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

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

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

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

2. Who is your dispute resolution hero/heroine?

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

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

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

4.   Were you ever the first in doing something?

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

5. What makes your conflict resolution style unique?

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

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

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

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

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

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

Pleading their case rather than adopting a less adversarial style.

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

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

9.   Some specific topics:

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

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

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

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

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

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

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

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

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

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

12. In your view, what makes CPR unique?

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

CPR = energy + information + sharing + adaptability

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

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

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

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

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

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

How did you get your start as a neutral?

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

Who is your dispute resolution hero/heroine?

Pierre Karrer, Robert Briner and Eric Schwartz. 

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

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

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

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

It is not easy to start out as an arbitrator.

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

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

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

Were you ever the first in doing something?

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

What makes your conflict resolution style unique?

I would like to think it is my intuition.

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

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

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

What is the most important mistake you see counsel make?

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

Now let’s turn to some specific topics:

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

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

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

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

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

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

For which types of conflicts would you recommend ADR?

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

The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Fatos Lazimi”

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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 Fatos Lazimi.

Fatos is a partner at Optima Legal and Financial based in Tirana, Albania.  He is an expert in international arbitration law and has participated in several international arbitration cases.  He is also a member of the ICC Court of Arbitration in Paris. Please see http://optimalaw.al/2016/11/03/fatos-lazimi/

 

How did you get your start as a neutral?

It all began back in 2015 when I was a party appointed arbitrator in a domestic case and at about the same time I was handling an ICC FIDC based case.  I was appointed as an Arbitrator by a well known company based in Albania but with foreign control.  The case was very complex as it dealt with a commercial transaction in the mining industry with a State party.  The proceedings lasted longer than expected due to the involvement of many accountant experts and witnesses of facts.

Who is your dispute resolution hero/heroine?It is very hard to pick just one hero or heroine in the dispute resolution arena, but I am deeply inspired by three esteemed gentlemen arbitrators:

  • Sigvard Jarvin
  • G. Bunny
  • Christofer C. Seppala

Sigvard Jarvin: I have been lucky to be local counsel in proceedings where Mr. Jarvin was an Arbitrator (mainly FIDIC Contract based disputes).  He is extremely skilled in the management of proceedings and he demonstrates an insightful analysis of the cases before him.  His patience and thoughtfulness are very impressive.

Nal G.Bunny: I have not been so lucky to be involved in proceedings where Mr. Bunny has served as an Arbitrator but I have admired him from a distance.  He has an encyclopedic knowledge of FIDIC contracts and his Awards – which I have been able to examine – are always well reasoned.

Christofer C. Seppala: I have been honored and privileged to be in close contact with Mr. Seppala while being Member of ICC Court of Arbitration in Paris.  On the one hand, he could be characterized without any hesitation as a mentor of interpretation and implementation of ICC Rules.  On the other hand, he is an excellent and unique interpreter of FIDIC concepts which are mirrored in many ICC FIDIC based cases. 

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

They must recognize that they have to live with their cases so they must make their best professional endeavors to ensure the legal process is full of integrity, independence and impartiality.

What makes your conflict resolution style unique?

I encourage the parties in dispute to try and find the things they have in common and I insist on this as part of the process.

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

Probably having to consider and then make a decision on a procedural issue which was requested by one party after the proceedings were declared closed.  I remember a case where the Claimant asked that the proceedings be reopened more than a year and a half after they were declared closed.  It was a very difficult decision to make because the circumstances which triggered the request to reopen were rather exceptional.  In particular, evidence had come to light but for state reasons it was classified as highly confidential.  The particular difficulty I was faced with was a lack of applicable legislation covering the confidentiality matters and their reflection in arbitration proceedings.

What is the most important mistake you see counsel make?

Devising dilatory tactics and unethical conduct.  I have witnessed  cases where the parties’ counsels engage in dilatory tactics.  For example, filing numerous applications seeking permission to postpone decision making and deferring the time for making a draft award.  I view these strategies as harmful for the parties which counsel represents and for the proceedings in their entirety.  They have the potential to undermine a party’s position in the eyes of the Tribunal and this may prompt the latter to make adverse inferences.  In the long run, such delay tactics decrease the advantages of arbitration as a method for resolving disputes

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

Adoption and enforcement of strong conflict rules, i.e. procedural controls on appointments so that the parties do not abuse the right to nominate arbitrators.

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

Data protection and cyber risks are becoming more and more important aspects in administration of arbitration proceedings.  I would support a revision of the various institutional rules e.g. ICC, ICSID, LCIA etc. so that they address these issues in stronger terms and impose penalties for breach of the applicable data protection rules.

In preliminary/ early decisions: do you attempt to identify and decide potentially dispositive issues early in the case?

Yes.  It is very important in terms of efficiency of the arbitration proceedings to identify the potential areas of dispute, in particular, those which are fundamental to the whole process, like jurisdiction matters, validity of arbitration agreements, bifurcation of proceedings on liability and quantum etc.

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

Given my professional background and personality I support a more proactive approach in administration of arbitration proceedings and I would therefore opt for the Prague Rules.

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

Extending arbitration to disputes arising from the Belt & Road Initiative.  This initiative is likely to spawn many disputes and ADR could be beneficially deployed.

For which types of conflicts would you recommend ADR?

If I had to pick one, I would say labor disputes.

In your view, what makes CPR unique?

Its philosophy and policy of conducting disputes.  I think CPR has unrivalled experience in procedural approaches and adopting final workable solutions.

Do you have an anecdote you would like to share?

Arbitration is the key but not the open door.

The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Bart Neervoort”

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bart

The CPR European Advisory Board (EAB) continues its series, “Meet CPR’s Distinguished Neutrals in Europe” and today it presents its fourth Q&A, with Bart Neervoort, from the perspective of a mediator.

Bart is an international trial lawyer turned full-time mediator and arbitrator, based in the Netherlands.  Over the last ten years he has handled disputes in diverse areas including construction, shipbuilding, professional negligence, medical malpractice and shareholder disputes.  He has been an arbitrator for NAI, ICC (Paris), UNUM (Rotterdam), LCIA (India) and CIETAC (China).  These days his practice focuses on mediation and he is a certified mediator for MfN, IMI, ICC (Paris), CEDR (London) as well as a CPR Distinguished Neutral. 

How did you get your start as a neutral?

As a committed litigator I was skeptical when the High Court in London suggested mediation in a case I was involved in before the case actually went to trial. I was more than surprised that the case settled in a day!

Who is your dispute resolution hero/heroine?

Among many others, I would say David Hoffman and Michel Kalepatis. David’s teaching at Harvard’s Summer School left me and other experienced mediators in awe as he demonstrated how to overcome the most challenging of deadlocks and keep the most difficult people at the table. And Michel is simply the Godfather of mediation in Europe!

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

Don’t be too keen as a mediator on reaching resolution. When you start mediating, you tend to think settlement is your success and failing to reach agreement is your failure. My experience has been that one can overstretch your skills if you are too eager. Let the parties do the work. It is their process. You are there to guide them. Keep in mind, it is their resolution, not yours and their problem if they do not resolve their dispute.  Finally, don’t boast about your success rate.  Remember, you are there for the parties.

Were you ever the first in doing something?

