Report calls for changes to arbitration appointments to avoid bias

The report, Usual Suspects: Decisions-Making in Arbitration Selection (42-page/ 7.88MB PDF), calls for a revaluation of the decision-making process regarding arbitration selection as well as providing an in-depth examination of the way in which these processes are carried out to remove the risk of unconscious human bias.

Carried out by Cortex Capital, the report examined the decision-making process around the way in which parties select arbitrators for appointments, analysing the impact of bias as well as the types of bias causing potential issues in current practices. 

The report suggests several ways to improve decision-making processes around arbitration selection, recommending ways in which to these procedural changes should be made. The recommendations include: capturing the process in writing and publicising best practice within the organisation; regular reminders about any diversity commitments; systematising the evaluation process by recording the arbitrator specification for each case and comparing candidates meaningfully against the relevant criteria; diversifying the network of contacts who are approached for recommendations and intelligence; looking at external sources during the initial candidate search; conducting checks on initial lists and final shortlists to test for any missing candidates; and recording the due-diligence and decision-making process in writing.

The common biases in this context include stereotyping, recency bias –a cognitive bias that favour recent appointments over historic ones - affinity bias – a tendency to favour those who share similar characteristics, interests, or backgrounds - as well the ‘halo’ and ‘horns’ effects that may lead to the quick perception of a person based on a single trait as opposed to qualifications and skills. The findings highlight the importance of awareness of a range of potential biases when appointing an arbitrator.

Re-evaluating decision-making methods may allow for a clearer and more relevant decision-making process. The issue requires more discussion, according to disputes expert Anna Wren of Pinsent Masons. “Parties naturally seek the best person to settle their conflicts. But our unconscious bias as humans and lawyers can impact the way we search for an arbitrator and shrink the range of candidates that we consider. Ultimately, this jeopardizes finding the right person for your dispute,” she said.

“Lawyers need to re-evaluate their selection methods. And parties should be questioning their legal team on this - to make sure they are not unconsciously excluding the ideal candidate.

“We should also be actively monitoring for diversity to ensure the pool of experienced candidates continues to grow”, Wren, who along with Pinsent Masons are signatories to the Equal Representation in Arbitration Pledge.

Commenting on the findings, research author Doctor Ulla Cartwright-Finch said: “I hope this report takes decision-making in arbitrator selection one big leap forward and that thoughtful discussion of this important topic continues.”

The project deliberately focused on Hong Kong but gathered data from across the globe. Initial findings suggested that practices are materially similar worldwide, with human decision-making universally impacted by common cognitive bias. This was found to particularly impact those decisions related to the appointment of an arbitrator.