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US lawyer threatens NAFTA claim over securities investigation

A US lawyer has threatened Canada with a NAFTA claim over his treatment by provincial authorities investigating his role in an alleged securities fraud. South Carolina-based attorney Jonathan Levy filed...

Anti-enforcement injunction lifted in Singapore

The Singapore Court of Appeal has lifted an injunction granted to an affiliate of US hotel group Hilton to prevent the enforcement of a Maldivian court judgment that was obtained in breach of an arbitration...

Abu Dhabi Global Market Courts Enhances its Attractiveness as an Arbitral Seat

Kluwer Arbitration Blog - Tue, 2019-03-12 05:40

Peter Smith

The Abu Dhabi Global Market (“ADGM”) is an international financial free zone and an important emerging seat of arbitration in the GCC region. The ADGM’s arbitration law is based on the UNCITRAL Model Law, with a number of significant enhancements relating to the confidentiality of proceedings, the joinder of third parties, and the waiver of the right to bring an action for setting aside.

The Court of First Instance (“CFI”) of the ADGM Courts (“ADGMC”) is the court designated as the supervisory court for arbitrations seated within the ADGMC’s jurisdiction. 2018 saw the CFI exercising that function for the first time in the cases of A1 v B1 (9 January 2018) and A2 v B2 (11 October 2018). One of these cases involved a pre-claim ex parte application for interim relief which demonstrated the ability of the CFI to organise hearings quickly, use sophisticated document management and international telephone conferencing facilities, and to grant swift and appropriate relief when necessary.

These cases are part of a wider trend. As the ADGMC enter 2019, they can be expected to build on the progress made in 2018. Last year saw an increase to 14 of the numbers of cases brought in the CFI, up from 7 the year before, i.e. a 100% increase. Many of the cases listed cover real property and employment disputes but, as more companies take offices on the island and residential developments grow, the volume and range of the CFI’s docket will surely increase with the ever-greater numbers of contracts subject to the ADGMC’s jurisdiction.

The CFI’s increased workload comes as the ADGMC signed a memorandum of understanding (the “2018 MOU”) revising and updating the mutual and reciprocal recognition and enforcement of, inter alia, ratified arbitral awards between the ADGMC and the Courts of the Emirate of Abu Dhabi represented by the Abu Dhabi Judicial Department (“ADJD”). The 2018 MOU builds on an earlier MOU signed between the same parties in 2016 and Article 13(11) of Abu Dhabi Law No. 4 of 2013, but provides further clarity on the specific processes for reciprocal enforcement which the 2013 law did not cover. The 2018 MOU fills a gap in the relationship between the ADJD-ADGMC identified previously. The 2018 MOU establishes that mutually ratified or recognised awards are to have the same force as a judgment of either of the courts without the requirement of any further ratification or recognition by the other court. Mutual recognition and enforcement also extends to include court-approved settlement agreements (known as ‘memoranda of composition’) certified by either court. Parties are already benefitting from these enforcement regimes, which are the result, as may be seen, of the collaborative efforts of the ADGMC and ADJD.

As a court of the UAE, the ADGMC is bound by the UAE’s international obligations under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, the Riyadh Arab Agreement for Judicial Cooperation 1983 and Gulf Cooperation Council Convention for the Execution of Judgments, Delegations and Judicial Notifications 1996.

In October 2018, the ADGM’s Arbitration Centre opened. The new centre provides parties with state of the art meeting and hearing room facilities. In December, the ADGMC launched “the world’s first fully digital courtroom”, allowing parties and their representatives to access court documents including court forms and bundles and to attend hearings remotely.

In summary, and as a result of its sophisticated arbitral law, its collaboration with the ADJD, and the effective performance of the CFI of the ADGMC of its arbitration related functions, ADGM is establishing itself as a leading arbitration seat in the region.

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Third Party Funding in Nigerian Seated Arbitrations: Setting the Law Straight

Kluwer Arbitration Blog - Mon, 2019-03-11 22:30

Opemipo Omoyeni

Introduction

This post addresses the topical issue of Third-Party Funding (“TPF”) in relation to Nigeria-seated arbitrations, and posits in variance with recent work on the subject that there is no extant law prohibiting TPF in Nigeria-seated arbitrations. This post points out that there has been an apparent misapplication of the common law principles of champerty and maintenance as is obtainable in courtroom litigation to privately convened arbitrations. Further, there seems to be a narrow conception of TPF in terms of direct funding of a proceeding by a funder (funders). The author argues that the scope of TPF is broader than envisaged as TPF also includes attorney financing (pro bono and contingency or success fee type arrangements) and Nigerian law permits the latter concept.

Origins and Scope

Nigeria is a common law country. Although English case law is considered largely persuasive, certain corpus of laws were imported into the Nigerian legal system by virtue of it being a former British Colony. This is known as the Received English Law which comprises of the principles of Common Law and Equity and Statutes of General Application (being statutes in force in England on the 1st day of January, 1900).

Historically, the English courts developed concepts like “champerty” and “maintenance” in response to what was considered to be interference by non-interested third parties with ongoing proceedings. Unfortunately, these doctrines of champerty and maintenance still form part of the Nigerian legal system on account of its association with the Common Law system and the reinforcement of these principles by local courts. Thus, in order to ascertain the scope and applicability of these doctrines in Nigeria, recourse must be readily had to the English Common Law system where these doctrines originated from. It has been posited that to understand the scope of a concept, one must readily refer to the mischief the law sought to remedy 1)Steyn L.J in Giles v Thompson[1994] 1 A.C. 142; [1993] 2 W.L.R. 908. jQuery("#footnote_plugin_tooltip_6971_1").tooltip({ tip: "#footnote_plugin_tooltip_text_6971_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });.

In the medieval British era, there was a prevalent mischief of influential persons (barons) purchasing weak claims with the expectation that they could use their power and wealth to influence the administration of justice and to eventually win those claims. This mischief was aptly pointed out by the Hong Kong High Court in Cannonway Consultants Ltd v Kenworth Engineering Ltd citing an extract from Jerry Bentham’s work:

“A mischief, in those times it seems but too common, though a mischief not to be cured by such laws, was, that a man would buy a weak claim, in hopes that power might convert it into a strong one, and that the sword of a Baron, stalking into court with a rabble of retainers at his heels, might strike terror into the eyes of a judge upon the bench. At present, what cares an English judge for the swords of a 100 barons? Neither fearing nor hoping, hating nor loving, the judge of our days is ready with equal phlegm to administer, upon all occasions, that system, whatever it be, of justice or injustice, which the law has put into his hands.”

