Author: CPR Staff

Meet CPR’s Appellate Panel: Hon. Christopher Droney

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Hon. Christopher Droney

Periodically, CPR showcases various members of our Distinguished Panel of Neutrals. We are pleased to introduce a new feature, “Meet CPR’s Appellate Panel,” and begin with this interview with Judge Christopher Droney, of Day Pitney LLP.

Droney is a former Judge for the United States Court of Appeals for the Second Circuit and the United States District Court for the District of Connecticut, as well as the former United States Attorney for the District of Connecticut. As a federal court of appeals and district judge, he presided over many trials and appeals in all matters that come before the federal courts, including intellectual property, unfair trade practices, employment discrimination, class actions, securities matters, commercial matters, antitrust, technology, insurance and corporate disputes.

A member of faculty for the National Advocacy Center, he taught at the Yale Law School and the University of Connecticut School of Law in trial and appellate courses. As U.S. Attorney, he was a member of Attorney General’s Advisory Committee of U.S. Attorneys and co-chair of its Civil Issues Subcommittee. He is also a member of the Committee of the U.S. Judicial Conference on the Administration of the United States Bankruptcy System and the Board of Directors of Federal Judges Association.

Q. How did you get your start as a neutral?

I got my start as a neutral fairly recently when I retired from the federal bench at the end of 2019.  However, before that I was a federal trial judge for fourteen years and a federal appeals judge for eight years.  In those positions I gained a great deal of experience in resolving disputes in so many different areas, whether it be commercial, trade secret, employment, antitrust, civil rights, class actions, securities and others.  I believe my time on the trial bench and the appellate bench combine for a rare insight into how to arrive at solutions for much-disputed matters and how to assess different sides of matters.  That experience also helps in seeing the essence of disputes and the best ways of drilling down on issues.

Q. Do you have any general words of wisdom for parties entering into deals and contracts, when it comes to anticipating future disputes and the right to appeal?

It is very often that the dispute resolution provisions of an agreement get little attention at the time the transaction is completed.  That is understandable as the parties typically expect success in all aspects of their relationship.  It is a mistake, however, to not give sufficient care in crafting those provisions and making them as specific as possible, especially as to the venue for resolving differences, the choice of law, the arbitral forum, etc.  In the unlikely event of the need for those provisions, at least the parameters of how to resolve the disagreement will be clear, and making headway in resolving substantive issues will be more timely.

Q. What makes your style of conflict resolution in the appellate context unique? How is it different from dispute resolution, pre-appeal? Do you have a particular philosophy or approach?

My experience on the Second Circuit is especially helpful.  I had eight years of dealing with complex issues in many different substantive areas and in attempting to achieve a common resolution with other judges.  I also gained a great deal of experience in becoming a “quick study” in very technical and complicated matters.  My experience in the district court helped greatly in being able to understand a variety of trial dockets and the procedures for resolving disputes, including practice rules and evidence.

Q. Which types of conflicts would you recommend for ADR and why?

Most business disputes lend themselves to ADR resolution as it is swifter than litigation, fair and thorough.  Perhaps technical areas are particularly well-suited to ADR resolution as the parties can select arbitrators or mediators who have background or experience in the particular area.  That is not always true in litigation.

Q. How can parties help to ensure progress when they reach an impasse?

If the parties reach an impasse, the best advice is to have an open mind about a creative solution.  Lawyers often are so close to their cases that they sometimes lose perspective and are not as open-minded as they could be. That is where the neutral comes in:  to offer solutions that perhaps counsel would not come up with on their own and to explain the positive aspects to all sides.

The CPR European Advisory Board Presents: “Meet CPR Distinguished Neutrals Based in Europe: Catherine Peulvé”

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The CPR European Advisory Board (EAB) continues its series “Meet CPR’s Distinguished Neutrals in Europe” and today it presents its next Q&A, with Catherine Peulvé, a commercial lawyer and mediator, CPLAW Paris, France.

  1. How did you get your start as a neutral?

I can date my start as a Neutral to the opening in Paris (France) of my law boutique CPLAW in 2007. Indeed, after several years with UK and US law firms (Freshfields Bruckhaus Deringer LLP/Cleary Gottlieb Steen & Hamilton LLP), including practicing abroad, I realized that despite being a lawyer and having gained a huge amount of experience as a litigator, I did not know so much about negotiation and mediation.

2. Who is your dispute resolution hero/heroine?

Charles-Maurice de Talleyrand, he is said to be the “Prince” of negotiators.  He is known for excellent preparation, obtaining and exploiting the necessary information, winning concessions and using lobbying strategies at private receptions: all principles that are still prevalent both around and outside the negotiating table.

3. What is the one piece of advice you would want to give to the younger generation looking for a first appointment as neutral?

“Give me six hours to chop down a tree and I will spend the first four sharpening the ax, ” said Abraham Lincoln, former president of the US. Thinking about this sentence, my advice to the younger generation would be learn how to learn and improve before doing. In other words, they must be well prepared. You can work hard as a neutral during sessions, but the magic happens when you have spent time preparing, structuring the process and perfecting your skills.

