Handling your First International Arbitration

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It was bound to happen eventually.  Maybe your company just went global or maybe they’ve been working internationally for years.  But eventually, whether through some mistake in translation in an international contract, some global or local change in circumstances, or just picking a poor foreign partner, a dispute has arisen over some international transaction.

You pull the contract out of the filing cabinet only to find out that it requires international arbitration for any disputes. So what should you do?  And how does international arbitration even work?

Consult with Experienced International Arbitration Counsel

The first thing to do in these circumstances is to consult with counsel who are familiar with international arbitration.  The lawyers at Fitch Law Partners have decades of experience handling international arbitration cases from start to finish, from the initial notice of arbitration all the way through enforcement or vacatur (invalidation) of an arbitral award.

In finding experienced counsel, make sure that they have specific experience with international arbitration, which has developed as a unique combination of common law (as in the United States and the United Kingdom) and civil law (as in Germany and France) practices that is different than litigation before a national court system.  Lawyers that attempt to arbitrate an international case as they would litigate before a U.S. court are in for a rude awakening.

The General Procedure of International Arbitration

The exact procedures of an international arbitration will depend on a number of factors, including: the contract language, the arbitral rules selected, the law of the seat of arbitration, and the arbitrators chosen.  But the general procedures followed in many international arbitrations are as follows:

1.  Notice Provided

The notice requirement is generally stated explicitly in the contract or the rules.  Some contracts require a “cooling off” period prior to submitting a dispute to arbitration, or mediation of the parties’ dispute prior to arbitration.  Following notice, an answer or denial is generally required from the Respondent (in international arbitration, Plaintiffs are generally referred to as Claimants, while Defendants are referred to as Respondents).

2. Selecting the Arbitrator or Arbitral Tribunal

There is next a period in which the parties select the arbitrator or the arbitral tribunal.  The selection process will depend significantly on the contract and rules. Some arbitration institutions provide the parties with a list of potential arbitrators (although the parties can normally agree on an arbitrator off of the list).  Often, if there are three arbitrators, each of the parties will select one, and then the parties and their selected arbitrators will select a chairperson.

Selecting the right arbitrators can make all the difference in how a case is heard, both procedurally and on the merits.  This is one of the key reasons to select experienced counsel, who will be familiar with international arbitrators and can help in selecting the right arbitrator or tribunal to hear the case.

3. The Procedural Conference

After an arbitrator or tribunal is selected, they will hold a conference (often by phone or videoconference) with the parties in order to set forward the procedure to be used by the parties, normally followed by issuance of a procedural order governing the case.  The procedure can vary depending on what the parties agree on or the tribunal ultimately orders, and so the remaining steps assume a typical procedure for the international arbitration.

4. The First Round of Briefing

Generally, a first round of briefing will be made from both sides, and such briefing should include both witness statements and documents setting out each side’s case.  The Claimant generally goes first, followed by a brief by the Respondent. These are often referred to as Statements of Claim and Defense, or in investment arbitration as the Memorial and Counter-Memorial.

5. Document Disclosure

Discovery in international arbitration is generally more limited than would be typical in American litigation.  Depositions are rare, and typically the first time to question the other party’s witnesses will be at the hearing.  And document production is generally narrow, often following the IBA Rules on the Taking of Evidence in International Arbitration.

Many tribunals will require the use of a Redfern schedule. Both sides submit their requests, along with their justifications for the requests, the opposing party then agrees to certain requests and objects to others in the same document, followed by a reply to those objections by the requesting party, again in the same document. The arbitrators then issue a ruling in the same document.

6. The Second Round of Briefing

Following document disclosure, the parties generally complete a second round of briefing, often known as the Reply and Rejoinder briefs. These briefs respond to the arguments from the earlier briefs, as well as bring in new evidence from the disclosed documents.

7. Pre-Hearing Conference

While the date for the arbitration is often chosen in the first procedural meeting, the tribunal will almost always have a conference with the parties prior to the hearing to go over any procedural issues. The tribunal may also want (or the parties may want to submit) pre-hearing briefing summarizing the parties’ arguments.

8. The Hearing

At the hearing itself, the tribunal and the parties will gather in order to hear evidence from the witnesses.  The parties will frequently make opening statements. Because witnesses have already put forth their case in chief in written witness statements, direct examinations are normally very short (on the order of 5-15 minutes), with most of the time being spent on cross-examination of the other side’s witnesses.  Frequently, unique procedures are adopted for expert witnesses, such as requiring the parties to submit points of agreement and disagreement between experts prior to the hearing or having both parties witnesses on an issue questioned at the same time (known as “hottubbing”).  Closing arguments are sometimes heard following the testimony.

9. Post-Hearing

Following the hearing, the tribunal may request additional post-hearing briefs, and after all briefing is complete, will issue an arbitral award.  The timing of such an award will depend on the contract, the rules, the complexity of the dispute, and the arbitrators.

10. Enforcement or Annulment/Non-Recognition

After an award is issued, it may generally be enforced in any of the 159 parties to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”).  The New York Convention has a set of limited grounds by which the losing party may challenge an award and have it annulled (at the arbitral seat–the place the arbitration took place) or refused recognition by courts.

While these are the general proceedings of an international arbitration, there are numerous other issues that may also arise, and all of the proceedings will differ depending on the contract, rules, and laws at issue.   Experienced international counsel should be consulted whenever an international dispute arises.  If you have any questions about an international arbitration clause or how to handle an international dispute, don’t hesitate to contact the attorneys at Fitch Law Partners.


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