Nigerian Jurisprudence and TPF

Indeed, the mischief that both doctrines were devised to remedy, were prevalent in the public justice system as administered in court rooms and the application of the doctrines at common law was confined to litigation. Their applicability cannot be extended beyond that remit. The concerns for holding otherwise have been noted to include, among others, the erosion of the party autonomy doctrine and the same have been reinforced elsewhere 2)Giles v Thompson [1994] 1 A.C. 142; [1993] 2 W.L.R. 908 jQuery("#footnote_plugin_tooltip_6971_2").tooltip({ tip: "#footnote_plugin_tooltip_text_6971_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });.

In view of the foregoing, the contention that TPF extends to arbitration appears rather curious. The scale of the application of the doctrine of champerty and maintenance under common law cannot be readily stretched or modified to apply to circumstances and situations not otherwise contemplated at common law except modified by local legislation(s) in that regard. It is, therefore, pertinent to note that at the time of penning this article, there are no local legislations or case law positing that the doctrine extends to the field of arbitration 3)See Miscellaneous Offences Tribunal v. Okoroafor(2001) 18 NWLR (Pt. 745) 295 jQuery("#footnote_plugin_tooltip_6971_3").tooltip({ tip: "#footnote_plugin_tooltip_text_6971_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });. The attendant consequence is, indeed, that TPF in Nigeria-seated arbitrations are, in all intents and purposes, legal. The law remains that whatever is not prohibited is allowed 4) Oyo v. Mercantile Bank (Nig) Ltd. (1989) 3 NWLR 229 jQuery("#footnote_plugin_tooltip_6971_4").tooltip({ tip: "#footnote_plugin_tooltip_text_6971_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });.

On another note, there are various incidences of TPF that do not entail the funding of a claim/defense by a formal funder for an agreed consideration. The financing of a claim by a lawyer or law firm on a pro bonoor contingency basis also falls under the umbrella of TPF. These arrangements, either in arbitration or litigation, are legal and permissible under Nigerian Law. Earlier decisions of Nigerian Courts adjudging contingency fee arrangements as at best unprofessional and at worst champertuous 5) Oyo v. Mercantile Bank (Nig) Ltd. (1989) 3 NWLR 229 jQuery("#footnote_plugin_tooltip_6971_5").tooltip({ tip: "#footnote_plugin_tooltip_text_6971_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); have since been supplanted by subsidiary legislations enacted pursuant to the Legal Practitioners Act 6)Rule 50 of the Rules of Professional Conduct for Legal Practitioners, 2007 allows Nigerian Legal Practitioners to enter into contingency arrangement with clients provided that these arrangements are reasonable. jQuery("#footnote_plugin_tooltip_6971_6").tooltip({ tip: "#footnote_plugin_tooltip_text_6971_6", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });.

Conclusion

Whilst the Arbitration and Conciliation (Repeal and Re-enactment) Bill 2017 has been extensively reviewed with calls for a more explicit recognition of TPF in the Bill among others, the law as it stands does not prohibit the incidence of TPF in Nigeria-seated arbitrations. A better approach, the author suggests, will be to demand for an enactment of a comprehensive regulatory framework for TPF, as is obtainable in other jurisdictions, by calling for a holistic revision to the Bill to provide for issues  bordering on disclosure of funding arrangements, conflict of interest considerations as it pertains to the arbitrators,  element of control and influence of the funder in the proceedings as well as other concerns in this space. An adoption of this approach will make Nigeria an attractive choice as a seat for contracting parties in arbitrations.

References   [ + ]

1. ↑ Steyn L.J in Giles v Thompson[1994] 1 A.C. 142; [1993] 2 W.L.R. 908. 2. ↑ Giles v Thompson [1994] 1 A.C. 142; [1993] 2 W.L.R. 908 3. ↑ See Miscellaneous Offences Tribunal v. Okoroafor(2001) 18 NWLR (Pt. 745) 295 4. ↑ Oyo v. Mercantile Bank (Nig) Ltd. (1989) 3 NWLR 229 5. ↑ Oyo v. Mercantile Bank (Nig) Ltd. (1989) 3 NWLR 229 6. ↑ Rule 50 of the Rules of Professional Conduct for Legal Practitioners, 2007 allows Nigerian Legal Practitioners to enter into contingency arrangement with clients provided that these arrangements are reasonable. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Windsor’s Julie Macfarlane to deliver Moritz’s 2019 Schwartz Lecture on Dispute Resolution

ADR Prof Blog - Mon, 2019-03-11 20:01
Titled “Pass-the-Trash”: How Universities Use Non-Disclosure Agreements to Protect Sexual Predators, Macfarlane will deliver Ohio State’s 2019 Schwartz Lecture on Dispute Resolution on Wednesday March 20 in Moritz’s Saxbe Auditorium. Use this link to register, go.osu.edu/schwartz2019. A description of Macfarlane’s lecture follows: The use of non-disclosure agreements (NDAs) in cases involving termination for sexual misconduct … Continue reading Windsor’s Julie Macfarlane to deliver Moritz’s 2019 Schwartz Lecture on Dispute Resolution →

Armenia threatened over mining blockade

A US-based gold developer has threatened to bring a treaty claim against Armenia over an “illegal blockade” of its local mining operation that began in the wake of the country’s 2018 revolution.  Colorado-based...

Ukrainian port authority prepares claim over Crimean assets

A Ukrainian state enterprise that manages the country’s seaports has put out a call for counsel to help it prepare an investment treaty claim against Russia over the expropriation of assets in Crimea....

The Interpretation of the New York Convention by the UAE Courts: a Geneva Flavor?

Kluwer Arbitration Blog - Sat, 2019-03-09 21:19

Abdelhak Attalah

Introduction

The United Arab Emirates (the “UAE”) is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “NYC”), which was adopted into UAE law by Federal Decree No. 43 of 2006. However, there have been instances where the lower courts of the UAE have come to interpret the NYC requirements for enforcement, and the concept of “double-exequatur” has arisen (i.e., the need for it to be shown that the arbitral award has been rendered enforceable in the jurisdiction in which it was made before it can be enforced in any other jurisdiction).

