Complex international business relationships predictably lead to disputes, forcing parties to seek an efficient and fair form of dispute resolution. International arbitration is a popular choice because it is often faster, cheaper, and more flexible than litigation in a national or state court. The following are tips and considerations for attorneys to maximize their value to their arbitration teams and to position themselves for substantive responsibilities.
Arbitration is a private legal proceeding wherein one or more impartial arbitrators, collectively referred to as “the tribunal,” take the role of a judge and resolve a dispute outside of the court system. Unlike courts, an arbitration tribunal has no inherent authority. A tribunal is obligated to follow the traditional rules of fairness and due process. However, a tribunal has significant latitude to adopt streamlining strategies that can lead to a faster and less expensive resolution (e.g., reducing discovery obligations, simplifying the schedule to focus on substantive issues, and eliminating unnecessary formalities). This procedural flexibility is doubly beneficial, as the complex rules of civil procedure found in most courts often intimidate parties that reside in different jurisdictions.
Determine the Level of Confidentiality Needed
Determine the client’s confidentiality needs as early as possible and proactively work to satisfy those needs. Arbitration provides for more privacy and confidentiality than litigation, which often requires proceedings to be conducted in the public eye. However, complete confidentiality is not always in a party’s best interests. For example, while it is sensible to restrict the disclosure of sensitive business information and respect local privacy laws, a party may want to maintain the ability to discuss the arbitration publicly so that it can update shareholders and customers. A party may also want to preserve the ability to use documents found during discovery in subsequent litigation.
When drafting the arbitration clause in the agreement that governs the parties’ business relationship, it can be prudent to include a confidentiality provision, because the parties may not agree on the desired level of confidentiality in a given arbitration once a dispute crystallizes. If the arbitration clause is silent as to confidentiality, a separate confidentiality agreement should be put in place early to maximize the confidentiality agreement’s effectiveness.
Familiarize Yourself with the Procedural Rules
Becoming familiar with applicable procedural rules is critical. Each international arbitration organization has its own rules, and they are often significantly different from one another. Even experienced team members may be unfamiliar with the rules in a given case. By becoming the team’s expert on the procedural aspects of the case and their practical implications, you can quickly demonstrate value to the rest of the team and position yourself for greater responsibilities later in the case.
For example, a client’s cost concerns and desired time to resolution may change the recommended tribunal. The International Court of Arbitration of the Chamber of Commerce (ICC) is one of the most actively managed organizations. The ICC requires the creation of a Terms of Reference, which details each party’s claims and the issues to be addressed. The ICC also formally scrutinizes a tribunal’s decision before issuing a final award. Both requirements have benefits, but they can also make the arbitration longer and more expensive. Additionally, the ICC and the Singapore International Arbitration Centre base their fees on the amount in dispute and require significant payments at the beginning of the arbitration. In contrast, the London Court of International Arbitration bases its fees on the actual time spent and spreads the payments more evenly over the length of the proceeding.
Proactively Research Potential Arbitrators
Unlike litigation, international arbitration allows the parties to control the identity of the tribunal members. For example, under the default ICC rules, either a sole arbitrator or a panel of three arbitrators will decide a dispute. If it is a sole arbitrator, the parties may either jointly nominate an arbitrator or allow the ICC to appoint an arbitrator. For a panel of three arbitrators, the rules allow for the complainant and respondent each to nominate an arbitrator. The third arbitrator is either jointly nominated by the parties or appointed by the ICC.
Through research, proactive counsel can leverage their ability to influence the selection of the decision-maker to the client’s advantage. The goal is to locate potential arbitrators who will understand and be receptive to your client’s positions, while not possessing any obvious biases to which an opponent can reasonably object. It is generally preferred for the candidate to have at least a general familiarity with the arbitration process, the subject matter at issue, and the governing law. For example, if the arbitration will involve a highly technical or complex area of the law, focus on arbitrators with significant experience in that area. If the arbitration involves the application of the law of a particular jurisdiction, prioritize arbitrators experienced in that jurisdiction. In cases with more than one arbitrator, it is often wise to nominate a candidate who can influence the selection of the presiding arbitrator and whose views the other members will respect during deliberations. Retired judges are popular choices because other tribunal members often recognize and appreciate their seniority and demeanor.
You can find suitable candidates for a tribunal in a variety of places. Many arbitration organizations, like the American Arbitration Association and Judicial Arbitration and Mediation Services, maintain free and easily accessible databases of affiliated arbitrators. These databases typically include arbitrators’ detailed biographies and a listing of representative matters. Coworkers with arbitration experience may be able to provide recommendations or share any experiences—positive and negative—with candidates discovered elsewhere.
Research potential candidates thoroughly, including those proposed by your opponent. Before being appointed, a nominated arbitrator typically must disclose any facts or circumstances that would impact his or her impartiality. But it is still essential to ensure that there are not any apparent biases (e.g., past business relationships or a previous representation of an opponent). Look for any publicly available opinions or articles on the subject matter at issue written by the nominated arbitrator. These may provide insight into the types of arguments to which the arbitrator will be most sympathetic. An attorney with a strong understanding of the positions and themes most likely to prevail has the best chance to be given a more significant role when working with experts and preparing for trial.
Make a Plan for Discovery
One of the reasons parties routinely turn to arbitration is its limited discovery compared with that allowed by US courts. This is especially true for foreign parties who are often intimidated by this aspect of US litigation. Discovery requests are generally required to be narrowly tailored. Depositions are typically disallowed. Instead, fact witnesses provide written witness statements and experts provide reports. A party may not have the opportunity to cross-examine either until the hearing. The scope of discovery granted may also depend on the jurisdictions in which the parties reside. If a party is from a jurisdiction where extensive discovery is uncommon, a tribunal may be hesitant to grant a request for it in the absence of a compelling reason.
Despite these practices, it is a common misconception that discovery will be largely unavailable by rule in an arbitration. Although discovery is often limited—scorched-earth discovery is typically incompatible with the efficiencies sought through arbitration—arbitrators will generally feel obligated to honor any reasonable agreement between the parties regarding the scope of discovery. For example, international arbitration often involves documents in various foreign languages, and it may be sensible to require the producing party to translate any of its responsive documents. A competent arbitrator will encourage the parties to work together to develop a fair discovery plan that meets the needs and scope of the case. In some cases, that may mean limiting discovery to the production of documents on which each party intends to rely. Still, in other cases, it may include a limited number of depositions and broad discovery requests.
Consequently, it is essential for arbitration counsel to determine what discovery will be necessary—and ensure that this is consistent with the client’s expectations regarding time and cost—as early as possible in the case. A tribunal will often want at least the beginnings of a discovery plan soon after being appointed. Knowing what discovery is most crucial for ultimately proving an attorney’s case will allow him or her to negotiate for those mechanisms successfully without committing to unnecessary and expensive discovery.
An international arbitration can be an excellent opportunity for a junior attorney. Clients generally expect arbitrations to be conducted relatively quickly and efficiently, which typically leads to leanly staffed litigation teams and significant substantive responsibilities for well-prepared attorneys who show initiative early in the case.