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Guide To Regional Arbitration (volume 4 - 2016)

Institutions Worth a Closer Look: North America

03 November 2015

The US has a number of thriving domestic arbitration providers – most notably the American Arbitration Association. But in the international space, the AAA has faced some challenges (as have others like it). One was its name, which didn’t help when promoting itself as neutral territory to non-American businesses.

More significant was the awareness in the international arbitration community that AAA arbitration was stylistically different from its European counterpart. 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, your role was to advocate their case.

Those aspects are now in the past. But for a time they helped to reduce the number of cases heading to the US to be resolved – and may also explain why this section of the book isn’t larger.

Other possible reasons for this include stable and reliable court systems, a preference for taking matters overseas (the majority of parties in ICC arbitrations are consistently US-based), and more of a reliance on ad hoc arbitration. The US is currently home to just three arbitral centres whose names arise frequently enough in GAR to warrant further notice.

The AAA began life in 1926, shortly after the signing into law of the Federal Arbitration Act. By the time the two other main players – CPR and JAMS – came along in 1979, the New York convention and the establishment of ICSID in Washington, DC had further cemented the United states’ place on the global arbitration map.

Away from the East Coast, there are a number of high-profile clubs and societies that attest to the wider market for arbitration in the country. Atlanta, Miami, Houston and San Francisco are all home to estimable societies with well-known members. The Atlanta International Arbitration Society (established in 2011) has been the most visible in the pages of GAR of late through its close working relationship with the new Atlanta Centre for International Arbitration and Mediation, which opened in Georgia in 2015. If this level of momentum is sustained, there’s every reason to expect a more geographically diverse US list in future editions.

But for now, other providers across the country don’t get nearly as much airtime; even other Eastern centres, like the National Institute for Dispute Resolution (established 1981) have struggled to compete: the NIDR is inactive and its website has expired at the time of writing.

Canada, meanwhile, was one of the first countries in the world to adopt the UNCITRAL Model Law in 1986, and to date around a third of all Model Law jurisprudence emanates from Canadian courts.

John Judge, an arbitrator and senior partner at Stikeman Elliott, notes that with the benefit of strong pro-arbitration decisions from the appeal courts and the Supreme Court of Canada, the provincial courts have become experienced at performing important roles under the Model Law, such as appointing arbitrators in ad hoc arbitrations.

Moreover, sources in the country cite anecdotal evidence to the effect that institutional arbitrations are significantly more common than arbitration conducted on an ad hoc basis in Canada.

So where are all the centres?

At the moment, the most famous Canada-affiliated centre is probably the Arbitration and Mediation Center of the Chamber of Commerce Brazil–Canada, based in São Paulo.

Toronto is emerging as the most likely city to become an arbitration hub in the country. A small number of institutions are based there, and the city is becoming more of a focal point thanks to its accessibility from US centres like New York and Chicago, as well as its high-profile hearing centre – Arbitration Place – built along the lines of Maxwell Chambers in Singapore.

But all of this is relatively recent, and perhaps represents a more slow-and-steady approach that other provinces have taken.

Vancouver made a big push in the 1980s after Canada enacted the UNCITRAL Model Law, with the establishment in 1986 of the British Columbia International Commercial Arbitration Centre. In the same year, Quebec also launched the Canadian Commercial Arbitration Centre. “Both have been pretty quiet though,” Andrew de Lotbinière McDougall of White & Case told GAR in 2012. Even Montreal’s election as the host city for the 2006 ICCA congress didn’t corner the market.

At the moment, then, the below institutions are the ones that are appearing on our radar.

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.

How widespread is it?

Very. 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.

Who’s on the board?

Some estimable US names, of course – George Berman, John Fellas and Jean Kalicki – along with well-known names from overseas, including Judith Gill QC in England, Kaj Hobér in Sweden, Kevin Kim in South Korea and Makhdoom Ali Khan in Pakistan.

Is it widely used by foreign parties?

Certainly. In 2014, users from 143 different countries brought cases. International filings reached a grand total of 1,015 over the year, making the ICDR the second largest administrator of international cases after the ICC.

Doesn’t it define “international” slightly loosely?

The tally includes US-based subsidiaries of non-US companies who prefer arbitration to the US court system, as well as cases in which one, or both, parties are from overseas.

How has it become so well established overseas?

A combination of international outreach and innovation.

When she took over in 2012, president India Johnson noted that the ICDR was in the middle of a big effort to encourage international users to select the US as a seat, drawing in a high volume of cases from Canada, Europe and China. A large amount of this international cheerleading was led by Mark Appel, who is responsible for the ICDR’s European, African and Middle Eastern operations and is highly visible.

Add to this its memorandum of understanding with the Bahrain Chamber for Dispute Resolution and cooperation agreements with China’s SHIAC and Mexico’s CANACO, among others; its regular co-conferences with the Centre for Arbitration and Conciliation of the Chamber of Commerce of Bogotá, CAM-CCBC, AMCHAM Brazil and ICSID; and the recent establishment of ICDR Canada.

It’s also not scared to try out new ideas, like the launch in 2013 of ADRCommunity, a social network dedicated to arbitration and mediation.

More recently, it’s brought in new rules that lower front-end filing fees on international claims, making it easier for parties to get a case started.

Were there any other changes?

A full package. The revised ICDR rules came into force at the beginning of 2014, with changes focusing on greater transparency, economy and speed.

The rules brought in the offer of mediation as a first resort in all matters, new measures incorporating the ICDR list appointment process – which kicks in when the parties fail to select a panel and asks them to strike out names when they can’t agree, much like a jury selection process – guidelines on exchange of information, and its own take on expedited procedures.

What does it do differently?

Cases of US$250,000 or less are automatically expedited, and in those of US$100,000 or less the award is made on documents alone. But the rules are designed in such a way that parties can easily apply them, by agreement, in larger cases.

How long do expedited cases take?

The time frame for expedited awards is set at 30 days. The ICDR aims to dispose of standard track matters, from filing to award, within 135 days.

How does it manage to be so quick?

In 2012, Johnson told GAR about the “shared feeling” among the legal profession “that all of us need to do more to reduce the time and cost of arbitration”, and one tactic the AAA has taken is to focus on educating users about the arbitral process. “Companies need to think of an arbitration as a major project and stay on top of it, as they do with their other projects,” she said “We want them to know the time and forum costs that real users experience when the process works well, so we can leverage good ideas.”

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.

Sounds like a big operation?

Among the biggest. 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 does it see?

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.

How does it achieve this turnover?

For one, it is highly organised. 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 it 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.

Is independence a draw for the neutrals?

One of them. Even barristers face conflicts sometimes. But another might be the way it’s structured.

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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?

JAMS previously 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 opened a centre in Toronto the following year.

JAMS International is headquartered in London, with additional European locations in Amsterdam, Milan and Rome. It has its own set of rules, independent of the US rules.

Why so many overseas offices?

The centre says they offer solutions for widely dispersed parties in a globalised economy. But there’s also the possibility that it’s because England and the Netherlands are strategic hubs and the Italian courts make arbitration a much more popular option there.

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.