Yes, I was the first Dutchman to do an ICC mediation (between a UN Body and a Greek party).

What makes your conflict resolution style unique?

I would like to think, that showing my own vulnerability to the parties works well.  Also, my sense of optimism about the outcome of the dispute and, of course, humor always helps!

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

Mediating between two very stubborn 88 year old shareholders!

What is the most important mistake you see counsel make?

They often fail to realize that in order to reach settlement at mediation it is extremely unhelpful to position oneself as the “opposing side.”  Settlements are reached together.

If you could change one thing about commercial mediation, what would it be?

I would make mediation advocacy compulsory in lawyers’ training programs.

Now let’s turn to a specific topic: what is your approach to cybersecurity and data protection in international dispute resolution?

I believe the dangers are currently underestimated and neutrals should have proper protection in place and be accountable for that to the parties.

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

Dispute prevention being recognized for what it’s worth in all layers of the business community. Resolution of disputes by the parties themselves being recognized by lawyers as something that is really beneficial for their clients.

For which types of conflicts would you recommend ADR?

I believe you can use ADR for almost any commercial or corporate dispute.

In your view, what makes CPR unique?

The way in which it has been able to mobilize both the corporate and legal US communities to draw up Dispute Resolution Pledges and offer a forum for ADR. If only CPR could reach the same standing in Europe!

Do you have an anecdote you would like to share?

A Greek almost tragedy that ended well! In an international mediation between a German and a Greek party, the latter and his lawyer made it difficult for the other party and the mediator. The lawyer, when asked in caucus what his client’s BATNA was, said he had no idea and saw it as his task to bring forward his client’s arguments as if in litigation, not to advise on a possible outcome of a court case. His client rejected what was on offer, said “no” and closed his folder. He said “no” a second time, putting his file in his briefcase and repeated his position a third time as he left the room. Finally, in an improvised caucus in the hallway the client made a counter-proposal with only minor changes, which was acceptable to the other party. Multicultural mediation. I love it.

The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Mauro Rubino Sammartano

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183The CPR European Advisory Board (EAB) continues it series “meet CPR’s Distinguished Neutrals in Europe” and today it presents its third Q&A with Mauro Rubino Sammartano.

Mauro Rubino Sammartano (pictured) is a partner in the Italian law firm Law Fed based in Milano.  Mauro sits as an arbitrator in commercial and investment arbitrations. His wide experience includes advocacy in Italy and in Paris, being an associate tenant of a London set of Chambers for many years, and a Recorder and Deputy Judge in Italy.  He has been involved in arbitration for about 30 years more recently, in mediation.  Mauro is also chair of the European Court of Arbitration and the Mediation Centre of Europe, the Mediterranean and the Middle East.  He lectures on arbitration and mediation and is the author of several textbooks and articles on topics of international arbitration.

Mauro kindly agreed to grant us an interview for the third blog piece of our series profiling CPR Neutrals in Europe.  Here are his insights:

How did you get your start as a neutral?

I have come to arbitration by acting as counsel in large international construction projects. I enjoyed arbitration and started studying it. I had been involved in construction matters for some time when I received my first appointment as arbitrator in a construction dispute.   I really liked it; I saw similarities with my prior activities as Recorder and then as a Deputy Judge in Italy.

Dealing with ADR, I realized that the top priority for litigants is to avoid or at least to narrow the scope of a litigation. I therefore started to deepen my knowledge of mediation, I have now become a trainer in mediation and the chair the Mediation Centre for Europe, the Mediterranean and the Middle East.

Who is your dispute resolution hero/heroine?

Hans Smit, Columbia University, for having handled an arbitration proceeding extraordinarily fast, which remains a rare example in commercial arbitration.

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

Study international arbitration and write about it.  It will transpire from your conduct whether you practice in this field because you like it, or it is just a business opportunity for you.

Were you ever the first in doing something?

Probably I was the first (i) to introduce in 1997 in the rules of the European Court of Arbitration, sections providing for an appellate arbitral tribunal in commercial arbitration and (ii) to stress the duty of an arbitrator to act “with humanity and humility.”

What makes your conflict resolution style unique?

I have noticed, through my various contacts on the international level, that a frequent complaint against arbitrators is that they remain distant from the parties, do not always know the file well and seem willing to spend the least possible time on the dispute. To me, the duties of an arbitrator are exactly the opposite: the arbitrator must be available to the parties, study the file well and devote to it all the necessary time. This approach amounts to acting in a spirit of service. My approach to arbitration is this one.

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

In my early days, to my great surprise, I had to refuse a top appointment because the appointor was clearly expecting that the party-appointed arbitrator would act for it.

Another difficult challenge to me is that there is not always enough discussion within the panel, each arbitrator tending to go his/her way. Discussions and even better, a very frank discussion, seem to me essential for the arbitrators to reach the best possible solution.

What is the most important mistake you see counsel make?

The most important mistake which in my opinion too many counsels make, is to keep repeating themselves in all their pleadings and/or discussions. This is likely to produce the risk that the arbitrator does not read at length all the passages in which he/she finds a clear repetition and sometimes in the middle of such repetition there could be anew sentence or word which might have helped that party’s case.

Another mistake is to insist on a hopeless argument. In general, counsel should not ignore what transpires from the conduct of the arbitrators and the opposing party and adjust – if needed – his/her line of defense.

If you could change one thing about commercial arbitration, what would it be?

A frequent negative view of commercial arbitrators is that they concentrate on showing how good they are and on writing a brilliant piece of legal literature.

Another very negative aspect for the image of arbitration consists of frequent appointments made just because of the “esprit de copinage”.  This leads some arbitrators not to share their position fully with the other members of the panel by fear of making them unhappy and jeopardizing the possibility that they could appoint him/her on other occasions in the future.

In your view, what makes CPR unique?

What to me makes CPR unique is the message that it conveys: it shows that CPR has neither a self-serving nor a commercial purpose and its Rules illustrate its goal of understanding the needs of the parties and to find way to address and accommodate them.

The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Tsisana Shamlikashvili

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Tsisana Shamlikashvili

The CPR European Advisory Board (EAB) continues its series, “Meet CPR’s Distinguished Neutrals in Europe,” and today it presents its second Q&A, with Professor Tsisana Shamlikashvili, centering around the theme of “Mediation in the 21st Century.”

Tsisana is a Moscow based, international expert in ADR.  She focuses on mediation and was responsible for initiating and supporting the institutionalization of mediation in Russia, founding the Center for Mediation and Law in 2005.  Her mediation/neutral practice covers a wide range of cases from complicated cross-border commercial disputes to family conflicts, as well as intellectual property, workplace, financial, personal injury and medical malpractice disputes.  She is currently president of the National Organization of Mediators (NOM), academic chair of the Federal Institute of Mediation, founder of the Scientific and Methodological Center for Mediation and Law, Chair of the Subcommittee on ADR and Mediation in the Russian Association of Lawyers, founder, publisher and editor-in-chief of the magazine “Mediation and Law”, and head of the Mediation Master’s Program at MSUPE. [https://mediacia.com/en/founder/]

By Kathleen Fadden (consultant with AMGEN) and Vanessa Alarcon Duvanel (King & Spalding LLP) 

How did you get your start as a neutral?

