Ready to Sign: The Singapore Convention, An International Mediation Treaty, Opens for Ratification

By Hew Zhan Tze

After years of negotiations, the Singapore Convention on Mediation last week reached the signature phase.

That means that countries around the globe can sign on, and ratify, a treaty designed to boost the use and support for mediation in cross-border transactions.

The convention is officially known as the United Nations Convention on International Settlement Agreements Resulting from Mediation, and is available at https://bit.ly/2YWbHKN.

On Aug. 7, more than 1,500 international delegates from 70 countries attended a Singapore signing ceremony.

A total of 46 countries–including the United States and China–signed the convention on the first day. (The full list is available from the United Nations at http://bit.ly/2ZPFGFl.)

The convention is a product of the efforts of the United Nations Commission on International Trade Law Working Group II to alleviate the difficulties of enforcing a cross-border settlement agreement reached from mediation. It can only come into effect after six months, and after three signatory countries ratify the treaty. See Article 14(1) of the Singapore Convention at the first link above.

Ratification is a signatory country’s domestic procedure where treaty approval is sought, and necessary legislation is enacted to give effect to the convention.

Generally, in the United States, a treaty can only be ratified by the president after receiving the advice and consent of the U.S. Senate. The Senate must pass a ratification resolution, requiring a two-thirds approval.  See U. S. Const. Art. II, § 2 (available at https://bit.ly/2zBgoge).

The Singapore Convention’s goals have been likened to a mediation version of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, best known as the New York Convention. (Available at http://bit.ly/2KHaa5W.)

The large number of initial signatories to the Singapore Convention appears to show a positive reception toward easing enforcement of a settlement agreement obtained from other similarly bound jurisdictions. This is in comparison to the 10 signatures received at the launch of the New York Convention six decades ago. The increase in numbers likely reflects an increased recognition of the effectiveness of ADR methods.

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More analysis on the Singapore Convention on Mediation will appear in the September Alternatives to the High Cost of Litigation, available soon at altnewsletter.com.

The author was a CPR Institute Summer 2019 intern.

 

Notes from AM19: The “Risky Business” of NAFTA, BITs, ITAs and Global Trade

By Evan Drake

The CPR Institute’s 2019 Annual Meeting was held at the Fairmont Hotel in Washington, D.C., Feb. 28-March 2.  The event featured more than 50 speakers on 16 panels addressing the most pressing issues in commercial conflict resolution.

One of the many CPR AM19 highlights was a lively panel discussion of international investment arbitration, Navigating Risky Business: NAFTA, BITs, ITAs and Global Trade.  The panel included international investment arbitration experts Arif H. Ali, a partner who co-chairs Dechert LLP’s international arbitration practice in Washington and London; Mélida Hodgson, a partner in the New York office of Foley Hoag; Mark Luz, senior counsel and deputy director of the Trade Law Bureau of Global Affairs Canada in Ottawa, a Canada government agency; and moderator Ank Santens, a partner in the New York office of White & Case and a CPR Institute board member.

The panel discussed the potential impact of the recent United States–Mexico–Canada free trade agreement, best known as the USMCA.  The agreement, which is awaiting ratification by each of the nations, regulates both trade and investment. Once ratified, it will replace the NAFTA.

The panel focused on international investment arbitration.

Moderator Santens began by introducing the panel members and providing an outline of modern investor-state dispute settlement, or ISDS.  Santens, who has served as both counsel and arbitrator in investment disputes under all major international arbitration rules, highlighted that bilateral and multilateral investment treaties, or BITs, play an important role in the global economy by increasing investment-system stability.

The typical ISDS claim is brought by an investor against a state, typically for breach of a substantive standard of protection contained in a BIT.  These standards vary treaty by treaty, but usually include at minimum protections against expropriation and guarantees of fair and equitable treatment. NAFTA, a multilateral trade and investment treaty, grants similar protections to U.S., Canadian and Mexican investors.

The reciprocal protections created by these treaties, Santens continued, allow investors to bring claims against states that would otherwise lack privity, and the number of these claims has increased substantially over the past 10 years.  The bulk of these claims have been arbitrated through ICSID–the International Centre for Settlement of Investment Disputes, which is part of the World Bank and based in Washington, D.C.

But other forums, including the Permanent Court of Arbitration in The Hague, Netherlands, the International Chamber of Commerce and the Stockholm Chamber of Commerce may be available to claimants. The United Nations Commission for International Trade Law, or UNCITRAL, among others, provides frequently-used ISDS rules.  (Private and nonprofit providers, including the CPR Institute, which publishes this blog, also have adaptable rules.)

