Introduction |
Business
people involved in complex international commercial transactions find
arbitration, and increasingly mediation, to be economic, efficient and
viable conflict-management tools for resolving disputes, despite
concerns among Europeans, in particular, regarding private dispute
resolution. In Romania, the Court of International Commercial
Arbitration, which has existed since 1953, represents an excellent
national forum for the settlement of such disputes as an alternative to
the Romanian court system. However, some foreign investors in Romania
may feel more comfortable with an international arbitration
organization. Often, they routinely select the International Chamber of
Commerce’s International Court of Arbitration in Paris as the forum to
resolve their contractual disputes. They do so with little thought of
the cost of the proceedings or the flexibility of the rules to which
they are agreeing to be bound. Many business people have no idea that
there is, in fact, an alternative to the ICC based in Dublin that can
prove to be more flexible and less expensive.
The International Centre for Dispute Resolution (ICDR) was established
in 1996 as a separate division of the American Arbitration Association
(AAA), the world’s leading provider of arbitration, mediation and other
conflict management services. The ICDR’s International Procedures,
governing both arbitration and mediation proceedings, allow parties the
control they need over the process and give arbitrators and mediators
the authority and flexibility they require to conduct efficient
proceedings. Administrative assistance is provided when it is useful.
The ICDR also acts as an appointing or administering authority under the
UNCITRAL Rules and administers cases under various industry rules of the
AAA.
This article explores the benefits of using the ICDR to resolve
international commercial disputes while also describing an international
arbitration proceeding. |
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The Administrative Conference |
The ICDR focuses on getting qualified arbitrators appointed quickly.
Within 48 hours of receiving a notice of arbitration, the ICDR issues an
initiation letter, inviting the filing of an answer and/or counterclaim,
and sets up the administrative conference. At the conference, usually
conducted by telephone, the ICDR supervisor likely invites the parties
to consider mediation; addresses jurisdictional and scheduling issues;
ascertains need for measures of interim relief; and solicits the
parties’ preferences regarding the number, qualifications and
availability of arbitrators. |
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Arbitrator Selection |
The ICDR rules encourage party control of and agreement on the procedure
for appointing arbitrators, with or without the assistance of the ICDR.
Arbitrators need not be chosen from the ICDR roster. The case manager
can assist the parties in identifying arbitrators with international and
subject-matter experience
and expertise or provide a list of potential
arbitrators from the ICDR roster. Reflecting international expectations,
ICDR rules require arbitrators to be impartial and independent. They
must submit signed disclosure statements (and make continuing
disclosure) identifying any connection to the parties or their
attorneys. Parties have the right to challenge an arbitrator who has
made a disclosure. If a challenge is made, the ICDR, after consultation
with supervisory staff, will decide whether to disqualify the
arbitrator. Ex parte contacts between the parties and any
arbitrator or candidate are largely prohibited. |
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The Preliminary Hearing |
Arbitrators serving under the ICDR rules routinely hold a preliminary
hearing to facilitate the organisation and management of arbitration
proceedings; some decisions can be made upfront that will cut down on
time and costs later on. Terms of reference are not required. Parties
discuss a wide variety of topics at the preliminary hearing, including:
subject matter and personal jurisdiction; locale of the arbitration; the
law governing the proceedings; the language in which the proceedings
will be held; claims, damages and defenses; the necessity for
pre-hearing information exchange and the scope, method and timing of
such exchange; the method and timing for submitting legal argument,
documentary and physical evidence; the necessity for and scheduling of
hearings, witness testimony and site visits; the scope, form and timing
of pre-hearing submissions; the need, if any, for interim relief; the
form of the award; and opportunities for mediation and settlement. |
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The Taking of Evidence |
Most likely, no single issue is as problematic in international
arbitration as information exchange, due to cultural differences in
expectations. Parties in Central Europe are opposed to what they believe
are the “fishing expeditions” of U.K. or U.S. style discovery, which is
at odds with the civil-law concept of due process. There are also
corporate concerns about the public disclosure of trade secrets and
other sensitive information.
The ICDR rules take a broad approach to information exchange; Article 16
instructs the arbitrator “to conduct the proceedings with a view to
expediting the resolution of the dispute.” The rules do not provide for
depositions, interrogatories, requests for admission and other
traditional common-law discovery tools. Article 19 of the rules
expressly authorizes the arbitrator to order the parties to produce
documents, exhibits or other evidence; how much information will be
exchanged depends on the facts of the particular case. |
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The Hearing |
The ICDR rules contain provisions that help the tribunal bring order to
proceedings that otherwise could drag on interminably. The order of
taking testimony is not prescribed in the ICDR rules; arbitrators take
testimony when it is most efficacious. Regarding the method of
presenting evidence, international commercial arbitration focuses on
using the “best practices” of civil and common law traditions. |
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The Award |
The ICDR rules require that the arbitrators in general render their
award promptly, with reasons. The rules also give arbitrators the
authority to make interim, interlocutory or partial orders or awards.
