the representation of arbitrators from certain regions relative to the global population and GDP.

For example, according to Franck (2015), although China and India are home to approximately 33% of the world's population and roughly 30% of the global GDP, less than 3% of participating arbitrators were Chinese or Indian. In addition, although Africa has the second-largest population (15%), only two African countries were among the 20 countries with the highest GDP (Egypt and Nigeria—2.5%), and Africa exhibited the lowest level of representation (0.4%). On the other hand, Europe and North America were over-represented in the number of appointments, comprising approximately 75% of the overall representation. According to direct accounts from arbitration practitioners, Asian, African, or Latin American chairs are very rarely appointed in cases that do not involve parties from their regions (Dalmaso Marques, 2015).

The recently constituted ICC Court for the 2018 to 2021 term shows ethnic diversity with 13% of its members from Africa, 26% from Asia, and 15% from Latin America, which is the highest rate recorded to date. The ICC recognized that these figures are unsatisfactory and committed to increase their efforts to enhance ethnic diversity in arbitral appointments, as part of a broader diversity initiative which was characterized as a matter of “utmost priority” for the ICC (Anderson et al., 2020).

The clear lack of geographical diversity is particularly problematic in investment arbitration, where the arbitral tribunals resolve matters of the public interest of both developing and developed states. However, most arbitral tribunals in ISDS cases are composed of arbitrators from Western Countries (75%) and most non-Western arbitrators were appointed by the respondent states or the arbitral institution (Bjorklund et al., 2020; ICSID, 2020).

Some initiatives have already been created to draw more attention to the need to improve ethnic, racial, and geographic diversity in international arbitration. In addition, there have been calls to invest concerted efforts to bring meaningful improvements to the ethnic, racial, and geographical diversity among appointed arbitrators. One example of such an initiative is the African Promise, which was launched in September 2019 and modeled on the ERA Pledge. This initiative aims to promote diversity and inclusivity in international arbitration by improving the profile and representation of African arbitrators and increasing the rate of appointments of African arbitrators. The African Promise was signed by 334 lawyers, arbitrators, professors, and other professionals.

Racial Equality for Arbitration Lawyers (REAL) is another initiative dedicated to dealing with issues of racial representation in international arbitration that was recently launched. REAL gathers international arbitration lawyers from all over the world who will work together to provide more visibility to arbitration practitioners from underrepresented groups (REAL, 2021). This initiative will create a platform for addressing the most relevant issues of intersectionality, including the prevalent implicit biases. As it is a very young initiative, its impact on the inclusiveness and diversity in international arbitration remains. However, it has already grabbed the attention of the international arbitration community, which indicates the importance of this issue.

Statistics on racial diversity on arbitral tribunals in commercial arbitration are not readily available and, thus, it is difficult to discern any trends in this regard. In addition to that, there have not been many publicly known examples of parties complaining of the inability to appoint an arbitrator of a specific ethnic, racial, or national background. However, a recent call for action for racial diversity in international arbitration came from an unlikely source, that is, Mr Shawn Carter, better known as the US hip hop artist Jay Z, who used his celebrity status to highlight the lack of racial diversity on the roster of arbitrators at the American Arbitration Association (Deb, 2018). Namely, Jay Z's legal team filed a request to stay arbitral proceedings before a New York state court, claiming that the insufficient number of qualified African American arbitrators on the list provided by the arbitral institution was discriminatory and rendered the arbitration agreement void. The arbitration was related to his 2007 sale of the Rocawear clothing brand to Iconix for approximately USD 204 million (Stempel, 2019). Before the court could rule on this request, the AAA agreed to allow the dispute to be heard by three arbitrators instead of a sole arbitrator, and provided the names of five African American candidates (Gerstel, 2019).

This case was ultimately settled, and it may be argued that it was never a question of whether Mr Carter would in fact rather appoint an African-American arbitrator or one of any other race or ethnicity. The issue was the fact that at the relevant time, he was not provided with sufficiently inclusive options which he perceived as a limitation to his party autonomy.