4.   Were you ever the first in doing something?

–     First women president of the Association for Business Lawyers (ACE) – Paris Section
–     First lawyer in my family
–     Winner of the Freshfields – Les Echos prize that launched my international career
–     Major of my student promotion at the Master’s Degree in Business and Economic, University of Panthéon Sorbonne Paris (1990)
–     Head of list of the ACE business lawyers for the election of the French National Council of Bars (CNB)

5. What makes your conflict resolution style unique?

I have been described, when appointed in a major, long-lasting, multi-dimensional mediation concerning a conflict that had been made public by the other side, as an outstanding mediator that managed the whole process in an extremely efficient manner, both in terms of ensuring the overall tone of the mediation and keeping the mediation on track over time.

My style is facilitative and I combine self-confidence with a sound command of the mediation framework, techniques and tools.

I invest time in training, keeping abreast of new tools that may enrich my practice.

6. What was the most difficult challenge you faced as a neutral?

The absence from the mediation table of a key family member in a complex inheritance and partnership dispute involving a real estate company. One of the sisters was  represented by her husband.  There was an uncomfortable atmosphere (the sister was kind of a “ghost” in the mediation), and I felt like the sessions were being recorded but I could not raise this issue upfront.

7.   What is the most important mistake you see counsel make?

Pleading their case rather than adopting a less adversarial style.

8.   If you could change one thing about commercial mediation [please chose one], what would it be?

Compulsory mediation: the French law of 23 March 2019 which reformed the justice system, introduced two new rules for amicable ADR: the principle of compulsory prior mediation in certain disputes and the possibility for any judge, in any matter, to order the parties in dispute to meet with a mediator. While the second option is a potentially interesting path, I regret the inclusion in our legislation of the first option (compulsory mediation), even on an experimental basis, for a number of reasons. It is inconsistent with the principle that the parties must be willing to mediate, particularly in commercial disputes, bringing them to the table before they are ready is unlikely to be beneficial.  Compulsory mediation undermines the principle of confidentiality which is the backbone of the success of mediation.  It is for the parties alone to determine the application of confidentiality obligations to their process, including with respect to the content and the outcome of the mediation as well as its existence. Making mediation compulsory obliges the parties to make the existence of their process public.  The new requirement could be counterproductive: for example, if the parties do not reach an agreement, it will obviously be very difficult to convince them to go to “real” mediation.

9.   Some specific topics:

What is your approach to cybersecurity and data protection in international dispute resolution?

Data security is important in all matters, including in dispute resolution. With respect to international dispute resolution, one must not only be cognizant of the requirements under the European General Data Protection Regulation but also of requirements in territories other than Europe and how the two sets of requirements operate (or not) in combination. As far as cybersecurity is concerned, we need to be attentive to protecting the confidentiality of information shared (arbitration and mediation, plus caucus confidentiality in mediation) and to choose the right tools to achieve that. So far as I am aware, CPR has been at the forefront of several pioneering initiatives in the field of cybersecurity and data protection over the past few years. 

10. What do you see as the next “big thing” in global dispute prevention and resolution?

The impact of the Singapore Convention on international business mediation.  I would like to share links to an abstract of an article I contributed to recently with other lawyers (French, Italian, Lebanese, Greek) on this subject : https://www.actualitesdudroit.fr/browse/civil/procedure-civile-et-voies-d-execution/26916/the-impact-of-the-singapore-convention-on-the-international-business-mediation

http://giustiziacivile.com/arbitrato-e-processo-civile/approfondimenti/limpatto-della-convenzione-di-singapore-sulla-mediazione

11. For which types of conflicts would you recommend mediation?

I think there are several good reasons for opting for mediation in business disputes:

–     Long term relationships can generally be maintained
–     Confidentiality is preserved
–     Offers an exit from a deadlocked situation
–     Helpful if the legal background is complex or there is a lack of proof
–     The financial consequences of the conflict would be too high to risk in litigation
–     It is a matter of urgency

There are also good reasons for NOT initiating or stopping a mediation process :

–     Bad faith of one of the parties
–     A third party is missing (ex. insurer)
–     A third party does not want to change its position/demand
–     A judicial decision is needed (Public order, precedent, publicity…)

12. In your view, what makes CPR unique?

Before I joined, I was impressed by CPR’s reputation and amazed by its detailed and accurate communications on several ADR issues worldwide. Since joining, I have been convinced that CPR possesses the appropriate skills, tools and talents for being a major ADR Center and I have been impressed with its reactivity to the Covid-19 crisis.  In particular, with the training webinars, information sharing, messages to Neutrals to stand together and find solutions.

CPR = energy + information + sharing + adaptability

13. Do you have an anecdote you would like to share?

I was once asked by a mediation Center to draft a default report because one of the parties refused to enter into the mediation process.  I was able to transform the situation into a fruitful and effective mediation, that ended with a successful and long term agreement between the companies.

I have been asked sometimes to give my tips on how I achieved this turn around. Although it is quite difficult to answer that question, I can share the following : (i) I urged the party not wishing to enter into the mediation process to be present at this meeting, and to be represented by one of its top guys; (ii) I was careful to ensure my attitude was very optimistic when meeting with the parties; (iii) I started to explain the rules and purpose of a mediation process.  Finally, the top guy, who made the effort to come and who had spent some time listening to what a mediation process entailed, probably understood that it was worth trying. Once we had reached that stage as part of the same meeting, I was meticulous about structuring the process (number of meetings /topics on the agenda / topics per meeting / participants and experts per topic…) and the rocket was launched to go for exploration.

