• Search

Guide to Regional Arbitration (volume 6 - 2018)

White List / Institutions Worth a Closer Look – North America

17 November 2017

The US is home to the mighty American Arbitration Association (AAA), which grew from a demand for domestic commercial arbitration. When it started to seek an international name, the AAA hit some obstacles. One was its name, which didn’t sound very neutral, and led it to adopt a different persona – the ICDR – for foreign-related work.

More awkwardly, international types viewed “American arbitration” as different. In Europe, all the arbitrators had to be neutral (even those appointed by parties), but in AAA arbitration, only the chairman was; party-appointed arbitrators were expected to be advocates for one of the sides.

Those aspects are now in the past. But for a time, this view helped to suppress the number of international cases headed to the AAA and the US.

It didn’t help that US firms were frequently on one side of an international contract, making the US less than neutral ground. (US parties are still the biggest users at the ICC.) Still, despite these obstacles, there are now three US arbitration institutions that are worth knowing about: the AAA; the CPR; and JAMS.

The AAA is the oldest – it dates to 1926, when the Federal Arbitration Act took effect. The forebears of the CPR and JAMS started in 1979.

White List

  • International Centre for Dispute Resolution (ICDR)/American Arbitration Association (AAA)
  • Judicial Arbitration and Mediation Services (JAMS)

Worth a closer look

  • ADR Chambers Canada
  • International Institute for Conflict Prevention & Resolution (CPR)

White list

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 is 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 has 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 was 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. They were trivial, but heartfelt. Lawyers familiar with other international arbitral provides felt ICDR case staff in those days weren’t multilingual; seemed slightly undertrained for the gravity of their role; made some odd decisions, etc.

Happily, those comments seem to be a thing of the past. There’s less negativity about the staff these days. This may in part be thanks to the growth in international LLM programmes in the US, which now keeps 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”, as one New Yorker recently maintained to us, they’re now a lot closer. And they don’t tend to interfere as much as the ICC staffers do!

How busy is it?

The AAA hasn’t released figures for the ICDR’s 2016 performance, but it usually handles around 1,000 cases a year.

What’s it being doing recently?

In 2016 the ICDR reorganised its staff along sector lines. From now on counsel and directors will work on the same types of dispute repeatedly. It also created specific panels of arbitrators for aerospace, aviation and national security cases. It also began to administer cases from its office in Singapore. The AAA, meanwhile, opened an office in Houston.

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’s 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.


Worth a Closer Look

The following providers are also all worth considering, for the right sort of case.

ADR CHAMBERS CANADA

What is it?

A private company made up of retired judges and experienced lawyers, based in Toronto.

How well-established is it?

It’s been around since 1994, and, around the time of its 20th anniversary, was reporting a caseload of 17,000 arbitrations and 23,000 mediations a year. If those numbers make it sound big, it actually has an “active members” list of around 40 names.

How does it manage the work?

Neutrals are divided into “expert panels” which focus on the various types of disputes the centre handles, which are split fairly evenly between commercial and civil matters.

Who’s on the neutrals list?

Among the judges, GAR readers will recognise names like Babak Barin and Barry Leon.

Why’s it only “worth a closer look”?

It is case load to date has been fairly domestic.

Could that change?

On paper, Toronto has the makings of a great arbitral seat. It’s a multicultural, international city – about half of its residents were born outside Canada – with good international connections. It also has one of the world’s nicest hearing centres – Arbitration Place – a purpose-built venue not dissimilar to Maxwell Chambers in Singapore. It is in the heart of Toronto’s financial district.

Are the two connected?

Arbitration Place is an independent business with plenty of partners – including the ICC and LCIA. But ADR is among them, and its neutrals have conducted hearings there. 

INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION (CPR)

Why’s it worth keeping an eye on?

The CPR was established in New York in 1979 by a group of enlightened in-house counsel in 1979 who wanted to find ways around the cost of US litigation. In those days it was called the Centre for Public Resources. It changed its names (though not its initials) in 2004, but it still has the same ties to the US in-house world (and to a lesser degree to non-US in-house lawyers too). 

Who are the people to know there? 

The president is Noah Hanft, former general counsel of MasterCard, who has the benefit of an eminent board that blends inhouse counsel such as Richard Hill of Shell with private practitioners such as Gilberto Giusti of Pinheiro Neto and George Bermann, the US academic and arbitrator.

Is it busy? 

We don’t know. Thus far, the CPR hasn’t released caseload statistics.

What does anecdotal evidence suggest?

GAR 100 firms use it – we know from the material they send us. It’s been something of an innovator too – so it comes up often at conferences. Indeed it received a GAR Award for innovation in 2016. 

What innovations has it come up with?

The most striking is possibly the appellate option, which allows a losing party to appeal the case to essentially a new tribunal. It's fair to say, it's had a mixed reaction  from the wider community. 

On a more positive note, there has been lots of praise for another CPR innovation: its screened appointment process. This is a clever way to combat the moral hazard created when arbitrators know which side appointed them: namely that they pander to that side. Under the screened procedure, arbitrators are kept in the dark about who chose them. GAR gave the screened process its innovation award. Whether it works as well in practice remains to be seen.

What are its rules like generally? 

The centre has only recently moved into case-administration. They have a big focus on time: for example, they require the centre to approve any  scheduling orders or extensions that would cause an award to be rendered more than a year after the formation of the panel. They also cap the administrative fees at US$34,000. Other features are a mandatory pre-hearing conference that the parties must attend.

Have the rules been tested yet?

They’re still fairly new, having come into force at the end of 2014. And, again, there’s no way of knowing without access to the centre’s stats.

Why isn’t it yet on the White List? 

Lack of hard data, mainly. None of the sources in New York GAR spoke to said they had experienced a CPR-administered case, in contrast to the ICDR (and now the ICC is in town too), meaning it is still in the untested category.

But it has great names associated with it – Ank Santens, Larry Neman and Rob Smit are three of the luminaries who have chaired its arbitration committee. And numerous references to CPR rules do appear in research for the GAR 100 (using earlier rules). So the signs are favourable that it's only a matter of time.