The Zoom in Arbitration: #CPRAM21 Practitioners Focus on Virtual ADR

By Claudia Diaz

Below are notes from the 2021 CPR Annual Meeting third-day panel, “Hot Topics In ADR And Year-End Wrap Up,” an hour-long Jan. 29 afternoon event.

  • Moderator Ana Reyes, a partner in Washington, D.C.’s Williams & Connolly, provided questions to three panels members, opening by noting that the effect of the pandemic on litigation and dispute resolution–including the adjustments the legal profession has taken, and which practices will be continuing–was the key hot topic that came up for the panel in preparing for the CPR Annual Meeting session.
  • Reyes’ first question for the panel was to comment on trends.  She said, “I have read that in this world of COVID that there are two recent trends in dispute resolution: more not less dispute resolution, and sooner not later.”  
  • Panelist Thomas J. Roberts, Chief Counsel, Litigation, Boeing Defense, Space & Security, in Arlington, Va., noted that he has seen a marginal increase toward more alternative dispute resolution. Initially there was hesitation to do mediation in a virtual setting, but he reported that his department has learned that virtual mediation works well. An in-house counsel, he said, should always think about resolution through mediation whenever a dispute arises. It is the best way to have a settlement conversation, he said, and the dispute will benefit from the guidance of a third-party neutral.
    • There are right and wrong reasons to mediate. Covid-19 has delayed dispute resolution, more so for courts than for arbitration. And he said you don’t want to mediate for the wrong reasons, focusing on entering and using the process solely because of the delays.
    • Still, with the delays, the windows for engaging in mediation are a little bit wider, which is lessening the hesitancy to mediate, giving people more time to consider it.
  • Question for Panelist Yvette Ostolaza, a Sidley Austin partner in the Dallas and Houston offices: Has the pandemic changed your clients’ desire to avoid a virtual hearing that they might not be able to delay? Are they trying to mediate where they would not before?
    • Ostolaza:
      • Virtual hearings are effective. Some clients said to wait, but the parties tried it “because there were bankruptcy issues.” After a securities class-action case mediation with 10 people, she said, “I found it way more effective to be by virtual and by a video than if I had been at an office.” So, efficiency was much better virtually than in person.
      • In virtual arbitration, there were differences in terms of the strengths of the party presentations, and more training is encouraged for participants.
      • There is something about video that makes it so obvious about who is not engaged. Participants need to behave as if they were in the courtroom. “We had one arbitrator that was clearly not paying attention and the client was pretty disappointed.”
      • “We need to remember this is a professional environment, . . . and not be too casual.”
      •  “I think there is a lot of cost-saving in the virtual world.”
  • Question on arbitrators pushing hearing forward virtually, even if that might not be best for the client.
    • Panelist J. Michael McNutt, senior litigation advisor and of counsel at the Paris law firm of Lazareff Le Bars:
      • ADR for his clients, who invest in multi-jurisdiction projects, virtual hearings adds a lot more complexity, said McNutt.
      • He said he has been working under new International Chamber of Commerce Court of Arbitration pandemic policies, which in certain circumstances pushes virtual hearings when the matter is not ready or too complex. For example, in one matter, among other logistical cross-border concerns, the parties needed translations for four languages. With due process considerations, the parties he is representing will proceed, but they will reserve their rights, noting also that there is a counterclaim.  “With international arbitration, it is a lot more complex.”
      • Moderator Reyes asked about cross-examination over video as opposed to in-person. McNutt replied, “It is very very difficult to have an effective cross examination because you can’t assume the other side is going to be honest or act properly.  You have to put another body in the room.” He says he is concerned about protecting the integrity of the proceeding.
  • Question: Are hearings different than mediations virtually?
    • Ostolaza:
      • “I wholeheartedly agree . . . that when it comes to depositions and . . . a hearing with live witnesses that you are cross examining it is very difficult.”
      • At a minimum, the attorney has a right to be with the client in person, and the other side should be socially distanced.    
      • Mediators can juggle multiple rooms better virtually than in person, knocking on doors and waiting.
  • Question to Tom Roberts of Boeing: What is one thing missing from the virtual mediation as opposed to the in-person mediation? Moderator Ana Reyes proposes that the key missing element is the mediator’s power to communicate with the individuals.  
    • Roberts:
      • “The best value that the mediator can bring” is to “credibly deliver the substance of . . . his or her view of the merits of the legal claims.”  He added, “that communicates pretty well virtually.”
      • On the downside, “there is a bit of easy-come, easy-go with virtual mediations.” No travel needed, just click in and click out, he said, concluding that it is easier now for parties to stop mediating.
      • A mediator that is committed to the process will have the people skills to stop today, but will catch up with the parties after—a mediator who wants to see it through.
    • Ostolaza:
      • She said her matters are starting earlier, with three or four calls before the actual mediation day, to go through the parameters and make the client feel comfortable so that the mediation will work.
      • For arbitration hearings, she advises practicing on exhibits and the process with the tribunal administrator
