CPR’s Arbitration Committee Tackles ADR Video Conferencing 

By Michael Hotz

The International Institute of Conflict Prevention and Resolution’s Arbitration Committee  hosted an online event early this month to tackle questions from neutrals and advocates designed to help them properly use video conferencing to conduct alternative dispute resolution hearings remotely.

The event was a continuation of a series of discussions hosted by the CPR Institute examining remote mediation and arbitration practices and addressing issues neutrals are encountering conducting remote hearings.  For a roundup of earlier CPR events, see this April 2 CPR Speaks blog post. The CPR Institute’s information clearinghouse on the virus and its effects can be found on its website at the link for ADR in the Time of COVID-19.

The April 7 teleconference was moderated by White & Case New York partner Jennifer Glasser, who is vice chair of the CPR Institute’s Arbitration Committee. Three panel members included: Daniel González, a Miami-based partner at Hogan Lovells; Samaa Haridi, a partner in Hogan Lovells’ New York office, and Jorge Mattamouros, a partner in White & Case’s Houston office.

Mattamouros began by discussing his video hearings experiences. The case he explored was a hearing in a large Brazilian M&A dispute. The hearing was mostly conducted in Portuguese, but also had English language witnesses. It began before the COVID-19 pandemic, so the process had to change in response to the health and safety measures implemented internationally.

Transitioning to remote hearings was made easier, Mattamouros explained, as the parties already had established a protocol for electronic conferencing. First, the parties conducted the opening presentation, and fact witnesses’ examination and cross examination, before travel bans in the United States and Europe.

Then the parties returned home and the hearing continued online using Zoom for the examination of the expert witnesses. Mattamouros noted that platforms like Zoom have chat functions that, if not turned off, allow the witnesses to receive messages during examination. Other neutrals, the panel noted, have used WebEx or other remote conferencing platforms.

The key benefit to being able to use telecommunication services to do arbitration was the ability to conduct hearings across the globe. This is especially relevant for smaller matters, as the amount disputed doesn’t necessarily merit traveling internationally.

Panelist Samaa Haridi discussed how technology allowed her to conduct an arbitration as tribunal chair remotely from New York, despite time differences, with the parties and co-arbitrators in Dubai and London. The timing was a key issue, as it required that the parties coordinate and that the arbitrators arrange a schedule that didn’t impose too great of a burden on any one party. In her hearings, Haridi explained, it often required that she start her day earlier than usual.

Glasser observed that remote hearings may require shorter hearing days but more total hearing time, both to accommodate time differences with parties across the globe but also because it is more difficult to keep the arbitrators and parties engaged when interacting virtually.

Haridi agreed that it was harder to keep people focused when they weren’t conducting in-person meetings. This required the neutral to adjust expectations of what could be accomplished each day.

In one semi-remote hearing Haridi participated in as arbitrator, the parties  were together in one location, and two of the arbitrators were in different cities. And while the third arbitrator was located in the same venue as the parties, he sat in a separate room to maintain an appropriate balance considering the virtual participation of the other tribunal members.

To ward off potential challenges to the award on the basis of perceived lack of neutrality or unequal access to information by the arbitrators, Haridi recommended having the neutral participate in a separate room from the parties in cases such as hers where not all of the arbitrators are able to sit together with the parties in one location. This maintains the appearance of impartiality.

Daniel González stated that he has participated in remote hearings for many years, such as examining a witness by video while the neutral and parties are together in another location.  While remote hearings in the age of Covid-19 present the new challenge of all participants joining remotely from different locations, and technology is rapidly evolving to meet this challenge, it is the human factor and interaction that has not changed over time and must be carefully considered as it will present special issues for the arbitrators, the cross examiners and the witnesses on how they can carry out these virtual hearings.  For example, one challenge the program panel members agreed on is the ability to use and assess body language.

For example, during cross examination, it is difficult for the lawyer to gauge the tribunal’s reaction or for the witness to know if they are effectively conveying information to them.

