On December 9, 2020, Young ITA and CIArb YMG hosted a live webinar debate on tips for a successful arbitration, moderated by Sarah Reynolds (Mayer Brown, Chicago/Palo Alto).

The event’s unique format enabled the panelists to share their perspectives on different issues arising at various stages of arbitral proceedings.  The discussion took place in the context of the following hypothetical scenario:  a software company based in Chicago (U.S.) is negotiating a cross-border professional services agreement with a company based in Dublin (Ireland) for the provision of after-hours tech support services.

Javier Rubinstein (King & Spalding, Chicago), who acted as in-house lawyer for a U.S. company, shared his thoughts on negotiating the contract.  First, Mr. Rubinstein advised adopting an arbitration clause because arbitration (i) allows for enforcement abroad, (ii) is usually more acceptable than domestic litigation to parties from different countries, (iii) tends to be faster and less expensive, and (iv) ensures confidentiality.  Second, Mr. Rubinstein suggested opting for institutional arbitration, which provides infrastructure and regularly updated state-of-the-art rules, and selecting a seat of arbitration whose courts have a healthy respect for arbitration.  Additionally, he advised pushing for an all-encompassing arbitration clause because an unclear scope may result in litigation over the question of jurisdiction and lead to delays and increased costs.  Lastly, Mr. Rubinstein advised that the negotiated contract encompasses a confidentiality clause.

For the purposes of the hypothetical, following the negotiations, the parties agree to an arbitration seated in New York (U.S.) and governed by the ICC rules.  A dispute arises.

Ricardo Ugarte (Winston & Strawn, Chicago), as the outside counsel representing a U.S. entity, shared five key steps to consider at this stage:  (i) assess the enforceability of the arbitration clause, (ii) analyze and follow any preconditions to arbitration, such as a written notice of the dispute or a meeting between the parties’ executives, (iii) go over all of the elements negotiated at the time of the contract, such as the seat or the applicable law, and consider their practical implications, (iv) examine any potential jurisdictional issues, (v) start the selection of arbitrators early, and finally (vi) make use of the time control advantage as the claimant.

In the hypothetical, we now have a case filed with the ICC.

Prof. Victoria Sahani (Arizona State University, Phoenix) explained the process within the institution.  On top of sending the request for arbitration, the claimant must pay a non-refundable administrative fee,1ICC Rules of Arbitration (2021), art. 4(4) and Appendix III, art. 1(1).X1  following which the secretariat assigns a team and specific counsel to administer the case. At that time, the parties are usually required to advance the costs, following which the secretariat confirms the arbitral tribunal.2Id. at art. 13.X2  The parties generally have the right to select their arbitrator, and the secretariat merely verifies that the selected candidate does not have any conflict of interest and is sufficiently available.  Once confirmed, the file is transferred to the arbitral tribunal (see infra Section ‎IV).3Id. at art. 16.X3   Fast forward to the very end of the proceedings, the ICC has a unique scrutiny procedure, through which it reviews the award.4Id. at art. 34.X4 

For the purposes of the hypothetical, a sole arbitrator is now confirmed and has received the file.

Lawrence (Larry) Schaner (Schaner Dispute Resolution, Chicago) explained that he starts by organizing the proceedings and in this respect establishes: (i) the terms of reference as required by the ICC, (ii) a procedural timetable, and (iii) specific procedural rules for the case, which will be incorporated into a procedural order.

The main phases in a typical international arbitration are: (i) pre-hearing memoranda, submitted simultaneously or consecutively, (ii) document exchange, and (iii) hearing.  Larry Schaner orders two rounds of pre-hearing submissions in the present case, with a document exchange phase in between.  Then, before the hearing, he holds a pre-hearing conference to address any logistical questions.  The hearing usually has the following components: (i) short opening statements and (ii) cross-examination of witnesses, as well as questions to the witnesses by the arbitrator.  The hearing can be followed by either oral closing statements or written post-hearing briefs submitted after the hearing ends.  Thereafter, the case is submitted to the sole arbitrator for a decision.

In the hypothetical, the sole arbitrator finds in favor of the claimant, awarding compensatory damages, pre-award interests, and lost profits.  He also finds the claimant is entitled to its costs.  Before issuing the award, the sole arbitrator submits the draft to the ICC secretariat for review and integrates any comments.

Margaret Moses (Loyola University, Chicago) concluded the webinar by explaining the enforcement of the award.  When the losing party does not voluntarily comply with the award, the judiciary may get involved in two instances:  First, the losing party may vacate the award in court where the arbitration was sited.  Because the present arbitration was sited in New York, U.S. federal district court judge would analyze the situation under the Federal Arbitration Act (“FAA”) and could only vacate the award on limited grounds, such as violations of due process or fairness.1FAA, 9 U.S.C. § 10.X1   Second, the winning party may bring a motion to enforce the award in the jurisdiction where the losing party’s assets are located, usually under the New York Convention.2Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, art. IV, 330 U.N.T.S. 38, 7 I.L.M. 1046.X2   The grounds for non-enforcement are also limited and somewhat similar to those under the FAA.

The event concluded with a short discussion about fee-shifting and misconceptions about the speed of the proceedings.