It has been a lifelong journey towards mediation which perfectly synthesized my professional background and experience.  Understanding how imperfect traditional ways of addressing conflict are and how much harm we can avoid using mediation as a preventive approach made me start the journey.

Who is your dispute resolution hero/heroine?

I strongly believe that each person who finds enough courage to step into a dialogue with his/her opponent has to be supported and professionals who assist in these complex situations are heroes and heroines too.

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

To be consistent and persistent, to stay humble and maintain curiosity.  Always be ready for the unexpected.  Be surprised about what won’t happen!

Were you ever the first in doing something?

Yes, indeed.  Development of mediation and its institutionalization in Russia was initiated by me, as was ADR implementation generally.

What makes your conflict resolution style unique?

Each mediator is unique and each mediation is unique.  My preference is to facilitate parties in their efforts to resolve the conflict, to find an exit out of dispute which will provide the parties with a mutually acceptable future.  This means possessing the ability to use different models of mediation in each case or even a blend of the models to achieve the best result.  The main thing is to follow the key principles of mediation as a modern tool to address the conflict and to develop conditions so that the parties in the conflict are empowered.

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

There are difficulties and dilemmas in almost every case.  Ethical dilemmas are often the most complicated to resolve.  For example, how should a mediator behave when he/she holds information crucial for settlement of the case but one party does not want to share the information with counterparts and does not wish the mediator to do so either or even have any direct discussion about the topic?

What is the most important mistake you see counsel make?

The biggest mistake counsel can make is to fail to give the represented party a real voice, view or opinion at the hearing.

If you could change one thing about commercial arbitration, what would it be?

It would probably be the introduction of a two to three hour compulsory informative session regarding mediation and the requirement to include a mediation clause in most contracts.

Now let’s turn to a specific topic: what is your approach to cybersecurity and data protection in international dispute resolution?

We have to be very attentive to potential vulnerabilities caused by the use of technology and indeed follow all data protection rules in every context, domestic and crossborder.

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

I think one of the next “big things” is the wider use of mediation.  Citizens, societies, corporations and states developing a real culture of dialogue to prevent conflict when disputes occur.  We should deploy all possible efforts to make that happen.  Thinking about new trends in dispute resolution, ODR deserves a mention.  It is necessary in a global digital world. Today there is an increasing demand for ODR in the court environment.  Hopefully, in time, the private sector in B2B / B2C transactions will understand the benefits of such tools not only in e-commerce and not just in the cross-border context. In recent weeks we’ve already witnessed a growing demand for ODR and mediation using tech platforms. Mediation will be one among other preventive tools in times of crisis for disrupted businesses.

For which types of conflicts would you recommend ADR?

In most cases, ADR and specifically mediation, offers parties more advantages and opportunities to resolve disputes with the best possible outcome because control is in the hands of the parties.  ADR can be used in commercial cases, IP cases, construction/development, insolvency, medical malpractice, personal injury etc.  There are very seldom cases when mediation cannot be used and of course, sometimes, it can be combined with other ADR modes.  For instance, recently there has been growing interest in hybrid procedures such as MED-ARB/ARB-MED.

In your view, what makes CPR unique?

CPR is one of the oldest organizations, established to change the dispute culture and promote ADR in business/economic environments as well as in society as a whole.  CPR is trying to approach and involve all stakeholders even if they have conflict of interests.  The CPR pledge for corporations and law firms was one of the key factors which increased awareness of ADR and spawned a demand for use of ADR.  Last, but not least, CPR has gathered the most experienced ADR professionals/neutrals.

Do you have any concluding remarks you would like to share?

The contemporary world needs dialogue and inclusion at all levels of society now more than ever in human history. In times of crisis and total threat to fundamental human rights, interference with private life, radical shifts within social life and familiar modes of communication, mediation can empower individuals, make their voices heard in a constructive way by others, especially by decision-makers.

Approach of the European Union to Bilateral Investment Treaties Concluded Between the Member States: Initial Thoughts on Draft Plurilateral Agreement for the Termination of Intra-EU BITs

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By Krzysztof Wierzbowski[1] and Aleksander Szostak[2]

The compatibility of investment protection treaties entered into between EU member states (the ‘Intra-EU BITs) with the regulatory framework of European Union law has been a controversial issue for quite some time. It can be recalled that the decision of the Court of Justice of the European Union (the ‘CJEU’) in Achmea (formerly Eureko) v. Slovakia (the ‘Achmea Decision’) declared investor-state dispute settlement clauses in intra-EU BITs as contrary to EU law. In particular the CJEU stated that disputes before arbitral tribunals based on intra-EU BITs may relate to matters of interpretation and/or application of the EU law. While a preliminary ruling procedure under Art. 267 TFEU enables courts and tribunals of member states to file a request pertaining to the interpretation and application of the EU law, no arbitral tribunal constitutes a court or tribunal under the meaning of the provision and, therefore, such arbitral tribunal cannot request a preliminary ruling.

As decisions of arbitral tribunals are final and, therefore, in principle, cannot be appealed to the national courts, the CJEU has found here a threat to proper interpretation and application of the EU law, which in turn has an adverse effect on the autonomy of the EU law .

The direct implication of the Achmea Decision is that investor-state arbitrations based on intra-EU BITs are not compatible with the EU law and should not be initiated. This may have a severe impact on foreign investors engaging in the European market and the foreign direct investment protection system in the EU.

In line with commitments contained in political declarations issued by the representatives of the governments of the EU member states on 15 January 2019, EU member states have quite recently reached an agreement on the text of a plurilateral treaty for the termination of intra-EU BITs.[3] Although it appears that the official text of the plurilateral treaty is not publicly available, its draft text has been leaked (the “Termination Treaty”) and may provide much needed insight into the future shape of EU policy towards protection of EU investors in the EU and the fate of intra-EU BITs. [4]

The fate of intra-EU BITs

According to the text of the Termination Treaty, intra-EU BITs listed in an annex to the Termination Treaty are to be terminated and shall not produce legal effects. Intra-EU BITS will therefore be terminated by means of mutual consent of contracting parties through a plurilateral treaty, which may prove to be the most efficient method of terminating all of intra-EU treaties in a consistent manner.

As a matter of certain standard, investment protection treaties provide for a solution applicable in the case of termination of the treaty. Investors enjoy continued protection for a set period of time, thereby not being surprisingly deprived of certain rights that might have been taken into account when the investment decision was made and implemented.

Interestingly, the Termination Treaty provides that such sunset clauses contained in intra-EU BITs, gguaranteeing the continued protection of investments existing prior to the termination of the relevant BIT, shall be terminated together with respective intra-EU BIT and shall not produce legal effects. Whether such termination by the Termination Treaty, without modification of intra-EU BITs by removing the sunset clauses from the legal framework and, subsequently, terminating each of BITs entirely, will be effective may be debatable (in particular by affected investors).

The Termination Treaty adds a degree of uncertainty with respect to the application of the Energy Charter Treaty (the ‘ECT’) in intra-EU relations. The Termination Treaty provides that it does not cover intra-EU proceedings initiated on the basis of the ECT and that this matter will be dealt with at a later stage. This may put many EU member states and foreign investors currently engaged, or considering engaging in intra-EU proceedings based on the ECT, in a disadvantageous position. It is noteworthy that recent years have witnessed a number of intra-EU ECT claims directed by foreign investors against for instance Spain (concerning reform of renewable energy sector).

