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

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.

***

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

_____________________________________

[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.

 

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

EU flagBy Vanessa Alarcón Duvanel

This is the second 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 the exchanges and discussions heard at the European Congress.  Summarizing this full day and four panels into one blog article would have deprived the readers of too many insightful views and ideas shared at the Congress. Therefore, 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 event kicked off with welcoming remarks by Maurice Kuitems, (EAB Chair, Fluor Corporation) and Olivier André (CPR), following by Elena Jelmini Cellerini, (EAB Member, SwissRe), and Nicola Parton (Swiss Re). Ms. Parton offered an inspiring message on the role of ADR and the importance of sustainable dispute resolution mechanisms, a goal that requires full respect of transparency principles and responsiveness to issues raised by our counterparts.

Make ADR great again! The in-house counsel’s perspective

Kenneth B. Reisenfeld (BakerHostetler) moderated the first panel of the day, which was exclusively composed of in-house counsels: James Cowan (CPR EAB Member, Shell International Ltd); Noah J. Hanft (CPR); Isabelle Robinet-Muguet (EAB Vice-Chair, Orange); and Gill Mansfield (Media Law Services).

The first question put to the panelists was whether there was a past renaissance about ADR, or has the ADR process gotten off track. The industry has come a long way since its early years. Many concepts have developed and there are now growing concerns that arbitration is not fulfilling its promises of being fast, confidential and efficient. These criticisms are legitimate and impossible to ignore in light of the high costs and duration of certain arbitral proceedings or the inclusion of U.S.-style disclosures in arbitral proceedings.

There is consequently a real need to make ADR great again, and to find business solutions to business disputes. The panel shared the in-house perspective on some of the means to improve the ADR process:

  1. Involving the business people

All speakers agreed that involving their colleagues from the “business side” is certainly not an easy step, yet it is important and a critical task of the legal department. When a dispute arises, the company’s business does not freeze and the project team has little time to devote to a dispute. The business team’s approach to the dispute will be different from that of the litigators and their early involvement can help define the ADR process in a more business sensitive manner, as opposed to a pure litigation proceeding.

Achieving adequate collaboration from the business people in a dispute requires a cultural environment sensitive to ADR and its benefits. This is only possible with sufficient trainings and an overall commitment of the management to ADR.  As the panelists phrased it several times, the business people must be able to understand the “importance of taking ownership of the matter.”

  1. Early case assessment (ECA)

For the panel, an early case assessment (ECA) is a critical element to any dispute resolution mechanism. It should be the first step in any dispute and is fundamental to understanding the business needs. A good ECA will serve in many ways: it will help shape the ADR process; guide the relationship with outside counsel; and highlight the skills and expertise to look for in the designation of a mediator or arbitrator, or in the selection of experts.

  1. Mediation

According to the panel, using mediation and appointing a commercially minded neutral can improve the efficiency of the dispute resolution mechanism. The financial savings can be significant, particularly in cases where the appointment of a neutral with relevant skills allows the parties to negotiate entirely (or partially) without having to involve outside counsel.

  1. Multi-tier / Step dispute resolution clauses

The speakers briefly touched upon multi-tier dispute resolution clauses, whereby in case of a dispute the parties undertake to take certain steps prior to commencing arbitration in an attempt to amicably settle the dispute. Some of the panelists view such clauses as a thoughtful way of bringing mediation into the process early, and a means to facilitate the involvement of the business people. Other panelists do not consider mandatory mediation as an efficient tool. Every dispute is different and settlement negotiations and/or mediation may sometimes be more appropriate at a later stage. An ADR-friendly corporate culture should also render multi-tier clauses unnecessary.

  1. Diversity

All panelists concurred that a lot of work has been done but so much remains to be accomplished in order to bring more diversity to the ADR process—particularly with respect to age and geographical location. From the panel’s perspective, the in-house counsels have a central role to play in this issue. They can, for example, ask the lawyers to “dig deeper” and present new names on the list of arbitrators, to encourage new appointments, which in turn will contribute to broadening the existing pool of experienced arbitrators for large and complex commercial disputes and will consequently increase the efficiency of arbitral proceedings.

The Progress and impact of the European Directive on mediation: Where do we stand and what’s next?

