A Mock Challenge under the CPR Rules for Administered Arbitration of International Disputes – An Overview

By Ksenia Koriukalova

On December 6, 2016 CPR’s Young Attorneys in Dispute Resolution (“Y-ADR”) and New York International Arbitration Center (“NYIAC”) hosted a seminar in New York City. The event featured a panel discussion on hot topics in international dispute resolution in 2016, as well as the mock challenge of an arbitrator under the CPR Rules for Administered Arbitration of International Disputes (“CPR Rules”).

The mock exercise was based on a hypothetical case involving the challenge of an arbitrator after a draft award had been circulated based on his alleged connection to the officer of the winning party, as well as on the views he expressed in his prior publications. The arbitrator in question served on a three-member panel which rendered a unanimous award in favor of one of the parties. The draft award signed by all three arbitrators was circulated to the parties by the chairman of the tribunal, and indicated that it would become effective if no comments were received from either party within 10 days.  The award was not delivered by CPR as required under its Rules. The losing party filed a request to correct the award within 20 days of the date of the Award, as provided for under Rule 15.6 of the CPR Rules. It simultaneously challenged one of the arbitrators. The challenge alleged “evident partiality” based on the fact that the arbitrator had been connected to the winning party’s CFO on LinkedIn for four years, and the two of them served on several committees of the college they had both graduated from. Another ground for the challenge was the alleged issue conflict, based on the arbitrator’s prior publications on the legal questions raised in the arbitration.

The mock challenge was considered by a panel of three CPR Challenge Review Board members, which included James H. Carter of WilmerHale, Lawrence W. Newman of Baker & McKenzie, and Hon. Curtis E. von Kann (Ret.). Anna Tevini of Shearman & Sterling LLP argued the case on behalf of the challenging party, while Ank Santens of White & Case LLP represented the party opposing the challenge.

The challenging party argued that the challenge was admissible, and that the challenge should have been granted, as the circumstances of the case allegedly gave rise to justifiable doubts as to the arbitrator’s impartiality. The challenge was based on Rules 7.5 and 7.6 of the CPR Rules, as well as on the provisions of the CPR Challenge Protocol.

The counsel stated that the challenging party had timely filed the challenge within 15 days of the time it had become aware of the respective circumstances, as provided for in the CPR Rule 7.6. She explained that submitting the challenge at the late stage of the proceedings was due to the arbitrator’s failure to disclose the relevant facts, which he allegedly had a duty to do. She also pointed out that, although the challenge was filed after the 10-day period for commenting on the draft award had lapsed, that did not make the award effective and the challenge – inadmissible, as the latter was submitted within the 20 days granted under CPR Rule 15.6 for seeking corrections of the award.

On the merits of the challenge, the counsel argued that the arbitrator’s connections to the other party’s CFO on LinkedIn and via college committees, his prior publications expressing views favoring the winning party’s position in the arbitration, and his failure to disclose these circumstances gave rise to justifiable doubts as to his impartiality. She referred to the 2004 Code of Ethics for Arbitrators in Commercial Disputes to support the argument that even the “appearance of partiality”, not necessarily actual partiality, satisfied the justifiable doubts standard.

The party opposing the challenge argued that the challenge was inadmissible, because the challenging party had been able to learn about the relevant facts from public sources well before the time of the challenge. The counsel referred to U.S. case law, the practice of England, France and Switzerland, as well as to the provisions of the American Arbitration Association and the CPR Rules applicable to challenges to prove that the right to challenge had been waived.

She further argued that the CPR Rule 7.5 “justifiable doubts” standard for arbitrator disqualification was not satisfied. The counsel referred to the IBA Guidelines on Conflicts of Interest in International Arbitration, which put arbitrators’ social media contacts on a “green list” and as such do not create even an appearance of bias, and thus do not require disclosure by an arbitrator. The same is true about prior expression of opinion on an issue arising in an arbitration, where such opinion does not focus on the case at issue. Finally, counsel argued that the arbitrator had no duty to disclose the facts at issue, and, in any event, non-disclosure was not an independent ground for disqualification.

After the oral arguments, the members of the CPR Challenge Review Board panel deliberated in front of the audience. They concluded that the challenge should be denied, as none of the facts referred to by the challenging party created grounds for disqualification of the arbitrator.

