2021 | VOL. 14 | NO. 1
New York Dispute
Resolution Lawyer
A publication of the Dispute Resolution Section of the New York State Bar Association
Reports from the Working
Groups of the Mixed
Mode Task Force
Successes, Stresses and
Secrets: The Psychology
of Remote Hearings
Putting Their Money Where
Their Mouth Is: Mass
Employment Arbitration
Filings and the Nonpaying
Party Problem
Trends in International
Arbitration Damages
Awards
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Contents
New York Dispute
Resolution Lawyer
2021 | Vol. 14 | No. 1
Features
Dispute Resolution Section News
6
Section Update
Mixed Mode Task Force Working Groups
11
Introduction to the Series of Articles on the Mixed
Mode Task Force
Jeremy Lack
14
Building Dispute Resolution Processes Into Agreements
To Minimize and Manage Potential Conflict During the
Commercial Relationship Lifecycle – Working Group 1
Kathleen Paisley, Jane Player and Thomas Stipanowich
17
Using a Guiding Mediator To Help the Parties Design
Bespoke Dispute Resolution Processes – Working
Group 2
Laura A. Kaster and Jeremy Lack
21
Mediators Using Non-Binding Evaluations and
Making Settlement Proposals – Working Group 3
Véronique Fraser and Kun Fan
25
Arbitrator Techniques and Their (Direct or Potential)
Effect on Settlement – Working Group 4
Edna Sussman and Klaus Peter Berger
29
33
37
Regulars
3
5
Message From the Chair
Laura Kaster
Message From the
Co-Editors in Chief
Edna Sussman, Laura A.
Kaster and Sherman Kahn
Ethical Compass
Professor Elayne E.
Greenberg
7
82
Book Review
Legal Reasoning Across
Commercial Disputes,
by Dr. S.I. Strong
Review by
Camille Ramos-Klee
86
Case Notes
Alfred Feliu
Arbitration
40
“Switching Hats”: Developing International Practice
Guidance for Single-Neutral Med-Arb, Arb-Med, and
Arb-Med-Arb – Working Group 5
Thomas J. Stipanowich and Mordehai (Moti) Mironi
Successes, Stresses, and
Secrets: The Psychology of
Remote Hearings
Lucy Greenwood
42
The Impact of Enforcement on Dispute Resolution
Methodology – Working Group 6
Kathleen Paisley and Jane Player
Putting Their Money
Where Their Mouth Is: Mass
Employment Arbitration
Filings and the Nonpaying
Party Problem
Dina Lamdany
Mediation
Considerations for Allowing Communications
Between Arbitrators and Mediators Appointed to
the Same Dispute – Working Group 7
Deborah Masucci and Dilyara Nigmatullina
51
Opening Mediation
Windows: Role of Parties,
Contracts and Institutions
Diego Faleck
55
How Does Conflict Coaching
Complement the Mediation
Process?
Courtney Chicvak
57
Mediating Ineffectual Parties
Norman Feit
International
59
Trends in International Commercial
Arbitration Damages Awards: Insights
from the 2020 Queen Mary/PWC Study
Preeti Bhagnani and Joy Lee
63
ICCA Survey on a Right to a Physical
Hearing in International Arbitration:
Reports Are Out from the U.S., Australia,
Italy and Vietnam
Yasmine Lahlou and Marcel Engholm
Cardoso
68
72
Being vs. Doing in the Relationships
Among Arbitration Practitioners
Cecilia Carrara
75
Future of Trust Arbitration and Its Impact
in Russia
Dmitry A. Pentsov
78
Mandatory Rules, Court Litigation and
Arbitration (Domestic and International
Disputes)
Guido Carducci
U.K. Supreme Court Delivers Landmark
Judgment on Arbitrator Bias and Duty of
Disclosure
Ema Vidak Gojkovic
New York Dispute
Resolution Lawyer
Co-Editors-in-Chief
Board of Editors
Edna Sussman
SussmanADR
20 Oak Lane
Scarsdale, NY 10583
esussman@sussmanadr.com
Leona Beane
11 Park Place, Suite 1100
New York, NY 10007
LBMediateADR@aol.com
Sherman W. Kahn
Mauriel Kapouytian
Woods LLP
27 West 24th Street, Suite 302
New York, NY 10010
skahn@mkwllp.com
Laura A. Kaster
Laura A. Kaster LLC
84 Heather Lane
Princeton, NJ 08540
laura.kaster@kasteradr.com
Geraldine Reed Brown
The Reed-Brown
Consulting Group
180 Union Street
Montclair, NJ 07042
RBCG1@aol.com
Gail R. Davis
Resolutions NY Inc.
120 East 30th Street
New York, NY 10016-7303
gdavis@resolutionsny.com
Dispute Resolution Section
Officers
Chair
Erin M. Hickey
Fish & Richardson PC
Citigroup Center,
52nd Floor
153 East 53rd Street
New York, NY 10022
hickey@fr.com
Jae Soog Lee
26 Sutton Terrace
Jericho, NY 11753
jaesooglee@yahoo.com
Barbara Antonello
Mentz
140 West 86th Street
New York, NY 10024
bmentz@mentz.org
The New York Dispute Resolution Lawyer is distributed to members of the New
York State Bar Association’s Dispute Resolution Section without charge. The
views expressed in articles in this publication represent only the author’s
viewpoint and not necessarily the views of the Association, the Section or its
Officers.
Laura A. Kaster
Laura A. Kaster LLC
84 Heather Lane
Princeton, NJ 08540
laura.kaster@kasteradr.com
Chair-Elect
Ross J. Kartez
Ruskin Moscou Fattischek P.C.
1425 RXR Plaza
East Tower, 15th floor
Uniondale, NY 11556
rkartez@rmfpc.com
Vice Chair
Noah J. Hanft
AcumenADR LLC
16 Madison Square West, Suite 1200
New York, NY 10010
nhanft@acumenadr.com
Secretary
Evan J. Spolfegel
Phillips Nizer LLP
485 Lexington Ave. Fl. 14
New York, NY 10017-2619
espelfogel@phillipsnizer.com
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Treasurer
Publication Date: April 2021
Theo Cheng
ADR Office of Theo Cheng
66 Cartwright Drive
Princeton Junction, NJ 08550
tcheng@theocheng.com
© 2021 by the New York State Bar Association
ISSN 1945-6522 (print) ISSN 1945-6530 (online)
This edition is only available online and by pdf..
Krista Gottlieb
ADR Center & Law Office
43 Court Street, Suite 1100
Buffalo, NY 14202-3111
kg@kristagottlieb.com
Immediate Past Chair
NYSBA.ORG/DISPUTE
Message From the Chair
The world has shared a difficult
year. For all of us, trying to protect one
another has meant a much higher degree
of isolation. Even when we feel gratitude
for work or safety, and the generosity of
health care workers and frontline service
providers, we remain on edge for friends
and loved ones and sometimes ourselves.
Any problems are heightened by a kind
of free-floating societal anxiety about all
those who are suffering economically or
from COVID-19. Now, with the prospect
of vaccines, we see a light at the end of
this very long tunnel, but we are still
holding our breaths and concerned about
the enormity of loss on multiple fronts.
The world of dispute resolution
has fared much better than many other
Laura
economic endeavors. We were adoptive
and adaptive, had technological tools, and
a crying need to help solve disputes so that
business could get back to business. We, as a Section, had
a mission to support each other in learning new techniques, devising new routines and practices, and giving
serious assistance to our courts, litigants, and counsel. We
have made and continue to make every effort to meet this
moment through examining together the paths forward
and calls to action, maintaining our focus on diversity
and inclusion, providing trainings, talks and town halls
on a wide variety of topics and innovations, providing
you with this journal, and meeting online together for
social-professional camaraderie. Being in association with
one another and having a professional community means
more to us all. We want to be your partner in advancing
your own career and the success of ADR.
This year’s annual meeting focused on some of the
broad social and civics issues that must be addressed
in this time. We have special skills we can bring to the
table and we have the felt need to serve our communities and foster diversity, equity and rule of law. Our
Annual Meeting Co-Chairs developed a wonderful and
inventive program. We have renewed and increased our
commitment to racial and gender equity not just in the
world at large but specifically in our profession that has
moved more glacially than most (including law firms and
the courts), despite the focused efforts of providers and
ADR associations. One of the things we have learned is
that while those who suffer the effects of bias or simply
others’ privileges may raise the issues and help us devise
solutions, it is also up to the privileged to work for real,
effective, and permanent change. Now is the moment to
fulfill commitments and to try new approaches.
The New York Bar Foundation is
a charity formed by lawyers, which
our Section supports, and on which
David Singer, our former Chair and
current co-chair of our Ethics Committee, serves as a director. The Foundation has among its missions increasing
public understanding of legal heritage,
advancing service to the public and improving the administration of justice.
Beyond supporting the work of the
Foundation, do lawyers generally, and
dispute resolvers in particular, have an
obligation to participate personally in
the work of civics training and support
for rule of law?
One of the questions we should
be asking ourselves as individuals, as
A. Kaster
members of the legal profession, and
as an association is: What are our opportunities to support equity and rule of law
beyond our focused ethical duties to our clients, parties,
courts, and colleagues? We began this discussion with the
Ethics Committee’s fall Town Hall, continued the exploration at the Annual Meeting, and must not abandon the
ongoing dialogue. Should we also accept a responsibility
to foster the connective tissue that supports rule of law
and the democratic functioning of our multiple communities? Do we have an opportunity and an interest
in educating lawyers and the public in communication
and dispute resolution skills that might make us all more
resilient and help revive the business community and the
economy? Can we begin conversations about constructive solutions to create processes for promoting discussion
and constructive results so that we have a foundation of
trust? How can we help create spaces for building shared
experience and small successes?
One of the books on our Annual Meeting reading
list was Robert Putnam’s Upswing. Some 20 years ago,
Putnam wrote Bowling Alone. It diagnosed as a societal
ill the diminished participation in civic groups of all
kinds where decisions large and small had to be made in
concert. That group participation had been an American
feature from colonial times. In Upswing, Putnam builds
on this insight to pinpoint the cause of national crisis
as the change from a focus on groups to a focus on the
self and individual rights that began in in the late 1950s.
Upswing suggests, based on in-depth statistical analysis
of 125 years of history, that we met a similar crisis in the
American gilded age of the late 1800s. Putnam looks at
four curves—greater or lesser economic equality, comity
and compromise in politics, cohesion in social lives, and
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
3
altruism in cultural values. It tracks a 60-year period of
parallel improvement from the late 1800s to the 1960s in
all four dimensions and then a downward turn in shared
prosperity and community values, and a surprising
downward turn in racial equality, with less progress than
hoped in gender equity—we took our foot off the gas.
Putnam’s message is: we met the challenge before and we
can meet it again by focusing on creating a “we” ethos
and redefining “we”more inclusively.
We want to be part of the work to help recenter our
civic culture, using rule of law and respect for legal and
democratic institutions and creating space for dialogue
as part of our personal and associational goals. I would
welcome your thoughts on this issue.
On the topic of contributions to the Section, I want
to acknowledge and express gratitude to the many
committee chairs and individual contributors. We have
focused on increasing diversity and providing diversity
scholarships; providing universal access to our journal
issue on online processes and COVID issues; our innovation tournament and writing competition for law
students; a host of CLEs and other teachings on advocacy in ADR and conducting mediation and arbitration
online; a call to action to negotiate or mediate cases early
to reduce the court backlogs; our core trainings to qualify
mediators and arbitrators for entry into the profession
and advanced trainings to support the development of
neutrals, developing a mediator mentorship program,
and throughout, supporting the New York courts’ presumptive ADR initiative. I would also like to recognize
the extraordinary fact that the past Chairs of the Section
remain champions and critical contributors. And without
the support and work you all continue to lavish on our
many projects, publications, and presentations, we would
not be one of the most productive Sections in the NYSBA,
as we are.
Our work this year would have been impossible
without the contributions of Catherine Carl and Simone
Smith. They will protest that there is a large NYSBA team
behind the curtain—and there is, and we thank them too.
But Catherine and Simone have gone above and beyond
in a year full of difficulty and increased demands. Thank
you on behalf of the Section.
In the next issue of this journal, Ross Kartez will write
this message. The Section is so fortunate to have an incoming slate of dedicated officers to continue our collective
work and growth. Thank you to all of them for their continued work on our behalf and thank you to the members
of the Section for allowing me to have the privilege of
working with you in this challenging time.
Laura A. Kaster
N E W Y O R K S TAT E B A R A S S O C I AT I O N
REQUEST FOR ARTICLES
If you have written an article you would like
considered for publication, or have an idea for
one, please contact the Co-Editors-in-Chief:
Sherman W. Kahn
Mauriel Kapouytian Woods LLP
skahn@mkwllp.com
Laura A. Kaster
Laura A. Kaster LLC
laura.kaster@gmail.com
Edna Sussman
SussmanADR LLC
esussman@sussmanadr.com
Articles should be submitted in electronic document format
(pdfs are NOT acceptable), along with biographical information.
4
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Message from the Co-Editors-in-Chief
Sherman Kahn
Laura A. Kaster
Edna Sussman
For many of us this has been the most difficult year
of our life as the pandemic drags on; many of us have
faced isolation, personal illness and loss. The ADR organizations, including especially our own NYSBA Dispute
Resolution Section, have rallied to provide support and
companionship. The many programs and Zoom networking sessions that were sponsored to maintain the
vibrancy and connective tissue of our community have
achieved their goal. As we look forward to the other side
of COVID-19, we look to embrace the innovations that
we have learned to adopt as we continue our perpetual
effort to improve the service we provide in the resolution
of disputes.
We bring you two articles that focus specifically on
the impact of the pandemic. The first provides a summary of the first four country reports, including the United
States, which have been prepared for the ICCA Survey on
the Right to a Physical Hearing in International Arbitration. The article addresses a question we have all been
asking ourselves throughout the recent months: Do parties have a right to an in-person physical hearing? A further reflection on the pandemic impact provides insights
on the psychology of remote hearings, which should be
helpful in more effectively using the virtual medium.
As we look to adapt to the new normal and consider
whether and how we should modify or expand the dispute
resolution services we offer, in this issue we present a series
of seven articles that explain the work of each of the working groups of the Mixed Mode Task Force. The task force’s
objective is to promote understanding across cultures
and foster the use of dispute resolution processes that are
tailored to the conflict and reduce the escalation of disputes.
The task force examines dispute resolution modalities
across the spectrum, including drafting the contract, guiding parties as to the optimal dispute resolution process, mediating with nonbinding proposals, employing arbitration
techniques that may have a favorable impact on the prospects of an amicable settlement among the parties, arbitrators and mediators switching hats, attention to enforceability
and exploring whether and when there can be interactions
between the arbitrator and the mediator. It is hoped that,
when completed, the task force’s work product will inspire
further discussion and the increased utilization of more creative processes to aid parties to appropriate resolutions.
Since there has been no slowdown in the issuance of
important court decisions, studies and arbitration case filings we present have the most significant developments. An
analysis of the landmark U.K. Supreme Court decision in
Halliburton on arbitrator bias and the duty of disclosure addresses many of the fundamental questions that arise in considering the arbitrator’s duty to disclose. Significantly, the
UK court directly addresses the tension between the arbitrator’s duty of confidentiality and the duty to disclose. The
findings of 2020 Queen Mary/PWC study on trends in international commercial arbitration damages awards provide
fascinating empirical conclusions based on a rich trove of actual awards. The filing of mass claims in arbitration through
individual filings offers a perspective on this new utilization
of arbitration to afford access to justice for those unable to
file class actions in court. Articles about mediation windows,
ethics, conflict coaching, mediating ineffectual parties, and
trust arbitration all provide practical tips. We close this issue
with a roundup of case notes on significant decisions that
have been issued by courts in the United States and a review
of a fascinating book that compares judicial and arbitrator
decision-making based on empirical studies.
We trust that you will find this publication of interest
and welcome your reactions to the articles and the issues
they raise.
Laura A. Kaster, Sherman Kahn, and Edna Sussman
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
5
Dispute Resolution Section News
Section Update
In this pandemic year, we have done a very great
deal, but we have also had to limit some of our in-person
historic activities and competitions for students. We were
unable to hold our in-person mediation and arbitration
tournaments.
We did, however, have two very successful competitions for law students interested in ADR, which we
celebrated at our February Executive Committee meeting.
We are very proud to foster ADR interest, knowledge and
ability in the next generation of lawyers.
The writing competition, the “NYSBA/ACCTM
National Championship, Alternative Dispute Resolution, Law Student Writing Competition,” which has been
overseen with enormous dedication by John Wilkinson,
a prior Chair of our Section, is a project we have undertaken for a number of years. In a national and New
York competition, it resulted in two winners. The first
place winning article is published in this journal on an
important topic relating to class action waivers : “Putting
Their Money Where Their Mouth Is: Mass Employment
Arbitration Filings and the Nonpaying Party Problem,”
by Dina Lamdany. The New York winning article author
is Harold Kang (Cardozo) with “Hong Kong and China:
Building Bridges Between Two Systems in One Country.”
The Section applauds and hopes to continue to foster
writing in our field that is accessible to practitioners.
We were also co-sponsors of the Innovation Tournament, the groundbreaking creation of Mark A. Berman in
cooperation with the technology professors and leaders
at Hofstra University School of Law and its School of
6
Engineering and Applied Science, and co-sponsored by
the American Arbitration Association, JAMS and CPR
(the International Institute for Conflict Prevention and
Resolution). It was conducted over two days, entirely on
Zoom. Thirteen teams from eight New York law schools
participated. The student teams met with technologists
and ADR leaders to develop apps designed to assist the
underrepresented in dispute resolution or to improve
dispute resolution processes. Then the students had 15
minutes to present to the first round judges, explaining
the problem and how the solution would work according to the logic of an app. After further development by
the selected finalists, the final round was judged by New
York-based judges, state and federal, and deans of the
hosting schools and NYSBA President Scott M. Karson.
Hofstra Law students Jordon Flanigan, Suzanne Hassani,
Nicole Kelly and Veronica Patel took top honors for their
app to simplify the complex debt collection process. The
team worked with Hofstra computer engineering student
Reina Eustache to develop the app. The second-place team
featured Hofstra Law students Avery Brogan, Jade Garza,
Leigh Merrill, Nicole Wong and Hofstra computer science
student Alexander Sutter. They developed an app to assist
individuals in finding an attorney or mediator to discuss
their legal options.
The writing competition and this new collaborative
tournament were only possible because many Section
members contributed time to support it. Thank you. It
is an exciting new addition that we hope to add to our
planned return to in-person competitions.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Ethical Compass
Ethical Compass: Three Different Judicial Treatments
for Settlement Fever
By Elayne E. Greenberg
Introduction
This is the first of a three-part series that examines
different aspects of the settlement fever that has stricken
our justice system. What can we learn from judicial decisions about how individual judges assess the settlement
means that lawyers, in consultation with their clients,
have chosen to resolve their case?
This column will provide snapshots of how judges,
as part of their thoughtful oversight obligation, have
dealt with three different dispute resolution processes in
three different types of cases: the negotiation class in the
opioid multi-district litigation;1 the request for mediation
in the bankruptcy case of The Diocese of Buffalo, N.Y. v. The
Continental Insurance Co. ;2 and the request to compel the
arbitration of sexual harassment in Latif v. Morgan Stanley & Co. LLC.3 Unlike the majority of cases where parties
can choose to settle cases using whatever means they feel
appropriate, these three cases involved judicial approval
that considers the selected means of settlement. The first
two cases involve statutes regarding multi-district litigation and bankruptcy that require judicial oversight of
the chosen settlement means. Distinguishably, the third
case, involving the motion to compel arbitration, required
judicial intervention to decide if the parties’ pre-dispute
resolution arbitration agreement was still in force after a
state law was enacted that proscribed such arbitration.
The goal of this column is to help guide lawyers and
their clients in their selection of the appropriate means to
achieve the client’s settlement objectives when their cases
require judicial oversight.
Undoubtedly, settlement fever is upon us, and most
practicing lawyers have caught it. Contributing to New
York’s spike of settlement fever, New York has adopted a
presumptive ADR approach. Even litigators have caught
the bug. Section Chair of our Dispute Resolution Section, Laura Kaster, in collaboration with the Chairs of the
Commercial and Federal Litigation, Intellectual Property
and Corporate Counsel Sections, have spearheaded a
Call to Action to all litigators to promote settlement.
This initiative encourages litigators to consider settlement of their cases where appropriate (emphasis added),
given the in-person court backlog caused by COVID-19
and court budgetary cuts. Yes, many judges also support
settlement4 and often allow settlement fever to continue
unabated. Caveat! This endorsement is not a blanket endorsement and, in fact, when it comes with judicial over-
sight, both the timing
and the means for
achieving settlement
may be scrutinized.
Ethically, the
decision to settle
rests with a client in
consultation with
their lawyer(s). Once
clients have decided
to explore settlement,
lawyers are then
ethically obligated
to discuss with their
clients the means for
Elayne E. Greenberg
exploring the client’s
settlement objective.
In these discussions concerning the case objectives and
the means of achieving those objectives, lawyers should
be able to provide clients with sufficient information,
including where there is judicial supervision of settlement
and information about the likely perspective of the judge
overseeing the case, to assist the client to participate intelligently in the settlement objectives and means selection.
Explicitly, the ethical parameters of these ethical
obligations are provided in Rule 1.2(a), Rule 1.4 (a)(2) and
Rule 1.4 Comment 5.
RULE 1.2: SCOPE OF REPRESENTATION AND ALLOCATION OF
AUTHORITY
BETWEEN CLIENT AND LAWYER
(a) Subject to the provisions herein, a
lawyer shall abide by a client’s decisions
concerning the objectives of representation and, as required by Rule 1.4, shall
consult with the client as to the means by
Professor Elayne E. Greenberg is assistant dean
of dispute resolution, professor of legal practice and
faculty chair of the Hugh L. Carey Center for Dispute
Resolution at St. John’s Law School. She can be reached
at greenbee@stjohns.edu She thanks Danielle Marino
(St. John’s Law ’21) for her assistance in the editing of
this column.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
7
class, an innovative dispute resolution process to help settle the multi-district opioid litigation.8 The Appeals Court
found that the negotiation class did not comport with the
procedural requirements of Rule 23 and the rule’s class
authorization limited to a litigation class and a settlement
class. An animated dissent voiced a broader interpretation
of Rule 23 that viewed the negotiation class as within the
ambit of the Rule 23 contours.
which they are to be pursued. A lawyer
shall abide by a client’s decision whether
to settle a matter.
RULE 1.4: COMMUNICATION
(a) A lawyer shall:
(2) reasonably consult with the client
about the means by which the client’s
objectives are to be accomplished;5
The “negotiation class” is the brainchild of the late
Professor Francis E. McGovern, respected special master of major U.S. mass claims and a dispute resolution
innovator, and his colleague William B. Rubenstein.9 The
duo had conceived of the concept of a negotiation class to
help overcome what they observed to be the two impasses
to reaching a settlement in multi-district litigation cases:
the defendant needed clearly defined parameters about its
financial liability, and the plaintiff needed the imprimatur
of a judicially approved class before plaintiffs could have
any negotiating legitimacy with the defendant. What is
novel about the negotiation class is that it requires all class
members to either agree or opt out of the agreed-upon
pro-rata settlement payout framework for class members
before the defendant even makes any settlement offer to
the class. Prior to the existence of a negotiation class, those
class members who were dissatisfied with a defendant’s
settlement offer could then opt out of the class after the offer was made and begin their own litigation proceedings
against the defendant, creating additional and unforeseen
liability costs for the defendant. Such financial settlement
uncertainty was an impasse to MDL settlements.
Rule 1.4 comment 5 explains:
Explaining Matters [5] The client should
have sufficient information to participate
intelligently in decisions concerning the
objectives of the representation and the
means by which they are to be pursued,
to the extent the client is willing and able
to do so. Adequacy of communication
depends in part on the kind of advice or
assistance that is involved. For example,
when there is time to explain a proposal
made in a negotiation, the lawyer should
review all important provisions with the
client before proceeding to an agreement.
In litigation a lawyer should explain the
general strategy and prospects of success and ordinarily should consult the
client on tactics that are likely to result in
significant expense or to injure or coerce
others. On the other hand, a lawyer ordinarily will not be expected to describe
trial or negotiation strategy in detail.
The guiding principle is that the lawyer
should fulfill reasonable client expectations for information consistent with the
duty to act in the client’s best interest
and the client’s overall requirements
as to the character of representation. In
certain circumstances, such as when a
lawyer asks a client to consent to a representation affected by a conflict of interest,
the client must give informed consent, as
defined in Rule 1.0(j).6
From each of the three cases spotlighted in this
column, we attempt to extrapolate judicial guidance that
will help lawyers have more realistic conversations with
their clients about selecting the appropriate settlement
means for their particular case.
The Negotiation Class
The creation of a negotiation class in the Opioid
multi-district litigation, while innovative, “is not authorized by the structure, framework or language of Rule 23.”7
On September 24, 2020, the U.S. Court of Appeals for the
Sixth Circuit overturned in a 2-1 decision District Judge
Polster’s approval of the formation of the first negotiation
8
As conceived, the negotiation class benefits defendants and plaintiffs in their settlement discussions. The
negotiation class provides the defendant some degree of
certainty about the expected cost of settlement before any
offer is made by helping to identify before any settlement offer those rogue plaintiffs who might opt out of the
class and pursue independent litigation. The negotiation
class provides plaintiffs with greater certainty that their
class would get judicial approval, giving plaintiffs added
leverage in their settlement negotiations with defendants.
Furthermore, the negotiation class, consistent with the
MDLs’ goal to promote the efficient appropriation of judicial resources and efficient resolution of MDL cases, was
designed to help mitigate the financial settlement uncertainty impasse and the uncertainty of judicially approved
class formation.
As stated in the introduction, most cases are settled by
individual plaintiffs without judicial supervision. Innovation is unsupervised; however, in multi-district litigation
and class action cases settlements are tightly managed
by Rule 23. One takeaway from the Court of Appeals
decision is that any dispute resolution innovation must
still comport with the Rule 23 mandates. A more general
takeaway from this analysis may be that pre-approval of
settlement should not be assumed when the actual terms
of settlement are unknown. One reason this innovation
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
seems to have faltered was because the class could not
fully understand what consent to settle meant.
Another takeaway is the importance of understanding the context in which multi-district litigation takes
place. Multi-district litigation was initially adopted to
conserve judicial resources by allowing for the efficient
resolution of related cases. However, multi-district litigation is not without critics who question whether plaintiffs
receive appropriate justice outcomes.10 Such scrutiny may
have contributed to the U.S. Court of Appeals’ willingness to even consider an innovation such as the negotiation class that strengthened a group of plaintiff’s negotiation leverage at the expense of forgoing the existing
protections for individual plaintiffs.
Motion to Request Mediation
Mediation should be used when all parties may be
properly involved and the case is ripe for mediation and
not misused to delay resolution.
In The Diocese of Buffalo, N.Y. v. The Continental Insurance Co. et al., Hon. Carl Bucki, the bankruptcy judge
for the Western District of New York, denied without
prejudice the diocese’s application to refer their case to
mediation in connection with an adversary proceeding
with eight insurance carriers. By way of background, the
Diocese of Buffalo had filed for Chapter 11 on February
28, 2020 after it had been named as the defendant in over
200 sexual abuse complaints. The New York State Child
Victims Act extended the deadline for child abuse victims
to file their complaints up to August 14, 2021, and the
diocese anticipates an additional 400 complaints to be
filed against them. In the meantime, the diocese sought
to determine the coverage obligations for the claims of
eight insurance companies by commencing an adversary
proceeding for a declaratory judgment. The diocese then
made a motion to resolve these adversary proceedings in
mediation.a
Judge Bucki provided three reasons for denying the
diocese’s request for mediation. First, all the parties in
an adversary proceeding must participate in mediation
to achieve a comprehensive settlement. In this case, the
identity of all the insurance companies are not known.
Second, the identity and scope of all the abuse claims are
needed before a case is referred to mediation. The scope
of the abuse claims are unknown, and will not be known
until August 14, 2021. Third, litigants need to share the
information necessary to assess their rights and defenses
before they enter mediation. In the case at hand, discovery
had not even begun.
The court recognizes the potential value
of mediation, particularly in situation like
the present case, in which the legal costs
threaten to dissipate resources that might
otherwise be used to address the claims
of creditors and to advance the mission
of the debtor. But mediation provides no
guarantee of settlement. Consequently,
it must be used with discretion, in ways
that minimize the risk of delay in the
resolution of claims.
In bankruptcy matters especially, the efficient resolution of a case is a priority to help preserve the assets at
hand. In this judicial decision, Judge Bucki evaluated
the diocese’s request to mediate against the Bankruptcy
Court’s overarching mandate to preserve, not waste,
diminishing funds. The judge decided that mediation was
not appropriate for this case, at this time. The court, in its
wisdom, believed that in this particular case, the Court
would provide needed oversight and a tight timetable for
discovery by following a litigation process. The court recognized that information exchange is often a pre-requisite
to successful mediation. Yes, information exchange can,
and often does, take place as part of mediation. However,
in this case, the Court concluded that based on its assessment of the parties, the Court needed to supervise that
information exchange to make sure that needed information exchange took place in an expedient manner.
An important takeaway is that courts will not support
a request to mediate if that request is viewed as disingenuous and just one more strategy to delay the case. This
case reminds lawyers that courts assess the parties and
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
9
their intent by the way the parties engage with the court.
This case also counsels a clear understanding of what is
known, unknown and what the consequences are to the
client. This decision highlights the importance of identifying all the parties who must be included in the claim
and in the settlement process.
Granting Motion to Compel Arbitration for
Sexual Harassment
The FAA pre-empts the CPLR 7515 prohibition
against mandatory arbitration clauses for sexual harassment cases.
On June 26, 2019, Judge Denise Cote of the Southern
District of New York granted defendant Morgan Stanley’s
motion to compel the arbitration of sexual harassment
allegations by Morgan Stanley’s former employee and
plaintiff in this case, Latif.11 In 2017, Latif, as part of his
employment with Morgan Stanley, entered into employment agreement that required inter alia that all “covered
claims,” including Latif’s sexual harassment allegations
against Morgan Stanley, be arbitrated. Then, in 2018, New
York State enacted CPLR 7515 which prohibited employers from requiring employees to arbitrate sexual harassment claim. The passage of CPLR 7515 was a response
to the public demand that sexual harassment claims
be resolved in a more public, transparent means rather
than arbitration.. In her order, Judge Cote stated that the
recently passed CPLR sec. 7515, proscribing mandatory
arbitration clauses for sexual harassment cases, was not a
bar to enforcement of Latif’s obligation to arbitrate.
The takeaway from this case is that when the predispute mean selection is arbitration, the court is likely to
enforce that choice. Courts have demonstrated their longstanding support of the FAA,which precludes hostility
to arbitration. The cases have established strong support
for enforcing arbitration, including in employment cases.
This strong public policy favoring the FAA pre-empts the
state statute disfavoring the arbitration secrecy in sexual
harassment cases. It also shows that at this point in time,
when courts are deciding whether to enforce pre-dispute
arbitration agreements, they are likely to decide that the
countervailing state laws reflecting public demands to
handle sexual harassment cases in an open and transparent way cannot override federal policy in favor of arbitration. Thus, when attorneys and clients are committing
to pre-dispute arbitration as a settlement means, clients
should understand that the courts are likely to enforce
that means, even in the face of changing social policies
and norms. Instead, those lawyer and clients who do
not wish to arbitrate their employment discrimination
claims have found that the strategic use of social media is
a more effective tool for convincing employers to change
their own policies and to remove from or decline to enforce, mandatory arbitration clauses in their employment
agreements.12
10
Takeaway …
While many judges are supportive of the settlement fever that has stricken the legal profession, judges,
judicial oversight obligations have a substantial impact
on individual cases supervised by individual judges
mindful of those obligations. This column reminds us
that when attorneys and clients are selecting the appropriate means to achieve a client’s settlement objectives,
the attorney must be aware of any potential for judicial
intervention, such as in class action and bankruptcy cases.
Furthermore, attorneys should be mindful that in addition to the process concerns and timing issues that clients
need to understand, they must make clear in these cases
that any settlement is also subject to the approval of the
judge overseeing the case. Depending on the judge, the
judge may either wholeheartedly endorse your chosen
settlement means or opt to intervene and direct a different course of action. As we have seen in the three cases
highlighted, context matters. Therefore, when a lawyer
and a client are having the ethically required conversation
about selecting the appropriate means to achieve the client’s settlement objective, they should also consider these
issues. Judicial oversight in these cases, offers a different
perspective about the selection of an appropriate means
for settlement.
Endnotes
1.
In re Nat’l Prescription Opiate Litig., 976 F.3d 664 (6th Cir. Sept. 24,
2020).
2.
The Diocese of Buffalo, N.Y. v. The Continental Insurance Co. et al, 630
B.R. 445 (W.D. N.Y. Sept. 11, 2020).
3.
Latif v. Morgan Stanley & Co. LLC, et al., No. 18cv11528 (DLC), 2019
WL 2610985, at *1 (S.D.N.Y. Jun. 26, 2019).
4.
Ellen Deason, Beyond ‘Managerial Judges’: Appropriate Roles in
Settlement, 78 Ohio State L. J. 74 (2017).
5.
N.Y. Rules of Prof’l Conduct R.1.4.(a)(2) (2018). https://nysba.org/
app/uploads/2020/02/NEW-YORK-RULES-OF-PROFESSIONALCONDUCT.pdf.
6.
Id. at R.1.4 cmt. 5. https://nysba.org/app/uploads/2020/02/
NEW-YORK-RULES-OF-PROFESSIONAL-CONDUCT.pdf .
7.
In re Nat’l Prescription Opiate Litig. 976 F.3d at 16.
8.
See In re Nat’l Prescription Opiate, Litig. 976 F.3d 664 (6th Cir. 2020);
see also Order Certifying Negotiation Class and Approving Notice,
In re Nat’l Opiate Litig., All Cases and The County of Summit, Ohio, et.
al. v. Purdue Pharma L.P. et al., (Nos. 1:17-md-2804) (Sept. 11, 2019).
https://static.reuters.com/resources/media/editorial/20190912/
opioidsmdl--negotiatingclassorder.pdf.
9.
See generally Francis E. McGovern & William B. Rubenstein, The
Negotiation Class: A Cooperative Approach to Class Actions Involving
Large Stakeholders, 99 Tex. L. Rev. 73 (2020) (providing further
information on the negotiation class).
10.
See, e.g., Elizabeth Chamblee Burch, Mass Tort Deals: Backroom
Bargaining in Multidistrict Litigation (Cambridge Univ. Press
2019).
11.
Latif v. Morgan Stanley & Co. LLC, et al., No. 18cv11528 (DLC), 2019
WL 2610985, at *1 (S.D.N.Y. Jun. 26, 2019).
12.
See, e.g., https://www.thenation.com/article/archive/
harvard-law-students-are-taking-on-forced-arbitration/.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Mixed Mode Task Force: Working Group Updates
Introduction to the Series of Articles on the Mixed Mode
Task Force
By Jeremy Lack
The Mixed Mode Task Force is a combined effort by
the College of Commercial Arbitrators (CCA), the International Mediation Institute (IMI) and the Straus Institute
for Dispute Resolution, Pepperdine School of Law. The
term “mixed mode” refers to combinations of different
dispute resolution processes (e.g., adjudicative processes,
such as litigation and arbitration with non-adjudicative
processes, such as conciliation or mediation). Well known
examples are MED-ARB (mediation follow by arbitration), ARB-MED (arbitration followed by mediation),
Dispute Resolution Boards and MEDOLOA (mediation
followed by last-offer arbitration).1 They have existed for
many decades, if not centuries. However, process combinations have varied greatly depending on local cultural
influences, from country to country, within countries,
and within different types of practices. The Task Force
was set up in April 2016 to generate discussion, dialogue
and deliberation among dispute resolution practitioners
and thinkers from different cultures and legal systems
regarding how mixed modes might better be used in both
public and private, domestic and international spheres
to improve access to justice and stimulate faster, cheaper
and better ways of reaching resolution.
The Task Force’s mission is to:
1) promote understanding of and share expertise on
mixed mode scenarios across diverse groups and
cultures;
2) promote partnering among diverse organizations
focused on the management and resolution of
conflict;
3) expand the use of dispute resolution processes
tailored to conflict, including measures that
manage, resolve and reduce potential escalation of
conflicts; and
4) facilitate research, investigations and discussions
regarding the management and resolution
of disputes and foster educational initiatives
regarding best practices.
The Task Force is organized into seven working
groups, each comprising 15-34 experts from around
the world having broad experience in different dispute
resolution practices, many of whom already have mixed
mode practices. Each working group has at least two
co-chairs. They are organized in conceptual chronological
order as follows:
• Working Group 1: Upstream conflict management
processes (e.g., dispute resolution clauses including
tiered/stepped processes) (Co-Chairs: K. Paisley
(BE), J. Player (GB) & T. Stipanowich (U.S.))
• Working Group 2: Neutrals facilitating tailored
process design (evaluative and non-evaluative) (CoChairs: L. Kaster (U.S.) & J. Lack (CH))
• Working Group 3: Mediators using non-binding
evaluations and proposals (Co-Chairs: K. Fan (HK)
& V. Fraser (CA))
• Working Group 4: “Arbitrator Techniques and their
(Direct or Potential) Effect on Settlement”(E. Sussman (U.S.) & K.P. Berger (DE))
• Working Group 5: Neutrals switching hats (M.
Mironi (IL) & T. Stipanowich (U.S.))
• Working Group 6: Finality and enforceability of
facilitated and arbitrated “Mixed Mode” outcomes
(K. Paisley (BE) & J. Player (GB))
• Working Group 7: Future directions: Interaction between mediators and arbitrators (D. Masucci (U.S.)
& D. Nigmatullina (RU)).
The Task Force ’s co-chairs work closely together. All
Task Force work product is public, and its documents
and reports can all be found at: https://imimediation.
org/about/who-are-imi/mixed-mode-task-force/. Its
terms of reference can be found at https://imimediation.
org/download/184/mixed-mode-task-forcedocuments/40716/memo-on-the-task-force-and-project.
pdf.
For a list of all working group members please go
to: http://www.imimediation.org/mmtf.
Jeremy Lack is an attorney and ADR Neutral in
private practice. He is a member of IMI’s Independent
Advisory Committee.
Laura A. Kaster is the Chair of the NYSBA Dispute
Resolution Section and a Co-Editor-in-Chief of this
journal. She and Jeremy are the co-chairs of Working
Group 2.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
11
The working groups approach is guided by five key
drivers:
1) Costs
2) Time
3) Enforceability
4) Self-determination; and
5) Relationships/harmony.
While the primary focus is on disputants as users
of dispute resolution processes (e.g., business owners
or executives and in-house counsel), its target audience
includes dispute resolution practitioners and service
providers (e.g., judges, arbitrators, conciliators, mediators and ombudspersons and ADR institutions), advisors
(e.g., advocates, external counsel and other consultants),
and other stakeholders.
The Task Force ’s origins can be traced back to a
two-day meeting organized by a group of senior business
leaders, corporate counsel, conflict management professionals and other experts that took place at Pepperdine
University in September 2014 on the theme “Reimagining
Corporate Conflict Management.” The group recognized
that although many companies have worked to improve
and streamline conflict management through various
“alternative” dispute resolution methods, those practices are pursued irregularly and have not fully realized
their promise to reduce costs or fully serve disputants’
interests. While it was appreciated that adjudicative and
non-adjudicative processes can be compatible, they are
seldom combined in practice and, when they are, little
experience in the field is shared. For example, some bar
associations and ADR providers have separate groups
or secretariats for arbitrators and mediators, and there
are difficulties at times in combining processes. For that
reason and others there was little information or evidence
of arbitrators and mediators ever working together in
teams. One of the ideas was to seek data and statistics
to capture what has been working effectively. The group
also wanted to explore avenues toward effective dispute
resolution.
The group also found inspiration in the Global
Pound Conference (GPC) series, an idea launched by Michael Leathes, the co-founder of IMI. The GPC was a bold
experiment. Using a specially developed application, it
sought to collect answers to twenty core multiple choice
questions (and a series of additional open text questions)
from experienced stakeholders in the field of dispute
resolution in 24 countries and 28 cities around the world,
with an additional international online survey. The same
questions were posed at each meeting. All answers were
analyzed and tracked according to how different groups
of stakeholders responded to them. On average, 4,490 experienced users and providers of dispute resolutions services answered these questions, divided into five groups:
(1) parties (15% of participants); (2) advisors (26% of par12
ticipants); (3) adjudicative providers (14% of participants);
(4) non-adjudicative providers (31% of participants); and
(5) influencers (15% of participants). Each of these questions was voted upon and the results produced during the
live meetings and discussed in four sessions within each
meeting. The first session focused on access to justice and
what parties want, need and expect. The second session
focused on how the dispute resolution market is currently
addressing these wants, needs and expectations. The third
session focused on the gaps between what parties wanted
and what was being provided, looking in particular at obstacles and challenges. The fourth session focused on how
to promote and provide better access to justice taking the
first three sessions into consideration: what action items
could be considered and by whom. The results of the GPC
series can be found online.2
A report summarizing the findings of the GPC series
was published in 2018, citing four key findings:
1. Efficiency is the key priority of the parties when
choosing dispute resolution processes.
2. Parties expect greater collaboration between
advisors to resolve disputes.
3. There was a growing interest in the use of predispute protocols and Mixed Mode dispute
resolution processes; and
4. In-house counsel are the key agents to facilitate
and drive organizational changes (whereas
external lawyers seemed to be the primary
obstacles to change).3
The GPC results on mixed modes processes were of
particular interest and galvanized the Task force ’s energies. Originally comprising six working groups, it altered
its internal organization and created the seven working groups identified above in February 2020. The GPC
answers reflected a lack of interest in focusing on the use
of adjudicative processes on their own (i.e., litigation and
arbitration). This was the least popular option in response
to a question on what processes and tools should be used
to prioritize commercial dispute resolution in the future
(GPC Core Question 3.2). The most popular response
was preventive pre-dispute or pre-escalation processes (a
51% rating) followed by combined mixed mode processes
(a 45% rating). In terms of the role of service providers,
the GPC data also indicated a universal belief, across
all stakeholder groups, that parties initially do not have
a preference regarding what type of dispute resolution
processes to use to resolve their disputes, and that they
wished to obtain more guidance from providers early on
regarding optimal ways to resolve their disputes, including more bespoke processes and combined processes
(GPC Core Question 1.4, which had a 61% rating).
We hope this special section of this journal on the Task
Force and the summaries of work to date by its working
groups will help to advance discussion in this field, which
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
continues to be of growing interest. We encourage all
readers to contact the authors of each report in this publication (who are the co-chairs of their respective working
groups) to share their thoughts and any experiences regarding mixed modes. All feedback is welcome. We hope
to ultimately generate sufficient information regarding
what practices already exist to be able to suggest some
possible preliminary guidelines or checklists for users
and providers interested in using mixed mode processes
in the future.
2.