This has created uncertainty, which undermines one of the NYC’s fundamental objectives: to establish uniform international standards for the recognition and enforcement of foreign arbitral awards in signatory countries.1) Pieter Sanders, Quo Vadis Arbitration?: Sixty Years of Arbitration Practice, A Comparative Study (Kluwer Law International, The Hague 1999) 67-69; Gary B. Born, The New York Convention: A Self-Executing Treaty (2018) 40 MJIL 116,119 (accessed on 3 January 2019) jQuery("#footnote_plugin_tooltip_3508_1").tooltip({ tip: "#footnote_plugin_tooltip_text_3508_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

Recent UAE Case Law on Double-Exequatur

Fortunately, to the relief of arbitral award creditors, in a ruling of the Federal Court of Cassation (the “FCC”) of 15 January 2019 in the joint Commercial Appeals Nos. 620/2018 and 654/2018, the FCC overturned a refusal by the Khor Fakkan Court of Appeal (the “Court of Appeal”) to recognize and enforce a foreign arbitral award issued under the Rules of the London Court of International Arbitration (“LCIA”) in London, UK, (the “LCIA Award”) on the basis that it had not been granted exequatur by the English Court before being enforced in the UAE.

The FCC found that (i) the Court of Appeal’s ruling amounted to a “double-exequatur” requirement, which was abolished by the NYC; and (ii) the lower court’s refusal to recognize and enforce the LCIA Award was due to its misinterpretation of the term “authenticated” set forth in sub-paragraph (a) of Article IV(1) of the NYC which states that:

To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:
(a) The duly authenticated original award or a duly certified copy thereof.

In the FCC’s view, the Court of Appeal had confused the meaning of the term authentication (an international certification comparable to a local notarization/legalization of any document) with the meaning of enforceability/exequatur set forth in Article 4 of the Geneva Treaties.2) The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927, the predecessors of the NYC. jQuery("#footnote_plugin_tooltip_3508_2").tooltip({ tip: "#footnote_plugin_tooltip_text_3508_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); The requirement for a leave for exequatur from the court under whose law the award was made was abrogated by Article VII(2) of the NYC, and hence the ruling of the Court of Appeal contradicts the prevailing legal position in the UAE.

The FCC confirmed that, pursuant to Article 238 of the UAE Civil Procedures Code, the UAE courts are bound by the NYC. In this matter, the FCC stated verbatim that:

The argument based on which the lower court rejected the recognition and enforcement of the said award was because it was not granted exequatur in the country where it was issued, and, is therefore, unlawful. This is because of the term authentication, which caused confusion in the mind of the lower court, does not mean ratification of the award and granting it exequatur as per the meaning taken from article 236 of the Civil Transactions Law, rather, it means authentication or legalization as required for the official documents issued by a foreign country and invoked within the State, and since the appealed judgement had a contrary opinion, it shall be declared as a wrongful application of the law, which prevented the lower court to adjudicate the case in its proper legal scope and under the provisions of the NYC mentioned above, the Court of Appeal has erred in its judgment and therefore, it must be overturned. (emphasis added)

The Evolution of the Double-Exequatur Concept: The Geneva Convention

As for the concept of double-exequatur, it should be noted that Article 4(2) of the 1927 Geneva Convention required the party relying upon an award or seeking its enforcement to supply, inter alia, “[d]ocumentary or other evidence to prove that the award ha[d] become final […] in the country in which it was made”.

While Albert Jan van den Berg explains3) Albert Jan van den Berg, The New York Convention of 1958: An Overview in (Emmanuel Gaillard & Domenico Di Pietro (eds), Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice (Cameron May 2008) 61 jQuery("#footnote_plugin_tooltip_3508_3").tooltip({ tip: "#footnote_plugin_tooltip_text_3508_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); that:

The NYC’s predecessor, the Geneva Convention of 1927, required that the award had become ‘final’ in the country of origin. The word ‘final’ [used in Article 4(2) of the Geneva Convention of 1927] was interpreted by many courts at the time as requiring a leave for enforcement (exequatur and the like) from the court in the country of origin. Since the country where enforcement was sought also required a leave for enforcement, the interpretation amounted in practice to the system of the so-called “double-exequatur”. The drafters of the NYC, considering this system as too cumbersome, replaced the term “final” in Geneva Convention, qualifying the award, with the word “binding” in NYC. Accordingly, no leave for enforcement in the country of origin is required under the New York Convention. This principle is almost unanimously affirmed by the courts.

The meaning of the term authentication stated in sub-paragraph (a) of Article IV(1) of the NYC was clarified by the FCC as per the meaning of the UAE statutes, especially Article 13 of the UAE Law of Evidence, in addition to the legal precedents explaining the meaning of the authentication of documents. Indeed, authentication shall be executed as per the Hague Convention of 1961 or as per the UAE modalities and requirements through which a document issued in a foreign country shall be certified i.e., by a solicitor or a notary public and by the respective Foreign Ministry. This interpretation is almost unanimously affirmed by the UAE courts.

The Position under the NYC

As a reminder, the NYC was established as a result of dissatisfaction with the Geneva treaties of 1923 and 1927, and one of the basic actions contemplated by it is the abrogation of the double-exequatur requirement. Article VII(2) of the NYC states that:

[t]he Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the extent that they become bound, by this Convention.

Moreover, pursuant to Article IV of the NYC, the arbitral award creditor is required to provide the court with only two documents (with translations certified by an official or sworn translator or by a diplomatic or consular agent if either document is not made in an official language of the country in which the award is relied upon):

(a) The duly authenticated original award or a duly certified copy thereof; and
(b) The original agreement referred to in Article II or a duly certified copy thereof.

Therefore, pursuant to Article IV of the NYC, enforcement of a foreign award is not conditional upon presentation by the award creditor of proof that the award is final and enforceable in the country of the seat, as the drafters of the NYC did not set such a requirement. Rather, it is for the party resisting recognition and enforcement to provide such proof as clearly required in Article V(1)(e) of the NYC which states:

1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

(e) The award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

Conclusions

Taken in the round, it is clear that Article V(l)(e) and Article VII(2) of the NYC were drafted with a view to put an end to the mechanism of double-exequatur required by Article 4 of the Geneva Treaties, by which a party seeking recognition and enforcement of a foreign award had to prove, among other conditions, that the award had become “final” in the country of the seat.

