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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
The article " Taking Your Case to the International Centre for Dispute Resolution" was published based upon approval of:
Rubin Meyer Doru & Trandafir
SOCIETATE CIVILA DE AVOCATI / LAWYERS PROFESSIONAL CORPORATION IN ASOCIERE CU / AFFILIATED WITH HERZFELD & RUBIN, P.C.