For more information about the GPC series, see https://
imimediation.org/research/gpc/gpc-about/. The raw data
are available at: https://imimediation.org/download/907/
aggregated-results/35505/final-cumulated-voting-results-march2016-september-2017.pdf. For detailed analyses by regions, see
https://imimediation.org/research/gpc/series-data-and-reports/
and https://imimediation.org/research/gpc/series-data-andreports/#905-909-reports, especially for data collected in North
America, which indicated notable differences between Austin,
Baltimore, Los Angeles, Miami, New York and Toronto. An overall
report analyzing the North American data sponsored by AAA/
ICDR can be found at https://imimediation.org/wp-admin/
admin-ajax.php?juwpfisadmin=false&action=wpfd&task=file.
download&wpfd_category_id=909&wpfd_file_id=48220.
Endnotes
3.
A copy of this final report discussing these four findings,
can be found at: https://imimediation.org/download/909/
reports/35507/global-data-trends-and-regional-differences.pdf.
1.
For articles on different forms of mixed mode processes,
see, https://imimediation.org/resources/background/
hybrid-dispute-resolution-processes/.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
13
Working Group 1 of the Mixed Mode Task Force
Building Dispute Resolution Processes Into Agreements
To Minimize and Manage Potential Conflict During the
Commercial Relationship Lifecycle
By Kathleen Paisley, Jane Player and Thomas Stipanowich
Commercial and corporate relationships and transactions take a variety of forms and time horizons from oneoff small transactions to major long term relationships
lasting decades and everything in between. This depends,
among other things, on the industry, the parties and their
relationship and the nature and structure of the transaction and its value.
Many companies have formal and informal mechanisms in place internally to avoid conflict in their commercial and corporate relationships and to recognize and
resolve disputes when they arise without the use of a
third party. This may include joint steering committees,
trigger mechanisms that require the involvement of senior management and eventually in-house legal expertise
when a potential dispute starts to brew, decision trees
and other dispute avoidance techniques.
In many cases such mechanisms will be adequate and
will make the use of a neutral unnecessary. However, in
some circumstances, companies will decide that the nature of the transaction and its importance to the business,
the parties’ past and future relationship, their competitive
position and relationship in the supply chain, and myriad
other factors make the use of a neutral of real additional
value from an early stage in the process.
Lifecycle Management
In looking at the role that a neutral can play in fostering commercial relationships and avoiding conflict,
consideration should be given to the changing role that a
neutral or neutrals can play during the lifecycle of a commercial relationship.
For example, the role of a “mediator” or “facilitator”
is different depending on the particular stage in the relationship life cycle and may involve, among other things:
• facilitating the making or renegotiating of a deal,
with renegotiation of particular importance during
the current pandemic;
• addressing issues that arise as a result of implementing a transaction;
• assisting the parties at the outset to create a structure to try to avoid conflict and effectively working
to resolve disputes during the life of the commercial relationship;
14
• acting as an “in-life,” “real-time” or “standing” neutral during the course of the relationship to proactively identify a potential conflict and/or facilitate a
resolution before an actual dispute arises—this can
be used as either an alternative to or adjacent with
dispute resolution boards or expert determination;
• if a dispute arises, assisting the parties in resolving
the dispute amicably either before or adjacent to
binding dispute resolution through arbitration; and
• creating a dispute resolution process suited to the
issues at stake, separately or in conjunction with attempting to assist the parties to resolve the dispute.
Parties may decide that the same person could fulfill
the mediation function from start to finish or that it would
be preferable to have different people with different skill
sets and perspectives at different stages of the life cycle.
For example, in a highly complex contract, it might make
sense to use a deal mediator to help create or re-negotiate
the deal terms and that mediator may have to address
conflict during the contracting or renegotiation phase in
a way that does not make them the ideal choice to act as
a standing/in-life mediator once the project is up and
running. On the other hand, both the knowledge and trust
WG1 is co-chaired by Kathleen Paisley, Jane Player
and Thomas Stipanowich. For a full list of WG1 members, go to https://imimediation.org/mmtf.
Kathleen Paisley is a recognized international arbitrator (and mediator) based in the U.S. and Europe. She
has acted in commercial arbitration cases under all the
major international arbitration rules and in investorSlktate cases before ICSID and under the UNCITRAL
rules and is triple qualified in law (Yale), finance (MBA)
and accounting (CPA Exam).
Jane Player is a leading mediator based in London.
She is a member of the IMI Users Council and honorary member of the International Academy of Mediators
and focuses on general corporate and contractual claims,
fraud and project disputes, IP/IT claims and media disputes and has particular experience in managing cross
cultural aspects of international disputes.
Professor Thomas Stipanowich holds the William H.
Webster Chair in Dispute Resolution as a professor of
law at Pepperdine Caruso School of Law in Los Angeles
and is a neutral with JAMS.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
built with the parties during the contracting process may
make the deal mediator ideally suited to continue in that
role. Furthermore, a standing/in-life mediator who has
acted as a facilitator during the project life cycle may be
inappropriate to act as a neutral mediator once a dispute
arises and a formal mediation is initiated. Conversely, the
parties may feel that the standing/in-life mediator is just
the person to fulfill that role. The flexibility of the options
and the choice available to the parties allows the process
to be sculpted to suit the dispute and to be adapted as the
nature of the dispute evolves.
At each stage in the life cycle, depending on the
subject matter of the transaction and other factors, the
parties may also decide to use different dispute resolution and avoidance mechanisms in addition to or instead
of mediation, including for example, dispute resolution
boards and expert determination or expedited arbitration
of specific issues.
Depending on the nature of the dispute that is likely
to arise, the parties may decide to include different
dispute resolution techniques in the contract. There is no
one-size-fits-all solution, and it is difficult to make generalizations because the requirements for a dispute resolution mechanism or neutral will vary significantly depending upon inter alia the length, size and the nature of the
project, type and size of the organizations involved, and
the nature of the dispute that is likely to arise.
It is also important to keep in mind that deciding upon and drafting dispute avoidance and resolution mechanisms into an agreement depends upon the
circumstances surrounding the contracting process itself
including the relative bargaining positions of the parties,
the nature of the industry and its experience with dispute
resolution, the value given to an efficient dispute resolution clause in comparison with other contract and deal
terms, and whether it is expected to benefit one party
more than the other.
For example, in a major construction agreement, both
parties will consider that disputes are likely to arise along
the way and they are both likely to place a high value on
putting systems in place in the contract to try and avoid
conflict and allow the project to continue notwithstanding the fact that a dispute has arisen. The same is true
in long-term energy, technology and life sciences agreements, outsourcing and joint ventures.
In practice, the construction industry has been an early adopter of the use of dispute resolution boards to allow
quicker decision making during the project life cycle in a
manner that allows the project to continue, whereas these
techniques have not yet found their way into other industry contracts on the same scale. In-life/real-time surfacing of issues combined with potential mediation of those
issues along the way, which leaves the decision making
with the parties, can be used instead of or adjacent to dispute resolution boards, and expert determination can also
be used depending on the context and whether the likely
nature of a potential dispute would require specific expert
assistance, or even early expedited arbitration.
Combinations in Practice
The most common combined dispute resolution
mechanism that one sees in dispute resolution clauses
across industries is a stepped clause whereby when a
dispute arises, the parties agree that they will first engage
in negotiation among senior management, followed by
mediation, followed by arbitration (or the courts). Alternatively, a two-step process is provided whereby the
negotiation step is omitted based on the view that parties
will have engaged in negotiation in any case before this
stage. Like many other forms of ADR clauses and processes, the use of stepped clauses can be traced back to the
construction industry; however, they are now widely used
across industry sectors.
Viewed from a life-cycle management perspective,
stepped clauses will be triggered after a dispute has crystalized and when any dispute avoidance procedures that
may have been built into the dispute resolution procedure
have been unsuccessful. Depending on what those dispute avoidance procedures consist of, it may be decided
that adding a stepped clause is not needed and that going
straight to arbitration or the courts is preferred.
For example, in a contract that includes a standing/
in-life mediator to surface and address potential disputes
in real time, if that process fails and a claim is then brought,
it may seem unnecessary to have additional negotiation
or mediation steps before proceeding to binding dispute
resolution. Furthermore, starting an arbitration would not
preclude the parties from agreeing in advance to hold a
mediation during the course of an arbitration, and asking
the arbitrators to set up a mediation window, for example,
after the initial round of pleadings. Further, in contracts
providing for a dispute resolution board, when a claim is
nevertheless brought, a stepped clause requiring mediation
may be appropriate because the process of a dispute resolution board and a mediation in a stepped clause is different.
Building Dispute Resolution Provisions
While there is no one-size-fits-all dispute resolution
mechanism, a number of practical considerations should
be taken into account when drafting a dispute resolution
process into an agreement. Some processes can be limited
to the parties (such as proactive contract management and
steering committees) and others can include neutrals and
experts, such as those discussed above.
Some considerations that may come into play in structuring a dispute settlement mechanism in advance and
including it in the contract are:
• What is the parties’ relationship status going into
the transaction? Are they new to each other or have
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
15
they worked together before? Are they culturally
different in outlook such that disputes are more
likely to arise?
• What type of relationship is contemplated by the
agreement and what is the best way to manage it?
• Does the performance of the contract require
significant interaction and co-dependence or is the
performance primarily one way?
• When is a dispute most likely to arise and what
type of disputes are likely in this relationship?
• Is one party more likely to have a dispute or potential dispute because of responsibilities under the
agreement or its relative size or financial status?
• Are there specific pressure points within the
contractual relationship that can be identified as
potentially leading to a dispute?
• Are there means that can be put in place to identify
a potential dispute quickly?
• What skill set is required to understand, help avoid
and potentially mediate or decide a particular type
of dispute?
• Is enforcement of an eventual amicable resolution a
prerogative should a dispute crystalize into a claim?
One practical barrier to including such provisions
in agreements is that even in cases where both parties
would benefit from having an agreed procedure in the
agreement, the persons who are actually negotiating the
agreement are sometimes not well versed in such issues.
Either they do not understand the legal significance and
advantages of a clause or they are not the people who are
putting the contract into effect so do not appreciate the
practical considerations of when a dispute might arise
and what they could do to minimize those risks. Even
when they may be aware of the risks, putting such mechanisms in place is often a low priority and such clauses
become the “midnight” clauses and are not given the
consideration they deserve. This is changing, however,
as companies are increasingly aware of the burden that
disputes place on the success of contractual relationships
and the considerable delays caused to projects. The result
is that companies are becoming more educated as to the
means of avoiding disputes and the value proposition in
doing so and are placing increased importance on designing and implementing more robust dispute prevention
measures into their agreements.
Importance of Careful Drafting
When including combined dispute resolution processes in agreements it is important to focus on the basic
functionality of the dispute resolution clause and to tailor
a process that effectively serves the goals and intent of
the parties and does not lead to pathological results. It is
16
important that the contractual provisions are drafted carefully and offer parties a clear and cohesive administrative
platform for dispute resolution. Terminology should be
used consistently and the potential impact of one process
on another should be considered.
However, trying to envisage all types of disputes that
might arise can lead to contractual provisions that do not
work and can lead to unintended consequences. For example, contracts may require that certain forms of technical disputes be referred to expert determination, when the
issues that actually arise will often involve both technical
and commercial elements. The contract language should
anticipate this and be drafted with appropriate flexibility. Further, parties to licensing and other IP exploitation
agreements sometimes provide for different types of dispute resolution for pure patent issues versus commercial
issues, which could also raise unforeseen complications.
The old adage that less is more is never more relevant
than when drafting dispute resolution clauses.
Any series of processes should have clear steps and
avoid invalidating or delaying the ultimate arbitration or
court process if one party is recalcitrant. This means that
the beginning and end of each stage should be clearly
defined (regardless of compliance) to avoid male fide parties using such clauses to cause delay and ensuring a
clear path through the process once one provision proves
unsuccessful. If a mediation step is provided before arbitration or another binding dispute resolution process can
commence, a time frame should always be included after
which an arbitration or court claim can be initiated. Further, it is generally wise to avoid concepts such as to mediate in “good faith” as that in itself can lead to disputes.
Parties should also ensure that they clearly comply
with their planned process, such as formally requesting
mediation, or taking other necessary steps to implement
the plan. Consideration should be given to whether a
waiver clause may be appropriate to ensure all efforts to
resolve disputes amicably are not lost or the arbitration or
court process put at risk if the process isn’t instigated correctly and in accordance with the contractual clause.
Summary
Although the future is notoriously unpredictable,
putting contractual provisions in place that try to foresee
potential disputes and devise means to address them at
the contracting stage when the parties are still friends has
many benefits. Requiring the parties to robustly consider the parameters of the disputes that could arise and
how best to address them, gives the parties control over
process design and will lead to more thoughtful contract
drafting. When potential disputes do arise, or even earlier
when issues threaten a dispute, those carefully crafted
provisions that have been put in place with a view to
avoiding conflict will hopefully provide for a smoother
and more expeditious resolution.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Working Group 2 of the Mixed Mode Task Force
Using a Guiding Mediator To Help the Parties Design
Bespoke Dispute Resolution Processes
By Laura A. Kaster and Jeremy Lack
This article summarizes the work done by Working
Group 2 of the task force set up by the International Mediation Institute (IMI), the Straus Institute at Pepperdine
University (SI), and the College of Commercial Arbitrators (CCA). It starts by explaining the benefits of appointing a process facilitator/mediator early in disputes,
and then discusses a range of practical tools, including a
model clause, checklist and diagnostic metrics.
The Benefits of a Process Design Facilitator/
Mediator
The core principle of the IMI/SI/CCA Task Force
is the need for multiple lanes on a “highway to dispute
resolution” to maximize speed, minimize costs, and take
into consideration relationships and other factors important to the disputants. Flexibility of process choices,
combinations, and sequences are key to the ultimate
goal. And parties who are interested in changing lanes,
going off-track, traveling through a new medium (e.g.,
negotiation, arbitration or mediation when they start of
on a different path) or doing issue selection for different
processes are likely to need guidance, particularly when
they are already in dispute.
Who can provide such assistance? Who can help
identify the specific issues to address, how to do so, and
in what sequence or combination? Working Group 2
of the Mixed Mode Task Force focused on the use of a
process facilitator, working as a mediator (to benefit from
confidentiality), to help the disputants focus on, discuss,
and choose procedural options as early as possible.
This “Guiding Mediator” helps the parties to determine their procedural needs and interests (e.g., budgets,
time constraints, access to information, importance of
preserving certain relationships, etc.) to help them design a bespoke process that can include adjudicative or
evaluative elements as well as non-evaluative elements.
Because of the privilege usually accorded to mediators, the Guiding Mediator’s communications and work
product can remain confidential or immune from discovery to encourage early and frank exchange of the disputants’ needs and interests. The Guiding Mediator, as an
architect of process design, can adapt to the disputants’
expressed preferences and suggest procedural options or
stages that can better align with their needs and concerns.
By focusing on issues of process first, the parties can
consider less tangible issues early on, such as personalities, cultures, loyalties and emotional reactions as well
as concrete calculations such as fees, deadlines, the relief
sought, and how to best implement a final outcome.
No assumptions are made and there is less gamesmanship. The parties have greater scope to think about their
procedural needs having been freed of their immediate
focus on possible substantive outcomes and such concepts as “winning” or “losing.” Considering procedural
needs and interests first and brainstorming procedural
options together with the Guiding Mediator helps the
disputants to “go to the balcony” earlier and build better
“in-group” dynamics. Relationships between counsel
and/or the parties can be improved by creating a partnership in terms of process design and helping to think
collaboratively as a team, before focusing on substantive
issues that could otherwise trigger a more competitive or
“out-of-group” dynamic without such a prior partnership
step. This collective early process focus helps to create and
maintain a more amicable and cooperative mindset, even
if adjudicative elements will be required. Simply considering whether there may be key issues that are likely to
drive results, or obstacles that may impede solutions, and
how to deal with them earlier, can help avoid premature
positional arguments. Does a disputant have an unfulfilled need for more information? Have they considered
one-another’s procedural needs (e.g., efficiency of time
and costs, or maintaining good relationships or reputations with certain stakeholders)? The Guiding Mediator
can help the disputants focus on these topics upfront and
explore and generate a range of issue-specific procedural
options, which may include sequencing or combining issues and processes. Focusing the disputants’ attentions on
such key topics early is one of the major contributions of
a “mixed mode” approach to dispute resolution. A better
journey can lead to a better destination. It is important to
WG2 is co-chaired by Laura A. Kaster and Jeremy
Lack. For a full list of WG2 members, go to https://imimediation.org/mmtf.
Jeremy Lack is an attorney and ADR Neutral in
private practice. He is a member of IMI’s Independent
Advisory Committee.
Laura A. Kaster is the Chair of the NYSBA Dispute
Resolution Section and a Co-Editor-in-Chief of this
journal. She and Jeremy are the co-chairs of Working
Group 2.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
17
plan accordingly early on, not only in terms of time and
costs, but also quality.
Another benefit of early joint process design with
a facilitator is that it can help de-escalate a dispute or
prevent it from escalating further. The Guiding Mediator can help the parties establish better communications
and a better exchange of information. What is needed
for constructive discussions or to maintain cordial relations between key protagonists? What behaviors would
the participants prefer to encourage or avoid? What are
perceived as key issues needing expert input or the applications of norms, such as applicable laws or industry
standards? What is the sequence in which these topics
could best be addressed? For example, it may be helpful
in an adjudicative or evaluative process to discuss causality or liability separately from damages or valuation
issues, but would it be helpful to look at the latter before
the former, e.g., to set a zone of possible agreement and
remove certain risks earlier in the process? How might
A Guiding Mediator may simply help the parties facilitate consideration and discussion of the procedural design. Or, with the parties’ consent, she or he may be more
directive, making recommendations regarding procedural
options and the timing of different parts of the process,
such as what topics to focus on first, who to consider involving, why and when. The Guiding Mediator can build
into the process a role for remaining involved throughout
the process, to consistently help the parties to review,
update and reconsider their procedural choices iteratively,
as the matter evolves or new issues emerge. Their role as
a process designer coach enables all of the participants
to take stock of a broader range of dynamics (e.g., likely
reactions to evaluative feedback on dispositive issues and
their impact on relationships), especially if evaluative or
adjudicative neutrals need to remain involved for further
deliberations. This can keep the process “on track.” Their
role could also encompass assisting the parties at the end
of the process to determine whether there are any clos-
“The ‘Guiding Mediator’ helps the parties to determine their
procedural needs and interests (e.g., budgets, time constraints,
access to information, importance of preserving certain
relationships, etc.) to help them design a bespoke process
that can include adjudicative or evaluative elements
as well as non-evaluative elements.”
different participants (e.g., businesspeople, advisors, witnesses, experts and/or stakeholders) be involved?
ing, implementation, compliance or enforcement issues to
address.
A Guiding Mediator can help the parties and their
counsel step back and evaluate the potential that a mixed
mode process might offer, combining an adjudicative or
evaluative approach (e.g., arbitration or conciliation) with
a non-adjudicative approach (e.g., mediation). Sequential, parallel and even combined process can be assessed,
possibly with different teams of participants at different
stages. The design process can consider using one neutral
to provide expert evaluations (whether binding or nonbinding) working together with another neutral who can
facilitate broader discussions, taking subjective needs
and interests into consideration, looking to the future.
Such a combination has reportedly been helpful in many
situations, leading to higher settlement rates and higher
satisfaction ratings both from clients and their counsel.
Engaging with guided process design earlier in disputes
may help generate considerable savings in costs and time
not only for the parties, but for justice systems in general,
providing faster, cheaper better access to justice.
Overall, a Guiding Mediator is about having an optimal dispute resolution process, while also saving time,
money, energy, and relationships. This can be at any stage
of the dispute. In the initial process design phase, for
example, a Guiding Mediator can help the parties identify dispositive elements of the dispute that may benefit
from adjudicative or evaluative input. Knowing that
dispositive elements may exist (e.g., whether a statute of
limitations period has expired, or if a limitation of liability
clause in a contract will be binding) may help the parties
in their facilitated negotiations. The investigation and
diagnosis steps can thus be used by the Guiding Mediator
to sequence process steps likely to result in an earlier and
cheaper resolution of the dispute.
18
As the proceedings evolve, the parties’ procedural
needs or preferences may evolve. A skilled Guiding Mediator should be able to assist the participants to diagnose
when and how to bring in adjudicative neutrals, possibly
appointing and instructing these neutrals on behalf of
the parties, and requesting a range of options or a zone
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
of possible outcomes, which can help narrow the range
of the negotiations. The Guiding Mediator can thus seek
to establish an ongoing cooperative relationship with
and between the parties that can result in greater trust in
the process itself, rather than focusing only on possible
outcomes and how to gain them. Such a process is more
likely to succeed if it is discussed and put into place before the parties have completed discovery or commenced
negotiations on substantive issues, which often harden
positions and make amicable agreements more difficult
to reach.
By generating a collaborative working relationship with the parties on an ongoing basis, the Guiding
Mediator can help spot and deal with any surprises in
the process. This can also avoid moving prematurely to
settlement discussions before the design of the process
has been finalized and more opportunities have been
considered. It can avoid disappointments and hostility
by discussing what the parties and their counsel wish to
avoid upfront.
A Guiding Mediator can also help at the end of a
dispute resolution process, before a final agreement has
been reached. She or he can help the disputants to consider the various ways in which the final outcomes can
be obtained, such as a settlement agreement or a consent
award, and any other formalities or rituals that may have
meaning to the disputants or simplify recognition and enforcement abroad. Should the matter not settle fully, the
Guiding Mediator can help to identify and discuss what
impediments remained and how they could possibly be
resolved using more procedural elements. If the Guiding
Mediator was able to observe all parts of the process, he
or she may be able to help the parties reflect on alternative ways of handling those topics that the facilitative or
adjudicative neutrals who handled substantive issues
were not able to resolve.
Practical Tools and Documents: A Model Clause,
Checklist and Diagnostic Metrics
While the value proposition of a Guiding Mediator
may be clear, Working Group 2 found that the use of such
a process guide has never been considered as a possibly
standard process. Its members realized there are no generally accepted metrics or diagnostic tools to help design
such processes. All the tools they developed and considered are working drafts subject to input and revision.
A Draft Model Clause
Working Group 2 started off by developing a draft
model clause for the appointment of a Guiding Mediator.
The current draft reads as follows:
Any disagreement or dispute between
the parties arising out of or relating to
this agreement, including its formation,
related documents and any non-contrac-
tual claims, shall be resolved as quickly
and efficiently as possible by mutual
consent using the most appropriate form
of dispute resolution available for that
disagreement or dispute (e.g., negotiation, mediation, conciliation, litigation
or arbitration) or a combination of such
processes as agreed to by the parties.
The parties [shall/may] jointly retain a
neutral, independent and impartial mediator to focus initially on process issues
(the “Guiding Mediator”). The Guiding
Mediator will help the parties to design
an optimal process for achieving an early
and mutually acceptable resolution. The
optimal process should be efficient and
cost-effective, taking into consideration
relationships and commercial interests,
as well as other important factors identified by the parties (e.g., enforceability,
remedies, deadlines, etc.) The Guiding
Mediator shall maintain strict confidentiality regarding all aspects of the process,
including any private conferences with
parties and/or their attorneys. The Guiding Mediator may provide non-binding
recommendations on process issues. The
parties agree that any information they or
their attorneys exchange or provide to the
Guiding Mediator and/or other parties
or stakeholders as part of this appropriate
dispute resolution process will be treated
as confidential and immune from discovery or disclosure. The Guiding Mediator
shall be granted mediation privilege and
professional secrecy status as a mediator
to ensure that all information exchanged
or provided pursuant to this process
shall be legally privileged and immune
from disclosure or discovery to the extent
possible under applicable laws. Once
appointed, the Guiding Mediator may act
as a mediator and/or arbitrator in any
subsequent proceedings with the prior
written consent of all the parties involved
in those proceedings. If a Guiding Mediator was not retained within [thirty (30)]
days from the date of first request for
the appointment of a Guiding Mediator
by a party, or if no other process or ADR
neutral has been agreed to or appointed
by that date by mutual consent of all the
parties involved in the dispute, the substantive matters in dispute shall be settled
by mediation [in accordance with the
rules of the [NAME OF INSTITUTION] in
effect at that date].
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
19
[The full draft clause then provides for
arbitration if the matter is not resolved
by mediation within 90 days of the appointment of the Guided Mediator.]1
A Checklist of Issues
Working Group 2 also generated a checklist of
issues that may help in assessing what factors might
favor certain procedural choices, and when and
how to suggest them. This checklist and other documents are available on the Task Force’s website at
https://imimediation.org/about/who-are-imi/
mixed-mode-task-force/#documents.2
“A better journey can lead
to a better destination. It is
important to plan accordingly
early on, not only in terms
of time and costs, but also
quality.”
Diagnostics Tools
Certain diagnostic tools are already being used by
some ADR practitioners to initiate conversations with
disputants and to develop a methodology for designing mixed mode processes. Many are inspired by the
“guided choice” movement and its six or seven steps.3 An
example of a set of exercises used by one of the authors
can be found here: http://lawtech.ch/wp-content/uploads/2016/03/SIX-PREPARATION-EXERCISES-PRIORTO-A-FACILITATED-DISCUSSION-OR-ADR-PROCESS2-parties-English-J.-Lack-2017.pdf.
A Mind Map
The Working Group also started working on a
mind map to illustrate what possible links might exist
between certain factors in its checklist and their possible impact on process design choices. See: https://
mm.tt/927123035?t=L9Jqfdvv52.
The above documents are works in progress that are
not intended to contain recommendations or a summary
of “best practices.” They are being provided to stimulate reactions, discussion and exchanges of information
on what is being done, and to encourage ADR neutrals,
disputants and/or their advisors to consider possible
ways of combining evaluative or adjudicative elements
early with non-evaluative elements early on, based on the
parties’ procedural needs and preferences.
20
These tools can help to generate a broader discussion
on the benefits of possible combinations and permutations
early in dispute resolution processes. These materials may
also be used at any stage of traditional dispute resolution proceedings (including litigation) as aids to consider
faster, cheaper and/or better outcomes. In either situation, early consideration of ways of combining mediation
together with arbitration, or conciliation and negotiation
can and should be considered more often. Process design
at the earliest stage can also ensure the attendance of the
right stakeholders, witnesses or experts at the right time,
and involve key participants earlier.
The Guiding Mediator will need to be flexible regarding when and how to arbitrate or mediate, how to initiate
such proceedings, and whether, when or how they can be
combined. The success of this approach will also depend
on the willingness of the parties and their advisors to hire
a procedural facilitator in the first place. Indeed, some
clients and/or their lawyers may be reluctant to discuss
what dispositive issues can be identified, triaged and handled earlier in the process. Initiating such as process may
also face resistance from lawyers or other advisors who
are unfamiliar with such processes and might perceive
them as being risky compared to the past traditional approaches they are familiar with. They may also prefer to
get adjudicative input early on, to assess the strengths and
weaknesses of the case, although this can lead to early
anchoring and overconfidence bias, making amicable discussions on process design more complex to raise. These
variables may all require identifying the personalities and
cultural contexts in which a mixed mode process is being
discussed and skill in managing the design process itself.
Conclusion
The idea of bringing in a process facilitator in the
form of a Guiding Mediator is not new. While the benefits
are clear, the ways in which to establish a Guiding Mediator and the practices to follow are not. The approach
seems to hold great promise, providing disputants with
greater autonomy and informed choices, and access to
faster, cheaper and better access to justice. More work is
needed, and more experiences need to be shared. Please
join us by providing us with your feedback and sending your thoughts and comments to the authors at laura.
kaster@kasteradr.com and jlack@lawtech.ch.
Endnotes
1.
For the full draft model clause, see: https://imimediation.org/
download/184/mixed-mode-task-force-documents/34267/
proposed-adr-clause-for-the-appointment-of-a-guiding-mediatorfor-commercial-agreements.docx.
2.
For the checklist, see: https://imimediation.org/download/184/
mixed-mode-task-force-documents/34268/checklist-of-criteria-formixed-modes-process-design.docx.
3.
For information about this movement, see: https://
gcdisputeresolution.com/.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Working Group 3 of the Mixed Mode Task Force
Mediators Using Non-Binding Evaluations and Making
Settlement Proposals
By Véronique Fraser and Kun Fan
Working Group 3 (WG3) of the Task Force explores
the topic of mediators using non-binding evaluations
and making settlement proposals as a form of mixed
mode dispute resolution. Mediators employing such
techniques might express their assessment of the strength
of a party’s case, predict the outcome of any arbitration
or litigation that might follow the mediation or, at the
parties’ request, make an outright suggestion of how the
parties could settle the dispute.
I. Different Perceptions Due to Cultural Impact
and Ethical Considerations
Mediators using non-binding evaluations and making settlement proposals is one of the most common
forms of mixed mode practice. This is also an area where
there appears to be considerable differences due to cultural impact and ethical considerations.
Conciliation vs. mediation: While some jurisdictions
maintain a distinction between mediation and conciliation, with only conciliation involving evaluation or settlement proposal1 the two terms are often used interchangeably in many jurisdictions and contexts.2
Evaluation vs. facilitation: While “evaluation” is
often considered the extent to which, in helping parties settle their dispute, the mediator tends to assess the
strengths and weaknesses of a legal position or to predict
outcomes in court; and “facilitation” means mediators
only assisting the parties’ negotiations without evaluating. In practice, however, the line between facilitation
and evaluation is less clear-cut. Evaluation could range
from behavior that is principally facilitative (or, in other
words “elicitative”3) to directive, that is, for example, asking questions to help the parties understand both sides’
legal positions and the consequences of non-settlement
or helping the parties to evaluate proposals to assess the
strengths and weaknesses of each side’s case or to predict
outcomes of courts or other adjudicative processes.4 It is
also common that, within a single mediation, mediators’
interventions move across the board from facilitation
to evaluation and vice-versa as the mediation process
evolves and in response to what is perceived to be
needed to move the dispute closer to a resolution.5
ADR Continuum
WG3 recommends distinguishing mediation and
conciliation for reasons that go beyond the terminology
debates that we have been witnessing in the literature for
several decades. Rather, dispute resolution processes can
be seen as a continuum, where, on the left side, parties
retain full self-determination regarding the process and
the substance of the dispute and, on the right extreme,
parties submit themselves to the authority of a third-party
neutral, such as a judge (see Figure 1). In the dispute
resolution continuum, non-evaluative mediation is closer
to the left axis than evaluative mediation.
Figure 1. Simplified Dispute Resolution Continuum
Negotiation
Facilitative
Mediation
Evaluative
Mediation
Non-binding Arbitration
Evaluation
Litigation
The concepts of “mediation” and “conciliation,”
“facilitative” and “evaluative” are not meant to be applied
rigidly, as they represent a continuum, rather than a static
point, as illustrated by Leonard Riskin’s Old Grid (figure
2).6 The level of intervention of the neutral depends on the
WG3 is co-chaired by Veronique Fraser and Kun
Fan. For a full list of WG3 members, go to https://imimediation.org/mmtf.
Veroniqe Fraser is Vice-Dean Delegated for Strategic
Development and Associate Professor, Faculty of Law,
University of Sherbrooke (Canada), an accredited mediator (IMAQ) and lawyer (Quebec and Ontario Bars).
Kun Fan is associate professor, University of New South
Wales Faculty of Law and Justice; member of the Herbert Smith Freehills China International Business and
Economic Law (CIBEL) Centre, an accrediated mediator
(HKMAAL), arbitrator, and domain names panelist and
is admitted to the New York Bar.
The co-chairs would like to thank Emile Chamberland for his excellent research work and tireless efforts,
as well as Rutger Metsch for his assistance, and the
members of the Working Group and the Executive Committee for their valuable inputs. Any errors and omissions are purely ours.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
21
party expectation and process design. It is particularly
important in cross-cultural contexts. The same term can
mean different things for different people. Parties and
neutrals should not assume that their expectations or
perceptions are shared by the other side. It is crucial to
communicate and share expectations in order to develop
proper process design at the beginning of the process.
Figure 2. Leonard L. Riskin’s Old Grid for Mediator Orientations
Role of Mediator
role7 that affects, to a varying degree, the substance or
the outcome of the dispute. Hence, parties subject themselves to the norms setting authority of the mediator.
When norms setting is reserved to the parties, the mediator helps them identify the norms (whether legal, ethical,
industrial, etc.) that will be used to arrive at the outcome.
In such cases, parties retain full self-determination regarding norms setting and the substance or outcome of the
dispute.
Figure 3. Working Group 3’s Grid Regarding Party Autonomy in Mediation and Conciliation Process
EVALUATIVE
Process
SUBJECTION
EVALUATIVE
EVALUATIVE
NARROW
BROAD
Mediation
Process
SUBJECTION
Substance
Problem
Definition
Problem
Definition
BROAD
NARROW
FACILITATIVE
FACILITATIVE
NARROW
BROAD
Substance/Norms Setting
SELF-DETERMINATION
SELFDETERMINATION
Mediation
Process
SELFDETERMINATION
Substance
SELFDETERMINATION
Litigation
Arbitration
Conciliation
Process
SUBJECTION
Substance
SUBJECTION
Substance/Norms Setting
SUBJECTION
Conciliation
Process
SELFDETERMINATION
Substance
SUBJECTION
SELF-DETERMINATION
FACILITATIVE
Note. Reproduced from Leonard L. Riskin, Understanding Mediators’ Orientations,
Strategies, and Techniques: A Grid for the Perplexed, 1 HARV. NEGOT. L. REV. 7, 25 (1996)
© 1996 Leonard L. Riskin.
II. Recommendations of Working Group 3
Recommendation 1: Using WG3’s “Grid Regarding
Party Autonomy in Mediation and Conciliation
Process” for Process Design
In considering mediators’ use of non-binding evaluations and settlement proposals, WG3 suggests a shift in
focus from mediators’ orientations to the effects of mediators’ techniques on party autonomy regarding substance
and process.
We recommend using an adapted version of Riskin’s
New New Grid to anchor party autonomy in mediation
(Figure 3). WG3’s “Grid Regarding Party Autonomy in
Mediation and Conciliation Process” can be a useful tool
for a third-party neutral to help the parties decide the degree of self-determination that they can retain regarding
norms setting and the substance of the dispute, as well as
the process.
WG3’s “Grid Regarding Party Autonomy in Mediation and Conciliation Process” consists of two intersecting continuums, the horizontal axis represents party
autonomy towards the substance or, more specifically,
norms setting; the concepts of “self-determination” and
“subjection” provides its anchors. The other deals with
party autonomy regarding the process, and it runs from
“self-determination” to “subjection.”
When mediators use non-binding evaluations or
make settlement proposals, they exercise a norms-setting
22
Note. Adapted from Véronique Fraser & Sèdjro Hountohotegbè, Process and Substance Self-Determination or Subjection: A New Frame of Reference
for Defining Mediators’ and Conciliators’ Interventions (GPRD Research Paper No. 2020/1) (on file with authors); Jeremy Lack, Appropriate Dispute
Resolution (ADR): The Spectrum of Hybrid Techniques Available to the Parties, in ADR IN BUSINESS: PRACTICE AND ISSUES ACROSS COUNTRIES AND
CULTURES, VOL. II, 339, 353-57 (Arnold Ingen-Housz ed., Kluwer Law International, 2011).
Recommendation 2: Adapting Neutrals’ Techniques
to Parties’ Process Choices Regarding Process and
Substance Autonomy
WG3 provides a taxonomy, based on WG3’s “Grid Regarding Party Autonomy in Mediation and Conciliation
Process,” of a range of evaluations that have been found
to be used by neutrals across various cultures and sectors (see Table 1). On the vertical axis, this table illustrates
six different types of evaluations (questions, educating,
generating and enunciating rules and norms, assessments
and opinions, developing proposals, predictions, pressing
or persuading). The horizontal axis shows examples of
techniques that can be used depending on the degree of
self-determination that parties retain regarding the substance and the process. This taxonomy serves as a guide
for the mediator to locate his or her interventions and
understand their impact in terms of party autonomy regarding the process or the substance of the dispute. It also
shows how a mediator can adapt his or her techniques
depending upon the choices that parties have made during the process design phase.
When a mediator uses techniques of group A, he or
she lets the parties arrive at a solution using the process
they prefer and only guides them through the mediation.
The mediator’s role is mainly to facilitate communication, a role that can be assimilated to a facilitative style of
mediation. Tactics found under the umbrella of category
B preserve the parties’ self-determination over the substance but allow the mediator to control the procedural
aspects of the mediation, establish and propose process
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
rules. In both categories A and B, as parties retain full
self-determination regarding norm setting and the substance of the dispute, the mediator generally does not
provide opinions, nor take position or make evaluations.
It is, however, possible for the neutral to educate the disputants about bargaining processes and skills, approach
each side, asking them to expose their risks, and bring in
experts.
Categories C and D share several elements, in the
sense that these techniques impact self-determination of
the parties regarding substantive aspects of the dispute,
notably the agreement itself. A mediator choosing to use
this approach brings in his or her own opinions of the
case, as well as external norms (legal, ethical, technical,
etc.) in the process. According to this model, categories
C and D are really similar regarding the techniques they
comprise, but a distinction in practice if the parties have
authorized the third party to take a directive role regarding the process. If that is the case, the techniques would
be categorized under D. If the parties retain control over
the process, the techniques would fall under C. In both
categories C and D, as parties subject themselves to the
norms setting authority of the mediator, mediators can
use techniques such as developing proposals, predictions
(when appropriate, providing one’s own opinion on the
merits). The neutral can offer advice, make assessment
regarding the process, make evaluations of an appropriate
solution or range of options, provide a BATNA analysis,
or offer other general opinions or evaluations. The neutral
can provide advice and opinions regarding technical matters or substantive law. The mediator can also decide to
involve an expert that will present his or her views and
formulate evaluations that fall within the parties’ negotiating range.
Table 1: Range of Facilitative and Evaluative Techniques Used by Mediators and Conciliators8
Range of techniques
A. Process and substance self-determination
B. Process subjection
C. Process self-determiand substance self-deter- nation and substance
mination
subjection
D. Process and substance subjection
1. Questions
Probing to understand the disputants’ procedural
needs and substantive interests
Challenging disputants
to generate new ideas,
posing problems to be
solved
Helping the parties to
find missing information
Leading questions, devil’s advocate
Suggesting techniques for addressing relational and/
or social issues
Helping the parties
to generate their own
norms
Neutral is expected to
generate, educate and
help the parties in applying possible norms
(e.g., finding of facts
and applicable laws)
Neutral can set, educate
and advocate norms by
which the dispute can be
resolved
Neutral forms his own
views of the matter, and
can apply norms (e.g.,
finding of facts and applicable laws) to help the
parties to understand
the strengths and weaknesses of their cases and
exchange relevant information
2. Educating,
generating and
enunciating rules
and norms
3. Assessments
and opinions
Leading questions, devil’s advocate
-Assisting the parties in generating
their own criteria
May take initiatives
regarding ways of addressing social and relational issues
Does not give opinions on substantive
issues
Does not give opinions
on substantive issues or
advise on final solutions
Neutral is expected to
form his own views of
the matter
Assisting the parties
to obtaining external
information that can
help them overcome
impasses (e.g., experts)
May take initiatives regarding ways of seeking
external information to
assist the parties in overcoming impasses (e.g.,
appointing experts and
determining the scope of
their mandate)
Neutral can evaluate
the strengths and weaknesses of each parties’
positions
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Neutral is expected to
provide his opinion (in
caucus or in joint session)
23
4. Developing
proposals
Does not make any
proposals on substantive issues
Does not make any proposals on substantive
issues
Helping the parties
Helping the parties to
to exchange inforexchange information
mation and to brain- and to brainstorm
storm (by focusing
on their interests
rather than on their
positions)
5. Predictions
Does not make predictions
Assisting the parties to
analyze their alternatives to a negotiated
settlement
Asking the parties’
counsel to make an assessment or advise them
about the likely outcome
of tactics
6. Pressing or
persuading
Does not make
Does not make presspressing or persuad- ing or persuading teing techinques
chinques
Suggesting ways of resolving key issues and
requesting disputants’
reaction to those ideas
Giving non-binding
proposals
Setting binding “floors
and ceilings”
1.
2.
See, for instance, the Swiss Code of Civil Procedure (CPC) Part 2,
Title 1 (Arts. 197 – 212) and Title 2 (Arts. 213–218). For a summary
of the distinction between mediation and conciliation from a Swiss
perspective, see Jeremy Lack, The New Swiss Rules of Commercial
Mediation of the Swiss Chambers of Commerce and Industry: Possible
Links to Arbitration, in New Developments in International
Commercial Arbitration 2008 105, 106-109 (Christoph Müller &
Antonio Rigozzi, eds., Schulthess, 2008).
See, e.g., a note from UNCITRAL stating:
In its previously adopted texts and relevant documents, UNCITRAL used
the term “conciliation” with the understanding that the terms “concilia-
Predictions of possible
impact on interests of
not settling
Predictions of possible
impact on interests of
not settling
Predictions of possible
outcomes if a case is
adjudicated in court or
arbitration
Using of probability
trees and other analytic
tools
Helping the parties to
identify dispositive issues and to exchange
information relevant to
these norms
adapt to the actual and practical use of the terms and with the expectation
that this change will facilitate the promotion and heighten the visibility of
the Model Law. This change in terminology does not have any substantive
or conceptual implications.
UNCITRAL Model Law on International Commercial Mediation
and International Settlement Agreements Resulting from Mediation,
2018 (amending the UNCITRAL Model Law on International
Commercial Conciliation, 2002), A/73/17, Annex II (31 July
2018), https://uncitral.un.org/sites/uncitral.un.org/files/
media-documents/uncitral/en/annex_ii.pdf.
24
Reality-checking and
helping the parties to
understand their BATNA/WATNA
Urging parties to make
concessions or reach
agreement
Providing a sound reason for settling
3.
Leonard L. Riskin, Decision-making in Mediation: The New Old Grid
and the New New Grid System, 79 Notre Dame L. Rev. 1, 20, 23 and
31 (2003).
4.
See Leonard L. Riskin, Understanding Mediators’ Orientations,
Strategies, and Techniques: A Grid for the Perplexed, 1 Harv. Negot. L.
Rev. 7, 25-29 (1996).
5.
This reflects in large part the experience of WG3 members. See also
supra note 3, p. 14-17.
6.
Supra note 4, p. 3. For a discussion regarding the continuum
structure of Riskin’s Old Grid, see supra note 3 at 14-17.
7.
Ellen Waldman, Identifying the Role of Social Norms in Mediation: A
Multiple Model Approach, 48 Hastings L. J. 703, 707-756 (1997).
8.
Adapted from Jeremy Lack, Appropriate Dispute Resolution (ADR):
The Spectrum of Hybrid Techniques Available to the Parties, in ADR
in Business: Practice and Issues Across Countries and Cultures,
Vol. II, 339, 353-57 (Arnold Ingen-Housz ed., Kluwer Law
International, 2011); Manon Schonewille & Jeremy Lack, Mediation
in the European Union and Abroad: 60 States Divided by a Common
Word? in The Variegated Landscape of Mediation: A Comparative
Study of Mediation Regulation and Practices in Europe and
the World, 19, 25-33 (Manon Schonewille & Fred Schonewille,
ed., Eleven International Publishing, 2014); Véronique Fraser &
Sèdjro Hountohotegbè, Process and Substance Self-Determination
or Subjection: A New Frame of Reference for Defining Mediators’ and
Conciliators’ Interventions (GPRD Research Paper No. 2020/1) (on
file with authors).
tion” and “mediation” were interchangeable. In preparing this Model Law,
the Commission decided to use the term “mediation” instead in an effort to
Expected to ultimately
give a (non-binding)
settlement proposal if
the parties do not reach
an agreement
When appropriate, providing neutral’s own
opinion on the merits
Reality-checking with
the aim to soften intransigent disputants or
their advisors to facilitate reaching a compromise
Endnotes
Identifying dispositive
issues and suggesting
ways of resolving them
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Working Group 4 of the Mixed Mode Task Force
Arbitrator Techniques and Their (Direct or Potential)
Effect on Settlement
By Edna Sussman and Klaus Peter Berger
Working Group 4 is hopeful that this work will enable
arbitrators and parties to consider measures for promoting
effective and efficient arbitrations within a framework that
includes consideration of the impact process decisions might
have on settlement.