The preceding analysis traced the sluggish progress in the achievement of diversity in international arbitration and the deficiencies in the available data which prevents a more nuanced analysis. To date, gender diversity has seen the most visible growth, mostly driven by appointments made by arbitral institutions and strong initiatives from professional organizations of arbitrator practitioners advocating for increased diversity in arbitral appointments. Ethnic, national, racial, and age diversity, as well as various forms of intersectionality, are inadequately recorded, and their true status remains unclear. However, empirical studies and anecdotal statements indicate that there is a serious underrepresentation of these categories in practice.

Considering the fact that the vast majority of arbitrator appointments are still made by the parties and their counsel (ICSID, 2019), there cannot be any sustainable shift in the practice of appointing female arbitrators until the parties become more open to appointing women or arbitrators of other diverse backgrounds. However, this is exactly where the “fiercest resistance” to diverse appointments comes from (QMUL-White and Case, 2018). The causes and possible solutions to this issue will be elaborated further in the forthcoming sections of this paper.

Diversity as the driver of legitimacy and quality of decision making in international arbitration

The benefits of diversity in adjudication are recognized in the perceived legitimacy of the decision-making process, and the quality of the final award. These two factors are closely intertwined and mutually reinforcing (Bjorklund, 2018). Firstly, diversity on arbitral tribunals, as a reflection of the body of arbitration practitioners and decision makers, contributes to the perceived legitimacy of the process and the arbitral award. One commentator argued that diversity will be the key factor that will maintain the modernity and desirability of international arbitration as the preferred dispute resolution mechanism (Haridi, 2015). Some scholars have gone as far as to assert that the global acceptance of arbitrations as a legitimate dispute resolution mechanism will depend on the increased diversity of the appointed decision makers (Paulsson, 2012).

On the other hand, the inclusion of diverse arbitrators in the deliberations and award-drafting should contribute to the well-rounded consideration of all relevant issues by preventing confirmation bias and group-think (Dos Santos, 2018). Groupthink is defined by Irving (1980) as “a quick and easy way to refer to the mode of thinking that persons engage in when concurrence seeking becomes so dominant in a cohesive ingroup that it tends to override realistic appraisal of alternative courses of action.” Under this theory, the inclusion of diverse members into larger homogenous groups can help challenge the status quo and serve as an antidote to preconceived notions or intrinsic biases adopted by other members of the tribunal. For example, diverse arbitrators with different ethnic and cultural backgrounds, as well as legal training, are likely to raise issues and nuances which may otherwise be overlooked by the “ingroup.” Even if their interventions do not ultimately change the reasoning of the majority, the award will reflect a comprehensive deliberation process which should contribute to the quality of the award. This was confirmed by the respondents of the most recent Queen Mary-White & Case survey (2021) who stated that industry-specific cases would benefit from more diverse arbitrators who would bring a less legalistic approach to the proceedings.

The legitimacy that follows diverse, inclusive, and representative adjudicative bodies increase the degree of compliance with its decisions and improve their public acceptance. However, it is important to ensure that the diversity is not purely symbolic and that it results in a shift in the power balance in the decision-making process (Bjorklund, 2018). As international arbitration is inherently diverse, the bigger challenge is to create an inclusive framework which will provide visibility and mobility for practitioners of all backgrounds, who possess the requisite qualifications.

The importance of legitimacy and quality of the arbitral awards is particularly visible in the discussions surrounding the reform of the investor-state dispute settlement system at the international level. Among the numerous reform areas discussed within the UNCITRAL Working Group III—ISDS Reform, State representatives have tied some of the most prominent issues to the arbitrators themselves, including the perceived lack of independence and impartiality, lack of diversity, and the inconsistency of the awards (UNCITRAL, 2019). In this context, diversity is also recognized as an important element for the improvement of the perception of legitimacy and quality of decision making in investment arbitration.

Studies have shown that the addition of women to the decision-making table does have an effect on reducing groupthink (Serrador & Turner, 2015). It is difficult to assess the impact of diverse arbitrators on the quality of tribunal deliberations in international arbitration, as empirical studies in this regard have been impossible due to the confidentiality of arbitral proceedings, but also due to the persistent practice of repeat appointments. Thus, the benefits of diversity in adjudication are yet to be fully examined in international arbitration.

