LUMSA – International Commercial Law December 3, 2015

Prof. Avv. Roberto PirozziEmail: robertopirozzi13@hotmail.com

LUMSA - International Commercial Law

Alternative Dispute Resolution Methods

For the sake of brevity, this presentation focuses primarily upon a general outline of Arbitration, Mediation and Negotiation as they exist within a civil law context. The reason for constraining this paper to a consideration of only these three forms of ADR is because most of the key principles applied to and underlying these three processes pervade virtually all forms of alternative dispute resolution.

Dispute Resolution Methods

• Negotiation

• Mediation

• Arbitration

• Litigation

Negotiation

• Dispute resolution between the parties involving only the parties

• Casual

– Conversations, emails, texts, phone calls

• Formal

– Meetings, documentation, presentations

• Resolution

– Regardless of how you got there:Put it in writing

Elevating the Negotiation

• Can’t settle at the jobsite level?

• Push the dispute “upstairs” –

• Again, only the parties are involved

• May be multiple meetings

• Resolution must be written

Mediation• Mediation: Bringing in a respected, neutral, uninvolved

person to help everyone reach a mutually acceptable resolution– The mediator DOES NOT decide

– Mediation may not resolve a dispute

• Key Points– Voluntary

– The resolution is binding, but the process is not• There is no such thing as “Binding Mediation”

– You set the rules

Mediation

• The Parties must agree to mediate

• The Parties must select a mediator

• The Contract may define mediation terms, procedures, maybe even the mediator

• Select a mediator with whom you are comfortable and who you believe will also be credible with the other parties

Mediation – The Process

• Parties provide the Mediator with information to understand the dispute

• The Mediator chooses to meet individually with the parties, or to call all parties together in a “joint session”

• After a sufficient exchange of information, the Mediator breaks the parties apart and begins shuttle diplomacy

• The Mediator works for you – make the Mediator work, not just shuffle back and forth

Mediation – The Resolution

• Mediators DO NOT Decide– The Parties decide

• The Mediator’s Proposal– Usually offered at gridlock

– Not always offered

– May be requested

– NOT binding until all parties accept

– The process is still voluntary

Mediation – Pros and Cons

• Involves a neutral 3rd party (mediator).• Mediator talks face-to-face with parties (who

typically are in different adjoining rooms) to determine “common ground.”– Advantages: few rules, customize process, parties

control results (win-win).– Disadvantages: mediator fees, no sanctions or

deadlines.

Arbitration

• Arbitration is the submission of a dispute to one or more impartial persons for a final and binding decision, known as an "award."

• Awards are made in writing and are generally final and binding on the parties in the case.

From the American Arbitration Association website: www.adr.org

LUMSA - International Commercial Law

Arbitration

Arbitration, a form of alternative dispute resolution, is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound.

LUMSA - International Commercial Law

Arbitration

Other forms of ADR include mediation (a form of settlement negotiation facilitated by a neutral third party) and non-binding resolution by experts. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions.

LUMSA - International Commercial Law

Arbitration

Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that is voluntarily entered into, where the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding.

LUMSA - International Commercial Law

Arbitration

Non-binding arbitration is similar to mediation in that a decision can not be imposed on the parties. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable.

Non-Binding Arbitration

• When the parties agree to Arbitrate, but also agree that the result will only be binding if all parties agree to accept the decision

• Many view this as a “dry-run”

• Could be considered similar to the Dispute Review Board, but without the project knowledge of the DRB members

Arbitration – Getting There

• Many times contract defined

• Always an option if all parties agree

• Variety of arbitration providers, including:

– American Arbitration Association

– JAMS: Judicial and Mediation Services

– International Chamber of Commerce (ICC)

– Private individuals

Arbitrator Selection

• Big Benefit: You “choose” your Judge

• Must be confirmed independent and unrelated

• Look for folks who will understand your situation, but without bringing too much bias and pre-conceived resolutions

• Consider the expediency of a single arbitrator versus the combined wisdom of a three-party panel

The Hearings• NO Ex Parte communications

• Arbitrator sets schedule

• Proceedings are formalized through rules

• Evidence is presented through sworn testimony

• Arbitrator may question the witnesses and the attorneys

• Arbitrator sets, with party input, closing briefs, submission timelines, and form of decision

The Decision• The Final Decision is Final

• There are very few accepted ways to overturn a Decision:

– The Arbitrator failed to hear evidence

– The Arbitrator was on the take, misbehavior

– The Arbitrator exceeded the powers granted to the Arbitrator

• Other than winning an appeal using one or more of those conditions – you are stuck with the Decision.

Arbitration Pluses & Minuses• Finality

• Letting a knowledgeable someone else decide

• Speed

• Cost

• Evidence Rules – Discovery, Depositions

• Hearing Flexibility – dates, format, location

• Confidential Proceedings

• Predictability

Arbitration Pluses & Minuses• Results may be unpredictable because

arbitrators do not have to follow precedent or rules of procedure or evidence.

• Arbitrators do not have to issue written opinions.

• Generally, no discovery available.

Litigation

• May be a Federal or State Agency– Board of Contract Appeals, for example

• In a courtroom, you get to choose– Judge: “Bench Trial”

• Yesterday, the Judge sentenced a rapist to life, today, the Judge is hearing you argue about money and time

– Jury: Your “Peers”• Check that jury pool – do any of them really understand the nuances of a

construction project?

Litigation • Getting There

– Many times contract defined

– Any party can initiate: “I’m gonna sue you!”

• Adjudicator Selection– The Judge is assigned

– You may be able to choose a jury

• Hearings– Strict rules of evidence

– The Court’s schedule – your schedule just doesn’t matter.

Litigation - Process

• Tedious

• Discovery – produce Everything

• Depositions

• Motions, Legal Positioning

• Pre-Trial Hearings

• Finally, the Hearing itself

Litigation - Frustration

• Cancel your vacation, you’re scheduled to be in Court

• But the Court will delay, as you are “trailing”

• When you do arrive, plan on short days with lots of vacant time

• Remember the money you are paying your team to be there.

Litigation – The Decision

• Likely one party won’t like the Decision

• That party will then file for appeal

– Regardless of entitlement

– Filing is to slow the payment process

– Frequently used to encourage the “winner” to accept an immediate but smaller resolution

• After years in Trial Court, now years of Appeals

– And you may be sent back for a new trial

Litigation Closure

I’m just so glad, I won…

Negotiation

Mediation Self-Decided - You Keep a Say in the Decision

Adjudicated - Someone Else Decides

Your Fate

Adapted from: Christopher Moore’s The Mediation Process, 1996, p. 7

Arbitration

Litigation

In Summary – The Descending Arrow of Escalation