International

New Book on "International Arbitration and Mediation: A Practical Guide"

Arbitrators, mediators, lawyers, ADR trainers and professors have many excellent guides to assist them in doing their job.  But what about the guy inside the company who has a cross-border dispute on his hands and needs to deal with it with intelligence, elegance and efficiency?  Or at least not flub it?  Two deeply experienced lawyers have come to the rescue.

Arbitration and Mediation:

Michael McIlwrath of General Electric (in Florence, Italy) and John Savage of Shearman & Sterling (in Paris, Singapore, and now Washington) have offered the most useful and worldly-wise single volume imaginable in International Arbitration and Mediation: A Practical Guide.  Its tone is both reader-friendly and authoritative, and its scope is exactly as broad as the problem itself, which is simply and clearly put at the outset:

Today’s business world is about risk.  Those who can accept risk — and manage the downside — will be rewarded.  In international contracts, dispute resolution often is or should be the single most important consideration in deciding whether a particular risk is one to accept.  The value of a [cross-border] contract may ultimately reside in how disputes arising out of it will be resolved.

This is a tantalizing proposition, but coming from business lawyers (rather than ADR wonks) it is arresting. 

The structure of the book reveals the breadth of its contents.  The first section explains the elements of a dispute resolution agreement in a  cross-border deal, and the second addresses the process of negotiating such an agreement.  The authors note that, despite the nomenclature in the literature, one doesn’t draft a dispute resolution clause — one negotiates it. 

Always commercially rational, the authors “propose negotiation strategies that treat the other party’s inflexibility as a potential opportunity that can be quantified and assessed just like any other form of commercial risk.”

The book then gets down to it, addressing what to do “When the Dispute Arises,” how to prepare for and get the most value from “International Settlement Negotiation and Mediation” and “The Conduct of the Arbitration,” and in a lucid and compact presentation, what to do “After the Arbitration: Challenge, Recognotion and Enforcement of the Award.”  The volume concludes with a concise description of ICSID and BIT arbitration, and attaches particularly useful Appendices, including model clauses, a useful template for internal Early Case Assessment, model requests and responses to arbitrate, forms of privilege logs, model BITs, and so on.

The authors also show a masterful command of international mediation and arbitration institutions.  They explain the rules and fees of each one, the advantages and disadvantages of existing institutions, the costs and the benefits.  These are sections that could have been written only by someone responsible for writing the checks.

Another tell-tale mark of the book’s reliability are the anecdotes that are sprinkled about the text, containing horrendous real-life examples of arrogance, stupidity, ignorance and miscalculation that  the authors have actually witnessed.  These boxed narratives are captioned “Not that this ever really happens….” and are delightful.  Or they would be if one could recover from the bare shock of the stories.  Here you learn of:

  • The accounting firm that recommended a reserve in the amount of the full value of a specious claim
  • The outside counsel whose extensive and expensive memos consistently misnamed the corporate client;
  • The outside counsel who, when asked to estimate costs in a matter, replied that it was impossible to predict but offered instead its hourly billing rates — and was fired;
  • The party who declined to make an opening offer, and thus anchor the subsequent negotiations, on the ground that “it is traditional” for the claimant to open with a demand;
  • The president of an arbitral institution who, without consulting the parties or the co-arbitrators, appointed “his close personal friend” as chair — a partner in the law firm that had drafted the contract in dispute;
  • The arbitration institution that appointed a mediator in a letter that instructed the parties not to engage in ex parte communications with him;
  • The fee quotations from mediators, ranging from USD 60,000 plus first-class travel to Asia and five days in a hotel, to USD 10,000 plus travel costs for a single day;
  • The mediation proposal made in 1999 to a state-owned entity that was rejected because “he did not want to create the suspicion of corruption that a settlement might create,” — and the arbitration that was still pending in 2010.

This is the book for business people.  It offers superb advice on how to allocate the risk of international business deals, and how to manage international business disputes.  That advice is based on a sound understanding of international law.  More importantly, it is grounded in decades of practical experience.  I recommend it without reservation.

Shearman & Sterling LLP | John   Mike McIlwrath is Senior

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