C'est une publication parue sur Direct Lille d'un article que j'ai écrit pour le Barreau de Lille en date du 5 janvier 2012 .

Yesterday I mentioned that I heard Schwab sued FINRA in federal court for declaratory relief regarding the validity of its class action waiver in the arbitration clause of its customer agreement. Schwab claims that the FAA and the Supreme Court’s decisions in AT&T Mobility and CompuCredit trump FINRA’s rules. You can download the complaint, filed [...]

Mining watchdog quiet on cause of lone open file
iPolitics.ca (subscription)
But critics in Canada say the office's methodology for tackling conflicts — known as alternative dispute resolution, or ADR — is flawed because it favours mining companies. “The people who have been harmed have to go up to the mines and ask if they ...

and more »

Mining watchdog quiet on cause of only review in 23 months
iPolitics.ca (subscription)
But critics in Canada say the office's methodology for tackling conflicts — known as alternative dispute resolution, or ADR — is flawed because it favours mining companies. “The people who have been harmed have to go up to the mines and ask if they ...

by Stephan Balthasar

Just a few weeks ago, an arbitral award made headlines in the German press: “Advisors in Märklin deal to pay multi-million euro fine”, “Märklin: advisors to pay damages”, “Märklin fallout: Former owner awarded $18.7 million in judgment against consultant”, to name but a few examples. According to the newspapers, the US-based consulting firm AlixPartners was declared liable for damages for giving wrongful advice to the financial investor Kingsbridge Capital Advisors with regard to the takeover of the German model railroad manufacturer Märklin in 2006. It is said that an arbitral tribunal awarded €14m in damages to Kingsbridge because of irregularities in the due diligence for which AlixPartners was responsible at the time.

The decision comes as a surprise in the market – not least because consulting firms ordinarily limit liability to cases of gross negligence or wilful misconduct. However, the case will not only have implications for the consulting industry. The unusual publicity it has gained raises questions concerning the conduct of arbitral proceedings generally, namely, what confidentiality obligations there are for the parties to an arbitration. The topic has repeatedly been debated in this blog (see, for example, Ileana Smeureanu’s post on the situation in the Philippines) and in the arbitration community generally. Confidentiality is, in fact, said to be one of the most important advantages of arbitration as a dispute resolution mechanism.

Practical experience such as the Märklin case shows, however, that confidentiality in arbitration is not guaranteed. Notwithstanding the long debate, numerous court decisions and legislative activity, there is still no generally accepted answer to the controversial question of whether an agreement to arbitrate implies an obligation to treat the proceedings and the attendant information as confidential. In England, there is a long line of case law according to which the confidentiality of arbitral proceedings is an implied obligation of the parties to an arbitration agreement (for a recent decision see Emmott v. Michael Wilson & Partners Ltd. [2008] EWCA Civ. 184 at [81] per Collins LJ). A similar position has been adopted by legislators elsewhere (see, for example, section 18(1) of the recent Hong Kong Arbitration Ordinance 2011 which expressly forbids the parties to disclose information relating to the arbitral proceedings).

However, senior English judges have expressed doubts as to the merits of this “confidentiality by default” rule (Associated Electric and Gas Insurance Services Ltd v. European Reinsurance Co of Zurich, [2003] UKPC 11 at [20] per Lord Hobhouse), and the English approach has, in fact, met with little sympathy elsewhere. In other jurisdictions such as Australia, Sweden and the U.S., the courts have refused to recognise an “implied confidentiality obligation”. In France, some court decisions have held that there was such an obligation (Aïta v. Ojjeh, [1986] Revue de l’Arbitrage 583; Bleustein v. Société True North et Société FCB International, [2003] Revue de l’Arbitrage 189). However, the new arbitration law of 2011 now provides specifically that in international arbitration, a duty to treat information confidentially cannot be implied from an arbitration agreement (there is an implied confidentiality for domestic arbitration under art. 1464(4) of the Nouveau Code de Procédure Civile, but under art. 1506, this does not apply in international arbitration). When the ICC prepared the edition of its new 2012 Arbitration Rules, it was decided not to include a general duty of confidentiality. Under the new rules, an arbitral tribunal may make orders to enforce confidentiality obligations (art. 22(3) ICC Rules 2012), but the legal basis for such obligations must be found elsewhere, for example, in an express agreement between the parties.

