International Arbitration – Traps, Tricks and Practice Pointers

International Chamber of Commerce (ICC) arbitration has been growing as an alternative to litigation. Atlanta is becoming a hub for international arbitration along with the busiest airport in the world, Atlanta’s Hartsfield Jackson International Airport.  Depending on the process set out by the arbitrator, international arbitration can serve as an efficient substitute for litigation. However, certain discovery tools may be left out of the process depending on the arbitrator’s decisions, which may work to the detriment of one or both parties.  Advantages and disadvantages exist for ICC arbitration. We review certain advantages and disadvantages of ICC arbitration along with certain practice pointers for parties considering utilizing ICC arbitration clauses for their contracts and for attorneys representing clients in ICC arbitration.

ICC arbitration The Costs of Arbitration

ICC arbitration may save money in the long run, by preventing multiple appeals, through more restrictive discovery, and by the receipt of a definite decision from the arbitrator. There is no actual appellate oversight to ICC Arbitration. Parties are only able to avoid an arbitration award by moving to set it aside based on the limited grounds specified in the New York Convention and in some cases the Federal Arbitration Act.  In addition, the calendar is tighter than in most litigation settings, and depending on the application of discovery rules, the arbitration can be more concise and abbreviated than normal commercial litigation.

While there is opportunity to save money through the more abbreviated ICC arbitration process, ICC arbitration costs a significant amount for filing and service fees.  The ICC and the arbitrator are paid a significant amount as well. To give this comment context, in a recent ICC arbitration in which our firm represented one of the parties, where the value of the combined claims and counterclaims between the parties reached a claimed level of approximately $1.8 Million, ICC fees and costs reached approximately $85,000.00 between both parties. In litigation, tax dollars pay for the administration of justice generally (unless a special master is appointed in rare cases).

The discovery process determined by the parties and the arbitrator can affect your costs greatly in ICC arbitrations. Even well intended positions by one party may cause unintended consequences and costs for both parties.  For example in a recent ICC arbitration, one of the parties wanted no interrogatory allowances and argued that interrogatories would be needlessly costly to the parties. The arbitrator limited interrogatories to three contention interrogatories. The result was that the parties had to develop most of their discovery through many depositions, which were quite costly.  Depending on the process applied by the arbitrator and the parties, the cost of discovery can be greater or smaller than in regular litigation. The parties will not know the range of costs of discovery until well into the first quarter of the arbitration process unless the parties can agree to the process before selecting an arbitrator and asking the arbitrator in the selection process if he or she will honor that process. Before you limit discovery, make sure you do not create unintended consequences.

Selection of the Arbitrator

ICC Arbitration is overseen and considered by an Arbitral Tribunal. The Tribunal may consist of a panel of three (3) arbitrators, or one (1) sole arbitrator.  While it is more costly to appoint an Arbitral Tribunal of three (3) arbitrators, the additional cost will allow for some checks and balances between arbitrators to further fundamental fairness of the proceedings and potentially avoid the risk of arbitrator bias or impropriety.  Both parties have an opportunity to determine the arbitrator(s) under ICC rules.  If the parties cannot agree on the makeup and selection of the Arbitral Tribunal, the ICC will make the selection.

You have one opportunity to select the arbitrator(s), and you need to make it count.  There is little to no review or appeal rights from an ICC Arbitration decision and the Arbitrator(s) is not bound by the general procedural rules of evidence and procedure.  With so much discretion afforded to the Arbitral Tribunal and little to no oversight, it is important to carefully vet and select the Arbitral Tribunal within the time allowed by the ICC

When selecting an arbitrator, you and your attorney should request and review the curriculum vitae or resume of the arbitrator.  If you do not have sufficient information as provided by the CV, you should ask questions about the types of commercial, real estate or other experience of the arbitrator germane to your dispute.   Additionally, unlike legal court proceedings, you are permitted and should interview the arbitrator before agreeing to his or her appointment, and we recommend strongly that you consider interviewing several candidates.  Recommendations and opinions of colleagues and other attorneys may be very helpful as well.  Additionally, although each Arbitrator must execute a statement identifying what if any connection he or she has with either of the parties and/or their attorneys, parties should try to confirm the independence of the Arbitrator as much as possible on their own.  Selection of the Arbitral Tribunal provides the parties with direct influence on how the arbitration will be conducted and should be done with as much reasonable diligence and care as possible within the selection time period allowed by the ICC.

Hecht Walker, PC Arbitration Representation

Our firm wishes you the best of luck in your ICC arbitrations.  If we can assist you in arbitration or in litigation, we would be honored to serve.  Please feel free to contact us about your international or domestic arbitration, commercial litigation, real estate litigation, employment law litigation, and business disputes of all kinds. Thank you.

atlanta attorney Greg Hecht

 

 

Greg Hecht has been a practicing attorney for 28 years.  He has been lead counsel in over 1000 hearings and 300 trials. His specialties include international arbitration, business, commercial and real estate litigation, local government law, commercial landlord/tenant, contract, 42 USC 1983, zoning, land use, employment law, personal injury & wrongful death, and litigation.

Full bio at http:// www.hechtwalker.com/attorneys/greg-k-hecht

 

 

 

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