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Hong Kong Arbitration Week Recap: ADR in Asia Conference – The Vision in Revision

Kluwer Arbitration Blog - Wed, 2018-10-31 20:00

James McKenzie and Wilson Antoon


Yesterday, participants at this year’s Hong Kong Arbitration Week came together to attend the centrepiece ADR in Asia conference.  The conference, titled “The Vision in Revision,” featured a veritable smorgasbord of speeches, panels and mocks and was held again at the Four Seasons Hotel.

Welcome Address and Keynote Speech

The conference was kicked off with a welcome address by current HKIAC Chair Matthew Gearing QC who announced the appointment of seven new council members to the HKIAC Council: Jianan Guo, José-Antonio Maurellet SC, Andrea Menaker, Catherine Mun, Ronald Sum, Robert Tang GBM, SBS, QC, SC, JP and Rimsky Yuen GBM, SC, JP.  Mr Gearing spoke to a number of positive developments at HKIAC, including the adoption of new rules which come into force on 1 November 2018 and a growing caseload.

Mr Gearing then yielded the conference floor to Professor George Bermann of the Columbia University School of Law who gave a keynote speech posing the question: why, when faced with recent scrutiny and an assortment of challenges, should the international arbitration community look to the future of arbitration with considerable equanimity?   Professor Bermann had three reasons for this.

  • First, he noted that the promised features of international arbitration had not receded in value. Confidentiality, party autonomy in constituting tribunals, finality of awards, ease of enforceability, and above all, the promise of neutrality, remain elementary advantages for arbitration that have not diminished over time.
  • Second, in his view, international arbitration has delivered further benefits that were not part of the “original promise”. These include an aptitude for procedural reform and adaptation that cannot be matched by national systems of litigation, the embrace of new technology, and the development of a dynamic and vibrant community of international arbitration practitioners.
  • Third, he noted that international arbitration has been able, relatively speaking, to avert anticipated risks, including arbitrators cutting procedural corners and not faithfully applying the law chosen by the parties. Professor Bermann said that whilst these might be occasional problems, they are not chronic.

So whilst challenges abound there was, according to Professor Bermann, much for arbitration practitioners (and indeed the day’s attendees) to look forward to.

Who Governs, Who Decides, And How? Arbitral Institutions Under Review

The first panel of the day delved into the inner workings of arbitral institutions in Asia and Europe, attempting to open up the doors in the major institutions’ decision making processes.   The panel was composed of leading members of arbitral institutions: Mr Gearing; Judith Gill QC, LCIA President; Alexis Mourre, President of the International Court of Arbitration (ICC); and Lucy Reed, Vice President, SIAC Court of Arbitration (SIAC) and chaired by Neil Kaplan QC.

Mr Kaplan kicked off discussion about the levels of transparency at the institutions in the decision making process posing the question: who decides things at each of the panel members’ respective institutions?  Each of the panellists introduced the decision-making bodies in their centres, with Mr Gearing noting that its key governing body, the HKIAC Council, has just been “revamped” with new term limits for its members and the aforementioned broadening of the Council.  Mr Kaplan questioned the panel about the transparency of these arbitral centres’ decision making processes and quizzed the panel on what their organisations have and are doing to increase transparency in this area.  All the panellists noted that their organisations publish decisions, particularly in relation to arbitrator challenges and (in most cases) where requested by parties with the ICC making these decisions available on its website.  Ms Gill noted however that not all decision making processes are susceptible to publication and cautioned that a balance needed to be struck.

Mr Kaplan then turned the conversation to the composition of the administrations’ governing bodies and the panellists’ attitudes regarding individuals sitting on governing bodies of multiple institutions.  Ms Gill pointed out the concern at the LCIA that, where there is functional matrix or similarity between roles held at different institutions there is a risk of conflict, though that each situation needed to be looked at individually.

After discussion of transparency in arbitrators’ and counsel’s rates, the panel discussed the topic of arbitration clauses in which parties agree a set of arbitration rules different from their usual administering institution.  All the panellists agreed that this was a vexed topic and that institutions have tried to work together to try to ensure that parties didn’t end up falling between the cracks of the institutions with a pathological clause and recourse only to the courts.  A protocol agreement between institutions on how this should be dealt with was suggested by Mr Kaplan and welcomed by all the panellists.  When queried from the floor whether the institution or the rules should be preferred in such a protocol the panel was unanimous: the rules should prevail.