Indeed, Article V(l)(e) of the NYC allows national courts to refuse the recognition or enforcement of an award if the party resisting enforcement establishes that the award: (a) has not yet become binding on the parties; or (b) has been set aside or suspended. Thus, the binding character of a foreign arbitral award in the hand of a creditor seeking recognition and enforcement in the UAE shall not depend on an exequatur by the courts of the country of the seat.

References   [ + ]

1. ↑ Pieter Sanders, Quo Vadis Arbitration?: Sixty Years of Arbitration Practice, A Comparative Study (Kluwer Law International, The Hague 1999) 67-69; Gary B. Born, The New York Convention: A Self-Executing Treaty (2018) 40 MJIL 116,119 (accessed on 3 January 2019) 2. ↑ The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927, the predecessors of the NYC. 3. ↑ Albert Jan van den Berg, The New York Convention of 1958: An Overview in (Emmanuel Gaillard & Domenico Di Pietro (eds), Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice (Cameron May 2008) 61 function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Purdue Global Agrees to End Use of Mandatory Arbitration for Student Complaints

ADR Prof Blog - Sat, 2019-03-09 16:39
I received the following email from Bill V. Mullen, Professor of American Studies, Purdue University, Vice-president of Purdue AAUP: American Association of University Professors members in Indiana have won another victory to reclaim Purdue University for students, not corporate profit. After mounting pressure from an Indiana AAUP statewide campaign, the Kaplan-run Purdue University Global has … Continue reading Purdue Global Agrees to End Use of Mandatory Arbitration for Student Complaints →

World Mediation Forum Part 2: Italy, Poland, China, India, France… and Even Texas!

Business Conflict Blog - Sat, 2019-03-09 13:02

At the 26th convening of the UIA World Mediation Forum in Zurich on March 5-6, 2019, a panel on whether mediation should be compulsory, among representatives of France, the US, Switzerland, and Italy, wrestled with intriguing philosophical considerations.  Is compulsory court annexed ADR inconsistent with the principle of judicial access?  Should conciliation, rather than mediation, be compulsory with respect to municipal or other citizen concerns?  Is compulsory mediation of parental concerns about children’s education more advisable than compulsory mediation of business-to-business concerns? 

Catherine LeClerq of Armand Avocats in Paris made a strong argument for compulsory mediation of disputes between state employees and administrative agency employers, a plan that has been experimentally introduced in 2016. 

Pasquale Orrico, of Arlenghi Agostini Avvocati in Milan, updated the complex and pervasive (one might say overreaching) compulsory mediation regulations in Italy.  Topics subject to compulsory mediation in Italy include real estate, tenancy, business lease, banking, and insurance. The only thing compulsory, however, is a first meeting; if, after a mediator explains the process, the parties decline to engage in mediation, then they are relieved of any further obligation and may proceed with their lawsuit.  In that sense, it seems to mandate compulsory awareness, consideration, and intentional rejection of mediation, rather than compulsory participation in the process itself.  Clients as well as attorneys must attend this first meeting.  As a result of this regimen, between 160,000 and 190,000 mediations per year are reported by the Italian Ministry and Justice; the number of settlements resulting from these mediations (i.e., sessions held as a result of these first meetings) is between 40-45%.  The mediations are conducted by bar associations, chambers of commerce, and other entities.  Voluntary mediation has risen 14% during this period – an interesting side-effect. 

Katarzyna Przluska-Ciszewska, President of the Polish Bar Council Mediation Center, reported on a confusing current proposal by the Polish Ministry of Justice addressing family law and divorce proceedings.  It requires, before formal filing of a divorce action, an informational conference meant to encourage reconciliation and, if not possible, outlining plans for child custody and financial support.  These matters must be notarized or officiated by a court in order to be enforceable – agreements met as a result of private mediation are not enforceable.  The proposal is that couples be informed of the “social consequences of the breakdown of the marriage” and the availability of “therapy and other means of family support.”  Part of this support is family mediation which, if not mandatory, is strongly brought to the parties’ attention.  If mediation is elected, the mediator presents to the court a “report containing the results of the mediation” as well as confirmation that the parties have been advised of the “social consequences” of the divorce.  Only after this report is delivered may a petition for divorce be initiated.  Thus, the mediator is a vessel to convey the concern of the state, rather than facilitating an autonomous decision by the parties.  Katarzyna added concern that the use of the term “mediation” to describe this process threatens the understanding and acceptance of compulsory commercial mediation, which is also being considered in Poland. 

Jeff Abrams of Houston, Texas, related the rise of compulsory mediation in that state.  Key developments were legislative action to empower judges to require mediation prior to scheduling trials; training respected leaders in the legal community as mediators; presenting judges with the efficacy of using these mediators; maintaining metrics of early use of mediation in the original jurisdictions to measure its effectiveness in reducing dockets; and “scaling” the system to courts across the state.

Cezary Rogula, of Krakow, Poland, and Jennifer Lygren, of Geneva, Switzerland, reported on the application of mediation to administrative and quasi-public contexts.  Jennifer explained an initiative involving regulation of financial institutions – mainly brokerages – with an eye to financial protection.  Investors may use ADR to pursue errors or misfeasance of financial service providers through legislated processes.  It requires a qualified mediator (skilled both in financial instruments and in mediation) to oversee the process.  Private mediation bodies are currently competing to fashion proposals for the government to approve their administration of the process.  A claimant client must first attempt direct negotiation and the request must come before any arbitration or other adjudicative proceeding.  The process is funded by the financial industry participants, and participation is mandatory.   Typical banking activities are not included – the scope is limited to executing securities orders, offering investment advice, managing portfolios, etc.  Cezary discussed mediating disputes involving public authorities, as part of the Polish code of administrative procedure.  The process has a goal, not of coming to a settlement agreement, but an “arrangement” by which the authority will deal with the private party on an ongoing basis.  Proceedings are not public, and the mediator is a potential witness in any ensuing court actions.  An example is the registration of a trademark.  A private publisher of magazines confronted difficulty in registering the titles of those magazines as trademarks – an administrative decision.  The mediation process allowed the presentation of factual, marketing, and expert evidence and informal discussion.  Of 29 proposed trademarks, 12 were successfully registered as a result of this process, to the client’s satisfaction.  The process allowed the airing of both the agency’s and the petitioner’s concerns, and the result was understood rather than resented or coerced.  A second example was made involving construction, with building permit, historical preservation, and zoning issuance.