The inherent flaws in the arbitrator appointment process and the information asymmetry in international arbitration

The arbitrator selection and appointment process is considered to be the key step in any arbitration, as the ultimate exercise of party autonomy. William C. Park put it in more illustrative terms when he stated that the three most important elements in international arbitration are: “arbitrator, arbitrator, arbitrator” (Rogers, 2012). Unfortunately, the arbitrator appointment process has not evolved much over the years, and the parties are still selecting arbitrators for multi-million-dollar cases using the same methods and sources the average person uses in selecting a contractor for their home. Despite the global trend towards data-driven decision-making and due diligence, the international arbitration parties and their counsel still rely on phone calls, internet searches, and personal recommendations (Rogers, 2012). Considering the high degree of responsibility and high expectations of quality and effectiveness from the party-appointed arbitrators, external counsel, and in-house lawyers are reluctant to experiment with appointing obscure candidates whose track record and procedural preferences cannot be verified from direct or indirect experience. Unfortunately, such information remains largely unavailable to most legal practitioners.

If parties and their counsel seeking to appoint an arbitrator for a high-stakes case are relying on still images and resumes to assess the skills of a potential candidate, they will inevitably make assumptions based on pre-existing notions and unconscious biases. These mental shortcuts will eliminate a significant number of eligible individuals whose public profiles are not sufficiently prominent. Thus, they are most likely to revert to their more “reliable” sources and personal contacts, whose recommendations will provide a live image of an arbitrator in living color whose procedural preferences and case management style are discernable. Therefore, when making the arguably most important decision in the arbitration, the risk-averse counsel will once more walk through the revolving door and appoint a well-known arbitrator whose reputation resonated clearly in the otherwise blurry marketplace of international arbitrators (Greenwood and Baker, 2015).

Unconscious bias and cognitive shortcuts in the arbitrator appointment process

The international arbitration community comprises an impressive body of legal experts, practitioners, and thought leaders in a broad range of scientific fields, although many of them are much less visible than others. The arbitration community has clearly expressed their concerns with the lack of diversity and emphasized the need to bring about meaningful change. Nevertheless, it seems that the same arbitration practitioners remain powerless in effectuating any real change, as the “prior experience” norm continues to dictate the arbitrator appointment process, resulting in the re-appointment of more prominent arbitrators (Franck, 2015).

When asked to identify the stakeholders who are best suited to make the most impact on the diversity of arbitral appointments, most arbitration practitioners identified the arbitration institutions as the key stakeholder in this regard. However, as elaborated above, the arbitration institutions make only a fraction of the overall arbitral appointments, and they are already investing consistent and effective efforts to diversify the pool of appointed arbitrators (Anderson et al., 2020). The reason behind the lack of spill-over effects of the diversity initiatives taken by the arbitral institutions to the parties and their counsel may be in the lack of information on arbitrators which notoriously plagues the arbitrator appointment process. Namely, even if the parties are provided with a robust list of diverse candidates, their CV and academic background still do not paint a picture of their case management style and track record on arbitral tribunals.

When advising their clients on the appointment of arbitrators, counsel is primarily driven by the goal of ensuring a favorable outcome of the case and thus focuses on the candidates that are most likely to increase their chances of success (Demeter et al., 2015). In the absence of reliable data on a larger number of potential arbitrators, they are more likely to be drawn to the “elite” whose reputation is publicly known, with little consideration of their gender or ethnicity. Since the parties only have one shot at appointing the “right” arbitrator, they have become notoriously risk averse, which has significantly narrowed the pool of arbitrators gaining a significant number of appointments, to the exclusion of otherwise qualified candidates (Claussen, 2015).

The so-called “diversity paradox,” (i.e. the fact that the same practitioners who support diversity initiatives as undeniably useful and beneficial fail to appoint diverse arbitrators), is becoming more and more obvious with the increased transparency of the data on the appointments of arbitrators in international arbitration (Rogers, 2017). On the one hand, the arbitration community is clearly concerned with the lack of diversity, but on the other hand, it seems that the parties and their counsel are the main force of obstruction when it comes to the diversification of arbitrator appointments (QMUL-White and Case, 2021). Although critics of the system of party appointments may attribute this to discrimination, such choices made by the parties and their counsel could be explained by certain cognitive reflexes which are ingrained in human nature (Giorgetti, 2013).