One-On-One Session with Former Secretary for Justice Rimsky Yuen SC And Address by the Current Secretary for Justice

The first panel session was followed by two sessions with the former and current Secretary of Justices of Hong Kong: Rimsky Yuen SC and Ms Teresa Cheng GBS, SC, JP.  Mr  Kaplan remained on stage to interview Mr Yuen SC who said that in his five and a half years as Secretary for Justice, he had the privilege of participating in many interesting matters, both legal and political, including handling the Snowden case about which (when pressed by Mr Kaplan) he could unfortunately say very little!  When asked about his interests outside of law, Mr Yuen SC said that he is partial to a cigar dipped in whisky, but (of course) after rather than before any court hearings!  The session was rounded off with Mr Kaplan asking Mr Yuen a series of rapid-fire questions:

  1. International arbitration or litigation? A. Arbitration.
  2. Beatles or Rolling Stones? A. Beatles.
  3. Rugby or soccer? A. Soccer.
  4. Apple or Samsung? A. Samsung.
  5. Hong Kong or Singapore? A. Hong Kong, of course!
  6. Institutional or ad hoc arbitration? A. Institutional.
  7. Fine dining or bowl of noodles? A. The latter.
  8. If you were on desert island, what book would you take? A. A book on how to fish, in order to survive.
  9. What one luxury would you pick? A. Cigar. (of course)

 Ms Teresa Cheng then gave a forward looking address focussing on the future business and economic opportunities in Hong Kong, including the Belt and Road Initiative and the Greater Bay Area, and the Government’s policies to promote Hong Kong as an international hub for deal-making and dispute resolution.

Options for Urgent Relief – Which Ones are Most Effective and When?

The first afternoon panel, moderated by Charles Manzoni SC, QC, was on urgent relief and the options available to parties and tribunals.  Claudia T. Salomon outlined that the options available to a party seeking urgent relief include: (1) appointing an emergency arbitrator; (2) seeking interim relief once the full tribunal is constituted; or (3) applying to national courts for relief.

David W. Rivkin outlined a number of considerations in deciding between the three options: (1) confidentiality, (2) level of urgency, (3) degree of impartiality of a national court, (4) nature of the relief requested, (5) the kind of security it might have to provide in order to obtain the requested relief, and (6) the seat of the arbitration and whether an emergency arbitrator’s award will be enforceable in that jurisdiction.

Taking on board these considerations, the second panel on this topic sought to demonstrate them in practice in case scenario showcasing a request for interim relief before the Hong Kong courts and a parallel request for interim relief before an arbitral tribunal operating under expedited proceedings.   Christopher Moger QC introduced the scenario to the audience which involved an apprehended exercise of a contractual put option which was (on the Claimant’s case) a danger to the subject matter of underlying arbitral proceedings.  Simon Chapman appeared as Counsel for the Claimant, Sheila Ahuja as Counsel for the Respondent with Swee Yen Koh acting as arbitrator and José-Antonio Maurellet SC acting as judge.  Catherine Munn was as a commentator to the proceedings.

The respective Counsel took the mock tribunal and court (and of course the audience) through the relevant tests demonstrating the not insubstantial room for argument on the interpretation of the tests for interim relief under the 2018 HKIAC Rules (which, although yet to be in force until the next day, were held to apply) and the Arbitration Ordinance in arbitral and court proceedings.

In the end, Mr Chapman was successful in obtaining part of his relief before Ms Koh, who emphasised her deference to maintaining the status quo over prejudice to the Respondent’s contractual rights.  In the court proceedings, Ms Ahuja was successful as Mr Maurellet SC was not persuaded that the applicant had properly exhausted his avenues through arbitration and was therefore minded to make no order on the basis that the Mr Chapman might come back to the court if it was unable to do so.  Of course, Mr Maurellet SC noted, it would still be open to Ms Ahuja to argue that the applicant could not meet the test for injunctive relief at that juncture.

Summary Proceedings and their Enforcement in Asia – Are They a Positive Development?

On the final topic of the day, a panel consisting of Caroline Kenny QC, Professor Anselmo Reyes SC and William D. Stone SBS, QC and chaired by Cameron Hassall discussed the addition of summary proceedings and whether or not they are a positive development.    Ms Hassall introduced the newly introduced process for early determination under the HKIAC Rules and posed the question: if the Tribunal has wide powers to control and manage the arbitration why introduce an express provision for early determination.  There was divergence on the panel on this.

Ms Kenny QC, on the one hand, conceded that while the provision was not strictly necessary there are two points recommending inclusion of the rule:

  • First, having the rule meant in her view that it will be more likely to be used; and
  • Second, the fact that the rule is expressly included in the rules will reduce the likelihood of challenged to awards on the basis of a lack of due process.

Professor Reyes SC, on the other hand, was less sure because by putting in the rule it might imply that in previous versions of the rules such relief is not available and might lead to additional challenges.

All of the panel raised concerns with meeting the particulars of the procedure and timetable, with Professor Reyes SC noting his worry about doing so under a recent SIAC procedure. He noted the difficulty, given the seriousness of the decision yet the brevity of timeframes under the SIAC procedure that formulating and providing the parties with adequate reasons for a decision was difficult.  Ms Kenny QC noted that the strict process in a sense might be welcomed in that it forces the Tribunal to be more rigorous about setting deadlines for the parties and thinking differently about the application.  The panel also discussed the differing legal tests under the summary determination procedures under the SIAC and HKIAC Rules and the meaning of “manifest” in that context with Mr Stone QC putting it somewhat tongue in cheek as “you know it when you see it”.  The panel concluded that whilst there were concerns about the adoption of the early dismissal proceedings in the new HKIAC Rules and indeed summary procedures in general, it was too early to tell their success or otherwise.

