“The professional home of dispute resolution – worldwide”

International Arbitration – Market Opportunities

Peter L. Michaelson, Esq. , FCI Arb, C Arb.Chair -- New York Branch and Former Trustee, CI ArbMichaelson ADR Chambers, LLC590 Madison Avenue, 18th FloorNew York, NY 10022T: 212-535-0010; W: www.plmadr.com; E: pete@plmadr.com

Thomas D. Halket, Esq., FCI Arb, C Arb. Deputy Chair, Board of Management – CI ArbVice Chair – New York Branch, CI ArbHalket Weitz LLP1214 West Boston Post Road, N277Mamaroneck, NY 10543T: 914-833-2681; W: www.halketweitz.com;E: thalket@halketweitz.com

Slide 1

“The old refrain ‘See you in court!’ is so last century. The latest trend in resolving contractual disputes is the less expensive, out-of-court process of arbitration. Even the Kardashians include an arbitration clause in their contracts, and you can’t get any trendier than that.”

“Arbitration cases – a growing revenue stream for law firms”

The Miami Herald – Business Monday – June 3, 2013

Slide 2

• Adolfo E. Jimenez oversees Holland & Knight’s litigation/arbitration section, which includes 8 attorneys in Miami, 5 in New York and 3 in Washington, D.C. He states: “International arbitration matters have increased six-fold in the last 10 years and three-fold in the last five years.” “The average amount at issue doubled between 2003 and 2008, and quadrupled in the last five years” — now in the

tens of millions. For many large city law firms, arbitration is no longer a sidelight but a fundamental part of the practice.

Jimenez states: “In the last five years, this is no longer a phase. This is here to stay.”

• Daniel E. González, co-director of Hogan Lovells’ international arbitration practice and partner in Miami office. The firm has 160 lawyers in roughly half of the firm’s 42 offices worldwide dedicated to international arbitration. He states: Although international arbitration “is not necessarily cheaper or faster,” international arbitration has taken off as

companies expand globally. The reason, he says: “Most countries conducting international business subscribe to widely practiced arbitration conventions, making an arbitral decision enforceable worldwide. In other words, winning at arbitration makes a payout more likely, even if the dispute arises in a country that lacks an independent court system.”

• The areas of business most suited to international arbitration include energy, telecom, financial services, construction and technology, because what they all have in common is they involve complex, cross-border infrastructure development.

• Another factor: Foreign firms seeking to resolve disputes on U.S. soil aren’t always comfortable with the jury system, says Kenneth Hartmann, a senior shareholder in the Miami firm of Kozyak Tropin & Throckmorton. “Foreign companies are weary of U.S. court proceedings.’’

• Inevitably, as more contracts — each with its own arbitration clause — are involved, the potential for an international dispute rises, with the promise of arbitration work for attorneys in Miami and many major cities for years to come.

“Arbitration cases – a growing revenue stream for law firms” The Miami Herald – Business Monday – June 3, 2013

Slide 3

Some statisticsDOMESTIC ARBITRATION Among the 7,000 members of the American Arbitration Association (AAA):•  Number of cases heard in 2012: More than 120,000•  Time to award: 7.3 monthsResolutions by arbitration are faster and therefore, likely less expensive. The median timeframe for a commercial arbitration handled by members of the AAA was 7.3 months in 2011. For the 12-month period ending March 31, 2013, the median timeframe for a civil case to go to trial in a U.S. federal court was 23.2 months. INTERNATIONAL ARBITRATIONFrom the 2010 International Arbitration Survey conducted by the University of London and sponsored by the law firm White & Case:•  London is the most preferred and widely used seat of arbitration.•  Singapore has emerged as a regional leader in Asia.•  Respondents have the most negative perception of Moscow and mainland China as seats of arbitration.•  Miami ranks No. 3 in the U.S. in the number of international cases heard, after New York and Los Angeles/San Francisco, according to the Miami International Arbitration Society.•  In cases handled by members of the American Arbitration Association (ICDR), international cases increased 12 percent from 2010 to 2011, for a total of 994. (AAA/ICDR data.)

