The Court’s Secretary General emphasized the importance of the anticipated information technology system upgrade, which would allow the Secretariat to keep track in real time of the status of each case, this is part of an entire review of priorities and procedures internally and externally with a view to delivering a quality service.

The ICC International Court of Arbitration‘s work load continues to increase at a fast pace. The number of cases registered jumped to 663 last year from 599 in 2007. In addition 407 awards were rendered in 2008, compared with 349 in 2007, while there were 1,317 cases pending compared with 1,285 at the end of the previous year. The new Hong Kong office of the Court was up and running, with some 100 cases already registered.

The conference will also delve into dispute resolution in the industry, covering issues such as litigation B2C, secrecy obligations and dual purpose technology, and their impact on dispute resolution proceedings. The range of procedures available to resolve disputes – such as state court procedures and international commercial arbitration – will be addressed.

The conference will be held at the ICC Secretariat in Paris and will be conducted in English and French. Simultaneous translation will be available. Space is limited, and a discount will be offered to members and non-members of ICC who enroll by 12 January.

What can a foreign party expect in relation to dispute resolution when doing business in China? If a dispute arises, negotiation is the best initial method of resolution. Most business contracts in China will include a clause requiring negotiation before other dispute settlement mechanisms are pursued. Negotiation might require attempts to enlist the help of local government officials by emphasising the importance of the foreign company’s investment.

If negotiation fails, it is arbitration that has for many years been the preferred method of resolution for foreign-related commercial disputes in China. Arbitrators have, at least until recently, been more experienced and better qualified in the subject matter than judges, and procedures have been more flexible and predictable. Arbitration also has the advantage of finality, in that awards are not subject to appeal whereas court rulings may result in a lengthy appeal process.

Arbitration in China is governed principally by the Arbitration Law 1995 and the Civil Procedure Law 1991. The most striking characteristic is that only institutional arbitration is recognised in China and it is unlikely that there will be any change in the near future to allow ad hoc arbitration. Parties are therefore bound to choose an institution and are restricted by some aspects of Chinese institutional practice. There is still considerable reluctance to allow foreign arbitral institutions to set up within China.

The China International Economic and Trade Arbitration Commission (CIETAC) is the best known institution for foreign-related disputes, but there are over 170 other arbitration commissions. CIETAC re-issued its panel of arbitrators in May this year and this included over 200 foreign arbitrators.

The procedure is normally inquisitorial although CIETAC now authorises adversarial procedures such as cross-examination. Documentary disclosure orders are rare. Hearings tend to be short, often only a day.

“The scale of the court system is staggering: 8.1 million cases were decided by China’s 220,000 judges in 2006”

One of the most frequently cited difficulties is enforcement of foreign-related awards made in China and international arbitration awards sought to be enforced in China under the New York Convention – to which China acceded in 1987. In response to international concern, the Supreme Court introduced a reporting procedure for courts intending to refuse enforcement. This and other measures have greatly improved matters although there are still residual difficulties in transparency and delay in the enforcement process.

How do foreign parties fare in court proceedings? The scale of the court system is staggering: 8.1 million cases were decided by China’s 220,000 judges in 2006 in the 3,234 courts. The four levels of courts comprise in ascending order: basic courts, intermediate courts, provincial high courts and the Supreme People’s Court in Beijing. Cases involving foreign interests will be heard by either a basic court or an intermediate court depending on subject matter and size.

The procedure involves a first instance trial and the possibility of one level of appeal. The process is subject to review by higher courts, with widened criteria introduced by a new Civil Procedure Law. This may increase safeguards in the process but at the expense of delay in achieving finality.

Part of the article writted by Adrian Hughes is a foreign panel member of China International Economic and Trade Arbitration Commission (CIETAC) in Building.

Jason Fry, Secretary General of ICC International Court of Arbitration said that the ICC Court is delighted to welcome young arbitration practitioners and corporate counsel to learn from some of the worlds most distinguished arbitrators and professionals. This is the first of what we hope will be an ongoing programme of events tailored to the new generation of arbitration professionals.

The conference is an opportunity for young lawyers and in-house counsel working in international arbitration to receive training from world-renowned arbitrators, members of the ICC International Court of Arbitration, and the ICC Secretariat. The weekend course will offer six hours of academic training with the stars and rising stars of arbitration. Plenary sessions, informal debates, and workshops held in parallel have all been designed for in-house counsel and lawyers.