The mock was an interesting exercise which not only focused the attention of the attendees on current legal questions, but also demonstrated how the challenge of an arbitrator under CPR administered arbitration works in practice. Stay tuned for other upcoming Y-ADR events in 2017!

Ksenia Koriukalova is a CPR Fall intern

Y-ADR Mock Procedural Hearing under CPR Rules for Administered Arbitration of International Disputes – An Overview

By Ksenia Koriukalova

On September 8, 2016 CPR’s Young Attorneys in Dispute Resolution (“Y-ADR”) held the Mock Procedural Hearing under the CPR Rules for Administered Arbitration of International Disputes at the offices of Williams & Connolly LLP in Washington, DC.

The mock case involved a multi-million-Euro energy dispute between business parties from both sides of the Atlantic. Vento, a French energy business company, and Vento España, its wholly-owned Spanish subsidiary operating a windmill plant, initiated arbitration against Wind Corporation, a windmill manufacturer based in Chicago, Illinois. The claim arose out of the purchase by Vento España of 25 windmills produced by Wind Corporation, at the price of €1 million per unit, with the right of first refusal with respect to 25 additional units to be produced by the manufacturer following the execution of the contract. Claimants alleged that Respondent breached the right of first refusal provision by selling windmills to a different buyer.

In late June 2016, Claimants filed their notice of arbitration based on the arbitration clause found in Vento España’s contract with Respondent, which called for arbitration under the CPR Rules for Administered Arbitration of International Disputes (CPR Rules). One month later, Respondent submitted its notice of defense and counterclaim objecting to the tribunal’s jurisdiction on the grounds that one of the Claimants, Vento, did not sign the contract containing the relevant arbitration clause.

Meanwhile, three arbitrators were appointed to hear the case on August 1, 2016. Two of the arbitrators were appointed pursuant to CPR’s screened selection process provided in Rule 5.4 of the CPR Rules. Under this selection process, two out of three arbitrators are designated by the parties without them knowing which party designated each of them. It is worth noting that CPR’s unique Screened Selection Process was the winner of the 2016 Global Arbitration Review (GAR) Innovation Award.

Pursuant to Rule 9.3 of the CPR Rules, the arbitrators scheduled the initial pre-hearing conference promptly after their appointment to discuss the procedural issues of the case. The Y-ADR event simulated this pre-hearing procedural hearing before the tribunal composed of Dana MacGrath (Sidley Austin LLP), Patrick Norton (Law Offices of Patrick M. Norton), and Allan B. Moore (Covington & Burling LLP). David L. Earnest of Shearman & Sterling LLP, C.J. Mahoney of Williams & Connolly LLP, Mallory B. Silberman of Arnold & Porter LLP, and Laura J. Stipanowic of Smith, Currie & Hancock LLP played the roles of party representatives and counsel.

The first issue argued before the tribunal was whether the question of the tribunal’s jurisdiction should be considered separately leading to bi- or even trifurcation of the arbitral proceedings. Respondent stated that because one of the Claimants, Vento, was not a signatory of the contract containing the relevant arbitration clause, the tribunal had no jurisdiction over its claims. In support of its argument on separate consideration of the question of jurisdiction over the non-signatory, counsel for Respondent referred to Guideline 2 of the CPR Guidelines on Early Disposition of Issues in Arbitration, which lists jurisdiction and standing as issues for which early disposition may be appropriate. The tribunal ruled against separate consideration of Respondent’s jurisdictional objections, primarily due to the tight time-frame of the arbitration. According to the arbitration clause, the arbitrators had to conduct an oral hearing on the merits within six months and render the award within nine months of its constitution. Another reason for denying the request for bi- or trifurcation were potential overlaps between the facts of the case relevant for deciding both on Respondent’s jurisdictional objections and on the merits of the dispute.

Next, the parties and the tribunal discussed the necessary length of the merits hearing and the dates suitable for all expected participants. This task appeared to be not an easy one because of the parties’ different positions on the optimal hearing length, other commitments of the chair of the tribunal, and the approaching holiday season.