Second Circuit: No U.S. Discovery for Private International Arbitration

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By Yixian Sun

Does 28 U.S.C. §1782(a), which authorizes “any interested person” in a proceeding before a “foreign or international tribunal” to ask for and receive discovery from a person in the United States, cover private international arbitration tribunals? (Full text available at https://bit.ly/3fvtr8z .)

This is a hot issue in the arbitration world, with cases sprinkled throughout the federal courts. In the latest decision, the Second U.S. Circuit Court of Appeals held last week that arbitration isn’t covered by Section 1782. In re Application and Petition of Hanwei Gup for an Order to take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. 1782 (Guo v. Deutsche Bank Securities Inc.), No. 19-781, 2020 WL 3816098 (2d Cir. July 8, 2020), as amended (July 9, 2020) (available at https://bit.ly/38SLd) (Guo).

And that move aggravates a circuit split created in recent months that points to the U.S. Supreme Court in an area that a year ago was considered settled law.

For more than two decades, the answer to the question on Section 1782’s applicability to private arbitral tribunals has been a firm “no.” In National Broadcasting Co. v. Bear Stearns & Co., 165 F.3d 184 (2nd Cir. 1999) (available at https://bit.ly/2UcWfdq) (“NBC”), the Second Circuit held that the phrase “foreign or international tribunal” does not encompass “arbitral bod[ies] established by private parties,” id. at 191. The Fifth Circuit quickly reached the same conclusion in Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999) (available at https://bit.ly/3gViPB0).

But the tide is turning. In 2019 and 2020, the Sixth Circuit and Fourth Circuit each decided that a private, party-contracted international arbitration panel constituted “tribunals” under Section 1782, in In re Application to Obtain Discovery for Use in Foreign Proceedings (Abdul Latif Jameel Transp. Co. v. FedEx Corp.), 939 F.3d 710 (6th Cir. 2019) (available at https://bit.ly/2AFPIB9) and Servotronics Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020) (available at https://bit.ly/3h7s0P8), thereby breaking with its sister circuits.

In the new July/August edition of Alternatives, and in an online discussion with Alternatives’ Editor Russ Bleemer, John B. Pinney, a senior trial lawyer at Graydon, in Cincinnati, provided an in-depth explanation on the changing landscape on this seemingly settled legal issue. See CPR Speaks for the discussion, the article, and links to the cases, at https://bit.ly/3gxyPIG.

Lying in the background of this debate is Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004) ((available at https://bit.ly/2zamp9C), the only Section 1782 case considered by the U.S. Supreme Court. In Intel, writing for the majority, Justice Ruth Bader Ginsberg held that the European Commission’s Directorate-General for Competition constituted a “foreign or international tribunal” within the meaning of Section 1782.

Intel did not directly address the issue of whether a private international tribunal is a “foreign or international tribunal.” Ginsberg’s opinion, however, cited a 1965 law review article written by Columbia Law School’s Professor Hans Smit, who has participated in the amendment of Section 1782: “the term ‘tribunal’ … includes investigating magistrates, administrative and arbitral tribunals, and quasi-judicial agencies, as well as conventional civil, commercial, criminal, and administrative courts.” Id. at 248-49 (citing Hans Smit, International Litigation Under the United States Code, 65 Colum. L. Rev. 1015, 1026, n.71 (1965)).

The Intel court’s favorable reference to Smit’s expanded interpretation of “foreign or international tribunals” was used by the Sixth Circuit as an additional support of its inclusion of private international arbitration under Section 1782. In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d at 724.

This fact was also heavily relied upon by the petitioner in the new Second Circuit Guo decision. As noted, the panel rejected the petitioner’s reasoning, and concluded that “nothing in the Supreme Court’s Intel decision alters [its] prior conclusion in NBC that §1782 (a) does not extend to private international commercial arbitrations.” In re Guo, at *2.

* * *

In 2018, Hanwei Guo initiated arbitration against Guomin Xie, Tencent Music, and several other entities before the China International Economic and Trade Arbitration Commission, best known as CIETAC. Id. at *4.

According to Guo, Xie and other respondents, through a series of fraudulent transactions, led him into selling his shares in the companies that later became part of Tencent Music for less than the shares allegedly were worth. Guo asked for compensation and asked to have his equity stake restored. The parties selected an arbitral panel in April 2019, and the matters are still pending. Id. at *3-5.

In December 2018, Guo filed a petition for discovery for information from four underwriters related to Tencent Music’s IPO pursuant to Section 1782 in New York’s  Southern District Court. Following the NBC precedent and determining that the nature of CIETAC is closer to a “private arbitral body,” the SDNY denied Guo’s application in February 2019. In re Application of Hanwei Guo for an Order to Take Discovery for Use in a Foreign Proceeding Pursuant to 28 U.S.C. § 1782, 2019 WL 917076, at *3 (S.D.N.Y. Feb. 25, 2019).

The Second Circuit affirmed last week. According to the panel, private international commercial arbitrations are still barred from proceedings under Section 1782 even in the wake of the Supreme Court’s Intel decision. The panel also determined that the arbitration before CIETAC is indeed a “non-covered, private, international commercial arbitration.” In re Guo, at *1-2.

Writing for a unanimous panel, Judge Debra A. Livingston offered several reasons in defending why NBC remains good law.

