Research Law

How to Interpret American Precedents on Arbitration

, by Andrea Costa
Catherine Rogers is one of four scholars behind the first ever synthesis of basic principles on this subject, and the author of a defining paper on what it really means for an arbitrator to be impartial

Despite a somewhat unassuming name, a Restatement of the Law is a fundamental building block of American jurisprudence. The United States, having inherited from England a legal system based on common law, does not have anything like the "Codes" typical of civil law countries (like Italy, France and Germany, among many others), which judges must apply when they rule.

In common law systems, under a doctrine called stare decisis, courts must abide by past decisions of other courts in similar situations and are thus bound by precedent. However, this concept of jurisprudence may, in practice, result in conflicting rulings as judges can and do have different interpretations of the same precedent. In order to overcome these inconsistencies, the American Law Institute (ALI) has issued since 1923 a series of Restatements of the Law which establish indisputable, basic principles (called "blackletter law") on a given subject and have become the standard reference for American courts.

The American Law Institute has recently published the new Restatement of the US Law of International Commercial and Investor-State Arbitration, a ground-breaking work by Catherine Rogers of Bocconi's Department of Legal Studies, George A. Bermann of the Columbia University School of Law, Jack J. Coe, Jr., of the Pepperdine University Caruso School of Law and Christopher R. Drahozal of the University of Kansas School of Law.

Unlike civil-law Codes, which have the full force of laws, Restatements are not primary, official sources of law. Once completed, however, Restatements are treated as secondary sources of law. In many fields, Restatements have had significant impact or even reshaped legal fields. They are compiled by scholars, not lawmakers. But they are often cited by US courts, which means that when adopted as the rule of decision by one court, they become effectively binding on subsequent courts as a result of stare decisis.

This Restatement of the US Law of International Commercial and Investor-State Arbitration is the first ever compiled on this subject. Catherine Rogers and the other three reporters worked on it for 15 years. It provides comprehensive guidance on legal issues arising in the American law of international commercial arbitration, and since American courts are very often required to rule on disputes involving parties from other countries, its importance goes far beyond the United States.

"It was an epic task to complete a comprehensive analysis of all US caselaw and then reduce the caselaw's major principles to blackletter propositions, and then it took 8 votes by the entire ALI Membership to get the draft approved. A Restatement only becomes a Restatement once it has been approved by a vote of the entire ALI Membership" explains Catherine Rogers, who adds: "I am American, but I am a Bocconi professor, and Bocconi is a university based in a European country with an entirely different legal framework. This achievement is very important for the university as a sign that its law department is truly international and engages both common law and civil law systems."

Catherine Rogers is also the author of Reconceptualizing the Party-Appointed Arbitrator and the Meaning of Impartiality, a recent paper published in the Harvard International Law Journal, in which the very essence of the arbitrator is under scrutiny. Arbitration, as a way of settling disputes, heavily relies on the arbitrators' ability to produce a fair judgement. Quite often, though, the parties themselves select the arbitrators or some of them. Critics observe that this should not be allowed as it introduces a form of bias in the process.

Professor Rogers thinks this is disingenuous: "The key inquiry is not whether bias exists, but rather subtler questions. Which forms of bias are legitimate? Who decides which forms of bias are legitimate? And how do we police the boundary between legitimate and illegitimate forms of bias?" The paper reverses the critique arguing that since bias cannot be completely dispensed with, we must take measures so that it has as little impact as possible on the arbitration.

Impartiality, Rogers argues, is not a binary concept but a multi-faceted one: "Take a university professor who is both a mother of five children and a member of the university's hiring committee. She is required to be impartial both as among her children and as among the individual job candidates. The nature of the impartiality demanded in each situation, however, is quite different."

Based on similar logic, Rogers argues that in a tri-partite panel, party-appointed arbitrators can be understood as having impartiality obligations that are not identical to those of the chair arbitrator. The nature of their impartiality obligations take shape as we understand their role as a structural check against various forms of cognitive bias, including Groupthink, which can affect all arbitrators on all on arbitral tribunals. Arbitrators' cognitive biases cannot be eliminated. They can, however, be bounded and counterbalanced by considering party-appointed arbitrators as a type of Devil's Advocate who systematically challenge the other parties' positions.