The panel then shifted its focus to ISDS history and development. Panelist Mark Luz, who works in the Canadian Department of Foreign Affairs and International Trade, began the discussion with the tongue-in-cheek goal of “explaining 120 years of investment law history in ten minutes.”

Luz, who has represented the Canadian government in NAFTA and other investment arbitration proceedings, described how the “gunboat diplomacy” of the early 20th century was gradually displaced by a system of treaties providing for protection of foreign investments, and how this system has developed rapidly in the past 20 years.

Prior to the advent of inter-state investment treaties, he explained, states defended the interests of their investors abroad in the same way they defended their nationals–through diplomatic protection. For capital-exporting European powers, this might even entail dispatching warships to pressure foreign governments into honoring their commitments to investors.

Evidence of this practice can be seen in the Hague Convention of 1907, on the law of war, in which states undertook not to use armed force for the recovery of debts owed to themselves or their nationals—provided, however, that the debtor states agreed to submit to arbitration.

Diplomatic protection, said Luz, was a poor system for resolving investment disputes.  Under this system, investors would generally need to exhaust local legal remedies before applying to their home states for diplomatic protection—a time-consuming and potentially expensive endeavor.

Furthermore, states were under no obligation to grant protection to their nationals, even in the event of a meritorious claim.  If political considerations weighed against damaging a sensitive relationship, a state might simply decline to exercise this protection, and an investor would have no way of seeking redress individually.

During the early-to-mid 20th century, certain customary protections began to gain expression through treaties; interstate bodies such as the U.S,-Mexico Claims Commission (1924) were created to adjudicate investment-related disputes.  But it was not until the NAFTA’s 1994 passage that investment arbitration “exploded” into the broad-reaching network of substantive protections for individual investors that characterizes modern ISDS.

Luz also noted that ISDS is not without its critics, and that many consider the system to be in the midst of a “legitimacy crisis.”  He recalled that during one NAFTA negotiation over an oil and gas project, protesters floated a blimp with the slogan “Frack Off NAFTA Chapter 11” outside the window of the conference room.  Chapter 11 is the NAFTA’s investment section.

Although many states have become increasingly critical of investment arbitration, Mark Luz believes that ISDS is more likely to adapt than to perish.  Pointing out the varied approaches that different actors have taken toward reforming the system—including NAFTA’s renegotiation, and the development of an international investment court at the United Nations—he emphasized that most states will seek to preserve the stability created by ISDS, even as they act to transform it.

Panelist Mélida Hodgson, of Foley Hoag, who has been both arbitrator and counsel representing the United States in NAFTA and World Trade Organization disputes, cited the USMCA’s transformative potential, but cautioned that the system isn’t changing just yet.

Until the new rules are ratified, Ms. Hodgson said, NAFTA is still the law.  Although the so-called “legitimacy crisis” facing ISDS may result in significant future changes, the USMCA represents a discreet set of reforms in both trade and investment law, which should be considered in the context of specific political factors.

Canada and Mexico, for example, have fared far worse in NAFTA disputes than the United States, and yet current U.S. Trade Representative Robert E. Lighthizer and his office has sought to reduce the scope of protections for North American investors.  While Mexico may want to re-assert government prerogatives in the energy sector, Canada appears more concerned with the USMCA’s trade provisions than its investment protections.

The result of these negotiations seems to be a two-tiered system, where investments in certain “special sectors”—e.g., oil and gas—will receive greater protection than other investments.

In any event, as members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), both Canada and Mexico have already committed to a limited set of obligations toward foreign investors. The CPTPP, like much of the USMCA, includes a higher bar than NAFTA for demonstrating discriminatory treatment against an investor, as well as reduced protections against expropriations. President Trump withdrew the United States from the agreement 2017.

Shifting the discussion to Europe, Dechert’s Arif Ali agreed with Mélida Hodgson that any USMCA impact will come only after the agreement is ratified. Ali stressed that modern ISDS development represented a historical shift from a “power-based system to a rules-based system,” and that European and other states are unlikely to abandon this useful framework for depoliticizing investment disputes.

