FINANCIER - Negocieri.ro€¦ · best-equipped cities to host international arbi-trations. It is home to the ICC International Court of Arbitration, the world’s premier ar-bitral

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SPECIAL REPORT

International dispute resolution

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OCTOBER 2013 ISSUE

R E P R I N T F I N A N C I E R W O R L D W I D E M A G A Z I N E

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SPECIAL REPORT

International dispute resolution

sponsored byin association with

CHARLES RIVER ASSOCIATES

FRESHFIELD BRUCKHAUS DERINGER

HOGAN LOVELLS

NORTON ROSE FULBRIGHT

SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

STONE PIGMAN

TKQP

REPRINT | FW October 2013 | www.financierworldwide.com

SPECIALreport

FORUMComparing regional arbitration processes

Getting the most out of mediationNORTON ROSE FULBRIGHT

International arbitration: would a single set of global valuation standards assist parties in testing expert valuation evidence?CHARLES RIVER ASSOCIATES (CRA)

Arbitration versus litigationCLEARY GOTTLIEB STEEN & HAMILTON LLP

CONTENTS

German courts emphasise supremacy of party agreements over the arbitral tribunal’s procedural discretionHOGAN LOVELLS

Litigation: the first 90 daysMORRISON & FOERSTER

Class actions in AustraliaALLENS

Q&AManaging and resolving class action disputes

ORGANISATION GLOSSARY

FORUM

Comparing regional arbitration processesFW moderates a discussion on regional arbitration processes between Elie Kleiman at Freshfields Bruckhaus Deringer LLP, Adrian Cole at King & Spalding, L. Santiago Soria at Marval O’Farrell & Mairal, Karam Singh Parmar at Tan Kok Quan Partnership, and Dieter Hofmann at Walder Wyss Ltd.

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Adrian Cole is a partner at King & Spalding. He can be contacted on +971 2 596 7013 or by email: [email protected].

Adrian Cole leads King & Spalding’s Middle East Dispute Resolution Practice. He is a construction law specialist advising on disputes relating to energy and infrastructure

development. Mr Cole is qualified as a quantity surveyor and has first-hand experience of the engineering and construction industries. He is an experienced arbitrator, adjudicator and mediator and is a Fellow of the Chartered Institute of Arbitrators and a member of the Chartered Institute of Building.

L. Santiago Soria is a partner at Marval O’Farrell & Mairal. He can be contacted on +54 11 4310 0100 (2404) or by email: [email protected].

Santiago Soria joined Marval, O’Farrell & Mairal in 1997 and has been a partner of the firm since 2008. He has vast experience in complex commercial litigation, including

disputes among shareholders, ‘class actions’, and commercial contracts. He has also actively participated in contentious issued related to administrative law matters. Currently, his professional practice also includes domestic and international arbitrations.

Karam Singh Parmar is a senior partner at Tan Kok Quan Partnership. He can be contacted on +65 6496 9541 or by email: [email protected].

Karam Singh Parmar is a senior partner at Tan Kok Quan Partnership (TKQP) and is called to the Singapore Bar, and the Bar of England and Wales. He practices civil and commercial

litigation and a large part of his practice involves arbitrations where he acts as counsel. Mr Parmar is a Fellow of the Singapore Institute of Arbitrators and a Fellow of the Chartered Institute of Arbitrators.

Elie Kleiman is a partner at Freshfields Bruckhaus Deringer LLP. He can be contacted on +33 1 44 56 33 18 or by email: [email protected].

Elie Kleiman is a member of the dispute resolution team and managing partner of the Paris office. Mr Kleiman’s clients come from a variety of sectors and industries. He has in-depth knowledge of the oil and gas, mining, chemicals and pharmaceutical areas.

THE PANELLISTS

Dieter Hofmann is a partner at Walder Wyss Ltd. He can be contacted on +41 44 498 96 90 or by email: [email protected].

Dieter Hofmann heads the Litigation & Arbitration Team. His primary focus is dispute resolution in complex, mainly international cases, ranging from pre-litigation advice,

representation of clients in court and in arbitration proceedings, coordination in cases involving multiple jurisdictions, enforcement of foreign judgments and arbitral awards and international legal assistance. He also sits as arbitrator in international arbitrations.

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FW: How would you describe arbitration facilities and processes in your region? How do they compare internationally?

Kleiman: Paris is arguably one of the world’s best-equipped cities to host international arbi-trations. It is home to the ICC International Court of Arbitration, the world’s premier ar-bitral institution, and enjoys an exceptionally strong practice in the field of international arbitration. Consequently, many first-class conference facilities, combining modern tech-nology with reliable services are available, including the ICC’s dedicated arbitration hearing centre. In addition, the courts in Paris have a long-established familiarity with arbi-tration-related matters, and French arbitration law offers one of the most arbitration-friendly legal environments, guaranteeing an impartial and efficient arbitral process. Finally, the cost of an arbitral process in Paris is noticeably lower than the European average, and in the event of state court involvement – for interim measures, annulment proceedings, and so on – French courts are faster and less expensive than most other state courts.

Cole: The Middle East region is reason-ably well-equipped with arbitration facilities and these compare favourably with those internationally. There are a number of sig-nificant regional arbitration centres – for ex-ample, Dubai International Arbitration Centre (DIAC); DIFC/LCIA situated in the Dubai International Financial Centre; the Abu Dhabi Commercial Conciliation and Arbitration Cen-tre (ADCCAC); Qatar International Court and Dispute Resolution Centre (QICDRC); and

the Bahrain Chamber for Dispute Resolution/American Arbitration Association (BCDR-AAA). In addition, many arbitration hearings are held at international-class hotels which are commonly preferred by tribunals and parties due to the enhanced quality of their facilities and catering arrangements.

Soria: Argentina, as an international arbitra-tion centre, provides a wide array of facilities to support both domestic and international arbitration. A large workforce of first-class bilingual and multilingual professionals – at-torneys, translators, accountants, for instance – can provide a high quality and committed service. Also, Argentina is far less expensive than other traditional arbitration centres such as New York, Paris or Madrid. To date, both domestic and international arbitration are governed by the National Civil and Commer-cial Code of Procedures (CPC), and the Model Law on International Commercial Arbitration (MLA) has not been incorporated to the Ar-gentine legal system. Although several bills based on the MLA have been submitted to the Congress, none of them have been enacted so far.

Parmar: The standard of Asia’s arbitration facilities and processes is good, with a num-ber of arbitration centres already operating at an international standard. Facilities and pro-cesses may vary from jurisdiction to jurisdic-tion, but the trend is towards improvement. In my opinion, the Singapore International Ar-bitration Centre (SIAC) stands out above the other regional arbitration centres. The country boasts a state of the art, integrated dispute res-

olution centre that houses first class hearing facilities and offices of top ADR institutes and dispute resolution professionals. Furthermore, Singapore has a judiciary that supports arbi-tration and there is a constant re-examination of legislation to ensure arbitration-friendly laws and processes are in place to promote and support arbitration.

Hofmann: Arbitration facilities and pro-cesses are of a high level in Switzerland. This is because Switzerland enjoys a long tradition of hosting foreign and domestic arbitrations. Moreover, arbitration is recognised as a pre-ferred method of dispute resolution in Swiss legal culture. The Swiss legal community, therefore, strives to maintain an effective en-vironment to conduct arbitrations. This has led to the enactment of a flexible lex arbitri for international arbitrations and to the Swiss Rules of International Arbitration – the unified institutional rules of various Swiss Chambers of Commerce. Despite their name, the Swiss Rules operate on a global level: the parties are not required to appoint Swiss nationals as arbitrators or to choose Swiss law to govern their dispute.

FW: How supportive are courts in your region in upholding and enforcing arbitral awards? Is the judiciary ‘arbitration friend-ly’?

Cole: The courts in the Middle East are gen-erally supportive of both domestic and inter-national arbitration. Regional governments have taken the lead in supporting arbitration as evidenced in recent years by accession to the New York Convention and the passing of various laws to support the arbitral process. In general, the courts recognise the importance of enforcing arbitral awards and many of the courts in the region are developing the expe-rience of doing so. Notwithstanding this, the experience of regional courts is still relatively limited and there have been a number of ‘un-usual’ decisions made when it comes to the enforcement of awards. In Qatar, for example, the Qatar Court of Cassation set aside a 2012 arbitration award on public order grounds be-cause the award was not issued in the name of His Highness the Emir of the State of Qatar. In a decision that caused shock and surprise to the legal community, the court held that the requirement for court judgements to be issued in the Emir’s name applied also to arbitration awards. Of particular concern was the fact that the court did not remit the award back to the tribunal for correction, depriving the claimant of its remedy. Qatar is a jurisdiction in which the government is supportive of arbitration and is promoting the Qatar International Court and Dispute Resolution Centre, amongst oth-8


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ers, so unusual decisions such as this serve to set this process back. Similarly in Kuwait, the Kuwait Court of Cassation recently held that enforcement of an award should be refused on the grounds that the arbitration agreement had been signed by the claimant’s general manag-er. The court held that the claimant’s general manager needed a special power of attorney to invoke arbitration and not the general power granted to him by his office. Given that both sides had actively participated in the arbitra-tion, this case shows that losing parties will do anything they can to avoid their liability. It is exactly in these types of circumstances that the regions’ courts need to take a robust stance and support the arbitral process. The UAE has not been immune from decisions which are unfriendly to arbitration. The Dubai Court of Cassation recently caused concern to the mar-ket by refusing to enforce three arbitral awards relating to off-plan real estate transactions. In these cases, despite the parties completing the full arbitral process and obtaining awards, it was held that the awards were contrary to public policy – since the awards related to is-sues of property registration which are exclu-sively matters for the Land Registry. Whilst an unsatisfactory outcome for the winners in those cases, it is positive to note that the court did not investigate the merits of these cases simply applying domestic public policy to the issue of jurisdiction.

Soria: Argentina is a member of the New York Convention of 1958. Therefore, Argen-tina recognises the validity and enforceabil-ity of foreign arbitral awards, provided said awards fulfil all the requirements set forth in the Convention. If the award has been rendered in a country that is not party to the Convention, then it would be enforceable in Argentina by compelling the provisions set forth in the CPC, which basically take into ac-count due process and public policy issues. In general terms, when the subject matter does not involve public interests, Courts tend to enforce arbitral awards. However, while some Argentine Courts have recently upheld the principles incorporated in the Convention con-cerning the enforcement of foreign arbitration awards, other courts – considering that public interests were involved – have ruled against the enforcement of such awards. The remedy of annulment is restrictive and may be filed on the grounds of violation of due process – for instance, lack of impartiality, bribery, inca-pacity of one of the parties, irregularity on the arbitral procedure or composition of the tri-bunal – if the award exceeds the terms of the submission of the arbitration subject matter, if the subject matter is not capable of arbitration, and if the award contains contradictory provi-sions in its enacting terms.

Parmar: Singapore’s government and its judiciary are clearly pro-arbitration. The nec-essary facilities and processes to promote ar-bitration are in place. Foreign arbitration prac-titioners are welcomed and the courts have clearly adopted a policy of limited and careful curial intervention in support of arbitrations. Arbitral awards may only be set aside on very limited grounds and this pro-arbitration stance can be seen in a number of cases where the courts have upheld and enforced arbitral awards. For example, the Court of Appeal re-cently commented that where public policy was cited as the ground for setting aside an ar-bitral award, this would only be allowed when the decision of the arbitrator “shocks the con-science of the court”.

Hofmann: The Swiss judiciary is arbitration friendly. First, Swiss state courts do not have unfettered powers of review; they may only annul an award if one of the narrow statutory grounds is met. Set-aside actions, therefore, are hardly ever successful. Second, Swiss state courts will refer the parties to arbitration and assist the claimant in appointing the arbi-tral tribunal, if there is prima facie evidence of the existence of an arbitration agreement. If the seat of the arbitration is in Switzerland, the claimant need not demonstrate the jurisdiction of the arbitral tribunal in detail in order to get the arbitration started. Third, Switzerland is a signatory to the New York Convention and enforces foreign arbitral awards in line with this Convention. Swiss enforcement courts, in particular, refrain from favouring a – losing – domestic party.

Kleiman: With the 2011 French arbitration law reform, France has confirmed its leader-ship as a pro-arbitration and user-friendly forum. While fostering a culture of minimal court intervention in arbitral proceedings, French courts consistently give their support to international arbitration. As a matter of principle, arbitrators have priority to rule on their own jurisdiction. Accordingly, French courts do not interfere before or during the proceedings, except in support of the arbitra-tion and only at the parties’ request. After the proceedings, French courts will automatically enforce an award if the party relying on it can prove its existence and if such enforcement is not manifestly contrary to international public policy. If the award is challenged or the order granting leave to enforce – exequatur – is ap-pealed, French courts will not review the mer-its of the case. They will limit themselves to verifying the existence of a valid arbitration agreement, ensuring that the arbitral tribunal was properly constituted; the arbitrators com-plied with the mandate conferred upon them; the arbitral proceedings complied with the

principles of due process; and recognition and enforcement of the award is not contrary to French international public policy.

FW: To what extent will your region as-sist with the arbitration process when called upon – for example, by empowering the arbi-trator, ordering preliminary relief, granting injunctions, and so on?

Soria: Legal scholars understand that, as a general principle, arbitral tribunals do not have the power to grant provisional remedies and that they may only request the courts to do so. They argue that the CPC does not explicitly grant this power to arbitral tribunals and, fur-ther, that the CPC would bar arbitrators from granting provisional remedies. However, the prevalent position is that the CPC should not be construed as preventing arbitrators from issuing provisional remedies, but rather as a mere prohibition to enforce such measures by themselves.

Parmar: Singapore’s policy of minimal cu-rial intervention in arbitration proceedings re-mains. However, when it is necessary to sup-port the arbitral process, the courts have not shied away from assisting. The court’s assis-tance, however, is not often required as Singa-pore’s International Arbitration Act empowers an arbitral tribunal to make orders relating to security for costs; discovery of documents and interrogatories; the preservation and interim custody of evidence; securing the amount in dispute; and interim injunctions or any other interim measure. Indeed, the emergency arbi-trator can also order interim measures before the tribunal has been constituted.

