Fast & binding dispute resolution: an unbridgeable gap?

The image accompanying this post is just for fun. To reassure you, when aiming for fast & binding dispute resolution, we are not thinking about a goat fight nor a pistol duel. Both may be fast and lead to a  binding decision, especially if fatal, but they do not allow for a fair resolution. 

Fast & binding dispute resolution

Usual options for dispute resolution

In most countries, there is a wide range of dispute resolution possibilities:

  • Through informal processes, controlled by the parties, that are less onerous and fast (if successful): negotiated solutions, mediation, conciliation, expert involvement etc. Other advantages are: the confidential nature; process flexibility; the higher probability to preserve relationships. The disadvantages relate to enforcement of the resolution and the potential disconnection from the “rights and wrongs” (e.g. due to commercial pressure, power etc).
  • Formal processes with final resolution: court proceedings and arbitration. The disadvantage is that these are slow and time consuming processes, often inconsistent with continuing business relationships and very expensive especially due to the need for legal counsel (representing more than 80% of the costs). Rationally speaking, only disputes with big amounts at stake should go to court or arbitration.

The above processes are unfortunately fast or binding and not both.

UK statutory adjudication, DABs and ICC expedited arbitration 

The UK can be proud of 20 years of statutory adjudication for construction disputes.  It has been a great success, reducing the amount of disputes going to court or arbitration!

Similar results have been achieved on projects with dispute boards (standing or ad-hoc). FIDIC is strongly pushing DABs on projects using their standard contracts  (now called DAABs = dispute avoidance and adjudication boards). 

The new ICC rules (introduced in March 2017), with their expedited procedure, are not filling the gap because the shift is mainly to 1 arbitrator,  making an award in 6 months with only a reduction of 20% of arbitrator’s fees and some procedural flexibility on production of documents, hearings etc. The extra rigor and time needed are justified for having final and binding awards.

So, in countries where there is no statutory adjudication nor dispute adjudication boards, how can we provide for fast & binding dispute resolution? 

Fast & binding dispute resolution with fast-track arbitration

The solution to achieve fast & binding dispute resolution is to establish a fast-track, ad-hoc, arbitration inspired by the UK rules for statutory adjudication: the Housing Grants, Construction and Regeneration Act + the Scheme for Construction Contracts Regulations 1996 (as amended).

The time limit is paramount. The award will be enforceable (except in case of jurisdictional problems or breaches of natural justice) and binding on the parties. The parties will retain the right to bring the dispute back before the court or arbitration (if foreseen in the contract), if one of the parties cannot accept the fast-track award on a permanent basis.

The defendant typically has to provide a response to the referral within 10 to 14 days. Within 28 days from the referral or such other period as the parties may agree upon, the arbitrator should formulate the award. Arbitrators used to normal ICC procedures may doubt this is achievable. But it works for UK adjudication and is a matter of adapting to the time available. 

Still, the arbitrator should reach a decision based on a fair and reasonable view of the legal entitlements of the parties. The arbitrator should act impartially, within his/her jurisdiction and respect the principles of natural justice.  He/she will give reasons for the decision. The parties can therefore understand the thought process and may accept the award more readily.

The arbitrator must be nominated promptly after the notice of the dispute. Typically within 7 days after the notice, either by agreement between the parties or by a nominating body. The parties can also foresee names in the original contract.

Concluding notes

This fast-track arbitration will solve the problematic gap to achieve fast & binding dispute resolutions for:

  • most small & medium enterprises,
  • minor amounts at stake, 
  • disputes during the course of a contract execution,
  • less complex situations even if the amounts are considerable (e.g. interim payment disputes) etc.

Because of the fact that the parties still have the right to go back before court or final arbitration, the dispute can be treated in a less legalistic way. The parties can prepare their cases themselves, if they so wish, rather than having to engage expensive professional assistance. 

You can contact us if you are interested in fast & binding dispute resolution. You can also leave a comment here below. 

For other articles on dispute resolution, click here.

Blog on contracts, “AfiTaC.com”, new status after 6 more months

Six months ago, we had published a first situation concerning the interest in the blog on contracts, “Afitac.com”. You can read it by clicking here. Now, curious to see how this blog has developed?

