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“Are the ethical rules common to DRB/DAB and mediation?”. Marc Frilet. Managing -Partner « FRILET-société d’Avocats » 91, rue du Faubourg St Honoré 75008 PARIS avocats@frilet.com. From moral values to business ethic (1).

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    1. “Are the ethical rules common to DRB/DAB and mediation?” Marc Frilet Managing-Partner « FRILET-société d’Avocats » 91, rue du Faubourg St Honoré 75008 PARIS avocats@frilet.com

    2. From moral values to business ethic (1) • In the French or civil law tradition, the concept of ethical rules is not easy to define when it comes to business matters. • In this culture, ethic is generally perceived as the addition of moral values implemented on an individual basis: “ Personal research of wisdom in actions ignoring special interests” • As such, family or business interests cannot compromise ethic. This highly philosophical definition based on universal values contrasts somewhat with the common law approach. • In the common law world, ethic appears to be less a moral value per se, than the development of such a value throughout a process where special interests can be taken into account.

    3. From moral values to business ethic (2) • There is more and more convergence between the civil law ethical approach somewhat theoretical and individualistic and the common law ethical approach much more practical. • Ethic and special business interests are no more perceived as a contradiction but reconcile progressively under the common law influence through some key concepts such as «corporate governance ». • This progress remains slow and critics are often heard on some aspects of corporate governance too much oriented towards the special interest of one group (i.e. the shareholders). • In business matters, there is a clear interest to promote ”ethic of responsibility,” as defined inter alia by Max Weber based on the possible consequences of decisions or actions. • This is particularly true for the promotion of ethic in DRB, DAB and mediation which should be oriented toward the special interest of the parties. In a nutshell, when underlying situations are different, the ethical rules may differ.

    4. The sources of business ethic: The example of the legal profession • There are numerous sources proposing core moral values and regulating them in various business situations. Each sector has a preferred list of values, more or less, developed at different levels of instruments from guidelines and soft laws up to regulations sanctioned in various manners. A well known example for public infrastructure or mining lawyer is the socio - environmental ethical standards in any project development. • Professional ethics also play a critical role. In relation to conciliation, mediation, DRB and DAB. It is useful to address the situation of the legal and related professions. • For lawyers, in civil law countries, codes of professional integrity (Code de déontologie) identify moral values which are further developed into rules and procedures sometimes sanctioned by criminal penalties. • We understand that this is also the case for legal professions in most jurisdictions in the world, where the legal profession’s integrity in relation to various behaviors are defined. Some ethical standards are expressed in a positive manner. Others in negative manner.

    5. Some positive and negative standards of ethic in legal professions: Example France • Main positive standards in the code of ethics of legal profession includes in France: • Dignity , - Loyalty, - Conscientiousness, • Probity, - Independence, - Humanity, • Honor , - Unselfishness, - Fraternity, • Delicacy, - Courtesy, - Moderation. • In relation to the client services, the main positive standards are as follows: - Competence - Diligence, - Devotion, - Prudence • The main negative standards includes: - Dishonesty, - Fraud, - Deceit, - Misrepresentation, etc.

    6. How the sources of professional ethic impact to the ethical rules for DRB/DAB and mediation ? • Example - Lawyer appointed as a mediator or as a Board member. Can he be relaxed from ethical professional standards ? If yes, which ones? • There is no straight answer in all cases, the general trend is that when compulsory professional ethic conflicts with other ethical rules (such as efficiency and cost) the lawyer is not bound by the same standards of behavior, as the ones imposed to him when he represents a client. • One of rationale is that the lawyer is not appointed to represent a party but for its capacity to be neutral. • In addition, there is no reason for having different ethical standards for individuals belonging to different professions. • On this basis, one can assume that profession ethical rules cannot apply in a same manner to any conciliation, mediation or adjudication whether carried out individually, or through a Board.

    7. Calibrating the ethical standards to the different types of conciliation, mediation and Boards (1) • This is an on going debate, especially, in our experience of the civil law world where the word “ethic” has a narrow definition. • There is a clear trend against customizing ethical parameters, since it is often perceived as compromising ethic. • In order to progress, it is useful to address first the underlying objectives and purposes of conciliation, mediation, DRB and DB’s and then, their possible consequences on particular ethical standards.

    8. Calibrating the ethical standards to the different types of conciliation, mediation and Boards (2) • I. CONCILIATION (or Facilitative mediation) Conciliation is often characterized as “indirect negotiation” between the parties with the assistance of an active third party. • Outline of key expectations : - Independence, impartiality, neutrality (reference: various authoritative rules, practices and procedures DRBF, FIDIC, ICC, World Bank, etc.), - Authority, - Business efficiency: speedy, result oriented, low costs

    9. Calibrating the ethical standards to the different types of conciliation, mediation and Boards (3) • Consequences on ethic : - Higher standards: Reinforced confidentiality and non disclosure obligations, Confidence building, Good faith, etc. - Lower standards: Due process of “contradictoire” can be compromised, A certain amount of posturing for facilitating a settlement negotiation is acceptable.

    10. Calibrating the ethical standards to the different types of conciliation, mediation and boards (4) • II. EVALUATIVE MEDIATION leading to recommendation including Dispute Review Boards The role of the mediator or of the Board is not simply to facilitate the settlement by the parties themselves but to express an opinion on the merits of the dispute. • Outline of key expectations : • Many of them on the status of mediator or board member are similar to conciliation: Independence, impartiality, neutrality, authority, • Capacity: the skills of the appointed members should include long term commitments, experiences in the field, ability to draw convincing conclusions from incomplete data or references, etc. • Effective functions are substantially different from arbitration due to much lower level of risks for the parties (recommendation), much cheaper and speedy.

    11. Calibrating the ethical standards to the different types of conciliation, mediation and boards (5) • Consequences on ethic: - Higher standards: in the choice of the board member in the organization of the process in the behavior regarding costs and timing issues in the control of the process in disqualification ? in liability ? - Lower standards: Due process and “contradictoire” can be compromised within limits

    12. Calibrating the ethical standards to the different types of conciliation, mediation and boards (6) • III. EVALUATIVE MEDIATION leading to binding decision including Dispute Adjudication Board A lot of debates have taken place on the organization, proceedings and the consequences of binding decisions. It is generally recognized that the “binding decision” is not enforceable like an arbitration decision but essentiality as a reinforced contractual obligation. It remains that it is generally perceived by the business community as a decision of a lower court.

    13. Calibrating the ethical standards to the different types of conciliation, mediation and boards (7) • Outline of key expectations: Many of them similar to mediation - Higher standards : • Quality and choice of the adjudicator are very similar to arbitration (less facilitation, more experience in arbitration, work site practice, claims, procedural contractual and legal matters) • Higher standards in term of due process to be complied with: particular focus on hearings, evidence, exchange of document, testimony, expert opinion, etc. - Lower standards: - Business efficiency, - Costs, - Timing

    14. Conclusion Although nothing is more difficult to define than ethical rules, judged during the conciliation, mediation, or Dispute Boards process and satisfactory to the parties in dispute, it can be concluded that: • Some underlying ethical rules more particularly related to qualification of the individuals are common for mediation, conciliation, DRB and DAB. • Several ethical principles must be implemented in different manner and with different priorities. If this conclusion makes some sense, the future of conciliation, mediation and Dispute Boards due to their different objectives and functions, will also depend of additional guidance and rules on some important ethical standards.