Hogan Lovells’ Haridi mentioned that the lack of body language also made it harder to evaluate the credibility of a witness. This is one critical issue that led Jorge Mattamouros to state that in-person meetings were still preferable.

Another issue the panelists discussed was the sharing of documents. Remote hearing technology allows for the presentation of documents through the video conference platform.  This feature was used in all of the remote hearings conducted by the panelists.

The panel then discussed how to ensure the efficient presentation of evidence in document intensive cases that are being heard remotely.  Mattamouros commented that he combined all of the exhibits into one master PDF so the parties, tribunal, and witness could easily navigate to the relevant document and page number being referenced without losing time to find and toggle between different documents.

González noted that vendors that handle the organization and presentation of the record in conventional settings were available for virtual sessions as well. Using a third party alleviates the burden on counsel to manage the technology and document presentation.  He argued that it was best to use whatever method the tribunal was comfortable with.

The participants then discussed fairness in arbitration.

Samaa Haridi commented that the use of online hearings could create additional challenges in enforcing an arbitration tribunal’s award. A party who dislikes the ruling could challenge the award by claiming there was no due process.  It remains to be seen how courts deal with such challenges.

White & Case’s Jorge Mattamouros noted that the party’s lack of consent didn’t always establish a lack of due process. That would be determined on a case-by-case basis.

The discussion noted that there is broad leeway granted to arbitrators and mediators when establishing a fair process. Acquiring consent is a simple way of reducing the likelihood that a party can challenge the outcome successfully, but it is not the only one.

Moderator Glasser concluded by asking for the panel’s views on the future of remote hearings after the Covid-19 crisis.  The panel agreed that remote hearings are likely here to stay in some form, such as convening initial case management conferences by video rather than meeting in person.

They also agreed, however, that human interaction is a critical part of a hearing and that in-person hearings will not become a vestige of the past.  Ultimately whether to hold a remote hearing will be a fact-specific inquiry depending on the circumstances at hand.

Glasser brought up the problem that, as more arbitration is moved online, newer attorneys may get fewer stand-up opportunities to make oral argument or cross-examine witnesses. In a standard face-to-face processes, the attorney in charge can allow the novice lawyer to take control more often, as they are still in the room and provide correction and assistance instantly. In the online forum, they do not have that ability, making it much less likely that anyone would be willing to risk their case to give the newer attorney some experience.

* * *

After the discussion of the benefits and issues with virtual arbitration procedures, CPR Institute Senior Vice President Olivier P. Andre discussed the need for those using document transfer or other communication platforms to ensure that they comply with relevant privacy laws.

Without proper cybersecurity, the process can leave parties’ documents vulnerable and potentially subject the neutral to lability. He recommended consulting the CPR/FTI Consulting Cybersecurity Training, the draft ICCA-IBA Roadmap to Data Protection, and the International Council for Commercial Arbitration-New York City Bar Association-CPR Institute Cybersecurity Protocol for International Arbitration. These resources are designed to provide guidance on how to manage the risks associated with cybersecurity and privacy regulations.

* * *

CPR Arbitration Committee Chair Hagit Elul, a partner in New York’s Hughes Hubbard & Reed, announced that the committee was planning on creating an industry-specific project by corroborating with other CPR Institute industry committees such as the pharmaceutical, finance, energy, and construction committees.

The committee also discussed the CPR Institute’s Annotated Model Procedural Order for Remote Video Arbitration Proceedings, a new best-practices document for navigating arbitration hearings electronically.  The document was since released by CPR on April 21, and the details can be found on CPR’s website here.

 

Michael Hotz is a CPR Institute 2020 Spring Intern. His account relies on post-session comments from the participants.

The CPR European Advisory Board presents: “Meet CPR Distinguished Neutrals Based in Europe: Bernardo M. Cremades Sanz-Pastor”

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Bernardo M. Cremades Sanz-Pastor

The CPR European Advisory Board (EAB) is proud to introduce its new CPR Speaks blog series: “Meet CPR’s Distinguished Neutrals in Europe.”  CPR’s panel of neutrals contains many experienced and skilled Neutrals, acting as arbitrator and/or mediators in dispute resolution around the globe.  Through a Q&A, covering some of the main and hot topics discussed in the world of international disputes resolution, this new blog posts series offers you an insight into the views of some of Europe’s leaders in the field. 

