CPR’s new website now hosts the CPR Speaks blog. You can find new posts, at https://www.cpradr.org/news/cpr-speaks.
CPR International Conference Highlights: ‘Effects on Cross-Border Disputes After the Singapore Convention’
By Bryanna Rainwater
According to the Singapore Convention on Mediation’s website, the Convention is a “multilateral treaty which offers a uniform and efficient framework for the enforcement and invocation of international agreements resulting from mediation.”
The speakers at the Oct. 6 CPR International Conference kickoff panel, “Effects on Cross-Border Disputes After the Singapore Convention” gave more context to the current legal landscape after the Convention has come into force.
The Convention was passed by resolution by the U.N.’s General Assembly in 2018, and signed into effect in August 2019. It has been hailed as a huge boost for mediation because it provides support for the effectiveness of the agreements the process produces.
The panel’s moderator was Javier Fernández-Samaniego, managing director of Samaniego Law with offices in Madrid and Miami. The speakers included: Sara Koleilat-Aranjo, a partner at Al Tamimi & Co., in Dubai; Michael Mcilwrath, founder and CEO of MDisputes, an ADR consulting firm in Florence, Italy, and a former vice president of litigation at Baker Hughes Co.; and Jan O’Neill, a professional support lawyer at Herbert Smith Freehills in London.
Koleilat-Aranjo said that mediation has “established itself as a viable, typically cost-effective, non-contentious, means to resolve disputes.” She noted that “up until the advent of the Singapore Convention, there wasn’t really . . . a legal instrument, at an international scale which sort of provided a passport . . . of enforcement of mediated settlement agreements.”
Koleilat-Aranjo discussed differences between the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), best known as the New York Convention, and the Singapore Convention. She noted that the Singapore Convention dispenses with reciprocity—the New York Convention only provides enforcement of an arbitration award that has been made in a jurisdiction that also has adopted the treaty–and that “the Singapore Convention adopts a transcendental approach, meaning . . . unlike the New York Convention, there isn’t really typically a place of mediation that is defined” like how the earlier treaty addresses the seat of arbitration.
Koleilat-Aranjo referred to what she calls “a certificate of origin,” which is when the parties must prove that settlement resulting from mediation occurred in order to enforce the award. She noted that this presents the novel issue of how to prove that a mediation award was given, particular outside of an “institutional framework,” so that it can be enforced via the Convention.
There are currently 54 Convention signatories, and eight states that have ratified it–seven at the date of the discussion, and one added since the CPR International Conference.
Koleilat-Aranjo noted that two of the nations that have already ratified the treaty, Qatar and Saudi Arabia, are in the Middle East. She said that this reaffirmed the popularity of mediation in those countries, and that this is not surprising considering the cultural and religious influences and attitudes toward the process. She said that in Arabic, the mediator is called the “agent of peace,” and that mediation has been used in Arab nations for many types of different dispute settlements.
The panel discussed the reservations carve-out in Article 8 of the Convention, which provides that, when adopted by a ratifying state, “the Convention would not be applicable to settlement agreements to which its government or other public entities are a party.”
Saudi Arabia, Koleilat-Aranjo noted, has carved out a reservation per its Royal Decree 96 (April 9, 2020), which mirrors the convention carve out: It does not allow mediation to apply to the government, government officials, governmental agencies, or any person acting on behalf of those agencies. She explained that the Saudi economy is tied in with the government, so this is broad reservation, with many international transactions tying private overseas parties to government actors.
Mike Mcilwrath gave his perspective on why the Convention has not yet been ratified by European Union nations. He said that the EU was “hostile to the convention during the drafting stage. They did not support it.” He added that this is likely because of the “coordinating effort” of the EU as a unified front, making it more difficult for individual states to sign on separately.
Mcilwrath noted that the EU chose to go to court over concerns about the AstraZeneca Covid-19 vaccine, rather than mandating mediation, which is a sign of the EU’s trend of choosing not to mediate.
HSF’s Jan O’Neill had a differing view, and–echoing Mcilwrath’s description of Italy likely supporting the Convention on its own but for the current EU hesitancy–noted that the U.K. also “has been left to its own devices” since Brexit. She added that “the U.K. is of course a very mediation friendly jurisdiction, [with a] very long-standing sophisticated mediation infrastructure.”
As a result, she said that she believes that the U.K. will sign the Convention eventually, noting that “there is a sense on the ground . . . it feels like it will happen. They’re certainly not sensing any hostility.”
She said she that the U.K. is familiar with mediation and ADR, but that priorities are stuck on the most pressing issues–the pandemic and the Brexit economy.
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CPR has posted a video of the full panel discussion. You can find it here after logging into the CPR website. Videos from the other September CPR International Conference panels can be found here.
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Panel moderator Javier Fernández-Samaniego has prepared an article analyzing the Singapore Convention developments and expanding on the panel discussion for CPR’s monthly newsletter, Alternatives to the High Cost of Litigation. His article is scheduled to appear in the December issue.
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The author, a second-year student at Brooklyn Law School, is a 2021 CPR Fall Intern.
CPR’s International Conference: European Views on the Resolution of Complex Technology Disputes
By Tamia Sutherland
During the Oct. 6-7 CPR International Conference–the first the New York-based conflict resolution think tank and publisher of the CPR Speaks blog has held combining the work of its international advisory boards–CPR’s European Advisory Board presented a virtual panel centered around resolving complex technology disputes.
The panel discussed highly technical blockchain, patent, and intellectual property disputes. Mark McNeill, a New York and London partner in Quinn Emanuel Urquhart & Sullivan, moderated the panel that included:
- Luke Sobota, a founding partner and Washington, D.C., managing partner at Three Crowns,
- Edith Jamet, general counsel at SoftAtHome, a Colombes, France, software company, and
- Mark Beckett, chief information officer at ArbiLex, an arbitration analytics and funding consulting firm based in Allston, Mass.
After introductions, Moderator McNeill posed a question about the resolution of blockchain disputes. Panelist Luke Sobota explained that blockchain operates as a fixed ledger stored internationally on computers world-wide, making the recorded data hack-proof as “the block exists everywhere at once, and nowhere in particular.” Though the blockchain is secure, it cannot anticipate every mistake or account for human error.
To illustrate what types of disputes may arise as a result of blockchain use, Sobota provided the following example: Blockchain technology can be used in commercial transactions by including a QR code with delivered goods that automatically transfers the payment from the buyer’s cryptocurrency account to the seller’s account, and records the transaction on a block when scanned by the recipient, also known as an oracle.
Sobota defined an oracle as “a real-world objective piece of data that the blockchain software, itself, can retrieve and verify.” This process does not require third-party involvement, and is “both the promise and limitation” of the technology, he said.
The oracle, however, can fall short. Disputes can arise when a recipient of goods fraudulently refuses to scan the QR code; the code has a bug that results in an excessive transfer of money; or the goods are partially damaged as there is no code for partial payment or refunds.
Due to blockchain’s decentralized nature, domestic courts do not have jurisdiction to resolve these transnational disputes, and sometimes, the parties are anonymous. Sobota explained that the two forms of arbitration best suited to resolve these unique disputes are (1) on-block arbitrations and (2) traditional commercial arbitrations.
On-block arbitrations are administered through various platforms and are currently “quite minimalist and only suitable to very simple transactions,” according to Sobota. In this case, parties agree that anonymous “jurors” will resolve the dispute, and the discrepancy is remedied automatically on the blockchain by issuing a new block.
For example, an on-block arbitration can immediately provide a refund for partially damaged goods. Panelist Mark Beckett mentioned Kleros, which is an example of an arbitration platform that relies on smart contracts and anonymized jurors to resolve disputes.
While this appears to be an easy and effective solution, questions about a lack of juror guidance, financial incentives, outside pressures, and concerns regarding juror consistency are critiques of the decentralized justice method.
Moderator McNeill then asked panelist Edith Jamet about the types of disputes she sees and how she prefers to resolve the disputes in her in-house role at a software company. She said she typically deals with patent issues. She said confidentiality is essential, and thus, mediation is best to find resolutions, and arbitrations are second best when the parties cannot come to a decision. She conceded, however, that sometimes court is mandatory and can be more secure.
Jamet discussed a mediation with the French tax administration where she had to demonstrate that her company’s technology was innovative and therefore eligible for a tax credit. Emphasizing Luke Sobota’s earlier point about finding sufficiently knowledgeable neutrals, Jamet said that she had to make an analogy to train tracks to illustrate her company’s technological software advancements because it was complex and she wanted the mediator to understand her arguments.