“Arbitration cases – a growing revenue stream for law firms” The Miami Herald – Business Monday – June 3, 2013

Slide 4

•Court litigation •26 •26 •37

•PricewaterhouseCoopers 2013 International Arbitration Survey

•16 •Arbitration •28 •56

•Court litigation •82

•817 •IC

C

LCIA

ICDR

•795 •137

•272 •224

•22 •33 •28 •17 •6 •29 •836

•13 •Arbitration •994 •17 •35 •24 •24

•SCC •68 •16

•Court litigation •SIAC

•22 •22 •28 •28

•649 •HKIAC •21 •41 •33

•CIETAC •8

•1,482 •38 •31 •23

•1,435 •18

•CRCICA

•31 •31 •37 •36 •18

•20

•53 •20 •20

•Swiss Chambers

•Construction

•21

•28 •44 •28

•1 (Most preferred)

•2

•3

•4 (Least preferred)

•Court litigation

• Adjudication/Expert determination

•Mediation

•Arbitration

•Mediation

• Adjudication/Expert determination

•Arbitration

• Adjudication/Expert determination

•621

•170• 216 •199

•86 •160

•188

•448

•275

•N/A

•51

• 66

• 59

• •104 •87

•2007 2009 2011

•5 •11

•5 •9

•9

• Adjudication/Expert determination

•Mediation

•1,118

•9

•7

•11

•Rank the following dispute resolution mechanisms in order of preference

•%

•Reported case-load – biennial trend

•599

•Rank the following dispute resolution mechanisms in order of preference for your industry sector

•Energy •%

•52

•Financial Services •%

•% •68

•11

•Mediation •22 •45 •22

•1 (Most preferred) 2 3 4 (Least preferred)

•11

Slide 5

Historical basis of Arbitration:

“Commercial arbitration must have existed since the dawn of commerce. All trade potentially involves disputes and successful trade must have a means of dispute resolution other than force. From the start, it must have involved a neutral determination, and an agreement, tacit or otherwise, to abide by the result, backed by some kind of sanction. It must have taken many forms, with mediation no doubt merging into adjudication. THE STORY IS NOW LOST FOR EVER.” [emphasis added]

Lord Michael John Mustil“Arbitration: History and Background”(1989) 6:2, J. Int’l Arb 43

Slide 6

Arbitration has ancient roots Exact origins are unknown Extensively used in Ancient Greece, Rome

and earlier References exist to its use in Roman

Britain (AD 110) and Anglo-Saxon England

Slide 7

Biblical link (5700+ years ago) --Possible origins of adjudication/arbitration (Jewish Law)The Bible records that: Moses sat as a magistrate among the people (Ex. 18:13) and, either on the advice of Jethro, his father-in-law (Ex. 18:17-23) or on his own initiative (Deut. 1:9-14), he later delegated his judicial powers to appointed “chiefs of thousands, hundreds, fifties, and tens” (Ex. 18:21; Deut. 1:15) reserving to himself jurisdiction in only the most difficult, major disputes (Ex. 18:22 and 26; Deut. 1:17).

Judges had to be “able men, such as fear God, men of truth, hating unjust gain” (Ex. 18:21) and “wise men and understanding and full of knowledge” (Deut. 1:13). They were charged to “hear the causes between your brethren and judge righteously between a man and his brother and the stranger”, not be “partial on judgment”, but to “hear the small and great alike; fear no man, for judgment is God’s” (Deut. 1:16-17)

“Bet Din and Judges”Jewish Virtual Library(http://www.jewishvirtual library.org/source/judaica/ejud_0002_0003_0_02840.html)

Slide 8

What is International Arbitration?• Arbitration involving international parties operating under an international rule set and

governing principles of international law (e.g., substantive law at the seat, procedural law of the venue, law where award will be enforced)• Procedure through which a dispute is submitted to a tribunal (1 or 3 arbitrators) which considers

evidence and makes a final, non-appealable, binding written award Private and confidential process – award has no effect on third-parties; award is rarely published and is

non-precedential; proceedings are closed to public and press Parties (not judges) have complete autonomy over the process

