“New and Improved New Year’s Resolutions” For Judges, Politicians and Policy-Makers

By Judge Steven I. Platt (Ret.)

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As the new year approaches, I welcome the opportunity in this space provided by The Daily Record, to reflect on the last almost 11 years since I “retired” as a full-time judge and entered a very different world of Private ADR, consulting, as well as public speaking, lecturing and teaching for diverse organizations. I have also been lucky enough and honored, during that time, to have been approved by the Court of Appeals to be recalled as a Judge and have done so enthusiastically and learned even more with the added perspective of my other work and experience incorporated into my decision making.

That said—and with I hope the proper degree of humility, as well as a recognition that our hopes and dreams should not be born out of naiveté or unrealistic expectations for ourselves, the three branches of government, or, for that matter, the human race—I offer the following, hopefully improved over previous years, based on new experiences and additional perspectives, suggested 2018 New Year’s Resolutions for Judges, Politicians and Policy-Makers:

1 – Don’t refuse to reference reality when you make personal, political, legal, and even medical decisions. You can aid that process by listening and paying attention to people and ideas with which you do not agree, in lieu of reinforcing or restricting your sights and sounds to those pictures and words which reinforce your previously held views.

2 – Don’t even try to defend the indefensible. It won’t work.

3 – Recognize that isolating yourself, your community and even your country—if you are a President, Governor, Legislator, political or community leader, policy-maker, or even a Judge—will not make the complexity of an increasingly complicated world go away. On the contrary, it will make your decision-making progressively more flawed and exponentially more dangerous to you and those affected by your self-inflicted defective judgement.

4 – Recognize that the choices which you desire are usually not the options that reality dictates that you must choose from. Wishing otherwise won’t change that reality.

5 – Don’t insist that “the other side” accept and subscribe to your perception of reality as a pre-condition to further communication, whether that “other side” is competing with you or is attempting to collaborate with you. Better to analyze and address your counterparts’ interests in the context of their reality if you wish to move your idea or process forward.

6 – If you are trying to persuade a third party of the merits or wisdom of your position on an issue—whether that third party is a jury, judge, the voters of a federal, state, or municipal district or the elected or appointed officials put there by the voters to decide your fate or your client’s fate—do not forget or ignore who those person(s) are and the intellectual world they live in. To do so will be fatal to your cause.

7 – Be intellectually curious if it is within your DNA to be so. If it is not, check with the best and the brightest in the medical profession to arrange a transfusion of DNA from a known intellectually curious person. Your life will be much more interesting and fulfilling.

8 – Recognize that there are many “Monuments to Persistence” whose success in whatever professional, business, personal field they chose was, in large part, the result of their persistence. Persistence in the pursuit of a good idea is worth emulating.My favorite illustration of this came from my now deceased friend and mentor, the first Chief Judge of The District Court of Maryland, Robert F. Sweeney, who in an interview upon his retirement, reflected upon what it took to accomplish what Governor Mandel had described as a “gargantuan task” – the creation and implementation of a new Court, The District Court of Maryland.

On May 5, 1971, as he was sworn in as the first Chief Judge and at the time the only Judge of The District Court, Chief Judge Sweeney said “Insofar as I am able, I shall attempt to make this court what the people of Maryland are entitled to have it be: A Court of integrity and a forum in which the personal and the property rights of all citizens can be freely and fairly adjudicated by judges learn in the law—judges who are dedicated to the principle of equal justice under the law for all.”

Upon his retirement, virtually a quarter of a century later, illustrating the wisdom and concomitant success of persistently confronting the reality of a corrupt culture in accomplishing that goal, Chief Judge Sweeney recounted that experience as follows: “There were judges who were racists, who had alcohol problems, who were wife beaters and who thought they had found the greatest 10-2 job in the world. I outlived the bastards. The whole collection of them.”

The moral of this story is obvious. The Monument is the District Court of Maryland!

9 – Share in the optimism of Bernard Baruch, an advisor to four Presidents, about the future based on his faith “in the power of the human mind to cope with the problems of life.” Share in his conclusion after a lifetime of advising Presidents that “To nothing so much as the abandonment of reason does humanity owe its sorrows.” We should therefore heed the warning based on history and experience that our failures as individuals and communities have been, and will be the consequences of “action without thought” which usually follows thoughts unaccompanied and therefore devoid of analysis.