The Termination Treaty appears to endorse the view that the legal framework of the EU sufficiently protects investors engaging in the European market. After all, by exercising some of the fundamental freedoms, such as freedom of establishment and free movement of capital, investors from EU member state fall within the scope of application of the EU law and enjoy protection under inter alia primary and secondary EU law as well as general principles of EU law.[5] It may however be doubtful that EU law and the national law of member states will always be perceived to de facto guarantee effective procedural and substantive protection to foreign investors engaging in the European market. One may identify a number of concerns associated with the potential bias of national judges, political pressure exerted by governments, corruption and malfunctioning of the domestic judiciary in general, which indicates that the view expressed in the Termination Treaty may be debatable.

One size does not fit all: concluded, pending and new arbitration proceedings

Although the Termination Treaty stipulates that all intra-EU BITs listed in an annex shall be terminated and shall not produce legal effects, it additionally addresses the status of arbitration proceedings under intra-EU BITs. In particular, the Termination Treaty distinguishes between three categories of arbitration proceedings under intra-EU BITs:

  • New arbitration proceedings

The Termination Treaty defines these as arbitration proceedings initiated on or after 6 March 2018 (i.e., on or after the date of Achmea Decision).

The Termination Treaty stipulates that arbitration clauses in intra-EU BITs shall not serve as legal basis for new arbitration proceedings as defined above.[6] This indicates that any intra-EU investment treaty arbitration initiated after the Achmea Decision will be declared as ineffective.

  • Concluded arbitration proceedings

The Termination Treaty defines these as:

Arbitration Proceedings which ended with a settlement agreement or with a final award issued prior to 6 March 2018 [the date of Achmea Decision] where:

  1. the award was duly executed prior to 6 March 2018, even where a related claim for legal costs has not been executed or enforced, and no challenge, review, set-aside, annulment, enforcement, revision or other similar proceedings in relation to such final award was pending on 6 March 2018, or
  2. the award was set aside or annulled before the date of entry into force of this Agreement;[7]

These intra-EU investment treaty arbitration proceedings will not be affected by the Termination Treaty. Accordingly, any award, final decision, or settlement issued before 6 March 2018 will not be considered as invalid, or not effective.

  • Pending arbitration proceedings

The Termination Treaty defines pending arbitration proceedings as arbitration proceedings initiated prior to Achmea Decision (i.e. 6 March 2018), which do not qualify as concluded.[8]

For this category of arbitration proceedings, the Termination Treaty provides a mechanism which aims at assisting the parties to the pending proceedings in finding an amicable settlement of a dispute – the so-called Structured Dialogue.[9] At the outset, it is interesting to note that the Structured Dialogue mechanism to a large extent resembles procedure for investor-state mediation.

The mechanism enables foreign investors to initiate settlement procedure with a state party to the pending arbitration proceedings within six months from the termination of intra-EU BITs, thereby providing the legal basis for respective pending arbitration proceedings to become converted to or substituted by, the specific  kind of mediation.[10] The settlement procedure is overseen by an impartial facilitator whose task is to find an amicable, lawful and out of court and out of arbitration settlement of the dispute. Settlement of the dispute shall be reached within 6 months.

While the facilitator shall be designated by an agreement of parties (i.e. foreign investor and state), and shall possess in-depth knowledge of EU law, the Termination Treaty does not seem to require an in-depth knowledge of public international law, or, more importantly, international investment law.[11] Although it is doubtful that parties would appoint a facilitator that is not an expert in public international and international investment law, the lack of express requirement in this respect may lead to undesirable situations that may undermine of the Structured Dialogue mechanism.

Interestingly, the Termination Treaty provides an additional option to foreign investors that enables them to seek the judicial remedies under national law against a measure adopted by the state, such measure being subject to such initiated arbitration proceedings. In such case, national time limits for bringing legal action do not apply provided that investor satisfies several conditions.[12] It is noteworthy that the provisions of intra-EU BITs that initially provided legal basis for the parties to settle their dispute, will not be considered as part of applicable law in proceedings before a national court. Clearly, this implies that investors will not be able to base their claims on substantive provisions of intra-EU BITs, which may severely limit the possibility to lodge a successful claim against a state.

Pending and New Arbitration Proceedings: what about recognition and/or enforcement?

The Termination Treaty provides that state parties to intra-EU BITs on the basis of which pending and/or new arbitration proceedings were initiated, shall inter alia request the national court of EU state and any 3rd state, to set aside an award issued in such proceedings, or to annul it or to refrain from recognizing and/or enforcing it, as applicable.[13]

Therefore, many arbitration awards issued after Achmea decision will, at least in EU member states, be ineffective.

Although the Termination Treaty covers intra-EU BITs only (as listed in the Annex to the Treaty), it deserves to be noted that one may extend the reasoning of the CJEU in Achmea Decision regarding incompatibility of investor-state dispute settlement clauses in intra-EU BITs with EU law to BITs concluded between EU member states and 3rd states.

In particular, disputes covered by such BITs and settled through investor-state arbitration may relate to matters concerning treatment of foreign investors engaging in the European market and, thereby, interpretation and application of EU law. While it is rather doubtful that tribunals constituted on the basis of such BITs will reject jurisdiction over a dispute, there is a threat to effective recognition and enforcement in the European Union of awards issued in such arbitrations.

The national court faced with a request for recognition or enforcement of such arbitral award, or the CJEU faced with a request for a preliminary ruling, may declare that the arbitration between a non-EU foreign investor and EU member state adversely affects the autonomy of the EU law and, therefore, recognition and enforcement of such awards should be refused. It can be expected that a request for a preliminary ruling from the CJEU on this matter will be made.

This would have a devastating impact on the effectiveness of guarantees contained in such BITs. In addition, this approach, if adopted, would severely impact recognition and enforcement mechanism contained in the ICSID Convention. Namely, Art. 54 of the ICSID Convention provides 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. As the mechanism does not leave room for any ground on which the recognition could be refused, potential refusal by national courts to recognize awards issued in arbitrations under ICSID rules would adversely affect the effectiveness of the ICSID Convention and possibly pose a threat to its existence.

Concluding remarks

Although the official text of the Termination Treaty is not publicly available, its leaked draft may serve as a valuable source indicating the fate of intra-EU BITs.

Some of the solutions provided under the Termination Treaty, such as the mode of termination of legal effects of sunset clauses, or retroactive effect of the Termination Treaty with respect to the claims that arose and could constitute the basis of New Arbitration Proceedings, may be controversial and will most probably be contested by affected investors. It remains a matter of separate discussion what avenue the investors may have in order to effectively contest the ex post deprivation of their rights.

Some investors may decide to engage in the treaty shopping practice and seek protection under BITs other than intra-EU ones. It remains an open question whether BITs concluded between EU member states and 3rd states will be affected by the reasoning of the CJEU in Achmea Decision.

ENDNOTES

[1] Krzysztof Wierzbowski is Senior Partner at Eversheds Sutherland Wierzbowski in Warsaw, Poland.

[2] Aleksander Szostak LL.M. is a lawyer at Eversheds Sutherland Wierzbowski.