More flexible, less formal and less constrained than litigation Parties select their panel (select for specific expertise, experience, nationalities) Proceedings usually administered through an arbitral institution (ICDR, ICC, LCIA, SIAC, WIPO,

HKIAC, Swiss Chambers, etc) with standard well-respected rule set and rosters of arbitrators, rule sets of major institutions are based on UNCITRAL rules (with some slight variations among rule sets) Ideally should be faster and less expensive than US litigation as rule sets favor cost and time efficiencies,

but increasingly proceedings now take on trappings of US litigation (“litigationalization”) No “home court” advantage; no foreign courts or juries; neutral forum Int’l arbitration is norm under BITs and international commerce New York Convention provides international recognition of arbitral awards in 148 contracting states

through treaty – very attractive for foreign commerce as arbitration awards are much easier to enforce in a foreign forum than a national court judgment

Very narrow grounds for overturning (vacating) the award in US under US Federal Arbitration Act(9 USC §§ 1-14); grounds for vacature differ country to country

Slide 9

General Int’l Arbitration Process

Slide 10

Commencement: Demand for Arbitration filed with Administering Organization, Response (Statement of Defense) filed

Preliminary (case management) Hearing between Counsel and Tribunal

Document Disclosure and Disclosure/Dispositive/Evidentiary Motions Phase

Arbitration Trial (Evidentiary Hearing)

Post-trial Phase (Post-trial Briefs, Closing Arguments)

Tribunal Deliberations

Tribunal (1 or 3 person) selected, then appointed by Admin. Org.

Tribunal renders Award

Prevailing party executes Award (losing party may challenge it)

• International Organizations• National Governments and Courts• Administrative Organizations• Professional Organizations• Arbitration Centers• Major International Law Firms

Players in International Arbitration

Slide 11

International Organizations• United Nations Commission on International Trade

(UNCITRAL)• International Centre for the Settlement of Investment

Disputes (ICSID)• Permanent Court of Arbitration (at the Hague)

National Governments and courts• National laws apply to international arbitrations seated

in the country in question

• National courts may be called on to:Compel arbitration, andEnforce or vacate an award

Slide 12

Slide 13

Major Administrative Organizations

• CPR, JAMS • BCIAC, ACICA, WIPO• SIAC, CIETAC, HKIAC• KLRCA, VIAC

• ICC• AAA/ICDR• LCIA

Other Administrative Organizations

Slide 14

Professional Organizations• Chartered Institute of Arbitrators• College of Commercial Arbitrators• Bar Associations• others

Arbitration Centers• New York International Arbitration Center• Maxwell Chambers (Singapore)• Dublin Dispute Resolution Center• Arbitration Place (Toronto)

Slide 15

Developing a presence in International Arbitration

• RoleNeutralCounselExpert Witness

Slide 16

Neutral• Learn about the process• Credentials• Panels• The usual stuff

Counsel/Expert witness• The usual stuff

• Over 12,500 members globally 13 UK Branches, 22 International branches

(New York Branch is latest as of 5/17/13)

• Non-profit UK charity• International center for ADR practitioners• Arbitrator and mediator education and training; professional

publications; conferences and events; develop and promulgate professional standards; provide professional accreditation

• Administer cases in UK in an array of ADR fields – construction, employment, commercial, insurance, sport

• Provide arbitration, mediation and other ADR services

Chartered Institute of Arbitrators

Slide 17

• Internationally, CIArb designations/accreditations are widely respected and broadly recognized as reflecting very high standards of professional excellence

• CI Arb courses offer a progressive ‘ladder' starting with newcomers to ADR and extending to those with advanced levels of knowledge, skill and experience

• Coursework, examinations and interviews or requisite experience qualify arbitrators for Institute membership as Associate (ACIArb), Member (MCIArb) or Fellow (FCIArb), and permit members to progress up the hierarchy

• CI Arb Fellows, who are highly experienced arbitrators, may be awarded the designation ‘Chartered Arbitrator’ (C Arb) (highest designation conferred by the Institute)

CI Arb Education and Accreditation

Slide 18

Thank you!

Slide 19