Offering a corporate view

Published on: 13/05/2021

Ben Rigby hears how corporate counsel are addressing current challenges in international dispute resolution, including which dispute resolution methods they prefer and whether, why, and how the perceive London as a dispute resolution hub, as well as pervasive issues of costs and risk management.

Steering the panel were Kai-Uwe Karl, the Global Chief Litigation Counsel, for GE, and Professor Loukas Mistelis, of Queen Mary University of London, who has blogged on London’s attractions for corporate counsel, and others, on this site.

They were joined by Stephan Balthasar, senior legal counsel, Allianz, and Glenn Baumgarten, litigation counsel, Deutsche Telekom; alongside Alison Pearsall, senior group counsel, Veolia, and Teresa Garcia Reyes, senior counsel, also of GE.

In introducing them, the co-chairs noted their businesses collectively account for a workforce of nearly 800,000 people and the revenue of the collective of $1.8 trillion, perhaps illustrating the size, and breadth of claims such businesses had to field.

One perennial question – which mode of dispute resolution do you prefer – was first discussed. While supporting arbitration in general, Teresa Garcia Reyes challenged the conventional view – which it is supposedly faster, cheaper, quicker to get to a result –as not necessarily always being true.

Rather, she said: “Parties prefer arbitration and transnational disputes, because it allows for flexibility and predictability”. Flexibility, she argued included aspects of cost efficiency – but also allowed for flexible resolution of disputes at a point when it suited one party to settle.

Another aspect of flexibility was the concept of confidentiality, albeit there were levels of confidentiality, especially where filings are in the public record. The biggest advantage though was predictability, especially for energy sector disputes.

Where litigation was not an option, whether because of corruption or political instability, the benefit of arbitration was that parties were guaranteed a predictable outcome, one in which both sides were picking the arbitrators, or allowing institutions to appoint the arbitrators under their own rules.

That predictability, supplied by a strict framework of procedural rules of quality standards that you can’t necessarily always get in jurisdictions where the rule of law was questionable, was valued; coupled with flexibility, it trumped speed, cost, and haste.

Balthasar agreed with Garcia Reyes – saying it wasn’t inevitably particularly cheap, or speedy, not least because recourse to dispute resolution was for “really high stakes” –but suitability was key; suitability as to resources, jurisdiction, dispute resolution as a mechanism, on the very subject in dispute.

Pearson, by contrast, focused on dispute resolution clauses – at the actual drafting of the contract. Anticipation was the key factor here, she said: “You try to anticipate what kind of disputes are going to arise out of the contract and in what jurisdiction it arises in.”

Nuance was part of this, in emphasising the choice of arbitration versus litigation; choice of clause depended on the type of dispute may arise; Baumgarten, for his part pointed out the benefits of selecting an arbitrator with deep expertise in an area, rather than a judge with none; plus procedural issues, such as joinder. Ideally, such possibilities should be anticipated at the drafting stage, so as to prevent any future delays in any dispute.

The panel were then asked to measure the success of mediation. Did the increased prominence of mediation translate to its greater use in the real world? Baumgarten pointed out that in most times, mediations commenced before starting arbitrations, which may then come to a settlement at a later stage.

His point – that the results of a mediation informed both parties, and what they understood about each other – was valuable, as “feedback may also help you to find an amicable solution at a later stage,” – but that was difficult to quantify.

Counsel, he suggested, gently, could be incentivised to follow mediations, irrespective of their desire to pursue what might be a legally interesting case, rather than pursuing the same; but there was no easy recipe as to how to solve the problem of encouraging mediations. Nonetheless, the benefits of ADR had been seen, not immediately after the process, but with quite some success, in terms of arranging an efficient solution, sometime afterwards.

One of the challenges corporate counsel faced was awareness of ADR, such as mediation, within the company, even before hiring external lawyers, so that managers were aware of what professional mediators could bring to resolving a dispute; as

“There’s still some work to be done to familiarize business with mediation”, noted Pearsall, although the panel noted increasing approval of general policies to try mediation as a means of settling a dispute.  Garcia Reyes agreed, but noted that one other argument would be to make external counsel consider mediation into the merits of a case at the very beginning.

Including clients – as professional negotiators – into the mediation process had its own benefits, not least because “this was [their] chance to run the show”, which was useful for in-house lawyers, especially in developing initial arguments and position statements.

At its heart, mediation reminded the parties of the value of their relationships – it acted a pause to evaluate that relationship, as much as evaluating the dispute – which was valuable in business itself.

The panel then moved to discuss standardisation in arbitration proceedings – for which there was a broad consensus as to the value of clear structures, which could help build a “baseline of efficiency” as Garcia Reyes put it, would be welcomed.

The discussion closed on how the panellists, drawn from across the EU, saw London’s future as a centre for international disputes. London obviously ranked high as a jurisdiction in which the rule of law prevailed – as the World Justice Project’s Rule of Law Index noted – and matters like enforcement, costs, speed and efficiency also counted.

Competition, however, was evident, from other jurisdictions, globally. That meant that “London has to stay competitive” as one panellist stressed. Brexit had arguably not diminished London as a seat of arbitration; but it had to be alive to other jurisdictions modernising their facilities, their arbitral laws, and their incentives to arbitrate in those countries.

That said, outside of the EU, panellists could see London emerging stronger, in time, being perceived like Switzerland, as a neutral seat of arbitration, one in which it was arguably more straightforward to enforce arbitration awards. On which positive note, the lively discussion concluded.