Despite the best efforts of the parties and their counsel to make the best out of the scarce information, even the most important decisions are much less rational than one may think (Greenwood, 2017). This is a direct consequence of the information asymmetry and deficiency elaborated above, due to which the appointing parties tend to overestimate the qualities of known candidates to the exclusion of those who are less-known, regardless of their objective qualities and qualifications (Greenwood and Baker, 2012). In such situations, the human brain takes certain “cognitive shortcuts,” reverting to pre-existing notions or trusted sources in order to rationalize the final decision. The outcome may bring the necessary closure and an acceptable solution, but in more cases than not, the outcome will be far less satisfactory than expected.

Such cognitive gymnastics are not unique to the stakeholders in international arbitration, but they are an inherent safety net in high-stake situations in which we do not dispose of sufficient reliable information which would allow us to make an informed decision. The minds of arbitration practitioners, despite their sophisticated legal education, still function either in an intuitive or deliberative setting (Frankish and Evans, 2009). In the absence of logical and factual inputs, the lazy analytics of the human mind will revert to the intuitive component without objection (Nappert and Flader, 2010). Therefore, even when presented with diverse and qualified arbitrators, counsel is more likely to appoint a repeat arbitrator if the baseline information level is low for all candidates (Fernando, 2019).

This leads to erroneous conclusions, flawed logic, and inaccurate judgment (Sussman, 2017). None of these factors should be present in the selection and appointment of arbitrators, which is the crucial phase of the arbitration process (Giorgetti, 2013). This pattern of deciding in the absence of facts and data is detrimental to party autonomy as the parties settle for that which is somewhat known instead of getting what they actually need. The only way to remove the element of the unknown from the decision-making process is through increased transparency of the information on arbitrators and their previous approach to case management in previous arbitral proceedings (Hosking, 2018).

The lack of information on arbitrators was also recognized as a challenge in the Queen Mary-White & Case survey (2018), as the vast majority of the responders confirmed that they would like to have access to more information about the arbitrators’ case management style, proactiveness, as well as procedural flexibility and preferences. They also expressed interest in substantive matters, such as the arbitrator's reasoning on contractual issues as well as their handling of different issues on the merits of the dispute. To achieve more transparency and data availability, most survey responders expressed their willingness to submit feedback on the arbitrators following the conclusion of arbitral proceedings (QMUL-White and Case, 2018).

Therefore, although it is difficult to measure the extent to which the decision-making process of the parties in international arbitration can be affected by external factors, the increased availability of information on arbitrators in the appointment process may eliminate the uncertainty which has been holding parties back from appointing diverse candidates. The following section proposes some data-driven solutions which are already available to the arbitration community, that may bridge the information gap and increase the diversity on the market of international arbitrators.

Section 2—data analytics and transparency as clearing the path to diversity in international arbitration

As elaborated in the previous section, the international arbitration community has made significant strides in promoting and enhancing diversity in arbitral appointments. However, the lack of information about diverse arbitrators still presents a serious barrier to the accident of the desired level of diversity n international arbitration, even if the parties are provided with lists of diverse candidates.

This is not surprising given the fact that a list of diverse candidates is no more than that – a list of more or less familiar names which may or may not indicate the ethnic or national background of the arbitrators. Faced with such options, the parties and their counsel are likely to resort to familiar names whose reputation is known, and whose arbitral track record can be gleaned from consultations with colleagues who have previously appeared before the respective arbitrator. The recommendations provided through personal connections only infuse the considerations with additional subjective assessments and biases.

However, even such arguably flawed information is a luxury available to top law firms and is not extended to attorneys representing smaller firms. Under such circumstances, these attorneys are even more likely to appoint well-known arbitrators whose work can be researched through publicly available sources. The lack of transparency of arbitrator information and the information asymmetry between the parties has perpetuated the cycle of repeat appointments, despite the public statements about the need for diversity in international arbitration.

Some scholars have identified the asymmetry and deficiencies of the available information as the main obstacle to meaningful improvements in the diversity of arbitral appointments (Commission and Moloo, 2018). In recent years, several informational tools have emerged prompted by the calls for increased transparency and more diversity in arbitral appointments. With their various approaches and data sources, these tools have large potential to meet the needs of the arbitration community, and to elevate the level of diversity in international arbitration through their consistent use and continuous development.

