Originally from The Dark Side of Arbitration

I. The Players Most Conspicuous by Their Absence from the Arbitration Proceedings

The parties’ in-house lawyers are too often conspicuous by their absence from international arbitral proceedings. This element, in and of itself, permits their inclusion within the dark areas of arbitration.

In speaking of the parties’ in-house counsel, some clarification is needed, as they can have very different legal functions within a corporation.

In this discussion I refer exclusively to general counsel who head sophisticated, modern legal departments, report directly to the CEO, control the choice of outside counsel, remain in exclusive contact with them, and are an integral part of the company’s management. This general counsel is a business partner of the CEO and, in the company’s organizational chart, is at the same level as those in other key corporate functions: finance and treasury, human resources, sales and marketing, production, planning, and so on. General counsel in such companies, through the internal legal department he or she heads, is responsible for handling, either directly or via outside counsel, all the legal issues confronting the company. 

This model of an in-house legal department is more or less standard in U.S. companies,  but not in continental Europe, where the internal legal function, with remarkable exceptions, is often hidden under other corporate functions (finance, human resources, marketing) and where its role is relegated to that of simpler matters of a routine nature such as debt collecting and performing ordinary corporate duties including drafting calls for meetings of corporate bodies and minutes thereof, powers of attorney, and so on. When more important issues arise, management resorts directly to outside lawyers, circumventing the internal lawyers. I am not referring to this type of in-house counsel – I should say law clerks – in the discussion which follows.