Hofmann: Swiss state courts will assist the arbitration process. They will, for example, assist in the appointment of the arbitrators or assist in the taking of evidence, if necessary. In the case of interim relief, Swiss-seated arbi-tral tribunals may issue injunctive relief – the Swiss lex arbitri expressly empowers them to do so. They cannot, however, hold a party in contempt of court. To make up for this lack of coercive powers, Swiss state courts render judicial assistance to enforce the injunction in case of non-compliance. The motto, therefore, is ‘as little as possible, but as much as neces-sary’, and assistance by Swiss state courts al-ways is set up as ‘support’, not ‘interference’. There is no basis for a Swiss state court to interfere with the conduct of an ongoing ar-bitration.

Kleiman: The Presiding Judge – juge d’appui – of the Tribunal de Grande Instance of Paris, assists parties to international arbitration, upon request. Applications are made, heard


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and decided through expedited proceedings. The juge d’appui may decide on the incapac-ity, removal or resignation of an arbitrator. Prior to the constitution of the arbitral tribunal and, in some circumstances, after its constitu-tion, the juge d’appui may assist the parties in the taking of evidence, in particular where the evidence is in a third party’s possession. Finally, prior to the constitution of the arbitral tribunal and, in some circumstances, after its constitution, the president may order interim and conservatory measures where a party so requests. France has no culture of anti-suit in-junctions. As a matter of law, however, French courts must decline jurisdiction when an arbi-tration agreement applies to a matter before them, unless the arbitration agreement is man-ifestly invalid or defective, or if all parties fail to raise a jurisdictional objection.

Cole: The courts in the Middle East region are generally supportive of the arbitral pro-cess and are empowered to grant a range of relief. For example, under the UAE’s Civil Procedure Law, the court may, inter alia: de-cline jurisdiction if the parties have an arbi-tration agreement, unless the parties agree to the Court’s jurisdiction; appoint the Tribunal to determine the dispute in the event that the parties refuse or cannot agree on the choice of Tribunal; decide a preliminary matter which is beyond the Tribunal’s jurisdiction; and re-quest the Tribunal to examine matters it omit-ted to decide upon or to clarify the award prior to ratification of the award. Under the DIFC Arbitration Law 2008, the court may, inter alia: grant a party an interim measure either before or during arbitral proceedings; enforce

an order from the Tribunal granting an interim measure; finally determine any procedural challenge to the arbitration brought by either of the parties; appoint the Tribunal if the par-ties fail to appoint or agree the Tribunal; and assist in the taking of evidence if requested by the Tribunal. Parties should, however, be aware that, save in respect of the DIFC, the region’s courts generally conduct proceedings in Arabic. This can create issues in English or any other foreign language arbitration where key documents will have to be translated, of-ten at considerable expense and time delay.

FW: Have you seen any recent changes in arbitration rules in your region? If so, when will these be brought into force and how do you expect they will affect the arbitration process?

Parmar: Legislative changes to arbitration have developed quickly in Singapore. Recent changes pursuant to the International Arbitra-tion (Amendment) Act 2012 include the re-moval of the strict writing requirement for a valid arbitration agreement; giving the courts the power to review a negative jurisdiction ruling; recognition for the emergency arbitra-tor; and redefining the meaning of a foreign ‘arbitral award’. The SIAC’s rules have also been changed to keep abreast of the legisla-tive changes. The fifth edition of the SIAC arbitration rules came into effect on 1 April 2013. Some of the changes include extending the jurisdiction of the SIAC to cover disputes arising under an investment treaty; granting greater power and control over the arbitra-tion process to the SIAC Registrar; and giving

powers to the arbitral tribunal to decide issues not expressly or impliedly raised in submis-sions. These changes will help reinforce the stability and certainty in the arbitral process.

Hofmann: The Swiss lex arbitri for domes-tic arbitrations has been modified, effective as of 1 January 2011. It does, however, only ap-ply to purely domestic arbitrations – that is, to arbitrations to which all parties are Swiss domiciled. The new rules, therefore, do not af-fect international arbitrations seated in Swit-zerland. The same, in substance, holds true even for domestic arbitrations. The new rules mainly reflect traditional Swiss practice and the amendments are limited to modernising certain rules and to eliminating a few rules that were criticised by arbitration practitioners and scholars. The new rules, therefore, will only alter the conduct of domestic arbitrations to a very limited degree.

Kleiman: On 13 January 2011, France ad-opted a new law on arbitration, in force as of 1 May 2011. The reform introduced two ma-jor innovations that have enhanced France’s reputation and attractiveness as a seat for arbi-tration. The first is the possibility for parties to waive their right to lodge an action to set aside an arbitral award. The second is that annul-ment proceedings or appeal of the exequatur order no longer stay execution as a matter of law. This new regime improves the enforce-ability of awards, prevents delaying tactics and affords a high level of protection to the winning party. Another noteworthy change, although not specific to France, is the revi-sion of the ICC Rules as of 1 January 2012. The key procedural changes under the 2012 rules include enhanced measures to promote cost and time efficiency in arbitration, clear procedures for dealing with complex arbitra-tions involving multiple parties or contracts, and emergency arbitration for parties seek-ing interim and conservatory measures. Also worthy of note is the release, in 2013, of the Paris Arbitration Rules, a set of ad hoc rules that are designed to provide users of inter-national arbitration with a cost-effective and rapid means of resolving disputes, including complex disputes, which is consistent with the requirements of justice and due process.

Cole: The Abu Dhabi Commercial Concili-ation and Arbitration Centre (ADCCAC) re-cently amended its procedural regulations of arbitration. This is a move that will be wel-comed by all users of ADCCAC as the pre-vious rules were a hotchpotch of provisions from different sources and lacked clarity and structure. The new rules are intended to reflect current best practice to streamline procedures and effectively support the arbitral process. 8


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Unfortunately, the requirement that all arbitral awards are produced in Arabic in addition to any other necessary language prevails. Whilst a translation of the award may be necessary to enforce in local courts, this is an expen-sive and unnecessary requirement where an award is to be enforced overseas. Past issues in respect of determining arbitrators’ fees will hopefully be resolved by the adoption of a table of fees similar to that of the ICC rules. Tribunals in the past have sought to avoid the ADCCAC rules or to supplement them with rules from other institutions – for instance the ICC. It is hoped that the new rules will create a comprehensive and well-structured framework for arbitrations in the future. Other recent changes in the region include the new Saudi Arbitration Law which came into effect in July 2012. Hopefully this new law will lead the way in making the Kingdom of Saudi Ara-bia a more attractive place for resolving com-mercial disputes in arbitration, reflecting the KSA’s ambition to modernise. The new law is more closely aligned with international prac-tice than previously, although remains subject to local and Shariah law influences.

Soria: There have not been any relevant changes to the arbitration rules in Argentina in recent years. Several bills based on the MLA have been submitted to Congress but none of them have been enacted yet. It is important to point out that a draft of the new Civil Code has been submitted to the Congress and con-tains, among others, the following contribu-tions. First, that the arbitration agreement is considered as autonomy agreement; second, that the arbitrators are entitled to decide about their own jurisdiction; and third, that arbitra-tors have the power to grant precautionary provisional remedies.

FW: How would you describe the local re-sources available to support arbitration in your region, including a network of experi-enced professionals?

Hofmann: Switzerland offers all the resourc-es required to successfully conduct an inter-national arbitration. First, there are numerous highly qualified arbitration practitioners, both counsel and arbitrators. Many of them studied or worked abroad and are capable of attending to arbitrations in different languages. Second, the infrastructure necessary for arbitration is readily available in Switzerland, and the coun-try is easily accessible from all over the world. Third, the Swiss Chambers of Commerce of-fers efficient institutional services and modern arbitration rules, which are available in vari-ous languages. Fourth, Swiss state courts are effective and swift in supporting Swiss-seated arbitrations, if required.

Kleiman: Paris is home to a large, multi-national community of legal professionals dedicated to the practice of international ar-bitration. This community includes attorneys, arbitrators, experts, interpreters and court re-porters from a variety of legal backgrounds, with extensive experience in appearing before arbitral tribunals and in-depth understand-ing of technical issues in various industries. Many of those practitioners are internation-ally recognised leaders in the field of arbitra-tion. Additionally, Paris offers all the logisti-cal advantages of a large, modern capital city including a substantial selection of accommo-dation facilities and excellent air travel con-nections, thanks to two well-connected inter-national airports.

Cole: Much of the commerce in the region is linked to energy and infrastructure devel-opment. Arbitration is commonly selected as the forum of choice, for construction and development projects in which many disputes arise. Accordingly, within the Middle East re-gion – and in the UAE and Qatar in particular – there are many international and local firms of claims consultants. Some of these firms also supply expert witnesses in matters such as quantum, programming and analysis. In respect of financial disputes, there is a good selection of experienced accountants in the re-gion. High quality experts in engineering and other disciplines, however, are harder to find, with the UK and the US being the principal sources. The last few years have also seen the number and quality of experienced arbitrators in the region increase, with institutions such as the Chartered Institute of Arbitrators and

some of the arbitral institutions themselves providing training courses.

Soria: There is a wide range of local re-sources available to support arbitration in Ar-gentina. First, there are several local arbitra-tion institutions which administer arbitration proceedings such as the General Arbitration Tribunal of the Buenos Aires Stock Exchange, the Argentine Chamber of Commerce and the Business Centre of Mediation and Arbitration. Second, there is a highly qualified network of professionals specialising in arbitration which can provide legal advice in several languag-es. Third, Argentina – in particular Buenos Aires – is usually the venue of international conferences on arbitration, international competitions and postgraduate programs in international arbitration, which contribute to Argentine lawyers’ increasing experience and knowledge of arbitration law.

Parmar: Local resources to support arbitra-tion in Singapore can only be described as ‘superb’. High ethical standards, high quality advocacy and high quality jurisprudence are the hallmark of the arbitrators and lawyers practising arbitration in Singapore. ‘Local resources’ must necessarily include non-resi-dents practising in Singapore. Singapore’s arbitration regime has been kept deliberately open, so that parties are free to engage law-yers of any nationality and use any governing law. Non-residents do not require work per-mits to carry out arbitration services in Singa-pore and, indeed, are offered incentives to ply their trade in Singapore. This all adds to a high quality local pool of experienced profession-


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als supporting the arbitration regime.

FW: What particular issues tend to arise when undertaking complex international, multi-jurisdictional arbitrations in your re-gion?

Kleiman: In complex, multi-jurisdictional arbitrations, the most common issues arise from the fact that such arbitrations usually in-volve multiple parties or contracts. One such issue relates to the principle of party equal-ity in the appointment of arbitrators in multi-party arbitrations. This was illustrated in the famous French Supreme Court Dutco case of 1992, in which two defendants were not prepared to jointly appoint a single arbitrator, considering that they had divergent interests. Other issues may arise where a party wishes to join one or more additional party or parties, or consolidate two or more pending arbitra-tions into one. The 2012 ICC Rules have set out clear guidelines and solutions to these po-tential issues based on the ICC Court’s exist-ing practice.

Cole: There are a multitude of issues that arise when undertaking complex international arbitrations in the region. These include the availability of visas for foreign witnesses to attend hearings; the requirement to swear oaths in a particular format and that losing parties tend to seek to raise any argument pos-sible to resist enforcement.

Soria: The main issues which arise in cases of complex international and multinational arbitration in Argentina include: whether, and

if so under what circumstances, non-signato-ries may be bound to arbitration proceedings; the appropriate scope of discovery, especially in cases when the parties come from differ-ent legal traditions; and whether, and under what conditions, injunction measures should be ordered by local tribunals. Other impor-tant issues include the admissibility of chal-lenge to arbitrators on the basis of a lack of independence and impartiality – particularly in non-institutional arbitrations governed by Argentine laws; and disagreements in the con-stitution of arbitral tribunals in cases of non-institutional arbitrations.

Parmar: When undertaking international, multi-jurisdictional arbitrations, the very first issue that arises is a logistical one. Schedul-ing teleconferences over different time zones, coordinating the travel schedules of counsel, arbitrators and experts for hearings, and en-suring support services such as translators are available, are some examples of the logisti-cal issues that need to be addressed. Parties also need to overcome cultural differences and their differing expectations of how the arbitral procedure will be conducted. Parties from different jurisdictions with different ar-bitral practices often have very different ex-pectations of the way evidence is taken, in the discovery procedure, in the role played by the arbitrator, and so forth.

Hofmann: There are no issues that routinely arise in international and complex multi-juris-dictional settings. In particular, the Swiss lex arbitri, reduces the risk that foreign parallel proceedings influence Swiss-seated arbitra-

tions. The lex arbitri instructs the arbitral tri-bunal to proceed with the arbitration and de-cide on its jurisdiction irrespective of whether a suit has previously been brought in another forum. The Swiss lex arbitri thus protects the integrity of the arbitration agreement. How-ever, it does not expressly provide a basis for active interference with foreign arbitrations or litigations by Swiss-seated arbitral tribunals. While certain scholars express the view that they are empowered to issue anti-suit injunc-tions, this view has not yet been tested before the Swiss judiciary.

FW: What trends do you see in terms of the choice of venue, compared to the choice of seat, for arbitrations conducted in your re-gion? To what extent does one choice influ-ence the other?

Cole: The two main venues for arbitration in the UAE are Dubai and Abu Dhabi. Ma-nama in Bahrain and Doha in Qatar are also used. These venues have a number of world-class hotels which are experienced in hosting arbitrations, as well as the arbitration centres themselves. Accordingly, the choice of venue will often simply come down to the parties’ preferences, although in practice the choice of seat will often inform the venue, rather than vice versa. Many parties are attracted to an arbitration seated in the DIFC, for example, due to DIFC law being founded on common law principles. Furthermore, regional govern-ments remain supportive of their ‘local’ arbi-tration centre. Thus, for example, contracts with the Abu Dhabi government commonly require arbitration in the Abu Dhabi Commer-cial Conciliation and Arbitration Centre, and so on.