Arbitration has always sought to be responsive to
user preferences. Such amendments to institutional rules
as emergency arbitrators, expedited arbitrations and consolidation and joinder illustrate the constant evolution of
arbitration procedures in response to user calls for such
innovations to meet their needs. In recent years, there
has been a constant call for a more expeditious and costeffective dispute resolution process. Greater utilization
of combinations of adjudicative and non-adjudicative
processes has been repeatedly identified by users as preferred and as enabling the achievement of better outcomes. This led the Working Group to consider whether
arbitrator and arbitration process choices might influence
parties’ ability to arrive at amicable resolutions.
Accordingly, Working Group 4 titled “Arbitrator
Techniques and Their (Direct or Potential) Effect on
Settlement” was charged with assessing what procedural
mechanisms might be used and what steps arbitrators
could take, staying within their role as arbitrators, that
may serve to have a favorable impact on the prospects of
an amicable settlement among the parties.
The Task Force
Working Group 4 was comprised of approximately
25 practitioners from numerous jurisdictions around the
world. Following discussion within the group, it was
concluded that the group would address the utility of
accepted case management techniques and arbitration
procedures. The focus would be on the arbitrator staying
within his or her role as an arbitrator and not switching
hats by undertaking a role as a mediator which is the
subject of Working Group 5.
A great deal has been written about steps to promote
efficiency and cost reduction in arbitration. Measures
such as tailoring the arbitration clause, opting into expedited procedural rules, using innovative ways to select
the chair, phone calls instead of lengthy submissions,
reducing the number of submissions, page limits, more
vigorous control of document exchange, interim hearings, use of videoconferencing and other technological
advances, use of the chess clock, etc., are all of great importance and serve in many ways to facilitate settlement.
However, in light of the many guides and articles on
those subjects already available, the working group selected
for examination a limited number of arbitration processes
that are often underutilized but may directly or indirectly
create opportunities for settlement. These measures include:
• A proactive first organizational meeting in which all
appropriate possible procedural steps are discussed
with the parties rather than the usual pro forma
short session to set the hearing date;
• Including one or more mediation windows in the
arbitration schedule so that there is a set time in the
schedule for the parties to discuss whether a mediation would be productive without any concern
by any party that it will be perceived as weak if it
raises mediation;
• More robust considerations to narrowing the issues
and to entertaining dispositive motions which resolve certain aspects of the case at an early stage, as
parties often need early guidance on such questions
in order to assess their settlement options;
• Serious analysis of whether formally or informally
bifurcating damages or issuing interim decisions
that are likely to have a significant impact on damages would lead to efficiencies and cost savings (for
example by reducing expert costs) and whether it
would be reasonably likely to lead to settlement
after the liability stage;
WG4 is co-chaired by Edna Sussman and Klaus Peter Berger. For a full list of WG 4 members, go to https://
imimediation.org/mmt.
Edna Sussman, esussman@sussmanadr.com, is an
independent arbitrator concentrating in domestic and
international complex commercial disputes. She is the
Distinguished ADR Practitioner in Residence at Fordham Law School and serves on the board of the American Arbitration Association. Sussman was formerly the
chair of the New York International Arbitration Center
and president of the College of Commercial Arbitrators.
Klaus Peter Berger, kpberger@netcologne.de, is a
full-tenure professor of domestic and international
business and banking law and ADR at the University
of Cologne, Germany, and a practicing international
arbitrator. He is the former president of the German
Arbitration Institute (DIS) and a member of the Council
of the ICC Institute of World Business Law.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
25
• Mid-arbitration reviews (Kaplan Openings) at
which the parties meet with the tribunal and work
with the arbitrators to identify the key issues in
dispute, both legal and factual;
• Offering of preliminary views by the arbitrators at
an agreed stage of the arbitration with the express
consent of all parties, taking into consideration the
possible impact on the arbitration going forward,
and with the understanding that the preliminary
views might change on further analysis;
• Greater use of sealed offers (also known as Calderbank offers) which are written offers of settlement
made by one party to another on a “without prejudice save as to costs” basis and shared with the
tribunal only after the decision on the merits.
The Working Group will review these measures with
an eye towards explaining when and why they should
be considered and provide practical guidance on their
application.
However, there are no uniform views. Numerous responses were submitted with such comments as: “An arbitrator has no role in fostering settlement—his or her role
is to decide”; “The arbitrator is a service provider. You
should only render a decision and not give advice”; “No
active role unless the parties want it”; “There is a very
limited role for an arbitrator to do things proactively.”
Working Group 4 seeks to provide guidance on the
techniques reviewed that may be favorably considered by
those who expressed all of the sentiments that are reflected in the survey, both positive and negative, about the
arbitrator’s role in settlement.
The Arbitrator’s Authority
The Role of the Arbitrator and the Survey
Over the past decade, there has been an evolving
debate about the appropriate role for the arbitrator. Is the
arbitrator simply appointed to manage the proceeding,
receive the evidence and make a decision—thus, a role
essentially limited solely to being a passive decision-maker—or is the arbitrator a service provider who should undertake a more active role and act as the dispute manager,1
the settlement facilitator,,2 the town elder,3 the collaborative arbitrator,4 the interactive or proactive arbitrator?5 Is
there a continuum along with a series of possible measures
that should be considered for each case?6 Should options
be discussed with the parties at the start of the proceeding
so that a bespoke process can be developed for the case
with the appropriate procedural steps which may directly
or indirectly have an effect on settlement?
Interviews were conducted by members of the
Working Group with approximately 75 individuals, from
jurisdictions around the world, to seek their reactions
as to the arbitrator’s role in settlement and to provide
their thoughts on the specific techniques that had been
selected by the Working Group for further examination.
While responses in this number can only be viewed as
anecdotal, we draw upon them for the valuable insights
they offer. References to this survey conducted by this
Working Group are titled “Survey.”
In response to the question “Do you think an arbitrator has a role in fostering settlement?,” 78.38% responded
“yes” and 21.62% responded “no.” Thus, a majority of respondents recognized that arbitrators have a part to play
in facilitating settlement. The comments expanded on the
positive responses by explaining that the tribunal: “Has
an important role in helping the parties understand the
procedural options to settlement, outside of the arbitral
26
proceedings as well as within the arbitral proceedings”;
“The arbitrator can have an active role provided this is
in line with expectations/wishes of the parties”; “The
arbitral proceedings can be framed in a manner favorable
to possible settlements”; “An arbitrator plays a significant
role in fostering settlement”; “It is the arbitrator’s duty to
encourage the parties to settle the dispute.”
No discussion of the arbitrator’s role or consideration
of a more proactive approach can be conducted without
a review of the arbitrator’s authority. The thought leadership on the evolving role of the arbitrator and the movement to greater acceptance of a more active role has been
reflected in guidelines, rules, and practice notes by multiple organizations. Perhaps the most telling evidence of the
evolution of thinking about the arbitrator’s role in settlement is the change in the UNCITRAL Notes on Organizing Arbitral Proceedings from the 1996 version to the 2016
version which evolved from “The arbitral tribunal should
only suggest settlement negotiations with caution” to “In
appropriate circumstances, the arbitral tribunal may raise
the possibility of a settlement between the parties.” Many
institutional rules and guidelines also refer to the arbitrator’s role in settlement:
• ICC Rules Appendix IV, h) (ii): “Where agreed between the parties and the arbitral tribunal, the arbitral
tribunal may take steps to facilitate settlement of the
dispute, provided that every effort is made to ensure
that any subsequent award is enforceable at law.”
• IBA Guidelines on Conflict of Interest in International Arbitration General Standard 4(d): “An arbitrator may assist the parties in reaching the settlement of the dispute, through conciliation, mediation
or otherwise, at any stage of the proceedings” (with
express agreement).
• Swiss Rules Article 15(8): “With the agreement of each
of the parties, the arbitral tribunal may take steps to
facilitate the settlement of the dispute before it.”
• German DIS Rules Article 26: “Unless any party
objects thereto, the arbitral tribunal shall, at every stage of the arbitration, seek to encourage an
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
amicable settlement of the dispute or of individual
disputed issues.”
• Prague Rules Article 9.1.: “Unless one of the parties
objects, the arbitral tribunal may assist the parties
in reaching an amicable settlement of the dispute at
any stage of the arbitration”; Articles 9.2. and 9.3.
allow “any member” of the tribunal “upon written
consent of all parties” to “act as a mediator to assist
in the amicable settlement of the case.”
• CIETAC Rules Article 47(1): “Where both parties
wish to conciliate, or where one party wishes to
conciliate and the other party’s consent has been
obtained by the arbitral tribunal, the arbitral tribunal may conciliate the dispute during the arbitral
proceedings.”
• Singapore International Arbitration Act Article
17(1): “If all parties to any arbitral proceedings
consent in writing and for so long as no party has
withdrawn his consent in writing, an arbitrator or
umpire may act as a conciliator.”
While the better view is that arbitrators always had
inherent authority to conduct an arbitration with the use
of all of the techniques identified in this working group’s
product, the specific recognition of the arbitrator’s authority with respect to settlement in an increasing number of rules and guidelines should serve to satisfy any
remaining concerns arbitrators may have about expanding their toolkit and to more frequently employ more
proactive measures. However, it is important to add that
the techniques being considered by the working group
are quite different from actively taking on the role of a
mediator but rather are standard procedural techniques
that may as a by-product also facilitate settlement.
Psychological Impact of Arbitration Procedural
Measures
tial beliefs. As has also been shown however, not surprisingly, voluntary settlement is facilitated as parties become
more realistic about their own prospects of winning. Early
disposition of material issues, in-depth midterm reviews
of the case by the arbitrator with the parties and providing preliminary views, early on or after the taking of evidence, are some of the measures that can be taken to assist
parties in overcoming these biases.
Arbitrators addressing issues earlier in the process
also serve to alleviate the impact of the “sunk costs” fallacy. Parties that have already spent considerable time and
money often feel they already have so much invested in
the process that they are less likely to settle and choose
instead to take the adversarial process through to the end.
While considered a “fallacy” that has no rational economic justification, the fallacy persists; earlier resolution
of material issues and attention to focusing the parties on
the issues of importance to the arbitrator sooner would
decrease the amount of “sunk costs” and thus diminish
the impact of this fallacy.
Greater and earlier interaction with the arbitrator may
also serve to foster settlement by providing “procedural
justice” in the litigants’ view and enabling them to have
their “day in court” or their “day before the arbitrator,”
an appreciation which has proven to foster acceptance
of resolution. It may also serve to address the litigants’
“equity-seeking”: The desire to obtain equity in the face
of having been badly treated, either by satisfying that
desire or forcing a recognition that the arbitrator may not
perceive the equities exactly the same way.
When considering which measures are most appropriate for the case before them, arbitrators may take into
account the nature of these psychological impediments in
deciding which techniques to choose in a particular case.
Differences in Cultures
An area not often considered is the impact of measures taken by arbitrators which can counter unconscious
psychological impediments to settlement. While, as
with all psychological influences, there are a considerable number of unconscious obstacles to settlement, the
working group notes a few impediments where arbitrator
techniques may serve to deflect or at least minimize the
psychological barrier.
Given the global nature of international arbitration,
the working group asked whether the arbitrator’s role is
dictated and whether it should be dictated by the arbitrator’s geographic, cultural or legal background. The working
group noted that historically Chinese arbitrators have been
more likely to engage in settlement discussions with the parties and arbitrators who follow the Germanic model often
provide preliminary views with the agreement of all parties;
a perception echoed by many of the survey respondents.
For example, study after study has demonstrated that
litigants and their counsel do not accurately predict case
outcomes. The principal culprits that lead to this predictive failure are referred to as the “optimistic overconfidence” bias: People are simply overconfident in their
predictions concerning the outcome of future events,
including outcomes in litigated disputes; the egocentricity bias: The tendency to assess the strength of the case in
a self-interested or egocentric manner; and confirmation
bias: People interpret evidence so as to maintain their ini-
However, recent studies suggest that there is increasing harmonization across cultures with respect to the
role of the arbitrator. For example, a survey of arbitrators
across cultures demonstrated that approximately 74%
of arbitrators, both east and west, shared the view that
it was “appropriate for the arbitrator to suggest settlement negotiations to the parties,” and 58%, both east and
west, thought it was “appropriate for the arbitrator to
actively engage in settlement negotiations (at both parties
request).”7 It has been said that with the current global
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
27
mix of national origin, legal qualification, and place
of practice of international practitioners, the east-west
differences, in fact, are “often very subtle” and with the
continuing melting pot of ideas, concepts and approaches
across jurisdictions, future generations of arbitration
practitioners will not depend so much on east versus
west concepts of appropriate arbitrator conduct.8
Thus, while legal and geographical culture still has
influence, it should not be viewed as limiting the arbitrator’s choice in crafting a process most suitable for the
dispute at issue as long as care is taken to ensure that
there is no breach of any governing ethical, legal or rulebased principle and the parties are consulted and have
confirmed their agreement to the process.
Cautionary Notes
The world of international arbitration is global and
so subject to different applicable substantive and procedural laws, different ethical constraints, and different
approaches by courts to enforcement issues. Addressing the impact of all of these differences on the particular techniques discussed was beyond the scope of the
project. Care must be taken in deciding how to use the
various techniques available to arbitrators to ensure that
they are in compliance with all applicable laws, all ethical
obligations, and will not jeopardize enforceability of an
ultimate award.
Care should also be taken to continue to be and appear to be impartial and independent and minimize the
likelihood that any party would come to a different view
based on the arbitrator’s conduct. Informed consent for
the use of techniques with respect to which such consent
would be advisable may protect the arbitrator from a challenge based on the use of the technique. Explanation (d)
of General Standard 4 of the IBA Guidelines on Conflict of
Interest in International Arbitration provides, “Informed
consent by the parties to such a process [settlement of the
dispute] prior to its beginning should be regarded as an
effective waiver of a potential conflict of interest.” But loss
of faith by a party may lead to challenges based on other
and unrelated grounds. While maintaining the parties’
faith in the arbitration, the arbitrators and the process is
essential, care should be taken not to be overwhelmed by
unnecessary due process paranoia.
Ultimately, arbitration is about party control; party
autonomy must prevail over other considerations. A
comprehensive conversation with the parties at the first
organizational conference to review options and design
the arbitration would enable the parties working with the
arbitrators to tailor the process to the particular dispute.9
Such early joint planning would serve the dual goals of
maintaining party autonomy and ensuring that arbitration
is responsive to user needs. Further, this would allow parties to anticipate in advance the procedure to be applied
and avoid arbitrators making suggestions during the pro28
cess that are unexpected and may lead to significant time
spent trying to determine what the suggestion signified.
Heeding user calls for greater process creativity will
enhance the utility and attractiveness of arbitration in the
dispute resolution spectrum as the Singapore Convention
comes into force making cross border mediated agreements enforceable, and the Convention on the Recognition and Enforcement of Foreign Judgments in Civil or
Commercial Matters enabling recognition and enforcement of civil and commercial judgments rendered by the
courts of other states.
Conclusion
Working Group 4 is hopeful that this work will enable
arbitrators and parties to consider measures for promoting
effective and efficient arbitrations within a framework that
includes consideration of the impact process decisions might
have on settlement. As it was aptly noted by one of the cochairs of the Working Group: “Techniques to facilitate settlement of the dispute should belong to the arsenal of every international arbitrator in order to diversify the services which
the arbitration community is able to provide to its users.”10
Endnotes
1.
Paolo Marzolini, The Arbitrator as a Dispute Manager—The Exercise
of the Arbitrator’s Powers to Act as Settlement Facilitator, in The
Arbitrator’s Initiative: When, Why and How Should It Be Used?,
ASA Special Series, No. 45 (2016).
2.
Gabrielle Kaufmann-Kohler, When Arbitrators Facilitate Settlement:
Towards a Transnational Standard, 187, Arb. Int’l, Vol. 25, Issue 2 (2009).
3.
David Rivkin, Towards a New Paradigm in International Arbitration:
The Town Elder Model Revisited, 375, Arb. Int’l, Vol. 24, Issue 3 (2008).
4.
Catherine Kessedjian, International Arbitration—More Efficiency
for Greater Credibility, in Rovine (ed.), Contemporary Issues in
International Arbitration and Mediation: The Fordham Papers 2014
(Nijhoff Publ. 2015).
5.
Michael Schneider, The Uncertain Future of the Interactive Arbitrator:
Proposals, Good Intentions and the Effect of Conflicting Views on the
Role of the Arbitrator, in Brekoulakis et al. (eds.), The Evolution and
Future of International Arbitration (Kluwer Law International,
2016).
6.
Klaus Peter Berger and J. Ole Jensen, The Arbitrator’s Mandate to
Facilitate Settlement, 887, Fordham Int’l L. J., Vol. 40, Issue 3 (2017).
7.
Shahla Ali, The Morality of Conciliation: An Empirical Examination of
Arbitrator “Role Moralities” in East Asia and West, 1, Harv. Negot. L.
Rev., Vol. 16 (2011).
8.
Stephan Wilske, Significant Differences in International Arbitration
in the “East” and the “West”: Myth, Reality or Lost in Globalization?
in Chang-fa Lo et al. (eds.), Legal Thoughts Between the East
and the West in the Multilevel Legal Order, Economics, Law and
Institutions in Asia Pacific (Publ. Springer Singapore 2016). But see,
Gabrielle Kaufmann-Kohler and Victor Bonnin Reynes, Arbitrators
as Conciliators: A Statistical Study of the Relation between an Arbitrator’s
Role and Background, 79, ICC Bulletin, Vol. 18, No. 2 (2007).
9.
See, e.g., Gabrielle Nater-Bass, The Initial Discussion with the Parties:
How Should It Be Done? Which Topics Must Be or May Be Addressed?
in The Arbitrator’s Initiative: When, Why and How Should It Be
Used?, ASA Special Series, No. 45 (2016); Cecilia Carrara, How to
Productively Conduct a Case Management Conference—Well Begun Is
Half Done, 43, N.Y. Disp. Res. Lawyer, Vol. 12, No. 1 (2019).
10.
Berger and Jensen, supra note 6 at 917.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Working Group 5 of the Mixed Mode Task Force
“Switching Hats”: Developing International Practice
Guidance for Single-Neutral Med-Arb, Arb-Med, and
Arb-Med-Arb
By Thomas J. Stipanowich and Mordehai (Moti) Mironi
Suppose you are the sole arbitrator in a commercial
dispute. While hearings are in progress counsel for the
parties come to you and explain that circumstances have
changed and both parties need a quick and informal
resolution of their dispute; they ask you, in whom they
have great faith, to assume the role of mediator. Would
you agree to “switch hats,” and, if so, under what conditions? How dispute resolution professionals, commercial
advocates and counsel, and business parties respond
to these questions varies depending on circumstances,
personal preferences, culture and legal tradition. While in
China and some other countries mixed roles are broadly
accepted, in countries like the U.S. lawyers, arbitrators
and mediators tend to be skeptical about a neutral changing roles during the course of resolving disputes. Some
other countries have statutes regulating or even prohibiting single-neutral “med-arb.”
Given the growing use of “mixed mode” approaches
in which both settlement-oriented and adjudicative
approaches are employed and the expanding competencies of arbitrators and mediators, it is not surprising that
a high percentage of dispute resolution professionals
now have some experience playing multiple roles in the
course of resolving disputes. Despite these realities, no
authoritative, comprehensive, widely accepted guid-
ance regarding med-arb, arb-med, or settlement-oriented
activities by arbitrators has yet been developed for international practice. In order to bridge this gap, a working
group of the International Task Force on Mixed Mode
Dispute Resolution set itself the task of creating new Practice Guidelines for Situations in Which a Mediator Changes
Roles to Function as an Arbitrator, or an Arbitrator Performs
the Functions of a Mediator (Single–Neutral Med-Arb, ArbMed, and Arb-Med-Arb) or Engages in Settlement-Oriented
Activities.1
Concerns Regarding Mixed Roles
Much has been written about the potential problems
associated with a neutral changing roles midstream. It is
WG5 is co-chaired by Thomas J. Stipanowich and
Mordehai (Moti) Mironi. For a full list of WG5 members, go to https://imimediation.org/mmtf.
Thomas J. Stipanowich holds the William H. Webster
Chair in Dispute Resolution as a professor of law at
Pepperdine Caruso School of Law in Los Angeles, and is
a neutral with JAMS.
Mordehai (Moti) Mironi is a professor of law at Haifa
University Faculty of Law.
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often said that due to the fundamental incompatibility
of the roles of arbitrator and mediator, performing both
roles in turn may work to the detriment of each—most
notably in scenarios where a neutral switches to the role
of arbitrator after attempting to mediate. Being aware
that their mediator may become a binding decision-maker, parties may be substantially less candid during settlement discussions, and instead concentrate on trying to
“spin” the neutral or look for hints about how she might
judge their case. If a mediator offers—or is perceived to
offer—such hints about the decision she might render,
one or both parties may form undue expectations regarding the latter. When a mediator-turned-arbitrator adjudicates, parties may have concerns that a final decision
may be influenced by information shared by the other
party confidentially—information they will have no opportunity to hear and confront. Ex parte communications
during the mediation phase could also form the basis for
challenges to a mediator-turned-arbitrator or for a motion
to vacate an arbitration award or for fending off a motion
to enforce a final award.
Why Switch Hats?
Why, despite these concerns, do some parties agree
in advance or post-dispute on a mixed mode process
or ask neutrals to consider shifting roles, and why do
a significant percentage of experienced dispute resolution professionals believe that in appropriate cases and
if approached with due care and caution, switching hats
may be a valuable component of their toolbox. Mixed
roles may be the best way of addressing parties’ special
needs and accommodating varied (or changing) agendas
in dispute resolution. They may offer a flexible means of
accommodating rapid “lane-shifting” between adjudication and negotiation, enhancing procedural efficiency
and economy and offering the prospect of a more tailored
result led by a trusted third party. The potential to use
arbitration as an add-on to mediation for the unresolved
issues assures finality and may enhance outcomes acceptability and sustainability. Finally, empowering a mediator
to act as an arbitrator may also facilitate the crafting of a
mediated resolution along with enhanced enforceability
of a “consent” arbitration award.
All this said, engaging with mixed roles is not for beginners. It requires deliberate planning, a seasoned neutral who enjoys the trust of the parties, a good judgment,
an educated consent and careful contractual drafting. As
explained below, mediator evaluations and the handling
of confidential communications in ex parte “caucuses”
are areas of particular concern that require thoughtful
handling. In the international commercial realm, moreover, the picture is further complicated by national or
regional variations in attitudes and practices.
30
Varying Perspectives and Practices in the
International Landscape
Those contemplating or performing mixed neutral
roles in the resolution of international commercial disputes are confronted by a variegated landscape of cultures
and legal traditions that embrace different perspectives
and practices when it comes to mediation, arbitration,
and mixed roles. These variances are mirrored in national
laws respecting domestic and international arbitration
and dispute resolution; rules and procedures governing
arbitration and dispute resolution; ethical standards; and
non-binding “soft law” norms.
On one end of the spectrum is Brazil, which prohibited the practice of med-arb in its 2015 law governing
mediation. Some jurisdictions with common law affiliations such as Hong Kong, Singapore and Australia have
legislated procedural strictures on med-arb.
A wholly different reality prevails in China, where
mediation is not traditionally a discrete professional activity, but is tied to other roles, such as government administrator, judge or arbitrator. Today, arbitrators, like judges,
regularly offer to “change hats” to help parties explore
settlement during the course of adjudicating disputes.
In Germany, the traditional strong and proactive role of
judges in promoting settlement has strongly influenced
the practice of arbitrators. Some German arbitrators may
upon the consent of the parties offer their preliminary
views about the parties’ case. In addition, if the parties
agree, German arbitrators may also propose the terms of
settlement. The Chinese and German traditions influenced
soft-law standards produced by CEDR’s report—Commercial Arbitration at Its Best—as well as the more recent
Prague Rules for international arbitration.
The United States stands somewhere in the middle.
In the United States, there is neither a tradition nor an
outright prohibition on neutrals switching hats. Furthermore, if not carefully managed such practices may result
in vacatur of an arbitration award or a court’s refusal to
enforce the product of a dispute resolution process. Leading arbitration and mediation providers tend to discourage such practices but permit agreement to med-arb or
arb-med. Reflecting prevailing views, the CPR Commission on the Future of Arbitration Report emphasizes the
dangers of pre-dispute or even post-dispute arrangements
in which the same individual is assigned the roles of
mediator and arbitrator and offers cautious guidance for
employment of mixed neutral roles. Meanwhile, there is
evidence that a sizable minority of experienced neutrals
have engaged in med-arb or arb-med.
In view of the above, there remains a need for a widely accepted, authoritative set of practice guidelines for the
use of single neutral med-arb or arb-med in the resolution
of international commercial disputes, as well as domestic
practice. It is this need that the International Task Force
on Mixed Mode Dispute Resolution hopes to address
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through the development of new Practice Guidelines, now
in working-draft stage.
New International Practice Guidelines:
A Working Draft
Drawing on our collective experience, the work of
previous study groups, and the reflective observations of
scholars and practitioners from around the world, an international working group is in the process of developing
new Practice Guidelines for Situations in Which a Mediator
Changes Roles to Function as an Arbitrator, or an Arbitrator
Performs the Functions of a Mediator. Key elements of the
current working draft are briefly summarized here.
(1) Need for Careful, Informed, Independent Reflection
by Parties and Counsel. Any decision by parties
to employ neutrals in dual roles (med-arb, arbmed or arb-med-arb) or to have an arbitrator
engage directly in helping facilitate settlement
should be the product of careful, informed, and
independent reflection and discussion by the
parties. Notwithstanding, at some point it will be
critical for the parties to engage the neutral(s) in
the discussion to receive their input and to ensure
their comfort with and commitment to the process.
Indeed, the parties’ faith and trust in the ability of
a neutral to “thread the needle” of a dual role may
be the single most critical element in submitting to
such arrangements.
(2) Ensuring Parties’ Mutual Understandings Regarding
Roles of Mediator and Arbitrator. Given the
diversity in perspectives and practice in different
parties of the world, it is critical for participants
in international dispute resolution—parties,
counsel, and dispute resolution professionals—to
anticipate that there may be different expectations
among parties from different cultures and legal
traditions, and to take responsibility for ensuring
mutual understanding and true meeting of
the minds regarding the roles and functions of
mediators and arbitrators.
(3) Neutral’s Competency, Availability, Independence,
Impartiality. A mediator should be authorized
to shift to the role of arbitrator in the course of
resolving a dispute, or vice versa, only if the
parties are confident of the neutral’s fitness
for both roles. The qualifications for the roles
are significantly different. Moreover, since the
standards of impartiality and independence
are higher it may not be possible for a neutral
to effectively shift to the role of arbitrator after
having served as mediator.
(4) An Agreement in Writing. Any ex-ante arrangement
regarding mixed neutral roles or an ad-hoc
agreement regarding switching roles should be
integrated in a written contract. Among other
things, the agreement should include a clear
demarcation of the respective phases or stages
of the process, using clear and concise language
to separately identify and delimit mediation and
arbitration. The agreement should avoid conflating
roles (such as “mediator/arbitrator” or “binding
mediator”) and be precise in describing how and
when an arbitrator shifts to the role of mediator, or
vice versa.
The agreement should include some form
of waiver—a provision to the effect that the
neutral’s participation in prior settlement
discussions as well as her/his exposure to ex-parte
communication will not be asserted by any party
as grounds for challenging the appointment of
the neutral as arbitrator or any arbitration award
rendered by the neutral.
(5) Key Process Options. If, prior to the commencement
of mediation, the parties are considering medarb or arb-med-arb, any of the following process
options may be explored and discussed between
the parties and by the parties with a prospective
mediator. Such provisions should be incorporated
in the parties’ written agreement. Perhaps the
two most consequential choices to be made by
the parties are (1) the scope of the neutral’s role
as mediator/facilitator of settlement—that is,
whether the neutral will engage in case evaluation
or offer proposals for settlement; and (2) whether
settlement discussions should include private
caucus sessions with individual parties.
If a mediator is expected to switch to an arbitral
role if settlement is not achieved, there is always
the possibility of avoiding private caucuses and
conducting the entire mediation process in joint session—an approach some neutrals have successfully
employed to settle disputes, thus avoiding arbitration. If, as is often the case, the participants prefer to
use private caucuses during the mediation phase, a
number of process options are available, including
the following:
• An agreement that if med-arb proceeds to arbitration, the neutral arbitration award must be dependent solely on evidence and arguments presented
during arbitration proceedings, and not on any
other communications or information conveyed
during mediation.
• An agreement that the parties consent to med-arb
with full awareness that information received in
ex parte caucus in mediation phase may be taken
into account by the mediator turning arbitrator in
formulating her/his arbitration award .
• A requirement that, at the conclusion of mediation
and before arbitration, the neutral shall disclose to
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31
the arbitration award. Moreover, in her or his
role as a mediator, the neutral has the benefit of
full information regarding the dispute and the
strengths and weaknesses of the parties’ cases.
the parties as much of the confidential information
she or he received [or provided] during the mediation as (s)he considers material to the arbitration
proceedings.
(8) Med-Arb, Arb-Med-Arb With a Tribunal. Although
engaging an entire tribunal in the mediation phase
of med-arb is likely to be cumbersome, two options
are readily apparent: having the chair of the
arbitration panel act as a mediator, or, alternatively
engaging the two wing arbitrators as co-mediators.
A variant of the latter approach might involve
each wing arbitrator being authorized to meet
separately (caucus) with the party that appointed
her/him during the course of mediation. The
downside of this approach would be to reinforce
concerns about the independence and impartiality
of the respective wing arbitrators. An alternative
would be to have wing arbitrators caucus with the
party that did not appoint them.
• An agreement that at the conclusion of mediation and before arbitration, the parties will confer
regarding the continued service of neutral.
• A requirement for separate written consent by the
parties to have the neutral arbitrate after the conclusion of mediation, or an agreement that either
party may opt out of the process at that stage.
• An agreement permitting neutrals to recuse themselves at the conclusion of mediation.
(6) Variations on Med-Arb. Even where mediation
is not successful in resolving all substantive
issues in dispute, mediators may be able to help
set the stage for a dispute resolution process,
including facilitating arbitration procedures
that are customized to more effectively suit the
circumstances and serve the needs of the parties.
(9) Capturing Meaningful Accounts and Data. Only
by collecting and sharing meaningfully detailed
accounts of our experiences—good and bad—with
med-arb, arb-med, and arbitrator engagement with
settlement will we be in a position to overcome our
varied predispositions in favor of more deliberate
and functional approaches. Only by this means
may we come to appreciate the potentialities and
limits of different forms of third-party engagement
during the settlement process, including the use
of private caucusing, forms of evaluation, putting
forth specific proposals for settlement, and other
formats that are often subjects of controversy.
One variant of med-arb is Mediation and
Last-Offer-Arbitration (MEDALOA), in which
traditional mediation followed by a process in
which each party submits a written final or “last
offer” to the neutral. As arbitrator, the neutral
proceeds to pick the last offer she or he considers
most equitable, or most appropriate under the
standards established by the parties. Although
this process sometimes occurs during mediation, it
may be agreed to beforehand.
(7) Considerations for Parties Contemplating Arb-Med.
An individual appointed as arbitrator may agree
to switch to the role of mediator at some point
in the arbitration process. The switch is likely
to be prompted by the parties’ belief that with
the help of the neutral, a negotiated settlement
is achievable. An added advantage is that the
neutral’s initial arbitral appointment will facilitate
the conversion of any mediated settlement
agreement into a consent arbitration award. Of
course, any arrangement struck by the parties
should address what happens if mediation fails to
fully resolve disputes.
Endnote
1.
Working Group 5 is co-chaired by Professors Mironi and
Stipanowich, and includes participants from Australia, Belgium,
Brazil, Canada, China / Hong Kong, Germany, India, Japan, The
Netherlands, Singapore, South Africa, the United Kingdom, and
the United States. Much of the material in the current working
draft recommendations was adapted from Thomas J. Stipanowich,
Arbitration, Mediation and Mixed Modes: Seeking Workable Solutions
and Common Ground on Med-Arb, Arb-Med, and Settlement-Oriented
Activities by Arbitrators, 26 Harvard Negotiation Law Review
(forthcoming 2021), available at https://papers.ssrn.com/sol3/
papers.cfm?abstract_id=3689389.
On occasion, it is agreed that an arbitrator will
take on the role of mediator after rendering a final
award but prior to its publication. (Accounts of
such proceedings describe a process in which the
completed award is placed, unopened in a sealed
envelope, on the table in full view of the parties.)
Such an approach may have appeal for parties
who are anxious about the risks of defaulting
to a third-party decision and may overcome
the concerns that ex-parte communication
received during the mediation would influence
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Working Group 6 of the Mixed Mode Task Force
The Impact of Enforcement on Dispute Resolution
Methodology
By Kathleen Paisley and Jane Player
When disputes cannot be avoided and are subjected
to a formal amicable dispute resolution procedure involving a neutral, whatever that procedure may entail, the
value of resolving that dispute is enhanced to the extent
that the outcome is enforceable if the other side does not
live up to its side of the bargain. Knowing that the result
will be respected either voluntarily or through legal
enforcement mechanisms increases party buy in to the
process, increasing the likelihood that the dispute will be
resolved.
Although parties voluntarily comply with most
amicable resolutions, enforcement mechanisms are an
important piece of the dispute resolution process. Their
speed and predictability encourage party participation
and enhances the credibility of the process with reluctant
parties.
The primary enforcement mechanisms available
to enforce amicable resolutions internationally are the
Singapore Convention on Mediation1 and the New York
Convention on arbitral awards.2
Enforcement Considerations in Planning Dispute
Resolution Proceedings
During the Task Force’s tenure, the means available to enforce amicable resolutions was significantly
enhanced when the Singapore Convention on Mediation
was adopted on 20 December 2018 and entered into force
on 12 September 2020. By providing a recognized means
of enforcement of mediated settlements, the goal of the
convention is to promote the use of mediation as a faster,
less expensive form of dispute resolution for international disputes and one which is more likely to preserve
commercial relationships.
Prior to the entry into force of the Singapore Convention, mediated settlements were typically treated the
same as any other contract or settlement agreement for
purposes of enforcement.3 This required a party seeking
enforcement of a mediated settlement to proceed in the
same way it would have for the breach of the underlying
contract that was the initial source of the dispute, potentially leading to another dispute resolution procedure.
The Singapore Convention eliminates the need to litigate
the breach of (the settlement) contract; now the obligations contained in international settlement agreements
are directly enforceable in contracting states by virtue of
the fact that they resulted from a mediation.
Prior to the Singapore Convention (and today except
in the five countries that have ratified it), the alternative
was to have the mediated settlement reflected in a consent award that could be enforced under the New York
Convention. As will be discussed further below, the New
York Convention generally allows for enforcement of consent awards where the arbitrator was in place before the
mediation and when a genuine dispute existed. However,
where an arbitrator is put in place later, or the mediator
becomes an arbitrator after the settlement was reached
for purposes of issuing a consent award, the New York
Convention may not allow for enforcement.
The uncertainty with respect to the enforcement of
mediated settlements led UNCITRAL to consider promulgating a specific convention geared at the enforcement of
meditated settlements. The need for such a convention
was hotly debated. One set of practitioners questioned the
need for it as 80% of mediated settlements are adhered to
anyway because they are the parties’ own agreed solutions to their commercial problems and so there is high
likelihood of compliance. However, an equally forceful
counter argument was made, perhaps rightly, that as
much effort is put into negotiating and agreeing a settlement, if the other party then decides not to perform, the
company requesting the performance has few options
other than litigation or arbitration, the very processes
they wanted to avoid in the first place, and therefore an
internationally recognized enforcement mechanism was
needed. Further, the lack of enforcement was often used
as a basis for reluctant parties (and their counsel) to refuse
to mediate and the Convention’s entry into force has
removed this obstacle.
WG6 is co-chaired by Kathleen Paisley and Jane
Player. For a full list of WG 6 members, go to https://imimediation.org/mmtf.
Kathleen Paisley is a recognized international arbitrator (and mediator) based in the U.S. and Europe. She has
acted in commercial arbitration cases under all the major international arbitration rules and in investor-state
cases before ICSID and under the UNCITRAL rules and
is triple qualified in law (Yale), finance (MBA) and accounting (CPA Exam).
Jane Player is a leading mediator based in London, a
member of the IMI Users Council and and an honorary
member of the International Academy of Mediators.
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The Singapore Convention now provides a standard
framework for the enforcement of mediated settlements
to resolve international commercial disputes similar to
the New York Convention for arbitral awards that has
been in place since 1958. As of September 12, 2020, 53
countries have signed the Singapore Convention including the U.S., China and India; however, the U.K., EU and
Australia have yet to sign and only five countries have
ratified. At the same time, the New York Convention with
its 166 ratifying countries continues to allow for broad
enforcement of arbitral awards including consent awards
falling within its scope.
In the context of considering the combination of
dispute resolution processes, if enforcement is a consideration, it will be important for parties to consider how
to structure the process so the outcome is most likely to
be enforced either under the Singapore Convention or
New York Convention in a place where the party against
whom enforcement is sought has assets, taking into account the following questions.
• Has the country or countries in which enforcement
would be sought ratified either the Singapore Convention or New York Convention or both?
• In the context of the Singapore Convention, has the
potential enforcing state made a reservation requiring an opt-in to the convention?
• Where one or both conventions have been ratified,
are their procedures in place in practice for timely
enforcement?
• Are the courts friendly to enforcement under the
relevant convention(s)?
Keeping in mind that, at the time of writing, only
five countries have ratified the Singapore Convention
compared with the 166 that have ratified the New York
Convention, if the possibility of enforcement is an important consideration, as further discussed below, it would
be wise to follow a process pursuant to which a bona
fide arbitration is brought as a first step when a dispute
is extant and any additional agreement for mediation is
put in place thereafter. However, looking forward, more
countries will ratify the Singapore Convention and it will
provide an increasingly viable addition and/or alternative option for parties seeking an enforceable result.
With that in mind, the following section briefly
outlines the factors to be taken into account to ensure enforcement of a mediated settlement under the Singapore
Convention and a consent award under the New York
Convention.
Enforcement Criteria
Mediated Settlements Under the Singapore
Convention
Under the Singapore Convention, contracting states
agree that if a party to a mediated settlement agreement
requests enforcement, each contracting state will recognize and enforce that agreement in accordance with its
own rules (subject to the contracting state’s ratification
or approval of the Singapore Convention). Importantly,
unlike the New York Convention, the Singapore Convention does not contain a reciprocity requirement so that the
enforcing country must recognize the mediated settlement
if it has ratified the Singapore Convention even if the
country in which the mediation was held has not adopted
the convention.
The party seeking enforcement must produce a copy
of the settlement agreement and evidence that the agreement was reached through the use of mediation and establish that it was international in scope, in the sense that:
(i) at least two parties to the agreement have their places
of business in different states; or (ii) the state in which the
parties to the agreement have their places of business is
different from either the state in which a substantial part
of the obligations under the agreement is performed or
the state with the closest connection to the subject matter
of the agreement.
Evidence that the settlement was reached through
mediation may include:
(1) the signature of the mediator on the mediated
agreement itself, or
(2) a document signed by the mediator indicating that
the mediation happened, or
(3) attestation by an institution that administered the
mediation, or
(4) if 1-3 are not possible, any other evidence
acceptable to the court before which any
application for enforcement is made.
If these criteria are met, the Singapore Convention
permits contracting states to refuse enforcement only on
limited grounds, which are similar to those set forth in the
New York Convention and also to those for which enforcement of a contract could be challenged, as follows:
(1) a party was under some incapacity, or
(2) the agreement is null and void under applicable
laws, or it is not binding or it is not final according
to its own terms or has been subsequently
modified, or
(3) the obligations in the agreement have been
performed or are not clear or comprehensible, or
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(4) there was a serious breach by the mediator under
the standards applicable to that mediator, which
resulted in the agreement, or
(5) the application to enforce is contrary to the
agreement itself, or
(6) the application to enforce is contrary to public
policy in the country of enforcement, or
(7) the subject matter of the dispute is not capable of
settlement under the laws in force in Singapore
( to include family, inheritance and employment
cases for example).
As such, the Singapore Convention potentially
enables parties in cross-border commercial transactions
who have settled their dispute through mediation to
enforce their settlements directly.
Practical Considerations
Some practical considerations that may arise in the
context of potential enforcement of a mediated settlement
that should be kept in mind are:
• What form of proof will be provided to establish
that the settlement was reached through mediation and is the proposed mediator comfortable to
provide it?
• When a settlement is reached with a time lag after
the mediation meetings, how will it be established
that the settlement resulted from the mediation (as
opposed to some other ongoing process while the
dispute was pending) and to what extent does this
mean that the mediator should remain available to
attest to the process?
• If the mediated settlement contains some provisions that would run contrary to public policy or
go beyond the scope of the Singapore Convention
(e.g., employment), what means will be put in
place so that the remainder of the mediated settlement would be enforceable under the convention?
• Is the settlement agreement sufficiently clear on its
face to be enforceable?
Consent Awards Under the New York Convention
Although the Singapore Convention has been enthusiastically received by many countries, until it has been
ratified more extensively, enforcement under the New
York Convention often remains the only alternative for
parties seeking to achieve an enforceable result through a
combined process.
including the International Chamber of Commerce (ICC)
rules, the AAA/ICDR American Arbitration Association
rules, London Court of International Arbitration rules,
UNCITRAL Arbitration rules, and the WIPO Arbitration
rules, among others.
The application of the New York Convention to consent awards turns on whether a consent award is properly
considered to be an award within the meaning of the New
York Convention, and further whether it arises out of a
dispute such that it falls within the convention’s scope.
With respect to whether a consent award is properly
considered to be an award, the prevailing view is that
a consent award is an award within the meaning of the
New York Convention, and neither the language of the
New York Convention itself nor that of the major international arbitration’s rules would argue against a consent
award being considered an award. As discussed in a
recent article in this publication, two recent United States
district court cases firmly held a consent award entered
by an arbitral tribunal and reflecting the settlement by the
parties to be an “award” enforceable under the New York
Convention and the same position applies under the UNCITRAL model law Article 30(2) which states expressly
that “[a]n award on agreed terms has the same status and
effect as the award on the merits of the case.4
However, in order to be enforceable under the New
York Convention it is not sufficient that a consent award
is considered to be an arbitral award; the award must
also arise out of a dispute. The New York Convention
provides: “This Convention shall apply to the recognition
and enforcement of arbitral awards ... arising out of differences between persons, whether physical or legal.”