Bernardo M. Cremades Sanz-Pastor is the first Europe-based CPR Distinguished Neutral to have answered our Q&A. Enjoy the read and please feel free to reach out to the featured Distinguished Neutral or the authors of these posts for any questions.

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

Bernardo Cremades is the founding partner of Spanish law firm B Cremades y Asociados based in Madrid.  He is without doubt a pioneer in the field of international arbitration and enjoys world-wide recognition.  His experience includes international commercial and investment arbitration.  He regularly acts as arbitrator in Spanish domestic and international disputes relating to commercial contracts and investment protection.  In addition, Bernardo regularly speaks at conferences on topics of international arbitration around the world.  As a commercial lawyer was involved in some of Spain’s most important M&A transactions.

Bernardo kindly agreed to grant us an interview for the CPR EAB blog series profiling CPR Neutrals in Europe.  His insights are a must read for anyone regardless of the level you find yourself in your career. We thank Bernardo Cremades for his honesty and the time he has dedicated to sharing his experience and insights.

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

When I was young, I lived a very quiet life dedicated exclusively to university teaching and research.  Despite my youth, the Court of Arbitration of the International Chamber of Commerce nominated me to preside over an arbitral tribunal in Vienna, in the proceeding known by its Parties NORSOLOR v. PABALK.  It was a commercial dispute regarding a purchase-sale and technical assistance contract between a Turkish and a French company.  As the arbitration was taking place in the city of Vienna, and no contractual provision gave the arbitral tribunal further powers, we had to arbitrate in law. The contract did not specify the applicable law, so the option of applying French or Turkish law was not possible as we would have reached diametrically different conclusions depending on which one was selected. This was not satisfactory. We thought the best solution would be to apply the general principles of law, invoking the Lex Mercatoria. Once the arbitration award was issued, one of the parties appealed for the annulment of the award before the Austrian courts, eventually reaching the Supreme Court. The argument in support of the annulment was that a tribunal, which was obliged to render a decision in accordance with the law, had used the general principles of law. In the challenging party’s opinion, this converted an arbitration in law into an equity decision. The Supreme Court understood that, in international law, the general principles are a source of law and, therefore, considered that our arbitration decision was correct. When one of the parties subsequently attempted to execute the award in Paris, the same problem arose: the argument was that our decision converting the arbitration into one in equity violated public order. It reached the Court of Cassation, which reiterated the doctrine admitted by the Austrian Supreme Court: the application of the Lex Mercatoria did not transform the arbitration; it remained de jure due to the legal nature of the general principles of International Law [Soc. Pabalk Ticaret Ltd Sirketi v. Soc. anon. Norsolor, Cour de Cassation (1re Ch. Civ.), 3 October 1984′, Journal of International Arbitration, (© Kluwer Law International; Kluwer Law International 1985, Volume 2 Issue 2) pp. 67 – 76]. Our decision sparked numerous doctrinal opinions and generated a lively debate. My quiet, academic life transformed into an active professional life dedicated to the world of arbitration.

  1. Who is your dispute resolution hero/heroine?

In an arbitration between the company FIAT and the Government of Spain in which the future of the SEAT car factory was discussed, I was fortunate to work with a co-arbitrator who would mark my arbitration conduct in the future. I am referring to Berthold Goldman, who can undoubtedly be considered the father of modern international arbitration. After the different hearings we held with the parties, the tribunal deliberated at length. Berthold Goldman defended with passion the claims of the FIAT company until the President tipped the balance in favour of my views. From that moment, Professor Goldman’s enthusiasm became an example of chivalry as he took me by the arm through one of the halls where we were deliberating and told me: “you have won, and you can rest assured that the arbitration award is going to be issued by unanimity.” This is an example that I have always remembered when faced with the temptation to issue a dissenting opinion.