The third issue the arbitrators had to decide was the number, sequence and content of written submissions, as well as the timing and scope of the disclosure. Claimants, European companies, insisted on limited document exchange and referred to the CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration to support their position. Respondent, a U.S. corporation, sought broad discovery and depositions, and argued that they were possible under the CPR Protocol if allowed by the tribunal or agreed upon by the parties. Claimants and Respondent also had different views on the number and content of submissions. The arbitrators ordered to have two rounds of simultaneous pre-hearing submissions, with the first round containing full positions of each party supported by evidence, and the second one being the response to the opposing party’s brief. The tribunal also decided that the discovery process with the use of the Redfern schedule should take place before the first round of written submissions. Respondent’s request for depositions was denied.

At the end of the procedural hearing, the chair of the tribunal asked the parties to consider settlement negotiations, and draw their attention to relevant Rules 9.3(e) and 21 of the CPR Rules.  Rule 9.3(2) of the CPR Rules expressly provides the possibility for the parties to engage in settlement negotiations, with or without the assistance of a mediator, as one of the matters to be discussed during the pre-hearing conference. Counsel and their clients discussed the possibility but, ultimately, there was no agreement between the parties to engage in mediation.

The mock pre-hearing conference provided a realistic picture of how various procedural issues are discussed and determined at an early stage of arbitral proceedings. It also demonstrates how CPR Rules and other tools available to the parties in CPR arbitrations are used in practice. Well-prepared party representatives and arbitrators made the proceedings very dynamic and interesting to observe. The recording of the hearing is available to CPR members (who are logged into the website) HERE.

Ksenia Koriukalova is a CPR Fall intern

Avoiding and Resolving Information Technology Disputes (CPR Master Guide)

By Meghna Talwar

The latest survey released by Queen Mary University of London, in collaboration with Pinsent Masons (“the Survey”), highlights the growth of ADR in Technology, Media and Telecommunications (TMT) disputes. The Survey records 67% of the total disputes which are IT related.

Foreshadowing this important development, in 2005, CPR’s IT Committee released its master guide titled “Avoiding and Resolving Information Technology Disputes” which provides detailed information about resolution of IT disputes with the help of ADR mechanisms. The master guide’s 7 chapters provide different methods for addressing IT disputes from avoiding them in the first place to resolving them by arbitration. The first chapter gives companies a head start to set things in place prior to dealing with external parties. The chapter provides cues on how companies can assess, prioritize and define their goals and identify the possibility of dispute in the long run in order to plan their resolution techniques right from the beginning.

Chart 5 of the Survey states that 61% of the disputes related to IT systems are caused due to delay. The survey also mentions that such delay may be caused due to several attributing factors rather than one cause. Chapter 2 of the master guide suggests practices which companies may adopt to avoid delay. The chapter which is titled “Avoiding Disconnect Between Negotiation and Implementation” describes ways in which companies can formulate healthy negotiations with other parties thereby building a strong working relation with them. The chapter also focuses on how parties can develop a good understanding of the project as well as their own interpersonal relations which could ultimately lead to limiting the risk of contracting any disputes.

While Chapter 2 discusses building strong relations, Chapter 3 encapsulates the technique of building a strong project foundation based on strong partnerships. The chapter highlights the advantage of building partnerships at an early stage and describes methods to sustain such partnerships once they are formed. Also, the chapter offers interesting suggestions on conducting workshops with stakeholders to create synergistic relationships.

Often guidelines are limited to dos and don’ts of a process which are purely theoretical in nature. However, Chapter 4 of the master guide carries out case study of an IT dispute which enables companies to understand the practical implications of the master guide. The case study is an interesting concoction of facts and analysis with suggestions from the IT professionals who comprised the CPR IT Committee. Thus, the master guide provides a well-rounded view of IT disputes and the complications involved therein.

The Survey states that 50% of the respondents prefer mediation followed by 47% who prefer arbitration. Hence, there is an earnest intention on the part of the companies to resolve disputes without resorting to courts. However, it would be effective to resolve disputes at a preliminary level. Chapter 5 of the master guide speaks about the use of hierarchical positions to defuse disputes at an early stage. The chapter also emphasis on the need for protecting stakeholders, thereby maintaining a dispute-free atmosphere.

