An inherent challenge of cross-national business endeavors is that, once a deal or business relationship is in place, the actual terms of the contract will be carried out in different countries. Despite the fact that the trans-national agreement or contract was written in one language and that the terms of the agreement likely specify that such language is the "controlling" language in the event of a dispute, the execution of the terms of that contract will, in almost all cases, be carried out in different languages.
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.
Earlier this month, a federal judge in the Southern District of New York spun a new twist in the long-standing legal battle over environmental contamination in the Lago Agrio region of Ecuador. In a 485-page ruling, Judge Lewis Kaplan ruled that lawyers leading the Lago Agrio plaintiffs' prosecution of claims against Chevron (which acquired the alleged contaminator, Texaco) used corrupt means to secure an $18 billion judgment from an Ecuadorian court. See Chevron Corp. v. Donziger et al, S.D.N.Y. 11-00691.
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."
In our modern global economy, many Massachusetts companies are finding themselves with a need not only for legal advice concerning Massachusetts and U.S. law, but also for legal advice concerning international law and the local laws of foreign countries in which they do business. As a result, foreign legal consultants--foreign lawyers who advise Massachusetts companies and residents on foreign law--are increasingly in demand. In order to avoid running afoul of prohibitions against the unlicensed practice of law, foreign legal consultants must become licensed prior to providing any legal advice in Massachusetts. There are specific rules issued by the Massachusetts Supreme Judicial Court ("SJC") governing the licensing of foreign legal consultants and the limits of their practice. Both foreign attorneys seeking to consult in Massachusetts, and Massachusetts companies seeking to retain foreign legal consultants, should become familiar with these and other applicable rules.