10 – Believe, as did Bernard Baruch, that our society can in fact solve our problems by placing our trust in the unfettered intellect, reason, wisdom, and compassion of smart individuals not in crowds.

 

I would footnote these updated suggested “New Year’s Resolutions” with the following afterthought based on my continued observations of all three branches of government and the politics, economics and psychology which drives them: The collective blogosphere, talk radio, cable TV, internet and advocacy groups, politicians, and other public figures—whether they claim omniscience, heavenly blessings or other supernatural powers or origins—do not address any reality except their own. That said, let’s try analytics in 2018. We might like it. In any case, Happy New Year!

This post is reprinted with permission from “A Pursuit of Justice,” a blog by Judge Steven I. Platt (Ret.) that focuses on the intersection of law, economics, politics and the development of public policy.  Judge Platt currently owns and operates his own private Alternative Dispute Resolution Company, The Platt Group, Inc. through which several retired judges and experienced practitioners offer mediation, arbitration and neutral case evaluation services to business, governmental agencies and their lawyers mostly in complex litigation and disputes.  Judge Platt’s experience and vocation make him an expert in conflict resolution particularly in complex disputes whether they are political, economic, legal, or as most often the case all of the above. Judge Platt can be reached at info@apursuitofjustice.com or via his website at www.theplattgroup.com.

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

Removing Anger in a Mediation Allowed Parties to Settle

StephenGilbert By Stephen P. Gilbert

I conducted a mediation several years ago between two companies in the healthcare field, one a small high-tech company (“Company A”) and the other a much larger conglomerate. The smaller company had invented certain cutting edge technology (“Technology A”), which held great promise but required a substantial investment of money and personnel (scientists and engineers), each of which Company A had little of, to finish the R&D work and bring Technology A to market.

Company A had entered into a joint development agreement with the conglomerate to conduct the R&D work and, if possible, commercialize the technology, which Company A hoped would be used in some of the conglomerate’s products. The agreement provided that if Technology A were commercialized and used in the conglomerate’s products, the conglomerate would pay a running royalty to Company A. The few scientists and engineers of Company A worked closely with the scientists and engineers of the conglomerate and disclosed significant confidential information to them to aid in the R&D work. The conglomerate also loaned substantial capital to Company A (covered by a promissory note) because Company A was operating on a shoestring.  The agreement contained a stepped dispute resolution clause: in case of a dispute, executives of the two companies were to confer to try to resolve the dispute; if that did not work, they would go to mediation; and if that did not work, to arbitration.

A year or two after entering into the joint development agreement, the conglomerate acquired a small company (“Company B”), which had developed its own technology (“Technology B”), which, with sufficient and successful R&D work, could be used instead of Technology A in the conglomerate’s products. Both Technology A and Technology B were also potentially useful in third-party products, not just the conglomerate’s products.

Sometime after acquiring Company B, the conglomerate terminated the joint development agreement, requested payment on the promissory note (as it had the right to do) and eventually started marketing products incorporating Technology B.

Company A accused the conglomerate of purposely trying to harm Company A and prevent commercialization of Technology A. The actions of the conglomerate to which Company A pointed included acquiring Company B, terminating the joint development agreement, demanding payment of the debt, and using Company A’s confidential information to help develop and commercialize Technology B. Company A said it would now have to try to raise money to pay the debt and at the same time would have to try to find a new R&D partner, since it still could not afford the R&D work required (nor did it have sufficient personnel) to commercialize Technology A.

Company A said commercialization of Technology A would now be substantially delayed or altogether prevented and that it might have to cease operations. It noted that the conglomerate would not have to pay any royalty for using Technology B in its products because the conglomerate owned that technology through its acquisition of Company B and, if the conglomerate wished to do so, it could license Technology B to third parties without worrying about competition from Technology A, since Technology A was not yet ready to be commercialized (and might never be).

After reviewing the two confidential mediation statements and speaking ex parte with each side prior to the mediation session, it seemed settlement was possible but getting there would not be easy.