Chapter 6 introduces the concept of appointing a standing neutral. The chapter describes a standing neutral as someone who is appointed as a neutral in advance of any conflict. The appointment of a standing neutral could save the parties a substantial amount of time and cost in a way that the parties would get neutral assistance immediately on detecting a dispute without having to search for it when the dispute arises.

It is understandable that in certain cases it is impossible to avoid disputes despite adopting prevention mechanisms. Proliferation of social media is an example of unavoidable disputes. The Survey recorded 93% disputes arising out of social media attacks and 54% disputes arising out of traditional media attack. Chapter 7 of the master guide describes the dispute resolution program which companies may adopt if avoidance strategies do not work. The Survey points out the importance of Dispute Resolution (DR) policies which companies adopt. It stated that only 25% of the respondent companies did not have a DR policy. Thus, Chapter 7 could be helpful for companies which fall within the 25% bracket and could give the remaining 75% some tips for improvement, if required. The chapter also introduces the CPR Rules on Expedited Technology Dispute Resolution which includes rules for both arbitration and mediation proceedings.

The CPR master guide was introduced long before the introduction of the Survey. However, from the Survey it is quite evident that the issues revolving around IT disputes that were discussed in the manual remain to be a cause of concern, even today. Hence, the master guide proves to be an effective tool for addressing such problems and acts as a catalyst to innovate and introduce mechanisms for resolving IT related disputes.

Meghna Talwar is a fall intern at CPR.

To order a copy of CPR’s Master Guide, “Avoiding and Resolving Information Technology Disputes,” click HERE. And be sure to browse our many other publications in The CPR Store HERE.

 

Brexit and ADR, Untangling the Complexities

The United Kingdom’s recent referendum vote to leave the European Union (EU) is just a few weeks old, and dealmakers are rightfully concerned about its ramifications. The falling pound, the most immediate consequence, is just one of many factors that could affect pending deals with British companies. Many parties entered into contracts with UK-based companies with certain assumptions based upon the country’s membership in the EU. Now, with the UK’s situation uncertain, the lawyers are lining up to figure out next steps.

On July 18, CPR’s arbitration committee convened a panel on the topic of Brexit’s impact on cross-border arbitration and litigation involving the UK, hopefully clearing up some of the mystery. The panel was moderated by Jean-Claude Najar (France) of Lazareff Le Bars, and featured Tim Hardy (UK) of CMS Cameron McKenna LLP, Vanessa Alarcon Duvanel (Switzerland) of White & Case LLP, and Clifford J. Hendel (Spain) of Araoz & Rueda Abogados, S.L.P.

As explained by Mr. Hardy, Brexit’s main immediate impact on cross border litigation in the EU is the uncertainty as to what will happen post-exit to the existing unified regime for dispute resolution applying to all Member States. Since 1973, the UK has been required to adopt unifying arrangements to avoid duplicate litigation in different States through a series of rules intended to determine that the court of only one State can have jurisdiction and that the decision of that court should be respected by all other courts of Member States. Initially, the incorporation of these reciprocal arrangements into the legal framework of Member States was undertaken through a  series of treaties – each requiring each State to approve, ratify and implement each Treaty.  As this was extremely cumbersome and slow, subsequently, EU Regulations were implemented directly applying the rules into the law of each member state.

To exit the EU the UK will have to repeal the European Communities Act which will automatically repeal all Regulations but it will not repeal all treaties. Accordingly, a complex situation could develop where arguably some treaties will survive and may be applicable and relevant to determining parties’ positions if disputes arise. “One would hope,” said Mr. Hardy, “that the legislature will do what it can to avoid this mess. But at the moment, we don’t know what steps will be taken to address and tidy it up.”

As for the practice of international arbitration in the UK or London, Mr. Hendel explained, there is no reason to think that Brexit will have any legal effect because the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), which is the lifeblood of international arbitration, is immune from what will happen with Brexit. The situation is different, however, in the world of judicial dispute resolution. Mr. Hendel referenced the falling away of important EU regulations concerning the automatic recognition and enforcement of judgments throughout the EU, jurisdiction and choice of courts, as well as choice of law, in two years’ time or so, unless the UK takes action before then through negotiation with the EU or unilateral action to keep these legal mechanisms in place. These regulations currently provide an important degree of harmonized certainty on how to deal with everyday issues that arise in EU cross-border disputes, and Brexit will inevitably undermine this certainty. Mr. Hendel noted that the UK might have an incentive to preserve this framework one way or another in order to preserve its perceived supremacy in the financial and legal industries.