Several arguments have been put forward in favour of an implied duty of confidentiality: Allegedly, confidentiality is part of the legitimate expectations of the parties to an arbitration agreement. Moreover, it is said that the private conduct of arbitral proceedings would become meaningless if the parties were at liberty to communicate freely about the arbitration. It is also feared that, without a duty of confidentiality, parties may face what is described as “trial by press release” instead of the neutral and objective dispute resolution mechanism that arbitration is expected to provide.

The latest legislative reform in France shows, however, that these arguments are far from compelling. There is little evidence that parties to an arbitration agreement actually expect that this agreement implies a confidentiality obligation. At any rate, against the background of widely diverging approaches of statutory law and case law, it is doubtful whether such expectations are legitimate. In fact, recent research from Queen Mary University suggests that for many users, confidentiality may not be that important after all (2010 International Arbitration Survey: Choices in International Arbitration, p.30). To imply a duty of confidentiality may also conflict with the principle of party autonomy, because it leads to confidentiality by default even where the parties never considered the issue at the time when the arbitration agreement was concluded. Where parties actually wish to secure confidential treatment of the proceedings, they are free to make an express agreement to that effect, and it is universally accepted that courts and arbitral tribunals will enforce such an agreement (subject to few exceptions such as legal provisions requiring the parties to make information public or requiring the public conduct of court proceedings in support of arbitration). In such circumstances, there is no need to imply an obligation of confidentiality.

A specific feature of the Märklin case suggests that there may be another argument against an implied confidentiality obligation: in fact, AlixPartners announced that it will apply to have the partial award set aside. Most recent figures suggest that about 20% of arbitral awards are not being complied with voluntarily and have to be executed. This figure is unsatisfactorily high and shows that in many instances, arbitration fails to provide a resolution of the dispute that is accepted by all parties. One way to improve this situation is to increase the degree of transparency in arbitration. Such transparency may have positive effects on the quality of arbitral awards: it would, in fact, create an additional incentive for arbitrators to conduct the proceedings in a way that stands the test of public debate, and to make persuasive and diligent decisions. In that respect, the recent legislative reform in France has much to commend itself.

At any rate, the debate on confidentiality is far from being settled. The latest trend in case law and legislation is, however, not to imply a duty of confidentiality in an agreement to arbitrate. Against that background, potential litigants will have to determine well in advance what needs they have with regard to confidentiality, and to include appropriate and express agreements in the arbitration clause, or at least in the terms of reference set up at the beginning of the arbitral proceedings. Without express agreements of that sort, confidentiality is certainly not a feature which parties should rely on when choosing arbitration as a dispute resolution mechanism.

More from our authors: Challenge and Disqualification of Arbitrators in International Arbitration
by Karel Daele
€ 160
The 33rd America's Cup Judicial and Arbitral Decisions
by Henry Peter, Hamish Ross, Graham McKenzie
€ 125
Yearbook Commercial Arbitration. Volume XXXVI. 2011
by Albert Jan van den Berg
€ 255


• Leave a comment on Kingsbridge Capital Advisors v. AlixPartners: What Confidentiality in Arbitration?

There appears to be some life left in the “vindication of statutory rights” argument following Concepcion and Stolt-Nielsen after all! The Second Circuit, in In re: American Express Merchants’ Litigation, 06-1871 (2d Cir. 2012), held that a class action waiver in an arbitration agreement can be ruled unconscionable if the plaintiff (here, a merchant) can [...]