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

Join a team and learn the profession of arbitrator, acting as secretary to the tribunal, or as counsel under the direction of an experienced arbitrator. Time will make you an arbitration expert, able to consider flying solo.

  1. Were you ever the first in doing something?

 The award mentioned above in response to the first question where we invoked the Lex Mercatoria as the applicable law opened a wide discussion and generated controversial points, especially in the debate between arbitration experts of Anglo-Saxon and continental law.

In the ABBOTT vs. BAXTER dispute, under CPR administration, we based our decision on good faith when the applicable law was that of Ontario (USA) [Baxter Int’l Inc. v. Abbott Labs., 540 U.S. 963 (2003)]. This is what we understood from an international litigation on trademark law and the award was ratified by the US Supreme Court.

In the HESHAM TM AL WARRAQ arbitration against the Republic of Indonesia [Hesham T. M. Al Warraq v. Republic of Indonesia, UNCITRAL, Final Award, 15 December 2014], we used as a basis to accept jurisdiction, the ICO (Organization of Islamic Cooperation) Treaty, the second largest intergovernmental organization. Our decision set a precedent for numerous subsequent arbitrations.

In the world of investment arbitration, the LANCO case against the Argentine Republic opened the door to investment protection arbitration in cases where the arbitration agreement consisted of the public offer for submission to arbitration by the receiving State of the investment, and for the legitimate investor to initiate an arbitration proceeding for the alleged breach of the treaty by the receiver of the investment [Lanco International Inc. v. The Argentine Republic, ICSID Case No. ARB/97/6]. In this arbitration, different issues were raised that will later be the subject of numerous awards, such as the principle of attribution of responsibilities to the State regarding breaches of intra-State public entities.

The SALINI arbitration against the Kingdom of Morocco extended the concept of investment to administrative concessions [Salini Costruttori S.p.A. and Italstrade S.p.A. v. Kingdom of Morocco, ICSID Case No. ARB/00/4]. Investment protection arbitration had been specially designed with a view to litigation derived from investments related to natural resources. After SALINI, the concept of investment protected by arbitration grew.

In the LUCCHETTI arbitration against the Republic of Peru [Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. The Republic of Peru, ICSID Case No. ARB/03/4], arbitration protection was questioned when corruption was involved in making the investment, on the grounds that those whose hands are stained should not be subject to any international protection, including arbitration.

  1. What makes your conflict resolution style unique?

As in any profession, I believe that it is most important to be well educated and then to devote many hours to preparation. The arbitrator must read all the submitted documents carefully and be able to respond to the parties’ requests. There is nothing worse than storing the documentation and only dealing with it when the time comes for the hearing. Many arbitrations are unnecessarily lengthy because the arbitrators do not know the substance of the matter sufficiently well to make decisions as proceedings progress.

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

The main challenge of the arbitrator today is to expedite the proceeding.  Today arbitration has ceased to be the artisanal activity it was many decades ago. We are facing a large arbitration industry.  To prevent that the proceedings be excessively long, the arbitrator must coordinate the agendas of the parties and their lawyers; respond promptly to excessively large document discovery requests; and try to minimize the duration of the hearings. The theatricality of certain “cross-examinations” should also be interrupted when deemed unnecessary and the abundance of witnesses and experts is sometimes unnecessary.

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

In the written phase, counsel can write excessively long and repetitive documents, when they should perhaps concentrate their efforts more on writing an executive summary for ease of reading. In the oral phase, counsel often forgets that his or her main mission is to convince the arbitrators and not to be so aware of the transcript or the client present in the meeting room.

  1. If you could change one thing about commercial Arbitration, what would it be?

Every effort should be made to reduce the duration and the excessive costs (that can sometimes be scandalous) of arbitration proceedings.

  1. Some specific topics:

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

 The requirements of cybersecurity and data protection in arbitration require both lawyers and arbitrators to strengthen the technological infrastructure of their firms. Before, during and after the arbitration there are security and protection rules that must be firmly maintained as arbitration frequently deals with very sensitive topics requiring strong guarantees.

b) Taking of evidence in arbitration: are you IBA Rules or Prague Rules? And why?

