JAMS International ADR Blog

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The impact of common and civil law on international arbitration

by Philip McMullan on 24 Aug 2016

The growth of global trade over the last forty years has been mirrored by the growth of international arbitration as a means for parties to resolve commercial disputes efficiently and cost-effectively. While well-established institutional and ad hoc rules exist to provide the framework for running international disputes (including JAMS), these rules are not sufficient in themselves to cover the varying situations and diverse procedural questions that will arise during the course of the hearing.

The legal representatives of each party quite naturally look to their own substantive legal training under their national system when agreeing how to answer these procedural questions. But in the context of an international dispute these national legal systems can be inappropriate, especially given the diverse backgrounds of parties, lawyers and arbitrators.

International arbitration, therefore, has had to develop its own distinct procedures over the years, influenced heavily by both the common and civil law traditions. It is useful then to examine how common and civil law have helped shape international dispute resolution. And given that arbitrators are likely to come from one or other of the legal traditions, it is also useful for parties and their legal counsel to understand how that is likely to influence the tribunal’s thinking on procedures, evidence and, ultimately, award.  

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A question of privilege

by Philip McMullan on 09 Aug 2016

The mediation process, by its very nature, requires confidentiality to work. Parties in dispute need to be confident that they can discuss their case frankly and robustly in the hope of reaching agreement; at the same time, they want to reserve their right to pursue further legal redress in the event of the failure of the process. The confidentiality of the mediation process stems at common law from the without prejudice privilege of all settlement discussions – with exceptions to be discussed further below. In addition, a well-drafted mediation agreement will also contain confidentiality clauses to ensure extra protection for the parties during the process. Such clauses have been relied on in the past to provide injunctive relief for one party, as well as allowing the mediator to enforce the confidentiality obligation against one of the parties attempting to break it. In a real sense then, confidentiality is the bedrock of the mediation process.

So the Court of Appeal's recent decision in Ferster v Ferster, upholding Rose J’s decision at first instance, that an email, sent during the mediation (by the mediator), did not attract without prejudice privilege is certainly worth examination. The facts of the case were exceptional. The appellant's email contained a revised offer to settle at a higher price. The revised offer was made on the basis of the respondent’s "wrongdoing" (an alleged undisclosed off-shore bank account) and continued to make various threats about the consequences if the respondent did not accept the offer – including threats of criminal proceedings, to his livelihood and to his family. The full judgment can be found here.  

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Dispute resolution clauses - FAQ

by Philip McMullan on 01 Aug 2016

When drafting an agreement for a new business partnership, after all the time spent negotiating around deliverables and costs, the deal's legal advisers might well be tempted to use a boilerplate dispute resolution clause. Under pressure from commercial, operational and management teams to get the deal signed and get started on the project, it would be perfectly understandable. It would also be a mistake.    

It might not be front of mind in the heady days of a new business venture but the dispute resolution clause can have far-reaching effects in the longer term. Forum, location, tribunal composition, rights (and ease) of appeal and enforceability of award all flow from the dispute resolution clause.These factors can be crucial in international disputes where the importance of black letter law can take a back seat to the realpolitik of a home jurisdiction tribunal for one of the parties or a location which makes enforceability a serious headache.   

So what are the key issues to consider when drafting a dispute resolution clause?

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CJEU confirms arbitral award in international patent license dispute

by David Perkins on 26 Jul 2016

As discussed in an earlier post, the Court of Justice of the European Union confirmed that its function is not to review findings of an Arbitrator or his interpretation of a Patent License Agreement: Genentech, Inc. v Hoechst GmbH/ Sanofi Aventis GmbH, Case C-567/14 (Judgment of the Court: 7 July, 2016).

Commenting on this decision, David Perkins finds that the position remains: international arbitral awards must be compatible with EU law and, consequently, it may be necessary to apply EU law when interpreting and applying the contract in issue.