The Second Circuit recounted the NBC-Intel history, and tackled the recent Fourth and Sixth Circuit cases going the other way, finding that Section 1782 applied to private arbitrations. 

Judge Livingston noted that the Intel court’s “fleeting reference” of “arbitral tribunals” is merely dicta. Id. at *17. Even if this reference had any legal significance, she added that under Section 1782, “‘arbitral tribunals’ does not necessarily encompass private tribunals,” because even Prof. Smit stated that “an international tribunal owes both its existence and its powers to an international agreement.” Id. (Quoting Hans Smit, Assistance Rendered by the United States in Proceedings Before International Tribunals, 62 Columbia L. Rev. 1264, 1267 (1962); the opinion also points to NBC, 165 F.3d at 189 (citing Smit’s 1962 article)).

Moreover, according to the Second Circuit panel, the legislative history does not warrant recognition of private international arbitration as “tribunals” under Section 1782. While Congress introduced the phrase “foreign or international tribunal” in order to expand the provision’s earlier formulation (which permitted for assistance only for “judicial proceeding[s] in any court in a foreign country”), a survey of House and Senate reports did not reveal the legislators’ intention to promote a “much more dramatic expansion into private arbitration.” Id. at *18-19. (Emphasis is the Second Circuit’s.)

The Second Circuit then found that the CIETAC arbitration did not qualify as an arbitration under a state-sponsored adjudicatory body, noting that “district court correctly concluded that the CIETAC arbitration is a private international commercial arbitration outside the scope of § 1782(a)’s ‘proceeding in a foreign or international tribunal’ requirement.”

In doing so, Judge Livingston analyzed whether “the [arbitral] body in question possesses the functional attributes most commonly associated with private arbitration.”

Several factors were taken into account. First, CIETAC, evolving from a government-sponsored entity, now “possesses a high degree of independence and autonomy” in its administration of arbitral cases, “and, conversely, a low degree of state affiliation.” Id. at *21-22.

Second, the power possessed by the Chinese government to “intervene to alter the outcome of an arbitration after the [CIETAC] panel has rendered a decision” is limited. In fact, such power is similar to that possessed by a U.S. court in setting aside or enforcing a private arbitration award under the Federal Arbitration Act and its incorporation of the New York Convention on the enforcement of international arbitration awards. Id. at *22-24.

Third, the CIETAC panel derives its jurisdiction “exclusively from the agreement of the parties,” rather than “any governmental grant of authority.” Id. at *24.

Finally, the ability of the parties to select their own arbitrators further suggests the private status of the CIETAC arbitration. Id. at *24-25.

* * *

The Second Circuit’s ruling mirrors the Fifth Circuit opinion in El Paso Corp. v. La Comision Ejecutiva Hidroelectrica Del Rio Lempa, 341 F. App’x 31 (5th Cir. 2009) (unpublished) (Available at https://bit.ly/3gXOTU7). There, the Fifth Circuit held that Intel has no negative effect on its Biedermann analysis, and concluded that a private Swiss arbitral tribunal did not constitute a “tribunal” within Section 1782. Id. at *34.

Judge Livingston also responded to the more-recent contrary rulings made by the Sixth and the Fourth Circuits. She pointed out that the Sixth Circuit never said that Intel compels a ruling allowing discovery for private arbitration. Rather, it held that such a way of understanding “was merely consistent” with Intel. In re Guo, at *17 (emphasis is the Second Circuit’s); see also In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d at 725-26.

The Fourth Circuit’s Servotronics opinion, on the other hand, was based on the finding that the U.K. arbitration at issue was a “product of government-conferred authority,” thereby falling into the same framework as the Second and the Fifth Circuits which limited § 1782 to tribunals “acting with the authority of the State.” In re Guo at *14 (quoting Servotronics, 954 F.3d at 214).

Indeed, the Intel decision neither compelled, nor rejected, the inclusion of private international commercial arbitration under Section 1782.

Therefore, before a directly on-point Supreme Court opinion, lower courts are free to make their own judgments, according to their own statutory construction methodologies, policy considerations, and factors considered in determining the nature of a foreign tribunal.

The Second Circuit relies more on legislative history in understanding the scope of “tribunals,” but the Sixth Circuit uses a textualist approach and looks into the usage of “tribunals” in legal writings. Compare In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d at 726-28, with In re Guo at *18-19.

The Second Circuit fears that allowing discovery would decrease the efficiency and the cost-effectiveness of private arbitration, whereas the Sixth Circuit appear to dismiss such concerns. Compare In re Application to Obtain Discovery for Use in Foreign Proceedings, 939 F.3d at 728, with In re Guo at *11. The Second Circuit believes that the fact that arbitrations are sanctioned, regulated and judicially supervised by the national authority does not suffice to make them “state-sponsored,” while the Fourth Circuit holds the contrary. Compare Servotronics, Inc. v. Boeing Co., 954 F.3d at 214-15, with In re Guo at *21-26.

* * *

One thing seems to be certain. A Supreme Court response is strongly called for. In a motion to stay issuance of the mandate, Rolls-Royce, the appellee in the Fourth Circuit’s Servotronics decision, represented that it intended to file a petition for certiorari to the Supreme Court.