The panel was composed of mediation experts from various European horizons: Alexander Oddy (EAB Member, Herbert Smith Freehills) who served as moderator; Vanja Bilić, PhD (Ministry of Justice of the Republic of Croatia); Professor Pablo Cortés (Leicester Law School, University of Leicester; Martin Brink, PhD (Van Benthem & Keulen); Ivana Gabrić (Končar – Electrical Industry, Inc.); and Tsisana Shamlikashvili (President, Russian National organization of Mediators, Founder of the Center for Mediation and Law, Head of Federal Institute of Mediation).

The European Union has enacted two “mediation” directives, namely: (1) the “European Directive 2005/52/EC on the facilitation and access to ADR and the promotion of amicable settlement” (the “EU Directive on mediation”), following which some member States have amended their domestic rules to impose mediation prior to litigation; and (2) the “Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes” (the “Consumer Directive on ADR”) which imposes mandatory mediation to all businesses with consumers.

The panelists extended the scope of their discussion beyond its title and the impact of the EU Directive on mediation to include private initiatives taken by corporations to impose mandatory mediation, independently from legislation.

Both the European Mediation Directive and the Consumer Directive on ADR have had a positive impact on ADR.  There is, however, still room for improvement. As with any major change, it will take time. All speakers agreed that improving the use of mediation requires increasing awareness of the benefits of mediation. The potential to save money and time and to salvage the business relationship is significant with mediation, and users need more knowledge of these advantages. One avenue mentioned by different speakers to raise awareness about mediation consists of allowing the management to witness a mediation proceeding in order to understand concretely how it works and how it deploys its benefits for the company.

Ivana Gabrić shared Končar’s success story of imposing mandatory mediation. In 2005, unrelated to any legislative action, the company decided to introduce a mandatory mediation policy for all of its contracts. Within a few years, the policy led to the elimination of all court litigation. Today, Končar has no pending litigations. In light of the success, the management extended the policy to labor disputes.

The EU Mediation Directive also triggered changes beyond the borders of the EU, such as in Russia where—Tsisana Shamlikashvili reported—mediation represents a big cultural change. In a country where courts are very busy and obtaining a judgment has become part of the ordinary business (regardless of the time it takes and any ability to enforce upon such judgement), introducing mediation is equivalent to changing mentalities and requires significant effort. But, the progress is on-going and the efforts deployed to convince the users of the benefits of mediation are starting to pay off.

Stay tuned for part II reporting on the panels discussing “Climate change and ADR” and “Complex financing of ADR.”

 

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.

 

Kavanaugh on Mediation

By George Somi

While the CPR Speaks blog traced the arbitration history of President Trump’s Supreme Court nominee, District of Columbia U.S. Circuit Court of Appeals Judge Brett M. Kavanaugh, in a series of recent posts—collected here—the circuit judge’s mediation history is much quieter.

That’s not unusual. While mediation periodically appears as part of the procedural history in appellate cases, the process itself generally isn’t a key part of the decisions.

But Kavanaugh, a 12-year appeals court veteran, was a member of a D.C. Circuit panel that issued an unpublished opinion where mediation was at the heart of the case.

In Judicial Watch Inc. v. United States DOJ, 719 Fed. Appx. 21 (D.C. Cir. 2018), the D.C. Circuit Court panel affirmed in a per curiam decision a federal district court’s ruling in favor of a Department of Justice summary judgment motion in a Freedom of Information Act suit.

The plaintiff, Judicial Watch, is a Washington, D.C., not-for-profit conservative watchdog group that files many FOIA suits primarily against Democrats and climate scientists— most of which have been dismissed.

In 2013, it filed a FOIA action seeking withheld Justice Department documents originating from settlement discussions with the House Judiciary Committee. Comm. on Oversight & Gov’t Reform v. Holder, 979 F. Supp. 2d 1 (D.D.C 2013).

The U.S. District Court granted summary judgment for the Justice Department on the FOIA request, first holding that Judge Amy Berman Jackson’s statements during Holder prohibited disclosure of the documents the nonprofit group sought.

Second, the court held the Justice Department could not release any records because of District Court Local Rule 84.9, which prohibits “parties… from disclosing any written or oral communications made in connection with or during any mediation session.”

After the D.C. Circuit remanded the case for clarification regarding the scope of Judge Jackson’s statements—she noted that she had not made a formal sealing order—the trial granted summary judgment a second time based on Local Rule 84.9 only.

Judicial Watch appealed solely on the basis that Local Rule 84.9 did not apply to the documents it specifically sought from the DOJ. It did not challenge the District Court’s conclusion that Local Rule 84.9 prohibited the DOJ from disclosing documents under FOIA.