On the facts of the Genentech case, Art.101(1) TFEU does not preclude imposing on a licensee an obligation to continue paying royalties for the use of patented technology for the entire period in which the agreement is in effect, notwithstanding the revocation or non-infringement of a licensed patent. As noted, this is subject to the proviso that the licensee is freely able to terminate the agreement by giving reasonable notice.

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Why parties to arbitration are resisting greater court involvement

by Philip McMullan on 19 Jul 2016

The UK’s Lord Chief Justice raised eyebrows in the legal profession in March, 2016 when he suggested that the growth of arbitration was hindering the development of common law. Lord Thomas of Cwmgiedd said that the UK took something of a wrong turning in 1979 and 1996 when it brought forward measures to make arbitration more attractive to the international market. The changes in the seventies and nineties focused on limiting the number of appeals which would come out of the arbitration process to be heard by a judge, thereby giving more finality and certainty to arbitration awards. But the unintended consequence, according to Lord Thomas, has been that a lack of commercial cases reaching the courts has hindered the development of common law.

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What are the main behaviours that tribunals dislike?

by Philip McMullan on 04 Jul 2016

Setting out its Guidelines on Party Representation in International Arbitration in October 2013, the International Bar Association (IBA) neatly summed up the difficulties facing tribunals. Counsel from different jurisdictions are "subject to, or informed by, diverse and potentially conflicting rules and norms", which the body was concerned could potentially "undermine the fundamental fairness and integrity of international arbitral proceedings". 

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No annulment of arbitral award in patent license dispute

by David Perkins on 19 May 2016

On a reference from the Cour d’Appel de Paris, A.G. Wathelet upholds the primacy of an arbitral award as compatible with Art.101 TFEU in Genentech, Inc. v Hoechst GmbH / Sanofi-Aventis GmbH, Case C-567/14 (Opinion of Advocate General Wathelet: 17 March 2016).

David Perkins finds that for the Advocate Ceneral, the issue turned on the terms of the License Agreement between Hoechst/Sanofi-Aventis and Genetech, and there was nothing in that Agreement which gave rise to infringement of Art.101 TFEU. Nevertheless, if the Opinion is followed by the Court, it is clear that – as a matter of general effect – there is power for a National Court of an EU Member State dealing with a request to set aside or refuse enforcement of an arbitral award to examine whether the Agreement and the effect of the arbitral award infringe Arts.101 and/or 102 TFEU and are, consequently, contrary to public policy.

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A European perspective on the arbitration of patent disputes

by David Perkins on 29 Mar 2016

Despite increasing harmonisation of patent law - for example, the adoption by the US of the "First to File" rule in the America Invents Act - there remains no global system, other than arbitration, which provides a single solution to multi-jurisdiction patent disputes. Nor is there such a system on the horizon. While the establishment of the UPC in Europe may eventually provide some improvement for patent disputes in the 28 EU Member States, that new Federal System brings with it the several uncertainties identified above and is, of course, limited in its jurisdiction.

With increased use of international arbitration in this sector, provided it continues to deliver sound, effective decisions within a reasonable time frame and at a reasonable cost, it is to be expected that it will more and more become the procedure of choice for parties in multi-country patent disputes.

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ADR added to financial list?

by Antony Collins on 06 Aug 2015

Regulatory action against banks has been a principal theme in financial services litigation in recent years. The most notorious regulatory finding against UK banks concerned misselling of payment protection insurance (PPI), which according to the Financial Conduct Authority (FCA), has cost lenders more than £20bn since January 2011

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Business conciliation services for small to medium-sized businesses

by Antony Collins on 31 Jul 2015

The UK government has unveiled yet another ADR initiative for small and medium-sized enterprises (SMEs). The latest plan from the Department for Business, Innovation and Skills (BIS) is for a Small Business Conciliation Service intended to “help small businesses settle their problems with large corporations” and to “avoid expensive legal costs and maintain business relationships by reaching mutually satisfactory agreements”.

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