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Guide to Regional Arbitration (volume 5 - 2017)

White List: North America

02 November 2016

The US has a number of large arbitration providers – most notably the American Arbitration Association (AAA) – that handle domestic work. But in the international space, the AAA has faced some challenges (as have its domestic rivals). One was its name, which didn't help in a business where neutrality is all.

More significant was the awareness in international circles that "American arbitration" was stylistically different. In Europe the whole of the tribunal was neutral (even those appointed by the sides), but in AAA arbitration, only the chairman was; if a party appointed you as arbitrator, you were an advocate for their case.

Those aspects are now in the past. But for a time they curbed the number of cases heading to US providers.

The also faced the obstacle that, in the US, there is a reliable court system; and that a US business is often on one side of an international arbitration (the majority of parties in ICC arbitrations are consistently US-based), making the US difficult to use as a seat. The US is currently home to three significant arbitration providers, all of which have to some extent international aspirations.

The AAA began life in 1926, around the time of the Federal Arbitration Act. The CPR and JAMS came along in 1979.

Interest in international arbitration in the US, though, is growing. Miami is becoming a thriving hub for Latin American cases, and there are  now international arbitration ‘clubs' and societies in Atlanta, Miami, Houston, San Francisco, as well as New York. In Atlanta, the Atlanta Centre for International Arbitration and Mediation, recently opened and is hoping to establish itself as another regular place for hearings..

So the landscape will change. But for now, these are the institutions to be aware of.

INTERNATIONAL CENTRE FOR DISPUTE RESOLUTION (ICDR)/AMERICAN ARBITRATION ASSOCIATION (AAA)

What is it?

The oldest and best-respected arbitral provider in the US.

How old?

The AAA was established in 1926, a year after Calvin Coolidge signed the Federal Arbitration Act. This marked the culmination of a period when successive presidents – beginning with Theodore Roosevelt, who initiated the second Hague Convention in 1907 – had thrown their weight behind the proliferation of international arbitration.

Why does it have two names?

The ICDR is the global face of the association, set up in 1996 to provide conflict management services at home and abroad.

Where is it based?

The ICDR has a multilingual staff serving more than 80 countries around the world, many of which are represented in its geographically diverse board of directors. It has offices with hearing centres in New York, Mexico City, Bahrain and Singapore.

How international is it?

It's widely used by non-US parties. In 2014, users from 143 different countries brought cases under ICDR rules. International filings reached a grand total of 1,065 over 2015, making the ICDR the second largest administrator of international cases after the ICC.

Is it like the LCIA and ICC in having a multicultural, international oversight body?

Very much so. The ICDR's international board includes some very familiar names – George Berman, John Fellas and Jean Kalicki, to name a few; and Kaj Hobér in Sweden, Kevin Kim in South Korea and Makhdoom Ali Khan in Pakistan are on the non-US side.

How has it developed such a reach?

It's put the miles in. The ICDR has had a number of senior figures who've been based in/or travelled extensively in different regions for the past 10 years or more. Those promotional efforts have paid off – particularly in Latin America, which now contributes a significant body of work. They've also led the ICDR into a joint venture in Bahrain.

What are the rules like?

The revised current ICDR rules came into force at the beginning of 2014, and included a number of adjustments to increase transparency, efficiency and speed.

Among the changes were a rule to ensure mediation is offered as a first step in all matters; an adjustment to the ICDR list system, which now kicks in  when the parties fail to select a panel (parties have to strike out names on the list they don't want; and anyone that remains after both sides have done that is appointable); it also adjusted down the amount you pay upfront to get a case started. And it announced its own twist on the expedited procedure.

What's different about the ICDR's expedited procedure?

Cases of US$250,000 or less are now automatically expedited, while those of US$100,000 or less will be arbitrated on documents alone.

The ICDR says cases going the expedited route will be decided matters, from filing to award, within 135 days.

What are the case-handlers like?

Like the ICC, the ICDR has a fair-sized secretariat who perform key functions under the rules, especially at the outset of the case. There used to be some grumbles about those – minor only – but grumbles nevertheless: that they weren't very multilingual; that they were slightly undertrained and prone to odd decisions; and so on. But that is in the past: it's fair to say that there's much less negativity about the staff these days. Lawyers and arbitrators who deal with it regularly seem pretty happy. This is seen as in part thanks to the growth in international LLM programmes in the US, which are keeping the ICDR well supplied with high-calibre, keen and above all affordable foreign lawyers to work there (and who have greatly expanded the number of languages it is fluent in). If the ICDR staff are still "not quite as good as the ICC", to quote one New York lawyer, they're now a lot closer. And they don't tend to interfere as much.

How busy is it?

In 2015 it had 97 international cases, out of 1,063 cases total. That total was worth US$8.2 billion.

JAMS

What is it?

JAMS (or Judicial Arbitration and Mediation Services) was founded in 1979 by a retired judge from California, Warren Knight, who decided to bring together a panel of former judges to arbitrate and mediate complex commercial cases. Today it has 25 offices in the US and two overseas.

It's big then?

It is. JAMS has a panel of nearly 300 full-time neutrals, who between them turn over more than 12,000 cases a year. Even while around 70 per cent of these cases are mediations, that's still more than 3,500 arbitrations a year.

What kind of cases go there?

A combination of commercial and civil. One headline-grabber was dispute between Kraft Foods and Starbucks from 2013, in which the sole arbitrator, JAMS' Edward Bobrick, ordered the coffee chain to pay US$2.6 billion for terminating a marketing deal.

What does JAMS itself do?

JAMS arbitrators use a "managed arbitration process" made up of checklists and procedures to keep the arbitration on time and within budget. And the neutrals are available full-time, so arbitration hearings are scheduled promptly and most matters are resolved within six months of the appointment of the arbitrator.

Is the panel "imposed" on the parties?

No, there's more or less full party autonomy, and the list of neutrals is completely transparent (and detailed – see the institution's excellent website at www.jamsadr.com). But if there is no JAMS neutral on the tribunal, it won't administer the case.

Is the list still just made up of retired judges?

No, it also welcomes lawyers, an increasing number of whom hail from outside the US. A notable recent arrival was Olswang's former head of arbitration, Andrew Aglionby, who was rumoured to be returning to the English bar before it emerged he had joined JAMS's "completely independent, credible chambers-type set-up in London" in 2015. Neutrals are in some cases attracted by a feature of JAMS's ownership structure.

How is it structured?

JAMS is run for profit (it turns over much more than US$100 million a year) and is owned by approximately 100 of its neutrals and management, who have one share each.

How international is it?

It's trying, which is probably the kindest thing to say. It forged a strategic alliance with the HKIAC in 2007, but its global efforts really began with the arrival of JAMS International in partnership with Italy's ADR Centre in 2011. It then opened in Toronto the following year. Now AMS International is headquartered in London and has offices in Amsterdam, Milan and Rome. It has its own set of rules.

How up to date are the rules?

The international rules came into force when the initiative began in 2011, and the Comprehensive Arbitration Rules and Procedures in the US came about in 2014. The latter set includes streamlined procedures for matters under US$250,000.