Hired Guns

TLDR: Experience and research tend to support the idea that biased co-arbitrators lead to better awards.

Wise cracks

As a child, I thought that piranhas, quicksand, and the Bermuda Triangle would give me loads of trouble in life. Experience has put those fears to rest, somewhat disappointingly I admit. Anyways, as a young arbitration practitioner, I thought that biased co-arbitrators would be an issue as I advanced in my career. Here too, experience has, so far, proved me wrong. I wanted to know why, so here we are in this month’s issue of Ultra Petita.

At the risk of betraying my (young!) age, there was a time when the topic of biased co-arbitrators would come up regularly during lectures and conferences for interns and juniors. I remember vivid war stories of unscrupulous parties in faraway lands putting “hired guns” on tribunals, to delay or disrupt the course of justice. Upon hearing these stories, experienced arbitrators would sort of listen politely nodding their heads (after all, they were experienced arbitrators), say a few words about how terrible that was before admitting that – in their experience – biased co-arbitrators, though tiresome to deal with, often led the tribunal to render a better award.

Let’s check out whether the research backs up the wisdom of experience. Spoiler alert, it mostly does.

The wisdom of crowds

In 2002, a group of well-known researchers conducted an experiment about the effects of confirmation bias in the context of group decisions.[1] The interesting aspect of this study was the method, which has similarities to arbitration.

The researchers asked participants to play the role of a board member of a company that was considering moving some of its operations offshore. They gave the participants information about the two possible locations for the new site and asked them to form their own individual view on which location was best. After collecting these individual views, the researchers assembled participants in groups of three, tasking the group to make the final decision on the location of the new plant. By design, some groups were homogeneous, in that the three members of the group shared the same preliminary view. Other groups were heterogeneous, as one member held a different preliminary view from the other two.

The researchers then looked at how the groups made their decisions and sought out additional information about the case. The homogeneous groups obviously confirmed the common choice that each member held as a preliminary view. The catch was, however, that these groups generally sought out less information and mostly asked for data that confirmed their view, passing over other information that could have undermined their preferred choice. The heterogeneous groups looked for more information and more balanced data, both for and against the preliminary view held by the majority. In other words, the homogeneous groups only tried to confirm their decisions, while the heterogeneous groups investigated matters further and in a more balanced way. ?

The researchers concluded that dissent within a group leads to a more balanced search for additional information on which to base the decision. They went further, comparing genuine dissent to artificial dissent. They labelled the heterogeneous groups “genuine dissent” because one member genuinely held a dissenting view. They stimulated “artificial dissent” by requiring some homogeneous groups to adopt a “devil’s advocate” approach, instructing the group to consider the issue from the perspective that their preferred option was incorrect.

The researchers concluded that genuine dissent eliminated confirmation bias. Artificial dissent, however, only reduced confirmation bias. All this to say that having a member of the group that genuinely disagreed with the majority held view led to better decisions. This confirms what experienced arbitrators told me a decade or so ago.

Three is a crowd

Given the foregoing, in the unlikely event that you were planning a career as a biased party-appointed arbitrator, you may wish to reconsider. But – and there does seem to be a but – there is a school of thought that says that dissent within the group should remain mild. When dissent turns into conflict, the outcome of the group decision process is affected negatively. There are two hypotheses to explain this. The first is based on the concept of information processing. It posits that a little conflict within the group stimulates information processing, which results in better group performance. However, intense conflict decreases people’s ability to think, meaning that information processing decreases and performance may suffer. The alternate hypothesis starts with a differentiation between “task conflict” and “relationship conflict” within the group. To oversimplify, task conflict leads to better group decisions, while relationship conflict leads to worse group decisions.

Now, you don’t often hear of intense conflict within an arbitral tribunal. I’m not even sure what that would look like: would people raise their voices? Send each other emails in capital letters? Would there be exclamation marks and emojis? I dunno, seems a bit over the top, especially in today’s virtual world. You can yell all you want on Teams; I’m just going to decrease the volume until it looks like you’re miming a tantrum. It is therefore unlikely that intra-tribunal conflict reaches an intensity capable of impacting the quality of the arbitrators' information processing abilities..

On the other hand, relationship conflict is very much a thing in the field. Oh boy, the blood feuds you hear about… I mean, they even put “enmity” as an orange conflict of interest in the IBA Guidelines. So yeah, it’s out there. And since you don’t have complete control over who you sit with as arbitrators, at some stage you are bound to end up on a tribunal with someone you dislike. If that dislike descends into conflict, the second hypothesis predicts a worse decision.

The jury seems to be in favour of the information processing hypothesis.[2] A little bit of conflict or dissent is good, but intense conflict is bad for the decision-making process. If you still wish to have a career as a hired gun, disrupter of justice, then go all in and become a bloodthirsty gunslinger – definitely not career advice!

Takeaways

This piece shows the perils of an arbitral gunslinger’s life. When you’re at the top of your game, dissenting with the majority - albeit reasonably, since you're a pro - you contribute the most to rendering a quality decision. It’s a fun paradox, how your expertise as a hired gun … wait for it … BACKFIRES!

Jokes aside, the main takeaway of this issue is: don’t put all your eggs in a hired gun’s basket. If you opted for a hired gun strategy, your case probably wasn’t rock solid to start with. It will likely get worse. The gunslinger’s very genuine dissent (if she’s good) or artificial dissent (if she’s still learning the trade) will probably lead the arbitrators to render a better decision. Both experience and research tend to support this conclusion.

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Footnotes

[1] S. Schulz-Hardt, M. Jochims & D. Frey, “Productive con?ict in group decision making: Genuine and contrived dissent as strategies to counteract biased information seeking”, Organizational Behavior and Human Decision Processes, 2002, 88, 563–58.

[2] C. K. W. De Dreu & L. R. Weingart, “Task Versus Relationship Conflict, Team Performance, and Team Member Satisfaction: A Meta-Analysis”, Journal of Applied Psychology 2003, Vol. 88, No. 4, 741–749.