As to whether a consent award arises out of a dispute,
the conclusion may differ depending on when the arbitration was brought. In cases where there is an ongoing
arbitration at the time of the settlement, even if it has been
paused for example to allow for mediation, the consent
award would arise out of the dispute that was before the
tribunal. This would be the case whether the settlement
was procured through mediation or not. However, where
a settlement is reached, whether through mediation or
otherwise, in advance of the arbitrators being appointed
and an arbitration is instituted thereafter merely to issue
a consent award, or a mediator later becomes an arbitrator to issue a consent award, many take the view that the
consent award would not arise out of a difference and
therefore would not be enforceable under the New York
Convention. While this issue remains undecided in many
jurisdictions, precaution would warrant avoiding this
eventuality where possible.
If the parties to an arbitration reach a settlement during the course of an arbitration, they may ask the tribunal
to record their settlement as a consent award (otherwise
referred to as an award on agreed terms). This is provided for expressly by most international arbitration rules
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35
Practical Considerations
To avoid this risk, when parties are considering how
to structure a combined process, if they desire the result
to be enforceable under the New York Convention, it
would be wise to initiate an arbitration first or at least at
the same time as the mediation. For example, this approach is adopted by the Singapore International Mediation Centre and Singapore International Arbitration Centre (SIAC) Arbitration-Mediation-Arbitration protocol.
Under most arbitration rules, the tribunal has the
discretion whether to issue a consent award, and considerations that arise for a tribunal when confronted with a
request for a consent award include:
• Does the settlement agreement go beyond the
scope of its jurisdiction because it addresses issues
outside the claims brought in the case?
• Does the settlement agreement raise potential
concerns related to fraud or illegality (including
money laundering) and to what extent do the tribunals’ obligations extend to probing such issues?
• To what extent should the tribunal review the settlement and explore the circumstances surrounding
settlement before issuing a consent award?
Parties and mediators should take these considerations into account in structuring a settlement that would
be subject to a consent award.
Other Enforcement Issues Impacting Combined
Dispute Resolution Processes
Enforcement considerations may also act as a constraining factor in designing combined processes. Example of factors to be considered are:
• When a stepped clause is employed, have the steps
been crafted so that they do not act as a barrier to
arbitration or create potential enforcement risk?
• When the same neutral acts as a mediator and arbitrator in the same case have proper consents been
put in place such that if an arbitration award is
ultimately rendered it would be enforceable? When
do those consents have to be given and by whom?
• Even if proper consents are obtained, if a neutral
engages in ex parte communication with the parties
during a mediation process and thereafter acts as
an arbitrator, does this create risks for enforcement?
• When an arbitrator undertakes activities geared
towards settlement, do those procedures create a
risk for enforcement of the award? If so, when and
how should he/she consider doing this to ensure
the enforceability of the award?
communications between them create a risk to
enforcement?
In the context of the enforcement of international
arbitral awards under the New York Convention, the first
step in challenging enforcement will be to seek to annul
or set aside the award at the arbitral seat, in which case
such issues would be raised during that proceeding. This
means that in deciding how to structure a combined procedure or to employ the other mechanisms considered by
the various working groups in the context of a procedure
involving an arbitration, an underlying consideration
will be the extent to which any award so produced could
pose a risk of being set aside or not enforced under the
New York Convention. These factors have been taken into
account by the various other working groups in considering the subjects addressed herein, but it may be wise to
consider in specific cases whether issues are raised under
the New York or Singapore Convention or the law of the
arbitral seat or of a likely enforcing court.
Conclusion
Parties and neutrals should always consider enforcement risk in structuring and implementing combined processes. Considering that 80% of amicable resolutions are
voluntarily complied with, enforcement will still be the
exception rather than the rule. However, the availability
of enforcement should it become necessary is important to
many parties (and their counsel) and therefore can hinder
development of, and participation in, combined processes
when not available.
When the Singapore Convention has been ratified
more broadly, parties will have an important additional
tool in their enforcement toolkit, and until then enforcement under the New York Convention remains a viable
alternative, provided processes are designed with enforcement in mind.
Endnotes
1.
United Nations Convention on International Settlement
Agreements Resulting from Mediation, adopted on 20 December
2018 and entered into force on 12 September 2020 (referred to as the
“Singapore Convention on Mediation”).
2.
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards was adopted by a United Nations diplomatic conference on
10 June 1958 and entered into force on 7 June 1959 (referred to as the
“New York Convention”).
3.
An exception to this is Directive 2008/52/EC of the European
Parliament and of the Council of 21 May 2008 on certain aspects of
mediation in civil and commercial matters, OJ L 136, 24.5.2008, p.
3–8 (and national laws promulgated thereunder).
4.
Laura A. Kaster, Consent or Agreed Awards and the New York
Convention—What Is the Status?, NY Dispute Resolution Lawyer, 11
(2) (Fall 2018) (and cases cited therein).
• When a mediator and an arbitrator are acting in
the same case, when and to what extent would
36
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Working Group 7 of the Mixed Mode Task Force
Considerations for Allowing Communications Between
Arbitrators and Mediators Appointed to the Same Dispute
By Deborah Masucci and Dilyara Nigmatullina
Introduction
Working Group 7 (hereinafter “WG7” or “the
Group”) was charged with the task of examining scenarios focusing on the types of communications between arbitrators and mediators who are not the same persons but
are appointed to the same case. Why would they communicate with each other, would the communications
impact the proceedings, and what role would the parties
play in setting the parameters of the communications?
WG7 found that there are international examples of
rules and procedures where the appointment of different
persons as arbitrators and mediators on the same matter is contemplated.1 Notably, while the number of such
rules and procedures is growing,2 none of them seem
to provide for the sharing of information between the
neutrals serving different roles. Nor was the Group able
to identify examples in practice where arbitrators and
mediators appointed to the same matter actually worked
together in the manner proposed by the Group.
In the absence of rules and procedures or examples
from practice, the Group could not identify “generally
accepted principles” or “best practices” in relation to
the examined scenarios. As a result, the Group based
its investigation on discussions with practitioners and
academics and on role-playing some of the scenarios.
This allowed the Group to formulate a framework that
provides some guidance on how to combine mediation
and arbitration in ways that would allow the mediator
and the arbitrator to communicate with one another in
the interests of seeking faster, less expensive, and/or
better outcomes than allowing each process to progress
independently.
Conceptual Framework for Communication
Between Arbitrators and Mediators When
Combining Mediation and Arbitration
When arbitrators and mediators communicate, a central tension may arise because the “rules of engagement,”
between parties and arbitrators on the one hand and
parties and mediators on the other, may differ starkly. To
parties, an arbitrator may be viewed as an authoritative
figure who makes binding decisions that may dramatically affect their business. A mediator may be thought of
as a trusted person who respects confidences, who may
or may not have any authority, and is guided by procedural principles and sometimes substantive principles,
such as not providing an evaluation. Mediators are, thus,
likely to be more flexible and they need not be as explicit
as arbitrators.
Rather than leaving the coordination of communication between arbitrators and mediators to chance or to
the appreciation of each neutral, caution dictates that
neutrals, parties, and counsel should first discuss what
rules and principles may exist. Particular attention should
be paid to the procedural rules that apply to the different
processes when deciding what and how the two neutrals
may communicate, and who should take the lead.
The Group suggests that a number of factors need
to be considered when arbitrators and mediators come
together and communicate with each other. These include:
• careful consideration of the risks of tainting the
arbitration process or the outcome of an arbitral
award in such an arrangement;
• a strategy for managing those risks;
• an informed determination by all the participants to
proceed;
• well-documented consent; and
• well-defined contingency arrangements as well as
risk mitigation structures and policies.
Regardless of the scenario as identified below, the
Group recommends that the parties and neutrals select
WG7 is co-chaired by Deborah Masucci and Dilyara
Nigmatullina. For a full list of WG7 members, go to
https://imimediation.org/mmtf.
Deborah Masucci is an independent arbitrator and
mediator. She is a past chair of the International Mediation Institute and the Dispute Resolution Sections of the
NYSBA and American Bar Association. She is a Fellow
of the Chartered Institute of Arbitrators and a panel
member for the American Arbitration Association and
an adjunct faculty member at Fordham Law School.
Dr. Dilyara Nigmatullina is a postdoctoral researcher
at the University of Antwerp (Faculty of Law, Law Enforcement Research Group) and an accredited mediator
in civil and commercial matters by the Federal Mediation Commission in Belgium.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
37
one of the following modes of communication between
the neutrals:
• mediators and arbitrators are free to consult with
one another without advance notice to the parties;
or
• mediators and arbitrators are free to consult with
one another without advance notice to the parties,
but are confined to specified purposes or subject
matter; or
• mediators and arbitrators may only consult with
one another after seeking and receiving specific
all-party authorization in a given instance, possibly
confined to a specified subject matter; or
• mediators and arbitrators may only consult in the
presence of the parties and their counsel.
The parties and neutrals should explicitly agree,
among other issues, on the selected mode of communication and that the neutrals remain bound by their retention agreements and any ethical codes of conduct contained within the retention agreements.
(3) Shadow Mediation: the parties wish the arbitrator
to take the lead and to involve the mediator on
selected topics only (e.g., to clarify certain rules
or discuss issues relating to discovery or witness
testimony), where the arbitral tribunal would
prefer not to know or have to take certain topics
into consideration;
(4) A Mosaic: the parties wish the neutrals to take
the lead through a series of sequential or parallel
proceedings where greater emphasis is placed
at different stages of a process as it evolves (e.g.,
in time, or on certain topics, starting off with
arbitration, and then creating a “mediation
window,” reverting to arbitration if the dispute
is not fully resolved or if a consent award is
required); and
(5) An Integrated Process: the parties wish the neutrals
to sit together as a team and consult with oneanother and the parties at all stages, carving out
exceptions (e.g., where an arbitrator’s ability to
render a binding and dispositive award on a
finding of fact or law may be compromised if the
arbitrator overhears what happens in a caucus).
“While we have little to no experience with arbitrator(s)
and mediator(s) appointed to the same case communicating with
each other, there is evidence that this tactic will increase. The work
of this Group will serve as a guide to parties and counsel seeking
to develop a structure that meets their needs and will promote
the efficient and fair resolution of their dispute.”
Scenarios Where Communication Between
Arbitrators and Mediators May Occur When
Combining Mediation and Arbitration
The Group focused its work on the first three scenarios above. The remaining areas will be examined in future
work of the Group.
The Group identified five different scenarios where
communication between arbitrators and mediators may
occur:
WG7 looked to the work of Working Group 2 for
issues to address when designing the first scenario.
Structure Development needs to be established early in the
proceedings by analyzing the different procedural and
substantive principles that the parties and the counsel
think may or should apply. If parties are not in a position to generate their own structure, they might consider
relying on the central principles for both arbitration and
mediation like the investigation of relevant facts, fairness
in process and outcome, and achievement of agreement or
final outcome.
(1) Structure Development: the parties wish the neutrals
to help posit and set procedural rules, without
deciding initially who between the neutrals
should lead on communications, which can result
in a decision on what topics the arbitrator and the
mediator should lead on, respectively;
(2) Shadow Arbitration: the parties wish the mediator
to be the primary neutral and to involve the
arbitrator only on certain key dispositive issues
where binding evaluative input is needed (e.g.,
findings of fact, determinations of liability or
quantum on specific points);
38
When kicking off the Shadow Arbitration scenario, the
mediator may first wish to discuss any sensitive issues
with the parties and their counsel to ensure they know
what not to raise or discuss in the shadow arbitrator’s
presence. In consultation with the parties on the one hand
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
and the arbitrator on the other hand, the mediator should
clarify and document taboo topics not to be raised in
any joint meeting. The parties would then identify key
dispositive issues that the shadow arbitrator needs to
resolve including issues of causation, liability, and quantum to name a few. Safeguards should be put in place
to ensure that the arbitrator does not receive information that might prejudice binding findings of fact or law
especially, for example, dispositive decisions on statute of
limitations or limitations on liability.
When the parties wish to proceed in the Shadow
Mediation mode, the arbitrator takes the lead to ensure
that all procedural and substantive rules are addressed
to achieve binding and enforceable findings of fact and
law, as well as a binding and enforceable arbitral award.
The arbitrator and mediator may work simultaneously
but need not be appointed simultaneously. The arbitrator
retains primary control over what the arbitrator determines to be important to issuing a binding award. It is
helpful for the arbitrator, the mediator, the parties and
their counsel that the arbitrator identify areas that may
or may not be discussed in the arbitrator’s presence. The
shadow mediator should be given free access to observe
the arbitration proceedings, in part, to be informed of
what has occurred in arbitration without having to have
this information repeated in mediation sessions. The first
action of the shadow mediator should be to facilitate
a discussion between the parties about the role of the
shadow mediator going forward, including those topics
where rules do not apply or the arbitrator does not wish
to dispose of them, and what the permitted scope of interaction between the arbitrator and the shadow mediator is.
The expanded WG7 article details considerations that
the parties and neutrals should address in each of these
scenarios. The topics include dos and don’ts, qualifications for neutrals being considered for these assignments
as well as recommended default party agreements and
practices for neutrals.
Conclusion
While we have little to no experience with
arbitrator(s) and mediator(s) appointed to the same case
communicating with each other, there is evidence that this
tactic will increase. The work of this Group will serve as a
guide to parties and counsel seeking to develop a structure that meets their needs and will promote the efficient
and fair resolution of their dispute.
Endnotes
1.
See, e.g., a combined set of “Simultaneous Mediation and
Arbitration Rules” offered by the Chamber of Mediation and
Arbitration of Paris at https://www.cmap.fr/notre-offre/lesautres-modes-alternatifs-de-resolution-des-conflits/ or the Rules
on med-arb and arb-med procedure of the European Center for
Dispute Resolution at http://www.ecdr.si/index.php?id=119 and
http://www.ecdr.si/index.php?id=120.
2.
See, e.g., the 2019 Beijing Joint Declaration of Belt and Road Initiative
Arbitration Institutions (signed by 47 institutions) supplemented
in 2020 with the “Working Mechanism under the Beijing Joint
Declaration” to expedite arbitrations through coordinated
mediations.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
39
Arbitration
Successes, Stresses, and Secrets:
The Psychology of Remote Hearings
By Lucy Greenwood
It is almost a year since the arbitration world enthusiastically embraced video conferencing as a genuine
alternative to in-person interactions. Whilst there were
initial doubts as to the possibility of conducting hearings
remotely, the way the arbitration community has pivoted
to this medium has been a resounding success. There
are considerable upsides to the increased use of video
conferencing in our practices, particular in terms of cost
efficiencies and carbon savings. Virtual hearings are more
accessible, invite more creative presentations in the terms
of use of visual aids and videos, reduce emissions and
save costs. Going forward, it is likely that all hearings, to
a greater or lesser extent, will have a virtual component.
That development is to be welcomed. However, fully remote hearings, such as those that have taken place during
the past year, exert a significant psychological toll on participants. Identifying the causes of the additional stresses
placed upon us in the virtual environment will assist us
in counteracting the psychological impact upon us and
enable us to capitalize fully on the benefits of a virtual or
semi-virtual hearing.
“Arbitrators pride themselves
on the ability to read people and to
unlock their ‘secret’ but overestimate
their ability to determine when a
witness is telling the truth.”
Numerous studies have found that the majority of
what is said is communicated not through words, but
through physical cues. If these physical cues are lost, diminished, or distorted, compensations have to be made.
In a video conference we have to work harder than we
do in person to identify and process cues such as facial
expressions and tone and pitch of the voice. Certain
non-verbal cues, such as body language, may be denied
to us altogether because of the way people interact with
their cameras and the way their remote environment is
set up. Silence, something advocates use to great effect, is
possibly even more problematic. Even delays in responding of just over a second can cause the individual to be
perceived to be less focused, and, for those waiting for a
response, can trigger anxiety in relation to the IT system
40
which may cause them to be distracted once the response
does come. To compound the strain on all participants, if
we can see ourselves on camera, we are acutely aware of
being watched, which brings with it a heightened need
to perform. Multi-tasking is another issue that is exacerbated by the use of video platforms. In remote hearings
arbitrators need to move between screens, annotate documents and monitor witnesses, counsel and, often, a live
transcript. Each time we switch from one task to another
there is a cost to our brains and general well-being. Multitasking increases the production of cortisol (known as
the “stress hormone”) and adrenaline (which triggers the
“fight or flight” reflex). Add these additional stresses to
the pressures of being in a high-stakes hearing and it is
easy to see why some arbitrators and counsel are longing
for a return to in-person hearings.
Arbitration hearings are all about communication. An
excellent communicator will both “transmit” and “receive” communications effectively and clearly. To ‘transmit’ effectively one should use body language to fill the
space available, maintain eye contact and adopt measured
speech patterns making good use of pauses. To ‘receive’
effectively, one should use body language to demonstrate
attention and active listening, maintain eye contact and
respond at appropriate moments when the speaker is
pausing. Focusing on these components immediately
demonstrates why remote hearings can be problematic.
As noted, non-verbal cues are dramatically reduced,
and pauses may have the effect of increasing stress and
inviting suspicion (as well as increasing the likelihood
of speakers talking over each other). Lack of eye contact,
however, is probably the most difficult issue faced in the
remote environment. It is a problem for communications
between arbitrators and counsel, but it poses a far more
significant problem in relation to witnesses.
Making eye contact with people helps us to connect
with and understand others and, in particular, to assess a person’s credibility and trustworthiness. Dickens
wrote that “every human creature is constituted to be that
Lucy Greenwood is an independent international arbitrator, qualified in the U.S. and the U.K., specializing
in commercial and investment treaty arbitrations with a
particular focus on energy related disputes. Visit www.
greenwoodarbitration.com for more information.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
profound secret and mystery to every other.” Arbitrators pride themselves on the ability to read people and
to unlock their “secret” but overestimate their ability
to determine when a witness is telling the truth. This is
particularly true in the remote environment. A witness
giving evidence remotely will struggle to maintain eye
contact with the tribunal and may be, entirely wrongly,
perceived as evasive. The so-called “vividness effect”
may also come into play in a remote environment. This
is the fact that arbitrators are likely to pay more attention
to testimony and perceive it to be more credible when it
is considered to be more “vivid,” i.e., there is an emotional connection with the witness or the witness tells an
engaging story. When the witness is physically closer to
the tribunal, arbitrators are more likely to engage with a
witness. IT system issues, attention lapses caused by arbitrators having to multi-task between viewing electronic
bundles and “reading” the witness’ demeanor, coupled
with a distracting background behind the witness can all
mean that the arbitrators’ brains are simply overloaded.
The result may be that the arbitrators are unable to operate effectively in “receive” mode, either to retain and
recall testimony or to give it appropriate weight.
How do we overcome the psychological challenges of
the remote environment?
First, there must be a move away from the mindset that a remote hearing is a straight substitute for an
in-person hearing. Discussions of how the hearing will
proceed should begin by acknowledging the toll that the
environment has upon us. For example, when an arbitrator briefly looks out of a window in a hearing room,
their mind is recharging and restoring their concentration
levels. When an arbitrator looks away from their camera
in a virtual hearing, they are perceived as inattentive, or
they may be concerned that they will be so perceived.
To address this, participants should agree that breaks
should automatically be taken every hour. Building on
the notion that remote hearings are not a substitute for
an in-person hearing, parties and arbitrators should take
advantage of the flexibility offered by the virtual environment, by, for example, taking evidence in blocks of time
over a longer period, taking evidence in a more creative
way and considering recording elements of the hearing
such as opening statements for arbitrators to view later
“on demand.” There is no reason to follow a traditional
in-person timetable in a non-traditional environment, so
parties should be encouraged to discuss more adventurous approaches to communicating their positions, with
increased use of visual aids and other mechanisms not as
readily available at in-person hearings, such as videos.
a clear view of the face and eyes. External microphones
should be used in every case. Each participant should
consider how backgrounds can be used to amplify appearance. For example, studies show that experts may
be thought to be more credible if they have a bookcase
“If we can see ourselves on camera,
we are acutely aware of being
watched, which brings with it a
heightened need to perform.”
behind them. Other witnesses should give evidence in
front of plain backgrounds. Participants should minimize
fatigue by using the “hide my video” function to eliminate the stress of constantly being reflected on screen.
Participants should avoid the temptation to multi-task by
closing open applications and should limit their activities
to one platform. It is important to understand the stresses
placed upon the brain by operating constantly in the same
environment and, when not in the virtual hearing room,
participants should make time to physically move into a
different environment to recharge attention levels.
There is an expression to the effect that “if it doesn’t
challenge you, it won’t change you.” There is no denying
that remote hearings are psychologically challenging, but
they also afford opportunities for us to change and evolve
the way that we present cases. To truly capitalize on the
benefits of a virtual component to our practices, we need
to appreciate the psychological effect they have upon us
and work to ameliorate this impact as much as possible.
Second, all participants must ensure that they
compensate as much as possible for the deficiencies in
communication caused by the virtual environment. In
particular, cameras should be positioned at eye level
and sufficiently far away from the participant to ensure
that hand gestures are captured in addition to providing
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
41
Putting Their Money Where Their Mouth Is:
Mass Employment Arbitration Filings and the Nonpaying
Party Problem
By Dina Lamdany
Introduction
In February 2020, a federal judge ordered the food
delivery company DoorDash to pay $9.5 million in fees
in a case brought by 5,010 delivery drivers against the
company.1 “You’re going to pay that money,” U.S. District
Judge William Alsup said in court.2 “You don’t want to
pay millions of dollars, but that’s what you bargained to
do and you’re going to do it.”3
Unlike many court orders, Alsup’s was unique because no liability had yet been determined. Instead, the
judge required DoorDash to pay $9.5 million just to initiate arbitration proceedings.
Long criticized as a mechanism for corporate actors
to avoid liability, over the last few years arbitration has
begun to be wielded by workers to gain recourse against
their employers. By collectively initiating arbitration
proceedings en masse, workers are challenging employers to act on their word: to participate in the expensive
arbitration proceedings that they fought for years in court
to preserve as a contractual right.
The phenomenon of mass arbitration filings sits at
the intersection of mandatory arbitration and class action
waivers. Unable to organize to bring their employers
to court together, workers are now banding together to
bring their employers to arbitration proceedings. In doing
so, they have exposed employers’ resistance to actually
participating in arbitration—and in particular, their fear
of paying for it. Through these actions, workers have thus
identified an opportunity to dramatically shift the status
quo: to force the creation of mechanisms that would enable workers to practically resolve disputes against their
employers.
This paper aims to describe the current status quo
in mass employment dispute resolution procedures and
assess the viability of possible alternatives. Part I explores
the history of mandatory arbitration and class action
waivers. Part II describes the recent mass arbitration
filings and their outcomes. Part III analyzes the nonpaying party problem and the means by which employers
have both succeeded and failed at using nonpayment to
stall arbitration. Part IV describes possible legislative and
procedural mechanisms for improving today’s arbitral
system. The last section concludes.
42
The Evolution of Mandatory Arbitration and Class
Action Waivers
In 1925, Congress passed the Federal Arbitration Act
(FAA), requiring courts to enforce arbitration agreements.4
Passed under pressure by the business community, who
believed arbitration to be faster and cheaper than litigation, the FAA’s stated purpose was to put arbitration
agreements on “equal footing” with other contracts and
overcome “judicial hostility to arbitration.”5 Over the last
40 years, however, the U.S. Supreme Court has expanded
the scope of the FAA’s applicability dramatically, authorizing the use of arbitration for a broad range of disputes.
These disputes, such as those arising out of statutory and
constitutional law, differ dramatically from the commercial contracts that had motivated its creation.6
Until the early 2010s, the Supreme Court largely
treated arbitration and class actions as compatible with
one another. In the 2003 case Green Tree Financial Corp. v.
Bazzle, a plurality decision of the Supreme Court concluded that arbitrators, not courts, must determine whether an
arbitration contract forbids class arbitration, with limited
judicial review.7 In doing so, Bazzle indicated that class
arbitration could be compatible with the FAA, and thus
and that class arbitration agreements were fully enforceable.8 In the wake of this decision, both of the United
States’ largest arbitration providers, AAA and JAMS, issued rules for the administration of class arbitration.9 Both
sets of rules were either modeled off of, or directly reference, Rule 23 of the Federal Rules of Civil Procedure.10 In
the subsequent years, arbitral tribunals not infrequently
found that parties had agreed to class arbitration, particularly in cases involving consumer contracts—resulting
in a caseload of more than three hundred pending class
arbitrations by 2011.11
The Supreme Court’s approach to class arbitration
took a marked turn in its 2010 decision Stolt-Nielsen S.A. v.
AnimalFeeds Int’l Corp. In spite of its expression of deference to arbitrators in Bazzle, the Stolt-Nielsen decision
overturned an arbitral tribunal’s finding that class arbitration was implicitly permitted by the parties’ agreement.12
Dina Lamdany is the winner of the NYSBA/ACCTM
National Championship, Alternative Dispute Resolution, Law Student Writing Competition. Her excellent
article appears here in the original. Dina is a 2L at
Stanford Law School, where she is co-president of the
Stanford Law and Technology Association.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Instead, the Court found that the arbitrators’ decision
was based on supposed policy considerations, and thus
that because the parties had stipulated that there was “no
agreement” regarding class arbitration, the parties could
not be compelled to participate in class arbitration.13
Notably, the Court also held that “class-action arbitration changes the nature of arbitration to such a degree
that it cannot be presumed that the parties consented
to it by simply agreeing to submit their dispute to an
arbitrator.”14
ize the benefits of private dispute resolution: lower costs,
greater efficiency and speed, and the ability to choose
expert adjudicators to resolve specialized disputes.”23 In
contrast, “class arbitration not only introduces new risks
and costs for both sides, it also raises serious due process
concerns by adjudicating the rights of absent members
of the plaintiff class—again, with only limited judicial
review.”24 As such, without an affirmative contractual
basis for determining consent to class arbitration, such
proceedings would be preempted by the FAA.25
Vastly expanding upon its decision in Stolt-Nielsen,
in the landmark 2011 case AT&T Mobility v. Concepcion,
the Supreme Court interpreted the FAA to allow businesses to require consumers to bring claims solely in
individual arbitrations, rather than also as part of a
class.15 The justices overturned the California Supreme
Court’s decision in Discover Bank v. Superior Court, which
had previously found class action waivers in contracts of
adhesion unconscionable under California state law, both
for litigation and arbitration.16 In Concepcion, the Court
found that California’s rule unfairly disfavored arbitration because it required class arbitration, which the Court
found to be incompatible with the “fundamental” or true
historic character of arbitration.17 In particular, because of
the “procedural formality” it would require, “the switch
from bilateral to class arbitration sacrifices the principal
advantage of arbitration—its informality—and makes the
process slower, more costly, and more likely to generate
procedural morass than final judgment.”18 As such, the
Court ruled that “[r]equiring the availability of classwide arbitration interferes with fundamental attributes
of arbitration and thus creates a scheme inconsistent with
the FAA.”19 Concepcion thus found the FAA to preempt
California’s claim of the unconscionability of class action
waivers.
Thus, in the span of less than twenty years, the options available to employees frustrated with their employers have dramatically contracted due to the Supreme
Court’s interpretation of the FAA. Today, more than
half—54%—of nonunion private-sector employers mandate arbitration for their employees.26 Large employers
are more likely than small employers to mandate arbitration: among companies with 1,000 or more employees,
65.1% have mandatory arbitration procedures.27 Of employers mandating arbitration, 30.1% include class action
waivers in their procedures.28 Large employers are also
more likely than small employers to mandate class action
waivers; as a result, 41.1% of employees subject to mandatory arbitration have also waived their right to be part of a
class action claim.29 For a significant portion of America’s
labor force, individual arbitration is their only recourse.
In 2018, the Court extended this holding to employment contracts in Epic Systems Corp. v. Lewis, finding that
despite protections afforded employees under the National Labor Relations Act, forced individual arbitration
agreements are enforceable under the FAA in employeeemployer disputes.20 As in Concepcion, the Court emphasized the importance of protecting “the traditionally
individualized and informal nature of arbitration,” which
the Court believed would allow for faster and less costly
dispute resolution than litigation.21
Last year, the Supreme Court reiterated its commitment to individual arbitration in Lamps Plus, Inc. v. Varela.
The case centered on whether a contract requiring arbitration with no mention of class arbitration—unlike the
contract in Stolt-Nielsen, which had explicitly stipulated
silence on the issue—should allow for class arbitration.
The Court held that courts cannot infer consent to class
arbitration from an “ambiguous” contract.22 Borrowing language from its Stolt-Nielsen opinion, the Court
explained that in arbitration, “parties forgo procedural
rigor and appellate review of the courts in order to real-
Mass Arbitration Filings: A Crack in the System
Over the last two years, drivers for both Uber and
DoorDash have been testing the limits of the judicial
system’s commitment to employment arbitration en
masse. In August 2018, 12,501 drivers for Uber filed for
arbitration with JAMS, arguing that they were misclassified as independent contractors and should be considered
employees under the Fair Labor Standards Act.30 The
cost for Uber to initiate all of the proceedings, each with a
required $1,500 filing fee, was more than $18.7 million.31
Similarly, in August 2019, DoorDash drivers filed individual demands for arbitration with the AAA on behalf
of 2,250 individuals with the same miscategorization
claims.32 In September 2019, 4,000 additional DoorDash
drivers filed.33 The cost for DoorDash to initiate all of the
proceedings would have been nearly $12 million.34
Rather than entering into the very arbitration proceedings that they had inserted into their workers’ contracts, both Uber and DoorDash refused to pay their share
of the filing fees. Three months after receiving 12,501
demands for arbitration from its drivers, Uber had paid
the filing fees necessary for an arbitration to commence
in only 296 cases.35 Similarly, although AAA imposed a
deadline for DoorDash’s payment a few months after
drivers paid over $1.2 million in filing fees, DoorDash
chose to instead email AAA and petitioners’ counsel stating that it had “determined that there are significant deficiencies with the claimants’ filings,” and that “DoorDash
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
43
is under no obligation to, and will not at this time, tender
to AAA the nearly $12 million in administrative fees.”36
Because of Uber and DoorDash’s refusal to pay,
the arbitration administrators refused to proceed with
arbitration. JAMS advised Uber that JAMS is “missing
the NON-REFUNDABLE filing fee of $1,500 for each
demand, made payable to JAMS.”37 JAMS also informed
Uber that “[u]ntil the Filing Fee is received we will
be unable to proceed with the administration of these
matters.”38 Similarly, AAA advised DoorDash and its
drivers in November 2019 that “Respondent has failed to
submit the previous requested fees for the 6,250 individual matters; accordingly, we have administratively closed
our files.”39
Unable to proceed without their employers’ payment,
Uber and DoorDash drivers thus filed motions to compel
arbitration. The Uber motion commenced a multi-month
back and forth with the company over the adequacy of
their counsel and whether the arbitration fees should be
split.40 Ultimately, the drivers entered into a settlement
with Uber in May 2019 in which the company agreed to
pay between $146 million and $170 million.41 Under the
agreement, a “large majority” of the more than 60,000
Uber drivers filing arbitration claims for employment
misclassification received settlement payments.42 In contrast, no such settlement was reached between DoorDash
and its drivers: as mentioned above, in February 2020, a
district court judge ordered DoorDash to pay its share of
the filing fees to proceed with arbitration.43
The Uber and DoorDash cases exemplify the precarious situation of employment disputes today. Workers
cannot engage in litigation against their employers, let
alone consolidate their claims in a class action. But they
also face difficulty initiating arbitration: due to employer
incentives to stall arbitration proceedings through nonpayment, in order to even initiate an arbitration proceeding required by their contracts, workers must navigate
the cost and complexity of litigation in court. Under the
current system, neither worker nor employer is satisfied:
workers are forced to litigate in order to take advantage
of a dispute resolution system they did not themselves
choose, while employers, as indicated by Uber’s large settlement with its workers, are so afraid of the cost of such
proceedings that they may be willing to pay enormous
amounts to avoid them. Mass arbitration filings thus
reveal that the status quo in worker-employer disputes
is in a state far from equilibrium: from the perspective of
both workers and employers, there are strong incentives
to move towards an alternative system.
Arbitral Fees and the Issue of Nonpayment
History of the Nonpaying Party Problem
Arbitral refusal to pay is hardly a new phenomenon.
The dispute currently playing out through mass filings
has been playing out for more than 15 years, albeit at a
44
smaller scale.44 Core to this dispute is the fact that arbitration comes with an upfront cost that does not exist in
litigation: the arbitrators. While taxpayers pay for state
and federal judges, the parties themselves pay for their
arbitrators. As such, a party interested in stalling proceedings can refuse to pay their share of arbitration fees.
In 2005, Richard Dewitt and Rick Dewitt wrote an
overview of the nonpaying party problem in their paper
“No Pay No Play,” which stemmed from an AAA roundtable on the issue.45 They argued that when a commercial
party refuses to pay its share of arbitration, the other
party is left with three flawed options: 1) fronting the
nonpaying party’s costs and later seeking reimbursement;
2) filing an action in court to obtain an order requiring the
nonpaying party to pay; or 3) discontinuing the arbitration and filing suit in court, claiming that the nonpaying
party has waived the right to arbitrate.46
As the Dewitts argued, for commercial parties, each
of these options may not only be onerous and timeconsuming, but also potentially ineffective. The first not
only requires a large fronting of capital, which the paying
party may not have access to, but also invites a substantial
risk that the nonpaying party will not be able to pay the
amount advanced or any eventual award.47 Commercial
arbitrations involving three arbitrators and 10 or more
hearings often engender fees totaling upwards of $50,000
per party—a large sum to front on behalf of an opposing
party.48 The second and third options, taking court action,
may not only require expensive and time-consuming
litigation, but also may not end in the paying party’s
favor. Courts have been split on how to decide such cases.
In Sanderson Farms, Inc. v. Gatlin, the Supreme Court of
Mississippi ruled in 2003 that a party who refused to
pay its share of filing fee and arbitrator’s expenses had
breached the parties’ arbitration agreement and, therefore,
had waived its right to arbitrate and to contest liability.49
In contrast, in Lifescan, Inc. v. Premier Diabetic Service, the
Ninth Circuit held that because AAA rules were incorporated into the parties’ agreement, and these rules give the
arbitrators discretion to apportion fees and expenses as
appropriate, arbitrators are authorized to decide whether
an arbitration should proceed in the case of a nonpaying
party.50 Accordingly, the court held that the relevant arbitrators in the case acted within their discretion in deciding
to allow the arbitration to continue, conditioned on the
paying party advancing the nonpaying party’s fees, rather
than compel payment.51 Thus, courts have taken vastly
different approaches to the nonpaying party problem,
leaving commercial parties agreeing to arbitration with a
significant risk of bearing the costs themselves.
Nonpayment in Employment Arbitration
In contrast to commercial parties, employees facing a nonpaying employer have often been able to find a
satisfactory remedy in the courts, who have recognized
a power imbalance between workers and their employ-
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
ers. Although many employees are unlikely to be able to
front their employer’s arbitration costs, most courts have
either forced arbitration to proceed, as in DoorDash’s
Abernathy case, or held that the claimants may bring their
claim in court instead. For example, in Stowell v. Toll Bros.,
the Eastern District of Pennsylvania found that a former
employer had waived its right to arbitrate when it failed
to pay the arbitration filing fee in a case of employee
sexual discrimination.52 Similarly, in Brown v. Dillard’s
Inc., the Ninth Circuit denied an employer the contractual
right to compel an employee’s participation in arbitration
after the employer refused to pay for and participate in
the employee’s prior attempt to initiate arbitration.53 For
those workers able and willing to initiate litigation, court
proceedings will thus likely enable them to either initiate
arbitration or continue in court.
If not, what recourse does the claimant-worker have
to resolve their arbitration demand, other than a costly legal action?59 As of this writing, AAA and JAMS’ responses
have not been made public, and the ambiguities in their
rules remain.
However, employee-initiated arbitration is intended
to be cheap and accessible—not to require litigation as an
entrance requirement. The United States’ leading arbitration administrators both intentionally limit employee
fees so as to enable employees contractually required to
arbitrate to be able to afford to do so. Under AAA rules,
an employee’s fees are capped at $300 for an individual
arbitration.54 Similarly, under JAMS rules, an employee
contractually required to arbitrate is subject to a max of
$400 in fees.55 Under both sets of rules, the employer is
responsible for paying the remainder of the arbitrator’s
fees.
Given not only the inefficiency and inaccessibility of
today’s employment arbitration environment, but also
employers’ own frustrations with the possibility of incurring fees en masse, the status quo is ripe for disruption.
However, what such an alternative system could look like
is still largely unsettled. While state legislators are focused
on enabling workers’ access to arbitration by alleviating
the nonpaying party problem, liberal federal legislators
have an eye for moving beyond arbitration altogether and
restoring workers’ access to class procedures. In the current judicial and political environments, neither approach
may be viable. As such, frustrated and savvy workers
are likely to turn to alternative procedural mechanisms
within the confines of arbitration. Such mechanisms may
allow for workers to benefit from joining their claims together, while inducing employer cooperation through the
promise of increased efficiency and cost reduction.
Despite their employee-friendly fee structure, arbitration administrators allow the nonpaying problem to
persist through their own rules. Today, both AAA and
JAMS of rules are ambiguous as to what recourse remains
for an employee if the employer refuses to pay these
fees. In its rules regarding employment disputes, JAMS
states that if a party fails to pay its fees, JAMS may either
suspend or terminate the proceedings, or allow the paying party to advance the required payment, to be reimbursed via the final reward.56 In its rules for commercial
disputes, AAA outlines a similar rule; however, its rules
for employment-specific disputes do not mention nonpayment.57 As seen in the Uber and DoorDash cases,
this often means that arbitration proceeds can be stalled
indefinitely through nonpayment.
This ambiguity in AAA and JAMS rules has recently
become a focal point in the public discourse on arbitration. In November 2019, a coalition of 12 Attorneys
General issued letters to AAA and JAMS seeking clarification on their policies on employer non-payment.58 In
their letters, the Attorneys General requested documents
on rules related to non-payment, as well as answers to
specific questions such as:
In the event a claimant-worker makes an arbitration demand for an employment-related claim and pays
the claimant filing fee, can the arbitration proceed if the
respondent-employer fails to pay the employer filing fee?
So long as employers are able to stall arbitration
proceedings through nonpayment, workers will be forced
to court to take advantage of their contractual right. For
a procedure that is intended to provide both parties with
“lower costs” and “greater efficiency and speed,”60 mandatory employment arbitration as practiced is thus a far
cry from the rosy vision outlined by the Supreme Court.
Alternatives to Mass Filings: Toward the Future of
Employment Disputes
Legislative Interventions Addressing Refusal to Pay
Given the consistency of Supreme Court precedent on
FAA preemption, states interested in protecting workers
have largely focused their efforts on making arbitration
more accessible, rather than trying to enable litigation
directly. By tackling, or even considering, the problem
of employer nonpayment, these states have attempted
to work within the Supreme Court’s arbitration requirements to provide workers with a remedy against their
employers. However, it remains to be seen whether even
relatively small efforts to change the incentive structure of
today’s arbitration system in favor of workers can survive
judicial scrutiny.
(1) Requiring Employers to Pay or Waive Their Rights
California has tried to enable workers to act on their
right to arbitration by creating a strong incentive for
employers to pay their share of the costs of arbitration. As
of January 1st, 2020, California has enacted SB 707, a bill
mandating that employers pay their designated arbitration fees or waive their right to compel arbitration.61 If
an employers’ fees are not paid within 30 days of the due
date, the employer is then considered in material breach
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
45
of the arbitration agreement and resultantly waives its
right to compel arbitration.62 The bill then authorizes the
employee to withdraw the claim from arbitration and
proceed with an action in court.63 The bill also requires
the court to impose a monetary sanction on the employer
and authorizes the court to elect to impose other possible
sanctions.64
Although SB 707 is yet untested in court, the California legislature has argued that the bill will survive judicial scrutiny because it does not “frustrate the purposes
of the FAA.”65 During the May 2019 Senate Floor discussion of the bill, members of the legislature supported the
bill’s judicial viability by pointing to the Ninth Circuit’s
decision in Sink v. Aden Enterprises, which found that a
party is in default of an arbitration agreement if it fails
to pay required arbitration fees.66 Because the Sink court
ruled that allowing a party refusing to cooperate with
arbitration to indefinitely postpone litigation is “inconsistent with the structure and purpose of the FAA,” the
California legislature argued that a bill intended to stop
such behavior should be consistent with the purpose of
the FAA.67
Despite the legislature’s arguments, SB 707 is unlikely to hold up to judicial scrutiny because courts can find
that it infringes on the parties’ federal right to delegate
questions regarding the conduct of the arbitration to the
arbitrator. The Supreme Court held in Rent-A-Center,
Inc. v. Jackson that this federal right extends so far as to
require a plaintiff who contended that the arbitration
agreement was unconscionable to arbitrate that claim.68
Other courts have found that when it is not clear whether
a party has violated the forum’s rules, the court will
generally defer to the arbitrator because “arbitrators are
the experts about the meaning of their own rules, and are
comparatively better able to interpret and apply them
than courts.”69 As such, a court is likely to find that in the
case of an employer’s refusal to pay its fees, an arbitrator, rather than a court, should decide on the appropriate
remedy. Because this contradicts SB 707’s mandate, California’s law is thus unlikely to survive judicial scrutiny.
(2) Requiring Arbitrators To Proceed or Abandon the
Arbitration
Because regulating employers refusing to pay their
fees is unlikely to survive strict judicial scrutiny, some
experts argue that regulation intended to aid workers in securing their ability to arbitrate should instead
regulate the arbitrators themselves. In the “Model State
Consumer & Employee Justice Enforcement Act,” the
National Consumer Law Center (NCLC) proposes that
states adopt regulation that targets arbitrators directly.70
Title VIII of the model bill regulates arbitration providers
who administer a minimum number of disputes brought
by employees.71 The bill requires that if an employer
fails to pay arbitration fees, the arbitration administrator
must either administer the arbitration or refuse to move
forward with it.72 If the arbitrator refuses to continue, the
46
employee would practically be allowed to move to court
because the arbitration administrator would notify the
parties in writing that the “arbitration forum designated
by the parties is unavailable to resolve this dispute.”73 For
those administrators who would choose to proceed, the
bill creates a cause of action to recover fees.74
The NCLC argues that its proposed bill would survive judicial scrutiny because it respects the autonomy of
both employers and arbitrators.75 This argument hinges
on the idea that the bill simply requires arbitration administrators to ensure that they enforce their existing rules
for fee-sharing, without requiring businesses to choose
specific arbitrators or rules.76 The NCLC also argues that
by allowing arbitrators to decide whether to proceed with
or abandon the case, the proposed bill avoids treating
arbitration proceedings with disfavor relative to judicial
or administrative proceedings, which was the cornerstone
of the Supreme Court’s reasoning in Concepcion.77
Although the Model Bill might withstand judicial
scrutiny in court, the environment of fear that recent
judicial precedent has created around any limitation on
arbitration makes it unlikely to be adopted by individual
states. When Maryland considered adopting other portions of the NCLC’s Model State Act in 2018, the legislature abandoned those provisions out of fear of federal
preemption.78 This decision was made under the influence
of testimony by the Maryland Bankers Association (MBA)
emphasizing the breadth of federal preemption law.79
While this self-serving testimony was likely exaggerated,
its impact underscores both the perceived and often real
risk that any state legislation imposing constraints on
arbitration faces today.