Now that the Second Circuit refuses to change its position, author John Pinney predicted that the odds of the Supreme Court granting certiorari would increase. John B. Pinney, “Will the Supreme Court Take Up Allowing Discovery Under Section 1782 for Private International Arbitrations?” 38 Alternatives 103 (July/August 2020) (available in multiple formats at https://bit.ly/2ZwUt8N).

Other commentators, share similar expectations with Pinney. See, e.g., David Zaslowsky, “Second Circuit Holds That Section 1782 Discovery is Not Available in Aid of Private International Commercial Arbitration,” Global Arbitration News (July 10, 2020) (available at https://bit.ly/2CDUzne). Stay tuned for the next development.

* * *

The author, a second-year Harvard Law School student, is a 2020 CPR Institute Summer Intern.

UN Report Lauds Mediation Expansion

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By Seorae Ko

In its 2019 annual report from its Office of the Ombudsman for United Nations Funds and Programmes, released in May, the United Nations celebrated significant progress in expanding mediation as a method of solving workplace conflicts.

The report identified it as one of “the greatest achievements of the past year.”

The Ombudsman Office has emphasized mediation use as a way of intervening in the UN’s internal workplace disputes. The office, which helps UN staff “resolve workplace conflicts in an informal, confidential manner with the aim of maintaining a harmonious workplace environment,” provides an informal grievance procedure for several big UN agencies and programs.

In 2018, the executive director at UNICEF, one of the UN agencies the Ombudsman office serves, commissioned an Independent Task Force on gender discrimination and harassment issues. As recounted in the recent Ombudsman Office annual report, the ITF report identified a number of areas that demanded improvement. In response, the executive director put forth immediate measures, one of which promoted the expansion of UNICEF’s mediation services.

Consequently, UNICEF moved to strengthen its mediation capacity and to provide a systematic, informal mediation option for workplace disputes. The effort included the creation of a team of “on-call external mediators” in the Office of the Ombudsman. To improve the reach and quality of services provided by these external mediators, a variety of measures have been adopted.

The Ombudsman Office’s Global Mediation Panel mediates workplace disputes worldwide. The annual report explains that the initial panel members have been identified, selected, and trained by the office in consultation “with some of the world’s leading mediation organizations as well as with the ombudsman offices of other international organizations.”

The goal is to have one or two on-call mediators available in every country where UNICEF has a presence.

In terms of quality, the Office of the Ombudsman now contains a Mediation Specialist and a Mediation Officer, who work toward uniformity in mediation services. They ensure that mediators heed to UN regulations and rules, and follow a mediation code of conduct developed by the Office.

The Office has also embedded quality control mechanisms in the mediation process, by allowing mediation users to discuss their concerns through surveys, with the Mediation Specialist, and with the Ombudsman directly. The office’s International Advisory Board further aids users in addressing their complaints, acting as a potential check on the Ombudsman’s recommendations.

The profiles of external mediators and board members are posted on the Office’s website to ensure transparency. See: https://fpombudsman.org/global-mediation-panel.

UNICEF has complemented the above measures with broader policy updates that increase support for mediation. New rules spell out that staff members are “strongly encouraged” to seek informal resolution mechanisms, including mediation, to “avoid unnecessary litigation.” The rules also allow organizations to suggest mediation to staff members. The report comments that, although these changes fall short of an opt-out mediation model, they are conducive to increasing the use of mediation.

Furthermore, the report identifies that the Office of the Ombudsman’s efforts have been successful because they found the sweet spot in boosting both supply and demand for mediation. The supply side includes having an appropriate number of mediators and providing a solid regulatory framework. The demand side includes training in, and promotion of, mediation services.

The report suggests that past attempts to expand mediation produced lukewarm results because they failed to address this double-sided need. For years before 2019, the United Nations attempted to “make mediation the ‘natural’ step to deal with employment disputes.” In its 2015 annual report, the Ombudsman’s Office had already identified mediation’s potential as a key tool in workplace dispute resolution, and commented on its underutilization.

In 2016, the office observed the positive impact of mediation in cases involving several stakeholders and a substantial degree of complexity. The 2017 and 2018 reports took it a step further, proposing an opt-out system of mediation, which was not adopted.

But the 2019 annual report shows that the office’s continued interest in mediation produced results. The latest report promotes mediation as a procedure that could both save significant resources in the pre-litigation stage and promote important values including self-determination and confidentiality. The report also warns that “successful dispute-resolution programmes worldwide include clear procedural disincentives to those who try to bypass mediation.”

These comments suggest that the United Nations will continue pushing hard to establish mediation as a preeminent pre-litigation procedure. Giuseppe De Palo, the Ombudsman for United Nations Funds and Programmes, described that “[the Office] took a clear position” in the report on “how to make mediation become mainstream.

The Office of the Ombudsman’s annual reports are available here; the office’s home page can be found at https://fpombudsman.org.

* * *

The author, a CPR Institute 2020 Summer intern, is a second year student at Harvard Law School.

Diversity in ADR and Anti-Racism Resources and Initiatives

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The following is a compilation of diversity and anti-racism resources, recommendations, and initiatives shared by CPR members and friends.

ADR Initiatives/Resources

Books/Articles/Reading Lists

Podcasts

Videos/Films

Additional Resources

Will the U.S. Supreme Court Allow Discovery in Private International Arbitrations?