Soria: Regionally, the usual places chosen as a seat of arbitration are Sao Paolo in Bra-zil, Mexico City in Mexico, Santiago in Chile and Buenos Aires in Argentina. In Argentina, Buenos Aires is usually chosen as a venue of international arbitrations for several reasons. First, it has experienced arbitrators, lawyers and arbitral institutions. Second, it is a great international city with one of the world’s great centres for finance, commerce, culture, art and tourism. Third, the city’s robust arbitration culture is strengthened by the fact that Argen-tina has ratified several international agree-ments concerning recognition and enforce-ment of arbitral awards, including the Treaties on Procedural Law executed in Montevideo in 1889 and 1940; the Inter-American Conven-tion on International Commercial Arbitration, signed in Panama in 1975; the Inter-American Convention on Extraterritorial Validity of For-eign Judgments and Arbitral Awards, signed in Montevideo in 1979; and the Protocol on


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Jurisdictional Cooperation and Assistance in Civil, Commercial, Labour and Administra-tive Matters within the MERCOSUR. In the region, the choice of venue is influenced by the choice of seat.

Parmar: For a long time, Singapore has been said to be an ideal ‘venue’ for arbitra-tion because of its geographical convenience, political stability, efficiency, integrity, so-phistication and good communication and transportation infrastructure. However, more and more, one hears of Singapore being se-lected for its arbitration friendly laws. If there is a trend, this suggests that Singapore as the ‘seat’ – as opposed to the ‘venue’ – of arbi-tration, is of equal or greater importance to litigants. To this end, the ‘seat’ of arbitration is not the physical location or venue where the arbitration is held but is understood to be the ‘connecting factor’ to a given procedural order or lex arbitri governing the arbitration. The choice of the seat of arbitration certainly influences the choice of the venue, and vice versa, as a party would want to be within the jurisdictional limits of the courts that have ju-risdiction over the arbitration proceedings.

Hofmann: The Swiss lex arbitri clearly dis-tinguishes between the seat of the arbitration and the venue of the arbitration hearings. If the seat is in Switzerland, the Swiss lex arbitri applies – irrespective of whether the hearings are held at another domestic or foreign loca-tion. If only the venue of one or all hearings – but not the seat – is in Switzerland, then the Swiss lex arbitri does not apply. The Swiss lex arbitri, therefore, affords the parties flexibil-ity. They may choose to seat their arbitration in Switzerland, but may conduct it elsewhere, if that proves to be more efficient. The par-ties should, however, be cautious and check whether holding a hearing outside Switzerland causes the lex arbitri of another jurisdiction to additionally apply to the arbitration. If so, the parties run the risk of conflicting procedural rules applying to their arbitration.

Kleiman: Under French international arbi-tration law, the seat of arbitration does not necessarily cause the procedure to be gov-erned by the principles applicable before the courts of that jurisdiction. Nevertheless, the choice of the seat remains significant as the seat of the arbitration is the place where the award is deemed to have been made and as the law of the seat determines the grounds on which an award can be challenged before local courts. In contrast, the choice of venue, which is merely the place where arbitral proceedings will be physically conducted, is of no legal relevance and often chosen for reasons of convenience. Several sets of arbitration rules

provide that the arbitral tribunal may, after consultation with the parties, conduct hear-ings at any location it considers appropriate. While Paris is regularly the venue of choice for hearings in arbitrations that have their seat outside France, the opposite is not true – when parties elect to have Paris as the seat of an ar-bitration, they also mean Paris as a venue.

FW: Is there any advice you can give to parties who are considering arbitration pro-ceedings in your region?

Soria: We would advise parties considering arbitration in Argentina to draft the arbitration agreement in clear terms to avoid pathological clauses from being a hurdle to institute pro-ceedings. In addition, the arbitration agree-ment should establish, preferably in broad terms, the scope of the issues to be submitted to arbitration, state whether the dispute must be settled ex lege or ex aequo et bono – absent any indication, Argentine law construes that the parties intended to settle the dispute ex ae-quo et bono – and include an express waiver to any appeal against the arbitration award. If possible we would recommend agreeing on institutional arbitration over ad hoc arbitra-tion proceedings, so as to deal more efficiently with issues that may delay the arbitration pro-ceeding, such as the constitution of the arbi-tral tribunal and challenges to arbitrators. All these measures would be particularly helpful to avoid undesirable judicial interventions, delays and an increase in costs in arbitration proceedings.

Parmar: If a party is considering arbitration proceedings in Asia, it would want to select a venue that is geographically convenient. Ide-ally, it would want such a venue to be modern, clean, efficient, with good infrastructure and world class communications. It would also want a venue that has an arbitration regime supported by a physical, legal and political infrastructure that supports arbitration. Such a venue should offer professionals – arbitra-tors, lawyers and experts – that are sophisti-cated, skilled and of high integrity. If all this is desired, then my advice to such a party is to select Singapore as the venue and seat of your arbitration.

Hofmann: The Swiss lex arbitri and the Swiss Rules are easily accessible. They are available in English and the same is true for certain textbooks and case law of the Swiss Supreme Court. Moreover, the Swiss lex arbitri and the Swiss Rules are in line with what arbitration practitioners from around the world would expect. As elsewhere, there are, however, a number of features which foreign practitioners may find peculiar at first glance

– for example, the parties are obliged to im-mediately protest if they believe the arbitral tribunal has interfered with their due process rights, otherwise the conduct of the procedure is deemed accepted. Also, the jurisdiction of Swiss arbitral tribunals, as a rule, extends to set-off defences. In order to avoid any issues, it may, therefore, be advisable to discuss key procedural features with a Swiss-based co-counsel before initiating arbitration.

Kleiman: Confidentiality, if important to the parties to an arbitration agreement, should be expressly agreed. While French law provides that, unless parties agree otherwise, domestic arbitration proceedings are confidential, this default provision does not apply in interna-tional arbitration. Often considered implicit, confidentiality is not presumed by the Paris Court of Appeal: in 2004, the Court dismissed a claim from a party who was seeking damag-es for the alleged breach of an implicit duty of confidentiality on the ground that the demon-stration that such an implicit duty existed had not be made. The existence and the extent of a duty of confidentiality in respect of interna-tional arbitration are therefore uncertain. For that reason, it is advisable for parties who wish to ensure confidentiality to expressly agree on confidentiality provisions and to determine the extent of such confidentiality obligations – for instance, to cover the award, the plead-ings, any document exchanged during the pro-ceedings, or even the mere existence of the arbitration – and to define the sanctions in the event of a breach. If an award is challenged, or enforcement proceedings are brought before French courts, the existence of the award and the court’s decision will be public. The award itself and the rest of the court file will, however, remain inaccessible to third parties.

Cole: Parties should be very selective when it comes to the choice of tribunal – there are some very good but also some very poor ar-bitrators. Ensure the local law requirements are known and adhered to by the parties and the tribunal in order to minimise the risk of challenges to the award. There are numer-ous local idiosyncrasies, such as the require-ment for all pages of an award to be signed which need to be followed. Consider care-fully whether external counsel is entitled to appear in the country of the hearing. Prepare cases well – many cases that are seen, both as counsel and tribunal, are not well prepared and fail to demonstrate causative links be-tween claims and relief sought. In terms of prejudice, recognise that there is no privilege against disclosure and therefore written offers of settlement, unless carefully managed, may be disclosed.


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Getting the most out of mediation| BY SHERINA PETIT, NIKHIL LAKHANI AND ADITI APARAJITA

OPINIONS ARTICLES

With the increase in complexity of con-tracts, legal disputes have become

much more common in this day and age. Cor-respondingly, the methods adopted by parties to resolve these disputes have also increased. While litigation through the courts still remains the traditional form of dispute resolution, par-ties have been working towards various modes of alternative dispute resolution.

The major attraction of these alternative methods lies in the speed, cost-efficiency, con-fidentiality and flexibility that parties can get from these forms of dispute resolution. The most popular methods include arbitration, ex-pert determination, mediation and conciliation. A hybrid form of dispute resolution, media-tion-arbitration, or med-arb, has also recently gained prominence.

In this article, the focus is on mediation, which specifically stands out as an option to protect the parties from incurring the signifi-cant costs associated with litigation and ar-bitration. Mediation is a process whereby an independent person is appointed to help the disputing parties reach an acceptable solution. Mediation comes into the picture when the parties are unable to negotiate their way out of a deadlock or are otherwise unable to recon-cile their differences. The central focus of the exercise is co-operation between the parties in resolving the situation as opposed to under-taking an in-depth analysis of past mistakes. The mediator does not assume a judge’s role to decide right from wrong but instead tries to build communication and consensus between the parties.

In order to get the most out of the mediation process, the parties need to bear a few things in mind. As it is a voluntary procedure, it pres-ents a golden opportunity for the parties to help shape their agreement for the future, with some careful thinking. First and foremost, the parties need to assess if the timing is right to launch into mediation and if mediation itself will be the best way to resolve the dispute. A correct assessment as to their respective posi-tions (with the aid of lawyers), will help the parties get off to a good start in the mediation process.

Once the parties have decided to go down the route of mediation, preparation becomes key to achieving success. A clear grasp of the facts and law not only ensures efficient use of time, but also gives the parties an idea about their

bargaining positions and consequently helps them to decide their minimum goals to be achieved from the mediation. The parties need to evaluate all possible outcomes of a settle-ment and while working towards achieving the best case scenario, should be prepared for the worst case as well.

Mediation is a two-way street. Parties have to come to the table with a clear idea of what they want and be prepared to explain their grounds and reasoning. Similarly, they also have to come to the table with an open mind and be willing to listen to the other party’s views. Issues may be understood in a different light during the mediation and each party can reassess their importance at that point.

Willingness to compromise is also important to a successful mediation. This compromise needs to be reflected in the approaches of both the parties and their respective lawyers. The parties need to appreciate the risks of litiga-tion and accordingly structure their views appropriately when compromising on certain points during mediation. Only a mutually ac-ceptable solution will be feasible in attaining a sustainable ‘win-win’ situation for all parties concerned.

Each party’s perceptions can change organi-cally during the process of mediation itself. Therefore, understanding the other party’s point of view and attempting to balance the pros and cons when negotiating a particular point is important. This will help the parties when reviewing their own position and possi-bly coming to a mutually acceptable solution. By giving up a minor point, each party may in turn benefit from a bigger gain. This approach of trying to achieve a mutually beneficial re-sult is crucial for any successful mediation.

Parties also need to take particular care to ap-point lawyers with extensive experience of ad-vising on and representing clients in all forms of ADR, and in particular mediation. Trained lawyers who are abreast of developments in the field and are accredited mediators can be hugely influential in shaping the proceedings. Experienced lawyers who have represented

clients in ADR procedures in a wide variety of sectors including construction and engineer-ing, banking and financial services, insurance and reinsurance, transport, international trade and professional negligence become crucial while handling mediation in particular indus-try sectors.

As stated above, the concept of med-arb is now being considered by some parties. Med-arb combines the process of mediation and arbitration. The first step involves the appoint-ment of a mediator who tries to help the parties reach an agreement but if the parties cannot reach a compromise, arbitration is then com-menced with the same mediator acting as the arbitrator who will eventually render a final and binding decision. Med-arb provides the advantage of having a two-step approach to dispute resolution before the same individual. However, it can be disadvantageous if the me-diator harbours pre-conceived notions (having been present in the mediation) with respect to any party’s position.

In summary, the key goal during any media-tion should be to achieve a settlement to the dispute. This can be attained by focusing on common interests and putting oneself in the other party’s shoes. Knowing how to articu-late one’s goals will help each party in defin-ing and redefining the settlement goals as the mediation progresses. Mediation will produce a workable solution if the parties engage with each other in order to achieve a desired out-come. A mediation settlement will not only help resolve immediate disputes between par-ties but may also help them in maintaining good business relations and in furthering fu-ture interests. Thus, in multiple ways, media-tion can serve to benefit the industry at large and with careful planning can serve as an ef-fective means of dispute resolution.

Sherina Petit is a partner, Nikhil Lakhani is an associate and Aditi Aparajita is a trainee solicitor at Norton Rose Fulbright. Ms Petit can be contacted on +44 20 7444 5573 or by email: [email protected]. Mr Lakhani can be contacted on +44 20 7444 5979 or by email: [email protected].

Compromise needs to be reflected in the approaches of both the parties and their respective lawyers.


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The International Valuation Standards Council (IVSC) has recently expanded

its mandate to include creating a single set of high quality, valuation standards and a glob-ally recognised, respected valuation profes-sion. In this article, we consider potential implications of these developments within the context of international arbitration pro-ceedings. In particular, we examine whether global valuation standards would be of ben-efit, by assisting arbitral tribunals in testing expert evidence; or whether such standards would be unhelpful by restricting the neces-sary discretion and professional judgement that clients and arbitral tribunals require from independent expert witnesses.

Companies are increasingly choosing to set-tle disputes through arbitration rather than in national courts. The reasons for this are well known and include the privacy of the arbitral proceedings, neutrality of the arbitrators (as compared with national courts in certain ju-risdictions), and the speed and efficiency of the process. Expert witnesses have an impor-tant role to play in the arbitration process; providing their expert opinion to the arbitral tribunal, which would otherwise not be avail-able from the witnesses of fact or the dis-closed documentation. An expert is under a professional obligation to express their inde-pendent professional opinions to the tribunal, rather than act as an advocate for the party paying their fees. The most frequently in-structed expert witnesses are those who opine on damages, usually involving the valuation of particular assets or the assessment of lost profits.