Legislative Interventions Enabling Class Action
Given the constraints of FAA preemption, state legislatures’ narrow focus on arbitral fees is likely to persist.
However, at the federal level, legislators may be able to
tackle the core issue underlying mass arbitration filing:
protecting workers’ ability to consolidate their claims into
class action. Indeed, in February 2020, the House of Representatives passed H.R. 2474, The Protecting the Right
to Organize Act of 2019 (PRO Act).80 In addition to other
sweeping reforms, the PRO Act overturned the Supreme
Court’s decision in Epic Systems Corp. v. Lewis by explicitly stating that employers may not require employees to
waive their right to collective and class action litigation.81
Although the PRO Act is unlikely to progress through the
current Senate and become law, it serves as a model for
changes that might occur in a different political climate.
Clearly, passing such legislation would render the mass
filing of arbitration complaints unnecessary; the broader
impact of such legislation on employment cases is yet
unknown, but likely to be monumental.
It is worth noting that ironically, and likely only in the
short term, the passage of a bill like the PRO Act might
lead to smaller settlement values for workers, as they
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
would lose the bargaining power that mass arbitration
fees currently provide them with. Indeed, just as Uber
drivers were beginning to file arbitration claims in mass
in Abadilla, a different cohort of drivers—those who had
explicitly opted out of arbitration in earlier contracts with
Uber—reached a settlement agreement resulting from a
class action against Uber for significantly less money than
in Abadilla, over the same underlying cause of action.82
While the Abadilla settlement allocated around $150
million to 60,000 drivers, the previous settlement, which
stemmed directly from a class action suit of 5,200 drivers, was capped at only $1.3 million.83 Because during the
class action plaintiffs acknowledged that defendants had
a significant chance of prevailing on the merits or significantly limiting damages, their bargaining power was
limited.84 The resulting difference in settlement amounts
indicates how in today’s precarious mass arbitration
environment, the threat of mass filing fees serves as a
forceful incentive for companies to settle—even in cases
they would be likely to win on the merits. Although
such incentives are unlikely to persist in the long term
as corporations modify their approach to engaging with
mass arbitration, in today’s environment savvy groups of
plaintiffs may continue to be able to leverage AAA and
JAM’s employee-friendly fee structure to their advantage.
Innovating Arbitration Procedure
(1) Private Agreement to Consolidate Claims
While comprehensive legislative reform allowing
for workers to pursue class action is likely far off, some
form of claim aggregation procedures might be attainable
within the current judicial and legislative environment,
within the confines of arbitration. Contrasting the Uber
and DoorDash cases provides insight into the variety of
ways such procedures could be incorporated into arbitration: either through a private agreement between the
parties, or directly through the rules of an arbitration
administrator.
For a period of time during the Abadilla dispute,
private agreement to claim aggregation procedures was
on the table: exhibits attached to the Uber drivers’ reply
brief indicate that for several weeks before settlement, the
company’s lawyers negotiated with plaintiffs around the
terms of a proposed series of “bellwether” arbitrations.85
On both sides, parties’ proposals indicated an interest
in utilizing a procedural mechanism to consolidate the
thousands of pending arbitrations to increase efficiency.
While the negotiations were a far cry from an agreement
to binding “bellwether” arbitration similar to a class action, they indicate the potential viability within today’s
pro-arbitration judicial environment of private consent to
a procedure that allows workers some form of collective
consolidation.
During negotiations with Uber, plaintiffs proposed
a procedural scheme that would rely on the results of
“bellwether” arbitrations to influence or determine the
outcomes of the remaining cases, similar to existing procedural schemes in the United States and Germany. Plaintiffs proposed that they would undergo nine “bellwether”
arbitrations, and then participate in mediation in order to
decide on a formula for extrapolating the results of those
arbitrations to the remaining plaintiffs.86 If the two parties
could not reach a deal in mediation, plaintiffs proposed
that they would then allow a single arbitrator to decide on
rules for extrapolating the “bellwether” arbitration results
to other drivers.87
Plaintiffs’ proposed procedures resemble those of
Multi-District Litigation (MDL) in the United States,
as well of the CapitalMarket Investors Model Proceeding (Kapitalanlegermusterverfahrensgesetz, otherwise
known as the KapMuG) in Germany. In an MDL, mass
claims arising from the same facts and laws are assigned
to a single court and judge for pre-trial management
and discovery purposes.88 The judge’s decisions on the
relevant motions, such as motions for dismissal, summary
judgment, or class certification, are shared across cases.89
After the discovery stage, litigation usually settles.90 The
use of MDLs as a procedural mechanism has significantly
increased in the United States since its inception in 1968,
as certification of mass injury claims for class action has
decreased.91 In the most analogous German procedure,
the KapMuG, a model case is chosen to progress through
the entire judicial process, with a liability decision that
is binding across cases.92 Remedies are then pursued
individually by each claimant.93 Because they did not yet
propose a formula for extrapolation, plaintiffs’ proposal
leaves open the possibility that the decisions regarding the “bellwether” arbitrations would either be fully
binding across cases, as under the KapMuG scheme, or
that as in an MDL, individual motions, such as rulings
on the admissibility of evidence, could be shared across
cases. Either option would allow for more streamlined
and efficient proceedings, within the confines of non-class
arbitration.
Although Uber rejected plaintiffs’ proposed procedure, its counter-offer exhibited a similar willingness to
modify and streamline arbitration procedures through
aggregation. In its response to plaintiffs, Uber proposed
that four, rather than nine, proceedings move forward
immediately, omitting the explicit “bellwether” language
that plaintiffs had used in their proposal.94 The company
then refused to agree to any sort of mediation afterwards
to determine how to apply the ruling.95 Instead, the company proposed that after the results of those arbitrations
were determined, negotiations could continue regarding
next steps.96 Likely afraid of the financial risk of accepting
any given deliberation en masse, Uber insisted that each
worker would have to be categorized as an independent
contractor or employee individually.97 However, the company also suggested that the remaining arbitrations could
proceed in small groups.98 In doing so, the company recognized that the much-lauded “efficiency” of arbitration
did not apply to the mass claims involved in their case,
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47
and that alternative procedures focused on aggregation
would likely be preferable for both sides. The company’s
subsequent agreement to pay between $146 million and
$170 million to settle the cases nine months later further
exemplifies its recognition of the inefficiency and cost of
proceeding within the confines of today’s individual arbitration rules.99 Although the case ultimately settled without any arbitration proceedings, the discussion between
Uber and its workers indicates that private agreement to
some form of collective arbitration proceedings may be
viable in the future.
(2) Formalized Bellwether Arbitration Proceedings
While employers and workers may choose to consolidate claims through private agreement, arbitration administrators themselves may also intervene by
CPR has proclaimed that it developed these procedures in order to fill a needed gap in the arbitration
space. In a December 12 brief, CPR wrote that Gibson
Dunn, Uber’s law firm, had reached out and “expressed
concern over the current options for administration of a
mass of claims and the fee structures being imposed.”106
CPR claims it was thus “eager to innovate in the area of
mass claims and, rather than just focusing on alternative
fees, took the opportunity presented to lend its expertise
and resources to think anew and find an efficient and fair
process for resolving these claims.”107CPR then consulted
with Gibson Dunn and DoorDash in-house lawyers as it
came up with its procedures, as well as plaintiff lawyers
not involved in the Abernathy dispute.108
Although the development of CPR’s mass-claim procedures has been criticized due to DoorDash’s significant
“Although legislative options for increasing worker’s ease of access to arbitration
or class action proceedings are unlikely to take hold in today’s judicial and
political climate, workers may find recourse within innovations on arbitration
procedures themselves. Either through private agreement to aggregated arbitration
proceedings, or through the development of such proceedings by arbitration
administrators, the pressure that recent mass filings has put on today’s
employment arbitration system may force employers to adopt procedures that
allow workers to come together to have their claims heard.”
developing protocols for such procedures that will be
contractually adopted. Indeed, the International Institute
for Conflict Prevention and Resolution (CPR) recently adopted such procedures, largely as a result of DoorDash’s
dispute with its drivers.100
In response to the mass claims filed by its workers, in November DoorDash introduced new arbitration
terms in its worker contract, which workers must agree
to before they can log onto the DoorDash app to work
and get paid.101 The new terms required that rather than
arbitrating disputes individually with the AAA, workers
will arbitrate disputes through the CPR, which had a few
days prior adopted protocols for employment-related
mass claims.102 Under the updated CPR rules, when more
than 30 cases are filed for similar claims, 10 cases will
proceed at once in arbitration proceedings paid for by
the employer; these cases will function as “bellwether”
cases followed by a mandatory 90-day mediation process
to resolve other claims.103 If mediation proceedings do
not end in global settlement, workers can either proceed
with arbitration or can go to court.104 If the proceedings
do produce such a settlement, individual workers retain
the option to opt out and pursue individual claims in
arbitration.105
48
involvement, the end product does not appear to be clearly biased towards employers.109 In fact, the procedures
closely resemble those of the established American MDL,
discussed above, as well as the “bellwether” proceedings
that Uber drivers had requested as plaintiffs against the
company. In addition to the obviously significant decrease
in costs for the employer, the core differences between
CPR’s rules and those requested by the Uber drivers
appear to be the 90-day time period allocated for the
mandatory mediation, as well as the random selection of
“bellwether” cases. In addition, plaintiffs dissatisfied with
a mediated settlement explicitly maintain the right either
to proceed in individualized arbitration proceedings.
Although CPR’s procedures are still too new to
evaluate empirically, in theory they seem to present an
innovative solution to the problem of mass employment
arbitration. While they do not provide workers with the
complex procedural protections of a class action, CPR’s
procedures do enable workers to aggregate their claims in
proceedings paid for by their employer, while ultimately
retaining the right to proceed in individual arbitration. Indeed, in today’s political and judicial environment, these
procedures may provide frustrated workers interested in
collective action with their greatest chance at actually having their dispute heard.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Conclusion
8.
Id.
Employment arbitration today stands at a crossroads. More and more employers are forcing workers to
arbitrate their disputes, while simultaneously decreasing their opportunities to join collectively to vindicate
common claims. But in parallel, these employers are now
starting to be called on their bluff. As Judge Alsup captured in his February 2020 Abernathy opinion:
9.
Gary Born, The U.S. Supreme Court and Class Arbitration: A
Tragedy of Errors, Kluwer Arbitration Blog (July 1, 2011),
http://arbitrationblog.kluwerarbitration.com/2011/07/01/
the-u-s-supreme-court-and-class-arbitration-a-tragedy-of-errors/.
10.
JAMS rules directly reference Rule 23, requiring arbitrators to
allow a class member to serve as a representative only if the
conditions of the Rule are satisfied. AAA rules for certification
closely follow those of Rule 23. See JAMS Class Action Procedures
(effective May 1, 2009); AAA Supplementary Rules for Class
Arbitrations (effective Jan. 1, 2010).
11.
Born, supra.
12.
Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 687 (2010).
13.
Id.
14.
Id. at 685.
15.
AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 352 (2011).
16.
Id. at 333.
17.
Id. at 334.
18.
Id.
19.
Id at 344.
20.
Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1616 (2018).
21.
Id. at 1623.
22.
Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 1419 (2019).
23.
Id. at 1416.
24.
Id.
25.
Id.
26.
Alexander J.S. Colvin, The Growing Use of Mandatory Arbitration,
Economic Policy Institute (2018), available at https://www.epi.
org/files/pdf/144131.pdf
27.
Id.
28.
Id.
29.
Id.
30.
Pet. for Order Compelling Arbitration, Abadilla v. Uber Technologies,
No. 3:18-cv-7343 (W.D.N.C. Dec. 5, 2018).
31.
Andrew Wallender, Uber Settles ‘Majority’ of Arbitrations for at
Least $146M, Bloomberg Law (May 9, 2019), https://www.
bloomberglaw.com/document/X7CP2DJ4000000?bna_news_
filter=daily-labor-report&jcsearch=BNA%25200000016a9d12d981a
beafd1382090001#jcite.
32.
Abernathy v. DoorDash, Inc., No. C 19-07545 WHA, 2020 U.S. Dist.
LEXIS 23312, at *23-24 (N.D. Cal. Feb. 10, 2020).
33.
Id.
34.
Id.
35.
Pet. for Order Compelling Arbitration, Abadilla v. Uber Technologies,
No. 3:18-cv-7343 (W.D.N.C. Dec. 5, 2018) at 3.
36.
Abernathy, 2020 U.S. Dist. LEXIS 23312 at 24.
37.
Pet. for Order Compelling Arbitration, Abadilla v. Uber Technologies,
No. 3:18-cv-7343 (W.D.N.C. Dec. 5, 2018) at 21.
The irony… is that the workers wish to
enforce the very provisions forced on
them by seeking, even if by the thousands, individual arbitrations, the remnant of procedural rights left to them.
The employer… faced with having to actually honor its side of the bargain, now
blanches at the cost of the filing fees it
agreed to pay in the arbitration clause.110
By engaging collectively in mass arbitration filings,
workers are thus forcing employers to put their money
where their mouths are and engage with the actual costs
of arbitrating worker disputes. Still in its early days,
this nascent tactic has received judicial approval and,
for some plaintiffs, resulted in large settlement awards.
Perhaps more importantly, it has disrupted the status quo
of forced arbitration by calling legislative, judicial, and
employer attention to the inefficiencies, inaccessibility,
and costs of today’s system—and in doing so, opened
what had previously seemed to be a closed door towards
more worker-friendly dispute resolution procedures.
Although legislative options for increasing worker’s
ease of access to arbitration or class action proceedings
are unlikely to take hold in today’s judicial and political
climate, workers may find recourse within innovations
on arbitration procedures themselves. Either through private agreement to aggregated arbitration proceedings, or
through the development of such proceedings by arbitration administrators, the pressure that recent mass filings
has put on today’s employment arbitration system may
force employers to adopt procedures that allow workers
to come together to have their claims heard.
Endnotes
1.
Nicholas Iovino, DoorDash Ordered to Pay $9.5M to
Arbitrate 5,000 Labor Disputes, Courthouse News Service
(Feb. 10 2020), https://www.courthousenews.com/
DoorDash-ordered-to-pay-12m-to-arbitrate-5000-labor-disputes/
2.
Id.
38.
Id.
3.
Id.
39.
Abernathy, 2020 U.S. Dist. LEXIS 23312 at 24.
4.
9 U.S.C. Sec. 2.
40.
5.
Deborah Hensler & Damira Khatam, “Re-Inventing Arbitration:
How Expanding the Scope of Arbitration Is Re-Shaping Its Form
and Blurring the Line Between Private and Public Adjudication,”
18 Nevada Law Journal: 388 (2018).
Alison Frankel, JAMS to Uber: Our Rules and Your Contracts Demand
Individual Arbitration, Reuters (Jan. 25 2019), https://www.reuters.
com/article/legal-us-otc-jams/jams-to-uber-our-rules-and-yourcontracts-demand-individual-arbitrations-idUSKCN1PJ2I0
41.
Wallender, supra.
6.
Id at 389.
42.
Id.
7.
Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 447, 123 S. Ct. 2402,
2404 (2003)
43.
Abernathy, 2020 U.S. Dist. LEXIS 23312 at 34.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
49
44.
See Richard DeWitt & Rick DeWitt III, No Pay, No Play: How to
Solve the Nonpaying Party Problem in Arbitration, 60 Disp. Res. J. 28
(Feb.–Apr. 2005).
80.
Protecting the Right to Organize Act of 2019, H.R. 2474, 116th
Congress §2(d)(3).
45.
81.
Id.
Id.
46.
Id.
82.
Hood v. Uber Techs., Inc., No. 1:16-CV-998, 2019 U.S. Dist. LEXIS 670,
at *7 (M.D.N.C. Jan. 3, 2019).
47.
Id.
83.
Id.
48.
Neal M. Eiseman & Brian Farkas, Stiffing the Arbitrators: The
Problem of Nonpayment in Commercial Arbitration, Harvard
Negotiation Law Review 15 (April 2015).
84.
Id at *17.
85.
49.
Sanderson Farms, Inc. v. Gatlin, 848 So. 2d 828 (Miss. 2003).
Pet. for Order Compelling Arbitration, Abadilla v. Uber
Technologies, No. 3:18-cv-7343 (W.D.N.C. Jan. 24, 2019), Ex. A.
50.
Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010 (9th Cir.
2004).
86.
Id.
87.
Id.
88.
Deborah R. Hensler, From Sea to Shining Sea: How and Why Class
Action Are Spreading Globally, 65 The University of Kansas Law
Review 965, 979 (2017).
89.
Id at 980.
90.
Id.
91.
Id.
92.
Id.
93.
Id.
94.
Pet. for Order Compelling Arbitration, Abadilla v. Uber Technologies,
No. 3:18-cv-7343 (W.D.N.C. Jan. 24, 2019), Ex. A.
95.
Id.
51.
Id.
52.
Stowell v. Toll Bros., No. 06-cv-2103, 2007 WL 30316 (E.D. Penn.
2007).
53.
Brown v. Dillard’s Inc., 430 F.3d 1004, 1006 (9th Cir. 2005).
54.
AAA Employment/Workplace Fee Schedule (effective Nov. 1
2019).
55.
JAMS Schedule of Fees and Costs, U.S. Domestic.
56.
JAMS Employment Arbitration Rules and Procedure (effective
July 2, 2014).
57.
AAA Commercial Arbitration Rules and Mediation Procedures,
R-57 (effective July 1, 2016).
58.
Letter to JAMS: Letter from Office of the Attorney General
for the District of Columbia to Kimberly Taylor, Senior Vice
President, Judicial Arbitration and Mediation Services, Inc., Re:
Request for Information Regarding Arbitration of Employment-Related
Claims (Nov. 12, 2019); Letter to AAA: Letter from Office of the
Attorney General for the District of Columbia to Ann Lesser, Vice
PresidentLabor, Employment, and Elections, American Arbitration
Association, Re: Request for Information Regarding Arbitration of
Employment-Related Claims (Nov. 12, 2019).
96.
Id.
97.
Id.
98.
Id.
99.
Wallender, supra.
59.
Letter from Office of the Attorney General for the District of
Columbia to Kimberly Taylor, supra.
103. Employment-Related Mass-Claims Protocol, International Institute
for Conflict Resolution and Prevention (effective Nov. 4 2019).
60.
Lamps Plus, 139 S. Ct. at 1416.
104. Id.
61.
Arbitration Agreements: Enforcement, CA S.B. 707, § 4 (2019).
105. Id.
62.
Id.
63.
Id.
64.
Id.
65.
SB 707: Hearing Before the Senate Judiciary Committee, 2019-2020
Regular Session at 9.
106. Alison Frankel, Ex-Judge Atop Controversial Mass Arbitration
Process: Give It a Chance To Work, Reuters (Dec. 23, 2019), https://
www.reuters.com/article/us-otc-massarb/ex-judge-atopcontroversial-mass-arbitration-program-give-it-a-chance-to-workidUSKBN1YR1ZI
66.
Id at 8.
67.
Id.
68.
Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 72 (2010).
69.
Pro Tech Indus., Inc. v. URS Corp., 377 F.3d 868, 872 (8th Cir. 2004).
70.
David Seligman, The Model State Consumer & Employee Justice
Enforcement Act, National Consumer Law Center (November
2015).
71.
Id.
72.
Id.
73.
Id.
74.
Id.
75.
Id.
76.
Id.
77.
Id.
78.
Maryland Financial Consumer Protection Commission, 2018 Final
Report 1, 50.
79.
Id.
50
100. Iovino, supra.
101. Id.
102. Id.
107. Id.
108. Id.
109. Id. U.S. District Judge William Alsup of San Francisco authorized
Keller Lenkner to conduct limited discovery to determine what
role DoorDash’s lawyers played in the development of the CPR
mass arbitration protocols.
110. Abernathy, 2020 U.S. Dist. LEXIS 23312 at 33-34.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Mediation
Opening Mediation Windows: Role of Parties, Contracts
and Institutions
By Diego Faleck
Introduction
Mediation has proven its effectiveness in leading
parties to settlement, even in the face of substantial barriers that set them apart. But there is one major obstacle to
settlement that the mediation process alone is physically
unable to surpass: the ignition of mediation itself.1 This
article aims at shedding some light as to how the selecting and shifting between different dispute resolution
processes often occur and the challenges and cognitive
barriers parties normally face to resolve disputes amicably. In addition, the article presents a few creative suggestions for clauses and institutional design of processes that
favor the opening of mediation windows.
Arbitration and the Adversarial Mindset
Arbitration may be the wisest choice one has, given
his or her interests in a case and the obstacles faced to
resolve a dispute. Arbitration is a process suitable for
dealing with a number of obstacles2 such as: (i) different views of law or facts; (ii) inability to negotiate; (iii)
unrealistic expectations, (iv) power imbalance and (v) the
jackpot syndrome.
Arbitration, however, is essentially an adversarial
process. As noted by Allison, it sets parties into an adversarial mindset that nurtures distrust, distortion and
animosity.3 In practice, by selecting arbitration, the idea
of using ADR to resolve disputes as painlessly as possible
surrender to increased cost, delay and acrimony.
Dynamic BATNA and Change of Winds
The utility of an arbitration process very often shifts.
Arbitration is normally the walkaway alternative that
parties have to a failed negotiation—their BATNA. It is
well understood that one’s BATNA (Best Alternative to
a Negotiated Agreement) is not fixed. The BATNA is in
reality dynamic.4 It often shifts as a function of changes in
information, the underlying circumstances, the actions of
third parties, and so forth.
For example, the discovery phase in the arbitration
process may reveal new information that substantially
changes the cost risk analysis. Or a company may be
merged or acquired, and new business opportunities may
alter parties’ perspectives. These dynamic changes call
for continually updating one’s assessment, and thus revising the appetite for settlement discussions.
However, there is always a risk that the adversarial
mindset might have vanquished the genuine ADR mindset. Cognitive barriers5 that are unfortunately natural
to negotiations, such as reactive devaluation, excess of
confidence, loss aversion, “fixed-pie bias” and principal/
agent issues, may fuel the adversarial mindset and make
it harder to get back to the table and settle.
What to do when a rational and sensible strategy
points to returning to a negotiation table, but the parties
are dug in an adversarial process, in which communication has been soured, trust has been damaged, and
animosity has been nurtured?
The Wisdom of Mediation
Mediation is, without doubt, a superior process to
deal with cognitive barriers, encourage flexibility, promote exchange of information, circumvent obstacles such
as different perspectives of facts or law, and assist parties
to resolve their disputes and satisfy their interests.
At times, the notion that mediation is the fittest process to the case is clear, but parties may not be ripe to engage in such discussions. A research conducted in 2020 by
the Brazilian Task Force on Mediation of the International
Chamber of Commerce,6 with the interview of 50 notable
arbitration practitioners, revealed that:
• Lawyers indicated that their clients are often not
open to the suggestion of mediation in the beginning of the dispute, while emotions and perceptions
of unfair treatment are heightened, and the frustration of failed settlement negotiations is still fresh.
• Many lawyers indicated that mediation during the
course of arbitration may be more effective, after
Diego Faleck (www.faleck.com.br) is a business
mediator, settlement counsel and a dispute resolution processes designer, with a track record in highly
complex cases. He earned an LLM from Harvard and a
Ph.D from the University of São Paulo. He is an adjunct
professor at Pepperdine Caruso Law School and an IAM
Distinguished Fellow.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
51
parties had exposed their views and perspectives
and updated their cost/risk analysis.
• Clients often need to endure some of the emotional
and financial distress of the arbitration procedure
before opening their eyes to the necessity and benefits of mediation.
• Mediation may be attractive as a “bump plan,” in
the event that decisions or evidence in the arbitration procedure reduce the chances of winning.
The mediation window is suitable to fit at many
different steps of the arbitration process, such as (i) the
pre-arbitration process; (ii) when deciding which issues
are covered or determining who is included; (iii) before or
after setting parameters for discovery; (iv) before or after
submissions of the parties; (v) before or after the arbitration hearing; (v) before or after partial or final awards.
The mediation window depends on the updated assessment of the parties’ BATNA, on managing cognitive
biases, and on seizing the opportunities to engage the
other side safely.
“The mediation window depends on the updated assessment
of the parties’ BATNA, on managing cognitive biases, and on
seizing the opportunities to engage the other side safely.”
• Mediation should always be included as a part of a
global litigation/arbitration strategy.
• Parties should be careful in proposing mediation
and wait for the right moment and incentives to get
it effectively ignited. This refers to the lawyer presenting the option of mediation to his or her own
client, as well as presenting the idea to the other
side.
Types of Mediation Windows
The Mediation Window
Corroborating our argument, Edna Sussman7 highlights the fact that parties hesitate to make the first move
toward settlement. There is an “expressed concern of parties that to suggest mediation or the commencement of
settlement discussions is a show of weakness which will
damage their negotiation position.” This is considered to
be a “highly relevant” barrier to achieving an amicable
solution, especially in jurisdictions where mediation is
emerging. In her view, “the mediation window resolves
that obstacle.”
According to Sussman, the mediation window is “a
time set in the procedural schedule when the parties will
discuss whether or not it would be useful to conduct a
mediation.” It entails the critical moment in which one or
perhaps both parties will make the first move toward an
amicable solution.
If opened successfully, the window will be followed
by a period of time during the arbitration procedure in
which the parties will dedicate their efforts to mediate
the case and resolve the dispute. The mediation window
may require that the arbitration procedure be paused or
may very well run parallel to it. As noted by Sussman,
the parallel mediation window should not interfere at all
with the deadlines nor delay the arbitration process. This
makes the process more acceptable to parties.
52
It is a good practice to use more than one mediation
window in the same case, if it becomes necessary. Sometimes, it may require more than one round of mediation
to temper expectations and deal with common competitive behaviors such as the “game of chicken.” Change of
circumstances, new information and updated assessments
may as well influence the appetite for concessions between rounds.
Looking forward to advancing awareness and fresh
practical approaches to the topic, we suggest there are
three different types of mediation windows: (i) the spontaneous window; (ii) the contract-based window and (iii)
the institutional window.
The Spontaneous Window
The spontaneous window occurs naturally in the course
of the arbitration process, without any previous agreement from the parties or support from the arbitrators or
institutions. It is not uncommon that parties and lawyers
find a way to approximate and engage in settlement
discussions on their own. For example, parallel talks may
rise between executives. Players or circumstances may
change. Parties may simply tire. A commonly trusted
third party may “mediate” the ignition of the mediation.
This is a rare thing but has its precedents.
Increased awareness on best dispute resolution practices may foster more willingness from lawyers and parties to open windows on their own. It could also generate
creative internal corporate initiatives or processes that
encourage spontaneous mediation windows, aligned with
early case assessment strategies.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
The Contract-Based Window
Spontaneous mediation windows exist in fact, but
they do not occur as frequently as they should. More
often than not, parties need an extra drive to be able to
overcome the barriers to igniting a mediation process.
One solution is the contract-based mediation window. Parties may include provisions for mediation windows in
their dispute resolution clauses.
Such clauses may regulate the timing and means by
which parties may propose or meet to discuss a mediation process. We can think of two levels by which such
clauses could be drafted, that vary in strength.
One softer possible form may estipulate that, at any
or specified moments during the course of the arbitration process, at their own will, any of the parties may
voluntarily suggest a mediation window. The rationale
for the clause is that the mere existence in the contract of
such provision makes it more natural to suggest mediation. Well-crafted clauses may contain language that
provide a “save face” and give comfort to the parties in
suggesting mediation. This may avoid, to some extent,
concerns with cognitive biases by the means of a less
intrusive clause.
Recognizing that the voluntary clause may not be
enough to deal with the barriers, another form would
be the mandatory contract-based mediation window. By
the means of this clause, at one or more predetermined
opportunities in the course of the arbitration procedure
(checkpoints), parties will be obliged to meet and discuss
mediation, or at least pause to consider it, and communicate to each other their decision.
The Institutional Window
Institutions can be very helpful in stimulating mediation windows. The internal rules of an institution could
consider a proposal for a mediation window at the outset.
The São Paulo Chapter of the Brazilian BAR Chamber of
Arbitration and Mediation, for example, formally and
automatically recommends parties meet and discuss
mediation in all incoming arbitration requests. This may
not be convenient to everyone, but certainly helps a good
number of hesitant parties in having a good excuse to
meet and discuss mediation. Other institutions in Brazil
have used objective conditions, such as the value of the
matter in controversy, to trigger an invitation to discuss
mediation. They assume lower value cases make arbitration less attractive.
Refining the Institutional Window
Adding some creativity to the pot, we find inspiration in the logistics of the “mediator proposal” to refine
the institutional stimulated window. Just refreshing the
readers’ memory, by the means of a classical mediator proposal, the mediator will issue a non-binding final offer for
settlement to the parties, which they cannot modify. The
mediator will then fix the deadline by which each party
will simply tell the mediator only “yes” or “no” to the
proposal. In case there is no agreement, the mediator will
inform the parties, but be bound to keep the individual
answer of the parties confidential. The mediator will not
expose the party who might have said yes, while the other
said no, to avoid strategic setbacks.
A similar procedure could be designed and operated
by institutions to foster mediation windows. Perhaps by
means of an opt-in or opt-out system provided for in the
internal rules, institutions could be responsible for proposing to the parties a mediation window at one or more
checkpoints in the course of the arbitration procedure.
The institution will fix a short deadline for a confidential
answer. If both say “yes,” parties will meet and discuss
the details of the mediation process. If one or both say
“no,” the institution will inform the parties that the event
was unsuccessful and will be under the confidentiality
duty as to who said what.
Parties could opt-in or out of such provision, or
even customize it. For instance, the institution may present a menu of checkpoints to the parties for their choice
as to which moments would they prefer to have the
mediation windows set. This could be made by combining the use of contractual clauses between the parties
with the provisions set forth in the internal rules of the
institution.
“Institutions can be very
helpful in stimulating
mediation windows.”
This advanced form of mediation window is completely fit do deal with cognitive barriers, rescue parties
from the adversarial trap and avoid the fear or showing
weakness and affecting negotiation positions. Other options or further thoughts on designing such processes are
timely and welcome.
[No] Role of Arbitrators and Tribunals
It is perhaps best not to mix mediation windows with
the activities of the arbitrator and the tribunal. Although
arbitrators may have skills and be in a superior position to detect opportunities and incentivize mediation
windows, this may raise substantial concerns from the
parties, especially in jurisdictions where mediation is
emerging.
Parties are constantly aiming at shaping the tribunal’s
perceptions in their favor. Looking for settlement might
signal weakness or lack of confidence? Not looking for
settlement might signal unreasonableness? Refusing to
accept the advice of the tribunal might make one look
bad? The mediation window procedure is perhaps more
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
53
attractive if parties are shielded from dealing with the
dilemmas and subjectiveness that the participation of the
tribunal may entail.
Endnotes
1.
Although this may happen in rare occasions, when a commonly
trusted third party may “mediate” the ignition of a mediation.
2.
Frank. E Sander and Lukasz Rodeiczer, Selecting an Apropriate
Dispute Resolution Procedure: Detailed Analysis and Simplified Solution,
in Michael L Moffit and Robert C. Bordone (Eds.), The Handbook of
Dispute Resolution. San Francisco, CA: Jossey-Bass, 2005.
3.
John R. Allison, Five Ways to Keep Disputes Out of Court, Harvard
Business Review on Negotiation and Dispute Resolution, Boulder,
CO, v. 68, n.1, p. 166-177, Jan.-Feb. 1991.
4.
Guhan Subramanian, Taking BATNA to the Next Level, Negotiation
(Newsletter of “Program on Negotiation at Harvard Law School”),
Cambridge, MA, v. 10, n. 1, p. 7, jan. 2007.
5.
.Robert H. Mnookin, Why Negotiation Fail: An Exploration of
Barriers to the Resolution of Conflict, Stanford, CA: Stanford
Center on Conflict and Negotiation, Stanford University, 1993;
Robert H. Mnookin and Lee Ross, Introduction, Kenneth
Arrow et al. (Eds.), Barriers to Conflict Resolution 20. New York:
W.W. Norton & Co, 1995; KOROBKIN, Russe Korobkin and
Chris Guthrie, Psychological Barriers to Litigation Settlement: An
Experimental Approach, Michigan Law Review, Ann Arbor/MI,
v. 93, n. 1, p. 107-192, Oct. 1994.; Russell Korobkin, Psychological
Impediments to Mediation Success: Theory and Practice, Ohio State
Journal on Dispute Resolution, Ohio, v. 21, n. 2, p. 281-327, 2006.
6.
ICC Brazil – 2020 Mediation Task Force Report – Interview with 50
Prominent Professionals in Arbitration on Status and Perceptions
of Mediation (to be published).
7.
Edna Sussman, The Mediation Window: An Arbitration Process
Measure To Facilitate Settlement, NY Dispute Resolution Lawyer, v.
13, n. 1, p. 20, 2020.
Conclusion
Combining different dispute resolution processes
and keeping an open mind to mediation is certainly a
convenient strategy and a best practice. More often than
not, parties may find themselves trapped in an adversarial mindset or caught by cognitive biases that prevent
them from engaging in amicable dispute resolution
processes.
Mediation windows are certainly a solution that
should be incentivized. Awareness and education are
ways to foster spontaneous mediation windows. Using
contracts is another. The institutional design of processes
that favor mediation windows is also a very promising option available to develop mediation windows at
a larger scale. The debate on mediation windows is still
embryonic. Dispute resolution processes designers still
have plenty of room for creativity in developing solutions to approximate parties and engage them in positive
discussions.
Contribute to the NYSBA
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54
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
How Does Conflict Coaching Complement the Mediation
Process?
By Courtney Chicvak
Introduction
During the conflict coaching process, trained neutral
coaches work with parties confidentially to help them understand a conflict and to build interpersonal conflict resolution skills to navigate the disagreement.1 Any dispute
or interpersonal conflict may be addressed. While mediation alone offers many benefits, individuals may have
a host of reasons that cause them to avoid engagement.
When reluctance is due to a lack of confidence in negotiation and communication skills or concern with interacting
with the “other side” due to the emotions involved, a conflict coach may be the answer.2 Conflict coaching provides
litigants with additional process support and empowers
them to participate in order to achieve their goals.
What Is Conflict Coaching?
Two conflict coaching models are used most frequently: the Conflict Coaching Matters model and the CINERGY™ model.3 The Conflict Coaching Matters model
defines conflict coaching as “a process in which a coach
and participant communicate one-on-one to develop the
participant’s conflict-related understanding, interaction
strategies, and interaction skills” and offers a four-step
process.4 First, participants provide the conflict’s history in
the “Discovering the Story” phase.5 Second, the coach will
ask a series of open-ended questions relating to “Identity,”
“Emotion,” and “Power” that encourage the participants
to begin “Exploring the Story from Three Perspectives.”6
The third step allows participants to “Craft the Best Story”
to decide how they would like to move forward in the
future and, finally, the participants “Enact the Best Story”
by practicing and rehearsing the skills that they will need
to implement the plan for moving forward.7
The CINERGY™ model defines conflict coaching
slightly differently: “a one-on-one process during which
a trained coach helps individuals gain increased competence and confidence to manage and engage in their
interpersonal conflicts and disputes.”8 The CINERGY™
model utilizes a seven-step process, “CINERGY” is an
acronym made from the name of each step.9 First, participants “Clarify Goals” by identifying what they hope to
achieve; second, the coach “Inquires about the Situation”
by gathering information about the history of the conflict;
third, the coach will ask a series of open-ended questions
that encourage the participants to “Name the Elements”
of the conflict.10 Through responding to the questions, the
participants analyze the situation both internally and externally from their own perspective and the perspective of
others involved using “The (Not So) Merry-Go-Round of
Conflict.” Fourth, the participants “Explore Choices” that
are available, ranging from non-action to having a specific
conversation.11 Fifth, the participants “Reconstruct the
Situation” and “Ground the Challenges,” identifying both
how they would take the next steps to achieve their goal
and what barriers may exist that prevent them from doing
so, and last, the participants say “Yes, to the Commitment”
by sharing their plan with the coach who acknowledges
their achievement in completing the process.12
Addressing Reluctant Mediation Participants
Throughout the coaching process, coaches encourage
participants to engage in self-reflection, perspective-taking, and skill-building to attain an improved understanding of their conflict and their goals in the dispute. The
conflict coach uses open-ended questions, active listening,
and impartial feedback on behaviors observed.13
Typically, the coach will confer about communication
skills. Having worked on them, the coach will reinforce the
improved behaviors through practice or note needed improvements. To succeed in mediation, individuals must listen and engage in conversation with the other participants.
By practicing and rehearsing beforehand with independent objective feedback, participants can build confidence
and can aquire the composure necessary to hear others.
Conflict coaching can prepare an individual for the
emotional and interpersonal elements of their dispute
during mediation by considering the history of the conflict, increasing self-awareness, improving understanding
of what to improve and how. Perspective-taking through
the use of open-ended questions can encourage participants to look at the dispute from a different point of view
and help them understand others’ needs and interests
that drive intense emotions.14 Similarly, conflict coaching
may position the party to be better able to articulate those
needs and interests in a facilitative mediation session.15
Three scenarios below may assist the reader to understand the context and potential of conflict coaching before
a mediation session:
(1) In an estate dispute, a conflict coach may help an
emotional client realize that the dispute is not only
Courtney Chicvak is an attorney, a mediator at Courtney Anne Chicvak Mediation LLC, a faculty member at
Columbia University and Grand Canyon University and
a negotiation coach for the Women In Negotiation (WIN)
Summit. Thank you to the members of the Dispute Resolution Section List Serve for sharing their insights and
perspectives on the topic of preparing participants for
mediation sessions, especially Lisa Pomerantz, Michael
West, Judy Cohen and Sally Mullins Thompson.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
55
about the contested will, but it also represents a
desire to validate the relationship with the deceased
or the relationship with a sibling. When attending
mediation, the participant may better seek to reach
an integrative agreement involving the relationship.
(2) In an employment dispute involving a terminated
employee, through perspective-taking, the
employee may come to understand how the
former employer may have perceived their actions
in a way that might lead to growth in future jobs
and facilitate resolution during mediation by
creating confidence in future employment.
(3) In a custody and visitation dispute, parents
uncertain about mediation may rehearse how they
will negotiate the parenting schedule with their
ex-spouse. Co-parents can gain practice during
coaching sessions that boosts their confidence and
enables them to articulate their interests and needs
productively. During the mediation, both parents
can express their interests in being present in the
child’s life and maximize the child’s opportunities
in order to reach their goal of an agreement.
Comparing the Roles of Conflict Coaches,
Mediators, and Lawyers
A conflict coach serves a different purpose and offers a
service separate from mediators and lawyers. By building
capacity before mediation, the use of a conflict coach may
alleviate stresses caused by tensions with professional’s ethical codes. Many alternative dispute resolution professionals
debate the extent of mediator involvement with preparing
individual parties for mediation.16 There is an inherent tension between the mediator’s neutrality and ability to offer a
quality process and coaching any one party ex parte.
In addition, the extent to which a conflict coach can
engage with mediation participants beforehand and the
nature of the interaction differs. A conflict coach provides
a participant with the opportunity to complete an indepth analysis of the dispute. In both conflict coaching
models, a coach may meet with the client on average for
three to six one-hour sessions during which the client focuses solely on the dispute and conflict resolution skills.
The coach’s qualifications are different. In some
instances, a coach may hold an advanced certificate in the
subject of conflict resolution or coaching or hold credentials
through the International Coaching Federation. Coaches
enter the field through many different backgrounds, ranging from psychology, human resources, mediation, law,
academia, business, and social work. While conflict coaches
exist in the legal sector, they are also used in organizational
settings, both independently for business leaders and employees, and as part of ombudsman programs.17
For individuals who are unrepresented, conflict
coaching before mediation cannot replace the value
of legal representation before and during a mediation
56
process. A conflict coach does not offer any advice, legal
or otherwise, nor does a conflict coach provide any type
of representation in the mediation process.18 However,
conflict coaching may provide additional support to an
unrepresented individual preparing for mediation, primarily if the dispute encompasses interpersonal conflict.
By providing the participants the opportunity to share
their perspective with a neutral coach before the mediation, they may be able to build skills that help them better
articulate their needs and interests. Already throughout
New York State, Community Dispute Resolution Centers
offer free conflict coaching services for qualifying individuals in conflict, the majority of whom are unrepresented
by counsel but who can benefit from working with a conflict coach before participating in a mediation session.19
Conclusion
More mediation participants will have positive experiences using an inclusive process design that includes
conflict coaching to address their underlying process
needs. Conflict coaching, coupled with mediation, has
already seen much success with participants in the Community Dispute Resolution Centers throughout New York
State. Designers of alternative dispute resolution programs, through the courts or privately, should consider
including conflict coaching panels as a resource for those
in disagreements. The expansion of Presumptive Alternative Dispute Resolution should encourage the continued experiment with mixing and matching methods to
achieve a positive outcome for all involved.
Endnotes
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Ross Brinkert & Trisha Jones, Conflict Coaching: Conflict Coaching
Strategies and Skills for the Individual 5 (2008); Cinnie Noble.
Conflict Management Coaching: The Cinergy Model 12 (2012).
See Brinkert & Jones, supra note 1; Noble, supra note 1.
See Brinkert & Jones, supra note 1.
Id.
Id.
Id.
Id.
See Noble, supra note 1.
Id.
Id.
Id.
Id.
See Brinkert & Jones, supra note 2; Noble, supra note 1.
Id.
Id.
See NYS-DR List Serve.
Id.
See generally, Cinnie Noble, Conflict Coaching – When It Works
and When It Doesn’t, Mediate.com, https://www.mediate.com/
articles/noblec8.cfm (last visited July 31, 2020); Ross Brinkert
& Trisha Jones, Conflict Coaching: Conflict Coaching Strategies
and Skills for the Individual (2008); Cinnie Noble. Conflict
Management Coaching: The Cinergy Model (2012).
See New York Courts, https://ww2.nycourts.gov/ip/adr/cdrc.
shtml (last visited, October 13, 2020); also NYSDRA, https://www.
nysdra.org (last visited, October 13, 2020).
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Mediating Ineffectual Parties
By Norman Feit
In a perfect world, parties would appear at a mediation represented by a duly authorized principal vested
with full authority to settle within limits blessed by any
ultimate decisionmakers after a thorough internal vetting
of the litigation merits, costs and risks. The mediation
would proceed apace, with each side offering complete
transparency to the mediator, who would orchestrate a
systematic march to reach common ground. Unfortunately, mediation dynamics are often not that simple,
requiring effective mediators to proactively triage the
participants and their authority, detect issues that may
derail the process, and manage the obstacles as well as
the frustration they incite in other parties.
For one thing, party representatives do not always
attend mediation sessions, preferring instead to delegate
to outside counsel and to remain “on call” for update
reports and further instruction. When party representatives do attend personally, they are sometimes de facto
mouthpieces, lacking authority and being obliged to engage as a conduit to the true decisionmakers who may be
fleetingly available or engage in time-consuming debate
behind the scene.
Beyond the absent or unauthorized representative
paradigm, more fundamental factors may render one
side unable to engage constructively. Many litigants enter
mediation without thinking deeply about the scope of a
reasonable settlement and securing the necessary authority in advance. In some cases, a perceived insurmountable gap between the parties leads to the conclusion that
a disciplined process of pinpointing an acceptable range
is not worth burning the brain cells. To the extent that an
analytic process is pursued, it may nonetheless end without consensus and default to approaching the mediation
from a baseline, abiding the process step by step.