Through consistent development and application, these information tools should democratize the arbitrator appointment process by ensuring equal access to information on arbitrators to parties with or without deep professional connections. These resources should supplement the information which is normally obtained through phone calls and internet searches. The added value of data-driven tools is their depth and objectivity, as opposed to the “solicitated feedback loop” which comes with personal recommendations (Greenwood, 2017). The section below outlines some of the existing data analytics tools and their various forms of application.

Data analytics tools as platforms for diverse arbitrators

The Puppies and Kittens survey is an early initiative aimed at gathering insights on arbitrators and making them available to the public. By completing and publishing the questionnaire, arbitrators were able to directly provide information about their approach to various aspects of arbitral proceedings, their procedural preferences and individual skills. The stated aim of these questionnaires is the improvement of the arbitrator appointment process, by making the responses collected from diverse arbitrators available to the broader public (Vidak-Gojković et al., 2015). The authors proposed some potential modalities of use of the information, including its inclusion in the arbitrator lists maintained by arbitral institutions or on the arbitrators’ websites, as a way of introducing themselves to potential appointing parties. Some arbitrators have indeed published their answers on their personal websites and profiles, with additional reflections and clarifications. Although it was a well-intended and useful project, it is highly reliant on the willingness of the arbitrators to provide and share such information. However, it is not suitable for the systematic collection and generation of data analytics on a larger number of arbitrators. In addition, responses provided by arbitrators themselves may not include all the relevant information appointing parties may be looking for when considering a particular arbitrator. When available, however, the responses to the Puppies and Kittens questionnaire can provide valuable insights into the arbitrators’ state of mind and soft skills.

The GAR Arbitration Research Tool (GAR ART) provides a search engine for the users, allowing them to research arbitrators by name, field of expertise, experience, and the language of the arbitration. Users can also access publicly available awards, arbitrator CVs, and other relevant links of interest to the parties. This database includes both prominent and less-known arbitrators. The users of this tool also have access to contact information of arbitration practitioners who have appeared before the specific arbitrator to inquire about the details about their case management style. GAR ART is beneficial for background research, as it provides details about the profile of the arbitrators and their previous engagements. The users are thus provided with valuable a baseline for their own analysis. However, GAR ART does not go deeper into an aggregated analysis of the case management or decision making of the arbitrators.

A similar tool with a regional focus was recently launched by the African Arbitration Association as a part of its African Arbitration Atlas (African Arbitration Association, 2021). The Directory of African International Arbitrators was established in order to create greater visibility for African arbitrators to parties in international arbitration. The Directory is free of charge for members of the African Arbitration Association and it is open to all international arbitrators of African nationality who submit their profiles. This database is an easily accessible and useful tool for parties and counsel considering arbitrating in Africa or appointing an African Arbitrator. This database also does not delve deeper into the analysis of the procedural track record of the arbitrators or their prior awards.

AI is a global data aggregator which creates information resources aimed at leveling the playing field for arbitration practitioners in the arbitrator appointment process. AI combines factual data about the arbitrators and their track record, as well as evaluative feedback from the parties who have appeared before the arbitrator in question.

Arbitrator Intelligence (2021) collects data through an anonymous online survey called the Arbitrator Intelligence Questionnaire or the AIQ. The AIQ is completed by the parties and counsel following the conclusion of the arbitral proceedings and it contains a set of factual and evaluative questions, none of which refer to confidential information. The questions cover to a range of procedural matters, including interim measures, challenges, document production, case management measures, the duration of the proceedings, costs, fees, and interest and the analysis of damages and interpretative methodologies applied in the award. The AIQ should not be completed by the members of the arbitral tribunal, the tribunal secretaries, or employees of arbitral institutions.

The data collected through the AIQ is analyzed and transformed into reports on particular arbitrators. These reports provide insights about the arbitrators’ prior case management, on an objective basis with some evaluative feedback provided in the adequate context. The information in the Reports is qualified by whether the AIQ Responder self-identified as the winning or losing party in the case. Therefore, the parties using the report can clearly discern whether the assessment of the arbitrator was colored by the personal dissatisfaction of the AIQ Responder with the outcome of the arbitration. The reports also provide comparative analysis benchmarked against global averages, allowing the assessment of the efficiency and effectiveness of the proceedings (Rogers et al., 2020).