The D.C. Circuit held that the District Court did not abuse its discretion in ruling that the documents that Judicial Watch sought from the DOJ were made in connection with a formal mediation under Rule 84.9.

The appellate panel described the lower court case:

In a November 27, 2012 status hearing in Holder, before the parties engaged in any mediation—formal or otherwise—Judge Jackson suggested that mediation would be appropriate in the case.  . . . The next time the parties met before Judge Jackson, she repeated her offer to impose court-ordered mediation and expressed dismay at the “pace of the negotiations.” . . .  At these status hearings, Judge Jackson emphasized that she had selected an individual—visiting Senior District Judge Barbara J. Rothstein—to mediate the parties’ dispute. On March 18, 2013, Judge Jackson finally ordered the parties to participate in the court’s formal mediation program.  . . .

In this unique factual and procedural context, we conclude that the district court did not abuse its discretion in concluding that the documents Judicial Watch sought from the [Justice] Department were “made in connection with” the formal mediation in Holder under Local Rule 84.9.

The court cited “Judicial Watch’s failure to challenge whether a district court’s collateral interpretation of Local Rule 84.9 can qualify as an exemption under FOIA.” Crucially, the court added that it “explicitly reserve[d] judgment on when (if ever) a district court’s collateral interpretation of its local rules can serve as the basis of a FOIA exemption.”

The panel, which along with Circuit Judge Kavanaugh included Circuit Judge Karen Lecraft Henderson and Senior Circuit Judge Douglas H. Ginsburg, affirmed the dismissal of the Judicial Watch suit.

 

The author, a student at Brooklyn Law School, is a CPR Institute Summer 2018 intern.

International Commercial Mediation Update: UNCITRAL Finalizes Convention and Model Law Drafts on International Settlement Agreements Resulting from Mediation

By Erin Gleason Alvarez

erinEarlier this year, we reported on the United Nations Commission on International Trade Law (UNCITRAL) Working Group II’s progress towards finalizing a convention on the enforcement of international commercial settlement agreements resulting from mediation. On June 25, 2018, UNCITRAL finalized the draft Convention on International Settlement Agreements Resulting from Mediation, to be known as the Singapore Convention, as well as finalizing the draft Model Law.

By way of background, Working Group II was initiated by UNCITRAL in 2014 in order to explore whether it might be feasible to develop mechanisms for the enforcement of mediated agreements in international commercial disputes. The need for this Working Group grew out of concern that parties to mediated agreements may not be afforded the same protections as those available in international commercial arbitration.

The achievements of Working Group II were extolled at an UNCITRAL conference at the United Nations on June 27, held in celebration of the 60th anniversary of the New York Convention. Representatives from Israel and Australia, who participated in the Working Group, led a discussion on the drafting process. Consideration over an international mediation convention lasted nearly four years, and it seems that a few mediations took place in finalizing the documents.

The Convention and Model Law drafts outline the requirements for a settlement agreement, process for enforcing an agreement and grounds for refusing to grant relief.  The documents are seen as completing the ADR framework for international disputes.

States that have participated in this process include Argentina, Australia, Austria, Bulgaria, Cameroon, Canada, Chile, China, Colombia, Czechia, Denmark, Ecuador, El Salvador, France, Germany, Greece, Hungary, India, Indonesia, Israel, Italy, Japan, Kuwait, Lebanon, Libya, Malaysia, Mexico, Namibia, Nigeria, Philippines, Republic of Korea, Romania, Russian Federation, Sierra Leone, Singapore, Spain, Switzerland, Thailand, Turkey, United Kingdom of Great Britain and Northern Ireland, United States of America and Venezuela (Bolivarian Republic of). The session was also attended by observers from Algeria, Belgium, Benin, Cyprus, Democratic Republic of the Congo, Dominican Republic, Finland, Iraq, Morocco, Nepal, Netherlands, Norway, Saudi Arabia, Syrian Arab Republic and Viet Nam, in addition to observers from the European Union and the Holy See.

From here the Convention and Model Law must be approved by the General Assembly, which will likely happen later this year. In August 2019, a signing ceremony will be held for the Convention in Singapore and thus the Convention will be known as the “Singapore Convention.”

At the June 27 United Nations event, hope was expressed that the Singapore Convention would do for mediation what the New York Convention has done for arbitration.