Any rational analytic approach may also be overwhelmed by cognitive biases, emotional reactions, internal politics, personal tensions, or philosophical differences. Decisionmakers may be too close to the dispute or
may have backed themselves into an awkward corner by
downplaying exposure or predicting success. If a strained
family or business relationship underlies one of the sides,
rationality may take a back seat to the paralysis of relationship friction. And on occasion, laziness, poor preparation or pure incompetence may cause a litigant or counsel
simply to be unprepared, unengaging and elusive.
Whatever the factors and dynamics, the bottom line
is that rather than entering mediation with a definitive
risk assessment and authorized negotiating strategy, too
often a party will do exactly the reverse. A mediation
involving multiple parties and insurers merely magnifies
the potential for moving or immobile parts. The net result
can be inefficiency, mixed signals, and frustration for the
mediator and other parties.
A mediator encountering but failing to grapple with
such a lack of cohesiveness invites a highly disruptive and
likely unsuccessful mediation. But while proactivity and
active management offer the greatest chance of keeping
the mediation on course, the challenge is to determine
why a party seems unable to engage or respond cogently
and in a timely manner, and then addressing the obstacle.
If no party representative is present, chaos might
mean that counsel lacks authority to make decisions, or
has too loose a grasp of the case to make confident decisions. Perhaps counsel has yet to pin down key analytic
components, or the principal lawyer who has mastered
the case is unavailable and a less knowledgeable substitute is handling the mediation. Triage at a pre-mediation
conference can obviate the inherent paralysis of such unauthorized parties and unknowledgeable counsel by addressing who will participate firsthand in the mediation,
including party representatives and insurance adjusters
if relevant. With the advent of virtual mediation, every
critical participant should now be available to join, even
if remotely. If issues persist when the mediation session
begins, an early robust discussion of the legal and factual
strengths and weaknesses should indicate whether other
participants or counsel need to join to make the process
more meaningful.
If a party representative needs to consult a higher
authority at every juncture, clearly the representative
lacks authority. To the extent that the mediation occurs
pursuant to court protocols requiring the presence of an
authorized representative, it may be counterproductive
to stop the train until an authorized individual appears
in person, or to challenge the bona fides of a representative
who presents the façade of authority but continually retreats at every decision point presumably to seek direction
from headquarters. While adding burden to the process,
such iterative consultations are not inherently disruptive
as long as the representative can secure prompt attention
and definitive direction from whoever is authorized. But
if the home base contact is either unavailable on a real-
Norman Feit recently retired as global head of Litigation and Regulatory Proceedings at Goldman Sachs
after a 26-year career at the firm. He previously spent a
decade practicing litigation with Sullivan & Cromwell
after a Second Circuit clerkship. He provides consulting and advisory services, including as a neutral, at
Feit Services LLC, and is an adjunct professor of law at
Fordham Law School.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
57
time basis, or otherwise lacks a preordained game plan
and needs to secure authority step by step from an even
higher authority, everyone is in for a long session.
Some parties cannot seem to make any significant
move or cogently explain why not. Probing may indicate
that the party or counsel has strong convictions about the
merits or principles and the resources to swing for the
fences, leaving little room for movement. But the stagnation may be due to other underlying dynamics. A representative may be reluctant to venture beyond an unrealistic negotiating zone to avoid criticism for settling too
high or low. Or standing behind the representative may
be an estranged family or fractured business leadership
that cannot functionally make decisions. A mediator must
end up mediating the party itself, exploring who the
representative answers to and how decisions are made.
The main mediation may have to be sidelined while the
mediator engages directly with the underlying principals
to forge temporary peace or build a rational consensus.
Another possibility is that a party’s counsel is blinded by optimism or afraid to deliver a realistic message to
the client. If counsel’s analysis and strategy seem extreme
and irrational, directly communicating with the client
becomes critical. For one thing, the client should appreciate that historical expense invested in a lawsuit, while potentially an emotional factor, should not affect the settlement calculus. What matters from a purely economic
perspective is the prospective expense and probability of
success or failure. In all events, business personnel tend
to approach decision making in a rational cost/benefit
manner and may be less reluctant to defer to counsel’s
bullish outlook after hearing a neutral’s observations. In
that respect, posing questions to counsel in the client’s
presence, especially about expenses, may expose the client
to a more sobering outlook. It may even be appropriate to
bring the principals together without counsel impacting
their economically rational thought process.
Meanwhile, as one side seems incapable of engaging
effectively for any of these or other reasons, the other side
(or sides) becomes more frustrated, demanding explanations and solutions from the mediator and threatening to
truncate the mediation. Why didn’t the other side bring
an authorized representative? Why can’t they engage
cogently on the facts or law? Why can’t they make any
kind of significant move? Is the problem the other side
or an ineffectual mediator? No one said that mediation
is always easy, and managing the inevitable frustration
without breaching confidences will require some thick
skin and relationship skill.
There is a delicate balance to pressing forward nimbly
versus kicking a dead horse, but few good mediators will
simply declare immediate defeat without at least trying to
identify the root of the problem. The sooner the dynamic
obstacle is recognized and addressed by the mediator,
the greater the likelihood of addressing and managing
the issue before the other side’s frustration builds to the
breaking point. That means being sensitive in pre-mediation discussions to any structural or authority dynamics
that could delay or derail productive sessions. It means
closely scrutinizing at the early stage of a session whether
the right representatives are participating and whether
engagement seems tedious or disjointed. And it means
acting swiftly and decisively if such an issue arises, rather
than letting the process plod along to an eventual intractable impasse.
N E W Y O R K S TAT E B A R A S S O C I AT I O N
DISPUTE RESOLUTION SECTION
VISIT US ONLINE AT
www.nysba.org/dispute
58
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Mediation
Trends in International Commercial Arbitration Damages
Awards: Insights from the 2020 Queen Mary/PwC Study
By Preeti Bhagnani and Joy Lee
Quantifying damages in international commercial
arbitration is complex and multi-faceted. Although many
legal systems tend to adopt the standard that damages
must be “reasonably certain,” this concept remains
amorphous, which leaves substantial room for debate between parties and affords arbitral tribunals considerable
latitude in quantifying damages. Empirical analyses of
arbitral awards damages are scarce, and limited guidance
is available on tribunals’ decision-making patterns and
approaches to quantum issues.
In December 2020, the Queen Mary University of
London’s School of International Arbitration and PricewaterhouseCoopers (PwC) released a study of damages
based on an analysis of 180 confidential ICC arbitral
awards ranging from US$0 to $1.7 billion in value (the
“Study”).1 The Study, which follows prior studies published by PwC that analyzed damages awards in over 100
investment arbitration cases (“the PwC Studies”), offers
useful insights into tribunals’ approaches to damages,
and comparisons between damages awards in investment and commercial arbitrations.2 This article summarizes the Study’s key findings and offers takeaways for
stakeholders in the arbitral process and suggestions for
addressing the issues highlighted by the Study.
Chasm Between Claimants’ and Respondents’
Assessments of Damages
The Study found a significant disparity between
parties on quantum. On average, respondents quantified damages at only 12% of the amounts requested by
claimants.3 This was consistent with the gap observed in
investment arbitrations according to the PwC Studies.4
The reasons for this discrepancy are unclear.5 There
was virtually no difference in the gap whether or not
quantum experts were involved.6 And the discrepancy
was observed even though respondents agreed with – or
did not challenge – claimants’ chosen methodology in the
vast majority of cases.7 The finding confirms that differences in the assumptions or inputs underlying a damages
valuation can result in wide disparities even where parties apply the same damages methodology.
Tribunals Do Not “Split the Difference”
Despite the gap between claimants and respondents
on quantum, there was no evidence that tribunals engage
in “splitting the baby.”8 To the contrary, the Study found
that tribunals tend to favor more closely the damages
positions of either party.9
This finding should help dispel the common misperception among corporate counsel that arbitrators are less
likely than a judge or a jury to decide strongly in favor of
one side or the other.10 In refuting the notion that arbitrators are inclined to split the difference between the parties
regardless of the merits of the case, the Study corroborates
a number of previous analyses of commercial arbitral
awards that reached a similar conclusion.11
“Despite the gap between
claimants and respondents
on quantum, there was no
evidence that tribunals engage
in ‘splitting the baby.’”
Tribunals faced with a large gap between the parties
on quantum can adopt a number of procedural techniques
in resolving the difference. One option is to address damages early in the administration of the case. This enables
the tribunal, parties, counsel and experts to understand
the parties’ respective theories of damages, which increases opportunities to narrow the scope of disputed damages
issues before the parties undertake their detailed damages
analyses.12 The International Institute for Conflict Prevention & Resolution has proposed a Damages Protocol that
adopts this approach in suggesting that tribunals address
damages during the initial conference with the parties.13
Tribunals may also order a pre-hearing meeting of the
party-appointed damages experts (without counsel present). A meeting between experts may assist the tribunal
Preeti Bhagnani is a partner in the International
Arbitration Practice of White & Case LLP. preeti.bhagnani@whitecase.com. Joy Lee is an associate at White &
Case LLP. joy.lee@whitecase.com. The views expressed
in this article are the authors’ alone and do not represent
the opinions of White & Case LLP or its clients.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
59
in narrowing down the issues in dispute, spotlighting
differences in assumptions or instructions adopted by the
experts, and/or identifying any information that is unavailable to one of the experts. The IBA Rules on the Taking of Evidence, which are often adopted as guidelines in
international arbitrations, contemplates such pre-hearing
meetings involving expert witnesses.14
the sunk costs approach in 99% of the claims where it
was proposed, compared to 85% of claims adopting the
income approach and 86% of claims adopting the market
approach.17
Engaging an Expert Can Make a Meaningful
Difference
Backward-looking approaches also tended to result in
a slightly higher percentage of the amount claimed. Tribunals awarded, on average, 82% of the amount claimed
under an asset approach and 55% under a sunk costs
approach, but only 44% of the amount claimed where
claimants used the income approach.18
In situations where a claimant appoints a damages
expert, a respondent has a choice between engaging its
own expert and presenting its case in opposition to the
claimant’s damages claim without the assistance of an
expert. Respondents may be tempted to choose the latter,
accepting the asymmetry in expertise and related risks,
in a bid to save costs and concern that providing a damages analysis through their own expert would suggest
weakness on the merits and lend credence to the quan-
These findings are unsurprising. As the Study’s
authors observe, a sunk costs approach often leaves less
scope for disagreement about the actual cost of items
claimed. By contrast, the income approach entails greater
uncertainty and room for disagreement, which may lead
tribunals to award a lower percentage of the amount
claimed.19 Claimants should bear this risk in mind in
selecting the damages methodology for their claim, while
“The Study revealed a profound lack of gender diversity in
expert appointments, with women representing only 11%
of experts in the awards reviewed, a statistic remarkably
close to the proportion of women serving as arbitrators
in the awards reviewed (10%).”
tum analysis. The Study’s findings would give respondents who are considering this option pause. The Study
shows that where claimants appointed experts, tribunals
awarded a meaningfully lower percentage of the amount
claimed in situations where the respondent also appointed its own expert (41% of amount claimed) compared to
situations where the respondent did not appoint its own
expert (69% of the amount claimed), regardless of the
size of the claim.15 This finding highlights the value of
obtaining expert assistance in opposing a damages claim,
particularly where the claimant has retained an expert.16
Backward-Looking Damages Approaches Are
More Frequently Accepted Than
Forward-Looking Approaches
Claimants in international disputes often face a
choice between “backward-looking” approaches to damages, such as sunk costs or the asset approach, or “forward-looking” approaches, such as the income approach
or market approach. Damages calculated based on a sunk
costs approach typically result in smaller values than
claims for future profits in a “but-for” scenario, which
may lead claimants to favor the latter. The Study, however, revealed that tribunals in commercial arbitrations
accepted backward-looking approaches more frequently
than forward-looking approaches. Tribunals accepted
60
also considering the difference in the quantum that reasonably may be claimed under each approach.
The Study also found that a change in the methodology proposed by claimants often created a larger difference
between the amounts claimed and the amount awarded.20
It is therefore in claimants’ interest to seek agreement with
respondents about the appropriate damages methodology
where possible.21 Where alignment is not possible, the risk
that a proposed methodology is rejected may be mitigated
by supplementing the chosen methodology with an alternative approach that serves as a “floor” or to cross-check
the value assessed using the primary approach. This strategy may help provide tribunals with confidence that the
claimant’s requested valuation satisfies the “reasonable
certainty” threshold.
Claimants’ Approach to Quantum Frequently
Criticized by Tribunals
The Study revealed considerable discontent among
arbitrators with claimants’ damages approaches. Tribunals criticized claimants’ damages calculations in more
than half of the claims reviewed in the Study, with the
most common criticisms relating to inadequate substantiation of damages claims, inaccurate assumptions
and speculation.22 These findings raise questions about
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
whether claimants are inflating their damages claims to
“anchor” tribunals on figures at the higher end of the
spectrum.23
One approach that may discourage exaggerated
claims is for tribunals to take into account the parties’
relative degree of success on their claims and defenses
(including as to quantum) in allocating costs.24 Tribunals
may also adjust the allocation of costs based on party
conduct that undermines an expeditious and cost-efficient proceeding,25 and/or deny claims for reimbursement of costs incurred in connection with the presentation of expert evidence where they determine not to
attribute weight to such evidence for lack of credibility
or reliability. Regardless of which approach is adopted,
express and early guidance that the tribunal will consider
the parties’ conduct in presenting their case on damages
when allocating costs is likely to discourage parties from
submitting overstated damages claims.
The Gender Gap in Expert Appointments
The Study revealed a profound lack of gender diversity in expert appointments, with women representing
only 11% of experts in the awards reviewed, a statistic
remarkably close to the proportion of women serving
as arbitrators in the awards reviewed (10%).26 Although
the arbitration community has increasingly recognized
the need to improve gender, racial and geographic
diversity in arbitrator appointments, relatively little attention has been directed to the diversity gap in expert
appointments.
The Study’s authors suggest ways in which professional services firms and law firms can contribute to
narrowing the gender gap among experts. These include
increased greater representation of women at the partner
level in professional services firms, greater use of joint
expert reports to encourage appointment of more junior
candidates, and increased commitment by law firms to
consider diversity when proposing experts for client
consideration.27
The diversity gap is an issue that requires further
discussion and commitment by all stakeholders. Consideration should be given to developing and publishing
objective metrics for evaluating experts, paralleling initiatives such as Arbitrator Intelligence. Arbitrator Intelligence collects anonymous feedback about arbitrators
from counsel, offering a repository of objective, measurable data that can inform arbitrator selection.28 A similar
database for experts may increase the visibility of lesserknown and diverse experts and reduce bias in the expert
selection process.
Divergence of Norms in Commercial and
Investment Arbitrations on Interest Awards
The Study revealed a significant divergence in norms
on awarding of interest in commercial and investment
arbitrations. Tribunals awarded simple interest in the
majority of the awards surveyed (79% of awards granting
pre-award interest and 74% of awards granting postaward interest).29 By contrast, compound interest was
increasingly the norm in the investment awards examined
in the PwC Studies.30
The Study’s authors note that this difference may
be partly due to the different bases for awarding interest in commercial and investment arbitrations. The most
common bases for awarding interest in commercial cases
were a legal or statutory rate (45% of awards) or a contractual rate (17% of awards), which often calls for simple
interest.31 By contrast, many investment treaties allow
for a “commercial rate” of interest, which tribunals have
increasingly interpreted as requiring compound interest.32
Notably, the Study found that arbitrators in commercial
arbitrations awarded simple interest even where the decision was left to their discretion.33
Because the quantum of interest awarded may be
comparable to, or may even exceed, the amount sought
in principal damages in certain cases, claimants who face
a choice between pursuing an investment claim under a
treaty and a commercial claim under a contract should
consider the relative likelihood of securing an award of
compound interest in each forum. Looking ahead, there
may be increasing attempts by parties to seek compound
interest in commercial arbitrations, as compound interest often better reflects commercial reality.34 Time will
tell whether commercial arbitration will follow the trend
experienced in investment arbitration, where compound
interest has, over time, become the norm.35
Conclusion
The Study makes a valuable contribution by revealing
patterns in tribunals’ approaches to damages in international commercial arbitration, based on objective data. It
brings to the fore parallels and differences between commercial and investment arbitration, and shines a spotlight
on important issues that warrant further discussion and
debate in the arbitration community.
Endnotes
1.
PwC and Queen Mary University of London, Damages Awards
in International Commercial Arbitration: A Study of ICC Awards
(2020), p. 22.
2.
See PwC, 2015-International Arbitration Damages Research: Closing
the Gap Between Claimants and Respondents (2015); PwC, PwC
International Arbitration Damages Research: 2017 Update (2017).
3.
The Study, p. 13.
4.
PwC, PwC International Arbitration Damages Research: 2017 Update
(2017), p. 3.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
61
5.
The Study, p. 3. The authors acknowledge that the gap may
be exaggerated because the Study considered only cases that
culminated in a final award, which tend to be the cases where the
parties are the furthest apart. Id., p. 13.
6.
Id. The Study found that the gap was 11.8% when experts were
involved, and 11.7% when experts were not involved. Id.
7.
Respondents disagreed with claimants’ damages methodology in
only 4% of claims applying the sunk costs approach, and 7% of
claims adopting the income approach. Id., p. 14.
8.
Id. at pp. 4, 12. This finding is consistent with the findings in the
PwC Studies. PwC, PwC International Arbitration Damages Research:
2017 Update (2017), p. 3.
9.
The Study, p. 12.
10.
A survey of 121 corporate counsel in 2011 found that a large
majority (71%) perceived arbitrators as tending to split awards,
regardless of the merits of the case. In another survey conducted
two years later by PwC, 13% of respondents who considered
that arbitration was not very well suited for their industry sector
stated that this was because of a tendency among arbitrators to
“split the baby.” D. Shontz et al., Business-to-Business Arbitration
in the United States: Perceptions of Corporate Counsel (2011), pp.
4, 11-12; Queen Mary University of London and PwC, Corporate
Choices in International Arbitration: Industry Perspectives, p. 9.
11.
Previous studies include six studies of AAA-ICDR-administered
commercial arbitration awards conducted in 2001, 2007, 2011,
2013, 2016 and 2018. The most recent, the 2018 study, examined
more than 2,500 AAA-ICDR-administered awards. In that study,
94.5% of the monetary awards were outside the claim “midrange,”
which was defined as 41% to 60% of the claim amount.
American Arbitration Association-International Centre for
Dispute Resolution, AAA-ICDR Awards Do Not Split the Baby:
Countering Counsel Perception in Commercial B2B Arbitration
Cases (2018), p. 3.
12.
See International Institute for Conflict Prevention & Resolution,
Protocol on Determination of Damages in Arbitration (2010), p. 3.
13.
See International Institute for Conflict Prevention & Resolution,
Protocol on Determination of Damages in Arbitration (2010),
Introduction.
14.
IBA Rules on the Taking of Evidence in International Arbitration
(2010) Art. 5 (4).
15.
The Study, p. 18.
16.
The Study, p. 18.
17.
The Study, p. 15.
18.
Although tribunals awarded 59% of the amount claimed where
claimants used the forward-looking market approach, this
62
relatively higher result was based on a small sample (14 awards).
Id., at 10.
19.
Id., at 10.
20.
Id., at 4.
21.
Id..
22.
Id.
23.
For a discussion of the “anchoring effect” in arbitration where the
ultimate award amount may be influenced by the parties’ initial
estimates, see Felipe Sperandio, Arbitrating Fast and Slow: Strategy
Behind Damages Valuations? Kluwer Arbitration Blog, February 28,
2018.
24.
A majority of ICC tribunals adopt this approach, applying the
“costs follow the event” rule as a starting point for cost allocation.
ICC Commission Report, Decisions on Costs in International
Arbitration, ICC Dispute Resolution Bulletin 2015, Issue 2, pp.
19-20.
25.
Some arbitral rules expressly encourage the tribunal to take party
conduct into consideration in the decision on costs. See, e.g., Article
38(5) of the 2017 ICC Rules; Article 38(5) of the 2021 ICC Rules;
Article 28.4 of the 2014 LCIA Rules; Article 20(7) of the ICDR Rules.
26.
The Study, p. 19.
27.
Id., p. 19.
28.
See Catherine A. Rogers, The Key to Unlocking the Arbitrator
Diversity Paradox?: Arbitrator Intelligence, Kluwer Arbitration Blog,
December 27, 2017.
29.
The Study, p. 20.
30.
Id., p. 20; PwC, 2015-International Arbitration Damages Research:
Closing the Gap Between Claimants and Respondents (2015) p. 9; PwC,
PwC International Arbitration Damages Research: 2017 Update
(2017) p. 7.
31.
The Study, p. 20.
32.
Id., p. 20.
33.
Id., p. 20.
34.
See Hrvatska Elektroprivreda D.D. v. Republic of Slovenia, ICSID Case
No. ARB/05/24, Award, December 17, 2015, ¶ 556 (“In essence,
compounding interest reflects simple economic sense. Business
people invest money and expect some yield from it.”); see also
Matthew Secomb, Interest in International Arbitration (2019),
Chapter 4, Calculation Method, ¶ 4.229.
35.
See Matthew Secomb, Interest in International Arbitration (2019),
Chapter 4, Calculation Method, ¶¶ 4.60, 4.210.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
ICCA Survey on a Right to a Physical Hearing in
International Arbitration
Reports Are Out From the U.S., Australia, Italy and
Vietnam
By Yasmine Lahlou and Marcel Engholm Cardoso
Introduction
As the COVID-19 pandemic disrupted in-person
hearings, and many initially postponed their proceedings
hoping for a quick return to normal, parties and tribunals
were like the rest of the world—incredibly fast at adapting to the new reality of remote proceedings. They were
helped by the institutions, which immediately stepped in
with technological and practical solutions and guidance
on the proper interpretation of their rules in the new context.1 This left arbitrators and parties, and some judges
too, to grapple with whether remote hearings are permissible under the applicable law.
To answer that question, which is bound to outlast
the pandemic, on September 4, 2020, co-editors Giacomo
Rojas Elgueta, James Hosking and Yasmine Lahlou, in
collaboration with the International Council for Commercial Arbitration (ICCA), launched a survey on “Does a
Right to a Physical Hearing Exist in International Arbitration?” in order to gather reliable, jurisdiction-specific,
information on the core legal questions posed by the
increased use of remote arbitral hearings.2 The project’s
centerpiece is comprised of national reports from a majority of the signatory states to the New York Convention
that have been prepared by distinguished local practitioners and will be published on the ICCA website.3
On December 18, 2020, the first four reports, from
Australia, Italy, the United States and Vietnam, were
published, offering initial results from jurisdictions in the
common and civil-law traditions, as well as one Model
Law jurisdiction. After the remaining national reports
will come out between now and March 2021, the coeditors will publish a general report with their analysis
of the survey results and a series of essays addressing the
interplay between remote hearings and key conceptual
issues in international arbitration.4
We propose in this article, after an overview of the
survey questions, to summarize the relevant findings under U.S. law with a brief comparison with the three other
jurisdictions where pertinent.
In short, in the U.S. there is no right to a physical
hearing in international arbitration and arbitrators enjoy
a broad discretion in fashioning the arbitral process so
long as they afford the parties a fundamentally fair hearing. As a result, and coupled with U.S. courts’ “pro-arbitration bias,” it is unlikely that an award will be annulled
or not enforced in the U.S. on the ground that the hearing
was remote – as long as the procedure was fundamentally
fair. There is no such right in Australia or Italy, but one
can be inferred in Vietnam.
The Survey Questions
The reports are structured around ten questions,
divided in five topics. First, the reports examine if a right
to a physical hearing exists under the lex arbitri. Second,
they review if such a right exists under domestic rules of
civil procedure, and whether those can be extended to
arbitration. Third, assuming such a right exists, the reporters were asked if it can be waived by the parties and test
whether arbitrators can order remote hearings where the
parties had agreed to have a physical one. Fourth, turning
to set aside proceedings, the reports examine whether,
assuming that a right to a physical hearing did apply
in a given proceeding: (i) a party must object to a violation of that right during the arbitration to preserve it as a
ground to vacate the award; (ii) a violation of that right is
sufficient per se to set aside an award or whether a party
must prove that such violation translated into a material
violation of the public policy/due process principle, or
otherwise caused actual prejudice; and (iii) in case a right
to a physical hearing in arbitration is not provided for under the law of the forum, the failure to conduct a physical
hearing by the arbitral tribunal could nevertheless constitute a basis for setting aside the award. Finally, the reports
examine whether a breach of a right to a physical hearing
constitutes a ground for refusing recognition and enforcement of a foreign award under Article V of the New York
Yasmine Lahlou is a partner of Chaffetz Lindsey
LLP, a Manhattan-based dispute resolution boutique.
Yasmine, who was educated in France, has over 20 years
of international dispute resolution experience with
exposure to both the civil and common law systems.
Email: y.lahlou@chaffetzlindsey.com
Marcel Engholm Cardoso is a legal consultant of
Chaffetz Lindsey LLP. He has experience in domestic
and international arbitration and holds an LL.M in International Business Regulation, Litigation and Arbitration from New York University. Email: m.engholm@
chaffetzlindsey.com
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
63
Convention. The reports conclude by looking at relevant
COVID-specific initiatives in each jurisdiction.
process.13 This includes the power to hold hearings in a
location other than the seat and to use witness statements
in lieu of an oral hearing.
There Is No Right to a Physical Hearing in
International Arbitration in the U.S.
In Vietnam, although the Law on Commercial Arbitration gives broad discretion to the arbitrators and does
not expressly provide for a right to a physical hearing, the
reporters have concluded that a right to a physical hearing can in fact be inferred under Vietnamese arbitration
law.14
There is no right to a physical hearing either under
the FAA or the laws of the key states that have adopted
laws on international arbitration.
The FAA, in fact, does not provide for a right to an
arbitration hearing at all. While its drafters certainly
contemplated that hearings are an integral part of the
arbitral process,5 the FAA is silent as to how hearings
should be conducted and courts are unlikely to infer a
Turning to the domestic rules that govern court
proceedings, the U.S. reporters addressed Rule 43 of the
Federal Rules of Civil Procedure, which requires that
“witness testimony must be taken in open court,” but pro-
“The answer as to whether a right to a physical hearing
exists in international arbitration might need to consider not
only the provisions of the particular jurisdiction, but also
its legal tradition, in order to reach the most appropriate
interpretation. It seems increasingly clear that there will
not be a one-size-fits-all solution.”
right to a physical hearing in arbitration. U.S. courts will
generally give great deference to arbitrators’ decisions
on procedure,6 so long as the parties were given a fundamentally fair proceeding, which includes giving the
parties a full opportunity to present material evidence.7
New York’s arbitration statute, on which the FAA
was originally modeled,8 deals with arbitration broadly
and does not expressly grant a right to a physical hearing. A few states have adopted the UNCITRAL Model
Law on International Commercial Arbitration,9 which
does contain express provisions on arbitration hearings
but no requirement that a hearing take place in-person.10
Similarly, the wording of the Revised Uniform Arbitration Act (RUAA) suggests the tribunal is not obligated to
hold a physical hearing.11
The reporters for Australia and Italy have also concluded there was no right to a physical hearing under the
lex arbitri. In Australia, a Model Law jurisdiction, courts
focus, like in the U.S., on the fundamental fairness of the
arbitral proceeding. Thus, the Federal Court of Australia
has held that collecting “evidence by telephone or video
conference . . . does not in and of itself produce ‘real
unfairness’ or ‘real practical injustice’.”12
In Italy, absent the parties’ agreement to the contrary,
arbitration law grants arbitrators broad discretion on
how to conduct hearings, subject only to the limits of due
64
vides that “for good cause in compelling circumstances
and with appropriate safeguards, the court may permit
testimony in open court by contemporaneous transmission from a different location.” Reviewing this rule’s
legislative history as well as how courts have interpreted
it, the U.S. reporters have concluded that although courts
certainly have the right to hear live testimony, it is less
clear that this needs to be done in a physical hearing and
that a right to a physical hearing currently exists in the
general rules of civil procedure.15 In any event, even if
such right exists in litigation, it would not be extended to
arbitration.16
The two civil law jurisdictions, Italy and Vietnam, do
recognize a right to a physical hearing in court proceedings, while no such right exists under the Australian rules
of civil procedure. Regardless, in all three jurisdictions,
the procedural rules applicable to litigation do not extend
to arbitration.17
Parties’ Autonomy and Arbitrators’ Discretion To
Opt for a Remote Hearing
Turning to whether the parties can waive their right
to a physical hearing, this was solely pertinent in Vietnam, where the reporters concluded that such right could
be waived.18
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Regarding the question of whether arbitrators can
order a remote hearing over the parties’ objection, the
U.S. reporters determined that the answer turns on
the underlying agreement as “arbitration is a matter of
contract” and arbitration agreements should be enforced
according to their terms.19 Thus, if the arbitration agreement requires a physical hearing, the arbitrators cannot
ignore such command. However, if the arbitration agreement is silent or ambiguous, the tribunal has discretion
to determine the manner of the hearing, provided it is
“fundamentally fair.”
In both Australia and Italy, 20 an arbitral tribunal
cannot order a remote hearing if the parties had agreed
to have a physical hearing before the start of the arbitration but could do so if the parties did not agree to have a
physical hearing until after the start of the arbitration.
Moreover, under Italian law, even where the arbitrators order a remote hearing despite the parties’ prearbitration agreement to have a physical one, this will not
constitute a ground to vacate the award unless the parties
had also agreed that the violation of that requirement
would be a ground to set aside the award.21
In Vietnam, where physical hearings are the default
rule, the tribunal’s decision to order a virtual hearing
would constitute a violation of the fundamental principles of Vietnamese law unless the parties had waived
their right to a physical hearing.
Right to a Physical Hearing in Set Aside
Proceedings
Turning to set aside proceedings, the survey first
asked whether parties must raise any basis to set aside
an award during the arbitration in order to preserve the
objection for a future annulment.
In both the U.S. and Italy, the answer is yes.22 In
Australia and Vietnam, the answer depends on the nature
of the violation. The objection must have been raised
and preserved during the arbitration as a condition to
raising it later unless the conduct of the remote hearing
somehow violated a “fundamental procedural right” in
Australia, or a “fundamental principle [] of Vietnamese
law.”23 In Australia, however, even where the parties
do not have to preserve the objection, courts will take
into account a party’s failure to do so as a relevant factor
when deciding whether the award should be vacated.
This is irrelevant in Vietnam.
On the question whether the conduct of a remote
hearing could constitute a ground to set aside the award,
the U.S. reporters explain that the assessment is highly
fact-dependent, but the answer is likely negative as U.S.
law sets a high bar for vacatur and courts are primarily
concerned with the fairness of the procedure.24 A “fundamentally fair” proceeding includes a full opportunity to
present material evidence, but nothing indicates that this
needs to happen in a physical hearing.
Australia adopts the same approach and will not vacate awards failing evidence of “real unfairness” or “real
practical injustice.”25 In Sino Dragon, the Federal Court
of Australia held that the remote taking of evidence did
not in itself justify setting an award aside. In Italy, unless
the parties agreed that failure to hold a physical hearing
could constitute a set aside ground, Italian courts will
inquire whether the parties were afforded due process,
which implied both the opportunity to present a case and
the right to obtain a decision without undue delay.26 If so,
the award will stand.
As for Vietnam, a violation of the parties’ right to hold
a physical hearing would, per se and without a showing of
actual prejudice, lead to vacatur.27
Recognition and Enforcement
Finally the U.S. reporters concluded it was unlikely
that the breach of a right to a physical hearing, if such
right is deemed to exist under the particular circumstances of the case, would lead a U.S. court to exercise its
discretion to refuse enforcement of a foreign award. When
presented with a defense under Article V of the New York
Convention to recognition and enforcement, U.S. courts
will conduct a de novo review of the issues raised by the
party.28 However, courts largely adopt a “pro-enforcement
bias,” conducting an extremely narrow reading of the
provisions.29
Under Article V(1)(b), which “essentially sanctions
the application of the forum state’s standards of due
process,”30 parties need not have been given the full set of
procedural rights afforded to litigants in U.S. courts, but
rather been afforded a “fundamentally fair” proceeding.31
Australian courts would also not look at the law of
the seat but assess if the party was given a “reasonable,”
not necessarily a “full” opportunity to present its case.32
Moreover, the party resisting enforcement would need to
show that having a remote hearing affected the outcome
of the case.
By contrast, Italian courts would likely analyze a
V(1)(b) defense against the lex arbitri, not Italian law.33
Even so, the objecting party would need to show actual
prejudice ensued from holding the hearing remotely.
Vietnamese courts would also look at the law of the
seat and might refuse enforcement if they find the remote
hearing posed an objective obstacle to a party’s exercise of
its procedural rights.34
Lastly, regarding Article V(2)(b) of the New York
Convention, U.S. and Australian courts have similar
approaches, and Italian courts will reach the same results but through a different reasoning. In the U.S., as in
Australia, enforcement of a foreign award will only be
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
65
rejected on public policy grounds if it violates the forum’s
“core” or “basic” notions of “morality and justice.”35 It is
unlikely that a violation of the right to a physical hearing
would rise to this level, even if such right existed. In Italy,
in addition to the fact that Italian law does not recognize
a right to a physical hearing, Italian courts would look at
violations of substantive public policy rather than procedural public policy under Article V(2) of the New York
Convention.36 A failure to hold a physical hearing is even
less likely to violate substantive than procedural public
policy.
8.
David M. Lindsey, James M. Hosking and Jennifer L. Gorskie,
United States in World Arbitration Reporter (2012), at p. USA-1.
9.
Those states are California, Connecticut, Florida, Georgia, Illinois,
Louisiana, Oregon, and Texas.
10.
For example, Article 24 of the Model Law requires arbitrators to
hold “oral hearings” at an appropriate stage of the proceedings.
11.
As discussed in the report, however, the RUAA’s application to
international arbitration will be very limited.
12.
Sino Dragon Trading Ltd v Noble Resources International Pte Ltd
[2016] FCA 1131. See Lucy Martinez and Jay Tseng, Australia Report
in ICCA Survey Right to a Physical Hearing in International
Arbitration, at 4.
In Vietnam, failure to comply with the parties’ agreement on dispute resolution, including an agreement to
hold a physical hearing, would constitute a public policy
violation and a basis to deny enforcement even absent a
showing of prejudice.37
13.
Giacomo Rojas Elgueta and Benedetta Mauro, Italy Report in ICCA
Survey Right to a Physical Hearing in International Arbitration, at
2-3.
14.
Hew R. Dundas, Nguyen Thi Thu Trang and Nguyen Thi Mai
Anh, Vietnam Report in ICCA Survey Right to a Physical Hearing in
International Arbitration.
15.
Hosking, Lahlou, Engholm, U.S. Report, at 6-8.
16.
Hosking, Lahlou, Engholm, U.S. Report, at 8-9.
Besides their primary goal of addressing the hot topic
of whether there is a right to a physical hearing in international arbitration or not, the reports will offer great
insight on key aspects of the annulment and enforcement
of awards, and more broadly on the level of convergence
of the domestic regimes of international arbitration.
17.
See Martinez and Tseng, Australia Report, at 6-9; Elgueta, Mauro,
Italy Report, at 5-8; and Dundas, Trang, Anh, Vietnam Report, at 3-6.
18.
See Dundas, Trang, Anh, Vietnam Report, at 6-7.
19.
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67 (2010). See
Hosking, Lahlou, Engholm, U.S. Report, at 9-10.
20.
See Martinez and Tseng, Australia Report, at 9-10; Elgueta, Mauro,
Italy Report, at 8-11.
Endnotes
21.
Elgueta, Mauro, Italy Report, at 10. Under Italian law, parties may
agree to additional grounds for vacatur. Thus, if they agree that
violation of their right to hold a physical hearing is such a ground,
the award could be annulled, otherwise the remedy is limited and
may include replacing the arbitrators.
22.
See Hosking, Lahlou, Engholm, U.S. Report, at 8-9. See also
Catherine M. Amirfar, Natalie L. Reid and Ina C. Popova,
National Report United States, in ICCA International Handbook on
Commercial Arbitration, at 83 (citing cases for the proposition that
“procedural objections not made to the tribunal will be deemed
to have been waived”). Elgueta, Mauro, Italy Report, at 12. Italian
arbitration law expressly requires parties to raise a breach of
procedural rules on the first available occasion.
23.
See Martinez and Tseng, Australia Report, at 11; Dundas, Trang,
Anh, Vietnam Report, at 7-8.
Conclusion
1.
2.
See AAA-ICDR, Virtual Hearing Guide for Arbitrators and
Parties and Model Order and Procedures for a Virtual Hearing via
Videoconference; CPR, Annotated Model Procedural Order for Remote
Video Arbitration Proceedings; ABA-ILS, COVID-19 Quick Reference
Guide; and SVAMC, Coronavirus Advisory. See also New York
Dispute Resolution Lawyer, Vol. 13, No. 2 (Summer 2020), entirely
dedicated to the impacts of COVID-19 on Alternative Dispute
Resolution.
That issue was also addressed in the topical publication,
International Arbitration and the COVID-19 Revolution,
published in the third quarter of 2020, which addressed other
issues posed by the pandemic to arbitration practitioners. Maxi
Scherer, Niuscha Bassiri, and Mohamed Abdel Wahab (eds),
International Arbitration and the COVID-19 Revolution (Kluwer
Law International, 2020).
24.
See Hosking, Lahlou, Engholm, U.S. Report, at 12-14.
3.
https://www.arbitration-icca.org/
right-to-a-physical-hearing-international-arbitration.
25.
25. See Martinez and Tseng, Australia Report, at 11-12.
26.
See Elgueta, Mauro, Italy Report, at 12-15.
4.
The report will appear as an installment of the ICCA Reports
Series.
27.
See Dundas, Trang, Anh, Vietnam Report, at 8-11.
28.
Polimaster Ltd. v. RAE Sys., Inc., 623 F.3d 832, 836 (9th Cir. 2010)
(“We review de novo whether a party established a defense
to enforcement of an arbitration award under the New York
Convention.”) See also Restatement (Third) U.S. Law Int’l Comm.
Arb. § 4.7, comment b (2019).
29.
Parsons & Whittemore Overseas Co. v. Societe Generale De L’Industrie
Du Papier (RAKTA), 508 F.2d 969, 973 (2d Cir. 1974); Polimaster Ltd.
v. RAE Sys., Inc., 623 F.3d 832, 836 (9th Cir. 2010) (“Polimaster’s
burden [of showing the existence of a New York Convention
defense] is substantial because the public policy in favor of
international arbitration is strong, cit. omitted., and the New York
Convention defenses are interpreted narrowly.”) See also Andreas
Frischknecht, Yasmine Lahlou, Gretta Walters et al., Enforcement
of Foreign Arbitral Awards and Judgments in New York (Kluwer
Law International 2018), 111-13; Paula F. Henin and Rocío Ines
Digón, Enforcing New York Convention Awards in the United States:
Chapter 2 of the FAA, in Laurence Shore, Tai-Heng Cheng , et al.,
Eds., International Arbitration in the United States, (Kluwer Law
5.
FAA § 4 (providing that after an order compelling arbitration,
“[t]he hearing and proceedings . . . shall be within the district in
which the petition for an order directing such arbitration was
filed); FAA § 10(a)(3) (allowing courts to vacate an award “[w]here
the arbitrators were guilty of misconduct in refusing to postpone
the hearing, upon sufficient cause shown[.]”
6.
See James Hosking, Yasmine Lahlou, and Marcel Engholm
Cardoso, United States of America Report, in ICCA Survey Right to a
Physical Hearing in International Arbitration (the “U.S. Report”),
at 3-5.
7.
See, e.g., ST Shipping & Transp. PTE, Ltd. v. Agathonissos Special Mar.
Enter., 2016 WL 5475987, at *4 (S.D.N.Y. 6 June 2016) (“there is no
brightline rule requiring arbitrators to conduct oral hearings. . . .
The key issue is whether the arbitral panel ‘allow[ed] each party
an adequate opportunity to present its evidence and argument.’”).
66
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
International 2017) at 575; Marike Paulsson, The 1958 New York
Convention in Action (Kluwer Law International 2016), at 13-15.
(citing U.S. case law on the development of the convention’s “proenforcement bias,” an expression coined by U.S. courts).
30.
31.
Parsons & Whittemore Overseas Co. v. Societe Generale De L’Industrie
Du Papier (RAKTA), 508 F.2d 969, 973 (2d Cir. 1974). See also
Generica Ltd. v. Pharm. Basics, Inc., 125 F.3d 1123, 1129–30 (7th Cir.
1997); Gary B. Born, International Commercial Arbitration, 2d ed.
(Kluwer Law International 2014) at 2176 (stressing that U.S. courts
considering the fairness of international arbitral proceedings
apply the constitutional requirements of due process, which
“guarantees ‘an opportunity to be heard at a meaningful time and
in a meaningful manner’”) and at 3501-02 (citing cases).
Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara, 364 F.3d 274, 299 (5th Cir. 2004). See also Parsons &
Whittemore Overseas Co. v. Societe Generale De L’Industrie Du Papier
(RAKTA), 508 F.2d 969, 975 (2d Cir. 1974) (ruling, inter alia, that
the tribunal’s refusal to postpone the hearing to accommodate a
witness’s schedule deprived the petitioner of its right to present
its case). Jennifer L. Permesly and Yasmine Lahlou, Recognition and
Vacatur of Foreign Arbitral Awards in the United States, in Laurence
Shore, Tai-heng Cheng, et al., International Arbitration in the
United States (Kluwer Law International 2017) 471, at 482-83
(explaining U.S. courts’ interpretation of “fundamental fairness”
and citing cases); D. Lindsey, J. Hosking and J. Gorski, United
States, supra note 8, pp. USA-83-84 (citing cases on U.S. courts’
understanding of fundamental fairness and stressing that it does
not include the full set of procedural rights guaranteed by the
FRCP).
32.
See Martinez and Tseng, Australia Report, at 13-14.
33.
See Elgueta, Mauro, Italy Report, at 16-17.
34.
See Dundas, Trang, Anh, Vietnam Report, at 12.
35.
See Hosking, Lahlou, Engholm, U.S. Report, at 18-19; Martinez and
Tseng, Australia Report, at 16-18.
36.
See Elgueta, Mauro, Italy Report, at 17-18.
37.
See Dundas, Trang, Anh, Vietnam Report, at 13.
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NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
67
UK Supreme Court Delivers Landmark Judgment on
Arbitrator Bias and Duty of Disclosure
by Ema Vidak Gojkovic
Summary
The U.K. Supreme Court delivered on 27 November
2020 its much-awaited decision in Halliburton v. Chubb.1
The case analyzes an arbitrator’s duty to disclose multiple appointments in related arbitrations. Given the
importance of the question before the Court, five arbitral
institutions and associations intervened in the case (ICC,
LCIA, CIArb, GAFTA, LMAA).
The Halliburton decision clarified that any arbitrator in English-seated arbitrations is under a statutory
duty to disclose circumstances that may give rise to bias.
While a similar (or stricter) duty already applies in most
institutional arbitrations under their arbitration rules, the
Halliburton decision extended the duty as a matter of law
to ad hoc arbitrations seated in England as well.