In many professions there is a single set of standards. For example, International Finan-cial Reporting Standards (IFRS) are becoming a single set of globally-accepted accounting standards providing a high-quality, common language for financial reporting. This assists users of financial information by providing transparent and comparable information. The vision of IFRS has been publicly supported by many international organisations, includ-ing the G20, World Bank, IMF and Basel Committee and there has been a very high uptake, particularly by listed companies.

The valuation profession has developed as a specialism practised by professionals in di-verse fields, such as economists, accountants, surveyors and tax advisers. As a consequence,

there may be concerns about the analytical consistency between valuation practitioners. An example of this lack of analytical consis-tency was illustrated on a recent arbitration involving the valuation of German assets on behalf of UK debt holders. An opposing expert disputed our adjustment to a discount rate on the basis that “it was not the accepted methodology for valuing this particular asset in Germany”. The core disagreement between the experts on this issue was which standard valuation formula should be deemed relevant – German standard or internationally accept-ed.

A question that arises is whether the desired privacy of most commercial arbitral proceed-ings unwittingly restricts holding an expert to account for their stated opinions. That is, an expert witness may be able to express seem-ingly contradictory views in two different matters, but because both matters are private the (apparent) inconsistency would not be identified or tested under cross-examination. There may be valid reasons for expressing different views, based on the specific facts of each matter, but the expert would not be questioned on such reasons.

As valuation standards converge, the result should be greater consistency in valuations across geographies and disciplines. There is no obvious reason why an accounting valu-ation for financial reporting purposes should be materially different from a litigation valu-ation or a taxation valuation, if they are pre-pared for the same assets as at the same date, under the same basis and using the same data. Ultimately, global standards would mean that the scope of valuers to pick and mix differ-ent approaches, sources and methodologies would be restricted.

A current difficulty facing arbitral tribunals is that extreme expert witness opinions can be difficult to expose and may simply appear to arbitrators to be an equal argument be-tween two ‘opposing’ experts. In the context of international arbitration, opposing counsel would thus be able to cross examine an ex-pert on their methodology by reference to a single set of authoritative, global standards rather than considering a vast array of often conflicting textbooks and national guidance. If necessary, the expert witness would need to explain where and why their analysis de-parts from established norms. As such, global

standards could provide a useful benchmark against which to assess such expert evidence.

One recent development of note concerns the increasing transparency in investment treaty arbitrations (administered by ICSID World Bank). For example, in a recent claim brought by The Renco Group Inc. from New York against Republic of Peru, the tribunal has very recently ordered that the proceed-ings, hearing transcripts and awards all be published. In addition, hearings in several treaty or regional trade agreement arbitra-tions administered by ICSID have been held in public and with live video broadcasts. Whilst this trend in treaty disputes is not as ground-breaking as would be the case in a commercial dispute, it suggests that arbitra-tors recognise the value of public scrutiny in matters involving sovereign states.

Another recent development for testing ex-pert opinions, colloquially referred to as ‘hot-tubbing’, involves the tribunal hearing expert evidence from more than one expert witness simultaneously. In our experience, the utility of this process depends on the active engage-ment of counsel, experts and tribunal, and the retention of firm control by the tribunal. Where the parties are well prepared, and are prepared to engage, hot-tubbing can be a valuable means of exploring the real issues identified between the experts. Global valu-ation standards could provide a useful tech-nical benchmark for counsel and the tribunal during hot-tubbing sessions.

One argument against attempts to ‘stan-dardise’ the technical methods used in the valuation profession is that valuation is ‘an art not a science’; implying that a valuation is merely a subjective judgement regarding the amount that a buyer would be prepared to pay for an asset. However, the existence of a ‘hu-man’ element in the process does not in any way mean that the accumulation of valuation evidence, data research and financial analysis should be disregarded; a rigorous, evidence-based approach should always inform an ex-pert’s opinion. Applying a single set of global standards could assist in limiting any subjec-tive element to a minimum.

Another argument against the use of inter-national standards is that they may stifle the necessary discretion, which experts exercise in complex and challenging assignments. Whilst valuation standards may move for-

International arbitration: would a single set of global valuation standards assist parties in testing expert valuation evidence?| BY GEOFF SENOGLES AND PHIL HERSEY

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Arbitration versus litigation| BY FERDINANDO EMANUELE AND MILO MOLFA

This article provides an overview of the relative strengths and weaknesses of in-

ternational arbitration compared to litigation. It aims to assist the reader into coming to a choice as to which dispute resolution mecha-nism would be more suitable in the circum-stances of the particular case.

Advantages of arbitrationThe composition of the tribunal. The advan-tages of arbitration over litigation generally flow from its theoretical basis as an instru-ment of party autonomy. Unlike the panel of judges in the court system, the composition of an arbitral tribunal is normally determined by the agreement of the parties. The typical ap-pointment system for a three-member arbitral tribunal is for each party to appoint a single arbitrator and the two arbitrators to then ap-point a third, presiding arbitrator. It is there-fore possible for the parties to appoint a tri-bunal that is highly specialised in the subject matter of the dispute. However, the limited number of leading arbitrators in the world has led to concerns regarding their independence and the risk of conflicts of interest. These concerns are assuaged by independence re-quirements existing under all main arbitration rules and laws.

Choice of seat. The parties may prescribe the seat of the arbitration, which will nor-mally be in a country other than the parties’ nationalities, to ensure neutrality. The seat determines the nationality of the courts that have supervisory jurisdiction over the arbitral process, including in respect of possible chal-lenges to the arbitral award.

There are two caveats to the benefits of be-ing able to agree on a neutral seat. Firstly, these benefits can be largely matched by in-cluding an exclusive jurisdiction clause in the contract providing for disputes to be heard in

the courts of a third-party nation. The benefits associated with the dispute being heard in a neutral venue is therefore not exclusive to arbitration. Secondly, mandatory rules of the law of the seat (or lex arbitri) concerning, in particular, arbitrability may preclude certain matters from being arbitrated.

Procedural matters. A third aspect to party autonomy is the parties’ ability to decide how the arbitral proceedings should be conducted. Most arbitral institutions allow the parties to amend their preset arbitral rules. This is in stark contrast to litigation before national courts, which are invariably subject to man-datory rules of procedure.

The ability to adapt arbitral procedure may be particularly useful where a party requires its case to be fast-tracked. In this case, the parties may impose a tight timeframe for the arbitral procedure, or, for instance, under-take a ‘baseball’ or ‘final offer’ arbitration, in

which each party submits a final offer to the arbitral tribunal to be selected as its award.

However, an expedited arbitral process may be frustrated by an obstreperous opponent, the unavailability of the arbitral tribunal, or the mandatory rules of the lex arbitri which may impose procedural limitations in order to ensure due process and the right of each party to make its case.

Confidentiality. While national courts may protect confidentiality in particularly sensi-tive cases, the default position is for court proceedings to be public. By contrast, arbitral proceedings normally take place in private.

Nevertheless, absent a formal confidentiality agreement, it is difficult for arbitral tribunals to impose any penalty for parties breaking the confidentiality of the proceedings. Further-more, the parties to an arbitration often need the assistance from the courts, either to seek an interim remedy, or to enforce an award. In

ward as ideas develop, the pace of revising standards may lag behind the development of new, novel valuation concepts. However, when justified there is nothing to prevent an expert expressing a view contrary to the es-tablished orthodoxy; simply, the existence of global standards provides a consistent frame-work for the evaluation of such evidence.

In commercial arbitration, the parties are free to decide how and where to conduct dis-putes – usually in private. Whilst this confi-

dentiality has obvious commercial benefits for the parties, one drawback is that expert evidence may be subject to a lesser degree of scrutiny than is possible, for instance, in na-tional courts. Global valuation standards may assist arbitrators and counsel in scrutinising valuation evidence against established norms. However, the key to realising such benefits is the availability and general acceptance of a single set of valuation standards across the majority of valuation practitioners and users.

The authors of this article intend to follow future developments in the field, and their application within international arbitration, to see whether the ambitious goals discussed above will be realised.

Geoffrey Senogles is a vice president and Phil Hersey is a principal at Charles River Associates (CRA). Mr Senogles can be contacted on +41 22 360 8090 / +44 (0)20 7664 3700 or by email: [email protected]. Mr Hersey can be contacted on +44 (0)20 7664 3700 or by email: [email protected].

The advantages of arbitration over litigation generally flow from its theoretical basis as an instrument of party autonomy. Unlike the panel of judges in the court system, the composition of an arbitral tribunal is normally determined by the agreement of the parties.


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both instances, the appearance of the parties in national courts will lead to disclosure of at least the existence of the dispute.

Finality. Another advantage associated with international arbitration is the certainty grant-ed by the initial award.

Most jurisdictions limit the supervision of national courts to cases where the tribunal lacked jurisdiction or independence, or had made a manifest error in its application of law. National arbitration laws generally pro-vide for a high threshold for applicants seek-ing to overturn an arbitral award.

A challenge to an arbitral award does not automatically stay the right to seek enforce-ment, but, if successful, can be far more dev-astating than a successful challenge to a court decision. Whereas the latter may simply re-sult in its remand to the inferior court, or a revision by the superior court, a review of an arbitral award will result in its annulment or vacation.

Enforceability. Perhaps the most important reason why parties elect arbitration over liti-gation in international contracts is the com-parative ease of the enforcement process. The 1958 New York Convention on the Recog-nition and Enforcement of Foreign Arbitral Awards currently has 148 state signatories and obligates each signatory to recognise and enforce arbitral awards rendered in the jurisdiction of another signatory state, sub-ject only to the rules and requirements of this Convention.

In contrast, the enforceability of national court decisions is governed by a few bilat-eral and multilateral treaties, none of which has the breadth of coverage of the New York Convention. Thus, enforceability is normally left to national laws.

The nearest equivalent to the New York Con-vention in respect of national court decisions is perhaps the Brussels Regulation which governs the reciprocal enforcement of judg-ments within the limited group comprised of the 27 members of the European Union, plus Iceland, Norway and Switzerland.

Shortcomings of arbitrationArbitrability. The first downside to arbitration is that in some jurisdictions certain subject matters (e.g., labour, corporate, or antitrust disputes, or matters where parties may seek punitive damages) are simply not arbitrable. If the matter is non-arbitrable, the only option is to litigate.

Multiparty disputes. It can be extremely dif-ficult to arrange arbitration in a case involv-ing multiple parties. While it is possible for a party to agree ex post facto to join an arbitra-tion, such cooperation is rarely forthcoming once a dispute has arisen.

Even where the parties are all bound by a

single arbitration agreement, the possibility of multiple parallel proceedings is ever pres-ent. Unless the arbitration agreement or ap-plicable rules provide for a tribunal to force consolidation, this may rest on the agreement of all the concerned parties and arbitrators. The difficulty of consolidating parallel pro-ceedings in multiparty arbitrations risks an inefficient and expensive procedure and the possibility of inconsistent awards.

Interim relief. In a few jurisdictions, includ-ing chiefly Italy, arbitral tribunals do not have the power to grant interim relief.

In any event, arbitral tribunals are poorly positioned to grant such orders. The first rea-son is that there is inevitably a delay in the constitution of an arbitral tribunal, unlike a court which is always in session. The sec-ond problem flows from the fact that arbitral awards require enforcement in national courts and this extra step runs counter to the urgent nature of interim relief.

National arbitration legislation often per-mits parties to apply to court to seek interim relief prior to the constitution of an arbitral tribunal or during the proceedings. However, this step would require the public disclosure of the dispute, thus undermining one of the benefits of choosing arbitration.

Evidentiary powers. Document discovery varies drastically according to jurisdiction. The European, civil law-based jurisdictions tend to favour limited (if any) document dis-covery, while the US supports wide-ranging document discovery and England falls some-where in the middle. An attempt has been made by the IBA to institute a collection of good-practice guidelines, whose touchstone for discovery is relevance (the IBA Rules on the Taking of Evidence). While the IBA Rules represent a compromise between civil and common law thinking, they only apply by agreement of the parties, and their interpreta-tion may be influenced by the nationality of the arbitrators.

Arbitral tribunals also lack coercive power to compel document discovery and may only draw adverse inferences from a party’s failure to comply with a document production order. Conversely, failure to comply with a court order requiring document production may re-sult in a contempt of court and possible civil or criminal sanctions.

Shortcomings that are unique to arbitra-tion. Parties can seek to delay the arbitration in ways that would not be possible in litiga-tion. Firstly, a party may disrupt the con-stitution of an arbitral tribunal by failing to nominate an arbitrator in a timely fashion, or by contesting the appointment of arbitrators. Secondly, a party may seek to seize a national court before the commencement of an arbitral proceeding by filing a suit for an anti-arbi-

tration injunction. In such a case, even if the court decided to allow the tribunal to deter-mine its own competence (pursuant to the kompetenz-kompetenz principle), there would still be another hurdle to jump before the ar-bitral process could get underway. Likewise, in litigation a party may seek to seize a court in another jurisdiction in the hope of delaying the proceedings.

Lack of res judicata effect. Res judicata is a doctrine of preclusion, preventing a party from bringing a claim in respect of a matter that has already been determined by a com-petent authority. The principle of judgments having preclusive effect is generally accepted in all developed states, but not in internation-al arbitration.

Lack of stare decisis. Stare decisis is a com-mon law doctrine that a principle established in a previous legal case is binding or persua-sive on courts subsequently dealing with the same principle. This doctrine plays a role in the national legal system of the substantive law governing the arbitral matter, and should equally be applied by the arbitral tribunal. There are, however, two caveats. Firstly, the possibility of appealing an arbitral award that misapplies a binding precedent as opposed to a decision of an inferior national court is much narrower (and even precluded, if the parties so agree). Secondly, although arbi-trators frequently refer to arbitral awards in making a decision, these precedents are not considered binding. To a certain extent, this problem is moot as the vast majority of ar-bitral awards are confidential and therefore cannot be considered by the parties in assess-ing their legal positions.

