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Diversity in international arbitration, Practical Law UK Articles w-019-5028

Diversity in international arbitration


by Gemma Anderson, Richard Jerman and Sampaguita Tarrant, Morrison & Foerster

Articles | Law stated as at 01-Mar-2020 | International

This article examines the challenges facing international arbitration tribunals in increasing diversity among
arbitrators and explores some of the initiatives which are being set up to address this issue.

This article is part of the global guide to arbitration. For a full list of jurisdictional Q&As visit
global.practicallaw.com/arbitration-guide.

The case for diversity


As society becomes increasingly global and disruptive forces drive continuous innovation in how we do business and
communicate, the need for those in senior roles to reflect the diversity of the communities they represent is readily apparent.
The case for diversity is arguably even more acute in the context of international arbitration, given the increasing geographic
and sector diversity of parties and the everbroadening scope of disputes referred to arbitral tribunals for resolution across the
globe.

Paradoxically, the community of international arbitrators has historically been, and largely remains, relatively homogenous
and difficult to break into. As a result, the pool of regularly appointed arbitrators is both shallow and small. It is increasingly
clear that this pool no longer reflects the real and aspirational diversity of the global community of arbitration users. For the
same reason that businesses strive for diversity to reflect their customer base, arbitrators should ideally reflect the growing
diversity of consumers of their services.

This article considers the perceived hurdles to increasing the diversity of international arbitrators, examines to what extent the
international arbitration community has met the challenge of diversity in recent years, and considers what more can be done
and by whom to meet this continued challenge. Although the focus is primarily on gender diversity, which has received the
most attention in recent years, it is acknowledged that gender is only one aspect of a much broader diversity issue, and that
other aspects of diversity warrant increased focus.

Perceived hurdles
Where does responsibility for the lack of diversity in arbitral tribunals lie? There are two broad schools of thought. The first
is that it is a supply-side issue, in that the pool of potential female and diverse is not sufficiently large. The second is that it is
a demand-side issue, attributable to the arbitrator appointment process and those responsible for nominating arbitrators.

Supply-side factors
Pipeline. Arbitrators tend to be retired judges or senior practising barristers or solicitors. Some therefore put the lack of
diversity among arbitrators down to the fact that women and diverse practitioners have historically been and remain
underrepresented in both groups. There is no question that this is a factor. Women, for example, remain far less likely than
men to reach the high ranks of the legal profession. However, the statistics suggest that this does not represent the whole
story. For example, data collected by the Solicitors Regulation Authority in 2017 found that women make up 48% of all
lawyers in law firms, being 59% of non-partner solicitors and 33% of partners. By contrast, the proportion of female
arbitrators appointed to arbitrations before the leading international arbitral institutions currently hovers around 20%.
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Repeat appointments. A related issue, and a particular challenge to diversity in international arbitration, is the predominance
of repeat appointments of arbitrators. The evidence suggests that repeat players are favoured. For example, in 2018, just 13%
of arbitrator appointments in London Court of Arbitration (LCIA) cases were of candidates not previously appointed in
arbitrations administered by the LCIA, a decrease from 17% in 2017. The Hong Kong International Arbitration Centre
(HKIAC) made an only slightly greater proportion of first-time appointments, with 14.4% of arbitrators appointed by the
HKIAC and 30.4% and 29.2% of arbitrators designated by the parties and co-arbitrators respectively in 2018 not having
previously been appointed or designated in HKIAC cases over the prior three years.

Again, the percentage of overall first-time appointments decreased from 2017, with designations made by the HKIAC and the
co-arbitrators decreasing [##from- author do you mean “from” or “to”? thanks] 33% and 38.5% respectively. The prevalence
of repeat instructions serves to further reduce and concentrate the group of experienced arbitrators. It also has the potential to
artificially inflate the perceived level of progress being made in increasing the number of female arbitrators (if the same few
female arbitrators are being appointed time and again). Whether attributable to parties’ natural conservatism in selecting
arbitrators, unconscious bias, or a lack of a network of mentors and sponsors for women arbitrators, this creates a barrier to
entry to new players.

Lack of visibility and information about diverse candidates. The confidential nature of arbitration means that there is a lack of
available valuable information from which to identify and assess potential arbitrators, including how they can conduct the
proceedings or decide a particular issue. The lack of quality, objective information about arbitrators means that decisions
about the selection of arbitrators are often made on intuition or habit, contrary to the global trend towards data-driven
decision making.

