On Women’s Equality Day, Advancing Women & Diversity on Tribunals
(As featured in Daily Business Review – August 2022)
Don’t you know
Talking about a revolution?
It sounds like a whisper.[1]
Tracy Chapman’s lyrics embody the diversity revolution currently underway in the international arbitration community.
In 2015, the idea of the Equal Representation in Arbitration Pledge (the “Pledge”) started at a dinner party in London where guests sought to identify what could be done to address the lack of gender diversity in arbitral tribunals. Refusing to accept the status quo of only about 10% of appointed arbitrators being women, members of what became the global steering committee discussed and debated different approaches, culminating in the Pledge. Since its May 2016 launch, more than 5,000 individuals and organizations from over 112 countries have signed the Pledge.[1]
The Pledge requires signatory organizations to track and disclose the number of female appointed arbitrators. Prior to 2015, these gender appointment statistics were not readily available. Now, nearly all the major arbitral institutions publish annual diversity statistics, allowing the arbitration community to measure its progress toward the ultimate goal of full parity.
The numbers show steady progress with the number of women appointed arbitrators more than doubling since 2015. For example, in 2020, women comprised 23.4% of all sitting arbitrators in cases pending at the International Arbitration Court of the International Chamber of Commerce (“ICC”).[2] Similarly, the World Bank Group’s International Centre for Settlement of Investment Disputes (“ICSID”) saw the number of female appointed arbitrators reach 27% in 2020.[3] And, at the London Court of International Arbitration (“LCIA”), 32% of arbitrators appointed in 2020 were women.[4]
Yet, the goal of full parity remains unfulfilled. One obstacle is the mostly-male composition of the pool of arbitrators. In June 2021, the American Association for Justice reported that at the American Arbitration Association (“AAA”) and Judicial Arbitration and Mediation Services (“JAMS”) (two of the largest arbitration organizations in the U.S.) 77% of arbitrators on the rosters were male.[5]
Many people trace the gender gap to the generally poor retention of women lawyers in the legal profession. Although men and women attend law schools and become lawyers in equal numbers, the number of women drops dramatically among the more experienced and senior members of the profession. Fixing this retention issue is key to diversifying the gender of arbitrators in the global arena, particularly since many arbitrators are senior members of the legal profession.
The lack of diversity is not limited to gender. The American Association for Justice also reported that at AAA and JAMS, the rosters of arbitrators were 88% white. This lack of racial diversity among AAA’s roster was catapulted into the spotlight in 2017 when Shawn “Jay-Z” Carter filed a petition with the New York State Supreme Court seeking to stay his arbitration against Iconix Brand because the AAA failed to provide the parties with any qualified African-American arbitrator candidates. Jay-Z ultimately dismissed his complaint when the AAA later provided a second list inclusive of African-American candidates.
As with gender diversity, retention, along with recruitment, is key to encouraging racial and ethnic diversity. The AAA has assumed a multi-year undertaking to increase the diversity of its rosters by actively recruiting women and racially and ethnically diverse candidates who meet the criteria for the AAA and ICDR panels. And, many arbitral institutions have started tracking and publishing the regional origins and nationalities of arbitrators, which should help promote awareness and encourage the appointment of racially and ethnically diverse arbitrators. The international character of many arbitration proceedings creates a unique opportunity for ethnic diversification to better reflect the diversity of arbitration’s end users, which continues to grow every year as more countries embrace arbitration as a preferred form of dispute resolution.
After Jay-Z brought attention to the AAA’s lack of diversity, the institution deployed a new algorithm in its case-management system to increase the diversity in the lists of candidates that it provides to parties. This approach has led to the increased appointment of diverse arbitrators, with 32% of all appointed arbitrators in 2021 being considered diverse.[6] Indeed, when parties are given a list of diverse candidates to consider, they are more likely to select a diverse arbitrator.
Many arbitration institutions have further championed the diversity revolution by appointing women and ethnically diverse arbitrators. In 2020, the ICC appointed women in 37% of the cases where it was called upon to appoint the arbitrators instead of the parties. The LCIA appointed women in 47% of cases and ICSID appointed women in 30% of cases. Institutions in Germany, Vienna and Stockholm appointed women in 54%, 63% and 47% of cases, respectively.
The greatest barrier to gender and ethnic diversity in arbitrator appointments stems from party-appointments of arbitrators. In the LCIA, the percentage of women arbitrators selected by the parties decreased from 22% to 16% in 2020. In 2020, the same percentage of women was also appointed by parties in ICC arbitrations. In ICSID arbitrations, of the arbitrators jointly appointed by the parties, only 12% were women.
Because party appointments comprise the majority of arbitral appointments, the Pledge continues to make this a key priority. The Pledge’s subcommittees have promulgated initiatives such as the corporate guidelines that are designed to assist corporate parties to focus on diversity and to encourage their outside counsel to do so as well.
Nevertheless, parties have a propensity to appoint established arbitrators. This results in fewer diverse candidates being appointed due, in part, to the retention issues previously mentioned. The LCIA tracks and seeks to promote first-time appointments for arbitrators to combat this bias. Several databases and research tools have been developed to further address the lack of quality information about arbitrators to provide parties with more options when making their selections.
Other groups have heeded the call for greater diversity. The Racial Equality for Arbitration Lawyers (“REAL”) effort was launched in early 2021 with the goal of advancing racial equality and representation of unrepresented groups in the international arbitration community. Several networks like Arbitral Women, Alliance for Equality in Dispute Resolution, and other institutional networks and initiatives carry the banner for greater diversity.
Diversity among appointed arbitrators legitimizes the integrity and credibility of arbitration and improves perceptions of fairness and impartiality in the arbitral process. Simply put, parties have greater confidence in a decision rendered by a tribunal that reflects their personal gender, cultural, and ethnic characteristics. This was the crux of Jay-Z’s challenge to the non-diverse candidates he was first presented in 2017.
Studies have also shown that diversity among members of an arbitral panel results in better arbitral decisions.[7] Diverse groups are less susceptible to the cognitive biases resulting from homogeneity, including “groupthink” which results in poor decision making. Different views and perspectives make for better reasoned arbitral awards
Advances made in recent years are encouraging. Indeed, the ICC Arbitration Court’s first woman president took office last year and aims to further increase diversity among the ranks of arbitrators. While more than half of the respondents to the 2021 Queen Mary University of London International Arbitration Survey agree, less than a third of them believe that there has been progress in geographic, age, cultural and ethnic diversity. Arbitrators, arbitration practitioners and arbitration parties themselves must follow the lead of arbitral institutions to turn the tide. Challenging the biases and approaches that discourage diversity and embracing practices that promote it will elevate the revolution from a whisper to a roar and effectuate true, lasting change.
[1] Tracy Chapman, Talkin’ Bout a Revolution, 1988.
[3] International Chamber of Commerce, ICC Dispute Resolution 2020 Statistics.
[4] International Centre for Settlement of Investment Disputes, World Bank Group, The ICSID Caseload Statistics Issue 2022-1
[5] London Court of International Arbitration, LCIA 2021 Annual Casework Report.
[6] Where White Men Rule: How the Secretive System of Forced Arbitration Hurst Women and Minorities, June 2021, American Association for Justice, The Association for Trial Lawyers, Research Reports.
[7] American Arbitration Association, Diversity and Inclusion Statistics, Appointment Diversity.
[8] Is Increasing Gender and Ethnic Diversity in Arbitral Tribunals a Valid Concern and Should Arbitral Institutions Play a Greater Role in Ensuring Diversity? Dr. Ula Cartwright-Finch, Cortex Capital, August 2019.