Ms. Duvanel examined how Switzerland has managed in the years since it voted in 1992 not to join the European Economic Area (EEA) to overcome isolationism vis-à-vis the EU. Although it took several decades, Switzerland managed to negotiate and ratify bilateral agreements with the EU to harmonize its legislation with that of the EU. For example, the Lugano Convention addresses the issues relating to jurisdiction and recognition and enforcement of judicial decisions between Switzerland and the EU. In the end, she explained that Switzerland has its own set of legislation, but that much of it is inspired by the EU, “fully harmonized but always a bit later.” The harmonization of the two legislative systems has been long and difficult for Switzerland, and it is likely to be difficult for the UK as well. She stressed, however, that all of that had no effect on international arbitration in Switzerland. Switzerland remains very attractive. Swiss arbitrators are among the most nominated in the world in international arbitration cases. Switzerland is the second most chosen seat for international arbitration and Swiss law is one of the most chosen applicable law due to the stability of the Swiss legal system.

From an in-house perspective, explained Mr. Najar (who held various senior legal positions in GE for close to 24 years), companies must analyze the potential consequences of Brexit on their contracts governed by English law, particularly long-term contracts, and determine how to best mitigate the uncertainty related to the impact of Brexit. There is a wide array of potential issues to consider, such as currency fluctuation, access to the EU market, organization setups, employees’ rights, corporate governance, and specific regulations. Dispute resolution clauses will also need to be reviewed closely. Najar pointed out that some companies had already started to opt out of the UK, in favor of jurisdictions such as France and Switzerland, several years ago out of other concerns, such as costs or being closer to a civil law environment. Najar stressed that English law enjoys a longstanding and solid reputation as the governing law in many contracts. However, it incorporates many elements of EU law, and Brexit will therefore create some uncertainty as these elements are being pulled out of English law. Since businesses do not like uncertainty, Brexit might deter companies from choosing the UK as a seat or English law as the applicable law.

For anyone involved in business in the UK, CPR’s European Advisory Board (EAB) is an excellent resource for efficient dispute prevention and resolution. The EAB, a highly experienced and distinguished group of sophisticated practitioners and users from Europe’s leading law firms and corporations, has recently released a European Mediation and ADR Guide. Developed under the leadership of CPR’s EAB, the Guide provides a valuable overview of the most widely used alternative dispute resolution processes (particularly mediation) and when they might be suitable, with practical suggestions on how to make use of them.

While Brexit may seem like an ugly divorce, the fallout for companies doesn’t have to be messy.

Screened Selection Offers Best of Both Worlds

We at the CPR Institute are still abuzz over our receipt, earlier this month, of Global Arbitration Review’s (GAR’s) Innovation Award 2016 for our unique Screened Selection Process, which allows parties to select arbitrators without revealing to the neutral which party selected them. We are pleased and proud that our efforts to improve the arbitration process have received the recognition of the ADR community.

What’s so special about the screened selection option, one of many that CPR offers in its Rules? In a recent article published in Law360, CPR’s Olivier Andre and Charles B. Rosenberg of White & Case discuss how the process avoids the “moral hazard” of party-appointed arbitrators who may subtly favor the party that chose them.

How does it work exactly, when this option is selected? CPR carefully vets a list of neutrals based upon the qualifications that the parties require, conflicts, schedules and fees. The parties rank them by preference and include any objections to specific candidates without the neutrals’ knowledge. CPR then uses these rankings and objections to assign each side’s highest ranked neutral and the individual with the highest combined ranking is chosen as Chair. Then the case proceeds using CPR Rules.