[3] See. Statement: EU Member States agree on a plurilateral treaty to terminate bilateral investment treaties [24 October 2019] available at: https://ec.europa.eu/info/publications/191024-bilateral-investment-treaties_en.

[4] Draft text of the treaty is available at: https://www.iareporter.com/articles/revealed-previously-unseen-draft-text-of-eu-termination-treaty-reveals-how-intra-eu-bits-and-sunset-clauses-are-to-be-terminated-treaty-also-creates-eu-law-focused-facilitation-p/.

[5] See. Point XI of the preamble to Termination Treaty.

[6] Art. 5 Termination Treaty.

[7] Art.1(4) Termination Treaty.

[8] Art.1(5) Termination Treaty.

[9] Art.9 Termination Treaty.

[10] Art.9(1) Termination Treaty.

[11] Art.9(8) Termination Treaty.

[12] Art.10 Termination Treaty.

[13] Art.7 Termination Treaty.

The views expressed in this article are those of the authors and do not necessarily reflect the views of The CPR Institute.

A Report on the 2019 CPR European Congress on Business Dispute Management (Part II)

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EU flagBy Vanessa Alarcón Duvanel and Kathleen Fadden

On 15 May 2019, CPR held its third annual European Congress on Business Dispute Management, in London. Organized by CPR’s European Advisory Board (the “EAB”) and kindly hosted once more by SwissRe in the magnificent Gherkin building, the Congress inspired thought provoking considerations on topics of dispute prevention and resolution. As with last year’s summary, we have split this reporting in two parts; Part I sharing the morning panel sessions can be found HERE. 

The afternoon’s session began with a keynote address by Teresa Giovannini of LALIVE in Geneva, Switzerland.  Teresa Giovannini has a wealth of experience in international arbitration having served as an arbitrator in over 200 arbitrations and held leadership positions in various institutions.  In a captivating speech entitled “what happens behind the curtains”, she gave the audience a glimpse of how arbitral tribunals operate.  The integrity of the arbitral process has often been criticized and bias, in particular, be it unconscious or conscious, can impact throughout the process.  Complete elimination of bias may be difficult and Teresa Giovannini outlined some simple steps that can minimize bias: adopting the screen selection process in the CPR Rules whereby the arbitrators do not know which party has appointed them; ensuring that the issues to be determined are identified at the outset of the proceeding and put to the parties; and strictly adhering to the principle that a case must be put aside if a party does not adduce sufficient evidence to support its case.

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“Master Mediators Answer the Most Intriguing Mediation Questions”

The first panel of the afternoon proved to be a lively discussion about mediation challenges.  The panel was moderated by Isabelle Robinet-Muguet (Orange) and Alexander Oddy (Herbert Smith Freehills).  The panelists were: Eileen Carroll (Mediator and CPR Neutral), Renate Dendorfer-Ditges (Ditges and CPR Neutral), Diego Faleck (Mediator and CPR Neutral) and Birgit Sambeth Glasner (Altenburger and CPR Neutral)

The panel addressed three intriguing mediation questions:

What are the challenges when dealing with cross border mediation and what advice would you offer?

Obviously good preparation is table stakes.  It is essential to take time to talk to the clients in order to understand what might be driving the dynamics, including whether the parties are being guided by lawyers and – in either joint or evaluative sessions – what the expectations are including how active they expect the mediator to be.  The mediator must establish the process and set a substantive agenda for the clients.  In this respect, another challenge that often arises in cross border mediations is that cross border frequently means cross-cultural.  Mediators must therefore be sensitive to, and familiar with, cultural differences as such awareness can guide the mediator in selecting negotiation strategies/tactics that are more likely to be successful.

A second challenge is one of timing of the mediation hearing.  Increasingly, mediations are being forced into short time frames, typically a day and no more.  Master mediators however criticized the efficiency of this template – check the box – practice.  It has proven helpful to require the parties to resume the following day because the interim night often provides valuable time for reflection.  Where does this 24-hour model come from?  The audience contributed suggestions pointing the finger to mediators who in most cases are lawyers and have other cases to attend to or at the insurers who tend to drive the 24-hour template.

Is the concept of a mediated settlement changing?

The concept itself may not have changed but its implementation suffers difficulties.  In line with its remarks to the first question, the panel noted that the purpose of mediation is unfortunately too often gravitating towards setting the stage for arbitration rather than settling the dispute.  It may be a function of the compressed time frames in which mediations increasingly take place (see above).

How do you deal with a conflict within a conflict?

There was no question that conflicts within conflicts impact the mediation process and therefore it is critical they be addressed effectively.  It is not an easy situation to navigate.  Good mediation process management and managing expectations are key as each case is different.  Master mediators on the panel shared illustrative examples of what can generate a conflict within a dispute such as the imbalance in the parties’ levels of sophistication and/or resourcing.  One often finds the weaker party being aggressive and/or irrational.  From a process perspective, a mediator should be equipped to handle such situation proactively by taking the time to understand the concerns (the party may be missing information or believing that its interests are unmet) and by warning the stronger side to be patient.

Mediation is an art – it requires skills, training and practice!

“The Resolution of Complex, Multi-Stakeholder, Multi-Jurisdictional Disputes”

The final panel of the day examining the use of ADR tools in large complex disputes was moderated by Cliff Hendel (Hendel IDR) and the panelists were: Gavin Chesney (Debevoise & Plimpton), James Cowan (Shell International), Ania Farren (Vannin Capital), Albert Hilber (Swiss Reinsurance) and Richard Little (Eversheds Sutherland).

Setting the stage for the discussion, Cliff Hendel offered a couple of interesting preliminary remarks.   Firstly, he reminded everyone that in large and complex disputes culture eats process for breakfast.  In other words, culture counts!  Failures often stem from the inability to understand one another.  Engaging in active listening is therefore key.  Secondly, there are of course trade-offs inherent to the co-existence of different legal systems.  Notwithstanding some European laws in the ADR field, national laws are not particularly harmonized, leading to the risk of forum shopping (among others).

This panel addressed two main issues:

What are your views on the use of co-mediation in complex disputes?

The overall view was that generally mediation, per se, remains difficult in many jurisdictions and that is for cultural reasons. For many Europeans resorting to non-binding ADR is still perceived as a sign of weakness and many parties adopt a mindset whereby if they are to spend money on a dispute resolution process, they want a binding result.  It is important to work to help parties overcome this hurdle.  There is really no substitute for having all the parties in one room and giving all stakeholders visibility as to the whole picture.  In the panel’s experience, this tends to produce more creative solutions.  On co-mediation specifically, experience shows that it works well when all involved mediators are well prepared and even better if they have worked together in the past.

Does litigation/arbitration funding have an impact on mediation?

There is an often referred to “traditional” view that third party funder involvement will make settlement less likely.  The panel did not entirely agree with that.  Ania Farren, offering a funder’s perspective, explained that having a funder on board signaled a strong case.  Funders typically do not influence the dispute resolution process and do not normally attend settlement discussions.  Funders in fact do favor early settlement often preferring less money early than more money later. That said, and unsurprisingly, different third-party funders have different risk appetites. This diversity while beneficial to parties seeking funding for their case brings uncertainty and raises concerns as to the funders’ impact on the parties’ ability to settle or mediate the dispute.  In international arbitration there is no formal regulation of the use of third-party funding and the panel agreed on the need for more transparency concerning funder involvement particularly given the potential for conflicts of interest.