Closing Remarks

It fell finally to the current Secretary-General of HKIAC, Ms Sarah Grimmer, to close the conference by re-capping the day’s events and detailing an exciting roster of activities for HKIAC in the coming year.  Amongst these events: the renovation of HKIAC’s premises; the launch of the inaugural HKIAC Lecture in Beijing; a legal summit focusing African arbitration; and (of course) next year’s Hong Kong Arbitration Week, to be held from 21-25 October 2019 and in which, no doubt, another packed day of ADR in Asia will again be a centrepiece.

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The post Hong Kong Arbitration Week Recap: ADR in Asia Conference – The Vision in Revision appeared first on Kluwer Arbitration Blog.

Nigerian arbitrators battle job loss to foreigners - The Punch

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Hong Kong Arbitration Week Recap: Making Arbitration Fit for the Future

Kluwer Arbitration Blog - Tue, 2018-10-30 20:00

James Kwan, James Ng and Kathy Tang

Hogan Lovells hosted an event yesterday, 30 October 2018, at its Hong Kong office, as part of the Hong Kong Arbitration Week, titled “Making Arbitration Fit for the Future”.  The event was graced by the presence of Bernard Hanotiau as the keynote speaker, followed by speeches from HKIAC’s Sarah Grimmer and Hogan Lovells’ James Kwan, Julianne Hughes-Jennett and Dan González.

Keynote Speaker: Bernard Hanotiau

Bernard Hanotiau kicked off the seminar by noting its fascinating theme of making arbitration fit for the future, which in his view is to make arbitration as efficient as possible by adapting it to match the evolution of society.  Hanotiau believes that there is still room for institutional rules to be improved from an efficiency standpoint, such as expanding grounds for complex arbitrations, introducing summary or early determination procedures and providing secured online repository where documents can be uploaded.

To make arbitration fit for the future, Hanotiau said that practitioners and arbitrators need to step up to the plate by adapting and improving their practice of the arbitral process.  This can be done by making use of modern and appropriate technology, and take the initiatives to shorten the procedure where possible.  On technology, Hanotiau highlighted its importance to shrink a large number of files, and suggested that site visits may possibly be replaced by 3D models or augmented reality very soon.

When met with an audience question on how to balance party autonomy against a party’s demand for a 40-page post-hearing briefs, Hanotiau said that the Tribunal should first discuss with the parties on the way forward.  If the parties are in total disagreement and the Tribunal considers them to be unreasonable, it will need to make a final decision.  Hanotiau thought that parties should approve of Tribunals that put their foot down to make decisions.

Innovation: Improving Institutional Rules as the Answer

HKIAC’s Sarah Grimmer then took the floor and introduced the audience to the brand new HKIAC Administered Arbitration Rules, which will come into effect on 1 November 2018.  Grimmer explained that there were three key objectives behind the amendments in essence: time and cost saving measures, efficiency in complex arbitrations and relevance to developments in international arbitration.

Some of the noteworthy amendments that Grimmer highlighted include: a cap on the total fees charged by an emergency arbitrator; introduction of an early determination procedure; imposition of a three-month time limit to render an award after close of proceedings; amended deadlines to appoint an emergency arbitrator and to render an emergency decision; possibility to file an emergency arbitrator application before commencing an arbitration; express reference to concurrent proceedings; encouraging the effective use of technology and delivery of documents through an online repository system.

Artificial Intelligence in International Arbitration

James Kwan, an international arbitration partner at Hogan Lovells’ Hong Kong office, spoke about the tongue-twisting concept of “AI in IA”.  Drawing on the 2018 Queen Mary University of London International Arbitration Survey, Kwan pointed out that there is a sentiment towards the greater use in the future of artificial intelligence (“AI“) technology, with 61% of the survey respondents noting that “increased efficiency, including through technology” is the factor that is most likely to have a significant impact on the future evolution of international arbitration. Kwan then highlighted for the audience how AI is used in international arbitration, ranging from enhancing case management to predictive justice and even having AI arbitrators.

While enhancing case management is quite innocuous, predictive justice and AI arbitrators are certainly the more heated topics.  Some of the concerns highlighted by Kwan include the failure for predictive justice to take into account the “human factor”, due process and the right to be heard.  On AI arbitrators, while the idea is tempting, Kwan said that such concept is unlikely to happen in the immediate future given the various hurdles such as: whether machines can be qualified as arbitrators; nationality and security of AI arbitrators; and whether AI arbitrators are capable to render reasoned awards or suitable to decide disputes at all, given their lack of understanding of emotions.  As such, Kwan foresees that although AI is here to stay, in its current form AI can only assist and facilitate, but is nonetheless useful and will play an increasingly significant role in arbitration.  Referring to the Terminator series, Kwan concluded that lawyers and arbitrators can be assured that their services are still needed until the judgment day comes.

Human Rights and Arbitration

Julianne Hughes-Jennett, a partner at Hogan Lovells’ London office, then took the stage to talk about the relationship between businesses and human rights (“BHR“) as well as international arbitration. Drawing from both soft laws (such as the OECD Guidelines) and hard laws (such as national legislations), Hughes-Jennett said that states have the duty to respect, fulfil and protect human rights while corporations have the responsibility to respect the same.  In the context of investment treaty claims, human rights can be used both as a sword (e.g., breach of access to justice and due process obligations) and a shield (e.g., claimant’s breach used to either mitigate the compensation owed).