 

Erin Gleason Alvarez serves as mediator and arbitrator in commercial and insurance disputes.  She is a member of the CPR Institute Panel of Distinguished Neutrals and co-chairs the CPR Institute Mediation Committee.  Erin may be reached at erin@gleasonadr.com

How to Tank a Mediation Without Even Trying

By James P.S. Leshaw

LeshawEvery so often, you may want to tank a mediation. Maybe you know in advance it can’t settle. Maybe the blood is so bad between lawyers or clients that you just want to teach a lesson to the other side.  It could be that you think the judge or arbitrator is really enjoying all of the discovery disputes or doesn’t have enough to do. Whatever the reason, based on my experience as a mediator, here are the top ten ways to blow a mediation (as well as some light reading).

  1. Promise your client (preferably in writing) that there is no way he can lose at trial. Also, be sure to under-estimate the cost of the litigation both in terms of the cost of fees and expenses as well as the client’s expected time-commitment and anticipated loss of sleep. This should sufficiently reduce the client’s incentive to settle at mediation.
  2. Do not submit a mediation statement to either the mediator or the other side. The reality is that the mediation statement serves very little purpose other than to educate the mediator and the other side to the strengths of your case. If you do decide to deliver a mediation statement anyway, consider using it as an opportunity to educate the mediator on how unreasonable the other side is (though this should be obvious to any experienced mediator as the other side has not yet caved to your demands). You may also choose to inundate the mediator and other side with copies of pleadings you have already filed in the case, with no explanation as to their relevance.
  3. Do not personally attend the mediation – your attendance might send the message that you are serious about settling. Instead, send a junior associate who has had little or no involvement with the litigation, who does not know the factual or legal issues and who does not have the confidence or trust  of the client. This will help to ensure that the mediation is not successful.
  4. Be efficient when preparing for the mediation (assuming you decide to attend). Do not focus on the law or the facts – the other side must already be familiar with these or be too dense to understand your version of the law or the facts. Focus on the important stuff like making the mediation personal.  Be prepared to embarrass opposing counsel by talking about their procedural gaffes in this case or their losses in other cases. This is really just constructive criticism.
  5. Do not make an opening statement at the mediation – simply state that your position is already clear. Should you decide to make an opening statement, be sure to point out how unreasonable the other side has been for not simply giving in, explain you are not prepared to compromise in any way, but have a “take it or leave it” offer. Also, don’t forget to remind the other side and the mediator that you have scheduled only one hour for the mediation because you need to be back at your office to take a phone call.
  6. Do not bring your client to the mediation. Instead tell the other side that the client is available by telephone or that you already have settlement authority. Should your client inconveniently decide to show up at the mediation, make sure he does not participate in the mediation. You’re being paid to attend the mediation so you should respond to any questions or comments made to your client by the mediator or the other side. This is your case after all.
  7. If your client is the defendant, cry poverty but do not provide any financial information to support the claim.
  8. Do not admit that your case has any weaknesses at all, including in a private session with the mediator. So long as you bury your head in the sand, neither the mediator nor the other side will realize there is a potential chink in your client’s armor.
  9. Yell, scream and pound on the table so everyone in the room knows you really mean what you are saying.
  10. If it looks like the case may settle despite your best efforts, be prepared to pack your bag and leave. The best exit is a dramatic exit.

About Jim Leshaw:

Jim Leshaw is a mediator and arbitrator based in Miami and Key Biscayne, Florida.  He handles a wide variety of commercial disputes throughout the United States, Latin America and Europe.  He also sits on the board of directors of Avianca Holdings, S.A. (NYSE:  AVH), the Latin American based airline. He can be reached at Jim@LeshawLaw.com.

This post originally appeared in Law360, and was republished with permission.

CPR Philadelphia Regional Meeting at Stradley Ronon on Effective Mediation Strategies for Client and Counsel

phillymtg

By Anna M. Hershenberg, Esq., Vice President, Programs and Public Policy, CPR

On April 10, 2018, the International Institute for Conflict Prevention and Resolution (“CPR”) held its first Philadelphia regional meeting at the offices of Stradley Ronon Stevens & Young, LLP, a long-standing CPR member and first recipient, more than a decade ago, of CPR’s “Law Firm Award for Excellence in Alternative Dispute Resolution” for the firm’s commitment to principled and creative conflict management and resolution.

