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Interview with Dr Alice Fremuth-Wolf: Moving ahead on international dispute resolution

2018 | roadmap

Arbitration is a process designed to support the swift and effective resolution of disputes between commercial parties in a private forum. Schoenherr partner Anne-Karin Grill sat down with the Secretary General of the Vienna International Arbitral Centre (VIAC), Dr Alice Fremuth-Wolf, to discuss her institution's policies and to get her outlook on the future of international dispute resolution.

Q: Confidentiality and transparency are two key aspects of arbitration that are often mentioned in the same breath. Is this a contradiction?

A: There is a natural and intrinsic tension between transparency and confidentiality, but I would not go so far as to call it a contradiction. 

One of the main features of commercial arbitration has always been its confidential nature. This allows parties to have their disputes settled in a private arena, which is perfectly fine.

To me, transparency is of utmost importance to prevent arbitration from being stigmatised as "jurisdiction behind closed doors", where decisions are being rendered that impact the fate not only of the parties but of a large group of people or even nations. This is especially so in investment arbitration cases. But major steps have already been taken in this respect (UNCITRAL Transparency Rules 2014). 

This is not necessarily the case in commercial arbitration between two private parties, however, unless perhaps public legal entities are involved. There is no subordinate public need that their private disputes be publicly debated or commented. There should not be a spill-over effect from investment arbitration to commercial arbitration in these cases. If we move one step further to other forms of ADR, such as mediation, no one has ever doubted that the confidentiality of the process is critically important. In fact, it is an indispensable element for the parties to open up and find creative solutions without prejudice.
 
Arbitral awards are only published if there is an agreement between the parties to that end. Sometimes they are published in anonymised form. Do you consider this a "lack of transparency" and therefore as a problem for arbitration?
As I already mentioned, this is another area of tension between transparency and confidentiality. In my opinion, the publication of awards in anonymised form tries to strike this balance, as it allows the public to be informed about the outcome of a dispute providing a summary of legally relevant and interesting details to a greater audience, while cutting out confidential data and information that is superfluous. 

According to Art 41 of our Rules of Arbitration, anonymised summaries or extracts of awards may be published in legal journals or the VIAC's own publication, unless a party has objected to the publication within 30 days upon service of the award. When the VIAC for the first time published its "Selected Arbitral Awards, Vol 1" in 2015, we prepared abstracts for each case part of this publication. As a matter of courtesy, we sought permission from the parties beforehand and were prepared to amend the drafts in accordance with the parties when they felt that the information disclosed could infringe their rights or lead to the parties being identified. With this admittedly cumbersome procedure, we ensured that interested parties felt safe while at the same time satisfying the appetite of practitioners to get insights into decided cases and their reasoning.

Your institution, the Vienna International Arbitral Centre (VIAC), has recently implemented some amendments. What are they about?

Our last big rules revision was in 2013, when we introduced several important new features, such as expedited proceedings, third-party joinder, consolidation and others. 

In 2016, we revised our conciliation rules and created brand-new state-of-the-art Mediation Rules that enable us to administer ADR proceedings as well as ArbMedArb proceedings, which is a unique feature (only the SIMC and SIAC offer a similar system).

The new (still draft) 2018 Rules of Arbitration and Mediation will foresee the following new provisions without changing the content of the 2013 and 2016 rules:

  • administration of purely domestic cases when parties have so agreed;
  • security for costs provision;
  • rules for tribunal secretaries;
  • more flexibility in cost decision of arbitral tribunals in that also the behaviour of parties and their counsel may be taken into account;
  • more flexibility of the Secretary General when deciding on the fees for arbitrators in that behaviour will be taken into account (up to 50% premium in complex cases and/or when arbitration was conducted efficiently, as well as deduction of up to 40% in case of severe delays or any other behaviour of an arbitrator that would justify such reduction).

Can you name any concrete measures that the VIAC is taking in the interest of increasing transparency?
As of 1 September 2017, the VIAC has decided to publish the names of arbitrators acting in current proceedings. With this new initiative, the VIAC is making international arbitration easier to understand following the call for more transparency in the appointment process of institutional arbitration. The list will be updated regularly and provides information on the appointment method, ie if the arbitrator has been appointed by the board of the VIAC or nominated by the parties / coarbitrators, and the date when the case file was handed over to the respective arbitrator. It also shows if the case is still pending or if an arbitrator's office was prematurely terminated without stating the reasons. 

We see this as an important step to show that diversity is already present and applied on an institutional level in the selection of arbitrators as regards gender, age and nationality. We hope this also serves as a benchmark for parties when they choose their arbitrator, where there is still room for improvement. The fact is that diverse tribunals work better and arrive at more balanced and better solutions.

Where do you see the greatest challenges for commercial arbitration in the future?
I think the biggest challenge is that arbitration runs the risk of suffering the same fate as litigation and thus be replaced by other means of ADR, such as mediation. In our quest to monitor, control and develop, we have reached a point where the once flexible instrument of arbitration has become over-regulated by rules, guidelines, notes and codes of conduct.

Some critics argue that arbitration stifles the development of state court jurisprudence, since some areas of law are effectively monopolised by arbitration. What is your position?
I think that there is a reason why parties have turned their backs on state court litigation and resorted to arbitration in some areas (eg m&a). One may be the selection of the arbitrators, which ensures that specialised persons deal with the disputes instead of state court judges, to whom cases were assigned randomly. Another may be the confidential nature of the proceedings.

In civil law countries, the law should not be made by judges, but by the parliament. But even if there is no binding case law, Supreme Court judgments still serve as an important guide, as they are publicly available. Of course, this argument alone should not suffice to criticise arbitration, as this development is not its fault. Solutions should be found for the underlying need, ie the availability of decisions in certain areas.

I am convinced that the publication of abstracts of awards in certain areas where parties have shied away from state court litigation would help to ensure the availability of sufficient case law in certain areas, even if non-binding.

The VIAC is the leading arbitration institution in Central and Eastern Europe. Why should the users of dispute resolution services choose the VIAC?
This is easy to answer: Because we have been active in this market for more than 40 years and have perfect knowledge of the players, parties, potential arbitrators and their specific needs and expectations. Our experience in this region is unmatched. We are often seen (and actually are) a common denominator and neutral ground for East-West disputes in the broadest sense, also encompassing disputes between parties from Asia and Europe.  

Thank you for the interview.