  • Question: Mediations don’t generally occur in international arbitrations—for example, the ICC does not require pre-mediations–perhaps because of a lack of availability of mediators that can work on the cross-cultural issues at play. Discuss these cultural factors.
    • J. Michael McNutt:
      • The reason the firm has offices in Dubai is for Chinese investors investing in Africa, who use arbitration in Abu Dhabi, in the United Arab Emirates, for those disputes.
      • The mentality and the civil law upon entering the contract is a fundamental issue when you have to interpret the contract in these international cases. In mediation it is difficult to find someone that “both parties would agree could accurately boil down” the essence of the dispute. He says that he cannot find qualified mediators– “Mediation is tough.”
      • For international mediation to become more relevant, it needs the ability to address these broad issues.
  • Question to Tom Roberts: Boeing is an international entity–Is that something Boeing has had to face, cross-cultural issues?
    • Roberts:
      • He agrees with McNutt, saying, “If you can find the right person then there is real value [to mediation].”
      • “The cultural differences, expectations, [and] legal understandings are very different in different parts of the world, so [finding the right person is] a big challenge.”
  • Question: Is there some loss in connecting in mediations virtually?
    • Ostolaza:
      • “There are differences in America” in negotiate style depending on the part of the country. “The art of being a great lawyer is understanding and embracing those differences and being good at it and being able to be a chameleon.”
      • She said she and her clients had discussions after virtual mediations by staying on the video for purposes of recapping client communications.
      • There can be a lack of buy-in without the travel and the commitment of an in-person mediation. But the counter is that it was “a little bit” friendlier not being in the same room with participants “hating” each other.  It counterbalanced.
  • Question: Often at the end of a mediation, noted Mediator Reyes, the mediator will ask parties to sign on to the terms of the mediation so the settlement will not unravel.  How have you addressed the technical request to sign on to the terms?
    • Ostolaza:
      • She had a term sheet at the outset for one pandemic mediation—she says she brings one to every mediation—and the parties were able to sign it two days after the conclusion of the session.
      • In another recent case, the mediation term sheet was signed with DocuSign—virtually–and no one left until it was done. That, she said, was the agreement about the deal going into the session, and it worked.
  • Question: Do you have a feeling that a couple years from now we will see a developing body of law about awards being enforced that were made in a virtual hearing?
    • McNutt:
      • If necessary, he says his firm will resist enforcement if it serves their clients.
      • He says he is a proponent of civil law issues, but in cross-border disputes, it is about the will of the parties and not the type of analysis of a common-law setting.
      • In a virtual hearing, he said, you do not know if the other lawyer is sitting across the table handing the answer to the witnesses. We have that problem even in in person hearings, said McNutt.
      • He said he looks forward to challenging the validity of awards where due process rights were abused, for example, in France, where process is fundamental to enforcement. Such challenges are “not good for arbitration,” he conceded, because finality of the award is the core reason clients turn to arbitration.
      • Tribunals need to render awards that can be enforced.
      • “The tribunal works for the parties, . . . and people need to hold tribunals accountable,” he said, for producing awards that can be enforced.
  • Question: A new issue developing, med-arb, in which you have a session with a single mediator and if a claim does not settle, then the mediator becomes the sole arbitrator, converting the matter to an arbitration from mediation. Comments?
    • Yvette Ostolaza:
      • She said she was not in a med-arb matter, but a client as part of the mediation agreed that if there is a dispute the neutral would arbitrate the mediation issues covered. She said she thought it would not work, because the mediator would think the entire time to protect himself. “I am not a fan,” she said, “Heck, I am not a fan of doing the federal magistrates’ [mediation] when they are mandatory and then going to the federal judge,” noting that she is skeptical that they will refrain from talking as the magistrate sheds the settlement role and the judge moves in to adjudicate.
    • Tom Roberts:
      • “I am generally down on the idea, but it also sort of depends on what the alternative is.” He agreed with Ostolaza’s concerns. It is impossible to not have the arbitrator contaminated by what they learned in the mediation process, said, adding he might be open to med-arb in a smaller case “where you really just want to get an answer.”
  • Moderator Reyes noted a 2021 CPR Annual Meeting chat comment advising that mediation is an old process with deep tribal roots that is common in most indigenous populations.
    • J. Michael McNutt:
      • “Mediation works when the community has already established who the mediator should be. That’s fundamentally different than a judge, of course.”
      • The skillset for arbitration: “We are hired to protect our clients and defend and win in the client’s interest. Prior to commencing arbitration there is a conversation of what is the client’s interests so that we know what they are and what to fight for.”
      • To mediate in arbitration is different, concluded McNutt, adding that the skillset is different.

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The author, a third-year student at New York’s Benjamin N. Cardozo School of Law, is a CPR 2021 intern. Videos from #CPRAM21 will be posted soon at www.cpradr.org.

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