In response to an inquiry about the arbitration’s suitability for IP disputes, Mark Beckett raised skepticism about the number of neutrals who have technical knowledge. He noted that, in court, at least there is a right to appeal. Luke Sobota noted again that suitability depends on the neutrals chosen. In the case of typical IP contractual disputes, however, no special knowledge is necessary, said Sobota.
Moderator McNeill asked Mark Beckett about ArbiLex, its mission, and what it can do. Beckett replied that ArbiLex is a legal technology startup that uses artificial intelligence and predictive analytics in international arbitration. The company provides practitioners and institutions with data to determine whether they should litigate or arbitrate a case. Ethics guidance states that lawyers generally cannot give a percentage chance of prevailing in a dispute due to predictive limitations. But ArbiLex is providing data for parties to assess the chances of prevailing in disputes.
Beckett explained that ArbiLex’s system can run combinations of different tribunals to provide outcome prediction analysis, provide information on who appointed certain arbitrators, predict case outcomes, relate outcomes to whom a particular arbitrator is sitting with, and provide data on how counsel has performed against each other. The information and graphics provided by ArbiLex, said Beckett, could cut down on the amount of research practitioners need to make tough decisions regarding dispute resolution of complex issues, where various interests may be pulling the practitioner in different directions.
Throughout the conversation, the neutrals that participate in CPR’s Technology Advisory Committee were mentioned as resources for finding technologically knowledgeable neutrals when these complex technology disputes arise.
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The author, a second-year law student at the Howard University School of Law in Washington, D.C., is a CPR 2021 Fall Intern.
Arbitration for Art: Regs Seek to Provide a Better Way to Resolve Disputes
By Jacqueline Perrotta
Over the past 30 years, the Art World has become the Art Market. Selling and purchasing art has become Big Business for collectors and investors alike. In a mostly unregulated market, new regulations are emerging on resolving disputes between parties involved in art deals.
On July 13, 2020, subject-matter experts including lawyers and professors with experience in the art sector and in arbitration, gathered to form these new “Regulations on Arbitration in the Art Sector of the Venice Chamber of Arbitration” as a way to better resolve art disputes.
A January 2021 article, “Art and Arbitration: an overview in light of the new Regulations on Arbitration in the Art Sector of the Venice Chamber of Arbitration,” highlights the context of the regulations in today’s global art market, the advantages of using arbitration for art sector disputes, and the new regulations, including their importance and potential impact on how the art market resolves disputes.
Described as the first initiative of its kind in Italy, the regulations promote the use of arbitration and provide an alternatives to the Hague’s Court of Arbitration for Art, or CAfA. Established in 2018, the Court of Arbitration for Art was founded to resolve disputes through alternative dispute resolution throughout the art market. Through CAfA, disputes can be arbitrated or mediated with the help of the Netherlands Arbitration Institute.
Disputes that arise in art parallel commercial transactions, but with niche concerns including issues of cultural and religious sensitivity, confidentiality, and authenticity.
The use of these regulations for art arbitration comes with several upsides. The article linked above highlights a prominent advantage where arbitration is efficient and is “freely accessible”–having an arbitration clause already baked in to provide a jumping off point if a dispute arises out of difficult cultural matters or from the uncertainty of fraudulent works.
Another upside discussed in the article that comes with using arbitration is “guaranteed confidentiality,” because art-market players often are sensitive regarding “reputation and discretion,” and there is a heightened importance of privacy for collectors and dealers.
The goal of the Venice Chamber regulations is also to broaden the use and scope of arbitration to the contemporary art context and go beyond the limited definitions of national legislation. By introducing the regulations, arbitration as a means of alternative dispute resolution is promoted as an efficient and effective way to resolve art sector disputes.
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The author, a J.D. student who will enter her second year this fall at Brooklyn Law School, is a 2021 CPR Summer Intern.
CEDR’s Eileen Carroll: Her Mediation Story
By Antranik Chekemian
F. Peter Phillips, director of New York Law School’s Alternative Dispute Resolution Skills Program, welcomed an online audience earlier this month as part of the program’s long-running lunchtime speaker series for a session with veteran U.K. mediator Eileen Carroll.
Carroll is founder of London-based Centre for Effective Dispute Resolution, better known as CEDR, “by far the most influential and prescient dispute resolution organization not only in the U.K., but really . . . in Europe,” said Phillips in the introduction to the Feb. 10 session, which had about 40 attendees.
Phillips invited Carroll to share her professional background and how her journey into the ADR world started. Carroll opened describing, among other things, a long history with the publisher of this CPR Speaks blog, the International Institute for Conflict Prevention and Resolution, and recounted some of those interactions over these years. [Phillips is a former CPR senior vice president.]
She said she was a senior litigation partner at a London law firm in the 1980s, with “good contacts” in the U.S., and she took a six-month secondment to San Francisco. “I was one of the senior litigation partners and they asked me whether I would go and work with a firm on the west coast,” she said, “and I took myself off to San Francisco.”
She said that she decided her focus would be alternative dispute resolution. “I learned a bit about mediation from some of the research I had done, and I thought that would be my project,” she said. She noted that she was impressed by how the mediation process “extracted people from the drama of litigation.” Carroll explained:
I then was given a book called The Manager’s Guide to Resolving Legal Disputes by Henry and Lieberman. . . . Jim Henry, based in New York, who had started . . . CPR. He became a very dear friend, and I was going to write a book, but someone gave me his book . . . and I decided when I read that I was really fired up to do something.
James F. Henry is founder of CPR, and Jethro Lieberman is a former CPR vice president and a retired New York Law School professor.
Carroll showed the audience an article she wrote stemming from her U.S. work, “Are We Ready for ADR in Europe?” International Financial Law Review 8 Part 12, 11 (1989).
The article’s title, she said, “was a question no one had asked, and I was determined that we were going to be ready for ADR in Europe. But I knew […] that I needed to do something to get a support behind me, so I set about founding a nonprofit organization.” She added, “I did get inspiration from Jim [Henry].”
She added, “By the time we launched CEDR, I had managed to get with the help of others–80 big companies to support the idea–[and] the major law firms in London didn’t want to be left out, so they thought they better support the idea.”
Philips jumped in and mentioned that CEDR’s story was similar to the CPR Institute’s origin in the U.S. “It wasn’t as if the idea was ‘Let’s take mediation and convince people of it’ so much as it was ‘Let’s take a core of leading owners of disputes–leading corporations, people who spend a lot of money litigating–and convene them so that they become the torchbearers,” said Phillips, adding, “They became the people who are convincing their peers.”
Carroll said that the ties to North America in her work continues, citing current work with the International Academy of Mediators. [CPR and CEDR continue to collaborate on seminars and trainings. Information on the next scheduled joint training–a four-day advanced mediation skills training seminar that begins April 19, in which the organizations will be joined by the Silicon Valley Arbitration & Mediation Center, is available on CPR’s website here.]
Philips asked Carroll about the role of emotion in commercial mediation, noting “the challenge to determine the extent to which . . . the expression of emotion in a commercial context is helpful.”
Carroll said, “In every conflict, there is emotion–people are upset in some way or other. Whether it’s because they have been avoiding it, whether it’s anger, whether it’s anxiety, all of those emotions I find present, and they display themselves in different ways, because we all have different kinds of personalities.”
She stressed the importance of “creating an environment where people can tell whatever their story is.” She stated that a mediator’s job is not to patronize but to notice the parties’ emotions and feelings, and explore them at the right moment with the right questions.
Carroll further emphasized that there is not a uniform approach in mediation. “There may be several working sessions with different people,” she said, “so to deal with these emotions, you have to go at it carefully without too many assumptions and create the space to get to know the people that you’re going to work with.”
Phillips then asked Carroll about the challenges women encounter in ADR. “When you were a practicing lawyer, you were very frequently the only woman in the room,” he said, “In the early days of ADR, you were very frequently one of the very few women who was making a go of it,” he said.
She emphasized that because law firms usually advise their clients during the mediator selection process, “they often follow the same kind of pattern of three names.” She expanded:
When l look back to the beginning of the field when we first started, . . . there was just a sense that we need people with status, people with experience, so at that point people were kind of looking to, ‘Who were those senior people?’ And the legal profession, even in the early 90s, a lot of those people were men. It is changing. But . . . those who were early entrants to the field obviously got . . . a reputation. [If they] were good mediators and good arbitrators who were around in the mid-90s, some of those people still have incredibly effective practices today.
