Originally from Investment Treaty Arbitration and International Law - Volume 14

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“I’m not a businessman. I’m a business, man.”

Jay-Z, Diamonds from Sierra Leone (Remix) 

I. INTRODUCTION

In 2015, Professor Philippe Sands observed that “we … need to address the deplorable practice of the same individual sitting as arbitrator in one case and acting as counsel in another, giving rise to situations in which you might find yourself deliberating with your fellow arbitrators in the knowledge that one or more of them is actually litigating the very point that you are seeking to write an award on. That is unacceptable”.  Senator Elizabeth Warren also questioned the feasibility of this practice, noting that “highly paid corporate lawyers would go back and forth between representing corporations one day and sitting in judgment the next … If you’re a lawyer looking to maintain or attract high-paying corporate clients, how likely are you to rule against those corporations when it’s your turn in the judge’s seat?”. 

This practice of individuals acting sequentially, and even simultaneously, as arbitrator/judge, expert and legal counsel in investment treaty disputes is known as “double-hatting”.  Double-hatting has attracted significant criticism on the basis that it raises issues of perceived or actual conflict of interest.  Accordingly, a number of commentators and practitioners have recommended that the practice be prohibited, meaning that it should be forbidden as opposed to regulated. 

However, is double-hatting problematic in all instances? In other words, does all double-hatting necessarily result in a conflict of interest? If not, is it feasible to regulate double-hatting in a manner that eliminates the risk of a conflict of interest arising instead of banning it outright?

This paper argues that the mere fact that an arbitrator also acts as counsel or expert in other investment treaty proceedings does not, in and of itself, establish a conflict of interest.