The Second U.S. Circuit Court of Appeals won’t budge.  It won't be surprising if its new class arbitration decision winds up before the U.S. Supreme Court.  The case already has been there. And the latest decision is the Second Circuit's third in the matter.  On Wednesday, it held that a waiver of class proceedings in an arbitration provision that American Express Co. uses in its agreements with merchants who accept the company’s credit cards is unenforceable. In re: American Express Merchants’ Litigation, Docket No. 06-1871-cv (Feb. 1, 2012). The Second Circuit had struck the class arbitration waiver before the Supreme Court held that commercial parties can’t be forced into class arbitration unless they have agreed to the process, in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010).   The nation’s top Court accepted Amex, and then remanded it to the appellate court in the wake of Stolt-Nielsen.  The Second Circuit still upheld its decision, but withheld its order so Amex could petition again. Before a decision could be made, the Supreme Court issued AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), which held that the Federal Arbitration Act preempted California law barring the enforcement of class action waivers in consumer contracts. The parties re-briefed, and yesterday the Second Circuit said that AT&T Mobility doesn’t affect Amex either.  “[AT&T Mobility] does not alter our analysis,” notes the opinion, written Circuit Judge Rosemary S. Pooler, “and we again reverse the district court’s decision and remand for further proceedings.” In fact, the only thing that has changed on the Second Circuit in Amex is the court’s composition.  Original panel member Sonia Sotomayor was elevated to the Supreme Court in 2009; Pooler is joined in the two-judge opinion by Circuit Judge Robert D. Sack. The new decision likely will be the subject of a cert petition.  Sotomayor, who joined with Pooler and Sack in the original decision--at 554 F.3d 300 (2009)--almost certainly would have to recuse herself if the Court agreed to take the case.   The current decision finds that the use of a class action waiver in a mandatory arbitration clause is unconscionable where a party can show that it effectively bars the exercise of its statutory rights. The opinion holds that the cost evidence produced--that the case could not pursued by individual plaintiffs--satisfies the requirements of Green Tree Financial Corp.-Alabama v Randolph, 531 U.S. 79 (2000).  As a result, the merchants would have no recourse in their claims against Amex for card agreements they say are too restrictive, and fees that they claim are too high. Green Tree Financial places the burden of proof on the party seeking to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive. Since 1999, Amex’s Card Acceptance Agreement has contained a mandatory arbitration clause that widely covers all claims, and prohibits parties from pursuing anything other than individual claims where arbitration has been initiated. In 2006, a New York federal district court recognized the arbitrability of a dispute between Amex and Italian Colors Restaurant, granting Amex’s motion to compel arbitration.  See In re American Express Merchants Litig., No. 03cv9592, 2006 WL 662341 (S.D.N.Y. March 16, 2006) The plaintiffs appealed, and the appellate panel found in its original decision that they met their Green Tree Financial burden of showing that their claims could not be reasonably pursued as individual actions.  The Second Circuit panel found, in reversing the lower court, that the effect of Amex’s arbitration clause, containing the class arbitration waiver, was to immunize itself from claims. The panel invalidated the class action waiver. Unlike Stolt-Nielsen, where the agreement was silent on class arbitration, which had been ordered by arbitrators, in Amex, the parties had agreed to a class arbitration waiver clause.  “The key issue,” according to the new opinion, “was whether the mandatory class action waiver in the Card Acceptance Agreement is enforceable even if the plaintiffs are able to demonstrate that the practical effect of enforcement of the waiver would be to preclude their bringing Sherman Act claims against Amex. In re American Express Merchants’ Litigation, 634 F.3d 187, 196 (2d Cir. 2011).” The Amex plaintiffs’ allegations were based on antitrust claims under the Sherman and Clayton Acts, 15 U.S.C. § 1 et seq., which bar certain anticompetitive business practices. In upholding its earlier decisions and discounting Stolt-Nielsen and AT&T Mobility, the Second Circuit relied on Green Tree Financial, as well as the arbitrability of federal statutory claims allowed in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 632 (1985), and Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991). Neither of the two recent Supreme Court decisions affected those earlier cases, the new Pooler Second Circuit opinion points out. The latest decision finds that class action suits are appropriate and sometimes the only economically rational choice for vindicating statutory rights. There also is a presumption in favor of the arbitrability of statutory claims, so long as the arbitration allows full recovery as intended by the statute.   But, according to the Second Circuit, such full vindication of statutory rights is not always possible through arbitration where the cost of arbitration can be demonstrated under Green Tree Financial to effectively prohibit such vindication.  In Amex, the statutory remedy was in fact undermined by a class arbitration waver clause, given the parties ‘ circumstances. Although there is broad judicial support for the use of arbitration clauses, the new opinion notes, the rights they provide are not absolute.  They cannot be used as a mechanism to avoid liability. And the case does not declare arbitration waivers per se unenforceable.  Pooler writes, [A]s the class action waiver in this case precludes plaintiffs from enforcing their statutory rights, we find the arbitration provision unenforceable. We again emphasize our holding comes with caveats. See Amex, 554 F.3d at 320 (“We emphasize two important limitations upon our holding.”) Our decision in no way relies upon the status of plaintiffs as “small” merchants. We rely instead on the need for plaintiffs to have the opportunity to vindicate their statutory rights. So if the plaintiffs can't vindicate their rights without a class process, and the Second Circuit can't order class arbitration under Stolt-Nielsen, what's next on remand?  Apparently, litigation.  "We conclude that this arbitration clause is unenforceable," writes Circuit Judge Pooler. "We remand to the district court with the instruction to deny the defendant's motion to compel arbitration." --Russ Bleemer, Editor, Alternatives, & Magda Laszlo, CPR Intern