Hughes-Jennett pointed out that the types of BHR disputes referred to arbitration will either involve a victim against a business, or a business against another business.  However, there are certain challenges to overcome for this type of dispute such as consent to arbitrate, applicable law, public policy, inequality of arms and spurious claims.  Notwithstanding these challenges, BHR disputes have already been filed previously, such as the arbitrations brought before the Permanent Court of Arbitration based on the Accord on Fire and Building Safety in Bangladesh.  Hughes-Jennett concluded that BHR arbitration is undoubtedly a welcome initiative, but it would be important to carefully consider the legal, practical and policy challenges as well as to continue to consult stakeholders on this matter.

Increasing Efficient Access to International Arbitration

Last, but certainly not least, Dan González (Global Head of Hogan Lovells’ International Arbitration practice) spoke about increasing efficient access to international arbitration. González  pointed out the consistency from different surveys that arbitration is the preferred tool for dispute resolution, but that the top complaints about international arbitration from these surveys include costs, delay and time taken to resolve the dispute.

On technology, he noted that electronically stored information (“ESI“) is overwhelming practitioners, as an average employee now generates around 800 megabytes of electronic information per year.  González then shared some tips for promoting better efficiency in arbitral proceedings, which include:

  • Working with the opposing counsel at an early stage. To improve efficiency, parties should try to agree on the procedural order, reduction in the number of pleadings and the discovery procedure. Parties could consider putting mediation on the schedule, as this may lead to early resolution of the dispute, or narrowing down of the issues.
  • Avoid raising every dispute with the arbitral tribunal. Parties should attempt to reach an agreement with the opposing counsel on some issues, and avoid the temptation of raising every disagreement to the Tribunal. However, González reminded the audience that it may be appropriate in some cases to raise significant disputes, which may provide an opportunity to advance one’s own case.
  • Conduct the discovery process in a more efficient manner. Counsel should only ask for the documents we need, rather than engaging in a fishing expedition. González also pointed out the need to identify key custodians, develop intelligent search terms, understand ESI and use technology assisted review (predictive coding) wherever possible.

Questions and Answers

As a parting gift to the audience, Hogan Lovells’ Kent Phillips asked each of the speakers to look into their crystal balls and predict on the future of international arbitration.

Kwan was of the view that there will be a greater influence by Chinese parties in international arbitration, which is evident from the increase in caseload across arbitral institutions such as HKIAC, SIAC and ICC.  He also said that this influence can be felt by the recent amendments to institutional rules like the “med-arb” procedure.

Both Hanotiau and Hughes-Jennett agreed with Kwan, with Hughes-Jennett noting that the bulk of her caseload now involves Chinese parties in commercial arbitrations.  Her prediction, however, is that there will be a rise in BHR disputes.  This is because there are already clauses in place for these disputes, and that it all takes is for them to spring.

González thought that more ADR processes will surface alongside international arbitration, which was traditionally thought to be a form of ADR in the United States but now became the method of dispute resolution.  While it is possible that there will be more and more mediations being conducted by necessity and to save costs, it may be challenging to conduct mediation in other parts of the world due to cultural diversity.

Finally, Grimmer shared González’s view that arbitration will continue to be utilized by more and more parties, which is clear from the arbitral institutions’ recent case load performance and improvement in case management quality.  Grimmer agreed with Kwan that Chinese parties will be engaging more frequently in the arbitral process, and that arbitration – from across the spectrum of dispute resolution – will remain absolutely strong.

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The post Hong Kong Arbitration Week Recap: Making Arbitration Fit for the Future appeared first on Kluwer Arbitration Blog.

Turkish company seeks to enforce against Gabon

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Squire Patton Adds 2 To Paris Real Estate Practice - Law360

Google International ADR News - Tue, 2018-10-30 12:50


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Arizona State Welcomes Tibetan Lama Gelong Kalsang Rinpoche

ADR Prof Blog - Tue, 2018-10-30 12:47
In light of recent events, we are hosting what we hope to be a great and uplifting program on Tuesday and Wednesday Nov. 6th and 7th.  If you happen to be in the southwest, it would be great to have you join us.  Announcement is below. The Lodestar Dispute Resolution Center welcomes the Venerable Gelong … Continue reading Arizona State Welcomes Tibetan Lama Gelong Kalsang Rinpoche →

When Is Arbitral Jurisdiction Over Non-Signatories Delegated To the Tribunal?

At a recent gathering of arbitration lawyers that I attended, the leader of a seminar concerning the arbitration rights and duties of non-signatories asked if anyone in the audience disagreed with the proposition that under US arbitration law it is for the courts not arbitrators to decide whether and when a non-signatory may or must arbitrate. Not being totally at ease with the stated categorical proposition, I ventured the comment that the delegation of arbitrability issues to arbitrators pursuant to the “First Options” case law may operate as an exception to that rule, and potentially a rather broad exception at...
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The post When Is Arbitral Jurisdiction Over Non-Signatories Delegated To the Tribunal? appeared first on Marc J. Goldstein - Arbitration & Mediation.

