International arbitration, a form of alternative dispute resolution that, with the agreement of the parties, avoids judiciary courts and devolves the settlement of a case to an arbitrator (or an arbitral tribunal), is easily considered the most glamorous field of law. “Arbitration centers are all based in the capitols of the world where 007 films are set, and the facts of many international arbitrations would make great plots for a James Bond film,” once wrote Catherine Rogers, the scholar of international arbitration and professional ethics who has recently brought Bocconi to the center of the arbitration stage with a conference on international investment arbitration that has no precedent in Italy.

Professor Rogers herself started to study professional ethics in arbitration after a sequence of events which would fit in a John Grisham book. “In 1994, straight out of law school in San Francisco,” she tells, “I was hired as a litigator in a New York firm. A couple of days before starting, they called me and proposed a change: instead of litigation in New York, why don’t you do international arbitration in Hong Kong? Well, I struggled to understand the meaning of ‘international arbitration’. At that time, it wasn’t even taught at law schools.”

Since arbitration figures and procedures are, for the best part, confidential, it has eluded academic interest for a long time and, even now, it’s easy to underplay its relevance. In 2021, anyway, the value of the pending arbitration claims at the top 30 law firms was estimated to exceed $2tln. The subfield of international investment arbitration regards foreign investors who claim that a state violated their guaranteed international investment protections. The cases are less numerous than those of commercial arbitration (involving companies, usually from different countries) but their value much larger, easily in the hundreds of millionsor even the billions of dollars.

Once in Hong Kong, Rogers had first-hand experience of how international arbitration works but ended up leaving over unethical conduct of the partner for whom she worked. Back in California, she continued to practice in another firm and started to study the ethical implications of arbitration. “When I published my first book on ethics in arbitration, I almost dedicated it to this partner who, in the meantime, had been arrested and convicted for tax evasion and obstruction of justice.”

Lawyers in different countries are subject to different codes of conduct, soethical issues can arise. “In the US,” explainsProfessor Rogers, “lawyers prepare witnesses, they rehearse the testimony, but this can be criminal misconduct in Italy and in the better part of Europe. What happens when an American and an Italian lawyer are involved in the same arbitration? We’ve had non-binding, international guidelines only since 2014, and a lot of work is still to be done.”

As it concerns sovereign states, the topic of international investment arbitration, discussed at the Bocconi conference, can be politically fraught and polarized. Arbitrators’ interpretations of the vague language used in investment treaties is considered too friendly to states by some practitioners and scholars, and too friendly to investors by others. Furthermore, some states and supernational organizations, like the European Union, tend to consider arbitration a diminution of their sovereignty and try to limit its reach. On the other hand, arbitration defenders argue, subjugating your sovereignty in order to attract foreign direct investment is itself a sovereign act.

International arbitration is also very expensive. Investors have been estimated to spend, on average, $6.4mln to challenge a State, and can thus think twice and thrice, if they are not certain of winning. In the last decade or so, new operators called third-party funders have emerged. They pay the fees in exchange for a hefty share of the award (often in the ballpark of 40%), only in case the funded party wins. This kind of arrangement, though, risks stokeing litigation, while various potential conflicts of interest may arise. Prof. Rogers co-chaired the ICCA-Queen Mary task Force on Third Party Funding in International Arbitration, that reported on the topic in 2018, “but many issues are still unresolved,” she says.

Finally, there is the so-called double-hatting issue discussed at the conference. The term refers to lawyers that act both as counsel on behalf of a party in some arbitration cases, and as arbitrators in others. Some allege that the temptation, as arbitrators, to make judgements that could be cited in favor of their clients in cases they advise for can’t be ruled out. “The problem can’t be easily eliminated,” Prof. Rogers explains, “because currently the only way you have to become an arbitrator is to stand out as a counsel in arbitration cases. It’s not a full-time job.” To keep the door to becoming an arbitrator open for newer and more diverse arbitrators, some forms of double-hatting seem likely to remain.