A panel addressed the application to mediation of concepts of marketing and economics.  Thiruvengadam B.C., of Bangalore, India, reminded the group that demand arises from necessity – if litigation is necessary and arbitration is merely an option (even a luxury), where does mediation lie?  Indian judges dispose of an average of 1,000 cases per year, and 10,000,000 cases are filed in Indian courts each year.  The judicial system is complex, and it takes 10-20 years for litigation to yield a final outcome.  Citizens therefore either give up or use alternatives to litigation – mosques, associations, mafia or other unconventional processes.  Court-annexed mediation was first introduced in 2000; by now, 120 cases, on the average, are referred to mediation each day with a success rate of 69%.  The quality of court-annexed commercial centers has been questioned (court-annexed mediation is free and mediators receive low fees) and there is a move to outsource mediation to private institutions.  Gerard Kuyper of Brussels evoked the classic supply/price/demand curve and suggested that the market of justice has a strict and unmodified supply line, with price determined only by demand.  Yet individual behaviors within this market are wildly different – Belgium has litigation at the amount of 7 to 1,000 but Netherlands less than one per 1,000.  Another related metric is time to resolution – Belgium has clearance of 100 days and far longer for Netherlands.  Gerard suggested that dispute behaviors are seldom rational and instead involve cognitive dissonances such as risk/loss aversion and emotional, rather than economic, choices.  David Lutran of Paris encouraged the presentation of mediation as a product competing with — rather than complementing — others on the market, subject it to marketing analysis such as providing for the economic welfare of the customer.  These considerations may include user assessment of the likelihood of satisfaction at trial or in other processes.  The attraction of disputants to traditional justice is fundamentally irrational, and distinctly branding mediation would seem to hinge on appeal to similarly emotional characteristics.  The mythology of the judge as a cultural figure is unique – mediators cannot hope to compete.  Put otherwise, the image of a blindfolded woman holding a balance and promising fairness through the dispassionate application of social norms is far stronger than the image of a handshake.  David suggested that emphasizing neutrality, expectations, control and the wide scope of potential outcomes are possibly effective branding approaches.  Emphasis should be placed on getting what a party wants, rather than defeating another party – that is, seeking self-interested profit from the conflict rather than a pursuit of Justice.”  The underlying approach is to satisfy the customer by proposing a process better designed to meet the customer’s own goals.  Mediation is not a deviate of institutional justice, but a direct method of obtaining stated economic goals in a rational, self-interested manner that is designed to accurately reflects the stakes involved.

A successful Mediation Forum was made even more successful with a panel on “Users of Mediation,” featuring Jean Marguerat of Froriep Legal SA in Geneva, Torsten Bartsch of Caterpillar Sarl, Laurent DeVille of Froriep, and Franz Wiehler of Siemens AG.  Torsten presented an unscientific survey of Lake Geneva-based general counsel, asking the preferred ways to deal with disputes.  By far the most favored was direct conversations between the parties.  There was little difference between arbitration and litigation, except in terms of certainty of results. Arbitration was preferred only in highly technical matters.  Franz concentrates on conflict identification and management within the enterprise.  He finds that identifying and assisting team members’ conflicts can add strength and value to a team.  He considers the greatest roadblock to corporate use of mediation to be awareness of its attributes and possibilities.  Laurent reports that a GC’s recommendation to a Board to engage in mediation is met with skepticism based on unfamiliarity, placing pressure on the GC that the outcome be favorable.  Cost is less the issue than outcomes.  In particular, a question is raised how an external facilitator can progress negotiation more effectively than an informed internal company representative.   He also noted that, based on his experience of practicing for 10 years in Japan, the cultural expectations of participants must be respected.  Dispute avoidance in Japan is a matter of dignity, reflecting a duty to behave in a certain way.  This is particularly true in family and labor cases.  Mediation is offered through a Mediation Court, and the process is formal, conducted by non-lawyers seeking consensus rather than vindication of rights. 

The final speaker at the Forum was Wang Fang, Deputy Secretary General of the Mediation Center of the China Counsel for Promotion of International Trade in Beijing.  She was introduced by Clarisse von Wunschheim of Altenburger Ltd, who encouraged a realistic view of the ascendency of the economies of Russia, India and China, which have real-world aggressive aims and real-world associated business disputes.  And, when considering China, size matters: Civil and commercial disputes brought to the courts in China in 2018 approximated 8,800,000.  Clarisse believed that the preferred method of commercial dispute resolution is arbitration using administered rules other than CIETAC.  She considers that co-mediation of commercial disputes between Chinese and Western parties to be essential – that it is practically impossible for a single mediator to serve both parties possessing such distinctive cultural predispositions.  Wang Fang reviewed the history of commercial mediation in China, which is intrinsic to the economy of the society and took institutional form in the early years of the Republic, starting in 1902 through Chambers of Commerce such as the one in Shanghai established in 1912.  Current government policies strongly support both domestic and cross-border mediation as part of what Wang Fang terms a policy of “diversified dispute resolution mechanisms.”  The Belt/Road mechanism has created occasions for increased attention to rapid dispute resolution mechanisms, most recently statements emanating from a January 23, 2018 reform committee and a similar notice dates January 12, 2017 concerning intellectual property rights.  She also emphasized the importance of strategic partnerships with non-Chinese commercial mediation centers, and agreed with the idea that co-mediation has an important role in addressing commercial disputes.   Most of CCPIT’s caseload of 2,000 cases per year continue to be internal, but joint centers with Italy, US, South Korea, Malaysia and other markets signify growth in international mediations.  CCPIT also hosts an International Mediation Summit annually since 2016.  The 2019 Summit will be held in October 16-18 in Chongqing.

This event attracted over 100 delegates from 20 countries in five continents.  We worked hard and played hard. The 27th meeting of UIA World Mediation Forum is scheduled for January 17-18, 2020 in Milan.  I have already marked my calendar.