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By Russ Bleemer

Under federal circuit court case law, 28 U.S.C. §1782(a) did not include private international arbitration tribunals under its provisions for ““Assistance to foreign and international tribunals and to litigants before such tribunals.”

In other words, “foreign and international tribunals” didn’t include arbitrations.

Suddenly, last fall, that court view began to change, and an esoteric and once-sedentary point of law is facing upheaval. 

In an article in the new July/August issue of Alternatives, and in the video above, John B. Pinney of Graydon in Cincinnati explains how seemingly settled law has erupted into six federal circuit court cases, and is about to be put before the justices of the U.S. Supreme Court on a cert petition.

Will the nation’s top Court take up the matter?

John ties together the cases and sets out the prospects on whether the Court will decide to incorporate arbitral tribunals into the §1782 definition in his just-posted article, “Will the Supreme Court Take Up Allowing Discovery Under Section 1782 for Private International Arbitrations?” 38 Alternatives 103 (available in multiple formats at https://bit.ly/2ZwUt8N; see altnewsletter.com for full issues and archives).

He also discusses in the video and the article the practice implications—what arbitrators, arbitration users, and providers need to do now in the wake of the evolving caselaw.

* * *

The author edits Alternatives to the High Cost of Litigation, on publisher CPR Institute’s website here, and on the Wiley Online Library at altnewsletter.com.

The CPR European Advisory Board Presents: “Meet CPR Distinguished Neutrals Based in Europe: Piotr Nowaczyk”

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The CPR European Advisory Board (EAB) continues its series “Meet CPR’s Distinguished Neutrals in Europe” and today it presents its next Q&A with Piotr Nowaczyk.

Piotr is based in Warsaw.  In addition to being a CPR Distinguished Neutral, he is a chartered arbitrator, advocate, the former president of the Court of Arbitration at the Polish Chamber of Commerce, a former member of the ICC International Court of Arbitration and a member of the VIAC Advisory Board. https://whoswholegal.com/piotr-nowaczyk

How did you get your start as a neutral?

In 1998 I was included on the roster of VIAC arbitrators and at around the same time I was appointed by the Court of Arbitration at the Polish Chamber of Commerce and recommended by the ICC Polish National Committee.  I believe my background as an ex-judge, advocate admitted in Poznan, Paris and Warsaw, partner at Salans (legacy firm of Dentons) and polyglot with an international background was helpful and has led to over 350 arbitration appointments in the last 20 years.

Who is your dispute resolution hero/heroine?

Pierre Karrer, Robert Briner and Eric Schwartz. 

Starting with the youngest (Eric Schwartz):  In 1991 I came to Paris, having been invited as a visiting lawyer by the Law Offices of S.G. Archibald.  Eric Schwartz was leading the arbitration practice there, together with Sarah François-Poncet.  He was an arbitrator in the dispute over the Egyptian Assuan Dam.  For me, a newcomer from Poland, it was my first introduction to a large-scale arbitration.  Later, our paths crossed many times.  Eric became Secretary General of the ICC Court of International Arbitration.  He wrote, together with Yves Derains, a Commentary on the ICC Rules of Arbitration.  About 12 years later I became a member of the ICC Court.  Eric became a partner at Salans Herzfeld & Heilbronn, where I was also a partner.  I organized his meetings and lectures in Warsaw.  To this day, I admire his calmness and composure.  He always speaks quietly and calmly about the most difficult matters.

Pierre Karrer was my favorite colleague among the members of the ICC Arbitration Court.  We usually sat side by side around the oval table at the court’s monthly plenary sessions.  I admired his comments on draft awards.  They were always light, accurate, often witty, and at the same time positive, even if critical.  We served as arbitrators on a few occasions and he gave me some practical advice.  For example, he advised me to separate the parties’ submissions.  He put the claimant’s submissions into the green file (“because, as at the pedestrian crossing, the claimant always wants to go forward”), and the respondent’s submissions into the red file (“because the respondent usually tries to stop the proceedings”).  The papers produced by the arbitral tribunal and the arbitral institution he assembled in a yellow binder.  In his house, he showed me specially designed shelves on wheels.  Each of them contained binders of documents regarding a particular case.  He moved them easily across the floor.  The files were bound in soft binders (“because they don’t damage the inside of the traveling suitcase”).  He gave me a lot of good advice. He said, “Piotr, if I have one dollar and I give it to you, it will be your dollar, not mine anymore. However, if I give you an idea or give you a thought, it will be mine and your thought, mine and your idea”.  He shared countless ideas and thoughts with me.  His famous multilingual Glossary of Arbitration and ADR was developed and expanded in Warsaw to include arbitration terminology in Czech, Polish and Russian.  It was my idea, his idea, our idea, my thought, his thought, or our common thought.

Robert Briner was the President of the ICC Court when I became a court member for Poland. He was one of the giants of international arbitration, a man of slightly old-fashioned ways, a gentleman always holding fast to his principles.  His three full terms of office making nine full years as president of the world’s biggest court of arbitration had left an indelible stamp on this institution.  He was an elegant, distinguished man, sparing in word and gesture.  He was ready to advise anyone who asked for his advice, in the simplest way possible, discreetly and briefly, sometimes in one sentence.  When the Polish National Committee put forward my candidacy for the ICC Court membership, I asked Robert Briner what he thought of it.  He looked me in the eye and asked: “Why hesitate?”  It’s difficult to forget that conversation which took place many years ago in a very unusual setting. We were both watching a pair of koalas in an Australian eucalyptus wood during a break at the annual congress of the Union Internationale des Avocats.