Customs deferment policy takes effect
Creamer Media's Engineering News
It caters for the deferment of customs duties and Vat payable on importation for both international and Botswana, Lesotho, Namibia and Swaziland (or BLNS) trans- actions and outlines the legal requirements and the respective timeframes allowed.

Yesterday I reported on FINRA’s enforcement action against Charles Schwab for inserting a class action waiver in its customer PDAAs. Today I hear that Schwab filed an action in federal court seeking a declaratory judgment that it’s class action waiver is lawful. Schwab offered to pay its customers’ arbitration filing fees pending the outcome of [...]

From time to time, I interview professionals in the conflict resolution world.  I was fortunate to catch up with Bryan J. Hanson, the Assistant Director of the Werner Institute for Negotiation and Dispute Resolution at Creighton University.  The Werner Institute has established a fascinating online program for a Master’s of Science in Negotiation and Dispute Resolution.  Here are Bryan’s answers to my questions.

          1. Your online program offers diverse teaching methods such as distance learning, two 5-day residency programs at Creighton with hands-on role plays, simulations and group exercises, guided research projects and a practicum.  What skills do you hope students will learn and how does the design of the program support and enhance their learning experience?

Our online program provides an innovative curriculum that heavily relies on virtual platforms to replicate the dialogue and activities that take place in a classroom environment. For example, students engage in weekly discussion forums, participate in group projects via online collaboration tools, and can participate in live discussions via web-conferencing platforms. (Here’s our website.) The online program also runs on a cohort model with a predetermined flow to the curriculum. Students will start in the foundations of conflict courses and proceed in a linear manner until they complete their practicum experience as the capstone to the program. We also have a residential degree program.  You can find a list of our campus-based courses here.  

          2. You have a stellar faculty.  How much students will be able to interact with them?

Our department is small, yet provides access to some very experienced and well -connected faculty members. We provide great value to the ability for our students to feel well connected with the entire staff and faculty at the Werner Institute. When in Omaha, our doors are always open, and when students are unable to meet in Omaha, we are available via phone, email and Skype.

Our online courses allow for constant engagement with our faculty. Dialogue that typically takes place in a classroom is replicated by weekly discussion forums that are led off by an initial line of inquiry provided by the faculty member. All students must participate to receive credit for the course and the faculty member has the opportunity to connect with each and every student this way.

