Dallas Bar Association
HEADNOTES Focus ADR/Collaborative Law
May 2016 Volume 41 Number 5
Focus
ADR/Collaborative Law
Arbitration in International Commercial Transactions BY RICHARD GALLAGHER
Thank you to the volunteers who helped make the Law Day Committee’s Mock Voir Dire a success. Held at the George Allen Courthouse on April 8 for more than 200 Dallas ISD students, the event addressed Miranda—More than Words. Special thanks to Law Day Committee Chair Mandy Childs, (front right) and Judge Martin Hoffman (far left) who organized the event.
Focus
ADR/Collaborative Law
The Mediator’s Prayer—A Practical Guide to Successful Mediation BY AL ELLIS
“Oh Lord, won’t you buy me a big diamond ring?” - Janis Joplin Just as Janis Joplin prayed for a diamond ring, mediators too have a few prayers their own. Following are a few of those prayers and incantations. Prayer 1 – Lawyers, please talk to each other in advance. Attorneys and their representatives often come to the mediation never having had a discussion about the potential for settlement. Sometimes, a party’s position is set in stone, and they have no room to negotiate. If this is the case, the lawyers should discuss the issue and ask the court for relief from mediation. For example, insurance companies often classify car crashes as minor vehicle damage/chiropractic care cases, and by policy or procedure, are prevented from making any offer above a small predetermined amount. On the positive side, at times, good attorneys just have not discussed settlement. As this article was being written, two fine attorneys came to our office for a mediation. I asked them if they could talk and settle the matter without me. They did! Prayer 1A – Please make an initial demand and settlement offer to each other. Long, long ago, before there was such a thing as mediation, lawyers and clients settled about the same percentage of cases as they do in mediation by talking to each other in advance. At the very least, a mediator prays for an initial settlement demand and offer prior to mediation. Prayer 2 – Please read your file before mediation. A brief overview so you know the basics of the case prior to mediation is very helpful. First,
it increases your client’s confidence in your representation. Second, it shows the mediator you are familiar with the facts and are prepared to enter into negotiations from the get-go. Answering this mediator’s prayer is especially helpful since we have fewer general sessions. The first opportunity for the mediator to learn about your position may be the initial discussion with the lawyer and his client. In this regard, while it is not always mandated, it is extremely helpful to the mediator to have a very short position paper available in advance. Prayer 3 – Please trust the mediator when asked for your bottom line goals. So often, parties are hesitant to provide the mediator with their final goals for they believe the mediator will then use that information to negotiate a settlement which is short of the goal. By the end of the mediation, the mediator will be pushing all parties to accept or pay less than their final goal, but you will be surprised how often one party’s final goal is within the parameters of the other party’s final goal. Prayer 4 – To paraphrase a well-known political slogan, “It’s the process, stupid.” Settlement of all cases, but especially cases with significant disputes regarding liability or damages, requires allowing the process to develop. While it may appear there are significant delays in progress, or nothing is happening, this is not normally the case. Good mediators spend a significant amount of time with lawyers and parties just getting to know the players, their backgrounds, their history, and their personal attitudes toward the lawsuit. Getting to know everyone on a more personal level helps everyone to relax and become more comfortable with the process.
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While traditional methods such as negotiation, mediation, conciliation, and litigation account for much of the dispute resolution activity with regard to domestic as well as international commercial transactions, international arbitration, which has long played a significant role in civil law jurisdictions, is becoming more commonplace in general and is overwhelmingly the preferred method of dispute resolution in the international energy industry. International arbitration may be used alone or in conjunction with conciliation or mediation, is accepted as being more “user-friendly,” and is significantly faster and cheaper than the other methods. The parties get to choose the language, location, rules of procedure, governing law, and the extent of confidentiality relative to the very existence of the dispute, as well as the issues and facts in dispute. To some extent, the parties also get to choose the arbitrators. While critics of international arbitration point to rising costs, it is unquestionably both less costly and less timeconsuming than U.S.-style litigation “Awards” in arbitration are intended to be final, binding, and enforceable and not subject to appeal based on alleged errors of law or fact, except in limited circumstances such as arbitrator fraud or corruption. Awards are generally required to be “reasoned” and “in writing” and the determination of factual and legal issues will typically be made by a panel of 3 professionals— not “civilians.” Significantly, current practice calls for the arbitrators to be “independent and impartial.” Awards are largely determined based on written submissions, but “hearings” are also a common feature. Problems frequently develop when parties or counsel try to change arbitration into litigation by attempting to utilize traditional U.S. discovery methods such as interrogatories, depositions, etc. Civil law countries are not favorably disposed to U.S. litigation and such efforts are frequently rebuffed, with the arbitrator(s) determining just how much discovery is “enough.” “International arbitrations” may be between private parties, a private party and a State, or between States. Like domestic arbitration, international arbitrations may be conducted on an “ad hoc” or “institutional” basis; in “institutional” arbitration, the administrative functions are handled by any of a host of ADR institutions. While there are many dozens of such institutions, the most well-known are the Interna-
tional Centre for Dispute Resolution (an arm of the American Arbitration Association), the International Chamber of Commerce, the London Court of International Arbitration, and the Stockholm Chamber of Commerce. The legal structure under which an international arbitration can be conducted may arise from a dispute resolution clause contained in an underlying contract, a separate “Arbitration Agreement” between the parties, or by the parties’ election to initiate proceedings under any of a number of international or regional Conventions (such as the Convention on the Settlement of Investment Disputes between States and Nationals of Other States), investment multilateral trade agreements, or bi-or multi-lateral investment treaties. Where the basis for an international arbitration is the underlying contract, the importance of studied foresight and skillful drafting cannot be overemphasized. It is not surprising that a number of different sets of laws may apply to a given arbitration. Importantly, arbitrations are subject to the procedural laws of the place of the arbitration (the “lex arbitri”). Also, the United Nations Commission on International Trade Law (UNCITRAL) has a “Model Law” which many countries have adapted for use which may come into play. The law agreed to in the “Governing Law” or “Dispute Resolution” clause will certainly apply. For arbitrations in the U.S., the Federal Arbitration Act encourages and protects the arbitral process and, close to home, the Texas General Arbitration Act may also have application. There are a number of international conventions, such as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), that may also be applicable with respect to enforcement of an award. Similarly, various Regional Conventions such as the Inter-American Convention on International Commercial Arbitration (the “Panama Convention”), the European Convention, the Moscow Convention, and the Arab Convention on Commercial Arbitration may find application in certain instances. As can be seen from this “glimpse,” international arbitration is a very viable and interesting method of resolving disputes (and enforcing awards) between two or more private parties and/or States with respect to international commercial transactions. HN Richard Gallagher is a solo practitioner and can be reached at: jrgallaghe@aol.com.
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