Phillips then asked Carroll about a recent CEDR report that discussed “how female mediators view their strengths as opposed to how male mediators view their strengths.” [CEDR’s current research can be found here.]
“[W]omen recognized that they were good at relationships and empathy,” said Carroll, recalling the research, “and a lot of guys obviously have that experience, but . . . a lot of the men saw themselves as more as getting the deal done, much more transactional.”
Carroll then referred attendees to a Simon Baron-Cohen’s 2012 book, “The Essential Difference: Men, Women and the Extreme Male Brain, which discusses these issues.
“Women do have some very natural abilities in relation to communication skills and they have done work with babies, boys, and girls . . . and the way they react. . . . So, women have a lot of natural skill in the area of mediation which I think sometimes they underplay because if you look at in life, women often have the role of having to make . . . all the relationships work within a family, sometimes in an office,” said Carroll.
Emphasizing the need for diversity, she concluded, “Women absolutely have the capability to do any tough mediation, because they have got the intellectual skill, they understand the background of the problem. There is no reason why there could not be as many successful commercial women mediators as men. I think it’s something about the filter of the selection process, which I think is changing.”
“All the business people I have worked with through the years in mediation, I have never had a problem,” said Carroll. “Over time,” she continued, “I have never . . . felt any concern in dealing with business people about the role of the woman mediator. Never. I would not say that was always the case in relation to certain members of the bar. . . . I have always managed to walk around it. It hasn’t been a problem.”
She concluded her presentation discussing instilling “patience and persistence” into mediation to make it successful.
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Eileen Carroll’s presentation is archived at the NYLS ADR Program link above and directly on YouTube here.
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The author, a second-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern.
Extinguishing Intra-EU Bilateral Investment Treaties: Recent Developments
By Krzysztof Wierzbowski and Aleksander Szostak
In line with the decision of the Court of Justice of the European Union (referred to here as the “CJEU”) in Achmea (formerly Eureko) v. Slovakia (the Achmea Decision) and the political declaration issued by the governments of the European Union member states on Jan. 15, 2019, most of the EU member states, with the exception of Austria, Finland, Sweden and Ireland, have entered into a plurilateral treaty for the termination of bilateral investment treaties between the EU Member States (referred to in this article as “intra-EU BITs” and the Termination Treaty).
The Termination Treaty was signed on May 5, 2020, and entered into force on Aug. 29, 2020. See Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT] (available at http://bit.ly/3iqsTn3).
Portugal, the Netherlands, and Luxembourg have made the following formal declarations concerning the Termination Treaty:
- “Luxembourg calls upon the European Commission and all member states to start, without any delay, a process with the aim to ensure complete, strong and effective protection of investments within the EU and adequate instruments in this regard.” It requests the European Commission to create a plan for such a process. Declaration of Luxembourg to the Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT].
- Portugal appears to endorse a view similar to that of Luxembourg and emphasizes its “support to the intensifying of the discussions between the European Commission and Member States with the aim of better ensuring a sound and effective protection of investments within the European Union. To this end, calls to assess the establishment of new or better tools under European Union law and to carry out an assessment of the current dispute settlement mechanisms which are essential to ensure legal certainty and the protection of interests of investors.” Declaration of Portugal to the Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT].
- The Dutch government confirms that although the Achmea Decision does not affect the Caribbean parts of the Netherlands (as Overseas Countries and Territories), BITs concluded with those territories shall also be terminated pursuant to the Termination Treaty. In this sense and irrespective of the Achmea Decision, the effects of the Termination Treaty will extend to all parts of the Kingdom of the Netherlands. Declaration of the Netherlands to the Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT].
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So what will be the fate of intra-EU BITs and intra-EU investment arbitration?
The conclusion of the Termination Treaty is a direct consequence of the Achmea Decision, in which the CJEU declared that Investor-State Dispute Settlement (the “ISDS”) clauses in intra-EU BITs are not compatible with the EU law. (The decision is available at http://bit.ly/2Kf8OmM.)
In general, the Termination Treaty is based on the premise that all intra-EU BITs shall be terminated and their sunset clauses, providing for the temporarily continued protection of investments existing prior to the termination of the relevant BIT, shall be terminated together with the respective intra-EU BIT and thereby shall not produce legal effects.
Furthermore, it stipulates that new intra-EU investor-state arbitrations may not be initiated and that pending proceedings shall be subject to the management procedure described below.
Interestingly, the Termination Treaty does not resolve the issue of application and compatibility with the EU law of the Energy Charter Treaty (the “ECT”) in the intra-EU investment protection context. In particular, the Termination Treaty stipulates that it does not cover intra-EU arbitrations initiated based on ECT Article 26 and that this issue will be dealt with at a later stage. Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT] at 2. The ECT is available at http://bit.ly/3nUL2u7.
Considering that in recent years we have witnessed rise of the number of intra-EU ECT arbitrations, the uncertainty introduced by the Termination Treaty may put the parties engaged in pending arbitrations, or anticipating initiation of new proceedings pursuant to ECT Article 26, in an adverse position. See,. e.g., Landesbank Baden-Württemberg and others v. Kingdom of Spain, ICSID Case No. ARB/15/45, Decision on the Intra-EU Jurisdictional Objection [25 February 2019]; Vattenfall AB and others v. Federal Republic of Germany, ICSID Case No. ARB/12/12, Decision on the Achmea issue [31 August 2018]; Masdar Solar & Wind Cooperatief U.A. v Kingdom of Spain, ICSID Case No. ARB/14/1, Award [16 May 2018]; Statistics of ECT Cases (as of Oct. 23, 2019) (available at https://bit.ly/3oGCeJz).
Notably, as argued by the Advocate General Henrik Saugmandsgaard Øe in his recently issued opinion in joined cases C‑798/18 and C‑799/18, the ECT ISDS clause does not apply in the intra-EU context, and the ECT may be entirely inapplicable to intra-EU proceedings. This indicates that if the CJEU follows the Advocate General’s reasoning, EU investors may be deprived of procedural and substantive protection under the ECT in the intra-EU relations. Joined Cases C 798/18 and C 799/18, Opinion of Advocate General Saugmandsgaard Øe [29 October 2020] (available at http://bit.ly/3bEYEHk).
Management of the pending intra-EU proceedings
Pending proceedings, defined as intra-EU investment arbitration proceedings initiated prior to March 6, 2018—the Achmea Decision linked above–and which have not ended with a settlement agreement or with a final award issued prior to March 6, 2018, where the award was duly executed prior to March 6, 2018, or the award was set aside or annulled before August 29, 2020, shall in principle be subject to the so-called Structured Dialogue, which is a mechanism that aims to assist disputing parties in finding an amicable settlement of a dispute. Art. 1(4) and (5) and Art. 9 Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT].
The settlement procedure is overseen by an impartial facilitator who shall find an amicable, lawful, and fair out-of-court and out-of-arbitration settlement of the dispute. Settlement of the dispute shall in principle be reached within six months. Art. 9 (1) – (14) Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT]. It can be observed that the mechanism resembles investor-state mediation.
Going a step further, the Termination Treaty implements an option for investors engaged in pending arbitrations to seek judicial remedies under national law before domestic courts against the host state measure contested in such arbitration proceedings. This option is available to investors under the condition that they withdraw pending arbitration proceedings and waive rights and claims under the relevant intra-EU BIT, or renounce execution of the issued award and commit to refrain from instituting any new arbitration proceedings. Art. 10 Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT]. In such case, limitation periods would not apply to bringing legal action before domestic courts.
This may have a severe impact on the prospect of lodging a successful claim against a state by the investor, since the legal framework of intra-EU BITs that provided a substantive and procedural legal basis in a pending arbitration will not be applicable in domestic court proceedings.
Doubtful recognition and enforcement of awards
Decisions and/or awards issued in pending, or, as the case may be, new arbitration proceedings may not be effective, because the Termination Treaty stipulates that contracting states shall, in case of domestic court proceedings, request the domestic court, including in any third country, to set the arbitral award aside, annul it, or to refrain from recognizing and enforcing it. Art. 7 (b) Agreement for the termination of Bilateral Investment Treaties between the Member States of the European Union [SN/4656/2019/INIT].
This raises a threat to the effectiveness of guarantees provided under, among others, the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the “ICSID Convention”).
