Principles of International Commercial Arbitration Allen B. Green McKenna Long & Aldridge, LLP

Principles of InternationalCommercial Arbitration

Allen B. GreenMcKenna Long & Aldridge, LLP


• International Arbitration v. Multinational Litigation

• Drafting An International Arbitration Clause or Agreement

• Conducting An International Arbitration


International Arbitration

vs.

Multinational Litigation

International Arbitration vs. Multinational Litigation

• Arbitration may allow resolution of disputes involving multiple parties and claims in a single forum – Litigation may require parties to pursue claims in multiple courts and countries simultaneously, because foreign judgments in a given country may not be enforceable worldwide

International Arbitration vs. Multinational Litigation (cont’d)

• Emerging Law On:– Consolidation of Proceedings– Bringing in Third Parties

• Arbitrability


• International arbitration is more flexible than litigation because arbitration allows for:– The selection of arbitrators with expertise relevant

to the dispute – e.g., selecting arbitrators with expertise in accounting for an accounting dispute

– More tailored and flexible rules of procedure– More limited discovery: Advantage or

Disadvantage


• Opportunity to draft an arbitration agreement that can resolve difficult litigation issues, such as governing law, jurisdiction, language, evidentiary rules, and confidentiality


• Arbitration offers a neutral forum– No “home court” advantage

• Arbitration may be resolved faster and cost less than litigation in multiple courts in multiple jurisdictions– Procedural agreement is the key– Arbitral institution vs. ad hoc proceding


• Arbitration should be less adversarial – making it easier to preserve the parties’ continuing business relationships

• Orders/awards cannot bind third parties because such parties have not consented to the arbitration

• Foreign arbitral awards must be enforced through national courts if not complied with by losing party


• Arbitral tribunals may not be able to grant effective interim relief– But see court injunction to preserve status quo

• There is no appeal, only challenge under the New York Convention

• Perception of Risk of Compromise Awards

A Third Alternative

• Mediation and Last Offer Arbitration

(“MEDALOA”)– Both mediation and arbitration may be applied

to the same dispute whereby the parties start with mediation and, if the parties fail to reach an agreement, the mediator must “change hats” and become an arbitrator

Common Mediation Scenarios• Relatively little is at risk or there is an impasse, but

parties are in similar positions with regard to burdens and costs of arbitration– Parties begin mediation, and, if no settlement occurs, the

mediator assumes the role of an arbitrator (or the parties agree to a new arbitrator)

– Each party presents a “closing argument” style presentation and a final “last offer”

– Arbitrator picks the most just “last offer,” which becomes a binding arbitration award

Common Mediation Scenarios (cont’d)

• Complex cases where most is at risk and/or the parties are at an impasse and far apart– Parties start with mediation and, if no

settlement occurs, the mediator – fully-informed of the case and the parties’ concerns – assumes the role of facilitator to help the parties negotiate the outline of a binding arbitration

Principles of International Commercial Arbitration

Drafting an International Arbitration Clause or Agreement

Drafting An International Arbitration Clause or Agreement

• Consent

• Scope– “All Disputes” clause

• “Any controversy, dispute, or claim arising out of, relating to or in connection with this contract or the performance, enforcement, breach, termination or validity thereof, including the determination of the scope of the contract to arbitrate, shall be determined by arbitration . . .”

Drafting An International Arbitration Clause or Agreement (cont’d)

• Use of an Arbitral Institution or Proceeding Ad Hoc

• Major Institutions:– ICC International Court of Arbitration– London Court of International Arbitration– American Arbitration Association (International Rules)– International Center for Settlement of Investment

Disputes (ICSID)


• Major Institutions (cont’d)– WIPO Centre– Stockholder Chamber of Commerce– Regional Institutions

• IACAC

• CEPANI

• Ad Hoc/UNCITRAL Rules


• Factors to Consider in Choosing Institutional Administrator vs. Proceeding Ad Hoc– Credibility/enforceability– Cost Factors

• Administrative costs

• Arbitrators’ fees

• Sole Arbitrator or Panel of Three


• Appointing Authority

• Specify seat of arbitration, situs, in a country that:– Allows the arbitration of the type of disputes that may

arise in the contract, and

– Has ratified the New York Convention

• Identify Choice of Law– Law of Arbitration

– Governing Substantive Law


• Consent to personal jurisdiction of courts where the arbitration is to be held and enforced may be desirable, particularly if one party is a government or government-owned entity

• Confidentiality Issues

• Address Discovery?


Interim Relief

• To preserve status quo– Arbitral tribunal powers– National court powers

• Consider requiring compulsory negotiation or non-binding mediation prior to a binding arbitration– Principals must participate– Short time period


• Standard ICC Clause– All disputes arising out of or in connection

with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules


• Standard LCIA Clause– Any dispute arising out of or in connection

with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause.


• Standard LCIA Clause (cont’d)– The number of arbitrators shall be

[one/three]. The place of arbitration shall be [city/state]. The language to be used in the arbitral proceedings shall be [ ]. The governing law of the contract shall be the substantive law of [ ].

Principles of International Commercial Arbitration

Conducting An International Arbitration

Conducting an International Arbitration

• Commencing the arbitration– Petition and Answer– Selecting a sole arbitrator– Selecting a panel of three

• Strategy concerning party arbitrator

• Strategy concerning the chair

• Appointing authority strategies

Conducting an International Arbitration (cont’d)

• Provisional remedies– Timing factors– Court injunction to preserve the status quo

pending arbitration– Provisional remedy from the tribunal– WIPO Emergency Relief Rules


• First procedural hearing

• Discovery– Depositions– Documents– Third Parties

• Motions– Summary Proceedings


Common Law - Typical Arbitration - Civil Law

Advocates Develop Judges Develop Facts Facts


• Presentation of Case-In-Chief– Memorials– Witness Statements

• Hearings– Nature, number and duration– Rules of evidence


• Witnesses– Factual– Expert

• Enforcing the Award– Petition to confirm– Challenge to the award

• Forum for challenge under the New York Convention

• Country of situs or choice of law


• Enforcing the Award (cont’d)– Defending the challenge– Chromalloy decision