Effective Arbitration: Essentials for the Clause Effective - PowerPoint PPT Presentation

Effective Arbitration: Essentials for the Clause Effective Procedure and Excellence in Deliberations John A.M. Judge Thirty Nine Essex Street Chambers London Arbitration Place Toronto

INITIAL CONSIDERATIONS 1. Why Arbitration Rather Than Court? > Generally: – Party autonomy: the parties are free to agree on procedure – Flexibility and speed: ability to adapt procedures to the dispute – Generally less expensive – Freedom to choose the decision-maker – Real Case management by the decision-maker – Greater confidentiality and privacy – Implied obligation to avoid procedural delay and proceed in good faith – Finality – domestically, limited appeal rights if not excluded ARBITRATION PLACE| SLIDE 1

INITIAL CONSIDERATIONS 1. Why Arbitration Rather Than Court? (Cont’d) > International Commercial Contracts and Disputes: – All of the above, plus – Neutral forum: no “home court” advantage – Avoid unattractive aspects of a foreign system, even a developed common law legal system (e.g., juries and punitive damages in U.S.) – No right of appeal; limited procedural grounds to set aside – Obligation to carry out award without delay in some rules (ICC, LCIA) – Ease of enforcement under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (exceptions: Taiwan, Belize, some key African countries etc.) ARBITRATION PLACE | SLIDE 2

INITIAL CONSIDERATIONS 1. Why Arbitration Rather Than Court? (Cont’d) > Cautions: – Multiple parties possible, usually only if signatories to contract – Types of claims limited to what contract provides – Limited right of appeal and review – Speed is not assured – Cost not necessarily less – Importance of arbitrator selection – For interim relief, may still need the courts ARBITRATION PLACE | SLIDE 3

INITIAL CONSIDERATIONS 2. What Arbitration Is Not > Mediation, which is not an adjudication: in mediation there is no resolution unless parties agree – Multi-tiered negotiation clauses as pre-conditions to arbitration > Expert determination: – What is it? – (e.g., accountant for price adjustment) – No procedural safeguards; no hearing – No “judicial” decision, but a determination ARBITRATION PLACE | SLIDE 4

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 3. Key Elements in Arbitration Clause > Agreement to arbitrate > Scope of disputes or arbitrability > Institutional or ad hoc arbitration > Venue/Seat of the arbitration: procedural law (express choice) vs. choice of law for contract > Language of the arbitration > Choice of Arbitrator: 1 or 3 > Cautions: Time limits?; multi-step clause? > Domestic only – rights of appeal, if any ARBITRATION PLACE | SLIDE 5

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 4. Scope: What is Arbitrable? > Any type of dispute may be decided by arbitration (save consumer contracts in Ontario and Quebec) > Avoid ambiguity > Better to use broad language that covers any dispute arising under or relating to the agreement (or to the legal relationship between the parties) rather than narrow, limiting language > The validity or enforceability of an agreement is arbitrable > Tort, equitable and statutory claims (including oppression remedies) are arbitrable ARBITRATION PLACE | SLIDE 6

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 4. Scope: Limitations > Limitations in some jurisdictions – e.g., a competition law claim or other statutory claim may not be arbitrable > Arbitration clause (or arbitral institution’s rules) may limit the jurisdiction of the arbitrator, i.e., no punitive or consequential damages > Right to arbitrate may be statutorily limited in consumer cases and class actions unless the consumer agrees to arbitration after the specific dispute arises > Common Exclusion- Validity of I.P. rights > Express provision for award of costs and interest > Parties – signatories and non-signatories ARBITRATION PLACE | SLIDE 7

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 5. Institutional Arbitration vs. Ad Hoc > Institutional Arbitration – Arbitration supervised and administered by an arbitral institution under the rules of that institution > Main Institutions Internationally: – ICC (Paris) – AAA\ICDR (NY) – LCIA (London) – CIETAC (China) – Regional Institutions – Stockholm, Singapore, Hong Kong, KL > Main Institution Domestically: – ADR Institute of Canada, Inc. ARBITRATION PLACE | SLIDE 8