It can be recalled that ICSID Convention Article 54 stipulates that each contracting state shall recognize an award rendered by an ICSID Tribunal as binding and enforce the pecuniary obligations imposed by that award as if it were a final judgment of a court where recognition is sought. This unique recognition mechanism does not leave room for any ground on which the recognition could be refused.
Considering a rather likely scenario in which a domestic court of an EU member state is faced with a request for recognition of award or decision issued by a tribunal in an intra-EU investment arbitration case, it can be noted that such domestic court will need to resolve uncertain and complex situation concerning the conflict of treaty norms. The domestic court will need to decide whether to recognize the award, or issue a decision in accordance with the ICSID Convention, or to comply with the EU law and refuse recognition and thereby, to undermine the ICSID Convention.
Although not addressed in the Termination Treaty, it appears that the CJEU argument in the Achmea Decision regarding incompatibility of the ISDS clauses in intra-EU BITs with the EU law may potentially extend to extra-EU BITs and arbitrations between EU members states and investors from third states.
Clearly, arbitrations initiated on a basis of ISDS clauses contained in such BITs may concern treatment of investors from third states investing in the EU, and therefore the subject matter of such arbitrations may relate to interpretation and application of the EU law.
Such arbitrations may also pose a risk to the proper interpretation and application of the EU law and have an adverse effect on the autonomy of the EU law. See Case C 284/16 Slowakische Republik (Slovak Republic) v. Achmea BV . Such reasoning, if followed, which is rather unlikely, would further deepen the crisis concerning European Union investment treaty arbitration.
It might be further noted that the competence of the court where the arbitration is seated to set aside the arbitration award may lead to the situation where such court would be a non-EU court and would not be bound by the Termination Treaty.
Furthermore, the winning investor may seek to have the arbitration award recognized and enforced in a non-EU jurisdiction where the defendant’s assets are located.
Taming the lion: The tendency of arbitral tribunals to reject intra-EU jurisdictional objections
Despite the Achmea Decision and clear commitment of EU member states on terminating the intra-EU BITs, arbitral tribunals in intra-EU arbitrations generally reject jurisdictional objections asserting incompatibility of intra-EU BITs.vSee, e.g., Strabag SE, Raiffeisen Centrobank AG and Syrena Immobilien Holding AG v. Republic of Poland, ICSID Case No. ADHOC/15/1, Partial Award on Jurisdiction [4 March 2020]; Vattenfall AB and others v. Federal Republic of Germany, ICSID Case No. ARB/12/12, Decision on the Achmea issue [31 August 2018]; Masdar Solar & Wind Cooperatief U.A. v Kingdom of Spain, ICSID Case No. ARB/14/1, Award [16 May 2018]; UP (formerly Le Chèque Déjeuner) and C.D Holding Internationale v. Hungary, ICSID Case No. ARB/13/35, Award [9 October 2018]; Addiko Bank AG and Addiko Bank d.d. v. Republic of Croatia, ICSID Case No. ARB/17/37, Decision on Croatia’s Jurisdictional Objection Related to the Alleged Incompatibility of the BIT with the EU Acquis [12 June 2020].
As emphasized by the tribunal in the partial award on jurisdiction in Strabag SE, Raiffeisen Centrobank AG and Syrena Immobilien Holding AG v. Republic of Poland, EU law does not form part of the law applicable to questions of the tribunal’s jurisdiction, and no extrinsic elements of interpretation under Article 31(3) of the Vienna Convention on the Law of Treaties can trump the clear expression of the parties’ common intention to arbitrate. Strabag SE, Raiffeisen Centrobank AG and Syrena Immobilien Holding AG v. Republic of Poland, at par. 8.143. It should be noted, however, that the intention of capital importing states to arbitrate disputes may be considered as no longer existent due to the signing and entry into force of the Termination Treaty.
Notably, the tribunal further considered the issue of the enforceability of an award issued in intra-EU arbitration and recognized its duty to render an enforceable award. It noted, however, that it is not able to predict the future validity, or enforceability of the award before enforcing courts. Id. at par. 8.140-8.142.
More recently, the tribunal in Addiko Bank v. Croatia raised several interesting points when rejecting Croatia’s jurisdictional objection related to the incompatibility of the Austria-Croatia BIT with the EU acquis.
The tribunal reasoned that in light of Article 2(1)(a) of the Vienna Convention on the Law of Treaties, the law applicable to the Austria-Croatia BIT consists of the terms of that BIT itself and general principles of international law, which are the sources of law not considered by the CJEU as incompatible with the EU law.
Furthermore, the tribunal noted that contrary to the BIT concluded between the Netherlands and Slovakia, considered by the CJEU in the Achmea Decision as incompatible with the EU law, the Austria-Croatia BIT does not incorporate EU law as part of its applicable law. Addiko Bank AG and Addiko Bank d.d. v. Republic of Croatia, ICSID Case No. ARB/17/37, Decision on Croatia’s Jurisdictional Objection Related to the Alleged Incompatibility of the BIT with the EU Acquis [12 June 2020] par.267. The tribunal concluded that the Austria-Croatia BIT does not give rise to the same functional concerns, which the CJEU found to be present in the context of the Achmea Decision. Id. at par.269.
This indicates that intra-EU BITs whose applicable law is limited to the terms of the intra-EU BIT itself and general principles of international law are not incompatible with the EU law. Following this reasoning, it can be assumed that the tribunal would reach a different conclusion if the Austria-Croatia BIT included a provision expressly or impliedly incorporating EU law as the applicable law.
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Some of the solutions implemented under the Termination Treaty may indeed be considered controversial. This is particularly the case with respect to the mode of termination of legal effects of sunset clauses, or more broadly, the retroactive effect of the Termination Treaty.
Investors may decide to seek protection under existing BITs concluded with non-EU states and, thereby, engage in the treaty shopping practice. It remains an open question whether such BITs will be affected by the Achmea Decision.
While the Achmea Decision argument has become a popular strategy for defendants in investment arbitration proceedings to challenge jurisdiction of arbitral tribunals, jurisprudence indicates that such arguments are generally rejected.
Although developments contained in mega-regional treaties, such as the Comprehensive Economic and Trade Agreement (available at http://bit.ly/2LXjQh3), may provide a model for the creation of standing investment court, which could replace the ISDS mechanism so far in place, the institutional design of the body must comply with the EU law in order to provide an effective alternative to domestic courts. In this regard, it is important to monitor development of the EU’s initiative concerning the so-called Investment Court System, which could be further developed into a Multilateral Investment Court.
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Krzysztof Wierzbowski is a Senior Partner at Eversheds Sutherland Wierzbowski in Warsaw, Poland. He is a member of the CPR European Advisory Board, which provides EAB posts for CPR Speaks. Aleksander Szostak LL.M. is a lawyer at Eversheds Sutherland Wierzbowski.
The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Gill Mansfield”
The CPR European Advisory Board (EAB) continues it series, “Meet CPR’s Distinguished Neutrals in Europe” and today it presents its next Q&A, with Gill Mansfield.
Gill is a UK qualified barrister and CEDR accredited commercial mediator with over 20+ years international legal and commercial experience the majority of which has been spent as in-house counsel. She has held Head of Legal, General Counsel & Company Secretary, and Senior Counsel roles across the media, entertainment, creative and digital/technology sectors, negotiating complex deals and resolving international commercial disputes. Her experience includes working with innovative new businesses and disruptive start-ups as well as award winning TV producers, multi-national corporations and household name brands.
How did you get your start as a neutral?
I trained and practised as a barrister before moving in-house, so litigation has always been part of my professional DNA. Whilst in-house I managed cross-border commercial and intellectual property disputes and litigation in courts throughout the World. My first experience of mediation was representing a media company as its Head of Legal in a court ordered mediation of a commercial dispute that was being litigated in California.
This judge-led session was very different from the mediation process that I use today. There was no joint session. The two sets of parties never met and were never invited to meet at any point during the day. However, the process was enough to pique my interest in mediation. A friend later recommended the CEDR mediation training and that, as they say, is history.
It’s fair to say that having experienced mediation as a party has definitely influenced my approach as a mediator.
Who is your dispute resolution hero/heroine?
That would have to be the late and much missed David Richbell. I, like many other UK mediators, owe a huge debt of gratitude to David as both a trainer and as a mentor.
David was always enormously generous with his time and his expertise. He saw any mediation where he didn’t take an assistant mediator as a wasted opportunity, and he encouraged those of us who he felt had promise to be actively involved in his mediations. I can still vividly recall the excitement when David first suggested that I run one set of mediation meetings solo whilst he ran another set of meetings in parallel.