Our online program also entails two 5-day residencies that bring students to Omaha to meet our faculty and engage in skill-building activities, practice negotiation, practice mediation skills, attend live lectures, and participate in networking opportunities that will increase the students’ ability for success once they enter the field.

          3. The program offers some subspecialties--what are they and how can they be useful in the real world?

We offer the opportunity to diversify your education via four different specializations. They are

• Organizational Conflict Management: In today’s competitive environment, organizations increasingly must cope with complexities, uncertainties, and conflict. Students will learn techniques and approaches for organizational teambuilding, conflict management, and process facilitation and consulting.

• Collaboration and Conflict Resolution in Health Care: Conflicts in health care occur on a daily basis, many of which involve poor clinical outcomes that may result in lawsuits, licensure disputes, credentialing and employment claims, and more simply, a general breakdown in trust of the healthcare system as a whole. With a focus on practical application of process tools and systems design strategies, students will learn effective techniques that can be integrated into clinical settings and expand options for managing legal and ethical issues that arise within healthcare organizations.

• Collaborative Practice and Conflict Resolution in Education: In areas from special needs to student services, and administration to campus life, conflict is an ever growing part of the landscape. Students will learn how to collaborate with colleagues, students, parents, and community members to assist and develop strategies to accommodate diverse learners so that they can succeed and fulfill their potential.   

• International Negotiation and Conflict Resolution: Disputes increasingly occur with an international dimension, including conflicts involving states, corporations, peoples, and political factions. With applications from a variety of disciplinary perspectives including international law, business, anthropology, and political science, students will learn conflict resolution techniques in the context of globalization with a focus on the implications of growing interconnectedness as both a source and solution for disputes.

          4. What kind of career can an M.S. in Negotiation and Dispute Resolution launch?  Where can students use the expertise they gain from this program?

The skills and concepts learned can lead to an exciting career as a practitioner in the field as a mediator, facilitator, trainer, or systems design consultant. A graduate will also be prepared to work in training and development.

One vitally important aspect of our interdisciplinary degree is that the skills and concepts learned in this program will lead our graduates down a path for success in any leadership position within an industry that aligns well with their interests and previous experiences. The graduates will be able to leverage their increased leadership skills, decision-making abilities, team development insights and understanding of conflict dynamics to succeed as program directors, business executives, and leaders of many non-profit and for-profit organizations.

 

by Matthias Scherer

By Matthias Scherer and Sam Moss

In a recent decision issued on 7 November 2011 on a request for annulment of a partial award on jurisdiction rendered by the Court of Arbitration for Sport (“TAS”), the Swiss Supreme Court recalled and applied its previous jurisprudence on the interpretation of pathological arbitration clauses (Case 4A_246/2011).

The case arose out of a contract between a football club and an agent relating to the transfer of a player. The contract contained a dispute resolution clause which provided that “[t]he competent instance in case of a dispute concerning this Agreement is the FIFA Commission, or the UEFA Commission, which will have to decide the dispute that could arise between the club and the agent.” After a dispute arose between the parties, the agent initiated arbitral proceedings before the FIFA Players’ Status Committee, a body tasked with adjudicating disputes arising from transfers of professional football players. However, on the basis of its internal rules, the Committee declined jurisdiction on the grounds that the agent was a legal person and not a natural person. The agent therefore requested the Zurich High Court (Obergericht) to appoint an arbitrator, which it did. However, the sole arbitrator subsequently found that he did not have jurisdiction on the grounds that the parties had agreed to submit disputes to arbitration under the rules of a sports arbitral institution.

Finally, the agent initiated arbitration before the CAS. In a partial award issued on 17 March 2011, the CAS ruled that it had jurisdiction over the dispute. However, the football club appealed to the Swiss Supreme Court pursuant to Article 190(2)(b) of the Swiss Private International Law Act (“PILA”) to annul the partial award on the ground that the CAS had erroneously held that it had jurisdiction, one of only two grounds available to a party to challenge a partial award (Article 190(3) PILA).