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The Conference concluded with closing remarks from Noah Hanft, CPR’s outgoing President and CEO and James South, Managing Director of CEDR.  This was an opportunity to outline the fruitful collaboration between CEDR and CPR.

Noah was thanked profusely for his phenomenal contribution to CPR.

 

 

Vanessa Alarcon Duvanel is an attorney admitted to practice in New York and Switzerland and specializing in international arbitration. She is based in Geneva and serves as the Secretary to the European Advisory Board.

Kathleen Fadden is a legal consultant and member of the CPR’s European Advisory Board.

 

A Report on the 2019 CPR European Congress on Business Dispute Management (Part I)

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EU flagBy Vanessa Alarcón Duvanel and Kathleen Fadden

On 15 May 2019, CPR held its third annual European Congress on Business Dispute Management, in London. Organized by CPR’s European Advisory Board (the “EAB”) and kindly hosted once more by SwissRe in the magnificent Gherkin building, the Congress inspired thought provoking considerations on topics of dispute prevention and resolution. As with last year’s summary, we have split this reporting in two parts: a Part I sharing the morning panel sessions, and a Part II covering the afternoon panels.

“The Future of ADR”

The first panel examined how the ADR community was responding to recent attacks on traditional arbitration and mediation and how ADR can remain relevant.  It was moderated by Mark McNeill (EAB member, Quinn Emmanuel Urquhart & Sullivan (then Sherman & Sterling).  The panelists sharing their perspectives were: Stefano Catelani (DuPont), Ferdinando Emanuele (Cleary Gottlieb Steen & Hamilton), Jennifer Glasser (White & Case) and Noah Hanft (CPR).

Considering the recent developments in dispute resolution, the panel’s remit was to consider whether ADR was approaching crisis point or, whether in fact, there were new opportunities to be seized.  The panel tackled a variety of topics:

Driving mediation into the arbitration process and whether arbitrators should encourage mediation.

Some jurisdictions still have limited acceptance of mediation for multifarious reasons: it can be difficult to find qualified mediators, arbitrators are reluctant to promote mediation and model escalation clauses often force a “check the box” type approach where mediation is not given adequate consideration and viewed solely as a mandatory step.  CPR has been actively encouraging mediation over the world and made a particular push in Brazil.  It has been considering a more flexible model escalation clause that whilst mandating mediation, is not prescriptive about when it shall occur – provided it is before the case is heard.  The use of mediation is referenced in the new 2019 CPR Rules for Administered Arbitration of International Disputes and mediation is now a topic for discussion within the preliminary conference (Rule 9.3e).

How will this change the ADR landscape in the coming years?

Noah Hanft offered his perspective on the evolution of ADR: In his view there is no dispute that mediation is effective so it really is in companies’ interests to adopt mediation.  He anticipates a growth in mediation even though he noted that user complaints have succeeded in driving down the average time it takes to conclude an arbitration.  But there will also be more use of hybrid approaches and the desire for efficiency and cost containment will drive innovation in the area.  These thoughtful comments led the panel to add that mediation was in fact being used nowadays in various stages of a commercial relationship.  For example, mediation is resorted to in transactions to facilitate deals and in the joint venture space consideration was being given to the early identification of those issues that may lead to a dispute with the engagement of a standing neutral and/or the introduction of turnkey provisions requiring stakeholders to focus on the health of the joint venture.

Is ADR at all relevant in investor state disputes?

When it comes to mediation or settlement negotiation, it is often politically very difficult for states to settle disputes with investors.  Andy Rogers of CEDR reported on an interesting development whereby CEDR, in collaboration with other organisations, is currently organizing training for mediators, ISDS practitioners and government officials to equip them with the knowledge and skills necessary to mediate investment disputes.

Will Brexit change the ADR landscape?

Since the Congress was hosted in the United Kingdom (UK) it would have been remiss not to consider the impact of Brexit on ADR!  English governing law and jurisdiction clauses have historically been popular choices for commercial parties and panelists were asked for their views on whether businesses should rethink this choice in light of Brexit.  The overall reaction was that there is no clear answer to the question and the area of greatest uncertainty likely concerns the enforcement of judgments.  Currently, under the Recast Brussels Regulation (Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) also known as the “Brussels regime”), a judgment rendered in an EU member state and enforceable in that member state is enforceable in all other member states.  If the UK exits the EU without an agreement on the continued operation of the Brussels regime, the latter will cease to apply and the reciprocity will be lost.  This could be remedied – to some extent – as the UK is seeking to become a member, in its own right, of the Hague Choice of Court Convention. As the panel noted, if the UK accedes to this international instrument, then as contracting state its courts must give effect to exclusive jurisdiction clauses and enforce any judgments resulting from such clauses. This blog cautions that the Hague Convention is narrower in scope than the Recast Brussels Regulation and questions still remain about the application of the Convention in circumstances where an exclusive jurisdiction clause has been entered into prior to the U.K.’s exit from the EU.   Post Congress, a new “Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters” was adopted on 2 July 2019.  The UK adherence to this new treaty would resolve many of the enforcement issues triggered by Brexit.  Although the 2018 Queen Mary & White & Case International Arbitration Survey reported that London remained the most preferred seat of arbitration and over half of the respondents thought that Brexit will have no impact on the use of London as a seat, it is clear, Brexit has created doubts and given rise to many questions that only time will answer.

This led panelists to move naturally to another new development in ADR, namely the introduction in various jurisdictions of “international” courts.  The Netherlands, Germany and Singapore to name just a few have created or contemplated the opportunity of creating “international” commercial courts.  Typically, these courts – which are established under national law rather than by international treaty – operate in English and adopt arbitration type rules.  Do these represent a threat or a challenge to arbitration?  In general, the panel did not see a significant threat.  There are, of course, pros and cons with national courts and arbitration tribunals.  A key benefit of arbitral proceedings is confidentiality, which is not necessarily guaranteed in court proceedings.  With respect to enforcement, currently, there is no global convention for the enforcement of court judgments in the same way that the New York Convention facilitates enforcement of arbitral awards.  On the other hand, summary disposition of issues is available in some court systems but historically arbitrators have been cautious about their use – even though recent revisions to most leading arbitral rules (including the CPR Rules) permit such procedures.  In summary, there is space for both fora and the panel noted that certainly from a user perspective, competition and choice could only be positive.

The last aspect concerning the future of ADR which the panel considered was: the Prague Rules and whether they will lead to increased efficiencies in arbitration.