World access map

Because an image says more than a thousand words, we simply show you our world map which has further colored blue. Only very few countries have nobody connecting to this blog. And, as the below list of biggest participating countries shows, all continents are nicely represented:

  • USA
  • France
  • Netherlands
  • United Kingdom
  • India
  • United Arab Emirates
  • Brasil
  • South Africa
  • Australia
  • Spain

Changes over the past half year

The biggest shift was as follows:

  • Back in April, a large part of people visiting this blog where redirected from LinkedIn. Especially, groups on FIDIC or Project/Risk Management had very active participation. However, over the past months, LinkedIn implemented important modifications, reducing its contribution: 
    • A shift from specialized groups to #subjects similar to Twitter, resulting in very limited activity in groups.
    • They now favor video content above text messages.
    • Posts containing external links are shown to less people (limiting “impressions”).
  • Nowadays, the search engines are bringing most new people. The chart below, with the number of visitors sent by search engines (mainly Google and Bing), shows this nicely. From April to June, on average, one or two persons reached the site after an internet search. This continues to increase with now more than 10 visitors per day.

Most popular articles of this blog on contracts

The search engines are now picking up the articles about a wide range of subjects: Negotiation, FIDIC, Tendering Process and Contract Risk Scoring. The most popular once are:

We also introduced a more fun way to reflect on, or learn about, contract management principles with our series “Contract Management & Music”:

This series was hugely popular on LinkedIn with more than 12 000 vies and 148 likes for the summary post:

Other features of this blog on contracts

Over summer, we launched a self-assessment, named “During/after holidays is a good time to self-assess your commercial & contract competences“. The results are helpful for you to determine your development areas and for us to target subjects for future posts. By the way, you can still give it a try. It contains 10 subjects carefully selected enabling you to perform the assessment in 2 minutes. It is targeted to Project, Contract and Tender Managers mainly active in construction, infrastructure, oil & gas and renewable energy projects.

The Tender Risk and Contract Review system, TRaCRs, that enables you to score the risks and get a general understanding of your projects in order to make objective decisions, continues to draw good attention. The following articles explains the main principles:

For those interested in (or, unfortunately, pushed into) dispute resolution, relevant articles can also be found on the blog regarding arbitration, dispute adjudication, mediation etc.

Our LinkedIn company page has steadily grown with more than 100 new followers. A special thanks to these followers for their interest to receive more.

Conclusion

Growth is continuing for this blog on contracts. The English language version is naturally drawing most attention. Besides, if sufficient interest exists, we will also continue with the French, Portuguese and Dutch versions. For the latter two, we seem to be filling a void, which is an extra motivation to serve these language communities (Brazil, Portugal, Mozambique, Angola, the Netherlands, Belgium etc).

Please keep reading us! Bookmark us in your browser; follow us on our LinkedIn page or on Twitter; and, if you appreciate an article, please let us know by providing a “like” or a “comment” or “share” it with others.

You may also contact us to become a guest blogger. We have already benefited from contributions from Jean-Charles Savornin, “Contract Management: are contracts cast in stone?“, and Paul Netscher , “Negative cash flow for construction companies“.

“Amiable composition” (Arbitration), why would you choose it ?

This article has been selected on the internet because of its interest for the readers of this blog. The original has been published by Altana Avocats – Paris and is available at the following location: https://arbitrationnewsaltana.wordpress.com/2013/12/02/why-choose-amiable-composition/ .

Some parties readily seek recourse to amiable composition, thinking the arbitrator will free himself from the rule of law.  Others, conversely, fear arbitrariness because for them, the concept’s boundaries are blurry and its result is unpredictable.

What is amiable composition and why choose it?

Pursuant to Article 1478 of the French Code of Civil Procedure, “The arbitral tribunal shall decide the dispute in accordance with the law, unless the parties have empowered it to rule as amiable compositeur“.  It would thus be logical to consider it is a standard different than the rule of law, to which the arbitrator will refer to decide the dispute.  However, this provision does not define amiable composition.

Article 187(2) of the Swiss Federal Law on Private International Law provides that “The parties may authorize the arbitral tribunal to decide ex aequo et bono“.  Would amiable composition be the fact for an arbitral tribunal to decide in equity?

Certain arbitration rules operate an even more subtle distinction, providing that the arbitral tribunal decides, if the parties so agree, in amiable composition or “ex aequo et bono“, i.e., “from what is good and just” (see, e.g., Article 21(3) of the ICC Rules or 35(2) of the United Nations Commission for International Trade Law (“UNCITRAL”) Rules.

The issue of the definition of boundaries of amiable composition, equity, or the fact that an arbitral tribunal decides ex aequo et bono remains debated.  However, scholars, case law and practitioners all agree that these concepts refer to some form of equity (different from the Common law concept of Equity).

The Paris Court of Appeal, ruling on an award in which the arbitral tribunal had decided in amiable composition, summarized the consequences of such a choice in the following way:

The amiable composition clause is a conventional renounciation to the effects and benefit of the rule of law, the parties losing the prerogative to request its strict application and, as a corollary, the arbitrators being empowered to modify or moderate the consequences of the contractual provisions, provided that equity or the well understood common interest of the parties requires it” (Paris Court of Appeal, 28 November 1996, Rev. arb. 1997, p. 381, note E. Loquin ; Paris Court of Appeal, 4 November 1997, Rev. arb. 1998, p. 704, obs. Y. Derains).