The football club first disputed that the Parties had even agreed to exclude the jurisdiction of the State courts. However, the Supreme Court, interpreting the Parties intentions according to the principle of normative consensus (“Vertrauensprinzip”), found that this was not the case (para. 2.3.1). The Court noted that while the dispute resolution provision did not expressly mention arbitration, the use of the terms “competent instance” and “decide the dispute” could be understood in good faith to mean that any disputes would be decided by one of the two football bodies in a binding manner, to the exclusion of the State courts. According to the Court, the provision did not give rise to doubts which would warrant a restrictive interpretation of the Parties’ alleged intention to exclude the jurisdiction of the State courts.

Of greater interest, however, is the manner in which the Court addressed the football club’s arguments that the arbitration clause was defective to the degree that it was impossible to apply, or alternatively that it had been extinguished by the decision of the FIFA Commission not to accept jurisdiction.

The Court began by setting out the approach in Swiss law to pathological provisions in arbitration agreements, which it defined as provisions which are incomplete, unclear, or contradictory (para. 2.2.3). As the Court explained, as long as such provisions do not relate to essential elements of the arbitration agreement, such as the binding submission of disputes to an arbitral tribunal, they will not in and of themselves lead to its invalidity. Rather, Swiss law requires courts and tribunals to look for a solution, either through interpretation or if need be by means of completing the contract, which respects the fundamental will of the parties to submit their dispute to arbitration. In this sense, Swiss law imposes a broad approach to interpretation of pathological arbitration clauses, once the parties’ intention to exclude State courts in favour of arbitration is established.

On this basis, the Court ruled that the fact that neither institution identified in the arbitration clause could have, according to their own rules, decided on a dispute between the parties, did not necessarily entail the nullity of the entire arbitration clause. According to the Court, the CAS had properly sought to determine whether the designation of the institutions was so essential to the arbitration agreement that the parties would not have agreed to submit their disputes to arbitration had they known that those institutions could not assert jurisdiction (para. 2.3.2). It further found that the CAS’s determination that the parties would nevertheless have agreed to submit their disputes to arbitration was not based on abstract considerations but rather on concrete indications arising from the facts of the case. In particular, the CAS considered that the parties’ designation of two alternative football associations in the arbitration clause indicated that they were not attached to one particular institution, and that, above all, they wanted to submit their dispute to an arbitral tribunal which was familiar with issues surrounding transfers of professional football players.

Having established that the institutions designated by the parties did not constitute essential conditions of their arbitration agreement, the Court turned to determining whether submitting the dispute specifically to the CAS was consistent with the Parties’ intentions. In doing so, the Court sought to correct the partial nullity of the arbitration clause, to the extent possible, by means of filling in the missing elements. The test applied by the Court was to ask what the parties would hypothetically have agreed to had they been aware of the defects in their arbitration clause (para. 2.3.3). After a review of the facts, the Court concluded that the parties would have agreed to submit any disputes directly to the CAS. In reaching its decision, the Court was particularly influenced by the fact that, by designating FIFA and UEFA, both of which are based in Switzerland, the parties indicated their intention to submit their disputes to an arbitral tribunal with seat in Switzerland, and that they intended such disputes to be decided by a sports organisation which was familiar with the football transfer market. In this context, the Court took into consideration that decisions of the FIFA Players’ Status Committee on transfers of players could in fact be appealed to the CAS.

In sum, the Supreme Court’s decision in case 4A_246/2011 is a good example of the broad and flexible pro-arbitration approach which has characterised the Court’s jurisprudence on pathological arbitration clauses in cases in which the parties’ intention to arbitrate is established. Despite being faced with an arbitration clause with clear references to two institutions which could not adjudicate the parties’ dispute, the Court did not find the clause to be invalid as a whole, but rather engaged in an exercise of filling in the missing elements in order to ensure that the fundamental intention of the parties to arbitrate their dispute was upheld. It is also noteworthy that in the first step of its analysis, namely establishing the intention of the parties to submit their dispute to arbitration, the Court did not consider the absence of the words “arbitration” , “arbitral tribunal”, “arbitrator”, or similar terms in the dispute resolution clause (which it itself acknowledged in para 2.3.1), to be decisive.