Parties and their lawyers generally have to rely on institutional lists, legal directories, internet searches, or recommendations
from within their networks to find potential candidates. This means that, although there is no longer a shortage of quality
female and diverse candidates, such candidates are often not visible to those who might instruct them. Chambers & Partners’
list of the “Most In Demand Arbitrators – Global-wide”
(https://chambers.com/guide/global?publicationTypeId=2&practiceAreaId=1245&subsectionTypeId=1&locationId=15649
) for international arbitration, for example, contains just three women of a list of 30 for Band 1 and one women of a list of 14
for Band 2.

Similarly, screening and intelligence-gathering of candidates generally takes place by way of wordof-mouth enquiries of
those who have appeared before or sat alongside a potential arbitrator. This ad hoc individual research is necessarily limited
in scope (to a few individuals) and access (to those with an extensive network in the international arbitration community). It
also contributes to the low visibility of diverse candidates, who are often less established in the international arbitration
sphere.

Demand-side factors
Appointment process. Party autonomy, including the parties’ relatively unfettered right to nominate arbitrators of their
choice, is a pillar of arbitration. The flipside of this is that the appointment process is opaque, and therefore both susceptible
to biases and stereotypes and not conducive to intervention. Some responsibility for increasing the diversity of arbitrators
must therefore inevitably lie with those tasked with nominating arbitrators, including arbitral institutions, parties/in-house
counsel, external lawyers, and co-arbitrators.

Appointing parties. These are the:

• Arbitral institutions. Arbitral institutions wield significant influence in relation to arbitrator appointments. They are
often called upon to select tribunal members or, more often, the presiding arbitrator, and parties frequently refer to
institutional lists of recommended arbitrators from which to make their own nominations. Arbitral institutions also tend
to hold more information on potential arbitrators than other likely appointers.

• However, the institutions can only do so much. The evidence shows that the majority of arbitrator appointments are not
made by arbitral institutions, particularly in the case of institutions (such as the German Arbitration Institute (DIS)) in

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which the presiding arbitrator is appointed by the co-arbitrators rather than by the institution (such as the International
Chamber of Commerce (ICC)). The ICC, for example, appoints arbitrators in around a quarter of cases. In contrast, the
LCIA has reported that, in 2018, 37% of selections of arbitrators were made by the LCIA Court, which is no doubt in
part attributable to the fact that, under the LCIA Rules, the default position is that the LCIA selects the members of the
tribunal unless the parties have agreed otherwise.

• Parties/in-house counsel. Parties are responsible for a large proportion of arbitrator appointments in most institutions
(in 2018, for example, 48% of Vienna International Arbitral Centre (VIAC) cases, 57% of ICC cases, and 46% of
LCIA cases). The responsibility to ensure greater diversity among arbitrators therefore also rests squarely with the
parties (and the lawyers who advise them). In-house counsel are increasingly paying attention to the diversity of their
external providers, including lawyers, and using data to monitor the diversity of their chosen law firms against
corporate targets. It is appropriate that this practice should be extended to the full external legal team (including
counsel and party-nominated arbitrators). Parties can wield significant influence and can and should demand that a
diverse range of qualified candidates are put forward to them for consideration.

• External lawyers. Parties and in-house counsel generally rely on their external lawyers to at least put together a shortlist
of arbitrator candidates. External lawyers therefore play a crucial and little-scrutinised filtering role in arbitrator
appointments. External lawyers and counsel may often be tempted to take a “safe” option by recommending arbitrators
that they have used before (perpetuating the problem of repeat appointments) and/or mirroring the type of candidate
they expect the other side to nominate (with what they perceive to be a candidate of equivalent gravitas). External
lawyers should examine their shortlists closely to evaluate how representative they are and consider whether there are
other equallyqualified candidates who ought to be put forward to the client for consideration.

• Co-arbitrators. As in any profession, there is also an onus on those at the “top” to bring others up behind them.
Co-arbitrators are often responsible for jointly selecting the presiding arbitrator, a role in which women and diverse
candidates are consistently underrepresented. Although their role in influencing the diversity of tribunals is often
understated, coarbitrators therefore have a direct and powerful opportunity to introduce variety into the tribunal and
give opportunities to a wider range of arbitrators to take on the presiding role.