There were about ten people from each side present at the joint mediation session: Company A had business people, investors, technologists, and outside counsel; the conglomerate had business people, in-house lawyers, and outside counsel. There were no technologists from the conglomerate present. I suspected this mediation was make or break for Company A; I doubted it had the money to litigate against the conglomerate.

Each side made a short, polite opening statement, and we then split up for caucus sessions. I started with the Company A team. It was the first time I was speaking in a caucus session with anyone on the Company A team other than its outside counsel. Company A did not mince words: it was positive that all of the conglomerate’s actions had been part of a long-term plan to harm it and delay commercialization of or kill Technology A. Everything it said about the conglomerate was laced with anger.

I went to see the conglomerate team. The conglomerate felt it had done nothing wrong. That was the same message that had been conveyed to me by its outside counsel during my discussions with them before the mediation session.

One of the conglomerate’s in-house counsel who was present had been involved with the joint venture when he was a junior member of the conglomerate’s legal department (he was now significantly higher up in the department). I asked what he had done with respect to the joint venture, and it became apparent he was a goldmine of information. He had participated in drafting the joint venture agreement, had helped “administer” that agreement for the conglomerate, knew about the substantial money it had spent and R&D efforts its technologists had made on Technology A, knew (at a high level) about the technical problems that had been encountered, and knew (at a detailed level) how the decisions to abandon the technology and terminate the agreement had been made. He also knew about the “wall” the conglomerate had put in place between its people working on Technology A and those working on Technology B.

During the pre-mediation session ex parte discussions, I had asked each side that, if possible, people familiar with the joint venture relationship be at the mediation, but the depth and breadth of this individual’s knowledge was more than I could have hoped for. I asked if he would feel comfortable sharing some of this information with the other side, and I also asked lead in-house and lead outside counsel if they would feel comfortable with his doing so. They asked why; I said I thought it might be helpful, added that I didn’t see any downside (since all the information would likely be disclosed during discovery if mediation didn’t work), and received yesses from everyone. Then I went to see the Company A team.

I told them I had had a helpful discussion with the other side and asked if they would be interested in hearing some information directly from the other side (since I could never do as good a job as the conglomerate’s people could of imparting the information). The Company A team said it saw no downside, and I asked both sides to reconvene for a joint session.

It was less than two hours since the original joint mediation session had started. I asked the in‑house counsel who had given me all the information to address the other side. I said that in particular what might be helpful for the other side to hear was the history of the conglomerate’s effort to develop Technology A, the problems it had encountered, and how it had come to make the decisions to abandon Technology A and terminate the agreement.

The conglomerate’s in-house counsel began by recounting the history of his involvement and then turned to the R&D efforts that had been made and the money that was spent. At first, the Company A team just listened but soon started asking questions, which the in-house counsel answered without hesitation. I didn’t speak again until there seemed to be a logical break point, at which time I suggested we have lunch.

After lunch, he was asked more and more questions by a few members of the Company A team, some rather pointed. Others from the conglomerate’s team started to chime in. It was a lively, sometimes loud discussion. I said little except to suggest breaks when I felt it was appropriate and to remind everyone it would be better if people spoke one at a time so everyone could hear what was being said. We broke for dinner and agreed to reconvene the next morning.

The next morning, the Company A team started by discussing what it would like to see in a settlement. Bargaining ensued. Agreement was reached late afternoon, and a heads of agreement (which provided for subsequent negotiation of a comprehensive agreement) was negotiated and executed, after which we all shook hands, each side thanking the other for participating and congratulating it on reaching agreement.

It was then that the key decision-maker of Company A shared with me and with the key decision-maker of the conglomerate the following. At the end of the first day, while the Company A team was returning to its hotel, he said to his team that in view of what they had heard from the conglomerate’s in-house counsel who had spoken at length and provided answers to their questions, they might have been wrong about what had happened and about what they had been sure was the conglomerate’s bad faith. His team sat at dinner that evening talking about what they had heard and came to agree with him. Once that happened, their feelings of anger dissipated and they started to focus on how to resolve the dispute.

We were lucky to have in attendance a smart individual from the conglomerate’s side who had sufficient first-hand knowledge of the entire situation and could present information (including answering probing and pointed questions from the other side) in a non-confrontational, believable way. There is no way of my knowing, but I think it would have been difficult, if not impossible, to have reached settlement at that time if the anger Company A felt and had expressed to me so strongly had not been removed.