The tribunal is required to apply the substantive law or the rules of
law agreed upon by the parties. Failing such agreement, the tribunal is
required to apply the law it deems appropriate. Arbitrators have broad
authority to fashion appropriate remedies and specific authority to
award pre-award or post-award interest on monetary awards. In a bow to
international expectations, the parties to arbitration proceedings under
ICDR rules expressly waive any right to punitive or exemplary damages,
except as required by statute. |
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Privacy, Confidentiality and Publication of
Redacted Awards |
Because many international commercial transactions involve large sums of
money, sensitive trade secrets, technical complexity and lengthy
business relationships, the private nature of arbitration can be a
significant benefit to the parties in a dispute situation. The ICDR
rules make provisions governing privacy and confidentiality of the
hearing and the award. In keeping with changing international
expectations regarding arbitral awards, the ICDR may publish awards
selected for their potential value to international practitioners,
edited to conceal the names of parties and other identifying
characteristics. |
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Time and Cost Judiciousness |
In general, the average time from filing to award in cases administered
under the auspices of the ICDR in 2005 was 357 days--short by
international arbitration standards. The ICDR aims to expedite the
process and presents the parties with significant opportunity to take
control of the proceedings, which in turn can curtail the costs.
The ICDR has an institutional bias in favor of settlement and encourages
the parties to try mediation, both at the commencement of the case and
closer to the hearing date. The ICDR administrative filing fees are
apportioned for an incentive for quick settlement. The initial filing
fee must accompany the filing of the notice of arbitration or
counterclaim. A subsequent case service fee becomes due and payable if
the matter proceeds to a first hearing. For counsel, this provides a
short window within which to negotiate a settlement, useful for
collection cases where there is little in the way of factual dispute.
Arbitrators are compensated at rates agreed upon by the parties prior to
their service. Transparency in connection with costs is aided by the
ICDR practice of asking arbitrators to publish their rate of service on
their resumes. |
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The ADR Clause |
Arbitration can be an appropriate solution for managing the risks and
relationships inherent in commercial contracts in Central Europe. The
process is most effective when contemplated and established in advance
of the need to implement it; i.e., by the inclusion in the original
contract between parties of a clause spelling out the terms of any
future dispute resolution. The parties’ agreement may incorporate the
ICDR rules by reference as in the following clause.
“Any controversy or claim arising out of or relating to this contract
shall be determined by arbitration in accordance with the International
Arbitration Rules of the International Centre for Dispute Resolution.”
The parties may also wish to consider adding:
“The number of arbitrators shall be (one or three)”;
“The place of arbitration shall be (city and/or country)”; or
“The language(s) of the arbitration shall be ______.”
The parties may agree to amend the rules to suit their particular needs,
for example, on time limits or information exchanges. Parties also may
expand their dispute resolution options by inserting a “step” ADR
procedure clause, which details interim steps to potential settlement up
to and including arbitration. |
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Filing Your Case with the ICDR |
Filing a case with the ICDR is a straightforward matter. Under the ICDR
rules, unless otherwise agreed, all written communications may be served
on a party by traditional air mail, air courier, facsimile, personal
service or e-mail. Arbitration proceedings are deemed to commence on the
date on which the administrator receives the notice of arbitration. The
ICDR maintains specialized administrative facilities in New York, where
a staff of multilingual attorneys supervises the administration of
international cases, and a European office in Dublin. The ICDR also
maintains a worldwide panel of more than 500 arbitrators and mediators
and has access to hearing facilities and services around the world
pursuant to 60 cooperative agreements with arbitral institutions in 43
countries.
Mark A. Meyer, Esq., is a member of the panel of arbitrators of both
the International Center for Dispute Resolution of the American
Arbitration Association and the Romanian Court of International
Commercial Arbitration.
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Editors Note: It is our policy not to mention our clients by name in
The Romanian Digest™ or discuss their business unless it is a matter of
public record and our clients approve. The information herein is correct
to the best of our knowledge and belief at press time. Specific advice
should be sought from us, however, before investment or other decisions
are made.
Copyright 2006 Rubin Meyer Doru & Trandafir, societate civila de avocati.
All rights reserved. No part of The Romanian Digest™ may be reproduced,
reused or redistributed in any form without prior written permission
from the publisher.
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