The meeting drew more than 130 people, with the attendees split evenly between in-house counsel from Fortune 500 companies, trial attorneys from the nation’s top law firms, and highly sought-after neutrals. The prominent attendees included 15 former judges and general counsels and chief legal officers from Aetna Inc., Comcast Corp., Deloitte, General Motors Corp., GlaxoSmithKline, Hewlett-Packard Co., Independence Blue Cross, Johnson & Johnson, KPMG LLP, Merck & Co., Monsanto Co., Pfizer Inc., TE Connectivity Ltd., Triumph Group. Inc., and Verizon Communications Inc., among others.

The program, “Effective Mediation Strategies for Client and Counsel,” was divided into three parts.  Bennett G. Picker, Senior Counsel at Stradley Ronon, CPR neutral and member of CPR’s Council, and Noah Hanft, President and CEO of CPR, kicked off the meeting with welcoming remarks.

Wharton School lecturer and mediation trainer Eric Max then led the first part of the program, “Negotiating Strategies for Clients and Counsel,” by facilitating an interactive discussion among the in-house counsel, outside counsel and mediator audience members.  Professor Max outlined the multiple layers of negotiation occurring at any given time during a mediation.  He challenged the audience with provocative questions, such as pressing each stakeholder to reveal if they lie to each other during the course of a mediation and exploring the reasons for their conduct.

After a networking coffee break, the program resumed with Sophia Lee, Partner at Blank Rome and former Chief Litigation Counsel at Sunoco Inc., skillfully moderating a panel discussion on the keys to effective preparation and advocacy with panelists Francine Friedman Griesing, Managing Member of Griesing Law; Scott S. Partridge, Vice President of Global Strategy at Monsanto and a member of CPR’s Board of Directors; and John Wright, Senior Vice President and General Counsel of Triumph Group.  Of particular interest to the attendees was Mr. Partridge’s explanation of how he created a relationship-based conflict identification and resolution process to shrink Monsanto’s – and then the entire industry’s – litigation portfolio.

The highlight of evening came when the Honorable Timothy K. Lewis (Ret.), Counsel at Schnader Harrison Segal & Lewis LLP, former federal circuit and district court judge and Chair of CPR’s Diversity Task Force, and Mr. Picker led the third part of the program, “Promoting Diversity in Mediation.”  Mr. Picker – who has been championing diversity and leading by example for decades – provided concrete steps that in-house counsel, outside counsel and mediators can take to drive diversity and inclusion in the dispute resolution field.  Judge Lewis then delivered deeply moving and personal remarks on his experiences as a black attorney and federal court judge in a predominately white legal world.  He challenged the audience to mentor colleagues from historically disadvantaged backgrounds, reminding them that everyone got to where they are by standing on someone else’s shoulders, and “that talent is distributed equally across all races and ethnicities and genders and identities. Opportunity is not.”

He set out his vision for what true workplace inclusion should look like and how to achieve it: “The goal here is not to be included simply because of race or gender; the goal is not to be excluded simply because of these qualities. But in order for us to get there, we have to make a concerted effort, and we must challenge ourselves, our assumptions, and sometimes each other.”  Judge Lewis’s remarks, which received a standing ovation, will appear in Alternatives to the High Cost of Litigation, CPR’s monthly international newsletter (see altnewsletter.com).

benandtimlewis

Pictured: Bennett G. Picker and Honorable Timothy K. Lewis (Ret.) 

The evening concluded with closing remarks by Thomas J. Sabatino, Jr., CPR Board Vice Chair and Senior Vice President, General Counsel, Law & Regulatory Affairs at Aetna and a networking cocktail reception.

In short, the CPR Philadelphia Regional Meeting introduced attendees to what CPR does best: create opportunities for high-level conversations between inside and outside counsel and provide businesses with the tools to cultivate a corporate culture that embraces diversity of perspective, and early and creative ways to prevent and resolve business disputes.

 

About CPR

CPR is an independent nonprofit organization that, for more than 40 years, has helped global businesses prevent and resolve commercial disputes effectively and efficiently. CPR’s membership consists of top corporations and law firms, academic and government institutions, and leading mediators and arbitrators around the world. CPR is unique as: (1) a thought leader, driving a global dispute resolution culture; (2) a developer of cutting-edge tools and resources, powered by the collective innovation of its membership; and (3) an ADR provider offering innovative, practical arbitration rules, mediation and other dispute resolution procedures, and neutrals worldwide. For more information, please visit www.cpradr.org.