The abovementioned information tools can transform the arbitrator appointment process and eliminate the uncertainty which has thus far kept the parties and their counsel from appointing less-known arbitrators from diverse backgrounds. Depending on the type of information the parties are interested in, they can either look into personal feedback from the arbitrators (if available), their professional track record and related resources, or analytics of their decision-making combined with party feedback.

The advantages and limitations of data analytic tools in pursuit of diversity in international arbitration

The availability and consistent use of these or similar data analytic tools could contribute over time to the democratization of the arbitrator appointment process and extend the pool of visible and available arbitrators. On the side of the appointing parties, access to information about arbitrators' track records will broaden the spectrum of arbitrators they can consider for a particular arbitration. Once the element of uncertainty and risk is removed from the equation, parties and their counsel will be able to make informed decisions and assess diverse candidates on a qualitative basis, regardless of their background (Greenwood, 2017). Arbitral institutions could also take advantage of the publicly available data analytic tools in the process of creating their rosters and lists, as well as in the situations when they are acting as the appointing authority (UNCITRAL, 2019). Thus, over time, the parties, institutions, and the arbitrators will be placed in an information equilibrium, which can open the door for more frequent diverse appointments.

Data analytic tools which provide insights into the case management, but also the interpretive methodologies and reasoning of the arbitrators are particularly valuable resources as most arbitrations remain confidential. Therefore, the number of people who see the arbitrators in action is very limited. Even if the awards are publicly available, it is still difficult to glean the role and performance of each arbitrator from looking at the hundreds of pages of factual and legal analysis, one at a time. Online, confidential data aggregators, such as the AIQ can help bridge this information gap by collecting and analyzing direct feedback from the parties and their counsel. Thus, the information on arbitrators could be made available to appointing parties without revealing the identity of the responder or any confidential information in the case.

The enhanced transparency and use of data analytics is also compatible with the broader diversity initiatives. For example, the stated goal of the ERA Pledge is the increase of the number of appointed women in international arbitration on the basis of equal opportunities for equal qualifications (ERA, 2020). The availability of robust resources on arbitrators and their decision making could support these efforts by offering sufficient information for the assessment of the qualifications of diverse arbitrators.

The degree to which data analytic tools can have a sustained and positive impact on inclusiveness and diversity in international arbitration will be determined by several factors. Primarily, the willingness of the parties to provide feedback on arbitrators will determine the scope of data analytics which can be made available to the interested parties. Despite the fact that the vast majority of arbitration practitioners have expressed their willingness to provide feedback on arbitrators after the conclusion of the proceedings there is still some reluctance due to the fear of violating confidentiality obligations or antagonizing the arbitrators (QMUL-White and Case, 2021). In order to alleviate these concerns, there will have to be a robust confidentiality and data protection framework established on the platforms seeking feedback on arbitrators (such as the anonymous, confidential Arbitrator Intelligence Questionnaire).

In order to unlock the full potential of data analytic tools as the drivers of diversity in arbitrator appointments, there will have to be a shift in the supply and demand side of arbitrator information. On the supply side, the parties and their counsel will have to consistently provide feedback on the arbitrators before whom they have appeared after the conclusion of the arbitration. Arbitrators can also indicate their openness to party feedback at the beginning or after the conclusion of the arbitral proceedings. At the same time, appointing parties and arbitral institutions should make consistent use of the available information in the arbitrator appointment process. As the volume of the data increases, the arbitrator market will become more competitive and diverse, providing visibility to any arbitrators who have received party feedback. Furthermore, the transparency of arbitral awards (whether in full or redacted form) should be enhanced to enable the systematic analysis that can contextualize the party feedback and enrich the body of available data that can be fed into the information ecosystem in the arbitration appointment process. Confidentiality concerns are still the primary factor standing in the way of the more robust publication of awards, even in redacted form. Thus, even some renowned arbitrators with hundreds of prior appointments only have a few dozen publicly available awards (at best). This will require a recalibration of disclosure methods that will enhance the flow of information without raising confidentiality issues.

