Section 1782 of the U.S. Code (28 U.S.C.§ 1782) is a very important discovery tool for litigants who are part of a legal proceeding outside the U.S. (particularly if access to discovery is restricted there). It allows a foreign litigant to make a request before a federal court to obtain evidence from a person within the district for "use in a foreign or international tribunal."
When foreign companies do business with Chinese companies, international arbitration can be a key tool for dispute resolution, as it avoids either having a foreign court judgment that is unenforceable in China or having to deal with Chinese courts and home-court advantage for the Chinese company. Chinese courts have a good track record of enforcing international arbitral awards under the New York Convention.
Your U.S. company and a commercial partner from a foreign nation had the foresight to designate international arbitration as the dispute resolution mechanism in your joint venture agreement. A dispute arose and you both diligently presented your claims to the arbitral panel. The arbitral panel has issued its award. What now?
International arbitration has many benefits for banking and finance disputes, and parties to those disputes are increasingly recognizing those advantages. While banks and financial institutions have traditionally used courts and other judicial forums to resolve disputes, including international disputes, increasing numbers of cases are being litigated and resolved through international arbitration.
Electronically stored information ("ESI") has connected businesses in ways that were not previously possible. ESI has also become a major source of evidence in all forms of commercial disputes. Arbitration generally limits discovery in order to promote its underlying goal as a cost-effective alternative to litigation. Nonetheless, parties often request documents from each other in disputes and the prevalence of ESI makes it inevitable that these documents will continue to impact the nature of international arbitrations.
In McDonnel Group, LLC v. Great Lakes Insurance SE, UK Branch (5th Cir. 2019), the Fifth Circuit recently held that the New York Convention trumps state insurance law. When its insurance claim was denied, McDonnel Group, LLC ("McDonnel") sued the insurers seeking a declaratory judgment that it was entitled to coverage. The insurers moved to dismiss arguing that the policy contained a provision to arbitrate all disputes between the parties. The policy, however, also contained a conformity to statute provision, meaning that if any term of the policy conflicts with a state statute, then "the terms are amended to conform to such statutes." Invoking that provision, McDonnel argued that it had no obligation to arbitrate because the arbitration clause was void as it conflicted with a Louisiana statute forbidding arbitration in insurance contracts.
In our modern, globally interconnected world companies from different nations frequently enter into business agreements with one another. While such joint ventures can create exciting opportunities, they can also run into challenges, or sour altogether. Thus, it is important to consider dispute resolution mechanisms at the outset of a contract or joint venture between international partners. International arbitration is the dispute mechanism best suited to resolving cross-border disputes. As the following five reasons show, international arbitration should be selected as the dispute resolution method between international partners for virtually any international contract:
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.
In the United States, the Federal Arbitration Act ("FAA") provides the rules that govern most arbitrations, and is binding on both state and federal courts. See 9 U.S.C. § 1 et seq. But the FAA is "something of an anomaly" in federal legislation as it "bestow[s] no federal jurisdiction." Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 582 (2008). So motions to compel arbitration or enforcement proceedings must be brought in state courts unless there is some independent basis to assert jurisdiction (such as federal diversity jurisdiction).
The Court of Appeals for the Eleventh Circuit will be the next body to weigh in on a dispute between Del Monte International GmbH ("Del Monte") and Inversions y Procesadora Tropical INPROTSA, S.A. ("INPROTSA") over an exclusive sales agreement for pineapples. The case has been appealed to the Eleventh Circuit, and the appeal raises issues of the finality of international arbitration awards.
Cost can be a deterrent when parties are considering whether to mediate a complex business dispute. Mediation is an excellent opportunity to settle a case in advance of costly trial preparation, but mediation requires parties to pay for both a mediator and their attorneys' time to prepare for and attend the mediation. Are those costs recoverable if mediation is unsuccessful and findings at trial require the losing party to pay the winning party's attorneys' fees and costs? According to recent federal case law in the District of Massachusetts, the answer to that question depends on the basis of the fee-shifting award.
Testimony by videoconference in international arbitration offers the disputants both a fair means for assuring that relevant evidence is heard and an effective tool for cost reduction.
There are fundamental differences between international arbitration and litigation in the U.S. courts that can impact the cost of resolving your dispute, the time to resolution, and each party's respective level of comfort with the process. Below, I set out a few important distinctions between the two processes.
A central feature of international arbitration is the presence of counsel, parties, and even arbitrators who hail from several different countries. Frequently, more than one nationality is represented at the arbitral hearing, and with that diversity come a host of issues that are not immediately apparent -- chief among them is the variety of different languages being spoken. Since a hearing will only be conducted in one language, it is often the case that many people in the room will need the services of both translators and interpreters in order to be present and fully understand the proceedings.
In the negotiation of complex cross-border commercial contracts, the parties too often pay scant attention to the terms of dispute resolution clauses. The clear advantages of choosing international arbitration over court forums can be overlooked.
The private nature of arbitration means that there is typically less information available-- to lawyers, their clients, and the public -- about the practices and preferences of arbitrators. A recently published study on arbitration, described by authors Thomas J. Stipanowich and Zachary P. Ulrich as "a wide-ranging, thoroughgoing empirical survey of practices and perspectives among experienced commercial arbitrators" sheds light on current trends in domestic and international arbitration.
As with any cross-border endeavor, language barriers can become a hurdle to overcome international arbitration and litigation. The dispute resolution clause in a contract may compel the client to arbitrate or litigate in a country other than their own. Arbitrators, parties, and even counsel may all hail from countries that speak different languages. Thus, a successful practitioner must give due consideration to the opportunities and challenges presented by the diversity of languages that may present itself in any given case.
BG Group plc won a major victory at the U.S. Supreme Court last month when the Court upheld an arbitration award requiring Argentina to pay BG Group more than $185 million. The case is yet another example of the deference that arbitration awards receive in U.S. courts.
Parties to a dispute often cite cost control as a reason for choosing arbitration over litigation. To achieve the goal of keeping arbitration costs down, it is important for counsel to play an active role in advocating for cost control. Without counsel's vigilant attention from the outset of the case, arbitration costs can rival litigation expenses. This is especially true international arbitrations where parties, counsel, and arbitrators hail from different parts of the world.
The International Bar Association ("IBA") recently released the "IBA Guidelines on Party Representation international Arbitration" ("Guidelines"). According to the preamble, the Guidelines are an attempt at normalizing the conduct of counsel relating to party representation in the face of the "diverse and potentially conflicting rules and norms" commonly found international arbitration. By adopting the Guidelines, parties subscribe to "the principle that party representatives should act with integrity and honesty and should not engage in activities designed to produce unnecessary delay or expense, including tactics aimed at obstructing the arbitration proceedings."