Initiatives to redress the imbalance


Gender has undoubtedly received the most focus in the discourse on increasing diversity in international arbitration. A
number of initiatives to effect change and achieve greater gender equality in arbitral tribunals have developed in recent years.
However, there is, of course, much more to diversity than gender and consideration should be given as to whether these or
similar initiatives could be extended to other aspects of diversity, including ethnicity and age.

Equal Representation in Arbitration (ERA) Pledge


The best-known recent initiative aimed at promoting diversity in the arbitration field is the ERA Pledge, which was drawn up
by members of the global arbitration community in 2015 in response to the under-representation of women on international
arbitral tribunals. The ERA Pledge has two general objectives:

• To improve the profile and representation of women in arbitration.

• To appoint women as arbitrators on an equal opportunity basis.

The ERA Pledge does not contain any specific quotas or targets. Instead, signatories undertake to take the steps reasonably
available to them to ensure wherever possible that (among other things):

• Lists of potential arbitrators or tribunal chairs provided to or considered by parties, counsel, in-house counsel or
otherwise include a fair representation of female candidates.

• Where they have the power to do so, counsel, arbitrators, representatives of corporates, states and arbitral institutions
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appoint a fair representation of female arbitrators.

• Gender statistics for appointments (split by party and other appointment) are collated and made publicly available.

• Senior and experienced arbitration practitioners support, mentor/sponsor and encourage women to pursue arbitrator
appointments and otherwise enhance their profiles and practice.

Other participants in the arbitral process are also encouraged to take the above steps.

The ERA Pledge now has almost 4,000 signatories (3,983 signatories at 16 January 2020, see
http://www.arbitrationpledge.com/) made up of lawyers, arbitrators, and other professionals and a variety of organisations,
including most of the leading international arbitral institutions. This suggests that it is raising awareness regarding the issue
of gender diversity, which is the first step to addressing the current imbalance. It has also given rise to increased transparency
as arbitral institutions have responded to the call to publish gender statistics on arbitral appointments (see below).

Professional networks
Several networks have been established to champion diversity in international arbitration, some focused specifically on
gender and others with a wider remit:

• ArbitralWomen. ArbitralWomen is a global network of women active in international dispute resolution, which was
established in 1993 and has grown to nearly a thousand members from over 40 countries. Its objective is to advance the
interests of women in promoting and improving the visibility of female practitioners in international dispute resolution.

• Alliance for Equality in Dispute Resolution (Alliance). The Alliance is a not-for-profit organisation with the broader
remit of advocating increased diversity and inclusivity in all aspects of dispute resolution and equality of opportunity
regardless of location, nationality, ethnicity, sexual orientation, gender or age. The Alliance has two main focuses, to
provide a forum for discussion and debate about issues topical to the global dispute resolution community and to
achieve change through educating and training practitioners on the problems associated with unconscious bias and the
benefits of greater equality and diversity.

• Institutional networks and initiatives. Some arbitral institutions have also established specialist initiatives aimed at
promoting the development, and increasing the visibility, of diverse practitioners. The ICC, for example, has sought to
promote younger practitioners through the development of the Young Arbitrators Forum (YAF), which is open to those
aged 40 and under and provides a variety of opportunities for individuals to network, gain knowledge and develop their
skills, and the Advanced Arbitration Academy programme, which provides dedicated professional training specifically
for arbitrators in various regions. In 2019, the HKIAC launched its Women In Arbitration (WIA) initiative, which is
committed to the promotion and success of female practitioners in international arbitration and related practice areas in
China.

• Arbitrator databases and research tools. There are a number of databases and other research tools that have been
developed to address the lack of quality information about arbitrators, some of which are particularly focused on
diverse candidates. The use of these tools gives parties and lawyers the potential to broaden and improve the scope of
their search for quality arbitrators:

• Global Arbitration Review’s Arbitrator Research Tool (ART). ART is a unique research platform that aims to make
arbitrator selection more straightforward, objective and cost-effective through identifying arbitration practitioners
and providing information, including CVs and procedural preferences, about arbitrators;