Cost of arbitration. It was long-said of ar-bitration that it was cheaper and quicker than litigation, but this is not always the case. Ar-bitral disputes have been known to last years, with subsequent challenges related to juris-diction and enforcement relatively common. Equally, whereas court judges are publicly funded, the fees of arbitrators (and institu-tions where applicable) have to be borne by the parties, as do all other costs of the arbitra-tion (such as the hiring of a venue and the fees for legal counsel and experts).

Reaching a decision between arbitration and litigationAs a short, non-exhaustive checklist, the fol-lowing matters should be taken into consid-eration to choose arbitration over litigation: (i) the need for documentary discovery from counterparty or third parties; (ii) the need to cross-examine the opposing party’s execu-tives – in arbitration, the general rule is that only individuals submitting a witness state-ment can be forced to testify; (iii) the need for third party witnesses – in arbitration, third


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German courts emphasise supremacy of party agreements over the arbitral tribunal’s procedural discretion| BY KARL PÖRNBACHER AND INKEN KNIEF

In a landmark decision on 17 February 2011, the Higher Regional Court of Frankfurt

(OLG Frankfurt) has strengthened the suprem-acy of parties’ procedural agreements over the arbitral tribunal’s procedural discretion (26 Sch 13/10). The German Supreme Court has rejected the claimant’s appeal and upheld the court’s decision with a resolution dated 2 Oc-tober 2012 (III ZR 8/11).

In the case before the OLG Frankfurt, a dis-tinguished DIS Arbitral Tribunal had issued a procedural order, containing detailed directions for the taking of expert evidence. Specifically, those directions provided that the parties were to disclose to the other side all information the experts had reviewed in the process of drafting their expert report. The directions contained in the procedural order had been subject to prior extensive negotiations between the parties and the arbitrators, and were referred to in the pro-cedural order as “agreement by the parties”. Later in the proceedings, however, the claim-ant failed to comply with those parameters, by failing to disclose the information its experts had reviewed, as provided in the procedural order. Overruling the respondent’s objection, the Arbitral Tribunal nevertheless admitted the expert report in question, on which it relied to award damages to the claimant in its final award of €210m.

Upon the respondent’s recourse, the OLG Frankfurt set the award aside in accordance with Section 1059(2)(1)(d) of the German Code of Civil Procedure (ZPO), providing that an arbitral award may be set aside if the arbi-tral procedure was not in accordance with an admissible agreement of the parties and this presumably affected the award. In its reason-ing, the OLG Frankfurt held that the parties’ agreement on issues of expert evidence quali-fied as a procedural agreement, regardless of whether it had been included in a procedural

order. Rather, according to the OLG Frankfurt, the legal nature of a certain direction was to be determined notably taking into account its drafting history, and whether there indeed had been a respective parties’ agreement. If that was the case, the arbitral tribunal could not de-viate from such agreement, even if the tribunal had emphasised its discretion over the arbitral procedure in a prior procedural order.

At first glance, the OLG Frankfurt’s deci-sion seems rather straightforward. Following the example of Art. 19 (2) of the UNCITRAL Model law, Section 1042 (2) ZPO provides: “Failing such agreement [between the parties] the arbitral tribunal may, subject to mandatory provisions of this Book, conduct the arbitration in such a manner as it considers appropriate.” In other words, under German law, as under most developed arbitration laws, the parties’ agreement on procedural issues takes priority over the tribunal’s procedural discretion. This bedrock principle was the basis for the court’s decision, holding that the parties’ procedural agreement on the taking of evidence could not be overridden by the arbitrators’ decision.

While the underlying legal principle is clear, the decision of the OLG Frankfurt neverthe-less brings about a number of implications and questions with regard to its implementation in practice.

First, against the background of the OLG Frankfurt’s decision, arbitrators should be very careful in qualifying a certain stipulation as ‘parties’ agreement’ in a procedural order. If a directive is hastily labelled as a parties’ agreement, this may lead to a serious restric-tion of the arbitrator’s flexibility. On the other hand, of course, any parties’ agreement must be respected, and designated as such in any procedural document. The suggestion in legal writing that arbitrators should by all means avoid the possibility of a procedural order be-

ing classified as a procedural agreement might well clash with the overall aim in arbitration to reach consensus between the parties to the extent possible.

Second, by strengthening the supremacy of parties’ procedural agreements over the arbi-tral tribunal’s procedural discretion, the OLG Frankfurt has at the same time also strength-ened the important role of the parties and their counsel in arbitral proceedings. Parties and their counsel should be aware of their oppor-tunity to steer the arbitration, and take respon-sibility for the conduct of the arbitral process. Where possible, counsel should reach out to the other side at an early point in time in order to reach sensible procedural agreements.

Third, the decision of the OLG Frankfurt requires German courts and legal practitio-ners to develop usable guidelines in order to distinguish mere procedural orders from pro-cedural agreements. In its decision, the OLG Frankfurt held that when procedural directives are drafted by the tribunal, circulated between the parties, revised in accordance with their comments, and then issued as a procedural order, this constitutes a procedural agreement which cannot be overridden by the tribunal. Such procedure is by all means commonplace, and it would represent a serious restriction of the arbitrator’s flexibility if any of such con-sensual orders were to be considered as over-riding procedural agreements only by the fact that both parties approved of, or consented to a certain subject.

Karl Pörnbacher is a partner and Dr. Inken Knief is a senior associate at Hogan Lovells. Mr Pörnbacher can be contacted on +49 89 290 120 or by email: [email protected]. Mr Knief can be contacted on +49 89 290 120 or by email: [email protected].

party witnesses cannot be compelled to at-tend; (iv) the need to consolidate related-pro-ceedings – if this is the case, litigation may be preferable, or great care should be taken in the drafting of the arbitration agreement; (v) the need for interim relief – interim relief is easier to obtain from and enforce in liti-gation, although the parties to an arbitration may be able to seek interim relief from a na-

tional court; (vi) the need for a final injunc-tion – while arbitral damages awards may be enforced with relative ease, it is difficult for an arbitral tribunal to supervise the award of a negative injunction; and (vii) the need to enforce the award in a jurisdiction other than the location of the hearing – if a counterpar-ty’s assets are mainly based outside the juris-diction of the dispute, arbitration is likely to

be the better option as the parties may benefit from the New York Convention.

Ferdinando Emanuele and Milo Molfa are international arbitration specialists at Cleary Gottlieb Steen & Hamilton. Mr Emanuele can be contacted on +39 06 6952 2604 or by email: [email protected]. Mr Molfa can be contacted on +44 (0)20 7614 2212 or by email: [email protected]. The authors wish to thank Ludovica Marvasi for her assistance in the preparation of this paper.


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Litigation: the first 90 days| BY LOUISE C. STOUPE AND PIETER DE GANON

The first 90 days of a suit are critical. Yet defendants and their lawyers tend to sit

by passively as the early stages of litiga-tion run their course. “Frequently”, writes Craig McEwen, “lawyers and their clients are trapped by the routines, incentives, and traditional expectations of legal and business practice.” See Craig McEwen, Managing Corporate Disputes: Overcoming Barriers to Effective Use of Mediation for Reducing Cost and Time of Litigation, 14 Ohio St. J. on Disp. Resol. 1, 26 (1998). The machine grinds into familiar motion: cost sensitivities and court deadlines encourage the repetition of habitual practices – answering the com-plaint, launching discovery, filing motions. By the time both clients and their lawyers engage seriously with the case, discovery – which in US litigation accounts for one-fourth of outside legal fees – is already well underway. See Lawyers for Civil Justice, Civil Justice Reform Grp. & U.S. Chamber Inst. for Legal Reform, Litigation Cost Sur-vey of Major Companies 17 (2010).

Drifting passively into discovery delays res-olution and costs money. To avoid this costly drift, defendants should approach the first 90 days of each case in the same way. As early as possible, and unquestionably before dis-covery begins, defendants should formulate a trial plan. This means gathering key facts, selecting key witnesses and documents, and analysing the other side’s arguments with an eye toward trial. Without this informa-tion, it is impossible to assess realistically – and thus monetise – the basic strengths and weaknesses of the case and to evaluate pos-sible end-game solutions.

Arguments. The first step in formulating a trial plan is to analyse not only the bare le-gal elements of the plaintiff’s claims, but to anticipate and evaluate the arguments that plaintiff is likely to raise at trial. Too often defendants’ attorneys, faced with budgetary constraints, draft the answer without analys-ing the issues in sufficient detail. This is re-active and wasteful: any early savings will, inevitably, be dwarfed by long-term costs as-sociated with irrelevant discovery and avoid-able changes to litigation strategy. Better to analyse and narrow the scope, and assess the risk, of each claim and defence. Better to estimate damages quickly and accurately. This information can then be used to value the case, to decide on a settlement amount (if any), or to plan a sound litigation strategy.

Key documents. The second step is to iden-

tify the 50 to 100 key documents in the case. Most trials turn on a handful of game-chang-ing exhibits. Almost all are identifiable early on. Waiting until discovery is underway to do so is not realistic. The millions of pages of electronic data involved in most corpo-rate cases cannot be narrowed effectively by junior attorneys, much less contract at-torneys, working alone. Instead, experienced trial counsel must be involved to anticipate and highlight the documents that will truly matter at trial. Proposing that key documents should be identified early is not a new idea. Most counsel agree that “corporations should know most of the pertinent facts within thirty days”. John B. Henry, Fortune 500: The Total Cost of Litigation Estimated at One-Third of Profits, Metropolitan Corp. Couns. 28 (Feb. 2008). Even so, most companies are reluctant to analyse the case early on, falling instead into the trap of preparing a pro forma answer and waiting for the discovery hammer to drop before digging into the documents. This ap-proach invariably costs more. It is no secret that discovery is typically overbroad and in-efficient: according to one study, the ratio of pages discovered to pages entered as exhibits is 1000/1. See Lawyers for Civil Justice, Civ-il Justice Reform Grp. & U.S. Chamber Inst. for Legal Reform, Litigation Cost Survey of Major Companies 3 (2010). What many liti-gants fail to recognise is that preparing a trial plan within the first 90 days saves money. It can, for example, be used to narrow and fo-cus the work of the document-review team. Likewise, it can shorten the period of time required to prepare witnesses for deposition and ensure thematic consistency across wit-nesses when they are eventually deposed. As judges are increasingly using interrogatories to limit the scope of arguments that can be made in proceedings, early assessment of the arguments in a trial plan also ensures that key points and documents are always included in written interrogatory responses. It should come as no great surprise that focusing trial counsel on the key issues early on generally results in lower legal fees.

Witnesses. The third step is to identify and assess relevant trial witnesses. There is noth-ing premature about doing so within the first 90 days. Witnesses, their statements, and – critically – their credibility can make or break a case. Here, again, the early evalua-tion of potential witnesses is instrumental to an accurate cost-benefit analysis. Weak witnesses might be a reason to pursue settle-

ment; strong witnesses make litigation more viable. In addition, having the business side of the client involved in trial preparation at the start of a case often facilitates greater in-ternal support for the onerous but inevitable discovery efforts that will follow.

How to use the trial plan. If you understand the arguments, have reviewed the key docu-ments, and have evaluated the human frail-ties of your witnesses, you can now evaluate your case. Is this a matter where you have the legal arguments on your side but your witnesses are weak? If so, then perhaps your best opportunity is at summary judgment. Is your case jury friendly: can you simplify the arguments and are your themes consistent? If not, then perhaps you should be lowering your damages expectations. At the very least, a trial plan helps you answer three critical questions:

What are my best arguments and what is the value of the claim? A trial plan helps you determine which cases to fight and which to settle. Armed with this information, you can make an informed and rational decision about how much to invest defending the ac-tion and the appropriate value of any settle-ment offer.

What factors make a difference and when will the key issues be decided? Understanding the nature of your best arguments is critical to determining when the key questions will be resolved. Some factual disputes are likely to be resolved during document discovery and depositions, others only at trial. Likewise, some legal disputes can be resolved quickly by the judge at summary judgment. Knowing when, and having an educated idea of how, these critical turning points will be resolved allows you to better estimate legal fees and to decide whether to settle or whether to fight.

What is the path to victory? Most cases settle because they are not worth the risk or the cost of bringing to trial. For all but a few cases on the margins, it is practically impos-sible to assess both risk and cost absent a trial plan. And for the cases where settlement ap-pears unattainable – for the cases that must be fought – a trial plan is essential. Either way, preparing a trial plan within the first 90 days is the best method to ultimately obtain the result you want: victory.

Louise Stoupe is a partner and Pieter de Ganon is a litigation associate at Morrison & Foerster LLP. Ms Stoupe can be contacted on +81 3 3214 6979 or by email: [email protected].


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8

Class actions in Australia| BY PETER O’DONAHOO AND MARK HOSKING

Class actions have now been a part of the Australian legal landscape for over 20

years. In recent years, Australia has become the most likely jurisdiction outside of the United States in which a corporation will face signifi-cant class action litigation. The growing num-ber of class actions in Australia is the result of several factors, including Australia’s liberal and plaintiff-friendly class action regime, and a predominantly unregulated litigation funding sector.

The most common class actions in the early years of the Australian regime were product liability claims. The largest was the class ac-tion commenced by Nixon against the tobacco companies, which had a class that included every person then living in Australia. These claims became less common following chang-es to Australian tort laws in the early 2000s, but have recently resurfaced, particularly in the pharmaceutical sector.

The first shareholder class action was filed in Australia in 1999. Since then, at least 30 share-holder class actions have been commenced in Australia, but only three have proceeded to tri-al and none to final judgment. In recent years, financial products class actions have been par-ticularly common, and ‘mergers and acquisi-tions’ class actions have begun to emerge. In the United States, it has been estimated that almost 92 percent of merger and acquisition deals in 2012 with a value greater than $100m attracted one or more class actions (Cain and Davidoff, 2013).

Although the Federal Court of Australia and the Supreme Courts of New South Wales and Victoria all have similar statutory class action regimes, the majority of class actions in Aus-tralia are filed in the Federal Court. A class ac-tion can be commenced in the Federal Court wherever seven or more people have claims which arise out of the same, similar or related circumstances and give rise to a substantial common issue of fact or law.