Another Wrong Arbitration Decision in New Jersey

Business Conflict Blog - Fri, 2018-10-19 21:19

It’s not often that an excellent court simply misconstrues — or worse ignores — relevant state statutes and superseding federal law.  But the Superior Court Appellate Division of New Jersey seems to have done so.  We assume that it was trying to protect employees claiming age discrimination.  In fact, it accomplished the opposite and poorly served the utility of arbitration law in the State of New Jersey.

Plaintiff Marilyn Flanzman filed a complaint in New Jersey Superior Court alleging that her termination from her job constituted age discrimination, harassment and discriminatory discharge in violation of the New Jersey Law Against Discrimination.  Defendant employer, relying on an arbitration agreement executed by plaintiff, moved to compel arbitration.  Plaintiff resisted, claiming that the arbitration agreement was unenforceable as a matter of law because it do not set forth “the process for generally selecting an arbitration forum.”  The appellate court noted that plaintiff argued “that without that information communicated somehow in the agreement — whether it be by designating AAA, JAMS, or some other mechanism intended to replace her right to a jury trial — there exists no mutual assent.”

The Superior Court found for the employer.  The Appellate Division reversed, reasoning:

Selecting an arbitral institution informs the parties, at a minimum, about that institution’s arbitration rules and procedures.  Without knowing this basic information, parties to an arbitration agreement will be unfamiliar with the rights that replaced judicial adjudication.  That is, the parties will not reach a “meeting of the minds.”

Thus, in New Jersey, the parties to arbitration agreements (but no other types of agreements) must reflect, in drafting the agreement itself, “a clear mutual understanding of the ramifications” of agreement.  The agreement must identify “what rights replaced their rights to judicial adjudication.”  The court did not require that AAA be engaged, and held that simply setting forth an agreed method for appointing a panel of arbitrators might satisfy this requirement.  The point is that “the parties must mutually understand what rights replace those that they gave up.”

The court rendered this opinion without hindrance from — and indeed only a single citation to — the New Jersey Arbitration Act.  Former Presiding Judge of the Appellate Division William Dreier notes in his volume, New Jersey Arbitration Handbook,  that N.J.S.A. 2A:23B-6 makes enforceable any agreement “to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement” without that agreement’s reciting its consequences.  N.J.S.A.  2A:23B-4(b) provides that such agreements may not, with respect to subsequent controversies, purport to restrict such rights as notice of the initiation of arbitration or representation by a lawyer, but nothing in the statute requires that arbitration agreements must include consent of who should act as arbitrator, or what rules will be used.  Indeed, N.J.S.A. 2A:23B-11(a) provides that “if the parties to an agreement to arbitrate agree on a method for appointing an arbitrator, that method shall be followed, … [and] if the parties have not agreed on a method.. the court shall appoint the arbitrator,” thereby contemplating that an enforceable arbitration agreement may not include a provision for naming an arbitrator.  As for the process by which the proceeding shall be conducted, N.J.S.A. 2A:23B-15(a) provides that “an arbitrator may conduct an arbitration in such manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding.”  It this contemplates that the method of the arbitration shall be determined by the arbitrator in the course of the proceeding, not by the parties in the course of the arbitration agreement.

By rendering invalid arbitration agreements that do not contain “the ramifications” of the selection of arbitration, the Appellate Division not only amended the New Jersey Arbitration Act by judicial fiat.  It also required that arbitration contracts contain provisions unique to them and not required by any other contracts — thus treating arbitration contracts differently from others, in violation not only of N.J.S.A. 2A:23B-6, but the Federal Arbitration Act and all judicial decisions interpreting it, which constrain state courts through the Supremacy Clause.  Could a party to any other type of contract in New Jersey contest its validity on the ground that the party did not understand the consequences of certain of its provisions?

How this came about, I am at a loss to speculate.  But this blog has previously noted instances where New Jersey courts have taken upon themselves what they seem to believe is a responsibility to protect consumers and employees from the perceived unfairness of agreements to arbitrate disputes.  The validity of such agreements, however regrettable they may be as a matter of policy, is well established — in the United States, if not in New Jersey.  In order to be enforceable in New Jersey, arbitration agreements now must feature certain provisions that arbitration agreements in neighboring states need not.   Were plaintiff Flanzman to have lived in neighboring Pennsylvania or New York, would her agreement to arbitrate have been rendered invalid on these grounds?

Two Valued Honors for Business Conflict Management LLC

Business Conflict Blog - Wed, 2018-10-17 19:10

I am pleased to report that Business Conflict Management has been the subject of two valued instances of recognition.

First, I am pleased to advise that I am the honoree of the James B. Boskey Award as “2018 ADR Practitioner of the Year.”  The Dispute Resolution Section  of the New Jersey State Bar Association presents the Boskey Award annually to a practitioner in recognition of achievements in (1) informing and educating the public about Alternative and Complementary Dispute Resolution techniques; (2) encouraging and promoting reform and modernization of our legal system; (3) improving the relationship between the legal profession and the general public; (4) exemplifying the goals and purposes of the Dispute Resolution Section; and (5) service to the residents of the State of New Jersey. The Award is widely recognized as the highest honor that an individual can achieve in the development and practice of ADR in New Jersey.  I am very grateful to the Section, to the Bar Association, and to my colleagues for this distinction.