• Arbitrator Intelligence. This seeks to bring data-driven analysis to arbitrator appointments via its Arbitrator
Intelligence Questionnaire (AIQ). The AIQ aims to provide collective intelligence from the global international
arbitration community through the systematic collection of feedback on arbitrators from parties, in-house counsel
and external lawyers. (In this respect, it differs from ART, which collates this information from arbitrators
themselves.) Once sufficient information has been collected, reports will be prepared. The success of this tool
will inevitably depend on arbitration users embracing it and providing the necessary feedback. Arbitrator

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Intelligence is seeking to enter into collaboration agreements with arbitral institutions requiring them to forward
the AIQ to the parties and their lawyers at the conclusion of arbitrations;

• ArbitralWomen database. ArbitralWomen offers the only female-focused search tool, which enables arbitration
users to find recommended female dispute resolution practitioners, including arbitrators;

• ERA Search Committee. This group also offers assistance in searching for female practitioners, which can be
accessed via an online form on the ERA’s website. The committee aims to provide proposals for female arbitrator
candidates who are less well known, but who are considered to have relevant experience, thereby increasing
visibility of these candidates.

• Increased transparency from institutions. Institutions have also responded to the call for transparency in the arbitrator
appointment process. In addition to the widespread publication of statistics relating to arbitrator appointments
(discussed below), several institutions have taken steps to publish details of arbitrators.

• In January 2016, the ICC adopted new rules aimed at promoting transparency and efficiency by publishing on its
website the names, nationalities and status of arbitrators in ICC cases and whether the appointment was made by the
ICC Court or the parties. The VIAC has similarly committed to publish the names of arbitrators acting in in VIAC
cases, and in 2019 confirmed that it had formed its first all-female tribunal, as visible from its published list. Arbitrator
Intelligence has also announced plans to publish international arbitral awards collected by it, with the intention of
making it easier for parties and counsel to do better research about arbitrator decision-making and thus improve the
predictability of arbitrator selection.

What progress has been made?

Gender
In some cases, as a direct result of the ERA Pledge, most major international arbitral institutions now routinely publish
statistics on appointments of female arbitrators. The intention is that increased reporting and transparency in relation to
female arbitrator appointments will bring with it accountability and be an effective driver of change.

The figures that are available for 2017 and 2018 make clear that there is a positive story to tell, but that room for further
improvement remains, and that all stakeholders need to be engaged to effect real and lasting change:

• Numbers of female arbitrators. The percentage of female arbitrators as a total of all arbitrator appointments by the
leading international arbitral institutions, including the ICC, American Arbitration Association (AAA), LCIA,
Singapore International Arbitration Centre (SIAC), HKIAC, VIAC, Stockholm Chamber of Commerce (SCC) and
International Centre for Dispute Resolution (ICDR), ranges from 14% (HKIAC) to 27% (SCC) and averages around
20%.

• There has been an increase in the appointment of female arbitrators for those institutions for which 2017 figures are
available, ranging from 1.7% (ICC) to 9% (SCC). Based on available 2015, 2016 and 2017 figures, this appears to be a
continuation of an upward trend. For example, the percentage of women arbitrators confirmed or appointed in ICC
cases rose from 10.4% in 2015 to 14.8% in 2016 to 16.7% in 2017 and 18% in 2018 and in ICDR cases from 10% in
2015 to 15% in 2016 to 22% in 2017 and 27% in 2018. Although, it should be noted that the level of female arbitrators
in LCIA arbitrations fell by 1% in 2018. The overall figures are therefore promising but confirm that there is room for
further growth in the numbers of female arbitrators.

• Who appoints female arbitrators? Although not all arbitral institutions provide information on the breakdown of how
appointments of female arbitrators are made, certain trends can nonetheless be identified from the information
available:

• Arbitral institutions. Arbitral institutions continue to lead the charge in terms of appointments of female arbitrators.
In 2018, the LCIA Court, which has long been a proponent of the advancement of women in international
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arbitration, appointed female arbitrators 43% (up 9% from 2017) of the time (at more than double the rate of
appointments by parties or co-arbitrators), and was responsible for 71% of all female arbitrator appointments.
Similarly, 93% of female arbitrators appointed in arbitrations administered by the VIAC were made by the Board.
The ICC appointed 41% of the 18.4% female arbitrators in ICC cases in 2018, despite only being responsible for
around 25 to 30% of total appointments. The increase in the appointments of women by institutions should in
time have a knock-on effect on party appointments, due to the prevalence of repeat appointments and increased
visibility of these candidates.