26th UIA Mediation Forum: Developments in Switzerland

Business Conflict Blog - Sat, 2019-03-09 03:58

The UIA World Mediation Forum convened its 26th meeting in Zurich on March 8-9, 2019.  As usual, however interesting the many presentations were, the meeting was especially marked by the opportunity to continue friendships with mediators from around the world, and to forge new relationships.

Appropriately, the first session set forth the “Swiss Dispute Resolution Landscape.”  Forum President Fabienne van der Vleugel moderated a panel of regional leaders.  Jean-Christophe Barth is by profession a banker and by inclination Co-President of the Swiss Chamber of Commercial Mediation.  The Chamber was established in 1997 and has 230 commercial mediators.   He notes that 98% of the Swiss economy are SMEs, and it is a formidable task to introduce them to the relatively unconventional method of amicable dispute resolution.  Court rules introduce mediation as an option, but the culturally fragmented nature of Swiss society, as well as the efficiency of business courts, militate against broad up-take of commercial mediation.  He proposed that mediation is an “unrecognized value driver” to businesses.  Andrea Staubli, President of the Swiss Federation of Mediation Associations (SDM-FSM), described the consolidation of various mediation associations under the common umbrella of the Federation and the institution of quality training protocols.  There are now 1,500 mediations among the 22 associations in the Federation.  These include commercial, family, construction and other mediation focuses, in various languages and approaches.  The Federation accredits and certifies both training courses and individual mediators.  Among the metrics she offered were that 70% of mediations settle, and that 80% of mediations extend over 1-5 sessions.  Urs Weber-Stecher, a member of the SCAI Arbitration Court, reported on that organization’s efforts in mediation.  He reviewed the benefits of the SCAI Rules of International Arbitration, including an arbitration-friendly judicial system (resulting in vacatur in only 7% of appeals).  He decried the traditional disconnect among commercial mediators and commercial arbitrators, suggesting that benefits might accrue from more cooperation among these professional communities, including hybrid processes.  SCAI reports 70-80 arbitrations and 7-10 mediation cases per year. Finally, Roman Manser, President of the Mediation Commission of the Swiss Bar Association (SAV-FSA), explained that mediation – regulated in Germany and Austria – is not centrally regulated in Switzerland, placing on professional associations the responsibility to promulgate rules and competency guidelines.  The Swiss Bar Association issues certification to mediators after the completion of certain hours of training.

This year the SCAI releases its new revision of Swiss Rules of Commercial Mediation.  SCAI Executive Director and General Counsel Caroline Ming joined attorney Kirstin Dodge of Hamburger AG to explain these new Rules. Revisions were meant to simplify and abbreviate the document itself; to clarify the system of fees owing to the institution and to the mediators; to address to possibility of hybrid (Arb-Med-Arb) processes; to satisfy international demands for certified mediated agreements; and for other reasons.  The Swiss Rules designate a “seat of mediation,” similar to international arbitration, designating the law that interprets the mediated agreement.  Interestingly, the Rules provide for entry of an agreement as an arbitral award, but only if the arbitration commenced prior to arriving at the agreement (in order that the arbitral award issue at the time a controversy is active).  The new Rules provide for a simplified procedure for matters involving less than CHF 50,000; certificates of mediation and of settlement agreements; and an advisory council to recommend outcomes of costs disputes or future modifications to the Rules.

Arbitrability of IP Disputes in India – A Blanket Bar?

Kluwer Arbitration Blog - Sat, 2019-03-09 01:00

Saniya Mirani and Mihika Poddar

Arbitration of IP disputes has inherent advantages of saving time and costs and ensuring confidentiality while also maintaining long-term business relations (see here). In India, arbitration will be especially useful in light of the enormous pendency of judicial cases.

However, arbitrability of any subject-matter is dictated by a country’s public policy. In India, what forms part of arbitrable subject-matter is determined as per the test laid down in the Booz Allen Case, expanded upon by the Ayyasami Case. The following two categories of disputes are thereby inarbitrable in nature:

  1. Disputes involving the adjudication of actions in rem as opposed to actions in personem, such as, disputes relating to criminal offences, guardianship matters etc. (hereinafter, the first test of arbitrability);
  2. Disputes arising out of a special statute, which are reserved for exclusive jurisdiction of special courts, such as, matters reserved for small causes courts1) Natraj Studios Private Ltd v. Navrang Studios & Another, 1981 AIR 537 jQuery("#footnote_plugin_tooltip_8766_1").tooltip({ tip: "#footnote_plugin_tooltip_text_8766_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); (hereinafter, the second test of arbitrability). (See here and here)

These tests evince that arbitrability is dependent upon the nature of the claim made in a dispute, i.e., whether the claim is in rem or statutory in nature. This principle should guide the arbitrability of IP disputes too.

 

The IP Regime in India: A Primer

Before understanding the arbitrability of IP disputes, it is essential to understand the functioning of IP regime in India. The scope of this article is limited to analysing arbitrability of patent, copyright and trademark regimes. These regimes allow a “statutory monopoly” to be given to the creator of an intangible asset, conferring an exclusive right to exploit it. There are corresponding statutory remedies to enforce this right. For instance, there exist statutory remedies for infringement of copyright, trademark and patent.2) See, Chapter XII, Copyright Act, 1957; Section 135, Trade Marks Act, 1999; Chapter XVIII, Patents Act, 1970. jQuery("#footnote_plugin_tooltip_8766_2").tooltip({ tip: "#footnote_plugin_tooltip_text_8766_2", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); As per the statute, these remedies must be granted by civil courts. The statutory mention of courts, as a forum to grant these remedies, creates the first hurdle in arbitrating IP disputes.

 

Lack of a Supreme Court precedent settling the issue

The Supreme Court of India has not conclusively settled the issue of arbitrability of IP disputes. In the Ayyasami Case, patents, trademarks and copyrights were listed in the category of inarbitrable disputes. However, the main issue before the court was of arbitrability of fraud (discussed here and here). Thus, categorization of IP disputes as inarbitrable was only obiter dictum. Therefore, this decision cannot be read to bar arbitrability of IP disputes.

 

Different positions of Indian High Courts

Both the aforementioned tests of arbitrability have been used to hold IP disputes inarbitrable. In the Mundipharma Case, the issue was whether a claim of ‘copyright infringement’ was arbitrable. The Delhi High court held the dispute to be inarbitrable given that infringement of copyright is a statutory claim, having definite statutory remedies that are to be granted exclusively by civil courts. This ruling thus seems to echo the second test of arbitrability that bars arbitrability of disputes arising out of special statutes which are reserved exclusively for civil courts.