 

About Stradley Ronon

Stradley Ronon attorneys have served with distinction as neutrals, both independently and under the auspices of ADR provider organizations such as the American Arbitration Association, the International Centre for Dispute Resolution, and the International Institute for Conflict Prevention & Resolution (CPR). Stradley Ronon attorneys have built a reputation for fairness and creative problem solving and are highly regarded for their ability to understand complex commercial transactions and cutting-edge technologies. In recognition of its commitment to principled and creative conflict-management and resolution, Stradley Ronon’s ADR practice group received CPR’s inaugural Law Firm Award for Excellence in Alternative Dispute Resolution. For more information, please visit https://www.stradley.com/

THE MASTER MEDIATORS/ Part I: On Joint Sessions

mastermediators

One of the panels at CPR’s recent annual meeting in Atlanta featured three master mediators: Eric D. Green, of Resolutions, LLC; Hon. Layn R. Phillips, Phillips ADR; and Linda R. Singer, Esq., a JAMS and CPR Neutral.

Guided by moderator Jana Litsey, Senior Executive Vice President and General Counsel and Secretary of The Huntington National Bank, our panelists shared views and best practice tips on the ADR process they know so well. This post, the first in a series, will focus on the almost curiously controversial topic of joint sessions.

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“We call it the disappearing joint session,” said Eric Green. “As all parts of a mediation are potentially valuable, I think the trend away from the joint session is a big loss, reflecting a misunderstanding of its potential and use and value. Of course, there are no rules in mediation except that there are no rules in mediation. Every case is different.”

Green noted that lawyers will typically insist no joint session is needed and would in fact be a waste of time—especially if they have him only for one day—because the case is mature and well known to both sides. While he agreed that those would be potential negatives, he has observed over time that the parties rarely in fact understand each other’s cases. Joint sessions have the potential to begin to close that gap.

“When you think about it,” he explained, “the joint session is your best and last opportunity to speak directly to other side. They are your audience and, to have a successful outcome, you must get them to agree to something you will accept. Assuming the session has been properly prepared—with private telephone calls between you and the mediator ahead of time, and with mediation statements exchanged—this is the start of a day’s worth of negotiation and your chance to get your message across to the other side (hopefully someone with real authority). This is your opportunity to establish a connection, demonstrate that you are prepared to be reasonable if they are, and to address the strongest arguments in the other side’s mediation statement.”

Joint sessions also serve an important purpose for the mediator, Green stressed. “If I need to say something to the other side at 5 p.m., I really want you to have said it at 9 a.m. so I can tie my message back to yours. It gives me a mechanism to deliver what is sometimes tough feedback to the other side by deflecting some of it, which can be very helpful.”

Green cautioned, “This is not an opportunity for you to get some emotional satisfaction by beating up on the other side. So don’t waste your time repeating your strongest points or engaging in threats or bombast. Don’t try to stand up and impress your client. And don’t try to impress the mediator—they are not the judge and jury.”

Green summed up, “No one has ever stood up in joint session, like in Perry Mason, and said, ‘I get it now, I’m guilty. I’ll withdraw my case.’ But it starts the process of people beginning to understand risk and see things from the other side’s perspective.”

Jana

JAMS and CPR Neutral, Linda R. Singer, described what she sees as a clear regional split, with colleagues on the West Coast coming down on the side of never seeming to utilize the joint session process, with East Coast colleagues being much more open to it.

“Some judge mediators are unaccustomed to managing conflict,” Singer surmised. “It makes them nervous.” But she agreed that the joint session process can be a real opportunity. “The hardest thing,” she described, “is when I convene a conference call and they tell me they’ve all agreed and don’t need a joint session, because it’ll take us until after lunch to get back to where we are in the process now, but then at 4 pm in the afternoon we are still saying the same things we were saying at the start of the day.”

Our third panelist, Layn Phillips, of Phillips ADR, was less enthusiastic about joint sessions than his colleagues. He tends to advocate for shared or exchanged mediation briefs and reply submissions, he explained, and holds the view that mediators mainly earn their money in private caucus sessions. But he did agree that there were circumstances (e.g., in some securities cases) where the joint session, or what he likes to call the “targeted session,” is helpful on topics like damages.