• The progress of the arbitral institutions on gender diversity is also reflected in the levels of female members in
institutional management, which is similarly expected to drive further appointments of female arbitrators. A
striking example is the ICC International Court of Arbitration, which as of 1 July 2018 comprises 50% women.
In addition, the new Board of Directors for the 2020–2022 term of the VIAC comprises one-third female
directors.

• Parties. There are also some signs of improvement in the number of female candidates selected by parties. This was
most evident in ICC cases, where in 2018 42% of the female arbitrator appointments were made by the parties
(although the majority of appointments in ICC cases are made by the parties). In addition, in 2017 in LCIA cases,
parties selected female candidates 17% of the time, representing a fourfold increase from 4% in 2016; although in
2018 this percentage fell to 13%.

• Co-arbitrators. The statistics suggest that co-arbitrators generally appoint the lowest proportion of female arbitrators.
In Milan Chamber of Arbitration cases, all the 47 chairs appointed by co-arbitrators from 2015 to 2017 were men.
Similarly, in HKIAC cases in 2018, only 8.3% of arbitrators appointed by co-arbitrators were women. Notably,
of the nine arbitrators appointed by co-arbitrators in SCC cases, five were female arbitrators (56%), which shows
a significant improvement from 2017 where no female arbitrators were appointed by co-arbitrators.

Nationality/geographic diversity
In terms of other aspects of diversity of arbitrator appointments, the most readily (and in most cases only) available
institutional statistics relate to the nationality or geographic origins of arbitrators. It is clear from the figures that the
geographical make-up of arbitral tribunals does not reflect the increasing geographic diversity of parties and international
arbitration practitioners.

The ICC’s 2018 statistics, for example, suggest that although the ICC appointed and confirmed arbitrators of 87 different
nationalities (two more than in 2017 and 12 more than in 2016), Western European candidates remain prominent (with 40.8%
of all arbitrators in ICC cases originating from Europe). Similarly, 210 of the 223 appointments in SCC cases were from
Europe. In terms of nationality, in 2018, the LCIA Court selected non-British arbitrators 57% of the time, compared to the
parties and co-arbitrators, who selected non-British arbitrators 20% and 27% of the time respectively. In 2018 HKIAC
appointments, 50.4% of arbitrators were permanent residents of Hong Kong and 77.6% Hong-Kong based, albeit within that
the arbitrators’ countries of origin were more diverse, with the majority of arbitrators being from the UK, Hong Kong and
Canada (29.6%, 20% and 5.6% respectively).

The recently constituted ICC Court for the 2018 to 2021 term has unprecedented regional diversity, with 13% of its members
originating from Africa, 26% from Asia, 39% from Europe, 4% from North America, 15% from Latin America and 3% from
Oceania. Yet, the ICC has acknowledged that the corresponding figures for tribunal members are unsatisfactory and has
committed to double its efforts towards greater regional diversity (in addition to gender equality) of its tribunals in the current
term. The ICC Court also launched an Africa Commission aimed at coordinating the court’s growth on the continent and
enhance its efforts to broaden the pool of African arbitrators.

In addition, the African Promise (Promise), which was modelled on the ERA, was launched in September 2019. The initiative
aims to promote diversity and inclusivity in international arbitration by:

• Improving the profile and representation of African arbitrators.

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• Increasing the appointments of African arbitrators, especially where disputes have an African connection.

The Promise now has nearly 300 signatories (277 signatories at 16 January 2020, see
https://researcharbitrationafrica.com/the-african-promise/) made up of lawyers, arbitrators, professors and other
professionals. The signatories promise to take steps to ensure that (among other things) committees, conference panels, lists
of potential arbitrators or tribunal chairs include a fair representation of African candidates. Further, the promise includes
arbitral institutions collating and making publicly available statistics for nominations and appointments (broken down by
party and other appointment) of African arbitrators, especially in arbitrations connected with Africa. The founders
emphasised the importance of having evidence and monitoring in place to identify where the issues are in order to improve
the international arbitration system.