Subsequently, in the SAIL Case [Suit No. 673/2014], a claim of ‘trademark infringement’ was held to be inarbitrable by Bombay High Court reasoning, “the rights to a trademark and remedies in connection therewith are matters in rem and by their very nature not amenable to the jurisdiction of a private forum chosen by the parties”. Accordingly, the dispute was held to be inarbitrable on the basis of the first test of arbitrability that makes actions in rem inarbitrable.

The Eros Case brought about the first winds of change to this negative trend. The Respondent was granted a copyright license to distribute the Petitioner’s films. The license contained an express negative covenant which prohibited the use of copyrighted films upon termination of contract. Respondent violated this term. Thus, the Petitioner initiated arbitration for ‘violation of the contractual covenant’ – a claim although sourced purely in contract, still required an infringement of copyright to be established.

The Bombay High Court held for the first time that it would be too broad, impractical and against all commercial sensibilities to hold that the entire realm of IP disputes is inarbitrable. Accordingly, the case rightly noted the nuance that that IP disputes arising purely out of contracts are arbitrable because they are actions in personam, i.e. “one party seeking a specific particularized relief against a particular defined party”. Thus, the case applied the first test of arbitrability. The court went a step ahead to state that, a finding of infringement had to be made for proving such a contractual breach and that an arbitrator was empowered to make such a finding of infringement as ‘infringement’ can only be in personam. Thus, an infringement claim could now be determined by arbitration.3) Note that this ratio had been upheld by an earlier case from the same high court called Eurokids International Media Ltd. v. Bhaskar Vidyapeeth Shikshan Sanstha (2015) 4 Bom CR 73. However, Eurokids case was never referred to by EROS, as should have been done in light of the precedential system followed by India. jQuery("#footnote_plugin_tooltip_8766_3").tooltip({ tip: "#footnote_plugin_tooltip_text_8766_3", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

However, even when the dispute is in personam, the second test of arbitrability can be applied, to hold the disputes arising out of special statutes as inarbitrable. This test was refuted in EROS reasoning that the statute nowhere provides that the court is an ‘exclusive’ forum, and thus, arbitration should be allowed. We argue that the holding of inapplicability of the second test was correct. The second test is applied where there is an underlying public policy objective in keeping disputes in the hands of courts. For instance, labour disputes are made inarbitrable by Industrial Disputes Act, 1947, for the reason that a public fora can address the power imbalance prevalent between employers and employees in labour disputes. However, in such IP disputes, similar considerations are not always in play. Thus, the EROS decision rightly refuted the second test of arbitrability.

Since the Eros and Euro Kids cases, other IP disputes that are purely born out of such negative covenants in contracts have also been upheld as being arbitrable.4) Deepak Thorat v. Vidli Restaurant Limited, 2017 SCC OnLine Bom 7704 jQuery("#footnote_plugin_tooltip_8766_4").tooltip({ tip: "#footnote_plugin_tooltip_text_8766_4", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

 

Analysis and conclusion

In earlier cases of Munidpharma and SAIL, where arbitrability of IP disputes was tested, the petitioners raised statutory claims of infringement of copyright/trademark, and expected statutory or public law-based remedies in return. Thus, the only gamut of IP disputes whose arbitrability had been tested hitherto were those that were purely born out of IP statutes. However, IP disputes are not merely statutory, but can be contractual as well.5) In some cases, an entire contract may be about an IP right. For instance, license agreements, joint research and development agreements, etc. In other cases, the IP rights may form a part of a larger commercial transaction, such as, mergers, acquisitions, distribution agreements. jQuery("#footnote_plugin_tooltip_8766_5").tooltip({ tip: "#footnote_plugin_tooltip_text_8766_5", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] }); With increase in quantum and complexity in commercial transactions, the arbitrability of purely contractual IP disputes arose very recently in recently in the EROS and Eurokids cases. These cases have rightly not applied SAIL’s holding about the inarbitrability of purely statutory I.P. claims to contractual IP claims.

Thus, as per the current position in India, there is no blanket bar on arbitrability of IP disputes. Instead, arbitrability is determined on the basis of nature of claims raised. Disputes of royalty, geographical area, marketing and other terms of the license agreements, which are purely contractual, would be arbitrable. Parties in India can and should freely arbitrate such disputes. However, a dispute of validity/ownership of an IP right should be decided by the court/assigned public administration, for the dispute would result in a judgement affecting the general public’s right to use the respective asset.

The position of infringement claims is dependent upon each case. Statutory infringement simpliciter would not be arbitrable in accordance with the Mundipharma and SAIL cases; while infringement arising purely out of contract will be arbitrable in accordance with EROS, Euro kids cases. However, often as is the case, if a counter-claim about the validity of IP right is raised against an infringement claim, the counter-claim needs to be resolved by the court for it would then be an action in rem. Pending such resolution, the arbitration may be stayed.

This position on arbitrability will ensure a balance of rights between inventor/author and the general public, with inventor/author retaining the right to arbitrate contractual rights and courts retaining jurisdiction over claims that affect the general public. Such a balance is desirable for effective functioning of the IP regime as well. The possibility of easy dispute resolution would encourage inventors. Retaining the courts’ jurisdiction over matters where the public’s right to use copyrighted works and patented inventions is affected, would also ensure a robust public domain and safeguard public interest.