The IBA Rules emerged – and I can testify to this since I was part of the drafting team of the first version – as a result of a real need to unify criteria between common law and continental law jurists. It is rare to see an arbitration proceeding today without, at least, a reference to the IBA Rules, which have become a true customary international procedural law. In fact, there is much talk about the Prague Rules in conferences and colloquiums, but I have never seen them applied or invoked in arbitration proceedings. The authors of the Prague Rules wanted to draw attention to the excessive costs and duration of the arbitration proceedings and they can serve as a wake-up call in the daily life of our arbitrations or even be taken into account when modifying the IBA Rules in the future, giving greater space to criteria from civil law legal systems. The message of the Prague Rules is very interesting, but in practice its application should be questioned, simply by analysing the fourth paragraph of its first article when it states that “At all stages of the arbitration and in implementing the Prague Rules, the arbitral tribunal shall ensure fair and equal treatment of the parties and provide them with a reasonable opportunity to present their respective cases.”  If the aim with these rules was to avoid the due process paranoia, different articles of these rules, such as the aforementioned article, question their effectiveness – which is why arbitrators are reluctant to use them. It cannot be forgotten that the purpose of the IBA Rules was limited to the taking of evidence, while the title of the Prague Rules is “Rules on the Efficient Conduct of Proceedings in International Arbitration”.

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

An important event in the world of dispute prevention and resolution is the emergence of third-party funding. Many arbitration proceedings are initiated today because the claimant and possibly the defendant have funding to undertake costly arbitration proceedings and subsequent court proceedings. Third-party financing is acquiring a very important dimension and is introducing the system of syndicated foreign currency loans to the financing of large litigations. Litigation has become a financial asset, and funders monetize their financing activity with the outsourcing of parts of the financing. Litigation and especially arbitration awards are bought and sold. A true secondary market has been created for the financial assets that arbitrations have become.

  1. For which types of conflicts would you recommend ADR?

I consider that ADR is recommendable for particularly personalized disputes. In terms of investment protection, it is unthinkable to reach agreements with sovereign states, which would undoubtedly be analysed in the country in question under the inquisitorial magnifying glass of corruption. I believe that disputes with consumers or those that occur in family businesses are very suitable for resolution through ADR. Equally, agreements between companies whose directors have full powers are good ADR candidates, since the positive result of a conciliation or mediation is only possible when those acting on behalf of the companies have sufficient decision-making capacity to reach a negotiated agreement. In construction disputes and, in general, disputes in which many awards are discussed, dispute boards are highly recommended. The periodic presence of the dispute board members from the beginning of the construction solves many problems that are not intelligible over time.

  1. In your view, what makes CPR unique?

Its speed. Arbitration administration centres have become excessively bureaucratic institutions, with internal policies regarding the appointment of arbitrators which are not always in the best interests of the parties to the dispute. Arbitration administration centres are service companies and as such they must compete with others; their speed of action is probably the most attractive asset to their clientele.

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

There is much talk about the clash of cultures in international arbitration and it is undoubtedly greatly exaggerated. I remember many years ago at the meetings of the former ICCA, the representative of China, the famous and much-loved Professor Tang, insisted that I should participate in arbitrations in China to learn the difference between how arbitration proceedings are run in different cultures. I was appointed arbitrator under CIETAC to resolve a dispute between a French car company and its distributor in China. Professor Tang presided over the tribunal and from the first day he tried to get the parties to reach agreements under his mediation. On the third day, after seeing that the President’s attempts to mediate between the parties were unsuccessful, both parties formally told us that if they had gone to CIETAC it was precisely for us to resolve their differences in arbitration, and could we please set aside the conciliation and mediation attempts – which we did. It was a good lesson for me that maybe the much talked-about cultural differences are not so true in practice. A good and experienced president of the tribunal should know when he or she can help the parties to reach an agreement and when the limits of arbitration prevent it.