What is the one piece of advice you would want to give to the younger generation looking for a first appointment as neutral?

It is not easy to start out as an arbitrator.

Arbitrators are late starters.  At first, you have to establish yourself as a barrister, solicitor, judge, academic, diplomat, businessman, politician or expert.  So, it is only later in life that you would typically become an arbitrator.  Young legal eagles tend to champ at the bit, eager to get their first case.  A rude awaking often comes at the first interview when they have to field these brutal questions: “How often have you acted as arbitrator?” “How many awards have you made?” “What is your experience with arbitration?”

The young hopefuls are stumped for an answer.  Imagine a patient asking a budding orthopedic surgeon eager to perform his first knee operation: “How many knee operations have you conducted, doctor?”  If the flustered doctor says, “Not even one, but I’d love to make a start,” the patient will go to see a real specialist, preferably one with more than 100 knee operations to his name.

There is no clear recommendation on how to get the first appointment.  David Rockefeller published the book “How to make a million dollars”.  In the preface he stated: “from this book you will learn how to make the second, the third or the fourth million…”.  I would rather not mention his advice on how to get the first million!  Young people are often attracted to arbitration because it offers the opportunity to publish articles, go to conferences and take part in the Vis Moot.  Many of the famous arbitral institutions sell modular training courses scaling up from introductory to advanced, from domestic to international and so on.  I would caution aspiring young arbitrators, completion of such courses does not necessarily mean that appointments will automatically follow.  Young lawyers can include an arbitration clause in every contract drafted and act as a counsel or administrative secretary.  One day, someone will offer an appointment as an arbitrator.  Currently, we have more participants in arbitration conferences than there are arbitration cases on this continent.  Telling young people “under 40” that they are well prepared and will replace us all one day is only partly true.  Parties still prefer experienced arbitrators who have earned their reputation with years of impeccable professional activity.  The patient prefers an experienced surgeon, not a young one, who is eager for the first surgery in his life.

Were you ever the first in doing something?

Yes, I was the first Polish advocate admitted to the Paris Bar back in 1993.

What makes your conflict resolution style unique?

I would like to think it is my intuition.

What has been the most difficult challenge you have faced as a neutral?

Initiating disciplinary proceedings against three young counsels who were intent on seizing my personal bank account to cover their fees in case they lost the arbitration case.

The counsel were defending the family business of one of them.  I was an arbitrator nominated by the claimant.  From the beginning, the counsel treated me as their number one enemy.  They also tried to seize the chairman’s bank account.  We learned about their activities in the middle of the proceedings.  At the hearing, we informed the claimant because we were concerned that doubts may be raised as to our impartiality and independence.  We completed the arbitration and passed a fair award, mostly in favor of these rogues.  We initiated disciplinary proceedings immediately after the award was delivered.  It lasted 5 years and resulted in discontinuation due to the statute of limitations.  The young counsel made friends with the dean of the local bar council. They became his friends and helpers, to the point of becoming members of the local bar council.  They became almost untouchable.  Time went by, and the bar members, including the dean, acting as disciplinary prosecutors dragged out the proceedings to such an extent that the claim ultimately became time barred.

What is the most important mistake you see counsel make?

Typically, they file too many documents and charge too many billable hours!

Now let’s turn to some specific topics:

  1. What is your view on the duration of arbitration proceedings?

Arbitration is like a pregnancy.  It should not be aborted or last longer than 9 months.  Every dispute can be managed within 9 months. It all depends on the energy, proactivity, devotion and dedication of the arbitral tribunal.  One of our roles is to combat delays provoked by counsel.  Unfortunately, counsel want to have as much time (billable) as possible and produce endlessly long submissions.  Counsel for the conflicting parties are able to agree on a highly extended provisional timetable, and then want to impose it on the arbitral tribunal.  Weak arbitrators spread their hands and say: “It is the parties who are the hosts of the dispute. We have to accept their joint proposal”.  I ask the co-arbitrators then: “If they are the hosts, then who the hell are we, the arbitrators? Guests?”

2. With respect to the taking of evidence in arbitration: are you IBA Rules or Prague Rules? And why?

Prague Rules are much simpler and tailor made for Eastern and Central Europe.

What do you see as the next “big thing” in global dispute prevention and resolution?

The big problem is arbitrators’ safety.  It is time to think about arbitrators’ immunity and an international convention to grant it.

For which types of conflicts would you recommend ADR?

I think you can use ADR for all types of conflicts, with very few local exceptions.

Monster Energy and Evident Partiality

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Alternatives to the High Cost of Litigation Editor Russ Bleemer is joined by veteran arbitrator-litigators Philip J. Loree Jr., in New York, and Richard Faulkner, in Dallas, to discuss the U.S. Supreme Court’s Monday cert denial in Monster Energy v. City Beverages LLC. The panel also discusses a recent Pennsylvania federal court case that follows Monster Energy, Martin v. NTT Data Inc., No. 20-CV-0686 (E.D. Pa. June 23) (available at https://bit.ly/2VwZi0V).   