Unlike the federal class action regime in the United States, class actions in Australia do not require certification of a class in order to pro-ceed, and do not require that the common issues for the class predominate over other issues.

The key features of the Australian legal land-scape which discourage or provide a constraint on class actions are the ‘loser pays’ rule (which holds that an unsuccessful party to litigation will usually bear the costs of the successful party), and the fact that Australian lawyers are prohibited from charging contingency fees (that is, fees charged on a ‘no win, no fee’ ba-

sis and calculated by reference to the value of the claim). However, these features have been undermined in recent years by the increasing availability of third party litigation funding.

Litigation funding in AustraliaUntil relatively recently, and subject to limited exceptions in insurance and insolvency con-texts, third party litigation funding was prohib-ited in Australia on the basis that it amounted to maintenance and champerty.

This position changed in August 2006 with the decision of the High Court of Australia in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386. In that case, the High Court ruled that third party non-lawyer litigation funding was not contrary to public policy or an abuse of process. Subject to the terms of individual funding agreements (which may give rise to questions as to enforceability and whether the related class action should be stayed or struck out), litigation funding is now permissible in Australia. Significantly, third party non-lawyer litigation funders are able to agree and secure contingency fees.

It has become clear since 2006 that the High Court’s ruling in Fostif represented a signifi-cant change in the Australian litigation envi-ronment. Academics such as Professor Vince Morabito have reported that, in the three years following the High Court’s decision, the num-ber of shareholder class actions in Australia trebled (Morabito, 2010). As a result of this change, the focus of attention has shifted from whether litigation funding is permissible to how it might be appropriately regulated.

To date, efforts to secure appropriate regula-tion of litigation funders have proved to be un-successful. In 2012, following decisions of the Federal Court and the High Court in relation to the regulation of litigation funding in Australia, the Australian government passed regulations exempting litigation funders from most Austra-lian financial services legislation, including re-quirements to register as a managed investment scheme and to hold an Australian financial ser-vices licence. At present, the only requirement imposed on third party non-lawyer litigation funders is to have in place adequate procedures to deal with conflicts of interest (ASIC Regula-tory Guide 248).

The growing acceptance of third party litiga-tion funding in Australia has had some interest-ing results. In June, the Full Court of the Fed-eral Court considered applications for security for costs made by the defendants in a series of class actions related to failed forestry planta-

tion schemes. The Court found that, in the cir-cumstances of the case, it was necessary for the claimants to provide evidence as to why they had not obtained third party commercial litiga-tion funding. In the absence of this evidence, the Court could not conclude that an order for security for costs would stultify the litigation.

In May, the trustee of litigation funder Claims Funding Australia (CFA) sought an order that it would be justified in funding a class action run by the plaintiff law firm Maurice Black-burn, with which CFA has close links: the firm has provided financial support to CFA, two of the firm’s senior principals are shareholders in CFA, another principal is a director of CFA, and all of the firm’s principals are beneficiaries of the trust formed to establish CFA. When it comes to determine the application, the Federal Court will consider whether allowing CFA to fund the class action would breach the prohibi-tion on lawyers charging contingency fees in Australia or involve a conflict of interest con-trary to Maurice Blackburn’s professional legal obligations.

Defendants and settlementIn the past, class action claimants in Australia usually targeted the defendant that had the clos-est connection to the alleged loss and damage. More recently, a trend has emerged of joining all those connected with the loss, including au-ditors, advisers, brokers, rating agencies and directors. Notably, in 2012, the Federal Court found for the claimants in a class action against ratings agency Standard and Poor’s in rela-tion to a AAA rating given to certain constant proportion debt obligations. This was the first ruling in the world against a ratings agency in relation to its rating of financial products.

Most class actions in Australia do not pro-ceed to judgment but instead settle. However, in this context, appropriate and effective risk management of class actions by defendants is challenging because there is usually significant information asymmetry. A class action defen-dant will often have limited information as to the size of the class (particularly in Australia where classes can be defined by reference to criteria), limited particulars as to the loss and damage suffered by the class and individual class members, and few documents concerning those claims.

Courts in Australia have generally been re-luctant to address this issue. This position is supported by the fact that the Australian class action regime does not require class members to take positive steps in the proceeding, and


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THE PANELLISTS

Steven F. NapolitanoPartner, Skadden, Arps, Slate, Meagher & Flom LLPT: +1 (212) 735 2187E: [email protected]

Steven F. Napolitano represents defendants in complex mass tort, class action and product liability litigation. Representative clients of Mr Napolitano have included manufacturers and distributors of asbestos and asbestos-containing products, pharmaceutical products and medical devices, heavy machinery, food and beverages, and other consumer products. Mr Napolitano is an author and lecturer on US product liability issues. He has served on Law360’s Product Liability Editorial Advisory Board.

FW moderates a discussion on managing and resolving class action disputes between Cari K. Dawson at Alston & Bird, Ross McInnes at Clayton Utz, Steven F. Napolitano at Skadden, Arps, Slate, Meagher & Flom, Wayne J. Lee at Stone Pigman Walther Wittmann, and Antonio Yanez, Jr at Willkie Farr & Gallagher.

Managing and resolving class action disputes

Q&A

Ross McInnesPartner, Clayton UtzT: +61 2 9353 4371E: [email protected]

Ross McInnes is a commercial litigator specialising in class actions. His class action experience traverses a range of industries and practice areas including financial services, pharmaceuticals, medical devices, anti-trust claims and shareholder class actions. Mr McInnes’ experience and understanding of the practicalities of running and managing large-scale class action litigation, and his in-depth knowledge of class action law, mean that he provides clients with the specialist skill set that class action litigation demands.

Antonio Yanez, JrPartner, Willkie Farr & Gallagher LLP T: +1 (212) 728 8725 E: [email protected]

Antonio Yanez, Jr is a partner in the Litigation Department of Willkie Farr & Gallagher LLP. He concentrates on securities and financial reporting matters as well as mergers and acquisitions litigation. Mr Yanez’s practice includes representation of issuers, officers, directors, underwriters, accounting firms and others in securities class actions, M&A cases, SEC proceedings and other litigation and regulatory matters. His litigation experience includes cases in federal, state and bankruptcy courts around the country.

Wayne J. LeeMember, Stone Pigman Walther Wittmann L.L.C. T: +1 (504) 593 0814 E: [email protected]

Wayne Lee is chair of Stone Pigman’s Commercial Litigation Group. He has extensive experience representing insurance companies, businesses and public agencies in a variety of class action lawsuits in Louisiana and the Gulf South region. He has resolved class and mass actions involving diminished value claims, first party insurance claims, insurance regulations and antitrust claims.

Cari K. DawsonPartner, Alston & Bird, LLPT: +1 (404) 881 7766E: [email protected]

Cari Dawson is the chair of the Class Action Practice Team for Alston & Bird’s Litigation & Trial Practice Group. She concentrates her practice on complex litigation matters, with particular focus on class action defence. Recently, Ms Dawson served as lead economic loss class action counsel in the Toyota Unintended Acceleration Marketing, Sales Practices, and Product Liability MDL. Ms Dawson’s practice also includes commercial litigation, client counselling, risk management, and strategic planning.

requires common questions to be addressed first, before the individual position of the class members.

More recently, certain Australian courts have evidenced a change in approach, particularly the Supreme Court of Victoria. Conscious of statutory obligations to ensure the just, effi-cient, timely and cost effective resolution of the real issues in litigation, the Supreme Court of Victoria has been willing to order the provi-sion of material which will assist defendants in assessing and managing their exposure to class action claims. In this context, courts have been willing to order closure of a class (so that it comprises a defined number of claimants), the

provision of particulars as to at least the loss and damage of some members of the class, and discovery of relevant documents connected to the above issues. However, to date, such a course has only been ordered where a class ac-tion is close to trial or a mediation and there are thought to be reasonable prospects that the provision of material of this type will promote settlement.

ConclusionRecent developments in the Australian legal landscape, including the increasing acceptance of third party non-lawyer litigation funding, have facilitated a growing number of class ac-

tion claims in Australia. At least in part, these developments are the direct result of the Aus-tralian government’s support for class actions, and non-lawyer private sector funding of class actions, as an important means of facilitating access to the civil justice system. However, to some extent, the checks and balances in the Australian system have helped to prevent what was predicted in the mid-2000s to be an explo-sion of class action activity.

Peter O’Donahoo is a partner and Mark Hosking is a lawyer at Allens. Mr O’Donahoo can be contacted on +61 3 9613 8742 or by email: Peter.O’[email protected].


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FW: Could you provide us with an update on recent trends and developments in class actions brought against corporate defen-dants? Are you seeing any recurring themes in case types?

Dawson: Corporate defendants continue to be the target of class action litigation across industries and types of claims. One particular trend is an increase in class action filings in so-called ‘plaintiff-friendly’ jurisdictions, namely California, New Jersey and South Florida. No matter the type of class action – consumer fraud, product liability or employment – these jurisdictions attract plaintiff class action coun-sel because of the more ‘plaintiff friendly’ statutes and case law in those jurisdictions. Plaintiffs’ counsel will often purposefully file multiple class actions nationwide asserting the same claims against a corporate defendant in order to increase the likelihood that a multidis-trict litigation (MDL) will be formed, and the pending actions will be coordinated or consoli-dated for pretrial proceedings. A recurring case type is so-called ‘no-injury’ product liability and consumer protection class actions. These class actions attempt to make the alleged com-mon conduct of the corporate defendant or the alleged class-wide defect the basis for certifi-cation of the class and attempt to side-step the issue of whether all or the overwhelming ma-jority of class members have actually suffered a concrete, particularised injury. Plaintiffs are seeking certification of so-called liability-only class actions or ‘issue classes’ under Rule 23(c)(4) to avoid the more rigorous analysis under Rule 23(b)(3).

McInnes: Since its introduction in 1992, the Australian class action regime has become a key feature of the Australian legal landscape. Barely a day goes by without the press report-ing the threat of a new class action. Australia has also made its mark on the class action stage

worldwide, with its plaintiff-friendly regime and a thriving class action industry driven by an active litigation funding sector. In Australia, the threshold requirements for commencing a class action are relatively low. We are see-ing a number of recent trends and reoccurring themes in the class action landscape in Austra-lia. First, a significant number of class actions that are currently being pursued, or have re-cently been pursued, are a legacy of the global financial crisis. The large scale and varied loss that occurred during the Global Financial Cri-sis (GFC) has meant that class actions have been utilised as a vehicle for many investors to pursue their claims and seek to recover some of those losses. Second, product liability, mass tort, pharmaceutical and medical device claims continue to be popular, along with shareholder class actions. It is also worth noting the signifi-cant impact that litigation funders are having on Australia’s class action market. Since the High Court’s decision in Campbell’s Cash and Carry Pty v Fostif Pty Ltd (2006) 229 ALR 58 there has been a significant increase in litiga-tion funding companies which, in turn, has increased the number of class actions being pursued.

Napolitano: In the area of mass torts and con-sumer litigation in the US, class actions have remained relatively consistent in recent years. Companies manufacturing foods and other consumer products have increasingly faced class actions alleging that their product labels – and even product names in some cases – are fraudulent or deceptive. These cases are often brought under state consumer protection acts prohibiting fraudulent and deceptive business practices. As one example, sellers of food and cosmetic products bearing the words ‘natural’ or ‘healthy’ have been named in class actions where their products allegedly contain ‘un-natural’ or genetically modified ingredients. In some of these cases, courts have allowed such

claims to proceed past the motion to dismiss stage and have certified classes, and a num-ber of labelling class actions have resulted in settlements.

Lee: At least three trends are worth noting. First, the Class Action Fairness Act is fulfill-ing its intended purpose of making it easier for complex cases to access federal forums. Second, the US Supreme Court in Wal-Mart Stores, Inc. v. Dukes has reminded litigants that class actions are “an exception to the usual rule that litigation is concluded by and on behalf of the individual named parties”. Certification is proper only if the court is satisfied “after rigor-ous analysis”, that every requisite for certifica-tion is met. Third, arbitration agreements will generally be enforced even if they preclude class actions.

Yanez: In terms of the defence of securities class actions, the most notable recent devel-opment is an expected renewed focus by the plaintiffs’ bar on traditional accounting fraud cases – that is, cases alleging that corporate books were cooked – driven by redoubled SEC enforcement efforts. With the onset of the fi-nancial crisis, the SEC focused its resources on crisis-related investigations and insider trading inquiries. But, a few months ago, the SEC announced the formation of a Financial Reporting and Audit Task Force dedicated to detecting fraudulent or improper financial re-porting. Increased scrutiny by the SEC can be expected to result in more companies identify-ing financial misstatements which, in turn, can be expected to lead to more securities class actions centred on those misstatements. At the very least, companies sued by the SEC or even entering settlements with the SEC can expect securities class actions to follow.

FW: Have there been any recent high-profile class actions worth noting? What do these cases demonstrate about the current state of how courts consider such class action claims?

McInnes: Two recent class actions are worth noting. First, the Vioxx class action was pursued on behalf of consumers who alleged that they suffered injuries caused by their consumption of the drug Vioxx. The case was significant for a variety of reasons, but in particular it is one of the few class actions which has actually run to trial and had a judgment handed down. The action went all the way to the High Court of Australia, where the Court rejected an appli-cation for leave to appeal the decision of the Full Federal Court in favour of Merck Sharpe & Dohme (Australia) Pty Ltd. Second, the Centro case was a group of shareholder class actions which settled in 2012. The Centro case 8


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involved a number of class actions by groups of shareholders who alleged that Centro had engaged in misleading and deceptive conduct based on the failure to provide continuous disclosure to the market of a number of obli-gations. It is, to date, Australia’s largest class action settlement, at $200m inclusive of costs. The Centro class action was funded by IMF (Australia) Ltd which announced after the set-tlement that it would generate a profit of about $42m from the claim.