Stephen P. Gilbert (www.spgadr.com) is a CPR Distinguished Neutral, CEDR Accredited Mediator, American Arbitration Association Commercial Master Mediator, Fellow of the College of Commercial Arbitrators, Fellow of the Chartered Institute of Arbitrators, Fellow of the American College of e-Neutrals, Member/Panelist of the Silicon Valley Arbitration & Mediation Center, and was a computer programmer, a chemical engineer, and a patent attorney.

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

By Ksenia Koriukalova

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

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

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

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

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

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

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

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

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

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

Ksenia Koriukalova is a CPR Fall intern

THE NEUTRAL’S NOTEPAD: Which ADR Technique – Choose Carefully

 

Steven Platt

CPR is happy to present the latest installment of “The Neutral’s Notepad,” in which members of our esteemed panel of neutrals contribute their thoughts on developments and best practices in dispute resolution. 

By Judge Steven I. Platt

Which dispute resolution technique should parties and their counsel use in the courthouse or conference room of the future? That was the question with which I concluded my last column. The short answer is the classic lawyer’s response – it depends!

The decision to utilize ADR and even the choice of which ADR technique to employ is often made by a business client who thinking he or she is saving money unknowingly at his or her peril includes a “form” dispute resolution clause in its commercial documents in an attempt to anticipate problems which might arise in the transaction and/or business or professional relationship. That “form” dispute resolution clause is often pulled from a book which should be titled “Dispute Resolution Clauses For Dummies” and prepared without the assistance of counsel. This usually means it is included in the contract without a full understanding of its ramifications. A poorly conceived and drafted dispute resolution clause in a contract can wreak havoc on the operations and finances of even the better run business organizations. This is true even when counsel is involved.

I have observed countless cases as a judge and now as a private mediator and arbitrator where the dispute resolution clause was drafted by a primarily transactional lawyer obviously without consulting the litigator perhaps in the same office who ultimately would have to work within the confines of the language in the clause if a dispute arose. This inevitably puts the client in an unnecessarily exposed position.

Business cases, labor disputes, buy-sell agreements, franchise agreements, and particularly employment disputes to name only a few types of cases arise in many contexts that have not been anticipated and for that reason are not governed by the dispute resolution clause inserted in a contract without much thought. These claims and the defenses to them each carry a unique potential for their own narrative which can develop into drama in the hands of capable litigators, parties, and witnesses in a forum that favors such a presentation. Therefore, it would behoove the prudent business or individual client and his or her careful and thoughtful transactional lawyer after consultation with the experienced litigator down the hall to think about the choice of dispute resolution mechanisms and providers before typing and pressing the print key on the desktop to insert the final version in their contract. That means it is wise to keep in mind how the client and any witnesses are likely to present before different types of audiences. Will they naturally make a good impression on a judge or jury. If not, then an arbitration perhaps preceded by a mediation probably is a better choice because it would be easier to guide clients and witnesses in these more intimate and less formal ADR settings than in a courtroom.

The consequences of not being careful or not being able to visualize how a particular dispute resolution protocol and provider would play out in the future have recently become much more apparent as what has been labeled the “Deflategate” case has played out on the national stage. As a result of allegations that New England Patriot Quarterback Tom Brady ordered/aided/abetted the deflating of one or more footballs in the Patriots playoff game with the Seattle Seahawks, the arbitration provision negotiated by the NFL Players Association with the NFL became operational. This resulted in a proceeding before Arbitration Commissioner Roger Goodell who arguably was arbitrary and capricious in the conduct of the arbitration hearing and the imposition of a 4-game suspension on Brady. That was the view of U.S. District Court Judge Richard M. Berman who nullified the suspension on the grounds that the conduct of the arbitration albeit arguably allowed under the arbitration provision of the collective bargaining agreement was unfair and therefore nullified it.

That ruling was reversed by a Three Judge Panel of the U.S. Court of Appeals for the 2nd Circuit who held that “The Commissioner properly exercised his broad discretion under the collective bargaining agreement and that his procedural rulings were properly grounded in that agreement and did not deprive Brady of fundamental fairness”.