Consequently, the arbitrator amiable compositeur must first search the dispute’s solution in law.  Then, if he is convinced that the solution is unjust or inequitable in the matter at hand, he may set aside or correct the consequences of the strict application of the rule of law.

However, is it not risky for a party to entrust what is just or equitable to the sensibility of one or three arbitrators?

Elements permit to regulate this subjectivity:

  • Parties may choose their arbitrators; it is up to them to choose people they trust, for their reputation or their knowledge of a designated sector;
  • The arbitrator has the obligation to motivate his award (Article 1482 of the French Code of Civil Procedure), failing which in domestic arbitration, the award may be annulled  (Article 1483 of the French Code of Civil Procedure);
  • Parties may, in their submissions, explain to the arbitrator not only the reason why their claims should succeed from a legal standpoint, but also that such a solution is just and equitable…

The subjective character of amiable composition may prove to be an advantage in cases in which the technicality and economical reality are predominant compared to legal issues.  In fact, certain arbitral institutions in identified sectors, gathering professionals very well versed in specific sectors, do not hesitate to provide in their arbitration rules that the arbitral tribunal will decide in amiable composition unless the parties agree otherwise (see, e.g., Article 24 of the Arbitration and Mediation Rules of the Fédération Nationale des Travaux Publics (“FNTP”), according to which the arbitral tribunal “decides as amiable compositeur unless the parties request it to respect the rule of law“).

In consequence, parties should analyse the pros and cons of having the arbitral tribunal decide as per the law or in amiable composition at the time of the drafting of the arbitration clause, taking into account the contractual elements of the industry and the applicable arbitration rules.

Click here for other articles about dispute resolution on this blog.

EBRD conference on FIDIC 2017 – Red and Yellow Books

On 27th of September 2018, AfiTaC participated to an event organized by EBRD (the European Bank for Reconstruction and Development) at its headquarters in London. The event was about the changes introduced with the new forms of contract, Red and Yellow Books, of the 2017 rainbow suite.

A couple of months ago, we also published on this subject, which became a very popular article: Thank you FIDIC for explaining changes introduced with FIDIC Rainbow Suite (ed. 2017).

Participants

After an introduction by Betsy Nelson (EBRD VP, Risk and Compliance), Jan Jackholt (EBRD Procurement) explained that  the event was a first of a kind for EBRD as an initiative the engage around selected topics with their stakeholders. The morning part included speakers from FIDIC (Aisha Nadar, Zoltan Zahonyi and Christopher Seppala), from Contractors (Philippe Dessoy, Mathias Fabich and Nabeel Khokhar) and from EBRD’s Clients (Kakha Sekhniashvili and Olena Kryvoruchko). The afternoon was devoted to a panel discussion, moderated by Sarah Thomas with the participation of Zoltan Zahonyi, Christopher Seppala, François Doré and Stefan Ciufu-Hayward.

Issues covered

Enough “name dropping”; let us now go to the take away’s from this event. To make this post compact and quick to read, I’ll present them in the form of bullet points:

    • Thank you to EBRD, FIDIC and the other participants for this event because it was really well organized, informative and open minded. Good general subject, excellent speakers, nice interaction from the public during the panel discussions, great networking opportunities during the coffee breaks with all the major actors concerned by FIDIC present.
    • FIDIC stressed that the 2017 versions remained loyal to their principle “made by engineers for engineers” with, of course, a legal review. They have enhanced Project Management features, a balanced risk allocation and more emphasis on reciprocity of the rights and obligations of Employers and Contractors. The changes were driven by users’ feedback, the international state of the practice and adopting some of the developments introduced with other versions since 99 (Gold and Pink Books).
    • Zoltan Zahonyi introduced the ideas around the changes:
      • More prescriptive:  requirements to give proper notices explaining their purpose.
      • Greater certainty, for example, on unforeseeable physical conditions and key personnel.
      • Enhanced contract administration: the programme (Sub-Clause 8.3) is now evolving along the project and better described. The contract shall be proactively administered by the Engineer.
    • Christopher Seppala explained the more detailed and prescriptive claims and disputes mechanism:
      • Still based on 4 tiers: Engineer’s role, DAAB, amicable settlement and finally international arbitration. Every dispute must go through these 4 levels (if not resolved during the process, which is of course the objectif).
      • An important psychological changes is that routine claims in day-to-day contract management (Sub-Clause 20) are now separated from the exceptional disputes (Sub-Clause 21).
      • Time limits have been further enhanced to impose discipline on the parties. There is a procedure for the Engineer to loosen the time bars.
      • The former DAB is now a DAAB. The additional “A” is there to put emphasis on “Avoidance” of disputes. There is a strong preference for a “standing”, rather than “ad hoc”, dispute board because the standing boards are more knowledgeable about the contract and can work pro-actively to avoid disputes to escalate.
    • The representatives of EIC (European International Contractors) provided their postions, established after months of internal analysis between their members, in a straightforward way:
      • They regret the length of the new contract (50% longer), which looks like a manual of good engineering practices. They fear the additional contract administration costs in order to properly serve notices and follow all the prescribed steps. These costs may not be incorporated in the price by less experienced contractors and consequently no resources will be made available which may result in contractual chaos.
      • Some concerns relate to the risk of “form over substance” when it comes to notices. For example, all information has been properly provided but the document is not correctly labelled as a notice for a specific purpose.
      • Also automatic answers to respect the time limits and avoid the “deemed” provisions are feared. They are worried that qualified contract managers, more than ever needed by both Employer’s and Contractors, will be scarce and hard to find.
      • The management meetings as per Sub-Clause 3.8 should have a defined output to avoid non-value added meetings.
      • They are a bit skeptical about the advance warning principle in Sub-Clause 8.4 where they are of the opinion that no party will give an advance warning if it relates to a risk it bears under the contract and rather handle this internally.
      • On dispute adjudication, EIC welcomes the emphasis on avoidance and favor standing boards but mention a JICA study on 124 large scale contracts, where 43% had a standing DAB contractually foreseen, but only 7% actually constituted it at the beginning of the contract. Maybe the additional “avoidance role” will motivate the parties to select the board members at a stage when disputes are still an unwelcome and remote subject?
      • They are relieved by the fact that “fitness for purpose” provisions now have to be explicitly stated in the Employer’s Requirements rather than understood from the “1000 pages contract” (or otherwise be limited to “ordinary purpose”).
      • FIDIC 99 Sub-Clause 3.5 [Determinations] only had two paragraphs and now has become Sub-Clause 3.7 [Agreement or Determination] with 36 paragraphs and many steps to be performed to conclude something.
      • The regulations regarding concurrent delays are still unclear.
      • A special concern is about the Contractors Documents that have to be reviewed by the Engineer (Sub-Clause 5.2.2). The definition of Contract Documents is hard to understand even by the top contractors. This definition starts with an exclusion and uses the word “Contractor’s Documents” in its own definition (see quote here below). My recommendation is to mutually agree a clear & explicit list of “to be approved” documents & drawings during the first month(s) of the project execution because this is a subject that can only be resolved on a case-by-case basis.

“Contractor’s Document” excludes any of the Contractor’s Documents which are not specified in the Employer’s Requirements or these Conditions as being required to be submitted for Review, but includes all documents on which a specified Contractor’s Document relies for completeness.

    • The representatives of EBRD’s Clients talked about some problems encountered on recent contracts using FIDIC. They also expressed some fear that the “deemed” acceptance provisions will expose them. An example is the case of deemed acceptance of O&M manuals which may be incomplete but still essential with during the entire operation period. Maybe Employers can propose an alternative remedy (time & money) for very specific cases where they cannot live with deemed acceptance?
    • The new “FIDIC Golden Principles”, which are a part of the guidance notes in the new standard contracts, are very positively received by all stakeholders. All agreed that a sixth golden principle would also be welcome: international arbitration in a neutral country.
    • At the end of the event, Sarah Thomas organized a vote to see if it is more likely that (i) people will continue using FIDIC 1999 and add, in the particular conditions, those provisions from FIDIC 2017 they find improvements or (ii) take FIDIC 2017 and adjust the changes they are less happy with. There were a bit more votes for the first option than the second. However, a natural tendency to oppose change and stick, as close as possible, to one’s knowledge base (FIDIC 1999) is no surprise. Time will tell.

My conclusions

  • Change is always opposed initially but FIDIC 2017 has the substance to make things work. The administrative rigor, for example related to notices, will soon become a habit just like EHS measures did over the past decade. This rigor will avoid misunderstandings about the stage the project is in (e.g. regular claim vs real dispute) and push the parties to table their problems early when they can be mitigated.
  • The “deemed” approvals & replies will avoid that projects stall and will push the parties to reply in a timely matter.
  • The Engineer is now back to a more neutral role with some mediator actions as foreseen in Sub-Clause 3.7 [Agreement or Determination]. It will take some time for Engineers to adapt but, I believe, it is this kind of attitude that avoids conflicts (together with the standing DAAB as second line of defense). The construction / contracting / project business can partially avoid the huge, non-value added, costs of disputes (cost of arbitration, delay in decisions etc).
  • The more prescriptive processes will help the less experienced users to implement the contract properly. The new versions can hopefully remain on top of the stakeholders’ desks. We must move away from the “negotiate, file & forget the contract” attitude that often existed in the past.

