Principles of International

Commercial Arbitration

Allen B. Green
McKenna Long & Aldridge, LLP
Principles of International
Commercial Arbitration
International Arbitration v. Multinational
Litigation
Drafting An International Arbitration
Clause or Agreement
Conducting An International Arbitration

Principles of International
Commercial Arbitration

International Arbitration
vs.
Multinational Litigation

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

International Arbitration vs.
Multinational Litigation (contd)
Emerging Law On:
Consolidation of Proceedings
Bringing in Third Parties
Arbitrability

International Arbitration vs.
Multinational Litigation (contd)
International arbitration is more flexible than
litigation because arbitration allows for:
The selection of arbitrators with expertise relevant
to the dispute e.g., selecting arbitrators with
expertise in accounting for an accounting dispute
More tailored and flexible rules of procedure
More limited discovery: Advantage or
Disadvantage

International Arbitration vs.
Multinational Litigation (contd)
Opportunity to draft an arbitration
agreement that can resolve difficult
litigation issues, such as governing law,
jurisdiction, language, evidentiary rules, and
confidentiality

International Arbitration vs.
Multinational Litigation (contd)
Arbitration offers a neutral forum
No home court advantage
Arbitration may be resolved faster and
cost less than litigation in multiple courts in
multiple jurisdictions
Procedural agreement is the key
Arbitral institution vs. ad hoc proceding

International Arbitration vs.
Multinational Litigation (contd)
Arbitration should be less adversarial making
it easier to preserve the parties continuing
business relationships
Orders/awards cannot bind third parties because
such parties have not consented to the arbitration
Foreign arbitral awards must be enforced
through national courts if not complied with by
losing party

International Arbitration vs.
Multinational Litigation (contd)
Arbitral tribunals may not be able to grant
effective interim relief
But see court injunction to preserve status quo
There is no appeal, only challenge under the
New York Convention
Perception of Risk of Compromise Awards
A Third Alternative
Mediation and Last Offer Arbitration
(MEDALOA)
Both mediation and arbitration may be applied
to the same dispute whereby the parties start
with mediation and, if the parties fail to reach
an agreement, the mediator must change hats
and become an arbitrator
Common Mediation Scenarios
Relatively little is at risk or there is an impasse,
but parties are in similar positions with regard to
burdens and costs of arbitration
Parties begin mediation, and, if no settlement occurs,
the mediator assumes the role of an arbitrator (or the
parties agree to a new arbitrator)
Each party presents a closing argument style
presentation and a final last offer
Arbitrator picks the most just last offer, which
becomes a binding arbitration award
Common Mediation Scenarios
(contd)
Complex cases where most is at risk and/or
the parties are at an impasse and far apart
Parties start with mediation and, if no
settlement occurs, the mediator fully-
informed of the case and the parties concerns
assumes the role of facilitator to help the parties
negotiate the outline of a binding arbitration
Principles of International
Commercial Arbitration

Drafting an International Arbitration
Clause or Agreement
Drafting An International
Arbitration Clause or Agreement
Consent
Scope
All Disputes clause
Any controversy, dispute, or claim arising out of,
relating to or in connection with this contract or the
performance, enforcement, breach, termination or
validity thereof, including the determination of the
scope of the contract to arbitrate, shall be
determined by arbitration . . .
Drafting An International Arbitration
Clause or Agreement (contd)
Use of an Arbitral Institution or Proceeding Ad
Hoc
Major Institutions:
ICC International Court of Arbitration
London Court of International Arbitration
American Arbitration Association (International
Rules)
International Center for Settlement of Investment
Disputes (ICSID)
Drafting An International Arbitration
Clause or Agreement (contd)
Major Institutions (contd)
WIPO Centre
Stockholder Chamber of Commerce
Regional Institutions
IACAC
CEPANI
Ad Hoc/UNCITRAL Rules
Drafting An International Arbitration
Clause or Agreement (contd)
Factors to Consider in Choosing
Institutional Administrator vs. Proceeding
Ad Hoc
Credibility/enforceability
Cost Factors
Administrative costs
Arbitrators fees
Sole Arbitrator or Panel of Three
Drafting An International Arbitration
Clause or Agreement (contd)
Appointing Authority
Specify seat of arbitration, situs, in a country that:
Allows the arbitration of the type of disputes that may
arise in the contract, and
Has ratified the New York Convention
Identify Choice of Law
Law of Arbitration
Governing Substantive Law
Drafting An International Arbitration
Clause or Agreement (contd)
Consent to personal jurisdiction of courts
where the arbitration is to be held and
enforced may be desirable, particularly if
one party is a government or government-
owned entity
Confidentiality Issues
Address Discovery?
Drafting An International Arbitration
Clause or Agreement (contd)
Interim Relief
To preserve status quo
Arbitral tribunal powers
National court powers
Consider requiring compulsory negotiation or
non-binding mediation prior to a binding
arbitration
Principals must participate
Short time period
Drafting An International Arbitration
Clause or Agreement (contd)
Standard ICC Clause
All disputes arising out of or in connection
with the present contract shall be finally
settled under the Rules of Arbitration of the
International Chamber of Commerce by one or
more arbitrators appointed in accordance with
the said Rules
Drafting An International Arbitration
Clause or Agreement (contd)
Standard LCIA Clause
Any dispute arising out of or in connection
with this contract, including any question
regarding its existence, validity or termination,
shall be referred to and finally resolved by
arbitration under the LCIA Rules, which Rules
are deemed to be incorporated by reference
into this clause.
Drafting An International Arbitration
Clause or Agreement (contd)
Standard LCIA Clause (contd)
The number of arbitrators shall be
[one/three]. The place of arbitration shall be
[city/state]. The language to be used in the
arbitral proceedings shall be [ ]. The
governing law of the contract shall be the
substantive law of [ ].
Principles of International
Commercial Arbitration


Conducting An International Arbitration
Conducting an International
Arbitration
Commencing the arbitration
Petition and Answer
Selecting a sole arbitrator
Selecting a panel of three
Strategy concerning party arbitrator
Strategy concerning the chair
Appointing authority strategies
Conducting an International
Arbitration (contd)
Provisional remedies
Timing factors
Court injunction to preserve the status quo
pending arbitration
Provisional remedy from the tribunal
WIPO Emergency Relief Rules
Conducting an International
Arbitration (contd)
First procedural hearing
Discovery
Depositions
Documents
Third Parties
Motions
Summary Proceedings
Conducting an International
Arbitration (contd)


Common Law - Typical Arbitration - Civil Law

Advocates Develop Judges Develop
Facts Facts
Conducting an International
Arbitration (contd)
Presentation of Case-In-Chief
Memorials
Witness Statements
Hearings
Nature, number and duration
Rules of evidence
Conducting an International
Arbitration (contd)
Witnesses
Factual
Expert
Enforcing the Award
Petition to confirm
Challenge to the award
Forum for challenge under the New York Convention
Country of situs or choice of law
Conducting an International
Arbitration (contd)
Enforcing the Award (contd)
Defending the challenge
Chromalloy decision