He personified all of the character attributes that one aspires to as a mediator and dispute resolver: warmth, good humour, inexhaustible patience and unassailable positivity, utterly unflappable, respectful and respected. The things that I learnt at his side during those early years as a mediator continue to inform my mediation practice every day. A true hero of the mediation profession.
What advice would you give to the younger generation looking for a first appointment as neutral?
It’s important to choose the right mediation training course but taking a five-day training in itself doesn’t make you a mediator. It’s just the start of your journey. So many people finish their training completely enamoured with the idea of mediation, passionate about the process and expecting the work to find them. Sadly, it won’t. I spent the early part of my mediation career working with some the UK’s most respected mediators first as an observer and then as an assistant. In dispute resolution, as in any other field, learning your craft is vital. Seek out people who you can learn from and opportunities to develop your mediation skills. Working with community mediation organisations can be a great way to continue to build your skills (but don’t be surprised to find that many other aspiring mediators are also seeking this experience too). The likelihood is that your first paid mediation will come from within your own network and in order for that to happen you need to build credibility and expertise. You also need to build your network both in the industry and amongst those who instruct mediators. That takes time and commitment. It’s not going to happen overnight and there is no silver bullet.
What is the most important mistake you see counsel make?
The biggest mistake that I see counsel make is failing to understand that their role in a mediation is very different from their role in the litigation process, and consequently preparing for a mediation in the same way that they would prepare for a trial: adopting a positional and adversarial approach.
Those counsel who are most successful in representing their clients at mediation are the ones who understand that it requires a shift of mindset and a different set of skills. I often tell counsel to set their litigator hat aside and put on their negotiator hat. The mediation process allows everyone to take a step back from the litigation and it creates a real opportunity to explore options and solutions. The fact that the discussions are confidential and without prejudice creates a safe space to work collaboratively with the mediator (and potentially opposing counsel) but this does require a shift in perspective and approach.
I see this very clearly in the way counsel approach Position Statements and their opening comments at the mediation. Both of these are opportunities to speak directly to the client on the other side of the dispute. They are opportunities to engage, persuade and influence the decision makers. This is something that you don’t have the opportunity to do in the usual course of litigation where everything is filtered via lawyers. Those counsel who simply rehash the pleadings, or take an adversarial approach, are missing a valuable opportunity.
If you could change one thing about commercial mediation, what would it be?
Commercial mediation still has a problem with the lack ofdiversity. Perhaps that’s not surprising given that many commercial mediators are drawn from the legal profession where this is also an issue.
This is slowly changing as the traditional stereotypes of what a mediator looks like are being broken down. However, we need to be vigilant to make sure that talented mediators who are female, black or from an ethnic minority or who have a disability have the opportunities to advance in the profession.
It’s heartening to see that law firms are increasingly asking mediation providers to recommend mediators beyond those who might be seen as “the usual choices” and asking to see “new faces”, but we still have a long way to go to be a diverse and inclusive profession which properly represents the diversity of the communities that we serve.
For which types of conflicts would you recommend ADR?
I’m going to focus on commercial mediation here as that is my particular specialism within ADR. In my view, the vast majority of commercial disputes are suitable for mediation. There are however certain types of cases where mediation is particularly beneficial. These include cases where:
- a speedy and cost-effective resolution of the dispute is desirable;
- the opportunity cost in terms of wasted management time and legal expenses outweighs the potential benefits of litigation;
- there are continuing personal or business relationships or ongoing contractual relationships that would be harmed by litigation;
- a confidential process is required to avoid adverse publicity, preserve client goodwill and protect reputations;
- control of the outcome of the dispute is important;
- a party wants an outcome that could not be achieved in court.
The litigation process is essentially binary: it’s win-lose and a win is usually quantified in purely monetary terms. In contrast the mediation process allows the parties to craft a settlement agreement that meets their legal, commercial and personal needs. Whatever those might be. In a commercial context this could involve renegotiating the terms of a contract or agreeing terms for the transfer or purchase assets. In terms of meeting personal needs, it might be gaining a better understanding what happened and why and receiving an apology. These types of outcomes simply can’t be achieved through litigation. I recently mediated an IP infringement case where much of what was finally agreed between the parties could not have been ordered by a court.
Mediation can also be used in the context of other ADR processes: when used within the context of an arbitration it may resolve the dispute completely or at the very least it can help to clarify and narrow the issues to be resolved.
In your view, what makes CPR unique?
For me the thing that makes CPR really unique as an ADR provider is that it is not just an organization of neutrals and dispute resolvers. Its membership and committee structures bring together in-house counsel across a range of different industries, partners and associates from leading law firms, academics and distinguished neutrals in a collaborative environment. It is this broad stakeholder engagement and dialogue that gives CPR a unique perspective and allows it to be responsive to the needs of users of ADR.
The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Klaus-Olaf Zehle”
The CPR European Advisory Board (EAB) continues it series “meet CPR’s Distinguished Neutrals in Europe” and today it presents its next Q&A, with Klaus-Olaf Zehle.
Klaus-Olaf is a German ADR practitioner based in the northern part of German. His activity focuses on mediation, moderation of meetings and workshops and coaching. A qualified industrial engineer, Klaus-Olaf spent 20 years in leadership positions at local and international IT consulting firms. He also sat on the board of a public telecommunication and outsourcing provider. In 2004, he started a second career as mediator, coach, moderator and leadership trainer with a natural special focus on customers from technology and engineering. He is a Certified Mediator from the International Mediation Institute (IMI), Den Haag and qualified as Certified Mediator according to German law. In addition to the CPR Panel of Neutrals, he is also on the panel of mediators for commercial disputes and an arbitrator for IT conflicts at the Hamburg Chamber of Commerce. Klaus-Olaf is very active in mediation in and around Hamburg where he lives: he teaches mediation in the Masters in Programme Management at the International School of Management and Networking & Network Building in the Masters in Corporate Management at the Business and Information Techology School. He speaks and practices in German and English.
Klaus-Olaf has kindly agreed to contribute to our series and give us his insight on his mediation practice:
How did you get your start as a neutral?
Before any education on mediation, I got my first experiences as an Executive in a company by solving conflicts between departments which had different targets.
Who is your dispute resolution hero/heroine?
Gary Friedman and Jack Himmelstein from the Center for Mediation in Law are my mediation heroes. Not only did I benefit from two practitioner trainings with them, but they have also influenced the German mediation scene from the early days of mediation in the country. Nearly all of my coaches in mediation had undertaken their first education in mediation from Gary and Jack.
Their concentration on the power of understanding characterizes the way in which I now personally conduct mediation.
From Germany my mediation experience was mainly influenced by Stephan Breidenbach and Jutta Lack-Strecker.
What advice would you give to the younger generation looking for a first appointment as neutral?
Do not expect to be the neutral that all parties in dispute are waiting for.
It takes a long time to build a reputation. Networking in local and nationwide mediation associations is helpful. There, you can get experience from other neutrals.
Also, local events are very important; you should try to make presentations or speeches about the benefits of mediation and other dispute resolution processes at such events. It’s all about educating your potential clients.
Short articles or essays about dispute resolution in local newspapers or journals also can be of help.
Were you ever the first in doing something?
Yes, on many occasions, I was an innovator or early adopter. In my profession as a consultant, I was one of the first to offer mediation. A lot of my colleagues followed me in this specialization.
Together with three colleagues, we developed a specific consulting concept for disputes within a corporation, which is based on the principle of disputes resolution by a neutral dispute. We named this concept equidistance consulting.
We also developed a new methodology called Congruation (Congruence & Integration). This process refers to the need to show the differences in the positions and interests of the various members of a team or a board in order to solve latent conflicts. This is a paradigm I learned from coaching by Gary Friedman and Jack Himmelstein,
What makes your conflict resolution style unique?
While I am conscious that it is not – from a purist point of view – part of a neutral’s role or acceptable, I sometimes switch from a mediator role to that of an experienced person with an outside view of the situation and provide advice and ideas on how to resolve the conflict. I always do this with the prior full consent of all parties involved.
One example: During a mediation process with several partners of a law firm and relating to managing issues, I switched my role at some point and reported to them on best practices that I teach in leadership courses. These best practices are intended to give the parties the possibility to learn from each other. The parties are free to decide together whether they want to follow this kind of best practice or an adjusted version of the same.
What has been the most difficult challenge you have faced as a neutral?
