International Arbitration – Market Opportunities

1. International Arbitration – Market Opportunities • Peter L. Michaelson, Esq. , FCI Arb, C Arb. • Chair -- New York Branch and Former Trustee, CI Arb • Michaelson ADR Chambers, LLC • 590 Madison Avenue, 18th Floor • New York, NY 10022 • T: 212-535-0010; W: www.plmadr.com; E: pete@plmadr.com • Thomas D. Halket, Esq., FCI Arb, C Arb. • Deputy Chair, Board of Management – CI Arb • Vice Chair – New York Branch, CI Arb • Halket Weitz LLP • 1214 West Boston Post Road, N277 • Mamaroneck, NY 10543 • T: 914-833-2681; W: www.halketweitz.com; E: thalket@halketweitz.com Slide 1

2. “The old refrain ‘See you in court!’ is so last century. The latest trend in resolving contractual disputes is the less expensive, out-of-court process of arbitration. Even the Kardashians include an arbitration clause in their contracts, and you can’t get any trendier than that.” “Arbitration cases – a growing revenue stream for law firms” The Miami Herald – Business Monday – June 3, 2013 Slide 2

3. Adolfo E. Jimenez oversees Holland & Knight’s litigation/arbitration section, which includes 8 attorneys in Miami, 5 in New York and 3 in Washington, D.C. He states: • “International arbitration matters have increased six-fold in the last 10 years and three-fold in the last five years.” • “The average amount at issue doubled between 2003 and 2008, and quadrupled in the last five years” — now in the tens of millions. • For many large city law firms, arbitration is no longer a sidelight but a fundamental part of the practice. Jimenez states: “In the last five years, this is no longer a phase. This is here to stay.” • Daniel E. González, co-director of Hogan Lovells’ international arbitration practice and partner in Miami office. The firm has 160 lawyers in roughly half of the firm’s 42 offices worldwide dedicated to international arbitration. He states: • Although international arbitration “is not necessarily cheaper or faster,” international arbitration has taken off as companies expand globally. The reason, he says: “Most countries conducting international business subscribe to widely practiced arbitration conventions, making an arbitral decision enforceable worldwide. In other words, winning at arbitration makes a payout more likely, even if the dispute arises in a country that lacks an independent court system.” • The areas of business most suited to international arbitration include energy, telecom, financial services, construction and technology, because what they all have in common is they involve complex, cross-border infrastructure development. • Another factor: Foreign firms seeking to resolve disputes on U.S. soil aren’t always comfortable with the jury system, says Kenneth Hartmann, a senior shareholder in the Miami firm of Kozyak Tropin & Throckmorton. “Foreign companies are weary of U.S. court proceedings.’’ • Inevitably, as more contracts — each with its own arbitration clause — are involved, the potential for an international dispute rises, with the promise of arbitration work for attorneys in Miami and many major cities for years to come. “Arbitration cases – a growing revenue stream for law firms” The Miami Herald – Business Monday – June 3, 2013 Slide 3

4. Some statistics DOMESTIC ARBITRATION Among the 7,000 members of the American Arbitration Association (AAA): •  Number of cases heard in 2012: More than 120,000 •  Time to award: 7.3 months Resolutions by arbitration are faster and therefore, likely less expensive. The median timeframe for a commercial arbitration handled by members of the AAA was 7.3 months in 2011. For the 12-month period ending March 31, 2013, the median timeframe for a civil case to go to trial in a U.S. federal court was 23.2 months. INTERNATIONAL ARBITRATION From the 2010 International Arbitration Survey conducted by the University of London and sponsored by the law firm White & Case: •  London is the most preferred and widely used seat of arbitration. •  Singapore has emerged as a regional leader in Asia. •  Respondents have the most negative perception of Moscow and mainland China as seats of arbitration. •  Miami ranks No. 3 in the U.S. in the number of international cases heard, after New York and Los Angeles/San Francisco, according to the Miami International Arbitration Society. •  In cases handled by members of the American Arbitration Association (ICDR), international cases increased 12 percent from 2010 to 2011, for a total of 994. (AAA/ICDR data.) “Arbitration cases – a growing revenue stream for law firms” The Miami Herald – Business Monday – June 3, 2013 Slide 4