The 2018 “Mediation” issue of Who’s Who Legal has also designated me as among 24 “Leading Individuals” in Canada and the USA, as a result of “nominations from peers, corporate counsel and other market sources this year.”  The editors noted that I was considered “a standout practitioner who is a well-respected authority on conflict management, especially in the case of franchise, employment and insurance disputes.”

Again, I am very grateful to those who expressed such confidence and I hope to continue to serve both clients and the field.

Concerns on the New Singapore Convention

Business Conflict Blog - Tue, 2018-10-09 10:52

The United Nations Commission on International Trade Law (UNCITRAL) has announced agreement on a “United Nations Agreement on International Settlement Agreements Resulting from Mediation.”  Informally named the “Singapore Convention,” the instrument has been hailed as a long-sought mechanism to give cross-border disputants the confidence that, if they engage in mediation of international commercial disputes, any resulting agreement will be enforceable by its terms.  The rational stated in the Preamble to the Convention is “that the establishment of a framework for international settlement agreements resulting from mediation that is acceptable to States with different legal, social and economic systems would contribute to the development of harmonious economic relations.”

A review of the provisions of the proposed Convention reveal, however, many aspects that are inconsistent with fundamental attributes of commercial mediation as practiced in Western jurisdictions, including the United States and the United Kingdom.  Moreover, the Convention’s clear reliance on the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) exposes fundamental confusion in the distinction between enforcing a contract and enforcing an award.

  1. Concerns of Mediator Attestation to the Settlement Agreement

It is the intention of the drafters that this treatment of “enforcement” be granted only as to “agreement[s] resulting from mediation.”  The question then arises how to verify that an agreement presented to the court of a country that is a party to the Convention is one that resulted from mediation.  Article 4.1(b) sets forth four possible ways that the party seeking enforcement may prove that it is such an agreement.  Two of them contemplate that the mediator attest to that fact by signing either the settlement agreement or another document “indicating that the mediation was carried out.”

Many mediators conscientiously refuse to sign a settlement agreement.  Most American mediators follow the practice that, consistent with their mediation agreements providing that they not be subpoenaed as a witness, they neither draft nor execute any written memorial that may be interpreted as witnesses its execution or – even worse – including them as a party to the rights and obligations set forth therein.

Additionally, many mediators decline to comment on whether a mediation was carried out, and among what parties, in the exercise of their obligation of confidentiality.  My own mediation agreement, by which parties engage my services, provides in part: “The Mediator will maintain in strict confidence all information arising out of or in connection with this mediation regardless of the form that information might take.”  I understand this to embrace the fact that a particular party engaged in a mediation with another particular party on a particular date concerning a particular issue.  Although I sometimes refer to a mediation (for example, in the course of my teaching or training), I never reveal the names of the parties and often disguise the information by, for example, changing the date, gender, or substantive issue involved.  (See Standard V(A)(3) of the Model Standards of Conduct for Mediators (2005)).  To my knowledge, this is common practice in both the UK and the United States.  To not only permit but, in some cases, to require a mediator to reveal that information is inconsistent with both contractual and statutory provisions that are broadly recognized.

2. Concerns of Refusal to Enforce Grounded on Mediator Conduct

Article 5 sets forth grounds upon which a court in a subscribing State may refuse to enforce a settlement agreement arising from mediation.  Article 5.1(e) provides that an authority may refuse to grant the relief sought against a party to an agreement if that party furnishes proof that “[t]here was a serious breach by the mediator of standards applicable to the mediator or the mediation without which breach that party would not have entered into the settlement agreement.”

This provision can be interpreted as a map for counsel to relieve its client of its obligations under a settlement agreement, by focusing on the conduct of the mediator.  Even the most superficial review of the body of case law in the United States arising from FAA Section 10(a)(3) – authorizing the vacatur of arbitral awards for arbitral “misbehavior”, frequently arbitral failure to provide timely and sufficient disclosure – leads one to shudder at the mini-trials to which this provision is likely to arise.  What standards are applicable to this mediator and this mediation?  What conduct of the mediator constituted violation of those standards?  What witness to the alleged conduct is competent to testify as to the alleged violation?  Shall the mediator be called to explain why the contested conduct does not constitute a violation of the applicable standards?

And what of the deeply entrenched principles – subsisting (in my jurisdiction of New Jersey) in statute, court rule and private contract — that no party will subpoena the mediator to testify in any proceeding; that mediation communications are confidential; and that such communications are also privileged and may not be introduced in any proceeding?  Shall we have contested motion practice on whether proffered evidence of mediator misbehavior shall be admitted before the trier of fact in an action to deny “enforcement” of the settlement agreement?