The topic is inherently difficult for many entrepreneurs and executives because it requires them to address the possibility of failure at the outset of a relationship they necessarily believe will succeed. As a result, many joint venture associates and business partners simply gloss over the issue, refusing even to address it.

If their clients are willing to listen, many lawyers offer the standard list of dispute resolution mechanisms: arbitration, mediation and buy/sell arrangements, also referred to as Russian roulette or Texas shootout provisions.

Although the terms “arbitration” and “mediation” are typically met with disinterest, “Russian roulette” and “Texas shootout” almost always pique interest. Yet that interest generally fades when the parties delve into the mechanics of the buy/sell arrangement. Business partners need a better alternative. Fortunately, there is one known as the possession arrow.

I observed the following interaction among three children at their school bus stop. As the bus rounded the corner, John, age 8; Annie, 6; and Ben, also 6, scrambled in line. Ben was disappointed that John was first, particularly because John went first the previous day. Ben appealed to his father to intercede, which he declined to do, suggesting instead that the children work it out. John offered to play rock-paper-scissors to decide the order, but that didn’t appeal to Annie. Neither the children nor their parents thought it was a good idea to set the order based on who got to the bus stop first. As the bus pulled up, the children agreed out of desperation to take turns going first, something they have continued to do.

Although taking turns as a method for resolving significant commercial disputes seems at first blush unsophisticated and arbitrary, it can work well if structured thoughtfully. In its most basic form, the possession arrow method authorizes one party to make the final decision on the first deadlock and gives the other party the power to decide the next one.

The approach requires business partners to establish fundamental principles to guide their behavior when confronted with a particularly difficult issue that could lead to a deadlock. The parties must make a covenant agreeing to be bound by those fundamental principles with respect to their joint decision-making and individual conduct when they are empowered to break a particular deadlock. The fundamental principles should include an obligation to deal in good faith and commitment to advance positions that are in the venture’s best interests, not the individual’s. It is sometimes also appropriate to include a requirement that the parties take positions consistent – to the extent that it is commercially feasible – with their most recent past practices.

When using the possession arrow, the parties must also determine who will be empowered to break the first deadlock. In some cases, the parties might be able to agree immediately. In other cases, the parties might decide to give the arrow to the one who did not declare the deadlock.

An effective dispute resolution mechanism should encourage cooperation to avoid deadlocks, foster commercially reasonable conduct and lead to outcomes that allow the parties to move forward. The possession arrow meets each of these criteria. The children and parents at the bus stop recognized that arbitration, mediation and game-playing were inferior to taking turns. It is time for business partners to do the same.

By David Charles, Special to Washington Technology. Lessons from the bus stop in dispute resolution. David Charles is a partner in the Corporate and Securities-Technology practice at Pillsbury Winthrop Shaw Pittman LLP.

So what exactly is expert determination and how does it differ from other methods?

This is one of a number of private dispute resolution methods collectively referred to as alternative dispute resolution (ADR). Other ADR methods include arbitration and mediation.

In expert determination an independent expert is asked by the disputing parties to decide one or more issues between them. The experts are required to use their knowledge and experience to reach a decision based on their own investigation of the issues. The experts must act fairly and the parties must agree to be bound by the decision.

In England and Wales arbitration is supported and controlled by the Arbitration Act 1996, which supports the enforceability of arbitration awards locally and internationally. There is no similar statutory involvement in expert determination.

In arbitration, fairness is formalised by the Arbitration Act. The arbitrator can only undertake an investigation if permitted by the parties and must share the results with the parties. Unlike the arbitrator, the expert is not immune from actions for negligence. In mediation, the mediator helps the parties arrive at their own settlement.

Are there particular types of dispute that suit expert determination?

Expert determinations tend to be applied to technical disputes. The expert is usually chosen for their expertise. The types of dispute for an accountant acting as expert include: share/business valuation disputes; disputes in relation to completion accounts; deferred consideration disputes following a sale of a business; profit share disputes in partnerships and joint venture agreements; and disputes about the loss of profits from breach of contract.

There can be numerous subsidiary disputes in connection with facts and the interpretation of words, which may be outside the expertise of the expert.

Together with other procedural considerations, the expert may need to agree arrangements to enable these matters to be dealt with in a way that does not lead to the validity of his award in respect of the substantive issue(s) being undermined.

How are appointments as expert made and what happens if no agreement can be reached?

