LEXPERT MAGAZINE
|
JUNE 2017 63
disputes, I may feel that a body of law in
front of the courts may benefit me in the
longer term."
Another circumstance less suitable
for arbitration is multi-party contracts.
"Where you have third parties that are po-
tentially affected but are not around the ne-
gotiating table when the arbitration clause
is negotiated, that can be a factor to prefer
litigation," says Bienvenu.
Consider a construction contract be-
tween an owner and a contractor. e con-
tractor may have several subcontractors.
e owner may sue the contractor over a
defect for which the subcontractor is re-
sponsible. "e contractor can turn around
and bring the subcontractor into the court
case," says Bienvenu. "In arbitration, that
wouldn't be possible unless there is an arbi-
tration agreement binding the subcontrac-
tor to participate in such an arbitration."
Another situation in which in-house
counsel might think twice about arbitra-
tion is when the counter-party is a large,
well-known company that frequently en-
gages in arbitration. "Arbitrators like to
be appointed," says Pappas. "ey may be
a little more friendly to the large company
because they want to be appointed in the
future. I don't want to overstate it, but it is a
practice that some arbitration practitioners
do bear in mind."
If in-house counsel is going to rely on
arbitration, they must ensure that the arbi-
tration clause applies to the right counter-
party. "Oen, international companies
incorporate a shell company," says Chias-
son. "Can you follow the money? It's very
difficult to bind a party that is not a party
to the arbitration agreement to an arbitral
decision. When a parent company has all
the money but it's their subsidiary that has
entered into the contract, you may find out
you're chasing an empty shell."
Bienvenu recommends a three-tiered
process, beginning with good-faith nego-
tiations, followed by mediation, and culmi-
nating, if necessary, in binding arbitration.
"You need to have very clear deadlines, and
very clear ability of either party to advance
to the next stage. If there is poor draing
[of the dispute-resolution clauses], some-
times the whole process can be paralyzed.
Or you get to arbitration and the first dis-
pute is whether the prior steps were com-
plied with. So there's a draing challenge
[for in-house counsel] when you provide
for these tiered dispute-resolution clauses."
It used to be said that the benefit of arbi-
tration over litigation was that the proceed-
ings were faster and less expensive. at's
no longer axiomatic. "As less experienced
counsel get involved in international arbi-
tration, lawyers who are trained in court
litigation are picking up arbitration files
and treating them in a manner similar to
arbitration files," says Chiasson.
e result has been broader discovery,
larger damages sought, much larger sub-
missions, greater reliance on experts and
their testimony, and more procedural
challenges to the arbitration. Some le-
CRAIG CHIASSON
BORDEN LADNER GERVAIS LLP
Often, international
companies incorporate a shell
company. Can you follow the
money? … When a parent
company has all the money
but it's their subsidiary that
has entered into the contract,
you may find out you're
chasing an empty shell.
| IN-HOUSE ADVISOR: INTERNATIONAL ARBITRATION |