Ali first took issue with the oft-repeated criticism that arbitrators in investment cases are, in effect, deciding public policy.  Issues of public policy often arise in cases of expropriation, in which states seek to regulate foreign investments for the public good, creating situations where arbitrators may determine that a state’s regulations are impermissible under an investment treaty.  Far from rejecting the system, however, he highlighted that states are more likely to use public policy as a litigation tool within ISDS, developing new procedural and substantive rights in the process.

Drawing a parallel with the USMCA, Ali cited the controversial Achmea decision of the Court of Justice of the European Union as an exaggerated threat to investment arbitration.  In its landmark 2018 opinion in Achmea, the CJEU declared that a Netherlands-Slovakia BIT–and by extension all inter-EU BITs–were incompatible with EU law.  The EC has supported this position by submitting amicus briefs in EU investment disputes. (For information on the case, see CPR Speaks here.)

Nevertheless, European states continue to refer their investment disputes to arbitration, and it is unclear to what extent the Achmea decision will actually affect the practice of arbitral tribunals.  As Arif Ali pointed out at the CPR AM19 panel discussion, the applicability of the Achmea decision to intra-EU treaties such as the Energy Charter Treaty, to which the EU itself is a part, is unclear, and already has sparked conflicting interpretations.  In Vattenfall v. Germany, for example, an ICSID tribunal determined that the ECT was unaffected by Achmea, despite the issuance of a “guidance note” by the European Commission to the opposite effect.

Ali looked at the proposed EU multilateral investment court as another possible evolution of European ISDS, rather than a departure from the system.  Considering the greater focus in more recent BITs on public policy, he said he felt that the development of such an institution would be “in principle, not a bad thing.”

Collectively, the panelists seemed to agree that NAFTA’s renegotiation should be seen as part of a systemic evolution in international investment arbitration.  In Europe, North America, and around the world, the panel members indicated that they believed that states are acting to reform ISDS to suit their changing interests. The USMCA, like the Trans-Pacific Partnership and Achmea, represents one piece of a continuing process.

The author is a CPR Institute Spring 2019 intern from Brooklyn Law School.

CPR Delegation Participates in the 69th Session of the UNCITRAL Working Group II on Expedited Arbitration

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In the picture (from left to right): Franco Gevaerd, Olivier P. André, and Piotr S. Wójtowicz.

By Franco Gevaerd

From Feb. 4-8, 2019, the United Nations Commission on International Trade Law Working Group II held its 69th session at the United Nations headquarters in New York. At this session, as set forth by the UNCITRAL during its 51st session, Working Group II commenced its deliberations on issues relating to expedited arbitration (see the Report of the UNCITRAL on the 51st session).

Given the CPR Institute’s international experience and expertise in international arbitration, the UNCITRAL Secretariat invited CPR to participate in the session as an observer delegation representing its views on expedited arbitration to facilitate Working Group II’s deliberations.

CPR sent a five-member delegation: Noah J. Hanft, President & CEO; Olivier P. André, Senior Vice President, International; Anna M. Hershenberg, Vice President, Programs and Public Policy & Corporate Counsel; Franco Gevaerd, International Consultant/Legal Intern; and Piotr S. Wójtowicz, Legal Intern.

Established in 1966 by the U.N. General Assembly, UNCITRAL plays an important role in developing an improved legal framework for international trade and investment, and in harmonizing and modernizing the law of these fields. The substantive preparatory work involved in doing that is typically assigned to UNCITRAL’s working groups (see the U.N.’s “A Guide to UNCITRAL”).

The UNCITRAL Working Group II is composed of UNCITRAL’s 60 member States and has been developing work focused on arbitration, conciliation and mediation, and dispute settlement. The group’s most recent project is the Singapore Convention. A signing ceremony for the convention is scheduled for Aug. 7, 2019.  Now, as mentioned above, the group’s attention has turned to the topic of expedited arbitration.

Expedited arbitration aims to streamline the process to reduce its time and cost. This topic has long been discussed by the international arbitration community and explored by arbitration institutions, mostly due to concerns with the length, cost and undue formality in the process, especially in less complex cases.

At the beginning of the group’s deliberations, it was generally agreed that this session’s work should “focus on establishing an international framework on expedited arbitration, without prejudice to the form that such work might take.” After that, the work should then proceed to analyze aspects relating to emergency arbitrators, adjudication, early dismissal of claims, and preliminary determinations by arbitral tribunals.

During the session, Working Group II participants discussed in depth many issues related to key aspects of expedited arbitration, including how to foster efficiency while preserving quality, due process and fairness; enforcement of awards resulting from expedited arbitration; application of the expedited procedure, and management of the proceedings.