This latest ruling by a divided Panel of the 2nd Circuit (2-1) basically sent the message subject to a successful appeal to the full 2nd Circuit and/or the U.S. Supreme Court that if you aren’t careful and agree to a private arbitral procedure and/or provider which results in an unfair proceeding and result you’re bound by what you agreed to. So Buyer Beware – you make an uncomfortable arbitral bed with a headboard/Arbitrator who is unfair – you lie in it!

This post is reprinted with permission from “A Pursuit of Justice,” a blog by Judge Steven I. Platt (Ret.) that focuses on the intersection of law, economics, politics and the development of public policy.  Judge Platt currently owns and operates his own private Alternative Dispute Resolution Company, The Platt Group, Inc. through which several retired judges and experienced practitioners offer mediation, arbitration and neutral case evaluation services to business, governmental agencies and their lawyers mostly in complex litigation and disputes.  Judge Platt’s experience and vocation make him an expert in conflict resolution particularly in complex disputes whether they are political, economic, legal, or as most often the case all of the above. Judge Platt can be reached at info@apursuitofjustice.com.

[EDITOR’S NOTE: Please also see the two ADR Briefs “Deflategate” stories in the June issue of Alternatives HERE.]

THE NEUTRAL’S NOTEPAD: Writing an Award that Withstands the Scrutiny of the Parties and the Courts

THE NEUTRAL’S NOTEPAD: Writing an Award that Withstands the Scrutiny of the Parties and the Courts

Eaton_TimBy J. Timothy Eaton

The end game in arbitrations is the final award. In most business-to-business commercial arbitrations, the final award is a reasoned explanation of the facts and law, and the relief being awarded. Since most arbitration awards are confidential, the audience for the written award is the parties and if subject to a review, the courts. What should be considered in writing an award that will withstand their scrutiny?

The first consideration is the title of the award. How the award is labeled is important and has consequences. If it is titled an “Interim Award,” its duration should be no longer than the arbitration itself and it should be entitled to reconsideration at any time before the final award is entered.

If it is a “Partial Final Award” – such as a finding as to liability only – it generally would not be subject to a reconsideration and may be appealable to the courts unless the tribunal indicates otherwise. The tribunal should make its intention clear as to whether it intends for the award to be judicially reviewable at that stage or not.

If it is a “Final Award,” the assumption is the tribunal has completed its task and the award is subject to enforcement or judicial review. The tribunal’s authority is over at that point.

Once the award has been labeled properly, the next step in preparing the award is to identify the parties and their status. This may seem obvious, but the issues and the relief may depend upon which party is raising a claim or defense. With the frequency of counterclaims, characterizing who is bringing the claim and the relief sought becomes an important point in the analysis.

Most arbitrators then like to proceed with a factual and procedural background to set the framework for the issues and analysis. This certainly makes sense, but first it may be helpful to consider the issues that you are going to be resolving. The issues really control the findings and facts which are necessary to recite in the award. What facts are material to the issues will become more evident once you have articulated the issues being decided.

Most arbitrators then set forth the procedural history by identifying what has occurred prior to the hearing. This section is really more for reviewing courts than for the parties because the parties know what has transpired. But is important for someone new to the arbitration to understand that the parties had an ample opportunity to engage in discovery, make their arguments, submit their exhibits and have their witnesses heard and examined. Some of the grounds for vacatur are based upon whether the parties had a fair and meaningful opportunity to present their case, so spelling out in detail how the arbitration progressed lends credence to the award.

Then the crux of the award follows with the statement of the issues that the parties are raising and how they are decided. It is critical that a party understands that the tribunal understood what issues they were raising. The tribunal may not agree with a party’s position on a given issue, but both for the purposes of confidence in the award and its possible reviewability, every material issue that was raised should be identified and ruled upon. A “sweeper” clause that issues not identified were fully considered (a clause I have used myself at times) is not generally satisfactory to the parties or to reviewing courts. The tribunal’s ruling on the merits of the issue is really secondary to the fact that the issues were properly identified.