“You might have 25-page opening submissions and several reply briefs,” Phillips explained, “but only three paragraphs dealing with damages, so it would not be uncommon for me in this situation to tell the parties I wanted a focused targeted joint session on damages. This may not necessarily be an opening joint session, but one which could take place later in the day.”

Another example might be if a case is very close to trial. Sometimes this can be a helpful reality check for the clients. “Much depends on your client representatives,” Phillips added. “If they are very sophisticated and prepared, and you’re convinced from pre-mediation submissions and calls that they know the case, having them sit there while a very talented trial lawyer takes their case apart is not necessarily helpful.”

“As everyone here knows,” Phillips summed up, “we’ve all been to joint sessions that are incendiary, or that cover ground that is not only well ploughed but well fertilized, so I try to be very focused on when and under what circumstances I recommend this process.”

Eric Green reported also finding joint sessions to be useful when there are complex technical issues, such as those arising in construction, design or financial cases. In fact, while this is unusual, he reported having a joint session last as long as a week in a case involving technical exchanges involving nuclear plants. “If the parties are insisting on a principles-based and merit-based approach to resolution,” he concluded, “joint sessions can provide an opportunity to demonstrate that you’ve heard the merits of the case. Then the parties can start discussing dollar amounts.”

Layn Phillips provided the final word on this topic, noting that it is not uncommon for him to hold joint sessions late in the day, particularly on non-monetary terms. “The last thing you want to do is to have a quiet, dignified search for a number, and then find out that the parties disagree on fundamental terms such as indemnification or non-monetary points that will turn out to have monetary value.”

Stay tuned to CPR Speaks for more tips from our master mediators, and more great content from AM18…

 

CPR Releases New Mediation Best Practices Guide for In-House Counsel

By Erin Gleason Alvarez and Rick Richardson

As co-chairs of the Mediation Committee, we are pleased to announce the release of the Mediation Best Practices Guide for In-house Counsel: Make Mediation Work for You.  The Guide will be launched as part of the CPR Institute Annual Meeting in Atlanta from March 8 through 10, 2018.

Make Mediation Work for You was inspired by conversations among in-house counsel that have arisen in the Committee.  What is the best way to convince counterparties that mediating early is a good thing?  How do you best prepare for mediation?  Should you always accept a counterparties’ suggestion on the mediator?  What is the best way to keep negotiations going if the mediation concludes without settlement?

The Guide answers all of these questions and includes insider tips from in-house counsel throughout.  Make Mediation Work for You begins with a discussion on when to contemplate mediation and then takes the in-house reader though every step in the process: from convening the process and making negotiations plans before the in-person session to creative solutions for overcoming impasse and structuring a settlement agreement.

Make Mediation Work for You will undoubtedly be a valuable resource for CPR members.  We are grateful to the Mediation Committee members for their efforts in creating this important guide, most notably John Bickerman, David Brodsky, David Burt, Steve Comen, Steve Gilbert, Duncan MacKay, Chris Mason, Judy Meyer, Meef Moh, and Mike Timmons.

We look forward to seeing many of you at the Annual Meeting next week!

 

Erin Gleason Alvarez and Rick Richardson co-chair the CPR Mediation Committee.  Rick serves as Vice President and Associate General Counsel, Dispute Resolution and Prevention for GSK.  Erin is the former Global Head of ADR Program for AIG; she now has her own mediation and arbitration practice and is a member of the CPR Panel of Distinguished Neutrals

International Commercial Mediation Update: UNCITRAL Working Group II Moves Forward on Convention and Model Law

erinBy Erin Gleason Alvarez

The United Nations Commission on International Trade Law (UNCITRAL) Working Group II met at its 68th session in New York from February 5 through 9 to finalize draft convention and model law documents. The focus of these instruments is on the enforcement of international commercial settlement agreements resulting from mediation.

Working Group II was initiated by UNCITRAL in 2014 in order to explore whether it is feasible to develop mechanisms for the enforcement of mediated agreements in international commercial disputes.  Since then, there have been several sessions to explore the most appropriate path forward.

The need for this Working Group grew out of concern that parties to mediated agreements may not be afforded the same protections as those available in international commercial arbitration. The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), entered into force in 1959, obligates States to recognize and enforce arbitral awards made in other contracting States.