Napolitano: The US Supreme Court has con-tinued to issue important rulings on class ac-tion practice. These rulings reverberate in all types of class actions. A key ruling from the Court’s 2012-2013 term was in Comcast Corp. v. Behrend. In Comcast, the Supreme Court reversed a class action encompassing more than two million current and former Comcast subscribers who alleged violations of federal antitrust laws. The Supreme Court held that the class failed the requirements for certification because the plaintiffs’ damages theory did not fit their theory of liability, and that questions surrounding individual damage calculation “will inevitably overwhelm questions common to the class”. Damages must be proven on a classwide basis. Federal courts in the US have now been applying the Comcast ruling to the facts of individual class action cases.

Lee: The Deepwater Horizon Oil Spill case is a multi-district proceeding that involves a variety of claims including personal injuries, economic damages and even admiralty limita-tions proceedings. The case has been tried over several months in multiple phases, and impact-ed putative class claims and individual claims. Prior to any settlement, plaintiffs pursued a hybrid putative class into which individuals were permitted to ‘join’ by filing a one page joinder. Different class settlements were en-tered for categories of economic claims and for personal injury claims. The economic damages class settlement has run into challenges, be-cause BP contends that the Settlement Claims Administrator has misinterpreted the agreed upon terms of the unlimited settlement fund. The case demonstrates that the courts are pre-pared to be creative in finding ways to address large damage claims affecting multiple parties and issues.

Yanez: One especially noteworthy securities case in recent years – at least, among those that have resulted in court decisions – was an in-vestor class action against the drug company Amgen. That case went all the way to the US Supreme Court on the issue of when courts should decide certain issues that go both to the propriety of certifying a class and to the merits of the claims being pursued. Without delving

into the technical details, the case was about whether one such issue could be decided prior to trial or could only be decided at trial. The Supreme Court held that the issue should be decided at trial and could not be short-circuited through pre-trial practice. The Amgen decision is important for businesses because it poten-tially extends the life of some class actions that might otherwise have been susceptible to a more prompt resolution. More broadly, it reaf-firms the continued viability of class actions as a mechanism for resolving securities claims.

Dawson: The US Supreme Court’s last terms included a number of high-profile class action cases, including, but not limited to American Express Co. v. Italian Colors Rest., Comcast Corporation v. Behrend, and Standard Fire Insurance Co. v. Knowles. In the American Ex-press decision, the Supreme Court held that a class waiver in a mandatory arbitration provi-sion is enforceable even if the costs of litigat-ing a claim individually outstrip the plaintiff’s potential recovery. In the Comcast decision, the Supreme Court made clear that the “rigorous analysis” first called for in General Telephone Co. v. Falcon and reaffirmed in Wal-Mart Stores, Inc. v. Dukes applies to damages issues, even when those issues overlap substantially – or even completely – with the merits. In Stan-dard Fire, the Court held that a named plaintiff in a state class action cannot thwart removal to federal court by stipulating to damages un-der $5m for himself and for the class that he sought to represent because he cannot legally bind members of the proposed class before the class is certified. These Supreme Court cases demonstrate, first, that the ability to pursue a case as a class action is not a ‘right’, second, that class certification should be scrutinised rigorously, and third, that tactical gamesman-ship to avoid otherwise proper federal jurisdic-tions over class actions will not be tolerated.

FW: By their very nature, class action dis-putes may involve parties from across the globe. What advice can you give to firms on handling class action disputes which span districts, borders or jurisdictions?

Napolitano: Class actions that involve par-ties from around the globe pose a number of significant considerations. It is essential that counsel in different jurisdictions carefully co-ordinate in all stages of cross-border litigation. Positions taken in different jurisdictions should be consistent where possible. If inconsistent positions are advanced in different courts, a coordinated defence may be negatively im-pacted. To the extent different legal standards exist on discovery and class certification, those differences must be understood early in the course of litigation. For example, the rules of

discovery vary greatly across legal systems. Many countries now recognise enhanced pri-vacy rights that may become implicated in liti-gation. Documents routinely produced in cases in the US may not be freely disclosed under the laws of other countries. Attention must also be paid to the timing of how quickly cases may be expected to proceed to a certification ruling in different jurisdictions.

Lee: Parties should understand the practices and procedures employed in the courts and the experience of the presiding judges. When claims arise from multiple jurisdictions, try to determine the jurisdiction with the law most favourable to the client, or the courts with the most experience managing complex litigation, and try to push the proceedings there. Under-stand the Manual for Complex Litigation and Rules of Procedure of the US Judicial Panel on Multidistrict Litigation and take advantage of the procedures tailored for complex cases. If there are multiple parties and counsel, ask the court to establish steering committees to limit the number of counsel that will speak for the respective groups and assign responsibility for coordination. Evaluate your client’s exposure and, if warranted, seek a leadership role on steering committees for similarly situated par-ties. Ask the court to coordinate schedules and discovery efforts. Some federal and state courts may even conduct joint status conferences, al-though some courts may be outside the state.

Yanez: Companies facing class actions that span jurisdictions should consider carefully and early in the process differences in the law applicable in the various jurisdictions, the pace the lawsuits are likely to take in those jurisdic-tions, differences in the discovery available, differences in the class action mechanisms, and related issues. The reason is that careful coordination across jurisdictions is essential if a company is to navigate multi-jurisdictional class action litigation successfully and as ef-ficiently as possible. To give just a couple of examples, the law in a jurisdiction in which cases move more quickly is likely to take on prominence even if relatively few class mem-bers reside in that jurisdiction. And differences in the type of discovery available – or permis-sible – in different jurisdictions can be critical to devising an efficient approach to discovery. A company would not, for instance, want to collect documents narrowly because only lim-ited discovery is permitted in one jurisdiction only to find that it needs to go back to the same sources to collect additional materials needed to comply with broader discovery obligations elsewhere.

Dawson: The best advice I can give is to have a national or international coordinating coun-8


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sel. With disputes spanning districts, borders or jurisdictions, it will be necessary for your legal team to work together in a coordinated and complementary fashion to protect the cor-porate client. A corporate defendant does not want inconsistent positions being taken in dif-ferent matters, and it needs to avoid the actions of counsel in one matter undermining a posi-tion it needs to take in a different, but related matter. Communication, coordination and col-laboration are vitally important. The coordinat-ing counsel needs to work with the inside legal counsel to thoroughly synthesise mission-criti-cal factual and legal issues, and effectively execute a carefully crafted strategic plan. In addition, because corporate defendants sued in class action litigation will often face related regulatory proceedings or government investi-gations, it also important to have a multi-disci-plinary approach to defending the corporation to ensure that the corporation is taking steps to mitigate its risks in potential related matters.

McInnes: Coordination of international legal strategy is extremely important when dealing with class actions that span different jurisdic-tions. It is important to be aware of the rules, procedures and the law in different jurisdic-tions to ensure that steps taken in one juris-diction do not jeopardise the position in other jurisdictions.

FW: A number of complex issues need to be addressed in relation to e-discovery, disclo-sure and information management in class action disputes. What systems and processes should firms have in place to ease the burden of data management in these cases?

Lee: Firms should have attorneys, staff and supporting consultants who are familiar with the current law and obligations for e-discov-ery and information management. When the threat of litigation materialises, steps should

promptly be taken to issue and diligently en-force document hold orders. Counsel should promptly meet with the client to obtain an un-derstanding of the client’s systems to evaluate not only the best means of ensuring the preser-vation of records, but also to assess the burdens and processes for searching and retrieving dis-coverable information. Those early meetings should also address confidential information and prospective limitations on disclosure. The firms should consider early meetings with all parties – or if too many parties, with a credibly large enough group – to settle on e-discovery protocols and perhaps agree on search terms or methodologies. Consider a joint database of produced documents which all parties – any-where – can access subject to court approved confidentiality orders and procedures.

Yanez: There are a number of IT solutions available to ease the burden of collecting and producing data that might be considered by companies particularly likely to be the targets of class action litigation. But I think a mecha-nism that many companies can consider is as-signing to an appropriate employee – or group of employees – the task of developing and maintaining a clear understanding of where and how data is maintained across the company’s offices around the world, how to retrieve that data, and what data may be retrieved consistent with local legal requirements. Having a central source for that information will ease the bur-den meaningfully for any company faced with class action litigation.

Dawson: A misstep in discovery can prove costly to a corporate defendant through the imposition of sanctions and the striking of pleadings. Lawyers representing those corpo-rate defendants are also at risk. A corporate defendant can have a winning case, but ulti-mately be forced to settle if e-discovery is not well managed. First and foremost, law firms

should have a dedicated team of professionals with expertise in e-discovery. This team must not only know the relevant federal rules and the Sedona Principles for Electronic Document Production, but also be expert in the technical issues associated with e-discovery, including a client’s IT infrastructure and the different production formats and issues associated with metadata and native production. Second, the team should have best practices to recommend to corporate defendants, including but not lim-ited to document hold memoranda, predictive coding and other analytics, password protected client extranets to serve as a document reposi-tory, e-discovery vendors, protocol for protec-tion of privileged information, and document review systems.

McInnes: In a class action, the majority of the burden of discovery falls on the defendant or defendants. Relatively speaking, the plain-tiffs often have very few documents. This is particularly true in product liability and per-sonal injury cases. Such cases often involve proceedings in various different international jurisdictions. Some of the documents required to be disclosed will be common to all juris-dictions and some specific to each individual jurisdiction. For example, a pharmaceutical company with a US parent and a local sub-sidiary may well need to produce documents relating to the research and development done in the US in multiple jurisdictions around the world. The local subsidiary may need to locate and produce regulatory files or marketing ma-terial specific to its location. As a result, not only do systems and processes need to be put in place that ensure that a comprehensive in-ternational effort is made to properly identify, collect, analyse and produce relevant material, but that that effort is coordinated on a global scale. This needs to be done to ensure that the cost is minimised and duplication of effort is avoided. Document review conducted in a cen-tral location needs to consider any differences in disclosure requirements and rules. Often the technical specifications for producing docu-ments in an electronic form are different. The differences need to be anticipated and systems put in place to minimise their impact.

Napolitano: To minimise the often signifi-cant burdens of discovery a company must have a well-organised document retention program in place before litigation hits. A docu-ment retention program should specify how long documents are kept in the ordinary course of business. However, once litigation is filed or reasonably anticipated, a document hold must be sent to employees who might have relevant documents. All potentially relevant informa-tion, including emails and other electronic doc-uments, must be preserved once litigation rears 8


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its head. A company should have procedures in place for the timely preparation and distribu-tion of a document hold, as well as the means to stop any regularly scheduled destruction of electronic and paper records. Typically a form hold can be prepared in advance and modified to fit the facts of a particular litigation. Any unreasonable delay in issuing a hold can have significantly negative litigation ramifications, including an award of sanctions.

FW: Disputes often bring a host of techni-cal issues that require the involvement of spe-cialised advisers. Do you recommend the use of third party class action administrators? In what ways can they streamline the process? What disadvantages do you see?

Dawson: I do recommend the use of third parties to assist corporate defendants in areas such as class action notice and claims admin-istration. They can streamline the process in a number of ways. For example, claims admin-istrators have expertise in developing notice plans to ensure that notice of a class action settlement is provided in a manner that com-ports with due process and will be approved by the court in determining whether a class settle-ment is fair, reasonable and adequate. Claims administrators have expertise in the processing of claim forms and payment of claims. Once the decision is made to settle a class action, a corporate defendant may understandably want to put the matter behind it and stop devoting its resources, including its personnel, to the litigation. With a claims administrator, the cor-poration can focus on its core business func-tions and not be burdened with administering claims. One drawback for certain corporate cli-ents is that the claims administrator is interfac-ing directly with their customers or employees. Many corporations prefer to have complete control over communications with their cus-tomers and employees by utilising their own personnel.

Napolitano: In the US, the key issue in class actions is whether the court will allow the case to proceed as a class action – that is, whether a class will be certified. In making that determi-nation, US courts are increasingly interested in learning how the case would be tried before a jury on a class basis. As a result, the use of sub-stantive expert witnesses to explain that point is increasingly common. If a defendant decides to settle a matter on a class basis, we do recom-mend the use of third party class action admin-istrators. Working closely with counsel, these administrators can do the ‘nuts and bolts’ of settlement and help manage the often substan-tial costs of a settlement program. Third-party administrators can help design and implement a notice program, process claims and inquiries

from class members, and issue payments to class members as warranted. While we do not see any disadvantages to using such adminis-trators, the key decisions on settlement must be driven by knowledgeable legal counsel.

Lee: When the putative class numbers in thousands and above, retaining class action ad-ministration is reasonable if not essential. As-sisting in the issuance of notices and tracking contacts, inquiries and claim form responses are tasks that class action administrators can handle efficiently subject to attorney review. From the defence side, the work of such ad-ministrators can also help to identify charac-teristics that might be used to demonstrate the absence of commonality required for class certification. Timing can be a factor, however, if databases are created too early and without sufficient planning, the benefit can be lost by costly re-work. Moreover, depending upon the case progress, the database may not be needed. Accordingly, planning is important.

FW: Often, the best option for parties is to settle the dispute and avoid protracted litiga-tion. At what point should parties consider settlement, and what considerations should be made when drafting a settlement agree-ment?

McInnes: The majority of class actions in Australia settle before trial. It means that those facing a class action will always consider the pros and cons of early resolution of claims. However, in Australia, an important consider-ation in the settlement of class actions is that the settlement needs to be approved by the Court. In order for a settlement to be approved, the Court must consider that the terms of the settlement are fair and reasonable not only for the group as a whole but also between group members. There are a number of recent cases that demonstrate that the Court takes its duty to protect the rights of unrepresented group mem-bers seriously and will have an active role in the settlement of class actions.