The Rules are intended to be an alternative to the well-known IBA Rules on the Taking of Evidence in International Arbitration (IBA Rules) and to bridge the gap between common and civil law approaches.  The panel’s position was not too optimistic.  Neither document production nor the taking of witness evidence are likely to be more efficient under the Prague Rules and the costs of arbitration proceedings are unlikely to reduce.  This is so because the Prague Rules provide a framework and do not exist in a vacuum; in many respects the level of efficiency and the nature of document production is driven more by the arbitrator.  In the panel’s view, rather than a new set of rules, it would be more useful to increase the pool of arbitrators  and even better, arbitrators that are more active!  The panel shared four examples as to why in its view the Prague Rules would not deliver efficiencies.  I) there is a conflict between article 2.1 which requires that the arbitral tribunal “shall” convene a case management conference “without any unjustified delay,” and the requirement in article 2.2 that the arbitral tribunal “shall” clarify at that same case management conference, undisputed / disputed facts and the legal grounds of the parties’ respective cases (among others). Indeed, experience shows that it would be inefficient (perhaps impossible) to clarify disputed and undisputed facts or legal positions on the basis of a Request for Arbitration and Answer to the Request since these typically do not contain sufficient detail.  II) article 4.2 on documentary evidence discourages document production but the rest of the provisions in the same section retreat from this position.  III) with respect to fact witnesses, articles 5.2 and 5.3 empower arbitrators to make determinations about calling witnesses but article 5.7 then rather diminishes that power by providing that if a party insists on calling a witness whose statement has been submitted by the other party, the arbitral tribunal should call the witness to testify at the hearing.  Finally, iv) in respect of experts, article 6.1 appears to make tribunal-appointed experts the default rule.  However article 6.5 states that a party may nonetheless submit a report from an expert appointed by that party.  Given that in practice many tribunals hear only party-appointed experts, the Prague Rules’ regime is likely to lead to arbitrations with both tribunal-appointed and party-appointed experts which will increase the volume of the parties’ submission, hearing time, and inevitably costs.

The future of ADR is in some respects uncertain (Brexit being an example) but at the same time full of interesting challenges and novelties.

“Preparing for the Robo-Revolution”

The second panel of the morning was similarly looking to the future but this time with a legal-tech focus.  The panel was moderated by Javier Fernández-Samaniego (Samaniego Law) and the panelists were: Ulyana Bardyn (Dentons US LLP), Diana Bowman (VINCI Energies), Sarah Ellington (DLA Piper) and Ralph Lindbäck (Wärtsila Corporation).

Should ADR practitioners be concerned about robots? Or do we consider that robots and computer arbitrators are still in the realm of science fiction?

To answer this question, the panel started by looking at the state and use of legal-tech today.  Certain types of dispute and several aspects of dispute management can be automated and in fact there are already automated tools deployed to handle routine and administrative tasks.  EBay was cited as an example, as it uses algorithms to generate decisions in e-commerce disputes.  Currently, automation is however mostly applied in low value disputes rather than complex cases. Whilst appropriate deployment of automated tools can bring benefits in terms of speed and accuracy, the panel noted that it also carries disadvantages and has its limitations.  For instance, it is not necessarily clear how due process will be respected if a computer arbitrator presides in an arbitration, or how algorithms could be created and comply with the confidentiality of arbitral proceedings, or how the parties would know how to pick the right algorithms for their dispute.  One significant limitation highlighted by the panel was the inescapable fact that disputes involve human beings and one cannot automate the relationship management aspect of dispute resolution!  Even if artificial intelligence were able to accurately predict the verdict in a dispute, some litigants simply want their day in court or their day in arbitration, an experience that no robot can satisfy.

Notwithstanding the challenges, law firms are preparing for the robot revolution and some have already achieved significant milestones in this respect. Law firm practitioners on the panel provided real insights into the approaches taken by their respective organizations.  Ulyana Bardyn shared with the audience some of Dentons’ leading efforts in this space including its collaborative innovation platform “Nextlaw Labs”; various programmes focused on case management enabling clients to see spending in real time, or assisting clients with finding the best pro bono help available; and the “Libryo platform” which aims to simplify legal complexity by providing a curated collection of all laws relevant to specific business sectors enabling lawyers to understand their organisation’s legal obligations in any given situation.

Sarah Ellington reported on DLA Piper’s own investments in technology and elaborated on three of the DLA tools, all of which are aimed at dispute avoidance.  A first tool is a guided pathway app geared to IT outsourcing projects and intended for commercial managers, it contains questions about project progress and status and produces a report with red flags if problems are detected.  The second is a virtual secondment tool which enables businesses to submit questions and have a response within 24 hours.  Finally, the firm has an immersive business simulation, essentially a training tool, geared toward infrastructure projects where users can engage in a facilitated session where they take on a particular role within a simulated project.

These tools are impressive from the lawyers’ perspective.  How is the business community reacting to this technology assisting their counsel?  Corporate counsels on the panel all agreed that dispute resolution should be looked upon as a value stream with a significant focus on dispute avoidance.  To reach this goal and develop successful tools, collaboration between law firms and their clients is key.  That is all the more relevant as the business community is making its own progresses in the digital arena.  Many businesses are entering into collaborations, partnerships and campus initiatives – e.g., sandbox environments where universities, startups and investors can come together to innovate– are growing.  Dispute resolution though is not always part of the picture. Would it ever be possible to predict that a dispute was coming?  In certain sectors, that Holy Grail may not be too far off.  As Diana Bowman described, VINCI Energies already attempts to obtain information about events that occur on site and shares it with the back office in real time.  With good record keeping and quality information there may be opportunities to both predict and resolve issues early before a dispute escalates.

Shifting gears slightly, the panel touched on another technology hot topic: cyber security. Cyber attacks are a significant and rapidly evolving peril for today’s businesses but the levels of security deployed, particularly in the arbitration field, varies significantly between, for example, sole practitioners and top tier international law firms.  Regardless of size, all can fall victim to an attack.  Speaking from experience, Sarah Ellington shared some of the lessons learned after DLA Piper suffered from the NotPetya malware attack in June 2017 resulting in all the firm’s IT systems globally being taken offline. The risks are real and the consequences of an attack can be devastating.  To cope with a potential problem, it is fundamental to have: an up-to-date business continuity plan including practical solutions for work continuation, a clear communication protocol, emergency contact groups, back up email, calendar and document management systems.

The digital revolution has arrived although not necessarily in all legal departments! In some of the most sophisticated companies the legal department does not even have a suite of templates.  Readers of this blog, as the audience at the Congress, are encouraged to think about the digital revolution as a wave: do you want to be bowled over by it or do you choose to ride it on a surf board?

Stay tuned for part II…

 

Vanessa Alarcon Duvanel is an attorney admitted to practice in New York and Switzerland and specializing in international arbitration. She is based in Geneva and serves as the Secretary to the European Advisory Board.

Kathleen Fadden is a legal consultant and member of the CPR’s European Advisory Board.

 

A Report on the CPR European Congress on Business Dispute Management (Part II)

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EU flagBy Vanessa Alarcón Duvanel

This is the third post of a new CPR Speaks feature, “The European View,” offering valuable insights and perspectives from CPR’s European Advisory Board (EAB).

On 31 May 2018, CPR held its annual European Congress on Business Dispute Management in London. Organized by CPR’s European Advisory Board (the “EAB”) and kindly hosted by SwissRe in the incredible Gherkin building, the event convened European and American practitioners for a successful day of discussion led by four interesting panels. 

This blog piece reports on two panel discussions that took place in the afternoon of the European Congress on Business Dispute Management on 31 May 2018 in London, in the Gherkin Building, kindly hosted by SwissRe.