Arbitrators are required to disclose any facts or
circumstances which “might” give rise to “justifiable
doubts” of bias. This test is significantly broader than
the test required for removing an arbitrator for apparent
bias, where an applicant must show that a fair-minded
and informed observer at the date of the removal hearing
“would” infer a “real possibility” of bias.
The Court also confirmed that a duty to disclose
might include the fact of multiple appointments in related arbitrations. It will depend on the circumstances of
the case and the type of arbitration. In maritime, sports,
and commodities arbitrations, for example, it is customary to engage the same arbitrator in multiple overlapping
arbitrations and would not require disclosure.
However, suppose an arbitrator fails to disclose multiple appointments that ought to have been disclosed. In
that case, the failure to disclose will in itself be a relevant
consideration when an arbitrator is challenged for bias. It
may therefore be prudent for arbitrators to err on the side
of disclosure, including ongoing disclosure in pending
cases.
Another welcomed feature of the Halliburton decision
is the Court’s guidance on how the arbitrators should
navigate and reconcile their duty of confidentiality and
duty of disclosure, which sometimes may compete. The
Court provided a roadmap that helps the arbitrators
make relevant disclosures under the implied consent theory, applicable to any LCIA, ICC and ICSID arbitrations.
Finally, the Court took a firm stance on treating wing
arbitrators identically to chairs when it comes to the
standard of impartiality. The Court refused to grant more
68
leniency to party-appointed arbitrators. The objective test
for apparent bias applies with the same force to both.
Factual Background
After the explosion of the Deepwater Horizon oil rig
in the Gulf of Mexico in 2010, Halliburton and Transocean
raised claims under their respective insurance policies
with Chubb. Chubb refused the claims. The policies directed any dispute to an ad hoc arbitration in London.
Halliburton initiated the first arbitration against
Chubb in January 2015 (first arbitration). Since the two
wing arbitrators could not agree on the chair, the English
High Court appointed Kenneth Rokison QC.
Following his appointment, Mr. Rokison accepted a
second appointment in an arbitration between Chubb and
Transocean, which also related to the Deepwater Horizon
explosion (second arbitration). In the second arbitration,
Mr. Rokison disclosed to Transocean his role in the first
arbitration. However, he did not disclose his appointment
by Chubb in the second arbitration to Halliburton.
Mr. Rokison also subsequently accepted joint appointment in an insurance arbitration brought by Transocean
against a different insurer, also related to the Deepwater
Horizon explosion (third arbitration). This appointment
was also not disclosed to Halliburton, but it was not the
focus of the two appeals.
Halliburton applied to the High Court under section
24(1)(a) of the Arbitration Act 1996 to remove Mr. Rokison
as chair in the first arbitration. It alleged that Mr. Rokison’s appointment in the second arbitration, and the lack
of related disclosure, gave rise to justifiable doubts as to
his impartiality. The High Court rejected Halliburton’s
application.
Halliburton then appealed the High Court decision to
the Court of Appeal, which also dismissed the appeal. The
case reached the Supreme Court in November 2019.
Given the importance of the issues addressed, the
Court allowed intervention from the ICC, the LCIA, the
CIArb, the LMAA, and the GAFTA. The ICC, LCIA and
CIArb advocated for a clear legal duty of disclosure and
Ema Vidak Gojkovi is an independent counsel and
arbitrator focusing on international arbitration and
public international law. She is qualified in New York,
England and Wales, and Croatia. Her email is: evidak@
vidakarbitration.com.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
argued that a failure to disclose should be treated as
giving rise to an appearance of bias.2 The LMAA and
GAFTA took a contrary position, and argued that in their
specific field, it is normal for arbitrators to be appointed
in multiple disputes with overlapping subject matter, and
that there was no need to impose a blanket disclosure
obligation on them too.3 Balancing both approaches led
the Court to make a strongly fact-driven decision.
Key Takeaway Points
The Halliburton decision sheds light on a number of
points that will matter to practitioners, including, in particular, arbitrators in English-seated arbitrations:
(1) Unless the parties agree otherwise (implicitly
or explicitly), an arbitrator is subject to a legal
duty under English law to disclose facts and
circumstances which “would or might reasonably
give rise to justifiable doubts as to his or her
impartiality.”4 The duty to disclose such facts
forms part of the statutory duty of impartiality.
It is important to note that the Halliburton
arbitrations were all ad hoc arbitrations, not subject
to any institutional rules. While the duty to make
disclosure is well-established in institutional
arbitrations, prior to the Halliburton decision it
was not clear if the same duty would apply in
ad hoc arbitrations. In Halliburton, the Court
confirmed that the duty to disclose exists as an
independent statutory duty under English law,
and is not a mere good arbitral practice.
Lord Hodge noted that there is indeed an implied
contractual term between the arbitrator and the
parties that the arbitrator will be impartial.5 An
arbitrator would breach that duty if she knew of
circumstances that might subject her to removal
but failed to disclose them.6 Unless the parties
have expressly or implicitly waived the right to
disclosure, such disclosure is a legal obligation.7
Moreover, the Court recognized that while the
failure to disclose will not necessarily suffice to
remove an arbitrator for bias, it will be a factor
that the “fair-minded and informed observer”
would consider when deciding on apparent bias
in considering arbitrator removal.8
(2) When addressing an allegation of apparent bias in
an English-seated arbitration, the English courts
will apply the objective test of the fair-minded and
informed observer, namely, “whether the fairminded and informed observer, having considered
the facts, would conclude that there was a
real possibility that the tribunal was biased.”9
The Courts will have regard to the particular
characteristics of international arbitration.
The test for apparent bias under English law is an
objective test, and it does not turn on the subjective
views of parties. The Court’s view contradicts the
approach taken by many institutional arbitration
rules, which favor a subjective test as “in the eyes
of the parties.”
In explaining the applicable test, the Court
emphasized that an “informed” and “fair-minded”
observer will naturally appreciate the importance
of the context of international arbitration.10
“Under this decision, in ad
hoc proceedings seated in
the U.K. : ‘Arbitrators are
required to disclose any facts
or circumstances which
“might” give rise to
“justifiable doubts” of bias.’”
The Court recognized that there are differences
between court resolution of disputes and
arbitration which may affect the bias analysis,
including that: (i) judges resolve civil disputes
in open court, whereas arbitration is often
private and confidential;11 (ii) unlike at court,
awards are typically subject to no or only a very
limited review;12 (iii) unlike judges, arbitrators
are paid by the parties and therefore derive a
financial benefit from appointments, which may
make them reluctant to alienate parties and risk
future appointments;13 (iv) arbitrators come
from different backgrounds, legal traditions and
ethical norms, and may have divergent views on
impartiality and independence;14 (v) in multiple
arbitrations concerning an overlapping subject
matter and one common party, a non-common
party has no way of knowing of the submissions
and evidence submitted to other tribunals—unlike
court where any party can sit in on proceedings or
demonstrate legal interest to be granted access to
case documents.
(3) The objective test for apparent bias applies equally
to wing arbitrators and to chairs, regardless of how
they were appointed. All arbitrators are subject
to the same disclosure obligations and the same
standard of impartiality.
The court rejected the suggestion that
when it comes to disclosures, a partyappointed arbitrator should be afforded
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
69
disputes to institutions with such practice accede
to this practice and accept it.
greater leniency than the chair. The Court
confirmed:
Disclosure is subject to an arbitrator’s privacy and
confidentiality obligations. Where such obligations
apply, the parties’ express or inferred consent is
required for disclosure. The ICC Rules, LCIA Rules
and ICSID Rules all provide a basis for consent to
be inferred.
that is not a distinction which
English law would recognize
as a basis for a party-appointee
avoiding the obligation of disclosure. The disagreement among
people involved in international
arbitration as to the role of the
party-appointed arbitrator is a
circumstance which points to
the disclosure of such multiple
nominations; it does not provide
a ground for nondisclosure.15
While there has been a considerable debate
between the practitioners as to the role and
reality of “gun for hire” arbitrators, the Court’s
One of the most intriguing aspects of the
Halliburton decision is its discussion of the
relationship between the duty of disclosure and
the duty of privacy and confidentiality. The Court
stated that where disclosure is required and the
information to be disclosed is subject to the duty
of privacy and confidentiality, disclosure can only
be made if the parties to whom the duty is owed
consent. However, and importantly, such consent
“The Court also acknowledged that the ICC Rules,
LCIA Rules and ICSID Rules all provide a basis for the
inference that parties to arbitrations under those rules
consented to disclosure of information to parties in
prospective arbitrations with the same arbitrator.”
view echoes the position of most other courts
and arbitral institutions around the world:
party-appointed arbitrators are subject to strict
disclosure obligations, to the same extent as chairs.
(4) The Court recognized that there might be
circumstances in which the acceptance of
multiple appointments with overlap with only
one common party “might reasonably cause
the objective observer to conclude that there is
a real possibility of bias.”16 However, there are
some arbitration practices for which multiple
appointments on related arbitrations are standard
and expected. There, this rule would not apply.
The result of this query will be fact-driven, and
will depend on the custom and practice in the
relevant field of arbitration. For example, Lord
Hodge acknowledged that there are practices in
maritime, sports, and commodities arbitrations in
which engaging the same arbitrator in multiple
overlapping arbitrations does not need to be
disclosed because the parties expect it and do not
generally perceive it as questioning arbitrator’s
impartiality.17 Accordingly, parties who refer their
70
need not always be express. It may also “be
inferred from the arbitration agreement itself in the
context of the custom and practice in the relevant
field.”18
The Court also acknowledged that the ICC Rules,
LCIA Rules and ICSID Rules all provide a basis
for the inference that parties to arbitrations under
those rules consented to disclosure of information
to parties in prospective arbitrations with the same
arbitrator.19 However, in the absence of consent
(expressed or implied), the arbitrator will have to
decline the new appointment.20
Case Outcome
Ultimately, applying the principles discussed above,
the Court held that Mr. Rokison had been under a legal
duty to disclose his appointment in the second (Transocean) arbitration to Halliburton because, at the time of
that appointment, the existence of potentially overlapping
arbitrations with only one common party was a circumstance that might reasonably give rise to a possibility of
bias. The arbitrator’s failure to disclose that information
constituted a breach of his legal duty.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
However, and taking into account all the circumstances of the case, the Court concluded that the fairminded and informed observer at the date of the removal
hearing would not infer a real possibility of bias.21 Mr.
Rokison explained that he had failed to disclose the appointments due to an honest oversight. The parties did
not challenge his explanation.22 The Court concluded
that an objective observer would not have inferred a
“real possibility” of bias based on Mr. Rokison’s oversight for six key reasons: First, the time sequence of the
three arbitrations (with the second and third arbitrations following the first arbitration) explained why Mr.
Rokison did not identify the need for disclosure in the
first arbitration of his appointments in the second and
third arbitrations. Second, it was unlikely that there
would be any overlap in evidence or legal submissions
in the arbitrations in question, and Chubb was therefore not likely to gain any unfair advantage by virtue of
participating in arbitrations where Halliburton was not
present. Third, Mr. Rokison did not receive any secret
financial benefit through his appointments. Fourth, the
Court did not believe that Mr. Rokison has subconscious
ill-will in respect of the robust challenge made by Halliburton.23 Finally, Lord Hodge highlighted that there
had been a lack of clarity at the time on whether disclosure was a legal duty under English law. Given that the
Halliburton decision has now clarified that standard, this
criterion will not apply to bias analysis of decisions after
Halliburton.
The Impact of the Halliburton Decision on Future
Arbitrations
In the aftermath of Halliburton, some arbitrators
may be even more inclusive and expansive when deciding what to disclose. However, for most arbitrators, the
Halliburton decision will not significantly change their
practice. Arbitrators already tend to err on the side of
disclosure. And the disclosure requirements of many
arbitral institutions are stricter than those under English law.
Regretfully, the Halliburton decision left some questions open. To name some, the Court did not provide
guidance on how repeat appointments by the same parties should be treated in impartiality analysis as opposed
to disclosure requirements. How many repeat appointments are too many? Another intriguing question is
whether the parties will trust the arbitrators to take the
role of the “fair-minded and informed observer” and to
evaluate their own bias. Some parties may feel that it is
they who are best placed to flag if a fact raises questions
for appearance of bias. But if the decision on disclosure
rests solely with the arbitrator, and the arbitrator decides not to disclose, how can the parties challenge that
decision?
one commentator stated, even if not required, the arbitrator evaluating what to disclose should “stretch” his or her
mind to see the facts from the “eyes of the parties.”24 After
all, in the system built on party consent, it is their expectation that matters most.
Endnotes
1.
Halliburton Company v. Chubb Bermuda Insurance Ltd [2020] UKSC
48.
2.
Halliburton Company v. Chubb Bermuda Insurance Ltd [2020] UKSC
48, at para. 42.
3.
Id. at para. 45.
4.
See Section 24(1)(a) of the English Arbitration Act (1996).
5.
An arbitrator’s statutory duties under section 33 of the 1996
Arbitration Act. See Halliburton Company v. Chubb Bermuda
Insurance Ltd [2020] UKSC 48, at para. 76.
6.
Id. For an arbitrator’s removal, see section 24 of the 1996
Arbitration Act.
7.
Id. at para. 78.
8.
Id. at para. 155.
9.
Porter v. Magill [2001] UKHL 67, at para. 103.
10.
Helow v. Secretary of State for the Home Department [2008] UKHL
62. See also Halliburton Company v. Chubb Bermuda Insurance Ltd
(formerly known as Ace Bermuda Insurance Ltd) [2020] UKSC 48,
at paras. 56-63.
11.
Halliburton Company v. Chubb Bermuda Insurance Ltd (formerly
known as Ace Bermuda Insurance Ltd) [2020] UKSC 48, at para.
56.
12.
Id. at para. 58.
13.
Id. at para. 59.
14.
Id. at para. 60.
15.
Id. at para 144.
16.
Id. at para. 152.
17.
Id. at para. 87.
18.
Id. at para. 88.
19.
Id. at para. 90.
20.
Id. at para. 88.
21.
Id. at para. 149.
22.
Id. at para. 149.
23.
Id. at para. 149.
24.
Stephen R. Bond, The Selection of ICC Arbitrators and the
Requirement of Independence, Arbitration International, Kluwer
Law International, 1988, v. 4, at pp. 303-304.
The solution might be to ask of the arbitrators to do
more than is required under the English statutory law. As
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
71
Being vs. Doing in the Relationships Among Arbitration
Practitioners1
By Cecilia Carrara
The management of the relationships among all the
participants in the arbitration—the parties, counsel, witnesses, experts, and the secretary—is subject to varying
national rules. Uniform rules that clarify the obligations
are particularly desirable. In addition a mindful approach
requires maintaining an ability to listen, the “being vs.
doing” attitude, being open to the evidence and opinions
of others. This it is a “soft standard” as opposed to a hard
norm. But if observed, it will facilitate compliance with
the written rules of conduct that apply internationally.
(1) Selected Written Rules of Conduct
In international arbitration, practitioners of different
nationalities are subject to diverse and potentially conflicting national bar rules or other forms of professional
or disciplinary norms. This may create some degree of
confusion and uncertainty including on different possible interpretations of the core principles of the legal
profession (independence, secrecy, duty of candor to the
tribunal, for example).
The IBA Arbitration Committee 2013 Guidelines on
Party Representation in International Arbitration2 provide some unifying guidance. The Guidelines were developed after a survey that sought to understand user views
as to the need for uniform guidelines on issues of counsel
conduct. Despite expressing a concern for potential overregulation, a majority of the respondents supported the
development of international guidelines.
72
Here, the following Guideline Rules deserve particular attention.
• “Party Representative should not submit Witness or
Expert evidence that he or she knows to be false; it
should advise the Witness or Expert to testify truthfully; take reasonable steps to deter the Witness or
Expert from submitting false evidence; withdraw as
Party Representative if the circumstances so warrant” (Rule no. 11).
• “A Party Representative may assist Witnesses in the
preparation of Witness Statements and Experts in
the preparation of Expert Reports” (Rule no. 20).
• “A Party Representative should seek to ensure that
a Witness Statement reflects the Witness’s own account of relevant facts, events and circumstances
and that an Expert Report reflects the Expert’s own
analysis and opinion” (Rules no. 21 and 22).
Cecilia Carrara is partner at Legance–Avvocati Associati (Rome, Italy). She has significant experience in
the field of national and international, commercial and
investment arbitration proceedings, both institutional
and ad hoc, acting as counsel and as arbitrator. She further represents international and Italian companies in
arbitration-related proceedings in front of the national
courts, such as recognition and enforcement proceedings of arbitral awards. E-mail: ccarrara@legance.it.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
• “A Party Representative may pay expenses reasonably incurred by a Witness or Expert in preparing
to testify or testifying at a hearing. It may also
pay reasonable compensation for the loss of time
incurred by a Witness in testifying and preparing
to testify; and reasonable fees for the professional
services of a Party-appointed Expert” (Rule no. 25).
These rules are specific to international arbitration
and do not find equivalents in most professional codes of
conduct at national levels. The likely reason is that ordinary civil procedural rules may differ from international
arbitration procedure on the point of taking of evidence
and, consequently, on the rules of conduct. In many legal
systems, even if the preparation of written statements
by witnesses and experts with the aid of the lawyers is
permissible in the context of arbitration proceedings, it
may not be the standard, or may even violate the rules of
conduct in ordinary court proceedings. In this respect, the
IBA Rules offer a form of unique guidance on what may
be considered a universally accepted standard in international arbitration.
Rule no. 3 of the IBA Guidelines states that:
[t]he Guidelines are not intended to
displace otherwise applicable mandatory
laws, professional or disciplinary rules,
or agreed arbitration rules, in matters of
Party representation. The Guidelines are
also not intended to derogate from the
arbitration agreement or to undermine
either a Party representative’s primary
duty of loyalty to the party whom he or
she represents or a Party representative’s
paramount obligation to present such
Party’s case to the Arbitral Tribunal.
These fundamental principles are: loyalty to the client,
mutual respect among professional colleagues, independence in
the legal profession.
The Code of Conduct for European Lawyers of 20064
and in the Italian Code of Conduct of 2014,5 are examples
of national codes that continue to apply. These rules of
“The being vs. doing approach keeps alive our curiosity
and enables us to learn from the clients and with the clients,
from opposing counsel and with opposing counsel, from the arbitrators
and with the arbitrators, from senior and younger colleagues, and
ultimately make our work more rewarding. Following this approach, we
will also naturally comply with the written rules of conduct that require
mutual respect among colleagues, independence in the profession,
and trust in the client relationship.”
Another effort to provide uniform guidance was
made by the ICCA (International Council for Commercial
Arbitration) Task Force on Standards of Practice in International Arbitration. In August 2020, the ICCA Task Force
released a consultation draft of its Guidelines on Standards of Practice in International Arbitration.3 Developed
by experts in the practice of international arbitration
with experience from diverse jurisdictions, like the IBA
Guidelines, the ICCA Guidelines are not intended to be
mandatory rules but rather guiding principles of civility
in international arbitration. They may be incorporated in
the parties’ arbitration agreement, adopted by arbitral institutions, or included by arbitral tribunals in procedural
orders or in the terms of reference.
Other principles that are at the core of the legal profession are contained in most national or regional codes
of conduct. These principles would in any event apply,
even where the IBA Guidelines are referred to by the
parties.
conduct recognize that in a society founded on the rule of
law, the lawyer’s role goes beyond her duty to represent
the client to include a duty to serve the higher interests
of justice. A lawyer has to be independent to safeguard
the rule of law in face of the power of the state and other
external pressures in society. Article 2.1.1. of the Code of
Conduct for European Lawyers states: “A lawyer must
avoid any impairment of his and her independence and
be careful not to compromise his or her professional standards in order to please the client, the court or third parties.”
Article 23 of the Italian Code of Conduct of 2014
provides that after being retained, a lawyer must refrain
from entering into “any economic or other form of relation with the client which might influence the professional relationship.” Article 51 further qualifies the duty
of independence of a lawyer and provides that “a lawyer
shall refrain, unless in exceptional cases, from testifying
as person of interest or witness about circumstances of
which he/she has obtained information in the course of
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
73
his/her professional activity or which are related to any
representation in which he has been engaged.”
Article 11 of the Italian Code of Conduct of 2014
underlines that the relationship between the lawyer and
the client is based on trust: the client shall trust his or
her lawyer. The reciprocal principle is that if a lawyer
reasonably believes that the client is lying to her, she may
withdraw from the mandate.6 If the lawyer decides to
assist the client, she will have to listen carefully and trust
the client’s version of the facts.7
(2) Being vs. Doing: It Is Also a Question of Attitude
After having recalled the main written rules of conduct on trust, mutual respect and independence— i.e.,
the “hard norms”—I would like to consider a “soft” element which should guide us in the relationships among
colleagues and in particular in the lawyer-client relationship. This soft element is our ability and availability to listen
and to communicate.
In order to better explain my point, I shall draw on
a parallel between the legal and the medical profession.8
There are many analogies: the client establishes a relationship with the lawyer because of a special need he/
she has; the lawyer has to consider the “best interest” of
the client; sometimes lawyers provide second opinion or
estimate percentages of success/ failure. Lawyers, like
doctors, have to interact with other colleagues within the
team and with different specialties; sometimes lawyers
genuinely grow to like clients (does this threaten objectivity?); sometimes as lawyers we deliver bad news, etc…
Unfortunately, we all need doctors from time to time.
This analogy is so useful, because we can immediately
identify which kind of approach we have appreciated
in our doctors and would like to follow for ourselves as
professionals. A paternalistic and directive approach? A
friendly, almost familiar one? Professional but empathetic?
Our own experience tells us that the most frequent
complaints are about failure to listen or failure to fully explain, tasks that are made more difficult when the patient
is receiving difficult information. Better communication
by lawyers needs more focus, time to listen and to communicate well is time well spent.
Special attention and focus should be given to situations in which the client has a special connection to the
lawyer or where an opposing counsel is a friend or longtime colleague, where there are concerns about the client
relationship or internal politics.
If the lawyer follows the rule of being vs. doing and
remains available to listen and to observe, the lawyer will be
more flexible and able to adjust to the circumstances of the case.
The press of business and complexity of matters and
deadlines need not affect the aptitude to listen, to observe, to
live the moment fully, to be vs. to do if we remain mindful and
practice deep listening.
74
The being vs. doing approach keeps alive our curiosity
and enables us to learn from the clients and with the clients,
from opposing counsel and with opposing counsel, from the
arbitrators and with the arbitrators, from senior and younger
colleagues, and ultimately makes our work more rewarding.
Following this approach, will also naturally result in
complying with the written rules of conduct that require
mutual respect among colleagues, independence in the
profession, and trust in the client relationship.
Endnotes
1.
The text of the article is drawn from the keynote prepared by
the author for the webinar “Selection of Factual Witnesses and
Drafting of Witness Statement,” jointly organized by ICC YAF and
AIA-ArbIt-40 on 21 October 2020.
2.
The IBA Guidelines on Party Representation in International
Arbitration may be downloaded from www.ibanet.org. On the
same topic, see also the following contributions: Felix Dasser, A
Critical Analysis of the IBA Guidelines on Party Representation, in
ASA Special Series No. 37, 2015; Jeffrey Waincymer, IBA Guidelines
in Party Representation In International Arbitration, in Kluwer
Arbitration Blog, 10 July 2013; Cyrus Benson, The IBA Guidelines
on Party Representation: An Important Step in Overcoming the Taboo of
Ethics in International Arbitration, Les Cahiers de l’Arbitrage (20141), 47.
3.
As of the date of this writing, whereof the consultation draft of
the ICCA Guidelines on Standards of Practice in International
Arbitration is not yet final and may be downloaded from https://
www.arbitration-icca.org/publications/ICCA_Report_N9.html. As
reported in the draft, the Guidelines are organized in four sections:
(I) general guidelines for all participants in the international
arbitration process; (II) guidelines for counsel and party
representatives; (III) guidelines for arbitrators; and (V) guidelines
for other participants.
4.
The Code of Conduct for European Lawyers dates back to
28 October 1988. It has been amended three times; the latest
amendment took place at the plenary session in Oporto on 19 May
2006. It is a binding text on all Member States: all lawyers who
are members of the bars of these countries (whether their bars are
full, associate or observer members of the CCBE) have to comply
with the Code in their cross-border activities within the European
Union, the European Economic Area and the Swiss Confederation
as well as within associate and observer countries. See: https://
www.ccbe.eu/documents/publications/.
5.
The Italian Code of Conduct may be downloaded from https://
www.consiglionazionaleforense.it/codice-deontologico-forense.
See also Francesco Caia, Antonio Gerardo Diana, Vincenzo
Pecorella, Codice commentato della deontologia forense, 2014;
Remo Danovi, Il nuovo codice deontologico forense. Commentario,
2014; Guglielmo Bevivino, Appunti su etica e professioni legali,
2014.
6.
Article 50 of the Italian Code of Conduct, paragraph 3, provides
that “[a] lawyer, who knows even at a later stage about the
introduction of false evidence, elements of proof or documents
provided by the assisted party in the proceeding, may not use
them or shall withdraw his assignment.”
7.
I refer in this respect also to Marcello Viglino, contract manager at
Webuild S.p.A. (formerly, Salini-Impregilo S.p.A.), in his speech
during the webinar mentioned under note 1, above.
8.
In particular, I wish to thank Prof. Giovanni Battista Serra for his
enlightening “behavioral lessons” received over almost a lifetime
and refer to his publication, Fisiopatologia del rapporto medicopaziente in ginecologia, MediaMed 2000.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Future of Trust Arbitration and Its Impact in Russia
By Dmitry A. Pentsov
Although the very idea of transferring one’s property
to another person “under the parole of honor” underlying the concept of a common law trust can still cause
some skepticism among people brought up on the traditions of the continental legal system, mistrust has not become an insurmountable obstacle to the use of this instrument by wealthy Russian individuals and companies in a
wide variety of situations. Privacy and confidentiality are
major issues for prospective trust settlors and those concerns are not well addressed in public court proceedings.
Indeed, as was demonstrated by Baron Thyssen’s claim
against the trustees of the Continuity Trust in the Bermuda Supreme Court in the early 2000s, once this dispute
was brought before court, privacy was one of the first
casualties of the resulting high-profile litigation.1 In view
of this and other court cases throughout the world, which
have attracted significant public attention,2 prospective
Russian settlors interested in preserving confidentiality of
their future trusts may turn toward a possible alternative,
namely, trust arbitration.
At the Intersection of Trusts and Arbitration
Trust arbitration is a relatively recent phenomena,
because until mid-2000s these two areas of professional
activities did not really interact. Trusts have been traditionally perceived as an effective instrument for intergenerational transfer of wealth or protecting assets from
creditors, or, in case of offshore trusts, as a useful tool to
preserve confidentiality of asset ownership, obtain tax
advantages, or simply avoid tax. Furthermore, over the
centuries the creation of trusts and their management has
become a highly specialized field of legal practice. Needless to say, lawyers specializing in international arbitration have not always regarded these areas of practice
as intellectually or financially attractive, or even safe in
terms of possible professional risks inherent in helping
clients minimize their taxation.
This situation started to gradually change in the
beginning of the 21st century with the growth of the use
of trusts in international commercial and investment
transactions. Since international arbitration is often seen
as the preferred way to resolve international commercial
disputes, international arbitration practitioners began
to look at trusts. In addition to that, cost and delay were
more apparent in court processes. This is exactly what
happened in Baron Thyssen’s case. According to certain
contemporaneous accounts, it was considered by a “novice judge” who was “clearly out of his depth” and, after
the cost of lawyers reached a hundred million pounds,
simply resigned from the case.3
Against this background, the desire of settlors to
maintain confidentiality, as well as to ensure quick and
inexpensive consideration of “internal” trust disputes involving settlor, trustee, beneficiaries and, sometimes, protector, by competent persons, has prompted a new look at
arbitration. Once the popularity of arbitration in this field
started to grow, a number of jurisdictions, including the
Bahamas,4 Guernsey,5 Malta,6 and the states of Arizona7
and Florida,8 have amended their trust legislation. From
their side, a number of leading arbitration institutions,
notably, the American Arbitration Association9 and the International Chamber of Commerce,10 have rapidly seized
an opportunity to expand their activities to this new area.
So far, these developments have not directly affected
Russia. However, given the significant interest of its
nationals in trusts, trust arbitration could appear there
in the very near future. In order to make trust arbitration
successful, Russian arbitration practitioners would need
to find an efficient “domestic” solution to various major
problems that currently hamper its development abroad,
notably, a means of extending the arbitration agreement
to trust beneficiaries and the enforcement of trust arbitral
awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the “New
York Convention”).
Extension of Arbitration Agreement to Trust
Beneficiaries
The existence of an agreement between the parties
to refer their disputes to arbitration, which underpins
international commercial arbitration, is embodied in the
requirement of a valid arbitration agreement, prescribed
both in articles II(1) and V(1)(a) of the New York Convention and in Russian domestic law.11 Since the trust deed is
normally signed by its settlor, and sometimes by trustee,
and, if appointed, by protector, it may be considered as
a valid arbitration agreement with respect to disputes
among these persons. However, because the trust deed
is not usually signed by beneficiaries (who may not even
be aware of the existence of this trust before they actually
receive distributions), at a first glance it cannot be recognized as valid arbitration agreement with respect to them.
At the same time, binding the beneficiaries is key in trust
disputes. That is why, finding an effective solution to this
problem of extending the scope of the arbitration agree-
Dmitry A. Pentsov is partner at the Geneva office of
FRORIEP Legal SA. He is qualified in New York State,
the Russian Federation and Switzerland. He can be
reached at: dpentsov@froriep.ch.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
75
ment to persons who did not sign it or to binding the
distribution of the trust estate, should be considered as a
prerequisite for the creation of an efficient system of trust
arbitration.
Unlike common law countries, the courts in Russia
do not have a precedent-setting function and their role is
generally limited to applying abstract legal norms to particular situations. Therefore, the easiest solution would
be the inclusion into the Russian Federal Law on international commercial arbitration of a specific provision
expressly extending the arbitration agreement to include
the beneficiaries of the trust. Until such statutory amendments are made, one of the possible solutions would be
to include into the arbitration clause of a trust deed an
express provision making the beneficiaries rights to claim
and receive benefits from the trust contingent upon their
acceptance of arbitrating disputes.
This solution follows the approach already used in
the 2018 ICC Arbitration Clause for Trust Disputes. It is
based on the theory of “deemed acquiescence,” according to which a beneficiary cannot claim the benefit of the
trust without accepting the associated burden, namely,
the arbitration agreement and other conditions for the
transfer of the trust property.12 While, strictly speaking,
this solution does not create an arbitration agreement
based on the mutual consent of parties, it can potentially
serve as a powerful deterrent for beneficiaries, discouraging them from bringing internal trust disputes before
courts instead of respecting the arbitration clause. It also
is consistent with a relatively recent trend in Russian
arbitration law, allowing for the inclusion of arbitration
clauses for corporate disputes in a juridical person’s
articles of association (“ustav”), which would be binding
on its future shareholders.13
Written Form Requirement of the New York
Convention
Taking into account that trust assets may be located
in different jurisdictions, not necessarily coinciding with
the seat of arbitration, the possibility of recognition and
enforcement of trust arbitration awards on a global scale
becomes a prerequisite for its successful development.
Although the New York Convention, to date ratified
by 164 countries,14 may be seen as the most successful
international instrument used to recognize and enforce
foreign arbitration awards, paradoxically it may also be
an obstacle to the extension of arbitration to trusts. Under
articles II(1) and V(1)(a) of the Convention, one of the
conditions for recognition and enforcement is the existence of an “agreement in writing” under which the parties undertake to submit to arbitration all or any differences that have arisen or that may arise between them in
respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration. At the same time, according to article
II(2) of the Convention, this term shall include an arbitral
76
clause in a contract or an arbitration agreement, signed by
the parties or contained in an exchange of letters or telegrams. In view of these requirements, even if a trust deed
contained an arbitration clause, there would be no “agreement in writing” within the meaning of the New York
Convention with the beneficiaries, because they do not
usually sign this deed. As a result, while the scope of the
arbitration clause in a trust deed may be extended to trust
beneficiaries by virtue of an express provision of national
legislation or one of the theories, developed by courts,
there is no guarantee that an arbitration award enforceable where rendered would be recognized and enforced
outside of that jurisdiction if the jurisdictions where
enforcement is sought literally follows the “agreement in
writing” requirements of the New York Convention.
Therefore, even if the Russian federal law on international commercial arbitration is amended to extend the
scope of an arbitration agreement included into trust deed
to its beneficiaries, that change alone will not eliminate
the risk of denial of recognition and enforcement abroad
of trust arbitration awards rendered in Russia. The same
analysis would apply to any jurisdiction that provides
for the applicability of arbitration agreements to trust
beneficiaries. Moreover, where common law trusts are
used by Russian settlors for assets located in the Russian
Federation (e.g., shares of Russian companies) to protect
them from creditors, as well as for succession planning,
the seat of trust arbitration will be the same as the location
of assets potentially subject to a future arbitration award.
In this case, the enforcement of trust arbitration award
would be made on the basis of Russian domestic legislation, regardless of observance of “agreement in writing”
requirements of the New York Convention. It follows that
the choice of Russia as a seat of trust arbitration could
avoid uncertainty in the matter of recognition and enforcement of its awards. Since the seat of arbitration and
the place of hearings do not necessarily have to coincide,
this approach could also allow New York practitioners
to conduct Russia-related trust arbitration hearings on
their home territory. Another possible solution could be to
include in the trust arbitration clause a condition that in
order to benefit from distributions all beneficiaries have to
sign an arbitration agreement.
Conclusion
There are no fundamental obstacles to the development of arbitration as method of resolving trust-related
disputes in Russia or elsewhere. The problem of extending the effect of the arbitration agreement contained in the
trust documents to its beneficiaries may be the most difficult. However, where a trust is established for movable
property located in the Russian Federation, its choice as a
seat of arbitration may create an advantage. In this regard,
it is to be hoped that the Russian legal community will
take advantage of the opportunities in this area and take
active actions aimed at the development of trust arbitra-
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
tion, which will help to transform Russia’s leading global
arbitration center.
6.
Arbitration Act, art. 15A(2) (Malta), available at:
http://justiceservices.gov.mt/DownloadDocument.
aspx?app=lom&itemid=8854&l=1 (last visited Oct. 23, 2020).
7.
Ariz. Rev. Stat, § 14-10205 (2019) (Title 14 – Trusts, Estates and
Protective Proceedings), available at: https://www.azleg.gov/
ars/14/10205.htm (last visited Oct. 23, 2020).
Endnotes
1.
See, e.g., Tim McDonald, Epic Family Dispute Swirls Around a Matter
of Trust, Los Angeles Times, Jul. 8, 2001, available at: https://
www.latimes.com/archives/la-xpm-2001-jul-08-mn-19684-story.
html (last visited Oct. 23, 2020).
8.
Fla. Stat. §731.401 (2019) (Arbitration of disputes), available
at: http://www.leg.state.fl.us/statutes/index.cfm?App_
mode=Display_Statute&Search_String=&URL=0700-0799/0731/
Sections/0731.401.html (last visited Marr. 1, 2020).
2.
See, e.g., JSC Mezhdunarodniy Promyshlenniy Bank & Anor v.
Pugachev (2014) EWHC 4336 (Ch) (Oct. 239, 2014) (U.K.), available
at: https://www.bailii.org/ew/cases/EWHC/Ch/2014/4336.
html (last visited Oct. 23, 2020); Slutsker v. Haron Investments Ltd.
and Anor (2013) EWCA Civ 430 (May 1, 2013) (U.K.), available at:
http://www.bailii.org/ew/cases/EWCA/Civ/2013/430.html
(last visited Oct. 23, 2020); decision of the Swiss Federal Tribunal
in the case of Mr. Dmitry Rybolovlev v. Ms. Elena Rybolovleva
(5A_259/2010) (Switz.) (2012), available at: https://www.bger.ch
(last visited Oct. 23, 2020); Vadim Schmidt v. Rosewood Trust Ltd (Isle
of Man) [2003] UKPC 26 (Mr. 27, 2003) (U.K.), available at: https://
www.bailii.org/uk/cases/UKPC/2003/26.html (last visited Oct.
23, 2020).
9.
See, Wills and Trusts Arbitration Rules and Mediation Procedures
(Rules Amended and Effective June 1,2012), available at: https://
www.adr.org/sites/default/files/Commercial%20Wills%20
and%20Trusts%20Rules%2012813%20-%20Archieve%202015%20
Oct%2021%2C%202011.pdf (last visited Oct. 23, 2020).
10.
See, ICC Arbitration Clause for Trust Disputes and Explanatory
Note (ICC Publication 891-0 ENG). ICC, 2018, available at: https://
iccwbo.org/publication/icc-arbitration-clause-trust-disputesexplanatory-note/ (last visited Oct. 23, 2020).
11.
Federal law on international commercial arbitration, dated Jul. 7,
1993, art. 7 (Russ.), available at: www.consultaant.ru (last visited
Oct. 23, 2020).
3.
Toby Molloy QC, Toby Graham, Arbitration of Trust and Estate
Disputes, 18(4) Trusts & Trustees 279 (2012).
12.
4.
Trustee Act (1998) (Bahamas), as modified by the Trustee
(Amendment) Act, 2011, dated 30.12.2011, No. 54, §§ 91A,
91B, 91C, available at: http://laws.bahamas.gov.bs/cms/
images/LEGISLATION/AMENDING/2011/2011-0054/
TrusteeAmendmentAct2011.pdf (last visited Oct. 23, 2020).
See, e.g., Sarah Ganz, Enforcement of Foreign Arbitral Awards Arising
From an Internal Trust Arbitration: Issues Under the New York
Convention, in Arbitration of Trust Disputes, Issues in National and
International Law 485, 505 (sec. 21.26) (S.I. Strong ed., 2016).
13.
Federal law on international commercial arbitration, art. 7, sec. 8
(Russ.).
14.
Status: Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (New York, 1958), available at: https://uncitral.
un.org/en/texts/arbitration/conventions/foreign_arbitral_
awards/status2 (last visited Oct. 23, 2020).
5.
Trusts (Guernsey) Law, 2007, § 63, available at: http://www.
guernseylegalresources.gg/article/97620/Trusts-Guernsey-Law2007-Consolidated-text (last visited Oct. 23, 2020).
COMMITTEE ON PROFESSIONAL ETHICS
ETHICS OPINIONS
The Committee on Professional Ethics has issued over 1100
opinions since 1964. It provides opinions to attorneys concerning
questions of an attorney’s own proposed ethical conduct under
the New York Rules of Professional Conduct. It cannot provide
opinions concerning conduct that has already taken place or the
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responsive to the question. If no opinions exist, the inquiry will be
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If you have a question about your own proposed conduct, send
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by fax to (518) 487-5564; or by mail to One Elk Street,
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NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
77
Mandatory Rules, Court Litigation and Arbitration
(Domestic and International Disputes)
By Guido Carducci
In any jurisdiction part of the law is referred to as
“mandatory” law or rules which the parties cannot
change by contract. This short article defines mandatory
law and discusses its application in domestic and international transactions.
I. Mandatory Law
Mandatory law (or rule) is, in a narrow sense, the law
in force that parties may not change by contract, that is,
the rules that apply to their subject matter in spite of a
contrary agreement.
Each legal system determines both the underlying
values (policies, public policy, morals, etc.) and the rules
that are mandatory in contract law. In an ideal world
there would be a clear distinction between mandatory
and non-mandatory in the rule itself for the sake of legal
predictability. But reality is often different.
Mandatory rules can be and are at times explicit,
for instance UCC § 9-602 which expressly bars certain
waivers. A non-mandatory rule is at stake if the lawmaker expressed in the rule “unless otherwise agreed” or
similar formulations. However, often it is left unspecified.
Lawmakers often enact the rule without making clear
whether it is mandatory or not, leaving the important legal determination—the mandatory or non-mandatory nature—to courts for an interpretation of the rule’s underlying purposes and policies. In this context there is little
legal predictability as courts may interpret the provision
differently unless and until the highest court provides the
leading interpretation.
In both common law and civil law jurisdictions it is
common to characterize law as being distinct from religion and morality and legally binding, while other rules
of conduct are not legally binding. The binding character
common to all rules of law does not mean all legal rules
are to be classified as “mandatory.”
Mandatory law acquires its full meaning only in contract matters because contract law grants the parties to a
contract the power to create, by entering a valid contract,
their own “law” in the form of contractual rights and
obligations. Such power is “freedom of contract” and,
more than a doctrine, is primarily a prerogative (“right”)
recognized by positive contract law, to different extents in
each jurisdiction and national contract law. A mandatory
rule denies, within its scope of application, “freedom of
contract” and invalidates any contrary agreement.
Inversely, a non-mandatory rule, or “default” rule in
Farnsworth’s terminology,1 is subject to contrary agree78
ment under “freedom of contract,” applies to the parties
and the subject matter unless they enter a contrary agreement. For instance, the Uniform Commercial Code is in
principle non-mandatory, except its rules prescribing the
obligations of good faith, diligence, reasonableness and
care which are mandatory and may not be disclaimed by
agreement. Nevertheless, the parties may agree upon the
standards to measure performance of these obligations
(UCC 1-302).
Non-mandatory rules are similar but distinct from
opt-out clauses. The former apply to their subject matter, with the same legitimacy and effects than mandatory
rules, as long as the parties do not agree otherwise. Differently, opt-out clauses usually exclude the application of a
set of rules, not a specific non-mandatory rule, and require
a general opt-out agreement, not a clause specifically
different from the non-mandatory rule that the parties
agreed to contract out.
The UN Convention on Contracts for the International
Sale of Goods (CISG) provides another useful example.
Article 6 of the CISG provides: “The parties may exclude
the application of this Convention or, subject to Article 12,
derogate from or vary the effect of any of its provisions.”
It follows from this provision that:
a) only Article 12 is a mandatory rule within the
CISG;
b) the parties may enter an “opt-out” agreement
excluding the application of the whole convention,
or of parts of the convention;
c) except Article 12, the other provisions of the CISG
are non-mandatory and their application to the
contract may be excluded, or their effect on the
contract may be altered, by a contrary agreement.
For instance, by agreeing in a clause upon a
different force majeure regime the parties derogate
from art.79.
Dr. Guido Carducci is an arbitrator, attorney, law
professor (Paris, London, Rome), former chief, International Standards Section, UNESCO (HQ Paris), and
a chartered arbitrator (FCIArb), ICC Commissions (Arbitration, Competition, Commercial Law). Panels include
ICDR, CIArb, formerly ICSID. He is former vice chair
of the International Arbitration and Litigation Committees, American Bar Association. carducciarbitration.com
/ gcarducci@noos.fr
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
d) If the parties do not derogate under Article 6, the
CISG applies and governs their contract (except
on validity of contract, usages, and on transfer of
title).