5. Rank the following dispute resolution mechanisms in order of preference for your industry sector • Reported case-load – biennial trend • Rank the following dispute resolution mechanisms in order of preference • 599 • ICC LCIA ICDR • Energy • 817 • % • 795 • 137 • 272 • 224 • 56 • 28 • 16 • Court litigation • Arbitration • % • 22 • 33 • 28 • 17 • Court litigation • Adjudication/Expert determination • Mediation • 621 • 52 • 29 • 13 • 6 • Arbitration • 836 • 17 • 24 • 35 • 24 • 994 • 170 • 216 • 199 • SCC • 16 • 68 • 5 • 11 • 28 • 28 • 22 • 22 • Court litigation • 86 • 160 • 188 • SIAC • Financial Services • % • 448 • 21 • 33 • 41 • HKIAC • 5 • 649 • 82 • Adjudication/Expert determination • 9 • 9 • Court litigation • 275 • 1,118 • 23 • 38 • 31 • CIETAC • Arbitration • 8 • 1,482 • 18 • 20 • 31 • 31 • 1,435 • Mediation • 36 • 37 • 18 • N/A • 51 • 66 • 59 • 9 • Mediation • CRCICA • Adjudication/Expert determination • 20 • 20 • 53 • 7 • Swiss Chambers • 1 (Most preferred) • 2 • 3 • 4 (Least preferred) • 104 • 87 • Construction • 2007 2009 2011 • % • 68 • 21 • 11 • Arbitration • Adjudication/Expert determination • 44 • 28 • 28 • 26 • 26 • 37 • 11 • 22 • 45 • 22 • Mediation • 11 • 1 (Most preferred) 2 3 4 (Least preferred) Slide 5 • PricewaterhouseCoopers 2013 International Arbitration Survey

6. Historical basis of Arbitration: • “Commercial arbitration must have existed since the dawn of commerce. All trade potentially involves disputes and successful trade must have a means of dispute resolution other than force. From the start, it must have involved a neutral determination, and an agreement, tacit or otherwise, to abide by the result, backed by some kind of sanction. It must have taken many forms, with mediation no doubt merging into adjudication. THE STORY IS NOW LOST FOR EVER.” [emphasis added] • Lord Michael John Mustil • “Arbitration: History and Background” • (1989) 6:2, J. Int’l Arb 43 Slide 6

7. Arbitration has ancient roots • Exact origins are unknown • Extensively used in Ancient Greece, Rome and earlier • References exist to its use in Roman Britain (AD 110) and Anglo-Saxon England Slide 7

8. Biblical link (5700+ years ago) --Possible origins of adjudication/arbitration (Jewish Law) The Bible records that: Moses sat as a magistrate among the people (Ex. 18:13) and, either on the advice of Jethro, his father-in-law (Ex. 18:17-23) or on his own initiative (Deut. 1:9-14), he later delegated his judicial powers to appointed “chiefs of thousands, hundreds, fifties, and tens” (Ex. 18:21; Deut. 1:15) reserving to himself jurisdiction in only the most difficult, major disputes (Ex. 18:22 and 26; Deut. 1:17). Judges had to be “able men, such as fear God, men of truth, hating unjust gain” (Ex. 18:21) and “wise men and understanding and full of knowledge” (Deut. 1:13). They were charged to “hear the causes between your brethren and judge righteously between a man and his brother and the stranger”, not be “partial on judgment”, but to “hear the small and great alike; fear no man, for judgment is God’s” (Deut. 1:16-17) “Bet Din and Judges” Jewish Virtual Library (http://www.jewishvirtual library.org/source/judaica/ejud_0002_0003_0_02840.html) Slide 8