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 6. Key Features of Institutional Arbitration > Institution acts as appointing authority (i.e., appoints the arbitrator(s) if parties cannot agree) > Reduces pre-arbitration litigation and delays over appointments and challenges to arbitrators (e.g., based on conflicts & challenges) > Monitors progress of arbitration to ensure efficiency > Additional contact for parties > Quality control for award, but can cause delay > Provides service at a price (varies from institution to institution) > More expensive, but avoids court costs ARBITRATION PLACE | SLIDE 9

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 6. Key Features of Institutional Arbitration (Cont’d) > Institutional rules are adopted - avoids the need to draft and re-invent detailed procedural rules > The institution should administer the arbitration when its rules are used > Additional features of institutional administration – Emergency arbitrator rules – Enhances arbitrator accountability – Handles funding and oversees arbitration fees – Some procedure may cause delay, but can improve quality > Awards may be more readily recognized and enforced internationally than awards made in ad hoc arbitration > Clear preference by knowledgeable in house counsel for international contracts ARBITRATION PLACE | SLIDE 10

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 7. Key Features of Ad Hoc Arbitration > In Canada, popular for domestic arbitration, largely due to absence of a credible, accepted Canadian Institution > Ad hoc arbitration is not administered or supervised by an arbitral institution > Ontario’s Arbitration Act and International Commercial Arbitration Act provide for ad hoc arbitration under the supervision of the Ontario courts > UNCITRAL Arbitration Rules may be more readily adapted to the needs of the dispute than institutional rules ARBITRATION PLACE | SLIDE 11

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 7. Key Features of Ad Hoc Arbitration (Cont’d) > Factors when considering ad hoc arbitration: – Can save institutional fees (unless disputes go to court) – Extra delay and cost if need to ask court to compel arbitration or appoint an arbitrator – Appointing procedure – if parties cannot agree, the default is court – Use of an appointing authority, short of institutional arbitration – Consider desirable extent of discovery and production of documents – Consider likelihood of review and potential scope of appeal for domestic arbitration at seat. Consider where the award will be enforced – For international transactions, consider law where arbitration would be held and where award would be enforced – Ad hoc can be useful for sophisticated parties who can co-operate ARBITRATION PLACE | SLIDE 12

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 8. Rules, Institutions and Clauses for Different Transactions > Domestic Transactions and Ontario Arbitration: – Ad hoc arbitration under the Arbitration Act – ADR Institute of Canada or ADR Chambers – New ICDR “Canadian” rules > Interprovincial Transactions: – ADR Institute of Canada – B.C. International Commercial Arbitration Centre – Consider new ICDR Canadian Rules ARBITRATION PLACE | SLIDE 13

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 8. Rules, Institutions and Clauses for Different Transactions (Cont’d) > International Transactions: – Canada-United States: – ICDR, possibly ADR Institute (avoid AAA rules) – Canada-China: – not CIETAC; Hong Kong, Singapore, Stockholm, recently LCIA, KLRCA – Enforcement issues – Canada-India – – LCIA (Mauritius) but other significant issues – Enforcement issues – Structure with non-Indian corporation – Canada-Europe – developed common law or civil law country: ICC is favoured; then LCIA and ICDR ARBITRATION PLACE | SLIDE 14

FACTORS TO CONSIDER FOR THE TRANSACTIONAL LAWYER 8. Rules, Institutions and Clauses for Different Transactions (Cont’d) > International Transactions (cont’d): – Canada-Elsewhere in Asia: – ICC, Singapore, Hong Kong, KLRCA – Canada-Africa: – ICC; LCIA (London or Mauritius) for Commonwealth countries – Canada-South or Latin America: – ICC preferred, then ICDR – Canada-foreign state entities: – ICC, LCIA, ICDR; now also ICSID since Canada has implemented ICSID Convention ARBITRATION PLACE | SLIDE 15