II. International Disputes and Mandatory Law
A. The General Regime: Conflict of Laws
When a transaction has an international character, it
is governed by a governing or “applicable” law defined
by the forum’s choice-of-law rules which determine the
national legal system (New York law, German law, etc.)
whose substantive rules2 govern the contract. Of course,
these substantive rules may be mandatory (see above I),
or non-mandatory, depending on their underlying policy
as made explicit by the lawmaker in the provision itself,
or by courts or tribunals in their interpretation. Within
this governing or “applicable” law its national rules apply to the contract, and possibly also international law
rules (mainly conventions), or even EU rules (for EU
Member States), if applicable.
ing case where New York’s unilateral choice-of-law rule8
permitting parties without New York contacts to choose
New York law,9 was applied to permit a parties’ choice
while the Court of Appeals held that a conflict-of-laws
analysis was obviated by the parties’ agreement which
chose New York law and excluded “conflict of laws
principles.”10
Foreign mandatory law
When the dispute is international applicable may be a
“foreign” law. Leaving its legal status (traditionally an issue of “fact”, at times “law”11) and burden of proof aside,
foreign law is more difficult to have access to and interpret properly. Insufficient access to, or knowledge of, the
interpretation of the relevant substantive rule(s) may lead
a court or an arbitral tribunal to apply the foreign rule(s)
as being mandatory, or non-mandatory, and to decide the
dispute accordingly, while the proper interpretation and
legal nature of the rule are the opposite and would lead to
an opposite outcome (validity vs. invalidity of a contrary
agreement) in its own legal system.
“Legal predictability deserves to be enhanced by early and
detailed assessment of the governing law, its mandatory and nonmandatory rules, and of possible foreign overriding mandatory
rules interfering with the ordinary applicable law.”
Freedom of contract vs. party autonomy
Under freedom of contract, which is a matter of contract law under the governing law, the parties may agree
upon, in essence, the clauses, type, form of contract. Under party autonomy, which is a matter of forum’s conflictof-laws rules—§ 1-301 UCC under a “reasonable relation”
test, and § 1873 Second Restatement4 under a substantial
relationship or other reasonable basis test5—the parties
may agree upon the governing law. A wise use of both
freedom of contract and party autonomy enables the parties to optimize the mandatory/non-mandatory balance
of the rules governing their contract within the applicable
law. Of course, the parties are to anticipate the relevant
limitations, in each jurisdiction. For instance, a contract
that is illegal in its place of performance is unenforceable
in New York if the parties entered into the contract with a
view to violate the laws of that other jurisdiction.6
B. The Exceptional Regime: Uniform Law
International uniform law conventions have increased
in number and coverage and are often non-mandatory to
favour international trade and parties’ agreement. However, a distinction is desirable, taking the CISG example.
The parties may derogate in substantive law under Art.6
from the CISG when it applies to the contract (above I).
In addition, parties that do not have their places of business in different contracting states may also rely on party
autonomy in conflict of laws and choose as governing
the law of a non-contracting state to exclude the application of the CISG as a whole. The applicability (as a whole
or in part) of the CISG depends on both substantive law
(derogation by contrary agreement under Art. 6) and conflict of laws (under Art. 1, b) in the 94 contracting states.
Except the United States and other six contracting states
that apply the CISG only if the parties have their places of
business in different contracting states.12
Choice-of-law rules vs. conflict-of-laws analysis
Whether or not a conflict-of-laws “analysis” is
retained by courts or tribunals to identify the applicable
choice-of-law rule, 7 the application of this rule is necessary to designate a governing law. In contract this rule
grants party autonomy. This is confirmed in an interest-
C. Some Key Differences Between Court
Litigation and Arbitration
Summarizing:
(i)
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
an international arbitral tribunal has no lex fori,
the law of the seat plays a role but certainly not
79
the overwhelming role that forum law plays
with regard to a national court;
(ii)
the tribunal’s interpretation as to whether a rule
is mandatory or not, for instance to determine
its jurisdiction, may be challenged by a party
and possibly rejected by a national court—
during or after the arbitration—depending on
the specific matter and the available annulment
grounds;
(iii)
arbitration-friendly policies are, in comparative
arbitration law, more common in international
than in domestic arbitration. For instance,
French law imposes a set of mandatory
procedural rule in domestic arbitration, not
in international arbitration. In the latter the
equality of the parties and due process are
mandatory under French law,13 and the latter is
mandatory under the UNCITRAL Model Law;14
(iv)
disregard of mandatory rules—and violation
of public policy more generally—may affect
the validity, and/or the recognition and
enforcement of an award (as under the New
York Convention, FAA Chapter II);
(v)
a strong pro arbitration policy, for instance as
affirmed under the FAA by the Supreme Court
in Mitsubishi,15 may lead courts to solve by a
pro arbitration interpretation a doubt between
mandatory or non-mandatory arbitration law.
II. Mandatory vs. Overriding Mandatory (or
Internationally Mandatory) Rules
This distinction is useful:
(i)
mandatory rules are part of contract law
and may not be contracted out by a contrary
agreement, in any domestic contract and in an
international or cross-border contract when
these rules are part of the governing law;
(ii) overriding mandatory (or “internationally
mandatory”) rules pre-empt within their scope
the operation of choice-of-law rules and apply
to the contract—if the court or tribunal grants
such application—instead of the ordinary
applicable law.
One of the few definitions of overriding mandatory rules in positive law is the following in EU
conflict-of-laws:16
Overriding mandatory provisions are provisions the respect for which is regarded
as crucial by a country for safeguarding its
public interests, such as its political, social
or economic organisation, to such an extent
that they are applicable to any situation
80
falling within their scope, irrespective of
the law otherwise applicable to the contract
under this Regulation.
It follows that, if its respect is regarded as crucial,
the same rule is both mandatory and overriding mandatory, thus preventing within its scope, not only a contrary
agreement but also the application of a foreign law.
Generally in comparative law the overriding (or
internationally) mandatory provisions of the forum
prevail over foreign applicable law.17 Inversely, a more
exceptional and probably rarely applied rule exists in EU
conflict-of-laws : the court of a Member State may give effect to the overriding mandatory provisions of the law of
another country—neither of the forum, nor of the governing law—where the contractual obligations have to be or
have been performed, insofar as those provisions render
the performance of the contract unlawful. For the sake of
clarity, the court may, not shall, give effect and in deciding
shall consider the nature and purpose of the foreign overriding rule(s) and the consequences on the contract of its
application or non-application.18
This EU regime concerning overriding mandatory
provisions addresses courts of EU Member States and is
not binding upon arbitral tribunals with their seat in the
EU.19
Turning to the U.S. perspective, the Restatement
Second completed in 1971 does not include a provision
dealing specifically with overriding mandatory rules of
the forum, nor of another legal system, generally nor in
contract. The closest, though different, provision is Section
187(2)(b) setting a possible exception to the chosen law.
This gap in the Restatement does not per se exclude the
existence and operation of overriding mandatory rules.
For the sake of clarity, mandatory and overriding
mandatory rules:
(i) rely as to their legal nature on their interpretation
by courts or arbitral tribunals when the lawmaker
failed to express their nature;
(ii) the same rule may be both mandatory and overriding mandatory and, if so, it prevents both
a contrary agreement and the application of a foreign law;
(iii) are substantive rules (as are ordinary commercial
and contract law rules), not choice-of-law rules;
(iv) are distinct and not to be confused with the
concept and operation of the public policy
exception to the application of foreign law. 20
Nevertheless, such rules may substantively be
part of the content of the forum’s public policy.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Conclusion
10.
The importance and complexity of mandatory and
overriding mandatory rules in international disputes are
real, beyond this short article, and legal predictability deserves to be enhanced by early and detailed assessment
of the governing law, its mandatory and non-mandatory
rules, and of possible foreign overriding mandatory rules
interfering with the ordinary applicable law.
IRB-Brasil Resseguros, S.A. v. Inepar Investments, S.A., Court of
Appeals of New York, December 18, 2012, 20 N.Y.3d 310982,
N.E.2d 609958, N.Y.S.2d 689. Lippman, Chief Judge, relied on the
Restatement (Second) of Conflict of Laws § 187 (3), although this
provision concerns the exclusion of “renvoi.”
11.
Since 1966, under the Federal Rules of Civil Procedure, Rule 44.1.
12.
Art.95 CISG.
13.
Articles 1464, 1506, 1511, Code de procédure civile. G.Carducci,
Arbitration in France: Law and Practice, Oxford University Press,
2021.
Endnotes
14.
1.
E.A.Farnsworth, Contracts, 2004, p.37.
UNCITRAL Model Law on International Commercial Arbitration
1985 (2006), Art.18.
2.
We exclude “renvoi” in contract.
15.
3.
We do not deal here with par.1 (incorporation by reference) .
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., Supreme
Court, July 2, 1985, 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444. At
473 U.S. 614.
4.
Positive law to the extent that it is applied by courts or
implemented in legislation.
16.
Regulation (EC) No 593/2008 of 17 June 2008 on the law applicable
to contractual obligations (Rome I), Art.9 (1).
5.
§ 187(2) (a).
17.
Regulation (EC) No 593/2008 Art.9 (2).
6.
Lehman Bros. Commercial Corp. v. Minmetals Int’l Non-Ferrous Metals
Trading Co., 179 F. Supp. 2d 118, 138 (S.D.N.Y. 2000).
18.
Regulation (EC) No 593/2008 Art.9 (3).
19.
7.
For a recent analysis, Petroleos de Venezuela S.A. v. MUFG Union
Bank, N.A., United States District Court, S.D. New York, October
16, 2020, F.Supp.3d 2020 WL 6135761103, UCC Rep.Serv.2d 150.
G.Carducci, The Impact of E.U. Regulation Rome I on International
Litigation and Arbitration, A-National Law, Mandatory and
Overriding Rules, in ICC International Court of Arbitration
Bulletin, 2011, vol.II, p.31.
8.
Unilateral to the extent that this New York law provision permits
the parties to choose only New York law, not the law of other
sister states, nor of foreign states (the parties may agree that the
law of this state shall govern their rights and duties).
20.
The application is excluded if it is manifestly incompatible with
the public policy (ordre public) of the forum. Regulation (EC)
No 593/2008 Art.21.
9.
General Obligations Law § 5-1401.
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NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
81
Book Review
Book Review: Legal Reasoning Across Commercial
Disputes, by Dr. S.I. Strong
(Oxford University Press, 2020)
Review by Camille Ramos-Klee
Legal Reasoning Across Commercial Disputes (Legal
Reasoning) is the culmination of Dr. S.I. Strong’s extensive
empirical study into how judges and arbitrators approach
legal reasoning and the differences that exist within the
dispute resolution community. Dr. Strong has undertaken
what she describes as “the first-ever multi-faceted empirical study on legal reasoning in commercial disputes,”
contrasting with prior scholarship, which has mostly focused on other types of disputes or on only one of judges
and arbitrators. By taking a more comparative approach,
Dr. Strong’s findings challenge many preconceived notions about legal reasoning, particularly in regard to the
differences between judges and arbitrators.
At its core, Legal Reasoning provides much-needed
information to three distinct groups: academics, legal
practitioners, and organizations that provide legal education. Academics interested in studying legal reasoning
will find a plethora of data in the statistical analyses
and narratives from neutrals, as well as inspiration for
their own related research. Legal practitioners will find
concrete advice on how best to frame legal arguments
and best practices when appearing before a neutral.
Finally, organizations seeking to develop programs for
the education of judges and arbitrators will find suggestions on the important elements to include when creating
their courses. Dr. Strong addresses and to some extent
demarcates information for each group within the text of
Legal Reasoning, allowing readers to easily locate which
portions are most relevant to their needs.
After devoting Chapter 1 to the basics of the study
and an overview of existing scholarship on legal reasoning, Dr. Strong focuses the majority of Legal Reasoning on
an in-depth description of each element of her study and
her findings. The study focuses on the distinct interpretations of legal reasoning across three traditional divisions
within dispute resolution practice: judges and arbitrators,
domestic and international disputes, and common and
civil law jurisdictions. To refine her analysis, Dr. Strong
focuses on courts of first instance, since these courts
must conduct the same fact-finding analyses that occur
in arbitration. In order to fully explore each division, Dr.
Strong tested three different approaches to data collection, elaborated individually in Chapters 2, 3, and 4. Each
of these approaches provides a different facet of guidance
for practitioners and scholars alike.
82
Dr. Strong’s first approach involved a survey sent
to 465 judges and arbitrators from various jurisdictions
around the world. The survey contained multiple questions addressing use of legal authorities, use of factual
authorities, the reasoning processes, the drafting process,
and judicial and arbitral education. Within the categories
listed, several of the questions asked the respondents to
evaluate the importance of various elements to their legal
analysis, for example rating on a scale from 1 to 5 the importance of various types of legal authorities in their final
decisions. Dr. Strong then conducted a statistical analysis
on the results of the survey in order to identify statistically significant differences within each of the three divisions
mentioned above.
The many tables included in Chapter 2 will provide a
valuable resource to arbitration practitioners and litigators
seeking to understand which elements of their arguments
are most persuasive or hold the most weight once deliberations begin. Among the most important takeaways for
practitioners are that factual issues affect legal reasoning
more strongly than previous studies indicate and that
neutrals are generally motivated by practical reasoning,
namely a desire to produce enforceable decisions and
awards, rather than more abstract philosophical concerns
about equity.
Camille Ramos-Klee is an independent tribunal
secretary based in New York City. She can be reached at
cramosklee@gmail.com.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
In addition to asking questions amenable to statistical
analysis, Dr. Strong also allowed for freehand comments.
These provided some insight into how the respondents
approached the questions presented and served as a precursor to the next portion of the study.
Chapter 2 also provides valuable information to organizations seeking to create or update courses on drafting
decisions and awards. Though most respondents stated
they learned to draft decisions and awards “by doing,”
the vast majority indicated they felt educational courses
were valuable to both new and experienced neutrals and
provided suggestions for how best to structure these
courses. The respondents expressed a need for courses
dedicated to drafting, especially those tailored to specific requirements at the various arbitral institutions.
In-person courses with mixed discussion and experiential formats prevailed as the most popular educational
method. While at first glance Legal Reasoning may seem to
be geared towards practitioners and scholars, organizations will benefit greatly from reviewing Dr. Strong’s data
in regard to judicial and arbitral education.
On a related note, prior to presenting her substantive
findings, Dr. Strong mentions the demographics of the
respondents, mostly with respect to their professional
backgrounds but also in regard to gender. Though the
elements of this study do not focus on the differences in
legal reasoning based on gender, Dr. Strong indicates that
she is working on such studies. These future studies are
particularly important given the growth of current diversity efforts in arbitration specifically but also in the legal
community at large.
Dr. Strong’s second approach to data collection
involved semi-structured interviews on legal reasoning
with 20 judges and arbitrators from various jurisdictions around the world. Due to the small sample size, the
inclusion of these interviews did not necessarily serve to
provide statistical data comparable to the first approach,
but rather to contribute first-hand insight into why
judges and arbitrators responded as they did to the issues
presented in the initial survey. In addition to providing
commentary that supports the findings from the survey,
these interviews allow the reader to hear perspectives on
legal reasoning in the neutrals’ own voices.
One new element that arises in the interviews is the
use of tribunal secretaries and law clerks. Since parties to
an arbitration sometimes raise concerns about tribunal
secretaries acting as a fourth arbitrator, Dr. Strong examines how much of the review of legal and factual authorities is actually delegated to a tribunal secretary or clerk.
Though the interviews did not render statistically significant data, as the sample size is so small, they revealed
common themes around the role of tribunal secretaries
and law clerks and may provide background for future
studies. For those who used tribunal secretaries and law
clerks, general trends showed that the tribunal secretaries
and law clerks helped review legal authorities in order to
locate and summarize the most pertinent sources but did
not usually review factual authorities.
Beyond studies on tribunal secretaries and clerks, legal practitioners and scholars will find value in reviewing
these interviews in order to further understand the preliminary conclusions from Chapter 2. While the interviews
are not a major departure from the findings of Chapter 2,
they do provide more context for the conclusions reached.
Arbitration practitioners and litigators will especially benefit from reading the snippets of advice included among
the responses, particularly in regard to the expectations
“By taking a more comparative
approach, Dr. Strong’s findings
challenge many preconceived
notions about legal reasoning,
particularly in regard to the
differences between judges and
arbitrators.”
that judges and arbitrators have for the parties appearing before them. Though Dr. Strong explicitly includes a
section devoted to advice from judges and arbitrators to
counsel, the responses addressing other matters also provide valuable insight for party representatives. Some of
this advice includes flagging which legal authorities and
factual exhibits are most relevant, avoiding long string
cites that include cases only remotely relevant without
further explanation, and to focus on the legal rules of law
rather than emotional appeals.
Dr. Strong’s third approach involved a quantitative
analysis of reasoned decisions and awards, which involved coding 76 different data points within published
awards and decisions from several jurisdictions. The
two major elements of coding focused on citation counts
of legal authorities, including distinguishing between
unique and repeat citations, and counting the number of
paragraphs devoted to each type of analysis. While at first
glance this chapter appears to focus heavily on statistical
analysis, ultimately the sample sizes of each group proved
to be too small for the production of any statistically
significant results relating to the divisions identified and
studied in the previous chapters.
Dr. Strong describes multiple issues that arose in this
portion of her study. Initially, she had significant problems obtaining commercial awards since most arbitral
institutions cannot or will not release original arbitral
awards due to confidentiality issues. Then, the research
conducted into commercial cases in U.S. courts uncov-
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
83
ered relatively few first-instance cases, complicating
data extraction. Finally, since Dr. Strong sought to study
the divide between common law and civil law, a need
arose for locating civil law cases written in English to
avoid having to do bilingual research. The study ended
up focusing on decisions from the Canadian province
of Quebec, which follows a mixed legal system with its
private law cases generally applying civil law. Because
Quebec is a bilingual province, all judicial decisions
are published in both French and English. Due to these
issues, the total sample size was too small to conduct a
meaningful statistical analysis.
The findings focusing on the division between
domestic and international disputes and the division
between common and civil law revealed initial trends
but also indicated a need for more research. In regard to
the domestic-international division, Dr. Strong’s initial
research uncovered a heightened emphasis on procedural justice in international disputes and some variation
in treatment of legal and factual authorities. In relation
to the common law-civil law division, Dr. Strong found
that many of the traditional divisions, such as greater
emphasis on statutes in civil law, are present but that
the differences between the legal systems are not as pronounced as originally thought. In laying out the initial
“Legal Reasoning is essential reading for anyone working in or
researching the field of commercial disputes.”
Despite a general lack of statistically significant
results, this final approach to the study brought to light
several areas that will require further research, most
significantly the differences in legal reasoning between
common law jurisdictions, which is an area not commonly explored. Because many aspects of this portion of
the study require further research, Chapter 4 will prove
most useful to scholars seeking to expand on the initial
findings.
Dr. Strong’s study on legal reasoning is extensive
and multi-faceted, appealing to several stakeholders
within the legal community. Overall, Legal Reasoning
focuses far more on the judge-arbitrator divide than on
the domestic-international or common law-civil law
divides. This is, in part, because most of the statistically
significant data that arose from the study related to
the lack of differences between judges and arbitrators.
More significantly, Dr. Strong mentions many times
that arbitral justice has traditionally been considered by
some to be inferior to judicial justice and that her study
seeks either to locate where exactly arbitral justice is
“inferior” in regard to legal reasoning or to show that
both forms of justice are comparable. The arbitral community will be pleased that the results of the study
reveal few statistically significant differences between
how arbitrators and judges approach legal reasoning.
Rather, the differences tend to lie in how individuals,
each of whom has his or her personal backgrounds and
predilections, whether arbitrators or judges, approach
legal reasoning.
84
groundwork in her study, Dr. Strong provides inspiration for future studies, both her own and from other
scholars.
Legal Reasoning identifies many matters for legal practitioners to keep in mind when appearing before a neutral, making it critical reading for arbitration practitioners
and litigators. At the same time, Legal Reasoning provides
a valuable model for scholars on how to approach an
academic study and multiple ideas for ways to expand on
Dr. Strong’s research. Educational organizations equally
benefit from learning how best to educate the next generation of judges and arbitrators. For these reasons, Legal
Reasoning is essential reading for anyone working in or
researching the field of commercial disputes.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
PUBLICATIONS
Arbitration and
Mediation
Authors
Leona Beane, Esq.
Gary P. Shaffer, Esq.
Kelly A. Librera, Esq.
This practice guide examines the two
most common forms of alternative
dispute resolution. Arbitration and
Mediation resolves the misconception
that these two procedures are
interchangeable by discussing their
differences and providing examples of
both procedures.
Complete with valuable practice pointers,
sample arbitration forms and appendices,
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Case Notes
by Alfred Feliu
Second Circuit Rejects Discovery Request for Foreign
Private Arbitration
Amazon Delivery Drivers Subject to FAA
Transportation Worker Exemption
Federal appellate courts have split on the question
of whether 28 U.S.C. § 1782 authorizes production of
discovery in the United States relating to foreign-based
private arbitrations. The Second Circuit, reaffirming its
prior non-precedential decision, ruled in this case that
§ 1782 does not allow federal courts to order discovery
in support of private arbitrations abroad. In contrast,
the Fourth and Sixth Circuits have ruled that discovery
may be granted in aid of foreign private arbitrations. The
Second Circuit reasoned in this case involving an arbitration before the China International Economic and Trade
Arbitration Commission (CIETAC) that determining
what constitutes a “foreign or international tribunal” for
purposes of § 1782 does not turn on one single factor but
rather on a range of factors including “the degree of state
affiliation and functional independence possessed by the
entity, as well as the degree to which the parties’ contract
controls the panel’s jurisdiction. In short, the inquiry is
whether the body in question possesses the fundamental attributes most commonly associated with private
arbitration.”
The transportation worker exemption under the
FAA applies to workers “engaged in foreign or interstate
commerce.” Amazon utilizes independent contractors
to make its deliveries, so-called “last mile” drivers. A
putative class action was brought on behalf of the drivers alleging wage and hour violations. Amazon moved
to compel arbitration based on an agreement signed by
the drivers. The drivers opposed the motion arguing that
they are subject to the FAA’s transportation exemption.
A trial court denied the motion and the First Circuit affirmed. In doing so, the appellate court took a broad view
of the scope of the transportation worker exemption,
taking into account “the nature of the business to assess
whether workers’ activities include the transportation
of goods or people in the flow of interstate commerce.”
Looking to precedence from the time of enactment of the
FAA the court concluded that “workers moving goods or
people destined for, or coming from, other states—even if
the workers were responsible only for an intrastate leg of
that interstate journey—were understood to be ‘engaged
in interstate commerce’ in 1925.” In rejecting arbitration
of the plaintiffs’ claims here, the First Circuit recognized
“that the FAA was enacted to counter hostility toward
arbitration and that, accordingly, we must narrowly construe the statutory exemption from the Act.” Nonetheless,
the court concluded this pro arbitration policy evident in
the FAA could not “override the original meaning of the
statute’s text.” Waithaka v. Amazon.com, 966 F.3d 10 (1st
Cir. 2020). See also Rittmann v. Amazon.com, 971 F.3d 904 (9
Cir. 2020) (exemption for transportation workers applies
to Amazon “last mile” drivers “who are engaged in the
movement of goods in interstate commerce, even if they
do not cross state lines”). But see Wallace v. Grubhub Holdings, 970 F.3d 798 (7th Cir. 2020) (Grubhub drivers who
deliver food locally may not invoke FAA transportation
workers exemption as they failed to demonstrate “the
interstate movement of goods [which] is a central part of
the job description of the class of workers to which they
belong”). Waithaka v. Amazon.com, 966 F.3d 10 (1st Cir.
2020)
The court concluded that the arbitration here was
a private commercial arbitration. In doing so, the court
emphasized that “CIETAC possesses a high degree of independence and autonomy, and, conversely, a low degree
of state affiliation.” Further, the grounds for overturning
awards under Chinese law parallels U.S. law, including
“a lack of agreement to arbitrate, the scope of the matters to be arbitrated, improper appointment of arbitrators, and fraud or bribery by the arbitrators or parties.”
Finally, the arbitrator’s authority derives from the parties’
agreement and not government-backed jurisdiction.
For these reasons, the court concluded that the arbitration here was best categorized as a private commercial
arbitration not subject to assistance under § 1782. Accord: Servotronics v. Rolls-Royce PLC, 975 F.3d 689 (7 Cir.
2020) (Section 1782 authorizing discovery for “foreign
tribunals” not applicable to private foreign arbitrations
but rather is limited to “governmental, administrative,
or quasi-governmental tribunal operating pursuant to
the foreign country’s ‘practice and procedure’”). In re:
Application and Petition of Hanwei Guo, 965 F.3d 96 (2d Cir.
2020), as amended (July 9, 2020)
86
Al Feliu is an arbitrator and mediator on various
AAA and CPR panels. Mr. Feliu is a past Chair of the
NYSBA’s Labor and Employment Law Section and a
Fellow of the College of Commercial Arbitrators and
the College of Labor & Employment Lawyers. The supplement to Mr. Feliu’s fourth book, ADR in Employment
Law (Bloomberg/BNA 2015), was published in 2017.
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
FAA Prevails Over New York Statute Barring
Arbitration of Discrimination Claims
Plaintiff agreed to be bound to WeWork’s dispute
resolution program when she accepted employment as
its director of employee relations. She later sued for race
discrimination in New York federal court and WeWork
moved to compel arbitration. Plaintiff opposed the motion, noting that New York enacted legislation barring the
mandatory arbitration of discrimination claims. The court
rejected plaintiff’s argument, ruling that the FAA governed the agreement and preempted New York’s statute
because it applied to a specific arbitration claim “rather
than a generally applicable defense.” The fact that the
program applied New York law did not change the result,
according to the court. “Therefore, a court considering
arbitrability in the face of a New York choice of law provision that is silent as to enforcement must keep in mind
that such provisions ‘[do] not . . . modify the default
rules of the FAA’ with respect to questions of arbitrability.” For these reasons, WeWork’s motion to compel was
granted. White v. WeWork Companies, Inc., No. 20-CV-1800
(CM), 2020 WL 3099969 (S.D.N.Y. June 11, 2020), motion to
certify appeal denied sub nom. Whyte v. Wework Companies,
Inc., No. 20-CV-1800 (CM), 2020 WL 4383506 (S.D.N.Y.
July 31, 2020). But see Newton v. LVMH, 2020 WL 3961988
(N.Y. Sup. Ct. N.Y Cty.) (FAA did not preempt New York
State’s law because “claims for sexual harassment, or
other discrimination-based claims, cannot reasonably
be characterized as claims concerning or arising out of a
transaction involving commerce” and sexual harassment
was not a “transaction involving commerce.”). White v.
WeWork Companies, Inc., No. 20-CV-1800 (CM), 2020 WL
3099969 (S.D.N.Y. June 11, 2020), motion to certify appeal
denied sub nom. Whyte v. Wework Companies, Inc., No. 20CV-1800 (CM), 2020 WL 4383506 (S.D.N.Y. July 31, 2020)
CPR’s Mass Claims Protocol Ruled Not Biased
Over 4000 delivery drivers filed consent forms
seeking to join a FLSA collective action pending before
a California district court. Doordash moved to compel arbitration. A certain number of those who signed
consent forms agreed to proceed under CPR’s recently
issued Mass Claims Protocol (the “Protocol”). Under the
Protocol, any time 30 or more nearly identical arbitration demands are filed in close proximity with each other
certain procedures are to be allowed. Included in those
procedures is the random selection of 10 cases to serve
as “test cases.” The results of those ten cases will then be
given to a mediator who will try to resolve the remaining cases. If the mediation fails, parties may opt-out of
the arbitration process and proceed with their claims in
court. Plaintiffs here argued that Doordash’s counsel,
Gibson Dunn, played a role in the development of the
Protocol and for this reason claims under the Protocol
will not be heard by a fair and impartial forum. The
court rejected Doordash’s argument. The court noted
that in fact CPR worked with experts in the field in de-
veloping the Protocol and Gibson Dunn did not control
the process. The court added that the Protocol “is offered
to the market—i.e., it is not a one-off protocol tailored to
Doordash but is openly available other companies.” The
court stated that at least “as a facial matter, the Court
is hard pressed to see any such catering or favoritism”
to Gibson Dunn’s client; rather, the court opined, “the
terms of the Mass-Claims Protocol appear fair.” The court
emphasized that the test cases were selected randomly,
the claimants have a greater role in selecting the arbitrators, and the employer pays for the mediation. Finally,
and most importantly according to the court, “after the
mediation process, a claimant can choose to opt out of
the arbitration process and go back to court,” an option
generally not available otherwise to claimants in the
mass claims setting. The court concluded therefore the
“Protocol is not so biased that it negates the agreement
to arbitrate.” McGrath v. Doordash, Inc., 2020 WL 6526129
(N.D. Cal.)
Bad Joke by Arbitrator Not Sufficient Grounds for
Vacatur
An award was issued in favor of respondent Uber
following a hearing in which its founder, Travis Kalanick, testified. Plaintiff sought to vacate the award on
evident partiality grounds. In support of his position,
plaintiff alleged that the arbitrator used his cell phone to
take a photo of Kalanick after he testified and remarked
at the close of the hearing that he “act[ed] out of fear”
and that he “would need security” if he ruled against
Uber. The court rejected plaintiff’s motion to vacate. The
court did not find credible the notion that the arbitrator’s
comments were a “sincere confession of fear” but rather
“were simply an attempt at humor— one of many made
by the arbitrator throughout the hearing.” The court
observed that if indeed the arbitrator was rendering his
decision based on fear, “the last thing he would have
done is placed that on the record.” While acknowledging
that the arbitrator’s comments may have been “inappropriate (or, worse yet, not as humorous as some of the
arbitrator’s better jokes), the remarks are not inconsistent
with impartiality once they are patently jestful intent
is recognized.” The court also found the claim of the
alleged photographing of Kalanick to be speculative at
best and insufficient to justify vacatur. Meyer v. Kalanick,
2020 WL 4482095 (S.D.N.Y.).
Evident Partiality Claims Against JAMS Arbitrators
Rejected
In Monster Energy v. City Beverage, the Ninth Circuit
vacated an award on evident partiality grounds in part
based on JAMS arbitrators’ failure to disclose the substantial business relationship between JAMS and Monster
Energy. This case involves three JAMS arbitrators, two of
whom are JAMS shareholders, who did not disclose their
financial interest in the business before hearing the case.
In rejecting a challenge to the award on evident partial-
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
87
ity grounds, the judge emphasized that, in contrast to
the facts in the Monster Energy case, the level of business
between JAMS and the prevailing party, Levi Strauss,
was not sufficient to constitute a significant business
interest. The court focused on “the importance of analyzing the details of the exact business relationships at issue
in determining whether disclosure was required.” Unlike
the 97 cases that JAMS administered for Monster Energy,
here JAMS administered one prior arbitration and six
mediations for Levi Strauss. The court concluded that
“six mediations (where the financial incentives are lower)
and one arbitration over the course of nearly 10 years is
trivial. That sporadic and limited business is nowhere
near as significant as the dealings in Monster Energy”
and in any event the party challenging the award here
specifically selected JAMS over the American Arbitration
Association. Further, the court noted that the arbitrators made appropriate disclosures at the commencement
of this case with respect to any prior dealings with the
parties. For these reasons, the court denied the motion to
vacate. Levi Strauss and Co. v. Aqua Dynamics Systems, 2020
WL 4051672 (N.D. Cal.)
Arbitrator Did Not Exceed Powers in Finding Breach
of Contract
Dr. Amarjit Virk was terminated as a shareholder
and employee of an anesthesiologist practice. Dr. Virk
brought an arbitration alleging discrimination and breach
of contract. The arbitrator rejected Dr. Virk’s discrimination claim but found for him on his breach of contract
claim and awarded him over $2.6 million. The medical
practice sought to vacate the award, arguing that the
arbitrator exceeded his power and ruled in manifest
disregard of law. The court rejected these arguments. The
court found that, contrary to the medical practice’s argument, the arbitrator fairly considered the conduct of an
individual and shareholder and appropriately considered
the private practice’s bylaws in reaching his determination. The court also rejected the medical practice’s manifest disregard claim. The court concluded that the arbitrator appropriately applied the relevant legal principles in
rendering his award. See also Diverse Enterprises v. Beyond
International, 827 F. App’x 422 (5 Cir. 2020) (arbitrator did
not exceed authority by awarding hourly rates above
what counsel actually charged where contract authorized
“reasonable attorneys’ fees” to be awarded to prevailing
party); Troegel v. Performance Energy Services, 973 F.3d 133
(M.D. La. 2020) (arbitrator did not exceed authority by
awarding attorneys’ fees without statutory basis where
the AAA rules applied and where both parties requested
attorneys’ fees); Axia Netmedia Corp. v. KCST USA, Inc.,
973 F.3d 133 (1 Cir. 2020) (award that prospectively
voided guaranty was within arbitrator’s authority when
determining remedy for material breach of operating
agreement and did not warrant vacatur). Virk v. MapleGate Anesthesiologists, 2020 WL 3050398 (W.D.N.Y.)
88
Arbitration Agreement Enforced Despite Missing
Key Terms
Arbitration agreements must be placed on equal footing with other contracts. Contracts are enforceable where
the essential terms are sufficiently definite and the parties
manifested an intent to be bound. With these principles
in mind, the New Jersey Supreme Court enforced an
arbitration agreement which failed to identify a specific
arbitrator or arbitration provider. The court emphasized
that the New Jersey Arbitration Act “authorizes the court,
upon application of a party, to decide an issue left open
by the parties with respect to the selection and appointment of their arbitrator, thus facilitating the performance
of the agreement.” Relying on the New Jersey Arbitration Act’s default provisions that serve to supply missing
terms for an arbitration contract, the court concluded that
enforcing the agreement comported with common law
principles for enforcement of agreements. “Although the
parties may choose to agree upon an arbitrator or arbitral
organization or set forth a plan for such a designation, the
NJAA’s default provisions are available to parties who
leave those issues unresolved.” The court ruled that the
parties may choose to leave open the selection of an arbitrator or arbitration provider until they are “in a position
to assess the scope and subject of the dispute, the complexity of the proposed arbitration, and considerations of
timing and cost.” Flanzman v. Jenny Craig, Inc., 244 N.J. 119
(2020)
Narrow Scope of Arbitration Clause Does Not
Encompass Claims
Plaintiff opened a savings account with HSBC
through the bank’s online application and entered into
a number of agreements including a master agreement,
the bank’s terms and charges disclosure, and a service
agreement. Only the service agreement contained an arbitration clause. Plaintiff alleged claims against the bank
relating to the accrual of interest on electronic deposits.
The bank moved to compel arbitration, relying on the
arbitration clause in the service agreement. The bank
argued that because plaintiff’s claims deal with the timing of electronic deposits, the evidence it will submit in
support of its defense will “necessarily touch on the substance of the service agreement.” The court distinguished
between broad and narrow arbitration clauses: “Where
the arbitration clause is broad, ‘there arises a presumption of arbitrability’ and arbitration of even a collateral
matter will be ordered if the claim alleged ‘implicates
issues of contract construction or the parties’ rights and
obligations under it.’” However, where the arbitration
clause is narrow, “the court must determine whether
the dispute is over an issue that ‘is on its face within the
purview of the clause’ . . . a collateral matter will generally be ruled beyond its purview.” Here, the court found
that the arbitration agreement was narrow in scope.
The court explained that although it uses some “broad
prefatory phraseology . . . that language is immediately
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
qualified by ‘regarding this service’” and “service” is
defined as “an Electronic Balance Transfer Service.” The
court therefore concluded that given the narrow scope
of the service agreement’s arbitration clause, “the claims
plaintiff brings . . . may relate to, but are not regarding,
the relevant ‘Service,’ there is no reasonable expectation
that plaintiff had pre-committed himself to arbitration
for a dispute like this.” Cheng v. HSBC Bank, USA, N.A.,
467 F. Supp.3d 46 (E.D.N.Y. 2020)
Award Ordering Union Members to Reimburse
Employer Confirmed
Two former employees were awarded severance pay
on false pretenses in the employer’s view. An arbitrator
ordered the employees to return the money, approximate
$20,000, to the employer. The district court refused to
confirm the award, ruling that the employees were not
part of the arbitration proceedings and therefore the
award was ultra vires as it sought to impose obligations
on non-parties to the arbitration. The Second Circuit
reversed. In doing so, the court emphasized that non-parties can be bound to arbitrate under agency principles. In
the labor context, the court pointed out “a labor union is
the exclusive agent for its members.” From this, the court
concluded “that the arbitrator did not exceed her authority because under both agency law principles and federal
labor law, the Union possessed the authority to bind [the
employees] to the award.” Here, the plaintiffs manifested
their intent to be represented by the union when they
authorized the union to file grievances on their behalf.
Beyond agency principles, the Second Circuit stated that
existing federal labor law “confirms that when a union
prosecutes employees’ grievances against an employer,
it represents those employees and those employees are
therefore bound by the arbitral award.” The court acknowledged that plaintiffs were not signatories to the
collective bargaining agreement, but reiterated that “it is
the nature of labor agreements and labor arbitrations that
the unions are the exclusive bargaining agents for and the
agents of the union members.” ABM Industry Groups v.
International Union of Operating Engineers, 968 F.3d 158 (2d
Cir. 2020)
Exclusive Control Over Selection of Arbitrator
Substantively Unconscionable
A professional boxer brought an action against the
World Boxing Organization (WBO) raising various claims
and the WBO moved to compel arbitration. The district
court granted the motion, but the First Circuit reversed.
The court concluded that the arbitrator selection provision in the WBO’s regulations was unconscionable. Under
that provision, disputes must be submitted to a grievance
committee made up of three individuals selected by the
president of the WBO. The only limitation was that the
arbitrators could not be members of the WBO executive
committee. The WBO conceded that the president could
select his own assistant to serve on the grievance committee. The court concluded that the arbitration selection
process was unconscionable where the WBO’s grievance
committee could appoint arbitrators “under the direct
control of the head of the WBO itself and that anyone so
chosen is for that reason presumptively not ‘independent’
in the least.” The court remanded the case to the district
court to determine whether severance of the offensive
arbitrator selection provision was feasible. Trout v. Organizacion Mundial de Boxeo, Inc., 965 F.3d 71 (1 Cir. 2020)
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
89
Section Committees and Chairs
The Dispute Resolution Section encourages members to participate in its programs and to contact the Section Officers or
Committee Chairs for information.
ADR in the Courts
Laura Kaster
Laura A Kaster LLC
84 Heather Lane
Princeton, NJ 08540
laura.kaster@kasteradr.com
Domestic Arbitration
Mansi Karol
American Arbitration Association
150 E 42nd St. Fl 17
New York, NY 10017
karolm@adr.org
Daniel F. Kolb
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017-3911
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Dani Schwartz
Wachtel Missry LLP
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47th Floor
New York, NY 10017
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CLE and Education
Jacqueline Nolan-Hanley
Fordham U. School of Law
140 West 62nd Street
Lincoln Center
New York, NY 10023
jnolanhanley@law.fordham.edu
Commercial Lending
Deborah A. Reperowitz
Stradley Ronon Stevens & Young,
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New York, NY 10017
dreperowitz@stradley.com
Jeffrey A. Wurst
Armstrong Teasdale LLP
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Diversity & Inclusion
Stephen Marshall
Dentons US LLP
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Iyana Y. Titus
Assistant Commissioner,
EEO
NYC Parks & Recreation
1234 5th Avenue
New York, NY 10029
iyana.titus@parks.nyc.gov
90
Legislation
Hon. Ariel E. Belen
JAMS
34th Floor
620 8th Avenue
New York, NY 10018-1664
abelen@jamsadr.com
Mark J. Bunim
Case Closure
155 East 44th St.
5th floor
10 Grand Central
New York, NY 10017
bunim@caseclosure.com
Ethical Issues and Ethical
Standards
Leslie Berkoff
Moritt Hock & Hamroff LLP
400 Garden City Plaza
Garden City, NY 11530-3322
lberkoff@moritthock.com
Mediation
Bart J. Eagle
Scarola Zubatov Scharffzin PLLC
1700 Broadway Fl 41
New York, NY 10019-4613
bje@barteaglelaw.com
David Singer
SingerADR Neutral Services
165 West End Avenue, Suite 10E
New York, NY 10023
dsinger@singeradr.com
Maria V. Hanford
Hanford Law Group
PO Box 75031
Forest Hills, NY 11375-0310
mhanford@hanfordlawgroup.com
Health Care
Andrew T. Garbarino
Ruskin Moscou Faltischek PC
1425 RXR Plaza
15th Floor East
Uniondale, NY 11556
agarbarino@rmfpc.com
Mediation of Wills, Trusts, Estates,
Guardianship, & Elderly Disputes
Leona Beane
233 Broadway, Suite 2340
New York, NY 10279
lbeanelaw@gmail.com
Joan D. Hogarth
The Law Office of Joan D. Hogarth
43 West 43rd Street
New York, NY 10036
jnnhogarth@aol.com
Membership
Susan E. Salazar
CUNY School of Law
salazar@susansalazarlaw.com
Randall Tesser
rtesser@tesserryan.com
International Dispute Resolution
Jadranka Jakovcic
jadranka.jakovcic@gmail.com
Rekha Rangachari
New York International
Arbitration Center
150 E. 42nd Street
Floor 17
New York, NY 10017
rrangachari@nyiac.org
NYSBA New York Dispute Resolution Lawyer | 2021 | Vol. 14 | No. 1
Negotiations
Noah J. Hanft
AcumenADR LLC
16 Madison Square West
Suite 1200
New York, NY 10010
nhanft@acumenadr.com
Richard I. Janvey
Diamond McCarthy LLP
295 Madison Avenue
27th Floor
New York, NY 10017
rjanvey@diamondmccarthy.com
Diane C. Rosen
Ortoli Rosenstadt, LLP
366 Madison Ave, Fl. 3
New York, NY 10017
dr@orllp.legal
New Lawyers and Law Students
Alexander Paul Bachuwa
2 Park Avenue
20th Floor
New York, NY 10016
alex@nomadresolutions.com
Publications
Sherman W. Kahn
Mauriel Kapouytian Woods LLP
15 W. 26th Street, 7th Floor
New York, NY 10010-1033
skahn@mkwllp.com
Public Relations
Alexander P. Bachuwa
2 Park Avenue, 20th Floor
New York, NY 10016
alex@nomadresolutions.com
Jadranka Jakovcic
jadranka.jakovcic@gmail.com
Jeffrey T. Zaino
Amrican Arbitration Association
150 East 42nd St. 17th Floor
New York, NY 10017
zainoj@adr.org
Securities Disputes
Robert M. Burksy
68 South Service Road - Suite 100
Melville, NY 11747
rbursky@rmblegal.com
Christine Lazaro
St. John’s University School of Law
Belson Hall, Room 2-26-E
8000 Utopia Parkway
Queens, NY 11439
lazaroc@stjohns.edu
Sports ADR Committee
Alexander P. Bachuwa
2 Park Avenue, Fl. 20
New York, NY 10016
alex@nomadresolutions.com
Laura A. Kaster
Laura A Kaster LLC
84 Heather Lane
Princeton, NJ 08540
laura.kaster@kasteradr.com
Jill Pilgrim
Pilgrim & Associates
33 West
jpesq@pilgrim-associateslaw.com
Edna Sussman
SussmanADR LLC
20 Oak Lane
Scarsdale, NY 10583
esussman@sussmanadr.com
Writing Competition
John Wilkinson
Fulton, Rowe & Hart
One Rockefeller Plaza
Suite 301
New York, NY 10020
johnhwilkinson@msn.com
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91
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Financial Services In Ireland Post-Brexit Part 1: EU Financial Regulation And Enforcement | April 22, 2021
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