I mediated a team conflict, which after some discussions resulted in there being one person opposed to nearly ten colleagues. I was convinced that even in this specific setting the conflict could be resolved by mediation. During the process, the significant imbalance of one against ten became more and more obvious, and I started to feel inclined to support the one-person party. I therefore recommended that they reduce the number of participants in the group of ten persons. This proposal was not accepted, and we stopped the mediation process.
What is the most important mistake you see counsel make?
Counsels who insist on prolonged discussions after a clear getting to “yes” phase. They should accept that their client does not need additional reasons or to reopen the discussion.
I sometimes have the feeling, that counsels like to make themselves valuable by showing that their view – when it is different from the negotiated agreement – is still the only right way.
If you could change one thing about commercial arbitration, what would it be?
Mediation should be mandatory before going to court or arbitration.
Now let’s turn to a specific topic: what is your approach to cybersecurity and data protection in international dispute resolution?
Online mediation is one of the most efficient ways to resolve disputes among parties who are located far away from each other. The current discussion on security risks of some platforms should be addressed at the beginning. The benefits should be balanced against the risks of confidentiality. All parties have to agree on the video conference platform to be used. Those documents that contains material worthy of protection could be shared in encrypted form via a separate communication channel and parties should be instructed not to share such material on screen during the video conference.
In your view, what makes CPR unique?
During my master studies in mediation, I learned about CPR in conjunction with the CPR pledge. I liked this idea and based my master thesis on this topic. The CPR pledge is for me still one of the key elements to dispute resolution.
Do you have any concluding remarks or an anecdote you would like to share?
My 2005 published master thesis on “Enhancing the acceptance of Alternative Dispute Resolution (ADR) practices between corporations through voluntary commitment, considering the example of the CPR Pledge and its transferability to the German market” was included in a PWC Study on ADR, which has had a lot of impact in establishing a series of conferences on ADR in Germany. Out of these conferences a round table of large corporations was established which now developed a pledge for Germany. CPR has indirectly influenced the acceptance to ADR in Germany.
The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Mladen Vukmir”
The CPR European Advisory Board (EAB) continues its series “Meet CPR’s Distinguished Neutrals in Europe” and today it presents this Q&A with Mladen Vukmir.
Mladen is the founder of Vukmir & Associates based in Zagreb, Croatia https://www.vukmir.net/. He has a background in intellectual property and is both a patent and trademark agent, admitted to practice before the Croatian State Intellectual Property Office (CSIPO) and the European Patent Office. He has been appointed by the Croatian government to serve as a member of the Board of Appeals for Patents and Topographies. In addition, he is an arbitrator on the panel of domestic disputes at the Permanent Arbitration Court at the Croatian Chamber of Commerce, a panelist on the UDRP Domain Name Panel at the WIPO Arbitration and Mediation Center and a distinguished neutral on the CPR Panels of Neutrals and at the INTA PON as well as being an IMI certified mediator.
How did you get your start as a neutral?
I have always thought that the adversarial process is not properly aligned with the interests of the disputants. During the second year of my traineeship, back in the Eighties, I attended a hearing in a divorce proceeding where I realized that I was not helping my client very much by bringing in legal expertise and positional thinking. Although I was well educated, I was not equipped to deal with the human aspect of the challenge faced by my client, captured in a protracted lawsuit. While it is a great anecdote, I will not retell it here beyond this summary.
As I am professionally involved in intellectual property, as soon as I became aware of the WIPO efforts in the mediation field, I joined its mediation education course in San Francisco, back in May of 2000 and immediately afterwards continued with the advanced trainings. A couple of years later, I participated in a full USAid mediation training held in Croatia by US instructors, followed by the first batch of International Trademark Association (INTA) international trainings as well as some CEDR organized trainings for the local judge mediators.
I clocked up my first practical experience (as a volunteer mediator) through a pilot, court-annexed program initiated by the Croatian ministry of Justice. This was followed by more international trainings and commercial mediation in various settings
Who is your dispute resolution hero/heroine?
My biggest mediation hero is Judge Srđan Šimac of the Croatian High Commercial Court, who started independently from me the very same year, through a judges’ exchange program in Canada. Since 2000, he has succeeded in bringing Croatia into the group of countries considered to have a developed mediation scene. A remarkable achievement. Since he took over the Croatian Mediation Association (HUM), he has turned it into a highly professional and experienced mediation hub, with an established mediation center and various training programs.
One of my early international trainers, an Italian mediator, Carlo Mosca, is also someone whom I remember as being a big influence. It was Carlo who first told me as a trainer during an INTA international training that a mediator is not responsible for the outcome of the process but is primarily responsible for the process itself. I think this is a very important insight for young mediators.
I should also mention my early trainers Bill Marsh, the late Colin Wall, and David Richbell, as well as Robert Mnookin and Gary Friedman. In addition, I would also like mention Jack Himmelstein, who was not my teacher but whose video on joint meetings strongly influenced me in accepting the importance of the joint mediation sessions relative to caucusing.
What is the one piece of advice that you would want to give to the younger generation looking for a first appointment as neutral?
Take any mediation that becomes available to you in order to find out how you function in the role of a mediator. It is important to find out as early as possible your own ideal balance between the knowledge you have acquired through mediation trainings, which helps to form you as a mediator playing her/his role and your own authentic self. Finding this balance is important in order to be able to build a deeper rapport with the parties. Secondly, do not hesitate to push much of the content typically dealt with during the opening phase into the preparatory phase of a mediation. This will make running the process with maximum efficiency much easier and, again, deepen your rapport with the parties.
Were you ever the first in doing something?
I was among the very first in my country to become interested in mediation back in 1999. This, in itself, was a pioneering step. However, I think even more important is the fact that since 1986, I have been very aware that the role of law will change in our societies. After many centuries of the increasing importance of law as a central axis of social organization, we are now faced with the prospect of law shifting away from its central role as a tool of social organization. To make myself clear, I do not think that law will vanish in any way, rather, I believe it will morph and shift to a different position in our societies, in a way similar to the path feudalism took previously. It did not disappear, but transformed into today’s role of constitutional monarchies bound by law.
Before the legal profession was ready to discuss this type of issue, back in 2004 I published an article, entitled “Embracing the Negative to Achieve the Positive” in The European Lawyer magazine, pointing out what was perceived as wrong with the system (https://www.academia.edu/19744783/Embracing_the_Negative_to_Achieve_the_Positive)This preceded, by some four to five years, thinking about the limits of the legal profession such as those elaborated in the fascinating book The End of Lawyers by prof. Richard Susskind.
What makes your conflict resolution style unique?
I strongly believe that every individual has a unique mediation style and that every mediation will further influence it. Each mediation is unique, just as snowflakes are and a good mediator understands that. Every mediator is bound to be unique because if a mediator is true to himself or herself he or she will approach any problem in his or her own, unique way. For example, because of my countercultural background, some street-smartness gained on the rock and roll scene, lengthy education in different countries and my legal family background, my own blend of introvert and extrovert characteristics, will certainly result in me having some individual approaches and ideas!
What has been the most difficult challenge you have faced as a neutral?
In retrospect, all of the challenges seem just like a learning process, whereby one gradually matures. Certainly, one of the most unexpected for me was a situation that occurred early on in my career. It happened in a business mediation and developed from a simple request by the parties to turn on the air conditioning in the room where we were meeting. It was an unfamiliar setting for all of us, we were in a hastily adapted apartment that was being used on a temporary basis by the Mediation Center. Not knowing where the AC controls were in this old apartment, I scanned the walls, looked under the windows and around the AC machines, as I did so I heard noises behind me. When I have turned around I saw the parties on their feet pushing the table at each other. The chairs which they had been sitting on soon started tumbling to the floor and then the shouting started. I managed to calm the parties sufficiently for them to pick up the chairs and sit around the table but I was not able to get the conversation running again or otherwise remedy the harm to the process that had occurred. The parties decided to proceed with arbitration as per the dispute resolution clause that was applicable.
Back then I was a very young mediator and I have since learned a great deal about the importance of the environment, which I have used to great benefit in some difficult subsequent mediations. For example, when faced with a serious impasse, it can be helpful to stand up and move away from the table, allowing the parties to regain space and start behaving partially out of the scope of authority of the mediator. This technique can encourage parties to be more assertive achieving transition to the phase of ventilation more quickly thus breaking the impasse choking the process.
Besides this single example that I have selected here, in general, I still find it rather demanding to deal with ethically questionable episodes that are revealed in some mediations.