CPR’s contributed substantially to the discussion throughout the week. In the Working Group II session’s first day, Anna Hershenberg pointed out that since its foundation, CPR has focused on creating rules that aim at efficient dispute resolution and users’ autonomy. She noted that in order to foster efficiency, CPR has built into its domestic and international arbitration rules quick time frames. Consequently, CPR’s international and domestic arbitration cases historically take an average of slightly more than 11 months from commencement of the proceedings to the arbitral award.

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Anna M. Hershenberg making her remarks during the session.

Later in the week, addressing the Working Group’s request to arbitral institutions to provide input on their experiences handling expedited arbitration proceedings, Olivier André pointed out:

CPR administered and non-administered arbitration rules already provide for time requirements which limit the length of proceedings. Users of CPR arbitration often customize their arbitration clauses to further limit these time requirements. In 2006, CPR also promulgated a fast-track procedure to supplement the non-administered arbitration rules. Parties can agree to this procedure to shorten the time requirements provided for under the rules and limit certain other procedural aspects, such as disclosure and the number of arbitrators, to expedite their proceeding.

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Olivier P. André making his remarks during the session.

Besides the CPR’s Fast Track Arbitration Rules, CPR also offers to users two other set of rules that provide for expedited arbitration procedures: The CPR Rules for Expedited Arbitration of Construction Disputes, and the CPR’s Global Rules for Accelerated Commercial Arbitration. In addition, CPR’s committees, which are composed of representatives from different stakeholders involved in the arbitration process, often discuss ways to improve the arbitration process in general and in specific industries.

By the end of the week’s discussion, Working Group II was able to find a consensus in many of the key aspects of expedited arbitration discussed, such as reasoned vs. unreasoned awards, monetary thresholds, and number of arbitrators for expedited arbitration.

Several questions, however, are still open to discussion for the next Working Group II session. For example, what will be the form of the group’s work? And will this international framework be applied to arbitration in general, or specific to international commercial arbitration?

The next session of the UNCITRAL Working Group II is preliminarily scheduled to take place from Sept. 30 to Oct. 4, 2019, at the United Nations in Vienna. CPR is looking forward to continuing to contribute to the efforts.

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The author is CPR’s International Consultant/Legal Intern. He holds a LL.B. from Pontifical Catholic University of Paraná (Brazil) and a LL.M. in International Commercial Law and Dispute Resolution from Pepperdine Law/Straus Institute for Dispute Resolution.

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

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

UN Commission on Int’l Trade Law Adopts Text on Online Dispute Resolution (ODR)

Today, the United Nations Commission on International Trade Law (UNCITRAL) announced its adoption of Technical Notes on Online Dispute Resolution (ODR).  The Technical Notes, which were formally adopted at UNCITRAL’s meeting in New York on July 5, 2016, are the first formal international text recognizing and supporting the use of ODR as a new method of dispute resolution. The formal press release from the United Nations Information Service can be accessed here.

The CPR Institute has been actively involved in the development and drafting of this innovative UNCITRAL text. In response to the need to develop more cost-effective approach to resolving B2B and B2C disputes in the Internet age, CPR became an official NGO Observer to UNCITRAL in the Spring of 2011.

Beth Trent, CPR’s Senior Vice President, Public Policy, Programs and Resources, was invited to serve as a member of the U.S. Delegation to UNCITRAL Working Group III (ODR) and provided an expert perspective on how to best achieve the objective of designing a system that enables parties to resolve disputes in a fast, flexible and secure manner, without the need for physical presence at a meeting or hearing.

The Technical Notes are expected to contribute significantly to development of systems that will enable this objective.  Following UNCITRAL’s approach of issuing texts of universal application, the Technical Notes are designed to ensure that ODR systems are accessible to buyers and sellers in both developed and developing countries.

 

Interview: Users Respond to CPR’s New International Rules – Most surprising and valued reported features

InternationalRulesSlimJimCPR recently launched a new set of Rules for Administered Arbitration of International Disputes for use in cross-border business transactions. These new Rules reflect best practices, including the arbitration work of UNCITRAL, and address current issues in international arbitration, such as arbitrator impartiality, lengthy time frames to reach resolution, burdensome and unpredictable administrative costs and requirements. To celebrate their release, and introduce them across the globe, CPR held a series of well-attended launch events in London, Paris, Miami, Geneva, Madrid, Brazil and Washington, DC.