9. What is International Arbitration? • Arbitration involving international parties operating under an international rule set and governing principles of international law (e.g., substantive law at the seat, procedural law of the venue, law where award will be enforced) • Procedure through which a dispute is submitted to a tribunal (1 or 3 arbitrators) which considers evidence and makes a final, non-appealable, binding written award • Private and confidential process – award has no effect on third-parties; award is rarely published and is non-precedential; proceedings are closed to public and press • Parties (not judges) have complete autonomy over the process • More flexible, less formal and less constrained than litigation • Parties select their panel (select for specific expertise, experience, nationalities) • Proceedings usually administered through an arbitral institution (ICDR, ICC, LCIA, SIAC, WIPO, HKIAC, Swiss Chambers, etc) with standard well-respected rule set and rosters of arbitrators, rule sets of major institutions are based on UNCITRAL rules (with some slight variations among rule sets) • Ideally should be faster and less expensive than US litigation as rule sets favor cost and time efficiencies, but increasingly proceedings now take on trappings of US litigation (“litigationalization”) • No “home court” advantage; no foreign courts or juries; neutral forum • Int’l arbitration is norm under BITs and international commerce • New York Convention provides international recognition of arbitral awards in 148 contracting states through treaty – very attractive for foreign commerce as arbitration awards are much easier to enforce in a foreign forum than a national court judgment • Very narrow grounds for overturning (vacating) the award in US under US Federal Arbitration Act(9 USC §§ 1-14); grounds for vacature differ country to country Slide 9

10. General Int’l Arbitration Process Commencement: Demand for Arbitration filed with Administering Organization, Response (Statement of Defense) filed Tribunal (1 or 3 person) selected, then appointed by Admin. Org. Preliminary (case management) Hearing between Counsel and Tribunal Document Disclosure and Disclosure/Dispositive/Evidentiary Motions Phase Arbitration Trial (Evidentiary Hearing) Post-trial Phase (Post-trial Briefs, Closing Arguments) Tribunal Deliberations Tribunal renders Award Prevailing party executes Award (losing party may challenge it) Slide 10

11. Players in International Arbitration • International Organizations • National Governments and Courts • Administrative Organizations • Professional Organizations • Arbitration Centers • Major International Law Firms Slide 11

12. International Organizations • United Nations Commission on International Trade (UNCITRAL) • International Centre for the Settlement of Investment Disputes (ICSID) • Permanent Court of Arbitration (at the Hague) National Governments and courts • National laws apply to international arbitrations seated in the country in question • National courts may be called on to: • Compel arbitration, and • Enforce or vacate an award Slide 12

13. Major Administrative Organizations • ICC • AAA/ICDR • LCIA • CPR, JAMS • BCIAC, ACICA, WIPO • SIAC, CIETAC, HKIAC • KLRCA, VIAC Other Administrative Organizations Slide 13

14. Professional Organizations • Chartered Institute of Arbitrators • College of Commercial Arbitrators • Bar Associations • others Arbitration Centers • New York International Arbitration Center • Maxwell Chambers (Singapore) • Dublin Dispute Resolution Center • Arbitration Place (Toronto) Slide 14

15. Developing a presence in International Arbitration • Role • Neutral • Counsel • Expert Witness Slide 15

16. Neutral • Learn about the process • Credentials • Panels • The usual stuff Counsel/Expert witness • The usual stuff Slide 16

17. Chartered Institute of Arbitrators • Over 12,500 members globally • 13 UK Branches, 22 International branches (New York Branch is latest as of 5/17/13) • Non-profit UK charity • International center for ADR practitioners • Arbitrator and mediator education and training; professional publications; conferences and events; develop and promulgate professional standards; provide professional accreditation • Administer cases in UK in an array of ADR fields – construction, employment, commercial, insurance, sport • Provide arbitration, mediation and other ADR services Slide 17

18. CI Arb Education and Accreditation • Internationally, CIArb designations/accreditations are widely respected and broadly recognized as reflecting very high standards of professional excellence • CI Arb courses offer a progressive ‘ladder' starting with newcomers to ADR and extending to those with advanced levels of knowledge, skill and experience • Coursework, examinations and interviews or requisite experience qualify arbitrators for Institute membership as Associate (ACIArb), Member (MCIArb) or Fellow (FCIArb), and permit members to progress up the hierarchy • CI Arb Fellows, who are highly experienced arbitrators, may be awarded the designation ‘Chartered Arbitrator’ (C Arb) (highest designation conferred by the Institute) Slide 18

19. Thank you! Slide 19