What is the most important mistake you see counsel make?
I generally see counsel that approach the mediation process with good faith and the utmost effort to sustain it. Having said that, I can provide an example of a situation where a counsel sent me through the roof, figuratively speaking. I will never know if it was a result of counsel not understanding the process or a deliberate attempt to undermine it. The situation arose when I was engaged by an important international mediation center as a convener, as they could not convene the parties themselves.
I spent a couple of months getting familiar with the matter and building trust with the parties, only to see a representative of one of the parties defeat all that effort with a single letter, drafted against my advice which I had provided based on my understanding of the issues behind the refusal to mediate. Instead of sending a carefully drafted, emotionally balanced and deferential communication, counsel decided to send out just another one of the positional threats that sounded impersonal and legalistic. I am not sure that his client was consulted, or even informed about my efforts and recommendations. The letter was not well received by the party that previously refused to mediate and it derailed the process.
My lesson here was that I might have had focused too much on the party that wished to avoid mediation and not enough on the party that was nominally willing to mediate. Regardless, it was really disappointing to see a colleague unable to contribute to, or even possibly intentionally undermine the rapprochement between the parties – by clinging onto the positional threats and impersonal communication. Having said that, my overall experience is that counsel are very helpful to the mediation process in general.
If you could change one thing about commercial arbitration, what would it be?
I never look at arbitration and mediation as belonging to the same group of ADR methods. Arbitration is a position-based process and mediation is not. Arbitration has a third person deciding on the outcome, rather that the parties achieving the settled outcome. I therefore, make a clear distinction between the two. I serve in both processes, but largely refrain from presiding as an arbitrator because I feel that the energy I spend is not proportional to the degree of service I can bring to the disputants.
However, since I do serve as a wingman from time to time, I can say that in my experience, some arbitrations are indeed more burdensome for the parties than litigation is, in terms of costs, complexity and duration. Because it is essentially a legal process, I think that the emphasis of the legal aspects in arbitration is not ideal in the ADR context. Equally, mediation is not free from its downsides. One of my early mediation trainers and a very experienced mediator himself said some twenty years after we have met and after he went through a mediation as a disputant for the first time, that he found the experience very difficult and much worse than he expected. He felt the process was painful and his feeling had apparently nothing to do with the mediator, or with the other party making it difficult, it was just simply difficult to go through the mediation.
Admittedly, his experience was based on the personal dispute, not a business one. Nevertheless, in order to prevent such experiences, I would like to assist the disputants in feeling as good as possible in the mediation setting and I think that one of the ways of doing this is actually not to focus only on the process itself. Of course, given the expectation of businesslike focus on the issue in dispute and the process itself, a mediator that departs from such focus risks appearing unprofessional. In other words, what I would like to help disputants do is peel away layers of the professional masks we wear all the time and be themselves to a greater degree even in commercial mediations.
Now let’s turn to some specific topics:
- What is your approach to cybersecurity and data protection in international dispute resolution?
I was always familiar with technology as I have worked with the IT industry early in my career and have myself been an eager early adopter. I think that one should neither completely rely on the technology nor fear technologies’ weaknesses. All software is bound to have some security issues, but that is not a reason not to go digital. Data can be lost and or compromised in the physical domain as well. Parties must set the standard of security they wish to achieve jointly and the mediator needs to adjust to their decision. As I am generally in favor of high transparency standards, I don’t have a personal urge to overprotect, but I will, depending on the circumstances, strive to adapt even to the highest security standards available.
- Preliminary / early decisions: do you attempt to identify and decide potentially dispositive issues early in the case?
Generally, yes. I think that “slicing the salami” in an arbitration has the potential to be very productive but I should say that identifying dispositive issues early does not necessarily mean that they will be decided early in most of the cases. I just think that identifying them is likely to be beneficial and deciding on them needs to be determined based on the legal and factual considerations of each case.
- Taking of evidence in arbitration: are you IBA Rules or Prague Rules? And why?
I have studied law in both civil and common law systems and do not favor either one on principle. I am mindful of the fact that procedurally, arbitration is often complex and it can sometimes be a burden for less sophisticated parties. I therefore agree with the attempts of the Prague rules drafters to bring increased efficiency into the arbitral proceedings. My general view is that it is best for the parties to settle in an interest-based proceeding, rather than to conduct a high-end position-based process to its end.
As I have mentioned above, I do participate as an wingman arbitrator but generally not as a presiding arbitrator because I believe that as a presiding arbitrator focusing on the positional legal process, I am not helping parties in the best most constructive manner.
What do you see as the next “big thing” in global dispute prevention and resolution?
Parties’ empowerment. It is already happening and the parties who take responsibility for their contribution to the dispute and who ramp up their communication skills will successfully retake control of their disputes. Parties that are skillful in recognizing all involved interests clearly and communicating properly about them are likely to diminish the overall number of unresolved disputes significantly. Therefore, ubiquitous, everyday application of the advanced communication techniques by the parties themselves is going to make a sea change in the dispute resolution field.
For which types of conflicts would you recommend ADR?
All, and I do not say that lightly, I have come to that conclusion based on my experience that regardless of the nature of the dispute, joint efforts to resolve issues are successful in any arena when the parties put in genuine effort. In some fields, the percentage of success might be lower, but communicating properly will continue to be of the utmost importance.
In your view, what makes CPR unique?
For me, CPR will remain unique as it was one of the first globally reputable mediation centers I was associated with. This happened at the time of cooperation between CPR and INTA while Peter Phillips was still involved, back in the mid Nineties. The degree of conviction in the strength of mediation that I have witnessed at CPR impressed me a lot and the great skills of the mediators associated with the Center has had a lasting impact on me.
Do you have any concluding remarks you would like to share?
It was Peter Phillips, whom I have mentioned above, who welcomed me warmly and took me for lunch during my first visit to the CPR offices. It was immediately after an INTA meeting where Peter spoke with strong conviction and unabashed emotion about the benefits of mediation. As someone with a background in rock culture, I was pretty much persuaded that this type of personal attachment to the cause is superior to the distanced ways so many of our colleagues choose to adopt.
The CPR European Advisory Board Presents: “Meet CPR Distinguished Neutrals Based in Europe: Jennifer Kirby”
The CPR European Advisory Board (EAB) continues it series “Meet CPR’s Distinguished Neutrals in Europe” and today it presents its next Q&A with Jennifer Kirby.
Jennifer is the founder of Kirby in Paris, France. She acts as counsel, party-appointed, sole arbitrator and chairman in arbitration proceedings under a variety of arbitration rules. Her experience spans a wide variety of industry sectors. In addition to CPR’s Panel of Neutrals, Jennifer is listed on the panels of many other international arbitration institutions around the world. Prior to creating her own boutique arbitration firm, Jennifer was a partner at a large law firm (2008-2010), the ICC Deputy Secretary General (2005-2007), ICC Counsel (2002-2004) and an associate with large U.S. law firms.
Jennifer kindly agreed to grant us an interview. Here are her insights:
1. How did you get your start as a neutral?
When I went to law school at the University of Virginia, there were no classes in international arbitration. And if there had been, I probably would not have taken them. I never took any international law classes or even had any interest in anything with the word “international” in it. A more provincial American law student would have been hard to find.
On my first day as an associate at Simpson Thacher, the assigning partner told me he was putting me on an international arbitration with Jack Kerr. I said, “What’s an international arbitration?” He said, “You’ll figure it out.”
As I began working on my first arbitration, it was not too different from working on my domestic litigation cases. As an associate, I was doing pretty much the same work – e.g., drafting briefs (but they were called submissions), preparing affidavits (but they were called witness statements), reviewing documents as part of discovery (but it was called disclosure). There was, however, one thing I could do in arbitration that I could not do in domestic litigation: live in Paris.
It was this realization that prompted me to seek out as much international arbitration work at the firm as I could. After about three years, I spoke with Rob Smit and told him that (1) I wanted to work exclusively in international arbitration and (2) I wanted to live in Paris – neither of which were possible at Simpson at that time. I asked Rob if he could help me find a job. He said, “Maybe you could get a job at the ICC.” I said, “What’s the ICC?” He said, “You’ll figure it out.”
All told, I spent six years at the ICC – first as Counsel and then as Deputy Secretary General. It was at the ICC that I really learned the ins and outs of international arbitration. The ICC is to arbitration what SEAL training is to combat. The learning curve is steep, and the work is demanding. But by the time you leave the institution, you know how to handle pretty much any situation an arbitration can throw up.