Next is the analysis of the material issues and the reasoning behind the conclusions reached. Each conclusion should be supported by a logical interpretation of the facts and law. References to case law are not always necessary but if there are statutes or authorities on given issues that the parties have relied upon, some reference to them in the award will at least signal that they were considered.

Most tribunals are both very measured in their analysis of the issues and not unduly critical of a party’s position. Arguments made by the parties are generally made in good faith and, even if you disagree with them, they should be treated with the same measure of good faith.

Last but not least, the award should specify the relief being afforded. It is a good practice to have the parties in the prehearing briefs state specifically the relief they are seeking in the claims or counterclaims. Sometimes an earlier filed claim is not clear as to what relief the party is seeking, and the relief sought may change as the discovery in the arbitration unfolds. So a delineation in the prehearing brief of the issues and the relief sought is very helpful to the tribunal.

After considering the specific relief requested, it is a good idea to review the arbitration agreement again to determine whether it has any limits on what relief can be given. Limits on punitive damages in particular are frequently included in the arbitration agreement. Other limitations may include a bar on consequential damages or attorneys fees.

Finally, do a gut check on what final relief should be ordered. Is it warranted by the facts in the law? Are you compromising the award because you do not agree with the law? Is it what the parties expect? Before you pull the trigger, you want to make sure your aim is on what the arbitration agreement contemplates and more importantly, requires.

In conclusion, each step in writing the award from the title to the relief must be carefully considered. The result is sometimes not as important as the process achieving it. Make sure the award informs parties and the courts as to how you arrived at it.

Tim Eaton is a Fellow of the College of Commercial Arbitrators and a member of the CPR Panel of Distinguished Neutral Arbitrators in Chicago. He is a member of the National Academy of Distinguished Neutrals and a member of the American Arbitration Association’s Roster of Commercial Arbitrators. He has lectured and written on arbitration topics. He is a litigation partner at the law firm of Taft, Stettinius & Hollister.

THE NEUTRAL’S NOTEPAD: Consider Expanded Use of Written Witness Statements

With this post, The CPR Institute introduces a new “CPR Speaks” series feature in which members of our esteemed panel of neutrals will periodically contribute their thoughts on developments and best practices in dispute resolution.

THE NEUTRAL’S NOTEPAD: U.S. Advocates and Arbitrators Should Consider an Expanded Use of Written Witness Statements in U.S. Domestic Arbitration

BenderRay-41309-06By Raymond G. Bender

One technique for creating efficiencies in arbitration is submitting the direct testimony of fact witnesses in writing rather than orally.  Written witness statements provide detailed testimony a witness would offer (including references to relevant documents) if questioned live.  The written testimony is signed by the witness, its truth and accuracy is sworn to or affirmed, and the statements are exchanged in advance of the hearing.  Each witness providing a written statement appears at the hearing for cross-examination by opposing counsel and questioning by the tribunal.

Written witness statements can afford material advantages in arbitration.  For example, as lengthy oral testimony becomes unnecessary, written testimony can save days or even weeks (in a complex case).  Exchanging witness statements in advance also permits opposing counsel to prepare fully for cross-examination. In fact, exchanging witness testimony prior to hearing permits all of the participants in the hearing—counsel and arbitrators alike—to focus before hearing on the key issues in dispute, formulate pertinent questions for the witness, and conduct a more efficient and streamlined proceeding.  Moreover, witness statements can obviate or lessen the need for depositions since opposing counsel will have advanced notice of a witness’ direct testimony.  Finally, written statements can serve an important fact-finding function when depositions are disallowed or limited to key witnesses.

Why are written witness statements so common in international arbitration, but not as prevalent in U.S. domestic arbitration?  Some U.S. counsel and arbitrators may be unfamiliar with the technique, particularly if they serve exclusively in U.S. domestic proceedings where oral testimony is the norm.  Others may believe that drawbacks associated with witness statements outweigh the advantages.

For example, some may feel that lawyers draft witness statements and the testimony therefore is not as spontaneous or genuine as when a witness testifies live.  A witness also might rely too heavily on the lawyer and not review the testimony carefully or completely.

