Key legal and regulatory developments driving and shaping M&A
We speak with Richard Naimark, Senior Vice President of ICDR Global Operations, about the ICDR’s extensive presence in Latin America, its efforts to address party and counsel misbehavior, and its unique experience with implementing and managing emergency arbitrators.
Party autonomy is the guiding principle of the ICDR. We aim to engage the parties at an early stage and to involve them as much as possible in the procedural aspects of the arbitration. This emphasis leads to a case management strategy and guidance process that seeks to have the parties participate actively and to express their needs and wants. Of course, we recognize that cases would not frequently make it to us unless the parties diverged in some respects. For this reason, the ICDR provides a strong framework for those who stray – for errant participants or those who flat out refuse to participate. This framework provides good tools for arbitrators and for administrators. Other than that, we emphasize practical and pragmatic solutions, with a heavy emphasis on expedition.
It is important for us to have a Latin American presence. After all, this is the hemisphere of our home office, in New York. We recognize the significant demand for arbitration in the region: many local countries’ economies have had recent booms, like Brazil’s, and the pre-existing arbitration infrastructure is very good in many of these locations. We have a strong relationship with the chambers of commerce in many of these countries, like Colombia and Brazil. Luis Martinez, one of our Vice Presidents, spends a significant amount of time in the region. There are many different ways to have a presence in Latin America; we seek to be a resource for practitioners and users in varied ways, according to local demand and needs.
The uptick in Latin American arbitration and mediation cases has been modest, rather than explosive. Certainly, the interest among practitioners and users has been explosive – but actual cases and filings have increased rather steadily over the past five or six years.
The ICDR has developed Canada-specific dispute resolution procedures but we have no plans at the moment to develop rules specifically for Latin America. That being said, we are frequently asked to cooperate, advise or otherwise strengthen our ties with local arbitration groups, such as chambers of commerce. Our cooperative projects with Amcham-Brasil, the Chamber (CCB) in Bogotá and the Brazil–Canada Chamber of Commerce over the past few years come to mind. We make a sustained, careful effort to acclimatize to each country, and seek to make long-term commitments. The high and consistent demand for our presence and advice, formal and informal, reflects the ICDR’s approach and stature in the region.
Under the AAA’s domestic commercial rules, there is a 30-day deadline. Previously, the ICDR rules imposed a ‘soft’ deadline. Under the revised rules, we imposed a hard deadline of 60 days from the date of the closing of the hearing (article 30). It is extremely rare in the ICDR process for arbitrators to go beyond that hard deadline.
Many international arbitral institutions, including ICDR, typically do not have a lot of control over individual appointments. In the ICDR procedures, we do very few direct administrative appointments of arbitrators. We emphasize the list method: we provide lists of arbitrators to the parties from which to select arbitrators. We encourage the parties to agree on somebody from the list, even if it means going to a second or third list of candidates. The ICDR has an active work group focusing on the issue of diversity. Encouraging diversity in our activities is an official focus of the AAA and the ICDR. We seek to give talented individuals exposure in articles and conferences. We also aim to make sure that the arbitrator candidates on the lists that we propose to the parties are truly competent. Everybody shares this responsibility to encourage diversity.
Unethical behavior does not affect many cases, but is present enough to raise an eyebrow. From my standpoint, I do not see more frequent abhorrent behavior by counsel today – but certainly the magnitude of unethical behavior has increased recently. I wouldn’t say that unethical behavior is a widespread problem.
When these problems arise, it isn’t just counsel, but the parties themselves that may be the primary instigators. Most cases of counsel misbehavior have, in my experience, been ultimately problems with the parties those counsel are representing. For this reason, the ICDR is developing a code of conduct directed to counsel and to the parties themselves (under the ICDR Arbitration Rules, article 16). The primary way in which this code of conduct will be helpful is not in stopping abhorrent behavior but in empowering arbitrators with the authority to address problems, in a clear framework.
As for the substance of this code, everything is being considered. All types of remedies, including cost-shifting, are being reviewed, but we don’t anticipate mandating any particular remedy or result. Lawyers too frequently think that problems can be anticipated and drafted away with sufficiently specific provisions. In my experience, it is better to set a clear guiding principle or principles and defined framework and leave implementation to the arbitrators. We do not want to attempt to prejudge the issues for the arbitrators.
I would say that the emergency arbitrator was a radical proposal, implemented conservatively.
The ICDR was the first – in 2006 – to provide an opt-out emergency arbitrator procedure, rather than one the parties needed to opt into. This significantly predates many other institutions’ emergency arbitrator provisions.
The ICDR always aims to be practical and pragmatic. In discussions before we introduced the emergency arbitrator provisions, our overriding concern was whether this would be a tool that attorneys and their clients would realistically use. At the time, emergency arbitrators (of the type we were proposing) were unheard of in international arbitration. The ICDR was not afraid to take a bold position on this, as long as it would be useful to parties. For us, the key value was that parties would get a one-stop shop. Getting a dispute adjudicated partly in arbitration and partly in, say, national courts, increases costs and promotes inefficiencies. The emergency arbitrator allows parties to address all these issues in one process.
The emergency arbitrator rules have been an amazing success, and we get rave reviews from parties. We have had 55 emergency arbitrator matters to date. All but one was completed within three weeks or less. One went longer with party consent. The attorneys have embraced it, and other arbitral institutions have begun to introduce it into their rules.
Drawing on the ICDR’s experience with emergency arbitrators, speed is all-important, so emergency arbitrators must be appointed by the institution. There is a need to canvass candidates for arbitrator quickly and maintain quality control over who is appointed. The ICDR has a pool of experienced and thoughtful emergency arbitrators. Sometimes it takes many calls by the ICDR to get an emergency arbitrator in place. The arbitrator candidates take their responsibilities seriously, and will typically decline if they are not immediately available. We ensure that the emergency arbitrator holds a meeting or conference call within 48 hours of their appointment.
As for enforcement, I am aware of one case in Los Angeles in which an emergency arbitrator’s order or award was challenged before a court and that challenge denied. Ultimately, though, attorneys have embraced the emergency arbitrator procedure, in part because awards or orders can be modified or replaced before the full arbitral tribunal. There are safeguards, of course – the arbitrators can require bonds or other security from the moving party.
The emergency arbitrator provisions are generally very well received. We do not anticipate making or needing any revisions, though we occasionally review the time limits in the procedure, while recognizing that these are often the best feature.
If you are really serious as a young talent with a future as a neutral, you have to be patient and realistic and able to take a long-term view. It is important to build a strong foundation and career demonstrating your excellence and integrity. By far the most important attribute is your listening skills. Party feedback frequently focuses on this one characteristic.
Mark Baker is a partner in our Houston office and global co-head of international arbitration, and Mark Stadnyk is an associate in our New York office.
In this issue, we cover a broad spectrum of ‘hot button issues’ for boards and companies operating internationally.
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