Let us try to make these new versions, and the philosophy behind it, a success. Of course, this will require mobilization of adequate resources to live up to this challenge. Please provide your comments here below.

Click here to read other publications concerning FIDIC on this site.

Talking about contract management, what are the latest evolutions and how can AfiTaC support?

In this post, we are talking with Jan Bouckaert about the evolution in contract management and the role AfiTaC can play in this.

What is evolving for contract management in the broad sense?

Jan: Some of the latest evolutions in contract management are as follows:

  • People are talking about new technologies establishing contractual relationships based on artificial intelligence. Often, proper reading of the contracts made by humans would already be a good start, wouldn’t it ?
  • Business relations are ever more international with inherent risks: fiscal exposure, disputes, integrity issues etc.
  • Even Small and Medium sized Enterprises are obliged to develop their contract management.
  • Negotiations are tough, even though win-win solutions should remain the objective.
  • Companies reduce their internal resources, reducing fixed costs but bringing overload, lack of expertise etc.

Out of curiosity, what does AfiTaC stands for?

Jan: AfiTaC is the abbreviation of “Advice for international Tenders and Contracts”. We are passionate about contracts. An important part of what we do is promoting Contract Management to a broader public than Lawyers and Contract Managers/Administrators. Our blog and exchanges on LinkedIn reflect this. For specialists, we challenge the status-quo based on real-live situations and arguments; for people building up their knowledge, we provide valuable learning bricks.

What can AfiTaC do to accompany the change?

Jan: Apart from our blog available in 4 languages (English, French, Portuguese and Dutch), which is quite unique, we also propose customized/adapted services. AfiTaC offers complementary support to leverage your teams at a far more attractive cost than external legal services and covering a broader scope – from contractual to commercial subjects, covering topics ranging from contract wording, to insurance, financial & tax issues etc. We do this based on 20+ years of experience.

Concretely speaking, how would we work with AfiTaC?

Jan: We will set-up a collaborative platform (cloud-based storage on servers in France, protecting your data) enabling flexible interaction: you can upload your questions and retrieve the answers. This will allow better tracking and sharing than a traditional e-mail solution. However, if you prefer a more traditional way, we can adapt. Of course, confidentiality, loyalty and professionalism are our guiding principles.

Can you tell us a bit more about the services you provide?

Jan: We will give you some examples of how we can create value for you:

Contract Hotline:

Based on a monthly fee, your team can contact us for commercial and contractual issues and receive a reply within 24 hours. The monthly fee will be adjusted, after prior agreement, based on the actual usage of the hotline in the preceding month: no bad surprises for you, visibility upfront and you only pay as per the value we create for you.

Negotiation Coaching:

In B2B relationships, surprisingly, the possibility to create or destroy value during negotiations is still largely underestimated. Often, the commercial staff receives the company’s wish list (must have’s, golden rules etc) but is lacking the arguments to defend their case and, even more, the skills to negotiate. Our coaching can make your team stronger and more effective in finding win-win solutions with your business partners.

Risk Management:

We can audit your contracts, provide a structured approached for risk management, set-up a contract risk scoring system and organize or participate in your risk boards.

Training:

Together, we can establish your team’s needs and build an appropriate training: commercial awareness, contract standards, negotiation practice, international business, contract management etc.

Integrity:

We can set-up a positive environment for this important, but often scary, subject so that your teams can make sure they remain proud of the healthy business environment in which you operate. This contains three steps: (i) establishing an adapted integrity policy and statement, (ii) providing training based on real-life examples and (iii) facilitate an alert mechanism to be used if the team fears that certain practices put their proudness at risk. This will be adapted to SME’s: compact and straightforward, not so sophisticated as in large companies who have dedicated resources for this.

Mediation and Arbitration:

While our goal is to avoid disputes to escalate by anticipation (with all the above services), we also support dispute resolution in a fast, cost effective and balanced way.

Can we test these services to see if they are useful for us?

Jan: Yes, you can. Our principle is to facilitate, as much as possible, the access to our services. You can step in as low as you want and hopefully expand when you see the value we create together.

Mediator, good to be an expert in the subject matter in dispute or not?

This article was taken over from LinkedIn for its interest to the readers of this blog:

A mediator should always be an expert in the subject matter in dispute

(Author: Martin Burns)

Some mediator training organisations insist that, once someone is trained in the skills and techniques of mediation, they can mediate any type of dispute. These bodies say that a mediator does not need specialist knowledge about the issues involved in a dispute.