A dispute resolution clause may be included in a contract, for example in a sale and purchase agreement for a company, which requires that an expert is appointed to resolve the dispute by expert determination.

If the parties to the agreement have not named the expert, or they are unable to agree on an expert, the contract may provide that the appointment is made by the president of a particular professional body from among its members.

Alternatively, there may be no pre-existing contractual provision for the appointment of an expert to determine the dispute. The parties may decide to use expert determination to solve the dispute.

How does the whole process work and what can the parties expect in terms of fees?

The initial stage of an expert determination assignment involves completion of the engagement formalities and agreement of the expert’s powers. The expert will check whether these are sufficient and, if not, seek to agree those necessary to fulfil their mandate.

The expert will usually issue directions in relation to disclosure of documentation and exchange of submissions including content, sequence and timing.

It is not unusual for further procedural issues to emerge as the matter proceeds.

These may include: defining the issue(s) for determination; dealing with delay on the part of a party; and dealing with abuse of the established process generally.

The written decision of the expert may be by letter to the parties, or in some other form of notice. In arbitration, accompanying reasons for the decision are a requirement, subject to the parties choosing otherwise. In contrast, in expert determination, unless it is agreed that they are required, the expert need not give reasons.

In arbitration, unless the parties agree otherwise, the arbitrator is required to deal with their costs and is empowered to award interest. In contrast, in expert determination these matters may not be within the agreed brief. In any event, it may only be the allocation of the expert’s fees which are in issue as far as the expert is concerned. Alternatively, the parties may have agreed to share these costs.

How much does the whole process cost and how does it compare with other methods?

In expert determination there may be no hearing, reduced disclosure (being disclosure necessary to meet the expert’s requirements), relatively little legal representation required if any, and no reasons given with the award. As a consequence expert determination is likely to be significantly cheaper than litigation. Due to the less formal structure of expert determination, subject to the agreed arbitration process, it can similarly be cheaper than arbitration.

Source: ITweek, UK. Daniel Djanogly is a partner at Kingston Smith LLP.

A Directive on certain aspects of mediation in civil and commercial matters was adopted today 23 April 2008. The purpose of the Directive is to facilitate access to cross-border dispute resolution and to promote the amicable settlement of disputes by encouraging the use of mediation and by ensuring a sound relationship between mediation and judicial proceedings. The Directive is one of the follow-up actions to the Green Paper on alternative dispute resolution presented by the Commission in 2002, the other being the European Code of Conduct for Mediators established by a group of stakeholders with the assistance of the Commission and launched in July 2004.

Welcoming the adoption of this Directive, Vice-President Jacques Barrot said: “This Directive fulfils the political objective established in October 1999 by the European Council of Tampere, which – in the context of encouraging better access to justice in Europe – called for the creation of alternative, extrajudicial procedures for dispute resolution in the Member States. Mediation can provide cost-effective and quick extrajudicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties. Agreements resulting from mediation are more likely to be complied with voluntarily and help preserve an amicable and sustainable relationship between the parties.

The Commission proposed the Directive in October 2004 (IP/04/1288). The Directive facilitates recourse to mediation by strengthening the legal guarantees accompanying it, thus giving real added value to citizens and businesses in the European Union. The key components of the Directive are as follows:

The Directive obliges Member States to encourage the training of mediators and the development of, and adherence to, voluntary codes of conduct and other effective quality control mechanisms concerning the provision of mediation services.

The Directive gives every Judge in the Community, at any stage of the proceedings, the right to suggest that the parties attend an information meeting on mediation and, if the Judge deems it appropriate, to invite the parties to have recourse to mediation.

The Directive enables parties to give an agreement concluded following mediation a status similar to that of a Court judgment by rendering it enforceable. This can be achieved, for example, by way of judicial approval or notarial certification, thereby allowing such agreements to be enforceable in the Member States under existing Community rules.

The Directive ensures that mediation takes place in an atmosphere of confidentiality and that information given or submissions made by any party during mediation cannot be used against that party in subsequent judicial proceedings if the mediation fails. This provision is essential to give parties confidence in, and to encourage them to make use of, mediation.

To this end, the Directive provides that the mediator cannot be compelled to give evidence about what took place during mediation in subsequent judicial proceedings between the parties.

The provision of the Directive on periods of limitation and prescription will ensure that parties that have recourse to mediation will not be prevented from going to court as a result of the time spent on mediation. The Directive thus preserves the parties’ access to justice should mediation not succeed.