Age
There is generally a dearth of available statistics on the age of arbitrators appointed to institutional arbitral tribunals. The
figures published for the ICC for 2018 show that the average age of arbitrators confirmed or appointed was 56, with 35%
below 50. Those arbitrators appointed by the ICC Court (directly or following a proposal by a National Committee) were, as
in previous years, on average, five years younger than those appointed by the parties or co-arbitrators. This, together with
initiatives such as the YAF and Advanced Arbitration Academy, and the “generational renewal” of the ICC’s new Court
(with 55% of its members being below 50 and 15% below 40) reflects the ICC’s ongoing commitment to the promotion and
development of younger practitioners. Other arbitral institutions could look to follow the ICC’s example in making available
statistics about the age of arbitrators and actively seeking to advance younger practitioners.

What more can be done and by whom?


The challenge of increasing the diversity of arbitral tribunals is a collective one for the international arbitration community
and that all stakeholders need to exercise their influence to effect meaningful and lasting change. Some suggestions as to how
this can be done include:

• Broadening the dialogue around diversity. Although the recent statistics on the gender diversity of arbitral tribunals are
encouraging, gender is only one small piece of the puzzle. There is no doubt that gender diversity has benefited from
the emphasis placed on it in recent years, which suggests that the same could and should be done for diversity across
the board. In particular, the ERA Pledge could be extended, or comparable initiatives (such as the Promise) could be
developed, to move the conversation on diversity beyond gender to include the promotion of other under-represented
groups.

• Increasing the visibility of diverse candidates. To achieve fair representation of women and diverse arbitrators,
increasing their visibility is key. One of the most effective ways to redress the current imbalance in arbitral tribunals is
no doubt to get commitment from the various stakeholders (particularly external lawyers and parties) to expand and
diversify their shortlists of candidates for appointments. Once diverse candidates are included on these lists and get
appointed, experience suggests that enhanced visibility and further appointments will follow. Those charged with
nominating and appointing arbitrators should use the expanding tools and resources available to them to broaden the
pool of candidates they consider, and challenge lists created by and presented to them that do not include a fair
representation of diverse nominees.

• Building on increased transparency through standardised reporting. Arbitral institutions have risen to the challenge laid
down by the ERA Pledge and continue to make good progress in increasing reporting on the gender balance of arbitral
tribunals. However, gender statistics are still not universally available, and those that are available are not easily
comparable across institutions. Arbitral institutions could be encouraged to standardise their reporting on gender, and
other aspects of diversity, with, for example, homogenous data points and a fixed annual reporting date. This would
permit more effective comparisons between arbitral institutions and tracking of progress on diversity across the
international arbitral community as a whole. It would also allow corporates, who are becoming increasingly astute
about monitoring diversity, to make active choices at the contracting stage to select arbitral institutions with good track
records on diversity.

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Diversity in international arbitration, Practical Law UK Articles w-019-5028

• Encouraging stakeholders to develop internal processes that focus on diversity. As set out above, progress in increasing
the diversity of arbitral tribunals will be driven by those responsible for appointing arbitrators (arbitral institutions,
parties, external lawyers and co-arbitrators). These organisations should be encouraged to examine their internal
decision-making processes for appointing arbitrators and ensure that they systematically consider diversity as part of
that process. Training on unconscious bias is now routine across many organisations. It is also common for law firms
and other organisations to have dedicated staff whose job is to scrutinise internal processes and policies from a
diversity perspective. This analysis could be extended to the appointment of external providers such as arbitrators.
Similarly, arbitral institutions, many of whom have stated their commitment to increasing diversity, should ensure that
their processes for confirming and appointing arbitrators have appropriate internal controls focused on diversity.

Contributor profiles

Gemma Anderson
T +44 (0)207 920 4063
E ganderson@mofo.com
W www.mofo.com/people/gemma-anderson

Professional qualifications. Bar admissions: England & Wales; New Zealand

Areas of practice. Litigation/commercial litigation; dispute resolution; arbitration

Richard Jerman
T +44 (0)207 920 4166
E rjerman@mofo.com
W www.mofo.com/people/richard-jerman

Professional qualifications. Bar admission: England & Wales

Areas of practice. Litigation/commercial litigation; dispute resolution; arbitration

Sampaguita Tarrant
T +44 (0)207 920 4053
E starrant@mofo.com
W www.mofo.com/people/sampaguita-tarrant

Professional qualifications. Bar admission: England & Wales

Areas of practice. Litigation/commercial litigation; dispute resolution; arbitration.

END OF DOCUMENT

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