The argument goes that a mediator is responsible for managing a process, which enables the parties to negotiate a settlement. It is not necessary for the mediator to have substantial expertise in the subject matter of the dispute. They say that it is the parties, not the mediator, who need to understand technical issues. The parties will know the facts better than the mediator, and since a mediator must avoid giving technical advice to the parties, having a mediator with specialist expertise is of little value in any case.

A more realistic view is that subject matter expertise may not always be necessary but, in practice, it is almost always wanted by parties. Also, it is usually of benefit to the parties. This rational approach has been transforming mediation in the land, property and construction sector. Fewer parties are ready to accept the “hands-off” facilitative model, and are opting for an evaluative process, where mediators actively use their expertise to inform, and sometimes challenge parties, and to provide sensible options on possible settlement terms.

The recent experience we have had at RICS, the leading regulatory body for professionals working in land, property and construction, reveals that most parties want a mediator who has technical expertise and can understand the precise nature of the dispute. They do not want to spend valuable time teaching the mediator about matters they see as straightforward. The mediator’s role is to liaise between the parties and communicate in an effective and incisive way. It follows that the mediator can do this better if they have significant technical expertise in the subject matter in dispute.

A UK survey undertaken a few years ago by the Centre for Effective Dispute Resolution (CEDR) revealed a great deal about changing expectations of parties relating to the expertise they require of mediators. Mediators who responded to the survey reported that the most significant factors in determining their appointments were:

  1. Professional reputation (i.e. knowledge of the subject in dispute)
  2. Amount of fees and basis of charge
  3. Professional qualifications
  4. Availability to undertake the mediation as and when required by the parties

Lawyers representing parties in disputes routinely rate similar factors as decisive when selecting mediators, although they also suggest that a CV which demonstrates that a mediator has plenty of mediation experience is also important.

More and more parties want their mediator to really understand the issues which are at the heart of their dispute. They see the role of the mediator as more than simply managing conversations and exchanges of information. They want a mediator who will help them to make informed judgment calls. Although a mediator with technical knowledge and experience should not give personal advice to either party, they should be able to apply their understanding of the subject matter to ask questions which help both side to properly consider the strengths and weaknesses of settlement options. If one party is being unrealistic, an expert mediator can ask hard, yet knowing, questions that get the party to reality check his or her position. If the parties require, the mediator should be able to draw on significant subject matter experience to offer possible settlement solutions in the form of reasoned, non-binding, recommendations.

Expertise in the technical aspects of a dispute allows a mediator to quickly grasp the pertinent facts and focus on the issues that really matter.

There are, however, a number of challenges facing expert mediators. These can be addressed through training in evaluative mediation procedures. The main challenge is to avoid making hasty conclusions and offering opinions too early or when they are not wanted by the parties. Expert mediators should exercise restraint and be active listeners, learning as much as they can about the parties’ relative positions and expectations. They should guide and help parties to engage in constructive negotiations. When bringing their expertise to bear, they should not dominate discussions between the parties simply to demonstrate their own expertise.

These challenges are offset by the fact that non-expert mediators can often spend much time getting parties to bring them up to speed on the subject area. Also, non-experts could be led to focus on less important issues and even reach wrong conclusions.

It is perhaps self-evident that ignorance in the subject matter seldom added value, and users preferred mediators who could grasp the issues quickly and proceed to move the parties towards informed solutions.

Part of the attraction of mediation is that parties can choose the mediator that suits them best, and it is apparent that more and more parties are choosing subject expert mediators. The rationale is that parties will more likely achieve a well-reasoned, informed and agreeable settlement with an expert mediator than with a mediator who has not been tried and tested in the relevant subject matter.

In case you would like access the original article, you can do this here.

New ICC Rules of arbitration effective since 1 March 2017

This article is selected on the internet by AfiTaC because of its interest for the readers of this blog (source: www.wolftheiss.com) :

Arbitration is becoming more efficient and transparent and less expensive thanks to recent revisions to the ICC Rules of Arbitration. The ICC Court has introduced rules for expedited arbitration procedures for small claims.

SCOPE OF APPLICATION

The ICC Court introduced revisions, into force since 1 March 2017. While the general provisions will apply to all arbitration proceedings commenced on or after this day, the rules for expedited procedures will automatically only apply to claims with a value of up to USD 2,000,000 arising out of arbitration agreements concluded on or after 1 March 2017.
The expedited rules can also apply to disputes worth more than USD 2,000,000 or arbitration agreements concluded before 1 March 2017 if the parties choose to opt in. Alternatively, it is also possible to opt out of the new rules. If the parties wish to do so, a suitable ICC model clause is available.

