International Arbitration - A Practitioner's Guide

Monday, January 3, 2011 - 01:00

The Editor interviews Philip D. Robben, Partner, Kelley Drye & Warren LLP.

Editor: Please describe your practice at Kelley Drye.

Robben: I've been very fortunate during my time here to have been involved in many cases that have covered the legal spectrum. I've handled cases that have involved the U.S. False Claims Act, major fraud, government investigations, products liability, life insurance and the pharmaceutical industry. I've been involved with general commercial-type arbitration cases, disputes about contracts and patent license agreements and, most recently, investment treaty arbitrations. My domestic experience informs the international arbitration side and that side informs the domestic experience in a way that has been both gratifying and useful.

Editor: I see that you have appeared before the International Centre for Settlement of Investment Disputes in at least two cases.

Robben: Right now I'm working on two cases there; both are for large German multinational companies that have brought claims under a treaty between Argentina and Germany for the promotion and protection of investments. The claims arise out of Argentina's response to a 2001-2002 recession. Our clients had made investments prior to that, and the country enacted certain laws that harmed the investments and caused losses. So, we brought claims before ICSID, who administers the claims, which are pending before panels of three arbitrators in each case, for damages for the injury to the clients' investments.

Editor: As a lawyer from the United States, you are dealing with people from at least two other countries.

Robben: Yes, this has been typical of my career. I've always had international clients, primarily from Europe. I've been dealing with that dynamic for some time, and I actually like it because it makes the cases more interesting than say a case where you just have two U.S. parties in a dispute and there is not that cultural exchange.

Editor: Have you appeared before other arbitral forums?

Robben: Yes, I've had cases in front of ICDR, which is the international branch of AAA, the American Arbitration Association. I've had AAA cases, and also what are called ad hoc cases, which are arbitrations that parties privately arrange. It can have an administrator such as ICC or AAA. In my experience most have just been administered by the parties, which can streamline the process. However, you lose the contribution that a professional organization can bring in terms of, for example, logistics, if nothing else.

Editor: What about the forum, the country where the arbitration takes place?

Robben: The forum is an important decision to make. From a practical standpoint, you want to pick a forum that is close to where your witnesses are, or at least convenient for them. Putting aside just the logistical points, you also need to be cognizant of what the law is in the country that you select as the forum. Most people in the arbitration world would say you want to pick a country that is a party to the New York Convention on the recognition of arbitration awards or the Panama Convention, which is similar and has a Latin American focus. This results in an award that will be enforceable in the widest range of places.

You also want a place where the law is conducive to arbitration. Some countries are much more deferential to arbitrators and much less likely to interfere in your arbitration. You'd also like a place where you can go to court if you need some type of preliminary relief, for example, an injunction to preserve the status quo.

Editor: Why is it important to have a carefully drafted arbitration clause or agreement?

Robben: Arbitration is a creature of contract, and freedom to contract is the general rule. So parties are free to craft the arbitration agreement any way they want. They can customize it in terms of where they arbitrate, the language used, the rules selected, the procedures, and the level of discovery, be it none or some or someplace in between. The contract is going to shape the whole arbitration procedure. You must be careful with it. Make sure you hit all the points that will get you a binding arbitration agreement, and will also make the arbitration conducive to the client's business and other needs.

Editor: What particular aspect of the arbitration clause or agreement do you feel requires particular attention?

Robben: I'd urge a lawyer to consider the venue and the rules of procedure. Arbitrator selection is certainly important too. One of the nice things about arbitration is you get to pick who will decide your case and you can provide for certain prerequisites. You might say the arbitrator should be admitted in New York or another country where the law of that country is going to be relevant or that he/she has certain expertise in a particular industry.

In the international context, the governing language of the proceeding is important. If your counterparty on a deal is Russian, you'd probably want to have an agreement that in a dispute you're going to be able to arbitrate in Russian and English just to ensure that both parties can participate and defend in the arbitration. One final thing I'd say to review is disclosure. Clients, especially from outside the United States, are very concerned about U.S.-style discovery.

Editor: What number of arbitrators do you find preferable?

Robben: In my experience three is best, particularly if you have an international dispute. One arbitrator who decides the whole thing can be risky because you have limited judicial remedies if you don't like the result. Using three tends to give you a little insurance because you have to have a meeting of at least two minds. I know some people tend to like one arbitrator for smaller cases and there are certain arguments to be made for that in terms of cost and efficiency.

Editor: When adversaries in arbitration follow different systems of laws - common law and civil law - how are these differences reconciled in arbitration?

Robben: In this context, the difference between civil law and common law is more procedural than substantive. Both legal systems have basic fairness concepts in common. The ability to present your case and the opportunity to be heard are familiar to both systems. Some friction between the two may arise with matters such as how to present witnesses. For example, U.S. lawyers generally like cross-examining witnesses and getting their testimony because U.S. lawyers are familiar with that process. For lawyers from civil law countries, cross-examination is generally a function of the court. In my experience, they tend to want to have time set aside to make arguments based on the law, the record and the facts, even if it means less time for taking live testimony. A good arbitrator or a panel of arbitrators will be able to give both sides what they want so that each will feel they've had a fair chance to make their case.

Editor: What are the principal advantages of international arbitration and what are its disadvantages?

Robben: I mentioned that you can customize the proceeding in a way that you couldn't if you were using the courts. You can customize the language, the discovery and where the arbitration will take place. You can make rules or procedures for picking the arbitrator. There is a confidentiality that a court, certainly in the United States, doesn't afford you. Those are the main advantages. If you are in a transaction with someone in another country, it's nice for the parties to be able to create a dispute resolution procedure that doesn't require either party to submit to local courts that they are not familiar with or have concerns about.

The disadvantages are those you see in either the domestic or the international sphere. There are no appeals, and you have a very limited chance for judicial review of an award. If you're unhappy with the result, there is a limit to what can be done to challenge it. That is a feature of arbitration with which one needs to become comfortable. Also there are costs. Courts, certainly in the United States, are free, but in arbitration you must pay the arbitration institution, and you compensate the arbitrators for their time. Those are costs that you have to expect but that can be something of a disadvantage, particularly if the claim is not very large.

I also find that arbitration tends to take a long time. It's driven by arbitrators who want to do the best job they can and are loathe to deny a party an opportunity to brief an issue or to make an argument. That requires time that a court might be less likely to have added because there is a more defined procedure in a court, certainly in a U.S. court.

Editor: What strategies can be used to manage costs?

Robben: Assessing the case early on and trying to see if the case should settle can certainly help. I know many people are fans of mediation early in a case to try and pick off those disputes that can be settled quickly without having to incur the cost of a full-blown arbitration. I would consider putting timelines into the agreement that are fixed so that the case doesn't lag. This is particularly helpful in a dispute with an ongoing project, for example, a construction project or a situation where you're going to have to meet various milestones. You can also try to put cost-shifting provisions into the arbitration agreement: If the other party feels they might be responsible for your costs and your legal fees if they raise arguments that lack merit, you might avoid frivolous practices that could otherwise result in wasting time and running up the costs.

Please email the interviewee at probben@kelleydrye.com with questions about this interview.