Napolitano: Before settling a class action, a defendant must weigh the options very careful-ly. Proposed settlements must be approved by US courts and are usually challenged. Courts are taking such challenges very seriously, and there has been a dramatic increase in the num-ber of class settlements that have been rejected. When settlements are rejected, the defendant is sometimes forced to spend substantially more money than originally anticipated to get the matter resolved. Further, defendants need to be careful about appearing to be willing to settle class actions too readily, as such an image may make the defendant a target for more cases. Although the analysis will vary from case to

case, a defendant should seriously consider settlement only after it has tried to use motions to dismiss, motions to strike class allegations, and other means available to defeat the class action. Finally, a class action can sometimes be resolved by settlements with the named plain-tiffs only where no class has been certified.

Lee: As a general rule, defendants should not settle or entertain settlement until they know which defences are viable and which are not, understand the totality of the class and poten-tial claims and damages and, if unlimited, what the settlement will likely cost, and they can de-fine the settlement class with enough certainty that it can pass the test for certification and achieve res judicata effect that will foreclose exposure from a sufficient number of claimants to justify the settlement. Bellwether trials can be a helpful tool to help establish settlement benchmarks. If you cannot achieve all three objectives, especially, the third – res judicata – then you should consider more piecemeal settlements and possibly forego class-wide resolution.

Yanez: Defendants in class action litigation are well-advised to consider settlement at all stages of a case from service of the complaint through the commencement of trial. That’s not to say that companies with meritorious defenc-es should settle or that defendants should seek to initiate settlement discussions even when faced with challenging cases. But the rela-tive costs and benefits of settlement should be weighed throughout the life of a lawsuit in or-der to help defendants measure the value of the lawsuit compared with the resources needed to defend against it. With respect to drafting the settlement agreement itself, principal concerns for defendants include the scope of the releases in the agreement and the extent to which simi-lar suits can be brought notwithstanding the settlement. Releases should be as broad as pos-sible, covering anything touching on the claims asserted in the lawsuit. And there should exist a mechanism for defendants to terminate the settlement if it stops making economic sense because too few plaintiffs participate.

Dawson: The decision to settle a class action is unique to each specific case and client. Set-tlement may be pursued at the outset of a case to avoid the cost of protracted litigation; in the middle of a case while potentially dispositive motions are pending and both parties are fac-ing uncertainty; or at the class certification stage, when an order has been entered granting certification of a class. In the settlement agree-ment itself, the corporate defendant should focus on the scope of the claims released. In addition, the corporate defendant will need to protect against class members opting out of 8


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the settlement by including a blow-up provi-sion, which enables the defendant to terminate the agreement if there are a significant number of opt-outs, and take-down provisions, which are designed to reduce the aggregate monetary award to be distributed to the class to account for opt-outs. Because settlement funds are of-ten not all claimed by members of the settle-ment class, the settlement agreement should include a provision that controls the distribu-tion of these unclaimed funds. Possibilities that the parties can consider include distribution of the unclaimed amount to the class members who did submit claims; reverter or recapture of the funds by the defendant; or distribution to a charity or other organisation through cy-près.

FW: Going forward, what are your predic-tions for class action disputes in your area of practice? Do you expect to see an increase in such disputes, and what types of cases are likely to be prevalent?

Yanez: The number of securities class action

lawsuits in the US has fluctuated over the years, but always within a relatively stable range. I would expect that to continue going forward. As to the types of class actions, I expect a resur-gence of claims alleging accounting fraud for the reasons I’ve already mentioned.

McInnes: As a general observation, because of the high degree of involvement of litigation funders in class actions – and the considerable number of litigation funding companies that have emerged over the last five to 10 years – the class action landscape will continue to be a focal point for the Australian legal system in the coming years. Although the GFC was a significant driver for the commencement of a number of class actions in Australia over the last five years, the jurisprudence is still devel-oping and class actions are yet to reach their full potential in Australia. As the class actions regime in Australia continues to mature, it is likely that a range of new and challenging is-

sues will emerge. The types of cases that we are likely to see are continued consumer and inves-tor claims, along with shareholder class actions – although the large number of recent share-holder class actions has been effective in tight-ening up corporate governance in Australia. The major plaintiff firms and litigation funders have focused their attention on the shareholder and financial services claims and become the domi-nant players in that field. This has left a gap in the market for emerging firms to pursue prod-uct liability claims. The up skilling of a greater number of firms in class action litigation has resulted in more claims being commenced by different plaintiff law firms. We are also likely to see a renaissance in product liability claims as a number of smaller plaintiff law firms begin to pursue class action litigation.

Lee: The Supreme Court’s pronouncements will force parties to either refine issues, class definitions and remedies to satisfy the ‘rigor-ous analysis’ for certification, or seek alterna-tive procedural devices to pursue large claims. As examples, in some instances, parties have deferred resolution of motions to certify and proceeded instead of selecting to try bell-wether cases to assess exposure and explore settlements. Subclasses may be proposed to minimise individual differences that might otherwise defeat certification. Where sufficient numbers of claimants are available, some cases will be filed as mass actions. Many companies will take steps to include non-class arbitration provisions in their contracts, but many other companies either cannot or will not take that course. Moreover, many class actions are not contract related and would not be affected by arbitration agreements. In short, class actions and mass actions will continue for the fore-seeable future. Fertile areas of such litigation include privacy claims and regulatory based claims, including banking, securities, antitrust, consumer protection and trade practice laws.

Dawson: I expect consumer class actions to

continue despite a number of favourable class action decisions issued by the US Supreme Court. The US Supreme Court has not answered the question of whether or not a class, which includes members who do not have standing under Article III and whose products have not manifested the alleged defect, can be certified. The Ninth, Third, Sixth and Seventh Circuits have answered in the affirmative, but the Sec-ond and Eighth Circuits have answered in the negative. I anticipate we will see an increase in no-injury product liability class actions in those jurisdictions that allow certification of classes despite the fact that many, if not most, members of the class have not experienced a problem with the product they own. Other ‘hot’ areas for consumer class actions will be consumer protection and fraud, antitrust, wage and hour, securities, and privacy class actions. I expect these cases to be prevalent across a va-riety of industries, though likely concentrated in those ‘plaintiff-friendly’ jurisdictions where the plaintiffs’ bar believes a class will be cer-tified and that the decision will be upheld on appeal.

Napolitano: I expect that creative and moti-vated plaintiffs’ class action counsel in the US will continue to use the class action mechanism frequently in the area of mass torts and con-sumer litigation. While the theories of liability will continue to evolve, plaintiffs’ lawyers re-alise full well the leverage that can be brought to bear over corporate defendants through the class action mechanism. I expect that such cases will continue to be common in many jurisdictions under state consumer protection laws. As manufacturers face ever increasing pressures to differentiate their products in the crowded worldwide marketplace, attention will continue to be paid to marketing and product claims. To the extent creative lawyers can put forth claims that such labelling is deceptive to consumers and in violation of state consumer protection laws, class actions will continue to be filed in this area.

Allens is a leading international law firm with partners, lawyers and corporate services staff across Australia and Asia, and a global network spanning 39 offices and 28 countries through its alliance with Linklaters. We provide a full range of commercial legal services to many of the world’s leading organisations – including 55 of the world’s top 100 companies and more than 75 of Australia’s top 100 companies. We offer our clients access to leading lawyers and resources in Australia, Asia and around the world.

Peter O’Donahoo Peter.O’[email protected]

Melbourne, Australia +61 3 9613 8742

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The Class Actions litigation team at Clayton Utz is one of Australia’s leading defence practices. We have been acting in group proceedings, multi-plaintiff claims and representative proceedings for over 20 years. We have acted in a number of the seminal class action cases which have shaped class action jurisprudence in Australia. We have learnt that class actions and group claims are a different species of litigation, with their own specialised rules and procedures.

Ross McInnes [email protected]

Sydney, Australia +61 2 9353 4371

Founded in 1965, Charles River Associates is a leading global consulting firm that offers economic, financial, and business management expertise to major law firms, corporations, and governments around the world. CRA has extensive experience in litigation and international arbitration, including both commercial and investment treaty claims, and has been engaged in some of the most complex and high-profile disputes of recent years. The firm provides expert testimony and analytical expertise in a variety of industries.

Geoffrey Senogles [email protected]

Geneva / London +41 22 360 8090 / +44 20 7664 3700

Phil Hersey [email protected]

London, UK +44 20 7664 3700

A leading international law firm with 16 offices located in major financial centres around the world, Cleary Gottlieb Steen & Hamilton LLP has helped shape the globalisation of the legal profession for more than 65 years. Our worldwide practice has a proven track record for innovation and providing work of the highest quality to meet the needs of our domestic and international clients.

Ferdinando Emanuele [email protected]

Rome, Italy +39 06 6952 2604

Milo Molfa [email protected]

London, UK +44 20 7614 2212

Freshfield Bruckhaus Deringer shares a vision: to become the number one international law firm; the firm that is widely recognised as standing apart, for the quality of our advice and for our unswerving commitment to our clients. But it’s not just our legal advice and client service that set us apart. It’s the way we work with our clients, other firms and each other, our character and our values.

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Paris, France +33 1 44 56 33 18

Alston & Bird LLP has grown to become a national AmLaw 50 firm while remaining steeped in a culture with client service and teamwork as the cornerstones of all that we do. We develop, assemble and nurture the strongest and broadest array of legal talent and expertise necessary to meet our clients’ needs in an ever-changing and fast-paced environment. Alston & Bird’s unique culture and core values have been nurtured for more than a century.

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Atlanta, GA, US +1 (404) 881 7766


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Celebrating more than 125 years of service, King & Spalding is an international law firm that represents a broad array of clients, including half of the Fortune Global 100, with nearly 900 lawyers in 17 offices in the United States, Europe, the Middle East and Asia. The firm also represents hundreds of clients with new ventures and mid-sized companies in emerging industries. The firm has handled matters in over 160 countries on six continents and is consistently recognised for the results it obtains.

Adrian Cole [email protected]

Dubai, UAE +971 2 596 7013

Morrison & Foerster is a global firm of exceptional credentials. With more than 1000 lawyers in 16 offices in key technology and financial centres in the United States, Europe and Asia, our clients include some of the largest financial institutions, investment banks, and Fortune 100, technology and life science companies. We’ve been included on The American Lawyer’s A-List for 10 straight years, and Chambers Global named MoFo its 2013 USA Law Firm of the Year.

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Tokyo, Japan +81 3 3214 6979

Founded in 1923, Marval, O’Farrell & Mairal is a full-service law firm that has been providing sophisticated, high quality advice to leading local and international companies, organisations and financial institutions for 90 years. It is the largest law firm in Argentina, comprising over 300 lawyers, and has wide experience of international business issues and the complexities of cross-border and multi-layered transactions.

L. Santiago Soria [email protected]

Buenos Aires, Argentina +54 11 4310 0100 ext. 2404

Norton Rose Fulbright is a global legal practice. We provide the world’s pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia. Recognised for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

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Hogan Lovells is a global legal practice that helps corporations, financial institutions, and governmental entities across the spectrum of their critical business and legal issues globally and locally. We have over 2500 lawyers operating out of more than 40 offices in the United States, Europe, Latin America, the Middle East, and Asia. Our practice breadth, geographical reach, and industry knowledge enable us to provide high quality business-oriented legal advice to assist clients in achieving their commercial goals.

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Munich, Germany +49 89 290 120

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Munich, Germany +49 89 290 120


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Stone Pigman has a long history of litigating complex commercial disputes in Louisiana and has substantial experience with class actions, mass actions and multi-district litigation. We partner with clients to learn about their legal needs and priorities and work toward their goals in every aspect of the litigation process. Whether we obtain class certification denial, seek alternative dispute methods or defend the matter through trial, our focus is always on our clients’ goals.

Wayne J. Lee [email protected]

New Orleans, LA, US +1 (504) 593 0814

James C. Gulotta, Jr. [email protected]

New Orleans, LA, US +1 (504) 593 0817

Carmelite M. Bertaut [email protected]

New Orleans, LA, US +1 (504) 593 0898

Walder Wyss is one of the leading law firms in Switzerland. Our clients include international corporations, small and medium-sized businesses, public companies, and family-owned companies, as well as public-law entities and individuals. The Walder Wyss legal team includes approximately 100 lawyers and tax experts, all of whom are highly qualified multilingual professionals with international experience. Walder Wyss is active in national and international professional organisations and maintains established business relationships with partner law firms in other countries.

Dieter Hofmann [email protected]

Zurich, Switzerland +41 44 498 96 90

TKQP’s arbitration and disputes practice group is the largest division in the firm. Its hallmark qualities of effective and efficient litigation have given it a reputation as being one of the top dispute resolution firms in Singapore. It has a wealth of experience in handling a broad and diverse spectrum of cases, and in particular complex civil and commercial disputes.

Kannan Ramesh, SC [email protected]

Singapore +65 6496 9508

Eddee Ng [email protected]

Singapore +65 6496 9540

Karam S Parmar [email protected]

Singapore +65 6496 9541

Established in 1888, Willkie Farr & Gallagher LLP is a full-service international law firm renowned for its expertise in corporate and securities law, litigation, business reorganisation and restructuring, real estate and a number of specialised fields including insurance, technology, media and telecommunications, tax, antitrust and competition, government relations, intellectual property, trusts and estates, executive compensation and employee benefits and environmental law. We operate from offices in New York, Washington, Paris, London, Milan, Rome, Frankfurt and Brussels.

Antonio Yanez, Jr. [email protected]

New York, NY, US +1 (212) 728 8725

With 23 offices, approximately 1800 attorneys and more than 40 distinct areas of practice, Skadden, Arps, Slate, Meagher & Flom LLP and affiliates serves clients in every major international financial centre, providing the specific legal advice companies across a spectrum of industries need to compete most effectively in a global business environment. Our clients include approximately 50 percent of the Fortune 250 industrial and service corporations, as well as financial and governmental entities, small, entrepreneurial companies and nonprofits.

Steven F. Napolitano [email protected]

New York, NY, US +1 (212) 735 2187