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Party Perceptions in International Arbitration Where are the disconnects?. Michael McIlwrath Associate General Counsel – Litigation GE Oil & Gas Brunel 24 May 2013. Disconnect number 1 party orientations towards the conflict and each other. Dispute over equipment failure. - PowerPoint PPT Presentation
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Michael McIlwrathAssociate General Counsel – LitigationGE Oil & Gas
Brunel24 May 2013
Party Perceptions in International Arbitration
Where are the disconnects?
2 /April 20, 2023
Disconnect number 1
party orientations towards the conflict and
each other
3 /April 20, 2023
Dispute over equipment failure
4 /April 20, 2023
Two causation theories: 1. Claimant’s expert: manufacturing and installation defects2. Respondent’s expert: excessive water in gas causing high vibrations in equipment left unchecked by customer
5 /April 20, 2023
“Claim valuation blindness”
Source: M. Mcilwrath, Selective Perception and Bad Faith Allegations in Commercial Settlement Discussions, Alternatives (CPR Institute), October
2004
6 /April 20, 2023
Consequences of disconnect 1 in
subsequent arbitration• Perception/accusations of bad faith• Party positions more
entrenched/extreme through preparation for proceedings
• Duration and distance of international cases reduces reality checks often available in state courts
• International arbitral tribunals typically reluctant to give parties early views of their case
• Losing party will blame loss on arbitrators (incompetence, bias)
7 /April 20, 2023
Disconnect 2 – party perceptions of the arbitral
process:
the culture of litigators vs business managers
8 /April 20, 2023
Satisfaction with arbitration?
“86% of Corporate Counsel reported they are satisfied with international arbitration”PWC/Queen Mary University Survey, International Arbitration: Corporate Attitudes and Practices 2008
“Well, they must not have have been talking to us…”Massimo Mantovani, GC, ENI Group, Milan (IDN podcast)
9 /April 20, 2023
Questions to international litigators and business people:
1.For a dispute of medium complexity and value of $5-10 million, how long should an arbitration take, ideally ?
2.What if it were an expedited or fast track arbitration?
10 /April 20, 2023
Conceptually, arbitration should meet party expectations of timing
“If you are marketing a product as an arbitrator, it is essential that you have different products. Product 1: you buy into it, and I give you an answer in 14 days. But I have two more products, which are called six months and ‘long as a piece of string’. You just sign up for A, B or C.” -- Australian arbitrator/mediator John Wade
11 /April 20, 2023
timing: views of lawyers (audio)Two arbitration specialists, English and Italian:
Arbitration? “Should take 9 months to one year.”
Expedited? “Six months”
German arbitration lawyer:
Arbitration? “International arbitration, if conducted very efficiently, could be within 6 months after the Terms of Reference have been signed, but average is probably 2 years.”
Expedited? “A fast track arbitration should last maximum 3 months.”
Senior in-house counsel (Siemens, Germany):
Arbitration: “Medium arbitration should not take more than 2 years.”
Expedited: “And 6 to 9 months for expedited arbitration.”
12 /April 20, 2023
timing: views of GE litigators (audio)
13 /April 20, 2023
timing: the voice of business (audio)Three business leaders in Doha, Qatar:
1. Arbitration? “It takes a long time… maybe, could take a couple of months”Expedited? “1 week or 2 weeks.”
2. Arbitration? “2-3 months for medium complexity arbitration, and 1month for expedited arbitration.”
3. Arbitration? “For medium arbitration… a couple of months and 3 to 4 weeks for expedited arbitration.”
US executive, global business
Arbitration? “Should take only 30 days.”
Expedited? “15 days.”
14 /April 20, 2023
timing: the voice of business (audio)
Michael Wheeler, Associate Dean, Harvard Business School:
Arbitration? “If you are talking about a construction example, I think you want to do it in days.”
“In ‘days’? From the filing of an arbitration request to an outcome?” “Yes, in days. If you’re trying to put up a skyscraper, I don’t think people want to be sitting around with the whole project stopped because you don’t know where you stand.” General Manager, international business
(>$200M/year):
Question: “What would you say if I told you your arbitration of a dispute involving $3-5MM might take three years to complete?”
Response: “I’d say that’s absolutely crazy. Why would you file for arbitration at that point? It makes no sense to me.”
15 /April 20, 2023
Consequences of disconnect 2
• Dissatisfaction of business managers with arbitral process, even if lawyers are happy
• Negative impact on arbitrators’ reputation, even if proceedings went smoothly
16 /April 20, 2023
Can we address the disconnects?
1. Parties: enhanced awareness of likely outcome, duration, cost: Early Case Assessments (ECA). (“Is the deal I can get today better than what I’ll get and spend in two years of arbitration?”)
2. Arbitrators: pre-appointment interviews and early case management conferences to set expectations. (“How long should this arbitration take?”)
3. Institutions: mediation as part of arbitral process
17 /April 20, 2023
end