Further detail about this Screened Selection Process can be found in the commentary to Rule 5.4:

Rule 5.4 presents a unique “screened” procedure for constituting a three-member Tribunal, two of whom are designated by the parties without knowing which party designated each of them. The procedure is intended to offer the benefits, while avoiding some of the drawbacks, of having party-appointed arbitrators. On the one hand, parties are able to designate arbitrators whom they consider to be well-qualified to sit on the Tribunal. On the other hand, any tendency (subtle or otherwise) of party-appointed arbitrators to favor or advocate the position of the parties who appointed them is avoided because those arbitrators are approached and appointed by CPR rather than the parties and are not told which party designated each of them. The Rules governing ex parte communications (Rule 7.4), challenges (Rule 7.6), and resignations (Rule 7.9) contain specific provisions designed to preserve the “screen” for the party-designated arbitrators under Rule 5.4 throughout the arbitration. The parties may choose the “screened” selection procedure in their pre-dispute arbitration clause (see standard pre-dispute clause), or agree to the screened procedure once a dispute arises.

CPR recognizes that, as a practical matter, some party-designated arbitrators selected pursuant to Rule 5.4 may deduce or learn which parties designated them – i.e., the “screen” may not, in all instances, be perfect. CPR nevertheless believes that the screened procedure is worthy of consideration by parties as a means to enhance the integrity of arbitrations involving party-appointed arbitrators. Any party-designated arbitrator who does, in fact, learn which party appointed him or her should disclose that fact to each of the parties and the other members of the Tribunal in order to ensure a level playing field. In the event an arbitrator discovers who appointed him or her, such knowledge would not be a basis for disqualification or challenge per se, and the arbitration can continue uninterrupted on a non-screened basis.

The Screened Selection Process is just one of the many tools CPR makes available to its users to customize an arbitration process that works best for the parties involved. If you have any questions about the Screened Selection Process or any other aspect of CPR’s rules, please contact Helena Erickson at herickson@cpradr.org.

Interview: Users Respond to CPR’s New International Rules – Most surprising and valued reported features

InternationalRulesSlimJimCPR recently launched a new set of Rules for Administered Arbitration of International Disputes for use in cross-border business transactions. These new Rules reflect best practices, including the arbitration work of UNCITRAL, and address current issues in international arbitration, such as arbitrator impartiality, lengthy time frames to reach resolution, burdensome and unpredictable administrative costs and requirements. To celebrate their release, and introduce them across the globe, CPR held a series of well-attended launch events in London, Paris, Miami, Geneva, Madrid, Brazil and Washington, DC.

CPR’s newest event takes a deeper dive into one of the Rules’ most buzzed-about aspects, the Screened Selection Process for Party-Appointed Arbitrators ™. Responding to the need to both preserve the right of the parties to appoint their arbitrators and guarantee the fairness and impartiality of arbitration, the Screened Selection Process ™ is available under the new CPR Arbitration Rules, and will be discussed from the perspectives of the users, outside counsel and arbitrators on July 30, 2015 at Jenner & Block in Chicago and via live webcast.

Olivier P. AndreToday, we sat down with CPR’s Olivier André, Vice President, International and Dispute Resolution Services, for a recap of the launch events and a preview into our upcoming event.

To begin, could you provide a quick recap of CPR’s recent launch events celebrating the new rules? 

Over the past few months, we have organized eight events to celebrate the launch of the new CPR Rules for Administered Arbitration of International Disputes.  At each of these events, panelists discussed the key benefits and innovations of the rules from different perspectives – the corporate counsel, arbitration practitioner, arbitrator, and institutional perspectives.   The events were well attended and, whether they were held in the US, Europe or Brazil, they triggered a lot of interest.

What were some of the most memorable responses you received about the rules, either at the launch events or otherwise. What are people most surprised about, thrilled about, etc.?  

The new rules triggered a lot of interest because attendees felt that they really address many of the criticisms we currently hear about arbitration, such as high costs, lengthy timeframes, and bureaucratic administration of the proceedings.   With the new rules, CPR provides only the services that are necessary from an administering institution, and no more.  Thus, CPR gets involved at the very beginning – at the commencement and arbitrator appointment stages – and at the end – to provide a “light” review of the awards and to issue them.