By Heather Cameron

The U.S. Supreme Court this morning declined to grant certiorari on a petition requesting clarification of the Federal Arbitration Act’s “evident partiality” standard.

This means that the Court, for now, will not revisit the “evident partiality” standard for arbitrators that can be used to overturn an arbitration award under the Federal Arbitration Act at 9 U.S.C. § 10(a)(2). And a Ninth Circuit decision overturning an arbitration award because a JAMS Inc. arbitrator failed to disclose his ownership ties to the Irvine, Calif., provider, will stand.

The Court’s docket page for the case, Monster Energy Co. v. City Beverages LLC, No. 19-1333, is available HERE.

Monster Energy was an appeal from a Ninth U.S. Circuit Court of Appeals decision last October, throwing out an arbitration award in favor of Monster Energy and ruling that “arbitrators are required to disclose their ownership interests in the organizations they are affiliated with and the organizations’ business dealings with the arbitration parties.” Monster Energy Co. v. City Beverages LLC, Nos. 17-55813/17-56082 (9th Cir. Oct. 22, 2019) (available at http://bit.ly/2PjmXzq); for more background and analysis, see Daniel Bornstein, “Ninth Circuit, Overturning an Award, Backs More Arbitrator Disclosure,” 37 Alternatives 170 (December 2019) (available at https://bit.ly/2NE7Q1x).

The decision is unusual because of its emphasis on the “repeat-player” phenomenon in arbitration.  It highlighted a circuit split over disclosure requirements for arbitrators, and reflected concern over bias in favor of repeat players in arbitration—an issue usually restricted to employment and consumer arbitration cases, not big companies. See Lisa Bingham, “Employment Arbitration: The Repeat Player Effect, 1 Emp. Rights & Emp. Policy J. 189, 209–17 (1997) (available at https://bit.ly/2VuElDJ).

The questions presented to the Supreme Court were:

  1. What is the standard for determining whether an arbitration award must be vacated for “evident partiality” under the Federal Arbitration Act, 9 U.S.C. § 10(a)(2)?
  2. Under the correct “evident partiality” standard, must an arbitration award be vacated when the arbitrator does not disclose that (i) he has a de minimis “ownership interest” in his arbitration firm and (ii) that firm has conducted a “nontrivial” number of arbitrations with one of the parties?

City Beverages, which distributed its adversary’s energy drinks in the Pacific Northwest, alleged that Monster Energy committed breach of contract in 2015 when it terminated their distribution contract without good cause. Monster Energy  exercised the contract’s clause permitting such termination so long as severance of $2.5 million was paid.

Though City Beverages rejected payment, the move was upheld in arbitration and Monster Energy was awarded $3 million in attorneys’ fees.

Overturning that award, the Ninth Circuit agreed with City Beverages’ claim that the arbitrator had failed to adequately disclose his relationship to JAMS and his firm’s relationship with Monster Energy.

In the Supreme Court’s only prior case examining the FAA’s evident partiality  standard, which authorizes vacatur of arbitration awards “where there was evident partiality or corruption in the arbitrators,” a majority agreed to overturn the award in question, but no clear rationale emerged. See Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145 (1968) (available at https://bit.ly/3g766Ks); see also Petition for Writ of Certiorari at 6–8 (available at https://bit.ly/2Bo3VU7).

Commonwealth Coatings, written by Justice Hugo Black, interpreted evident partiality as coextensive with the judicial standard, finding that arbitrators must not only be unbiased, “but must also avoid even the appearance of bias.” Commonwealth Coatings, 393 U.S. at 150.

Two of the five justices joining Black’s opinion, however, wrote a narrowing concurrence, penned by Justice Byron White, concluding that vacatur was only appropriate where the arbitrator failed to disclose “a substantial interest in a firm which has done more than trivial business with a party” to the arbitration. Id. at 151­–52. They found that the mere “appearance of bias” disqualification standard for federal judges does not establish evident partiality on the part of an arbitrator. See Petition at 19.

A majority of federal circuit courts have applied something akin to Justice White’s reasoning, according to the petition. “The First, Second, Third, Fourth, Fifth, and Sixth Circuits require those seeking vacatur of an arbitration award for evident partiality to show ‘a reasonable person would have to conclude that an arbitrator was partial to one party to an arbitration.’” Id. (Citations omitted; emphasis is in the brief.)

In its Monster Energy decision, the Ninth Circuit joined the Eleventh Circuit in adopting Justice Black’s less-demanding “reasonable impression of partiality” standard.

In her dissenting opinion in Monster Energy,Ninth Circuit Judge Michelle T. Friedland wrote that such a standard will have the effect of generating endless litigation over arbitral awards, defeating arbitration’s benefits of expedience and finality, echoing Monster Energy’s claims. See Bornstein, supra at 172.

JAMS, noting its role as a neutral organization “that has always refrained from supporting or opposing challenges to the arbitral process or arbitration awards,” filed an amicus brief in support of Monster’s rehearing petition. (Available HERE).

Both Monster Energy’s petition and JAMS’ brief stressed the lack of evidence to support the Ninth Circuit’s assumption that arbitrators might be biased in favor of repeat players since the law review article it cited on the phenomenon described a single study of employment, rather than commercial, arbitrations. See Petition at 31–32.

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Cameron, a second-year Fordham University School of Law student, is a CPR Institute 2020 Summer Intern.