3.  Holistic Concerns Regarding “Enforcement” of Mediated Settlement Agreements Generally

There is also the more holistic concerns about the entire idea that an agreement arising from mediation is “enforceable.”  Arbitrations result in awards – drafted by tribunals with authority – imposing obligations on the “losing” party that can certainly be enforced by their terms.  By contrast, settlements (whether mediated or not) result in agreements, with mutual obligations whose authority derives from the parties’ consent, and often they are incapable on their face of being merely “enforced.”

Take, for example, a cross-border mediated settlement in which one party agrees to supply the counterparty with such quantity of material as the counterparty “may reasonably require,” and to do so in a “commercially reasonable” period of time after notice.   The counterparty now complains that it did not receive the material when it was needed, and seeks to “enforce” the agreement.   What notice was given, by whom and to whom?  Was the amount required reasonable?  And was the time period “commercially reasonable”?

Or, as another example, by way of compromise in the course of a negotiation, a arty agrees to supply a store with chocolate cake at a lower price, and also to supply cakes that are “ethically sourced.”  It turns out that, unknown to anyone, the ingredients of the cakes were not ethically sourced and the store seeks to “enforce” the mediated settlement agreement, by holding the defrauded supplier strictly liable for its “breach” of the settlement agreement.  Under commercial practices, the Convention on the International Sale of Goods, or other standards, is the supplier in breach?  And is it a fundamental breach?  And does the agreement support lost profits?  Exemplary damages?

In both these cases, an arbitration tribunal may interpret the contract, resulting in an award that is enforceable by means of the New York Convention.  But may a court “enforce” the settlement agreement on its terms by means of the Singapore Convention?

Litigation Conduct Waivers and the New York Convention

Today’s post concerns waiver of the right to arbitrate by an ambivalent plaintiff in a US District Court, and under what conditions it might be appropriate for a US District Court, applying the New York Convention and FAA Section 206 (governing motions to compel arbitration under arbitration agreements covered by the Convention), to decide that such a waiver by virtue of the litigation conduct of the plaintiff renders an arbitration agreement “null and void” (or “inoperative”) under Article II (3) of the Convention*. Every sermon needs its text, and today our text is a recent case from Silicon Valley: Hebei...
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The post Litigation Conduct Waivers and the New York Convention appeared first on Marc J. Goldstein - Arbitration & Mediation.

Mediation Summit in Changsha, China

Business Conflict Blog - Mon, 2018-09-17 04:46

The China Council for Promotion of International Trade (CPPIT) in conjunction with its Hunan Province Sub-Council convened a dynamic Mediation Summit in Changcha, China, on 12-13 September 2018.

The first panel discussed implications of the Belt/Road Initiative, announced five years ago.

GAO Xiaoli, Deputy Chief Judge of the Civil Tribunal of the Supreme People’s Court, addressed how Chinese courts can provide assistance in international disputes, particularly international commercial mediation.  She noted that increased engagement in international trade has challenged China’s capacity to resolve commercial trading disputes efficiently and in line with disputants’ interests.  She rejected the model of mediation as a substitute for litigation, and suggested that there is no need to approach the challenge with an “either/or” attitude.  It does require that mediated agreements be enforceable (either judicially or through the notary process), strengthening the effectiveness of the international mediation process.  Enforcement proceedings should also be quick and not protracted, and sensitive to commercial demands.  She proposed certain procedural administrative improvements to support the growth of mediated resolutions.  Some of these – such as court-appointed mediation — were promulgated already by decree dated 27 June 2018.    (A later panel, which I moderated, addressed enforcement of mediated settlement agreements through the newly promulgated Singapore Convention.)

Pasit ASAWAWATTANAPORN, Managing Director of the Thailand Arbitration Center, noted that his country is an important trade and investment partner with China.  It has benefited from China’s aggressive investment activities in connection with Belt/Road, resulting in a 10% growth in Chinese trade.  Thailand’s own infrastructure plans are heavily influenced by Belt/Road, for example the high-speed train from China through Laos to Thailand.  These public and private investments amount to at least 1.5 trillion baht (USD 45 billion) in the past five years, including roads, airports, hospitals, ports and tourism.  In acknowledgement of the critical nature of the success of these projects, the Thai government has eased restrictions on foreign workers, loosened regulations of procurement laws, and – in the case of the high-speed train project – taken actions to anticipate and forestall disputes.  He noted that arbitration is not the ideal approach inasmuch as disputes in this area are best addressed early, inexpensively, and with the goal of a consensual outcome.

CHEN Fuyong, Deputy Secretary General of the Beijing Arbitration Commission, offered several case studies of disputes that have arisen from activities associated with Belt/Road.  One was a construction dispute between a Hong Kong and Beijing corporations to complete a construction located in Russia, featuring an arbitration clause before the Beijing Arbitration Center.  Claimant initiated such an action, but Respondent sought to enforce the requirement of mediation prior to arbitration.  The arbitral tribunal interpreted the Russian “Development Project General Contract” to be too general to enforce, and permitted the arbitration to go ahead.  In another case involved a purchase agreement providing for payment by the acquired company of contingent debt or outcomes of lending legal proceedings.  Dispute resolution proceedings were sufficiently vague as to be commercially ineffective.  The lesson is a general one – clarity matters when drafting dispute resolution agreements and when transferring risk through contracts of insurance.