More from our authors: Challenge and Disqualification of Arbitrators in International Arbitration
by Karel Daele
€ 160
The 33rd America's Cup Judicial and Arbitral Decisions
by Henry Peter, Hamish Ross, Graham McKenzie
€ 125
Yearbook Commercial Arbitration. Volume XXXVI. 2011
by Albert Jan van den Berg
€ 255


• Leave a comment on A primer on pathological arbitration clauses in Swiss law

Paul und Anton gehen beide in die siebte Klasse des Lietzenburger Gymnasiums. Schon bei ihrer ersten Begegnung haben die beiden festgestellt, dass sie nicht sonderlich gut miteinander auskommen: Beide haben starke Persönlichkeiten und sind gerne das Alpha-Tierchen der Klasse. Bisher konnten sie sich gut aus dem Weg gehen, aber für heute hat der Lehrer Gruppenarbeit [...]

Bridge Mediation and ADRLR launch Essay Competition on mediation; Entries to ...
Bar & Bench
Bridge Mediation LLC, an international Alternative Dispute Resolution (ADR) company along with the Alternative Dispute Resolution Law Review (ADRLR) is hosting an essay competition for law and management students in India.

Holland & Knight LLP | Holland & Knight Expands South Florida Litigation ...
Linex Legal (press release) (registration)
Both attorneys will maintain offices in Miami and Fort Lauderdale and work closely with the firm's Commercial Litigation, International Litigation and Arbitration and Latin America Teams. They were previously shareholders with Greenberg Traurig.

by Phillip Capper

This is an update on the post of 27 January 2012 dealing with the African Fertilisers decision. Last week, the English Court of Appeal handed down its judgment in the latest episode of the West Tankers dispute, upholding the first instance decision and approving the decision of the Commercial Court in African Fertilisers. The decision affirms the continued pro-arbitration stance of the English courts, the Court of Appeal emphasising that “the efficacy of any award by an arbitral body depends on the assistance of the judicial system”.

The factual background to West Tankers has been widely discussed (and is summarised in paragraphs 1 to 14 of the judgment) and there is no need to do so again here. Before the Court of Appeal, West Tankers submitted that judgment be entered under s. 66(2) of the English Arbitration Act 1996 (the “Act”) against the insurers on the terms of a declaratory arbitral award. This was on the basis that such a judgment would allow West Tankers to establish the primacy of the award over any judgment by Italian courts in ongoing proceedings of the same dispute. The High Court held that “[t]he purpose of s. 66 (1) and (2) [of the Act] is to provide a means by which the victorious party in an arbitration can obtain the material benefit of the award in his favour other than by suing on it” and that “[w]here … the victorious party’s objective in obtaining an order under s. 66 (1) and (2) is to establish the primacy of a declaratory award over an inconsistent judgment, the court will have jurisdiction to make a s. 66 order because to do so will be to make a positive contribution to the securing of the material benefit of the award”.

The insurers appealed, arguing that Field J had erred in his construction of s. 66 of the Act, specifically in the meaning of the word “enforced”, and that a declaratory judgment (and in particular a negative declaratory judgment) is incapable of being “enforced” under the meaning of the section. Lord Justice Toulson, in the leading judgment, however agreed with West Tankers that a broader interpretation of the phrase ‘enforced in the same manner as a judgment to the same effect’ in s. 66 is “closer to the purpose of the Act and makes better sense in the context of the way in which arbitration works”. He rejected the insurers’ argument that in the present case the court would not be enforcing an award but only the rights determined by an award as being “an over subtle and unconvincing distinction [that] sits on shaky foundations”, emphasising that “the enforcement of any judgment or award is the enforcement of the rights which the judgment or award has established”. However, Toulson LJ emphasised that the language of s. 66 is permissive and requires the court to determine whether it is appropriate in the situation before it to enter judgment – it is not “an administrative rubber stamping exercise”.