CPR’s newest event takes a deeper dive into one of the Rules’ most buzzed-about aspects, the Screened Selection Process for Party-Appointed Arbitrators ™. Responding to the need to both preserve the right of the parties to appoint their arbitrators and guarantee the fairness and impartiality of arbitration, the Screened Selection Process ™ is available under the new CPR Arbitration Rules, and will be discussed from the perspectives of the users, outside counsel and arbitrators on July 30, 2015 at Jenner & Block in Chicago and via live webcast.

Olivier P. AndreToday, we sat down with CPR’s Olivier André, Vice President, International and Dispute Resolution Services, for a recap of the launch events and a preview into our upcoming event.

To begin, could you provide a quick recap of CPR’s recent launch events celebrating the new rules? 

Over the past few months, we have organized eight events to celebrate the launch of the new CPR Rules for Administered Arbitration of International Disputes.  At each of these events, panelists discussed the key benefits and innovations of the rules from different perspectives – the corporate counsel, arbitration practitioner, arbitrator, and institutional perspectives.   The events were well attended and, whether they were held in the US, Europe or Brazil, they triggered a lot of interest.

What were some of the most memorable responses you received about the rules, either at the launch events or otherwise. What are people most surprised about, thrilled about, etc.?  

The new rules triggered a lot of interest because attendees felt that they really address many of the criticisms we currently hear about arbitration, such as high costs, lengthy timeframes, and bureaucratic administration of the proceedings.   With the new rules, CPR provides only the services that are necessary from an administering institution, and no more.  Thus, CPR gets involved at the very beginning – at the commencement and arbitrator appointment stages – and at the end – to provide a “light” review of the awards and to issue them.

In between, CPR handles all billing aspects, but lets the tribunal interface directly with the parties on all other matters.  All pleadings and filings to CPR are in electronic format only.  As a result of this “lean administration,” CPR is able to offer a very competitive schedule of administrative costs.  Administrative costs are capped at US$34,000 for disputes over US$500 million.   At a time when all companies are trying to contain the costs of dispute resolution – and where smaller companies simply cannot afford an expensive dispute resolution process – that was particularly appealing.

Another feature which triggered a lot interest is the provision under the rules for the issuing of the award within 12 months of the constitution of the tribunal.  Very often, users of arbitration have had terrible experiences of proceedings that lasted longer than court proceedings, when arbitration is supposed to offer a fast dispute resolution process.  The CPR rules require all actors of an arbitration to use their best efforts to comply with this time requirement.  Any scheduling order or extension from the tribunal that would result in extending this timeline must be approved by CPR.  Such extension requests are not new, but what was interesting to the attendees of these events was the fact that these approvals are not automatic.  Whenever such an approval is requested, CPR can convene all involved in the arbitration to discuss the factors that have led to the extension request.  This mechanism increases the accountability of all actors of the arbitral process while asking them to comply with a reasonable timeframe.   I say reasonable because historically the average length of CPR cases is a little over 11 months.

Finally, there was a lot of interest – particularly from the corporate counsel – for the provision in the rules which encourages the arbitral tribunal to propose settlement and assist the parties in initiating mediation at any stage of the arbitration proceedings.

CPR’s event in Chicago delves deeper into one of the most unique and valued features of the rules—the screened selection process. What were the challenges that necessitated this specific Rules feature? How did we address those challenges? What have responses from users of the new rules been like on this point in particular?  

Arbitrator selection is a key phase of any arbitration and getting qualified arbitrators appointed for a particular dispute is critical to ensure smooth proceedings.  The ability for the parties to choose their decision makers is also one of the main advantages of arbitration.  The CPR rules offer many options that arbitration users can choose from in their arbitration clause depending on the specific nature of the disputes they anticipate.  The bottom line is that they have the ability – and are encouraged – to really control the arbitrator selection process.

One of the options provided is called the CPR Screened Selection Process ™ for party-appointed arbitrators.  That process – which is unique to CPR arbitration rules – enables each party to choose their “party-appointed” arbitrators without them knowing which party has designated them.  CPR acts as a screen between the parties and their candidates.  This is an interesting process because, even though all arbitrators under CPR Rules must be impartial and independent, there can be some degree of ambiguity around the role that a party-appointed arbitrator is supposed to play.  This selection offers the parties the ability to choose their arbitrators while, at the same time, removing that ambiguity and changing the working dynamics among the members of a tribunal.