References   [ + ]

1. ↑ Natraj Studios Private Ltd v. Navrang Studios & Another, 1981 AIR 537 2. ↑ See, Chapter XII, Copyright Act, 1957; Section 135, Trade Marks Act, 1999; Chapter XVIII, Patents Act, 1970. 3. ↑ Note that this ratio had been upheld by an earlier case from the same high court called Eurokids International Media Ltd. v. Bhaskar Vidyapeeth Shikshan Sanstha (2015) 4 Bom CR 73. However, Eurokids case was never referred to by EROS, as should have been done in light of the precedential system followed by India. 4. ↑ Deepak Thorat v. Vidli Restaurant Limited, 2017 SCC OnLine Bom 7704 5. ↑ In some cases, an entire contract may be about an IP right. For instance, license agreements, joint research and development agreements, etc. In other cases, the IP rights may form a part of a larger commercial transaction, such as, mergers, acquisitions, distribution agreements. function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
by Edited by Niuscha Bassiri, Maarten Draye
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Section 1782 Discovery For Use In Private Arbitrations: The New York Saga Continues

Kluwer Arbitration Blog - Fri, 2019-03-08 03:00

Lucas Bento

United States Code Section 1782 has become the weapon of choice for international litigants seeking discovery in aid of foreign proceedings. Section 1782 allows an “interested person” (such as a foreign litigant) to apply for discovery over a person or entity “found” in the U.S. “for use” in a proceeding “in a foreign or international tribunal.” Significant uncertainty exists, however, in whether Section 1782 discovery can be sought for use in a private arbitration abroad.  In a prior Kluwer Arbitration Blog post, I reviewed a decision of the U.S. District Court of the Southern District of New York (“SDNY”) that granted an application for Section 1782 discovery for use in a foreign arbitration governed by the London Maritime Arbitration Association (“LMAA”).

While the Second Circuit has not weighed on this issue post-Intel (the leading Supreme Court case on Section 1782), a recent decision from the SDNY provides some additional insight on how New York federal courts interpret the statute, particularly in light of Second Circuit precedent (“NBC”) holding that Section 1782 does not apply to proceedings before private arbitral panels—until now one of only two circuit court decisions addressing the issue.  That precedent was called into question by a passage in Intel that parenthetically quoted a law review article authored by Professor Hans Smit—one of the principal advisers to Congress on the drafting of Section 1782—that included arbitration proceedings in an illustrative list of “tribunals.”1) See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 258 (2004); citing Smit, International Litigation under the United States Code, 65 Colum. L.Rev. 1015, 1026–1027, and nn. 71, 73 (1965) jQuery("#footnote_plugin_tooltip_6829_1").tooltip({ tip: "#footnote_plugin_tooltip_text_6829_1", tipClass: "footnote_tooltip", effect: "fade", fadeOutSpeed: 100, predelay: 400, position: "top right", relative: true, offset: [10, 10] });

In Children’s Investment Fund, the SDNY declined to follow NBC by holding that an arbitration governed by the London Court of International Arbitration (“LCIA”) rules fall within the purview of Section 1782.  The applicants were investors in a group of Mauritius private equity funds that were formed to invest in real estate in India.  Disputes eventually arose relating to the management of the funds, and the applicants initiated a series of actions in Mauritius, India, and an LCIA arbitration in the United Kingdom.  The applicants subsequently filed a Section 1782 application seeking discovery over certain individuals and entities in the United States for use in those foreign proceedings, including the LCIA arbitration.

In considering the threshold issue of whether an LCIA tribunal qualifies as a “foreign or international tribunal” under Section 1782, the SDNY noted that “the question of whether a private, foreign arbitration panel satisfies the ‘for use’ requirement of § 1782 is unsettled in th[e] [Second] Circuit.”  While the Court explicitly acknowledged NBC, it went on to note that “five years after NBC…. the Supreme Court cited an article by Professor Hans Smit including the text, ‘the term ‘tribunal’ includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts.”

In noting that the Second Circuit has not considered whether a private arbitration tribunal satisfies the “for use” requirement since Intel, the SDNY sided with the U.S. District Court of the Northern District of Georgia, which held that NBC no longer applies since Intel.  The Court consequently found that

“a private arbitration tribunal is a ‘proceeding in a foreign or international tribunal’ for the purposes of § 1782; therefore, the LCIA satisfies this statutory requirement.”

The decision is significant for foreign litigants who wish to use Section 1782 to obtain evidence from persons that “reside” or are “found” in New York for use in a foreign private arbitration.  It departs from the “shadow” of NBC and falls more heavily within the gravitational pull of the “weight of Intel” and the district court decisions citing Intel for the proposition that Section 1782 authorizes discovery for use in private arbitral proceedings.  While other SDNY decisions have also recently gone the other way,  perhaps the time is ripe for the Second Circuit to finally weigh in on the issue.

 

Lucas Bento FCIArb FRSA is the author of The Globalization of Discovery under 28 U.S.C. § 1782: Law and Practice (Kluwer Law International, forthcoming 2019).  He is a Senior Associate at Quinn Emanuel Urquhart & Sullivan and President of the Brazilian-American Lawyers Association.  The views expressed in this post are the author’s personal views, and do not reflect the opinions of Quinn Emanuel, its clients, or of the Brazilian American Lawyers Association.

References   [ + ]

1. ↑  See Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 258 (2004); citing Smit, International Litigation under the United States Code, 65 Colum. L.Rev. 1015, 1026–1027, and nn. 71, 73 (1965) function footnote_expand_reference_container() { jQuery("#footnote_references_container").show(); jQuery("#footnote_reference_container_collapse_button").text("-"); } function footnote_collapse_reference_container() { jQuery("#footnote_references_container").hide(); jQuery("#footnote_reference_container_collapse_button").text("+"); } function footnote_expand_collapse_reference_container() { if (jQuery("#footnote_references_container").is(":hidden")) { footnote_expand_reference_container(); } else { footnote_collapse_reference_container(); } } function footnote_moveToAnchor(p_str_TargetID) { footnote_expand_reference_container(); var l_obj_Target = jQuery("#" + p_str_TargetID); if(l_obj_Target.length) { jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight/2 }, 1000); } }More from our authors: Arbitration in Belgium: A Practitioner’s Guide
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Negotiation, Trump, and Lessons for the Future

ADR Prof Blog - Thu, 2019-03-07 10:49
Just wanted to highlight for everyone that the Negotiation Journal has published an amazing set of wide-ranging and interdisciplinary brief commentaries on Trump and negotiation in a special issue called Negotiation and Conflict Resolution in the Age of Trump.   You can find this at Wiley and a few of us have also posted our … Continue reading Negotiation, Trump, and Lessons for the Future →

The 2020 USNews Dispute Resolution Rankings

ADR Prof Blog - Wed, 2019-03-06 22:38
Today the USNews rankings of law schools and law school specialty programs were “leaked.”  That means they were distributed to law school deans to prepare their publicity statements, to trumpet the good and explain the bad.  And the specialty rankings were tabulated differently this year, requiring voters to rate every school for which they had … Continue reading The 2020 USNews Dispute Resolution Rankings →
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