Although Toulson LJ emphasised that the issue before the Court of Appeal “is not a question with a distinctively European flavour”, the consequences of the judgment, and more generally of the approach of the English courts, clearly are (as illustrated earlier in African Fertilisers). It remains uncertain whether the judgment falls under the arbitration exception to the Brussels Regulation 44/2001, thereby underlining the need for reform of the Regulation. As any such reform is likely to take time, there remains the real possibility that the English courts may, before any such reform, be faced with enforcement proceedings under the Regulation of an (inconsistent) judgment of the Italian courts. The questions presented by African Fertilisers remain unanswered for the time being.

Phillip Capper and Christian Blank

White & Case LLP
London

More from our authors: Challenge and Disqualification of Arbitrators in International Arbitration
by Karel Daele
€ 160
The 33rd America's Cup Judicial and Arbitral Decisions
by Henry Peter, Hamish Ross, Graham McKenzie
€ 125
Yearbook Commercial Arbitration. Volume XXXVI. 2011
by Albert Jan van den Berg
€ 255


• Leave a comment on Declaratory award held enforceable by English Court of Appeal: further support for reform of the Brussels Regulation

In a very interesting development with implications for the fate of class action waivers in the securities dispute context, FINRA Enforcement filed a complaint today against broker-dealer and FINRA member Charles Schwab for including a class action waiver in its customer agreement.  Schwab had amended its customer agreement to include the class action waiver in October [...]

Douglas Noll Delivers Groundbreaking Peacemaking Strategies in The ...
San Francisco Chronicle (press release)
... author of Elusive Peace: How Modern Diplomatic Strategies Could Better Resolve World Conflicts (Prometheus, 2011) won the International Peace and Justice Book Award for outstanding advances in understanding Alternative Dispute Resolution.

and more »

Es ist an einem ganz normalen Donnerstag. Siebte Stunde Physik, 14.00 Uhr. Die Schüler tummeln sich unruhig wartend auf dem Gang, stecken ihre Augen noch einmal schnell in die krakeligen Physikformeln und warten. Peng, die Tür springt auf. Der Physiklehrer steht am Anfang des Gangs zum Physiktrakt. „ACHTUNG ER IST DAAA, ER KOMMMT!“, ruft ein [...]

PR Web (press release)
Douglas Noll Delivers Groundbreaking Peacemaking Strategies in The ...
PR Web (press release)
... author of Elusive Peace: How Modern Diplomatic Strategies Could Better Resolve World Conflicts (Prometheus, 2011) won the International Peace and Justice Book Award for outstanding advances in understanding Alternative Dispute Resolution.

As a mediator, I have spent a great deal of time training, reading and thinking about how best to listen to the parties.  I spend a lot of time in mediations listening to the parties.  I want the quality of my listening to be respectful, authentic and empathetic.  I want to make a truly human connection.

It occurred to me to remind myself to bring that same intention to listening to my law clients. 

Fortunately, Mark Goulston, M.D., a psychiatrist, business consultant and coach, has outlined his secrets of success in Just Listen.   Essentially, Dr. Goulston’s premise can be summed up like this:

                  “The more your “get” where someone is
                  coming from (and care where they are
                  coming from) the more likely you’ll be
                  able to take them where you want them
                  to go.”

One of the impediments to deeply listening is our natural inclination to interrupt with a comment or with an analogy from our own experience.  Dr. Goulston recommends reigning in that inclination, and instead, asking the speaker to continue speaking.  He encourages them with three types of “interventions”:

1. “Tell me more.”
2. “Hmmm,” and,
3. “Really?”

If you use these techniques with your clients, I think you’ll find that they will appreciate you all the more.   Everyone is comforted by feeling heard and respected.  (Thus, the cinnamon toast:  comfort food.)  You’ll have a much stronger connection.  A by-product is, having felt heard, they are more likely to listen to you.

All new techniques require practice.  Choosing a loved one to practice this on could be a true win-win.