Olivier André is CPR’s Vice President, International and Dispute Resolution Services. In this capacity, Mr. André is responsible for CPR’s international activities, as well as international arbitration and mediation matters which are brought before CPR pursuant to its rules. He can be reached at oandre@cpradr.org. For Mr. André’s full bio, click here.

ADR Around the World: Mexico

This article is the second in a four-part CPR summer series that examines the state of dispute resolution in a number of rapidly changing locales around the world. 

Mexico: A Globally Integrated Economy Moving Towards Effective Commercial Dispute Resolution

By Boaz Cohon, CPR Student Intern

Notwithstanding meager economic growth in recent years, when looking at how Mexico is situated within the global economy it is clear why the country is slated to become the 8th largest economy in the world by 2050. Mexico is fortuitously located adjacent to the world’s largest economy in the United States, which its companies have relatively unfettered access to via the North American Free Trade Agreement (NAFTA). This proximity has made Mexico “an important node in the world trading system” and situated it well in a multitude of global value chains (GVCs). Furthermore, President Enrique Peña Nieto’s financial reforms have broken up telecom oligopolies and liberalized the energy sector, creating even more incentives for multinational enterprises (MNEs) to invest.

One strategy for insuring Mexico reaches its burgeoning economic potential is to improve the efficacy of mechanisms for resolving commercial disputes. Currently, commercial dispute resolution in Mexico offers a mix of problems and potential, with some encouraging, recent improvements but options that are still lacking by international standards. Absent these effective methods, Mexico can still be a challenging place to do business for both domestic firms and MNEs.

Procedural changes to commercial litigation have—auspiciously—already been passed and begun to be implemented. In 2011 the Mexican legislature passed a series of well-received reforms including an expedited process with oral hearings for smaller monetary claims, a reduction in procedural timeframes, and a decrease in the number of appeals (writs of amparo) a disputing party can make.

If implemented, these reforms, coupled with the much larger judicial reform of 2008, would undoubtedly have a positive impact on Mexico’s rule of law and judiciary. The World Justice Project ranked Mexico 79th out of 102 countries in the most recent iteration of its Rule of Law Index, and citizens continue to be skeptical of the judicial system as a whole with 54% of respondents in a recent survey saying that the court system has a bad influence on the Mexican state.

This apparent lack of trust in litigation, even in the face of reforms, has likely contributed to a rapid rise of arbitration as the go-to mechanism for resolving commercial disputes. Mexico has adopted the UNCITRAL model law for both domestic and international arbitrations with only minor modifications, and is a signatory of the New York Convention (1958). Over time the judiciary has also become increasingly accepting of arbitration and has remained appropriately aloof from outcomes, not intervening in decisions and enforcing awards unless a clear procedural issue has been demonstrated.

Interestingly, the same upbeat tone cannot be taken when describing other forms of alternative dispute resolution (ADR) in Mexico in the context of resolving commercial disputes. Even as the business population has warmly taken to arbitration, it has, at least comparatively speaking, shunned mediation — despite its cropping up in many other areas of disagreement, such as medical malpractice suits, juvenile justice cases, and labor dispute resolution. In commercial disputes a culture of Pyrrhic victory and notions of the need to ‘win’ legal battles may be obstructing widespread acceptance of mediation in the business community.

This has remained the case even in the face of powerful drivers of change. In 2001 the American Bar Association (ABA) and Freedom House in conjunction with the United States Agency for International Development in Mexico (USAID/Mexico) pursued a program establishing 28 mediation centers. The program increased use, but only to a limited degree.  A 2008 constitutional amendment that set out principles and procedures of mediation, obligations of participants and practitioners, and created Alternative Justice Centers across the country likewise did not immediately incentivize significantly more disputants to undertake mediation to resolve commercial disputes.

Perhaps change needs to come from inside the ADR community in Mexico, and, if so, two organizations look primed to help realize such a cultural shift. The Mediation and Arbitration Center of the National Chamber of Commerce of Mexico City (CANACO) has a broad focus including arbitration and mediation and is the most well-known mediation provider in the country, and The Arbitration Center of Mexico (CAM) primarily focuses on arbitration but is looking to expand into mediation.

In sum, as the complex economic machine that is Mexico continues to gain momentum, it would no doubt benefit from lubricating the gears with a diverse array of effective dispute resolution tools for domestic and international firms.

The CPR Institute would like to thank Boaz Cohon for this contribution. Boaz, a summer public policy/legal intern at CPR, is majoring in Political Science and History at Vanderbilt.