KEY FEATURES OF EXPEDITED PROCEDURE

In brief, the expedited procedure amendments bring about the following changes:

  • The dispute will be referred to a sole arbitrator, even if the arbitration agreement provides for a three-member tribunal. Before, the parties’ agreement on the number of arbitrators and the procedure governing their appointment has prevailed over the ICC Rules (which provide for a sole arbitrator as a general default rule subject to particular circumstances of the case which allow the ICC Court to decide otherwise). Either the ICC Court or the parties will appoint the sole arbitrator (within a time limit set by the ICC), depending on the particular arbitration agreement.
  • The Terms of Reference, which have always been a traditional feature of ICC proceedings, are no longer required.
  • After the tribunal has been constituted, the parties will not be able to make new claims unless expressly authorized by the tribunal.
  • Within 15 days after the transmission of the file to the tribunal, the case management conference must be held. The tribunal will be required to render its award within 6 months of the case management conference, unless this deadline is extended by the ICC Court.
  • The tribunal may exclude the production of documents. It may also limit the number, length and scope of submissions, witness statements and expert reports, and decide the dispute solely on the basis of documents. Alternatively, it will have the authority to hold hearings not only in person, but also via telephone or video conference.
  • In order to increase cost efficiency, the arbitrators’ fee range will be reduced by 20 percent.

FURTHER AMENDMENTS

As for proceedings that do not fall under the expedited procedure rules, the most important modifications are these:

  • The time limit for issuing the Terms of Reference will be reduced to 30 days (instead of 3 months);
  • Reasons for the decisions by the ICC Court concerning the appointment, confirmation, replacement or challenge of arbitrators will no longer be confidential, but can be communicated upon the request of any party;
  • A request for arbitration will require a filing fee of USD 5,000 (instead of USD 3,000); and
  • There is a revised fee scale for the ICC administrative expenses, effective as of 1 January 2017.

OUTLOOK

With regard to the expedited procedure, nothing will change in respect to arbitration agreements that have been concluded before 1 March 2017 unless otherwise agreed to by the parties. However, starting from that date, it will be essential to carefully consider whether or not to opt out of the new expedited procedure rules. Undoubtedly, the revision of the ICC Rules will increase the efficiency and transparency of ICC arbitrations while simultaneously lowering their overall cost and duration.

ICC MODEL CLAUSE, RECOMMENDED PROVISIONS

Parties wishing to resort to arbitration under the ICC Rules are recommended to agree to the following standard ICC arbitration clause:
“All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.”
It is also recommended to include the following provisions:
“The place of arbitration shall be [city, country].”
“The language of the proceedings shall be [language].”
If the parties wish to opt out of the emergency arbitrator provisions, they should include as follows:
“The Emergency Arbitrator Provisions shall not apply.”

If the parties wish to opt out of expedited procedure provisions (which would be applicable to a case where the amount in dispute is up to USD 2,000,000), they should include as follows:
“The Expedited Procedure Provisions shall not apply.”
If the parties wish to apply the expedited procedure provisions in any case (i.e. irrespective of the amount in dispute), they should include as follows:
“The parties agree, pursuant to Article 30(2)(b) of the Rules of Arbitration of the International Chamber of Commerce, that the Expedited Procedure Rules shall apply irrespective of the amount in dispute.”
If the parties wish to determine their own threshold amount for the application of the expedited procedure provisions, they should include as follows:
“The parties agree, pursuant to Article 30(2)(b) of the Rules of Arbitration of the International Chamber of Commerce, that the Expedited Procedure Rules shall apply, provided the amount in dispute does not exceed US$ [specify amount] at the time of the communication referred to in Article 1(3) of the Expedited Procedure Rules.”

The original article can be found at this location: 

https://www.wolftheiss.com/fileadmin/content/6_news/clientAlerts/2017/2017_Q1/17_02_24_WolfTheiss_CA_New_ICC_Rules.pdf

ICC Rules of Arbitration

This article is selected on the internet by AfiTaC because of its interest for the readers of this blog (source: out-law.com) :

The ICC Rules of Arbitration are the most widely-used institutional arbitral rules in the world, especially in relation to international construction and energy disputes. A new version of the Rules came into force on 1 January 2012. The 2012 Rules apply to all ICC arbitrations that commenced on or after that date, unless the parties have agreed that the previous version of the Rules will apply. [Note from AfiTaC: since the publication of the original article, a new version of ICC Rules of Arbitration has become available in 2017: ICC-2017-Arbitration-and-2014-Mediation-Rules-english-version.pdf]

The previous version of the Rules was published in 1998. To a large extent the new Rules simply codify the solutions and approaches that the ICC Secretariat has followed since the last revision of the Rules.