To accommodate parties’ desire to mediate international commercial disputes, practices have emerged to try to transform a mediated settlement agreement into an arbitral award. In addition to practical concerns over enforceability, these steps add significant process to mediation, which parties tend to like because it is simpler than arbitration (among other reasons). Other recourse for enforcement of mediated settlements in international commercial disputes can include pursuing claims for enforcement of the agreement under contract law. But this may also be difficult in the international context, depending upon the jurisdiction where enforcement is sought. Protracted cross-border litigation to enforce a mediated settlement is counterintuitive at best.

Thus the proposed model law and convention seek to alleviate these concerns, recognizing the increased use of mediation in the international commercial context and the benefits that the mediation process affords parties. The instruments, as they are currently drafted, address both enforcement concerns and the possibility for a party to invoke a settlement agreement as a defense. To date, changes have not yet been uploaded to the UNCITRAL website that would show the most recent revisions to the draft model law and convention. The most recent drafts are available here.

By way of background, a “model law” is a template of sorts, for States to consider adopting locally. A “convention” on the other hand is an instrument that is binding on States and other entities (so long as they are signatory to the document).

What does all of this mean for parties to mediation? For now, it means waiting for further developments. UNCITRAL must ultimately approve the instruments before any adoption or ratification processes may commence. The Commission will commence review this summer.


Erin Gleason Alvarez is Principal at Gleason Alvarez ADR, LLC.  She serves on the CPR Institute Panel of Distinguished Neutrals and co-chairs the CPR Institute Mediation Committee.  Erin previously acted as the former Global Head of ADR Programs for AIG. 

Erin now serves as mediator and arbitrator in commercial and insurance disputes and may be reached at erin@gleasonadr.com

Ethics Issues in Mediation: Confronting the Maze of Confidentiality and Privilege

By Ginsey Varghese

With a rise in litigation about mediation, likely linked to its  increasingly common use, it is important to take a closer look at the ethical issues facing both the mediator and advocate in a mediation.

What are the ethical obligations of mediators to parties when engaged in “shuttle diplomacy” in private caucusing? How does blanket confidentiality in mediation agreements intersect with attorney-client and work product privilege? In disputes following mediation, will courts pierce the confidentiality of mediation? Can mediators be subpoenaed to testify?

These hairy contours of the law and mediation were addressed in an interactive panel hosted jointly by CPR, Practical Law, and Jenner & Block, LLP on January 8, 2018.  The panel was moderated by Steven Skulnik (Editor) of Practical Law, and featured Noah Hanft (President and CEO) of CPR, Bernadette Miragliotta (Managing Counsel) at American Express Company and Richard Ziegler (Partner) at Jenner & Block, LLP (pictured in the order, from left to right below).

use webinar

Almost 400 people attended the session via webinar, and another several dozen in person at Jenner & Block’s New York offices. The discussion was extremely engaging as the moderator, Mr. Skulnik, steered panelists’ conversations around realistic hypotheticals with live polling and immediate feedback from the audience.

The session began discussing a mediator’s duty of confidentiality in private caucus. Mr. Ziegler stated, “An effective mediator must review with the parties exactly what the mediator can say in caucusing with the other side.” All the panelists agreed, adding that mediators must be tactful in their language conveying information to guard the confidentiality of each side.

In a discussion about whether mediators should suggest specific dollar amounts for offers or demands, Ms. Miragliotta stressed that this should be avoided as it is essential that parties feel like it is their mediation…that they own the process and the settlement. It is not beneficial for parties to feel rushed into an outcome over which they do not feel ownership, she added.

Another important consideration  discussed is that there is no single uniform body of law on mediation across the 50 states jurisdictions and federal jurisdiction, and only 12 jurisdictions have adopted the Uniform Mediation Act.

As Mr. Hanft explained, knowledge on the applicable law or the necessary “magic words” in a particular jurisdiction when enforcing a settlement or protecting confidentiality in a post-mediation dispute is paramount. He also offered practical guidelines to ensure a settlement is more likely to be enforced.

The panelists deliberated a range of other topics: the complexities of Attorney-Client Privilege and Work Product Doctrine in a mediation; post-mediation disputes that commonly arise including settlement enforcement; mediation confidentiality issues in malpractice or non-party disputes; and best practices for mediator and advocates, among others.

As Jenner & Block’s Ziegler summarized, “Confidentiality in mediation is not ironclad.”

The final takeaway? When in mediation, be mindful of not crossing ethical lines and not inadvertently waiving attorney client privilege or work product protection.

An audio stream of the panel discussion is available In CPR’s member’s only Resources Library HERE (you must be logged in to view).