In between, CPR handles all billing aspects, but lets the tribunal interface directly with the parties on all other matters.  All pleadings and filings to CPR are in electronic format only.  As a result of this “lean administration,” CPR is able to offer a very competitive schedule of administrative costs.  Administrative costs are capped at US$34,000 for disputes over US$500 million.   At a time when all companies are trying to contain the costs of dispute resolution – and where smaller companies simply cannot afford an expensive dispute resolution process – that was particularly appealing.

Another feature which triggered a lot interest is the provision under the rules for the issuing of the award within 12 months of the constitution of the tribunal.  Very often, users of arbitration have had terrible experiences of proceedings that lasted longer than court proceedings, when arbitration is supposed to offer a fast dispute resolution process.  The CPR rules require all actors of an arbitration to use their best efforts to comply with this time requirement.  Any scheduling order or extension from the tribunal that would result in extending this timeline must be approved by CPR.  Such extension requests are not new, but what was interesting to the attendees of these events was the fact that these approvals are not automatic.  Whenever such an approval is requested, CPR can convene all involved in the arbitration to discuss the factors that have led to the extension request.  This mechanism increases the accountability of all actors of the arbitral process while asking them to comply with a reasonable timeframe.   I say reasonable because historically the average length of CPR cases is a little over 11 months.

Finally, there was a lot of interest – particularly from the corporate counsel – for the provision in the rules which encourages the arbitral tribunal to propose settlement and assist the parties in initiating mediation at any stage of the arbitration proceedings.

CPR’s event in Chicago delves deeper into one of the most unique and valued features of the rules—the screened selection process. What were the challenges that necessitated this specific Rules feature? How did we address those challenges? What have responses from users of the new rules been like on this point in particular?  

Arbitrator selection is a key phase of any arbitration and getting qualified arbitrators appointed for a particular dispute is critical to ensure smooth proceedings.  The ability for the parties to choose their decision makers is also one of the main advantages of arbitration.  The CPR rules offer many options that arbitration users can choose from in their arbitration clause depending on the specific nature of the disputes they anticipate.  The bottom line is that they have the ability – and are encouraged – to really control the arbitrator selection process.

One of the options provided is called the CPR Screened Selection Process ™ for party-appointed arbitrators.  That process – which is unique to CPR arbitration rules – enables each party to choose their “party-appointed” arbitrators without them knowing which party has designated them.  CPR acts as a screen between the parties and their candidates.  This is an interesting process because, even though all arbitrators under CPR Rules must be impartial and independent, there can be some degree of ambiguity around the role that a party-appointed arbitrator is supposed to play.  This selection offers the parties the ability to choose their arbitrators while, at the same time, removing that ambiguity and changing the working dynamics among the members of a tribunal.

Olivier André is CPR’s Vice President, International and Dispute Resolution Services. In this capacity, Mr. André is responsible for CPR’s international activities, as well as international arbitration and mediation matters which are brought before CPR pursuant to its rules. He can be reached at oandre@cpradr.org. For Mr. André’s full bio, click here.

On Norton Rose Fulbright Litigation Survey: In Litigation v. Arbitration Debate, Best Answer is “It Depends”

In mid-May, law firm Norton Rose Fulbright released its 11th annual Litigation Trends Survey—the broadest the firm had ever undertaken, compiling results from more than 800 corporate counsel (primarily general counsel) representing companies across 26 countries on dispute-related issues and challenges. According to the firm survey summary, “While each country or region surveyed is unique, one common theme comes through loud and clear—corporate counsel around the world see the growing litigiousness of the  business environment as an important trend that bears watching.”

Survey results reflected significant corporate spend on litigation, with 34% of US respondents reporting litigation budgets of 1 million to 5 million, as compared to only 26% two years ago. There was also a slight increase in the companies reporting litigation budgets of $10 million or more.

One point of particular interest was the broad utilization of international arbitration, particularly for larger companies (more than $1 billion in revenue). Across all regions and industries, more than two-thirds of companies with $5 to $10 billion in revenue preferred arbitration, and were also much more likely to have been involved in an arbitration in the past 12 months (38%). Specifically, given the choice, for disputes that were international in nature, nearly half of total respondents said they preferred arbitration over litigation, with about a quarter choosing litigation and the remaining quarter answering, “It depends.” Continue reading