Most of the changes are aimed at increasing the efficiency of the arbitration process.

The 2012 Rules explicitly require both the arbitrators and the parties to “make every effort to conduct the arbitration in an expeditious and cost-effective manner”.

The changes will force participants to define more aspects of their claims and outline the merits of the dispute earlier on in the process.

The Rules also contain new penalties for behaving in a way that undermines the process’s efficiency. The new Rules permit the tribunal, when making allocating costs, to take into account “the extent to which each party has conducted the arbitration in an expeditious and cost-effective manner”.

Entirely new provisions relate to the emergency arbitrators, case management, and multi-party arbitrations.

Main changes introduced by the 2012 Rules

Emergency arbitrator: the emergency arbitrator provisions are probably the most innovative provisions in the 2012 Rules. A party which needs urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal may apply for such measures in accordance with Article 29 and the provisions in Appendix V.

The party applying for the emergency arbitrator must file its Request for Arbitration no later than 10 days after the Secretariat receives the application. If it does not, the President will terminate the emergency arbitrator proceedings unless the emergency arbitrator determines that a longer period of time is necessary. This is quite a tight timescale.

The emergency arbitrator’s decision will take the form of an order. The order will not be binding on the arbitral tribunal and it is unclear whether or not an emergency arbitrator’s order would be enforceable under the New York Convention, which refers to “awards”. Interim orders and measures are enforceable under national laws in some jurisdictions but not in others.

The emergency arbitrator provisions contained in Article 29 and Appendix V of the 2012 Rules will not apply if the parties’ arbitration agreement was concluded before 1 January 2012. In addition the emergency arbitrator provisions will not apply if the parties have elected to opt out of those provisions or have agreed to follow another pre-arbitral procedure that provides for the granting of conservatory and interim measures.

Case Management: the Rules require the tribunal to convene a case management conference to define procedural matters at the start of the arbitration. Further case management conferences may take place if necessary to ensure that the arbitration is efficiently conducted. The arbitral tribunal is encouraged to take a proactive role in order to determine an efficient conduct of the procedure by using the management techniques set out in Appendix IV and in the ICC publication “Techniques for Controlling Time and Costs in International Arbitration”.

Arbitrators have to inform the parties and the Secretariat of the date they expect to submit their draft award. According to the previous version of the Rules the arbitrators were supposed to communicate an “approximate” date (to the Secretariat only). Furthermore, the ICC Court is required to take the efficiency of the arbitrators and the timeliness of submission of the draft award into account when setting the arbitrators’ fees.

Constitution of the Arbitral Tribunal: the powers of the ICC Court have been expanded in order to allow the Court to appoint a suitable arbitrator in the event that a national Committee fails to make the appointment within the deadline fixed by the Court or the president of the National Committee certifies that a direct appointment is “necessary and appropriate”. The Court can also appoint arbitrators in proceedings involving States or State entities.

Independence and impartiality of arbitrators: whereas under the 1998 Rules arbitrators had to be independent of the parties involved in the arbitration, they must now be impartial as well as independent. Accordingly they must disclose any circumstances that could give rise to reasonable doubts as to their impartiality as well as anything that might call into question their independence. In addition, prospective arbitrators must sign a statement of acceptance, indicating their availability. Such a declaration is aimed at reducing the procedural delays due to the over-commitment of arbitrators.

Challenges to jurisdiction: while the old version of the ICC Rules allowed parties to raise jurisdictional challenges to the Court on the validity of the arbitration agreement, under the new Rules such challenges will be addressed by the arbitral tribunal unless the ICC Secretary General refers the issue to the Court. Article 6 of the ICC Rules has been revised to speed up the procedure.

Multiple Parties and Multiple Contracts: the 2012 Rules include entirely new provisions on multiple parties and contracts. According to Article 7, a party may request that an additional party be joined to the arbitration by submitting a Request for Joinder to the ICC Secretariat. Article 9 confirms that claims arising out of or in connection with more than one contract may be made in a single arbitration, irrespective or whether such claims are made under more than one arbitration agreement under the Rules.

Finally, the 2012 Rules expand the powers of the ICC Court of Arbitration to consolidate arbitral proceedings under Article 10.

Technology: The new Rules explicitly allow the arbitral tribunal and the Secretariat to communicate with the parties by e-mail, as they already had in fact been doing for some time, while the previous version of the Rules referred to obsolete methods of communication, such as telex and telegram. References to these obsolete methods of communication have been deleted. Tribunals are encouraged to consider the use of video conferencing at hearings where attendance in person is not essential.

 

The original article can be found at this location: https://www.out-law.com/en/topics/dispute-resolution-and-litigation/arbitration-and-international-arbitration/2012-icc-rules-of-arbitration/