The afternoon session started with the keynote address of MasterCard Europe President Javier Perez who shared with the audience the important role of ADR in MasterCard’s business worldwide. In a thought-provoking speech, Mr. Perez emphasized MasterCard’s partnership approach with its clients according to which MasterCard does not initiate disputes (litigation or arbitration) against its clients, and rather uses ADR as a means to save the trust relationship.

“Climate change and ADR”

Moderated by Daniel Schimmel (CPR EAB member, Foley Hoag), the first panel of the European Congress’ afternoon session had four speakers: Kate Cook (Matrix Chambers); Dr. Karl Mackie CBE (CEDR); Nicola Peart (Three Crowns LLP); and Peter Stewart (Interfax Global Energy). Starting from the 2015 Paris Agreement, the panelists discussed how climate change may affect ADR.

The 2015 Paris Agreement signals a significant change and represents concrete actions and timeframes to reduce emissions and adapt to the impact of climate change. It contains strong procedural rules and verification obligations and tells States what to do in respect to climate change. Things have evolved in recent years and changes have been implemented. All States recognize nonetheless that there is a significant gap between where we are and where we should be.

Almost everything in the Paris Agreement is measurable: one can establish whether water is clean/cleaner, what the average temperature is, the number of miscarriages, etc.  Liability can be disputed. Climate change matters are therefore likely to generate disputes and ADR processes. Below are a couple of scenarios mentioned by the panelists:

  1. The risk of investment-treaty claims. Under the Paris Agreement, States must each year implement measures towards the overall long-term objective of stabilization of the temperature; also known as the 2o C global temperature target. The means to maintain the average temperature increase well below 2o C are multiple and include, g., low carbon, no carbon, renewable energyand new building standards.

    These measures and changes in legislation may affect investments and lead to investment treaty claims by foreign investors. The measures may also create incentives for foreign investment such as when a State implements incentives on renewable energy. The arrival of foreign renewable energy firms may not please everyone and if the State subsequently takes a step back and imposes a moratorium on foreign investment, this policy change may constitute a breach of the doctrine of legitimate expectations and lead to a fair and equitable treatment claim by the foreign investor (subject to an applicable treaty). This was the case in the NAFTA case Windstream Energy LLC v. Government of Canada (PCA Case No. 2013-22, 27 September 2016).

  2. New contracts with ADR clauses. The obligations imposed upon States by the Paris Agreement and the 1997 Kyoto Protocol have led to new contracts, many of which contain ADR clauses. One example of this is an international emission system developed under the Kyoto Protocol, whereby parties that exceeded their emission reduction commitments may sell the excess so-called “assigned amount units” (AAUs). Disputes arising out of this system are resolved by arbitration under the Permanent Court of Arbitration (PCA)’s Optional Rules for Arbitration of Disputes Relating to the Environment and/or Natural Resources (“Environmental Rules”).[1] For example, a dispute could arise in respect to a carbon emission registered project if, after the investor has invested, it turns out that the carbon credit was miscalculated, which could affect the value of the investment.
  3. Investment funds. Several investment funds are dedicated to climate change, including the Green Climate Fund (GCF). States, corporations and individuals who contribute to such a ‘green planet’ fund sign a contribution agreement with ADR clauses. In turn, the fund enters into contracts for its investments and these transactions contain arbitration clauses.

Data available to the panelists show that not all companies have reacted to climate change in the same manner. The measures required can be important and may give management the feeling that they are losing the agenda. The panelists praised certain companies, including CPR members in the oil & gas industry, for their efforts in lowering emissions from both their own operations as well as from the plants they operate on.

The entire panel agreed that climate-related disputes involve complex issues that ordinary state courts cannot deal with and require a very thoughtful and structured process.  In this context, mediation is here again an efficient solution able to address the specificities of climate-change cases, such as the need for a fast resolution, the political implications, the status of the parties (NGOs, multinationals, government), etc.

Climate change is one of the new fields to watch and learn about, for ADR practitioners.

“Complex financing of dispute resolution”

The last panel of the day was moderated by Mark McNeil (EAB member, Sherman & Sterling) and composed of two lawyers, Matthew Bate (Winston & Strawn) and Robert Wheal (White & Case), along with a representative of litigation finance and funding providers, Leeor Cohen (Burford Capital).

Starting with a short reminder of the origin of disputes financing, the panel then discussed the important aspects to consider when working with third party funders, the advantages and downsides of financing of claims, the impact on arbitration and the concept of portfolios of claims.

Initially, ADR financing was developed for parties who could afford the costs of “access to justice.” The concept has evolved and increased in many respects and all claimants now have the option to consider whether they wish their claim to be funded, insured, or otherwise monetarized. More and more well-financed companies use third party funders who have become a risk management tool, most particularly in so-called fee-shifting jurisdictions where court and arbitrators apply the loser-pays rule.

From the perspective of the lawyer trialing the case, the success of ADR financing depends on the good relationship with the funder; a good collaboration is important to avoid the risk that the funder withdraws its funding.

The rapid expansion of ADR financing testifies to its success. Yet, the panel identified potential downsides and risks associated with third party funding:

  • Financing of ADR is a complex world and the panelists described funding contracts as a “nightmare.” Getting to a funding contract also takes significant time and involves lengthy due diligence, questionnaires and the signing of NDAs. Third party beauty contests quickly multiply the work as funders have different approaches and hence different sets of questions.
  • The use of a party funder often limits the party’s ability to negotiate a settlement. By the time the parties reach a settlement, the funder will have spent money and will often want to be involved and approve any settlement amount. A so-called “waterfall provision,” according to which the funder gets first a portion of any settlement amount and the client receives something only if anything is left, impacts on settlement negotiation.
  • A funder may influence the conduct of the proceedings. Some funding agreements contain language reserving the funder’s right participate in decisions relating to the conduct of the proceedings, including with a right to agree to finance the case only as long as it is satisfied that it is worth pursuing. According to the panelists, this could translate negatively on the conduct of the proceedings and the claim must remain 100% with the claimant.

The financing of claims affects the arbitral proceedings in various ways. Respondents have sought disclosure of third party funding agreements, or applied for security for cost on the ground that the claimant’s need for funding suggests that it will not have the necessary funds to pay the costs of the arbitration if it is ordered to. Claimants have sought in their statement of costs recovery of funding costs, which the panelists confirmed, under most arbitration rules the arbitrators have the power to award.

Finally, the panel discussed the debated concept of portfolios of claims, i.e., the financing of multiple claims together. Under this structure, the funder calculates its return based on the performance of the entire portfolio and not each individual claim. Portfolio financing brings down the cost of financing by grouping several claims of a single claimant; it also secures the availability of financing throughout the proceedings. Several law firms have preferred to stay away from portfolios of claims and favor the financing of claims individually.

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The European Advisory Board will share the date of 2019 CPR European Congress on Business Dispute Management within the coming months.

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[1]  https://pca-cpa.org/wp-content/uploads/sites/175/2016/01/Optional-Rules-for-Arbitration-of-Disputes-Relating-to-the-Environment-and_or-Natural-Resources.pdf ; see also, for more details: https://pca-cpa.org/en/services/arbitration-services/environmental-dispute-resolution/

Vanessa Alarcon Duvanel is a member of White & Case’s international arbitration group and is based in the firm’s Geneva office. She is also the Secretary of CPR’s European Advisory Board. She can be reached at vanessa.alarcon@whitecase.com.