However, when preparing witnesses for oral testimony, attorneys also typically assist and invite them to rehearse their hearing presentations.  Attorneys have a duty to admonish witnesses concerning the truth and accuracy of their testimony—whether they testify orally or in writing—and to highlight the need to defend the testimony under cross-examination and arbitrator questioning.  Witnesses also sign and/or swear or attest to their written testimony, and such formalities signal that witness statements need to be truthful and accurate and not approached in a careless manner.

Another potential concern about written versus oral direct testimony is that the tribunal’s first exposure to the witness would be on cross-examination.  No lawyer wants arbitrators to observe a witness initially in a defensive posture under questioning by opposing counsel.

This concern can be addressed by permitting counsel offering the witness to conduct a brief direct examination (e.g., 15 to 30 minutes), depending on the nature and size of the testimony and the case.  This lets the tribunal hear from the witness in his or her own words.  Such abbreviated direct examination could include background information on the witness and/or a summary of key aspects of the witness’ written testimony.   This direct testimony should be relatively brief so as not to frustrate a fundamental purpose for using written witness statements, i.e., to achieve efficiency and cost-savings.

A final potential concern is that using written statements prevents arbitrators from evaluating a witness’ credibility on direct examination.

There normally are sufficient opportunities for a tribunal to assess witness credibility other than on direct examination—most critically during cross-examination, but also on re-direct, and during questioning by the tribunal as well.  Moreover, permitting an abbreviated direct exam before a witness is cross-examined, as discussed above, affords yet another window for arbitrators to assess witness credibility.

Granted, written witness statements may not be an optimal solution for every witness or in every case.  For example, where believability of a key witness or witnesses may influence the outcome in an arbitration, presenting the witness’ direct testimony live may be preferable to using a written witness statement.

Additionally, any decision to present the direct testimony of fact witnesses in written or oral form ultimately should reside with the parties and counsel. Arbitration still is a creature of party agreement, and arbitrators in U.S. domestic arbitration should never compel the use of one technique over the other.

However, here are some general practice tips that arbitrators might keep in mind, not only to help ensure that counsel consider the full range of their options, but to utilize written direct testimony, if they so choose, in an optimal way:

  • Arbitrators should encourage written witness statements where appropriate and highlight the benefits surrounding their use.  Including witness statements as an item on the preliminary hearing agenda, and having an open discussion of the pros and cons during the preliminary hearing itself, can expose the technique to counsel otherwise unfamiliar with it.
  • Arbitrators should condition the use of written direct testimony on the witness’s attendance at hearing for cross-examination and questioning by the tribunal (unless all parties and the tribunal agree to waive a witness’ appearance).  Cross-examination of witnesses generally is considered a fundamental right in the U.S. (and in other common law jurisdictions) and this right should be safeguarded when written witness statements are used.
  • Arbitrators should permit sponsoring counsel to question the witness briefly on direct examination (e.g., to summarize key points) so the witness can “warm to the seat” before being turned over for cross-examination.  This procedure lets the witness become comfortable in the arbitral setting and also allows the tribunal to observe witness credibility (albeit briefly) on direct examination.
  • U.S. arbitrators should review witness statements in preparation for the hearing, listen attentively during examination by counsel and, if appropriate, pose follow-up questions to the witness to clarify relevant facts, gain insight as to witness credibility, or achieve a better understanding of the case.

In conclusion, greater reflection and dialogue on written witness statements should give U.S. counsel and arbitrators an enhanced appreciation for their use in U.S. domestic arbitration. U.S. arbitration proceedings would surely benefit from this development.

Raymond Bender is a full-time commercial Arbitrator in domestic and international disputes.  He is a member of the CPR Panel of Distinguished Neutral Arbitrators for Washington, D.C., Technology, and Cross-Border Disputes; the American Arbitration Association’s Roster of Commercial Arbitrators for Washington, D.C., Technology, and Large, Complex Cases; the International Center for Dispute Resolution (ICDR) Panel of International Arbitrators; and the Silicon Valley Arbitration and Mediation Center’s List of the World’s Leading Technology Neutrals.  He also has served in International Chamber of Commerce (ICC) and ad hoc arbitrations.  Mr. Bender is an Adjunct Professor at the Washington College of Law, American University, Washington D.C., where he teaches Alternative Dispute Resolution Law, and serves on the Arbitration Faculty of the International Law Institute.