Regardless of the immense potential of data analytics tools in spotlighting diverse arbitrators who already have one or more appointments under their belt, this does not address the issue of facilitating the entry of new candidates into the realm of arbitral practice. In order to step into the highly competitive and concentrated field of international arbitration, “fresh faces” will also need a platform and guidance until they are in a position to be considered for appointments.

The systematic use of these resources, and their expansion through feedback from the participants in arbitral proceedings could create a robust depository of information about arbitrators of all backgrounds and levels of experience. It is important to ensure that these tools and platforms do not turn into ranking mechanisms which could still create a preference for some arbitrators over others. This would ensure equal visibility to less-known arbitrators and help increase the likelihood of their appointment.

In addition, the information tools should be made available to all interested parties under equal terms, in order to ensure equal access to feedback on arbitrators to all interested parties and counsel. These resources can help correct the information asymmetry and democratize the access to the market of international arbitrators on the demand and supply side, by eliminating the excessive reliance on personal inquiries and recommendations (Rogers et al., 2020). A data-driven arbitrator appointment process would create opportunities for the entry of new candidates from diverse backgrounds. The increased availability of information on the track record of arbitrators may serve as a self-correcting mechanism for the performance and conduct of arbitrators, resulting in a race to the top among established and upcoming players in the market of arbitrators.

Instead of a conclusion: mapping the road ahead

The analysis of the state of diversity in international arbitration may leave the readers with mixed impressions. Some may be encouraged by the visible progress in the appointment of female arbitrators, while others may be disheartened by the lack of significant advances in geographical, ethnic, or racial diversity. There will also be those struck by the paradoxical, yet stubborn reluctance of parties and their counsel to appoint new and diverse arbitrators in their disputes. Others will point to arbitral institutions as best positioned to pursue and ensure the increased diversity in international arbitration, boasting their success to date. However, drawing such conclusions would bring us right back to the beginning of the discussion. Such a circular logic would once again overshadow the opportunities for concrete and actionable progress.

The studies and empirical data show that there is no lack of diversity in the legal profession or among arbitration practitioners. Courts, arbitration institutions, law firms, and universities are becoming more diverse every year, although there is room for the improvement of the status of women and minorities within those institutions (Rhodes and Buford Ricca, 2015). Disputing commercial parties are also becoming more diverse each year, with the rapid expansion of international trade and global value chains (World Bank Group, 2020). However, the road to the first arbitration appointment remains thorny for everybody but European and North American middle-aged men.

Over the past decade, there have been significant efforts and initiatives by professional associations, arbitral institutions, and law firms which have resulted in visible changes in the landscape of arbitral appointments, but even more in the attitudes towards diversity in international arbitration, or lack thereof. For what it is worth, most people are no longer comfortable just walking into a conference room which is apparently non-diverse (Rhodes and Buford Ricca, 2015).

As elaborated above, despite the advances in the attitude of the international arbitration community and the intensity of efforts towards increasing the diversity of arbitral tribunals, the statistics stubbornly show a lack of actual change on the ground. The ongoing debates about the stakeholders and institutions which are best placed to address the diversity issue in international arbitration have not yielded any solutions or strategies to resolve this issue. If the anecdotal and speculative theories are pushed aside, the information asymmetry and lack of visibility of diverse candidates remain the most consistent cause for the existing diversity gap.

Luckily, this issue can be and currently is being addressed through data-driven tools, which should help level the playing field and increase the visibility of less-known arbitrators. Once all the stakeholders in international arbitration are consistently making use of the available information tools, the parties and their counsel will be able to make informed decisions in the arbitrator appointment process, which should take the inherent biases and flawed reasoning out of the equation (Rogers, 2020). In addition to expanding the pool of diverse arbitrators, this will enable the parties to fully exercise their autonomy in the arbitrator selection process in the truest sense.

The path towards diversity and inclusiveness in international arbitration will require a concerted effort from the entire arbitration community, and it cannot be delegated solely to the arbitral institutions or the parties and their counsel. Armed with reliable and robust information on arbitrators, we can look forward to a future in which we will no longer be discussing diversity as an issue but an inherent feature of arbitral tribunals.