I received an appointment as co-arbitrator from the LCIA not long after leaving the ICC to rejoin private practice. At that point, I had already been working exclusively in international arbitration for about ten years and was a known quantity to people at all the major arbitral institutions. While some institutions require you to have had a case before they will give you one, others are open to giving new arbitrators their first opportunity. Thankfully, the LCIA was willing to take a chance on me.
2. Who is your dispute resolution hero/heroine?
Robert Briner. Dr. Briner was the chairman to ICC Court during most of the years I worked there. I had the pleasure of seeing him regularly and working with him quite closely for about five years. That he was a giant in the field cannot be gainsaid, but saying this understates his significance to me, which is more personal. He combined integrity, intelligence, practicality and diplomacy in a way that made him not just an inspiration, but a kind of guiding light. To this day, when faced with a particularly tricky situation, I ask myself, “What would Dr. Briner do?”
3. What is the one advice you want to give to the younger generation looking for a first appointment as neutral?
Once you have some meaningful experience as counsel under your belt, meet with arbitral institutions and let them know that you want to start sitting as arbitrator. CPR, as well as the ICC and the LCIA take a keen interest in raising the next generation of international arbitrators and giving new people a shot. As more senior people become increasingly oversubscribed, this is essential.
4. Were you ever the first in doing something?
Given that I am young (by arbitration standards), I doubt that I am the first to do anything. Everyone in my generation necessarily stands on the shoulders of those who came before us. Having said this, I believe that when I started my own boutique arbitration practice in 2010, I was among the first people to do so.
At that time, clients were especially cost-conscious in the aftermath of the 2008 financial crisis. How to Reduce Time and Cost became the prevailing theme at arbitration conferences around the world. I started my boutique to offer top-flight arbitration expertise for smaller disputes where it would not be cost effective to engage a large firm.
What surprised me, though, was how many arbitral appointments came in. At that time, I was focused on acting as counsel and it had not occurred to me that this would happen. But I’m glad it did. For me, sitting as arbitrator is an honor, a privilege and a passion.
5. What makes your conflict resolution style unique?
I make a point of knowing the file well from the beginning of the case through the award. This allows me to manage the case proactively and efficiently and to take correct decisions quickly from beginning to end. This may not be unique – indeed, I hope it is not – but (sadly) many lawyers have told me that it is rare.
6. What was the most difficult challenge you faced as a neutral?
I am often appointed in cases that promise challenges even many experienced arbitrators would have trouble managing. So much so that, at this point, it is probably fair to say that I specialize in difficult cases. The challenges I have faced are so numerous and varied that I cannot say which has been the most difficult. Nor would I want to try, as describing the situations would necessarily entail disclosing circumstances that would be identifiable at least to the people involved and perhaps others. Instead, I will simply make an observation.
In 2009, Global Arbitration Review held a roundtable discussion in Paris on The Dynamic of Time and Cost. At that event, Emmanuel Gaillard said that two attributes arbitrators should have are the “ability to anticipate” and “courage”. As an arbitrator, it is not enough to keep up with a case. You need to be thinking several steps ahead – anticipating the parties’ likely next moves and what will be coming down the pike. And when the moment arrives for you to take a decision, you have to have the guts to take the correct one – come Hell or high water. Unfortunately, too many arbitrators lack the courage to do so.
7. What is the most important mistake you see counsel make?
Counsel in my cases are generally superb. One of the great pleasures of sitting as an international arbitrator is seeing excellent advocacy. In my experience, mistakes are rare – and important mistakes are even rarer.
Having said this, I have occasionally had counsel who try to capitalize on the due process paranoia that at times seems more rampant than the coronavirus. I am, however, immune to that particular disease.
8. If you could change one thing about commercial arbitration, what would it be?
I would have far more cases decided by sole arbitrators instead of three-member arbitral tribunals.
In 2009, I challenged the prevailing party preference for having three-member tribunals in my article With Arbitrators, Less Can Be More: Why the Conventional Wisdom on the Benefits of Having Three Arbitrators May Be Overrated. There, I contended that, from a systemic perspective, having three arbitrators as opposed to one does not generally improve the quality of the arbitral process or the award and may actually do the opposite. Any increased confidence parties have in the arbitral process from having three arbitrators is accordingly misplaced.
I wrote that article before I had ever served as arbitrator based on my experience at the ICC, where I participated in the administration of approximately 3000 international arbitrations and read and critiqued over 1000 draft arbitral awards. Since then, my more granular experience sitting as arbitrator has only confirmed my views. Given parties’ attachment to having party-nominated co-arbitrators, however, I do not have high hopes that the preference for three-member tribunals will abate any time soon.
9. Some specific topics:
a) What is your approach to cybersecurity and data protection in international dispute resolution?
CPR and FTI Consulting have developed a superb series of training modules on cybersecurity and data protection. They explain the nature of the threats that currently exist, the duty arbitrators have to mitigate the risk they pose, and the practical steps arbitrators can take to do so depending on the particular circumstances of their practice. I have found this series to be invaluable.
And I can’t see the word cybersecurity without immediately thinking of Stephanie Cohen. Steph is my go-to guru for all matters related to cybersecurity and data protection. She is as practical as she is knowledgeable. I cannot overstate how much I have benefitted from her expertise and guidance.
b) Taking of evidence in arbitration: are you IBA Rules or Prague Rules? And why?
IBA Rules. The IBA Rules reflect the prevailing consensus with respect to the taking of evidence in international arbitration. In Procedural Order 1, I typically note that I may refer to the IBA Rules for guidance in the conduct of the proceedings and no party has ever objected to this or suggested that I should refer to the Prague Rules instead.
In all events, however, I am not sure that the two sets of Rules would be as different in practice as one might think. This is because the differences seem to me to be more matters of emphasis than fundamentals.
Both the IBA Rules and the Prague Rules give arbitrators ample discretion to craft solutions that make sense in light of the circumstances of the particular case. Does a reference to one set of Rules as opposed to the other lead arbitrators to exercise their discretion in a materially different way? Maybe. But if I had to guess, I’d say, “Probably not.” Unless and until the Prague Rules gain greater currency, however, it’s hard to know.
10. What do you see as the next “big thing” in global dispute prevention and resolution?
I will be interested to see how expedited rules may come to affect arbitral rules more generally. Many institutions now have expedited rules that provide for streamlined proceedings. These rules are often designed with smaller cases in mind, but it may be that they ultimately point the way to making arbitral proceedings more efficient across the board.
11. For which types of conflicts would you recommend ADR?
I am usually hesitant to suggest ADR to parties appearing before me. In the cases where I sit, the parties and counsel are almost universally sophisticated and experienced. I figure that they are aware of mediation and other forms of ADR and have considered those options. If they have not gone down that route, there is usually a good reason.
Having said this, I have on rare occasion had cases where I have suggested mediation at the outset. These cases typically concerned situations where the parties had an ongoing relationship that it would be to their mutual advantage to preserve and the dispute seemed to arise from a breakdown in relationships between key individuals. In short, they were textbook examples of the types of situations that can often be successfully mediated.
In these circumstances, I suggested that the parties might want to consider mediation and explained why – not because I thought the parties had failed to consider it, but to clear my own conscience. I just didn’t feel comfortable moving ahead with the arbitration without disclosing to them that I thought mediation might well allow them to reach a more constructive outcome more quickly and more cheaply.
12. In your view, what makes CPR unique?
CPR is a think tank that general counsel created 40 years ago to find ways to prevent disputes and promote the efficient resolution of any disputes that do arise. Through CPR, in-house counsel, practitioners, neutrals and academics collaborate to find innovative solutions to some of the field’s most vexing problems. It is CPR’s members who develop its rules to ensure that they are always in sync with users’ needs.
13. Do you have an anecdote you would like to share?
My decision to leave New York and go to the ICC was more fraught than one might initially assume. While I wanted to move to Paris and specialize in arbitration, it also required me to step outside my comfort zone. Apart from a college year abroad at Cambridge, I had never lived outside the US. My French was rusty (to put it mildly). Since law school, I had only ever worked in large law firms. Leaving Big Law in New York for the ICC would mean leaving all my friends. It would also mean taking a hefty pay cut.
As it came time for me to take my decision, I started getting cold feet and felt unsure about what I should do. I called Hans Smit to talk things over. He listened patiently as I explained my fears and reservations and then said, “Jennifer, will you please just go and lead an interesting life.” Thanks to Hans, that is what I’ve been doing ever since.