Source: A boost for mediation in civil and commercial matters: European Parliament endorses new rules

¿How, exactly, PayPal resolves disputes between ecommerce merchants and their customers? Colin Rule, PayPal‘s Director of Online Dispute Resolution was intervied by Practical eCommerce magazine:

Practical eCommerce (PeC): If an ecommerce customer pays for a legitimate product using PayPal and then decides he doesn’t like it and complains to PayPal, what will PayPal do?

Colin Rule: In cases where the buyer is simply disappointed in the item, we would encourage the buyer to work directly with the seller. PayPal does offer buyer protection, but this protection covers buyers for items that they didn’t receive and for items that are significantly not as described. It does not cover cases where the buyer is merely disappointed with the item or where the item did not meet the buyer’s expectations.

Practical eCommerce (PeC): What are a merchant’s options if a customer asks PayPal to hold payment?

Colin Rule: If a merchant does get a chargeback, a couple pieces of information can be extremely helpful to dispute it. Proof of delivery, such as online tracking offered by both USPS and UPS, can be critical evidence in reversing the chargeback. A copy of the buyer’s signature confirming receipt can also be extremely effective. Finally, if a merchant did refund the buyer at any point in time, proof of the refund (and/or the shipment of a replacement item) is important.

Practical eCommerce (PeC): What other options are available to merchants to address disputes?

Colin Rule: Again, we always encourage buyers and sellers to first try to work through disputes together. To help with that, we’ve launched the dispute resolution center – a step-by-step system designed to facilitate communication between the buyer and the seller in order to get resolution of the issue. Since launching PayPal Dispute Resolution, buyer claims against sellers decreased by 50 percent, and seller losses on PayPal due to chargebacks decreased 20 percent.

If the dialogue with the seller fails to produce a satisfactory result, the buyer can then escalate the dispute into a claim, where our claims specialists gather information from both parties, examine the case and work with both parties to try to fairly and efficiently resolve the claim. In this process, PayPal will ask sellers for documentation that helps us determine that they shipped the item to the buyer and that the item was as described.

Practical eCommerce (PeC): Why should an ecommerce merchant accept payments from PayPal?

Colin Rule: It helps them increase sales and lower costs. PayPal has 141 million accounts worldwide and merchants therefore have access to a large, global base of buyers. At any given time, there is $3 billion stored in PayPal accounts, which turn over every two weeks. Many buyers view the money in their PayPal accounts as discretionary, so they are more willing to spend it, perhaps with an ecommerce merchant.

Source: Quick Query: PayPal’s Director of Online Dispute Resolution

The award followed four days of intense competition , as the team from Sao Paolo and the University of California Hastings College of Law were pitted against each other to mediate a complex business deal. The Brazilian team, made up of Gisela Ferreira Mation, Pedro Fida Fenelon Tibucheski, and Daniel Tabel Luis received a trophy, EUR 2 000 in prize money, an internship at ICC’s ADR Secretariat, and a set of legal reference books.

Every participant in this year’s competition received a year’s subscription to the ICC International Court of Arbitration Bulletin. The awards ceremony was officiated by Guy Sebban, ICC Secretary General, Jason Fry, Secretary General of the ICC International Court of Arbitration and ICC Dispute Resolution Services Director and Pierre Tercier, Chairman of the ICC International Court of Arbitration.

This year’s competition involved an even bigger roster of contenders from 30 universities in Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Morocco, Singapore, Switzerland, Ukraine, the UK and the US.

Competitors acted as counsel and parties before professional mediators and used ICC’s ADR rules to solve business problems.

“What better way to educate tomorrow’s lawyers on the range mechanisms available for resolving international business disputes than through an international competition?” said Pierre Tercier.

The competition is part of ICC’s Dispute Resolution Services core mission: to educate the next generation of law professionals. Inaugurated in 2006, the annual ICC International Mediation Competition is organized by the Amicable Dispute Resolution (ADR) division. The competition brings together law schools from all over the world, giving students an opportunity to test their problem-solving skills in a mock international mediation, and to meet experts from diverse legal and professional backgrounds.

Next year, the 4th ICC International Mediation Competition takes place 12 to 16 February.

For more information contact:

Ms Emilie ROMEO
Project Coordinator
Email: iccmediationcompetition(AT)iccwbo.org