Prachant KUMAR, of the Bar Association of India, noted you can choose friends and enemies but not neighbors, and the close regional reliance with China has dictated consensual, non-confrontational dispute resolution processes between Chinese and Indian businesses.  Cultural traditions such as frugality, efficiency, and attention to elders inform the use of consensual resolution processes in the region; it is simpler and more cost-effective than alternatives.  He warned of the risk that, as happened with international arbitration, the simple features of mediation may be made obscure, legalistic and expensive if appropriated by the legal community.  He used an iPhone as an example of something that contains much expertise, but is designed to be very simple for the user of the device.  He urged that companies engaging in cross-border deals opt for simple agreement language, close monitoring of local advisors, and early attention to operational issues that, if left unattended, could develop into formal, disruptive disputes.  He reported on a 2018 initiative in Indian courts that commercial disputes be mandatorily referred to mediation – an effort that, if successful, could have a substantial and welcome impact on the state of civil justice in India.


Supreme Court Grants Cert Addressing Delegation of Arbitrability

Business Conflict Blog - Thu, 2018-07-05 13:46

Upon reconvening in October 2018, the Supreme Court will take up  an interesting question involving the familiar rules of First Options v. Kaplan:  Who is to decide whether a claim is subject to arbitration — a court or the arbitrator?  The peculiar facts giving rise to that concern in Archer and White Sales Inc. v. Henry Schein Inc. broaden, rather than limit, the case’s interest.

Archer, a distributor and seller of dental equipment, brought a suit against Schein, a manufacturer, alleging violations of the Sherman Antitrust Act through a pattern of conduct including price-fixing and anti-competitive agreements that were continuing.  The suit sought both money damages and an injunction prohibiting the continuing conduct.

Schein moved to compel arbitration pursuant to an arbitration agreement that required the application of AAA Rules and that carved out of its scope “actions seeking injunctive relief.”  The Magistrate Judge granted the defendants’ motion to compel arbitration on the grounds that (a) the choice of AAA Rules evince an intention to delegate arbitrability to the arbitrator, and that (b) the arbitration agreement can be reasonably construed as contemplating the inclusion of this dispute.

(AAA Rule 7(a) provides that an “arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.”)

The district court vacated the Magistrate Judge’s order and held that the dispute was not arbitrable  pursuant to the arbitration agreement, because it expressly carved out any claim for the injunctive relief sought by the plaintiff in the action.

Upon appeal to the Fifth Circuit, the parties agreed to the existence of an arbitration agreement, but not to whether its scope included the filed action.  Following its precedent in Douglas v. Regions Bank, the court entered into a two-step analysis, asking first whether the parties “clearly and unmistakably” intended to delegate the question of arbitrability to an arbitrator, and second whether there is a plausible argument for the claim’s being arbitrable.  This is so because, according to the Douglas analysis, if the argument of arbitrability is “wholly groundless,” it made no sense to send to an arbitrator a dispute as to which there are no grounds whatsoever for arbitration.

As to the first step — whether the parties unmistakably agreed to delegate arbitrability — the court skirted the question of whether AAA Rule 7(a) delegated the question of arbitrability to claims that are subject to the carve-out in the arbitration agreement.  Instead, it held that the second Douglas step was dispositive irrespective of the resolution of that first inquiry.  That second-step analysis was straightforward, according to the Fifth Circuit.  The arbitration agreement “expressly excludes certain types of disputes,” and among them are claims for injunctive relief.  Here we have a dispute where the claimant seeks injunctive relief.  Any conclusion  that the claim is subject to arbitration is therefore “wholly groundless,” and the court could see “no plausible argument that the arbitration clause applies” to it.  The district court therefore properly determined that the action was not subject to arbitration, and its order denying defendants’ motion to compel was affirmed.  “The mere fact that the arbitration clause allows [plaintiff] to avoid arbitration by adding a claim for injunctive relief does not change the clause’s plain meaning.”

[Note to Self:  Revise slide 19 of the “Drafting Arbitration Clauses” Power Point!]

So we have several interesting questions.  Does a clause carving out “actions seeking injunctive relief” carve out that portion of an action that seeks an injunction, but preserve that portion that seeks monetary damages?  Is the idea of booting “wholly groundless” claims of arbitrability properly applicable only to claims having nothing whatsoever to do with the contract at issue (say, a claim for an unrelated, non-contractual injury)? In determining the “wholly groundless” nature of the assertion of arbitrability, is the court improperly construing the arbitration agreement, in derogation of the parties’ determination that the arbitrator should do so pursuant to AAA Rule 7(a)?  Is there an at-least-colorable construction of the carve-out language that would hold that the parties may come to court to seek injunctive relief, but must arbitrate claims for money damages?

At least we will have no doubt about “who decides” these questions — the Supreme Court will.

Music for Mediators

The Mediation Times - Sun, 2013-05-26 16:07
For years I have talked about the similarity of mediation with both photography and music, particularly jazz. I have been clearing out my inbox and came across an hilarious email trail between some of the UK’s top mediators. The topic – songs for mediators, parties and mediation! I thought I would share … Thank to [...]
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