International Arbitration Law Library Arbitration and Mediation in International Business Second Edition Christian Bühring-Uhle andfor the Second Edition Lars Kirchhoffand Gabriele Scherer KLUWERLAW INTERNATIONAL
Contents Foreword to the Second Edition Preface by the Authors Abbreviations v xv xvii Introduction 1 PART ONE: CHALLENGES OF CONFLICT MANAGEMENT Chapter 1 Need for Conflict Management in International Business 5 I. Globalization of the World Economy 5 II. Vulnerability of International Business Relations 6 1. Increasing Complexity of International Business Transactions 6 2. Particular Vulnerability of International Business Relations 6 a. Economic Factors 7 b. Financial and Monetary Factors 7 c. Political Factors 7 d. Legal Factors 7 e. Interpersonal Factors 8 III. Reduced Effectiveness of Contractual Planning 11 IV. Problems of Litigating International Disputes in National Courts 12 1. Jurisdiction 12 2. Conductof Procedure 16 a. Neutralityof Forum 17 b. Fundamental Differences between Civil Law and Common Law Procedure 17 c. Judicial Conflicts of Gathering Evidence Abroad 24 3. Substantive Law 25 4. TheEffectofForeign Judgments 25 V. Conclusion: Need for Conflict Management 27
ARBITRATION AND MEDIATION IN INTERNATIONAL BUSINESS PART TWO: INTERNATIONAL COMMERCIAL ARBITRATION Chapter 2 Background, Legal and Institutional Framework 31 I. Background 31 1. History 31 2. Attributes of International Commercial Arbitration 32 a. Adjudication 33 b. Private 33 c. Agreement 33 d. Commercial 33 e. International 34 3. Types of International Commercial Arbitration 34 a. Specialized Arbitration 34 b. Institutional and Ad Hoc Arbitration 35 c. Arbitration in Law, Amiable Composition and Arbitration Ex Aequo et Bono 40 d. Contractual Gap Filling / Adaptation by Arbitral Tribunals 40 II. Legal Framework of International Commercial Arbitration 42 1. National Legal Systems 42 a. The Limits of "Delocalization" 42 b. The Interaction of National Laws 44 c. The Liberalization of National Arbitration Laws 45 d. The Impact of National Legal Systems on Arbitration 46 2. International Conventions 56 a. The New York Convention 57 b. Other Significant Conventions 61 3. Advantages of the Legal Framework of International Commercial Arbitration Compared to Transnational Litigation 63 a. Jurisdiction 64 b. Procedure 64 c. Application of Substantive Law 66 d. Effectof Awards 66 4. Conclusion 67 Chapter 3 The Process of International Commercial Arbitration 69 I. Characteristic Features of the Process 69 1. Party Autonomy 70 2. The Blend of Civil and Common Law Elements 71
CONTENTS II. The "Typical" Sequence of an International Arbitration 72 1. Initiation 73 2. Constitution of the Tribunal 73 3. Pre-Hearing Phase 75 a. Preliminary Hearing 76 b. Written Phase and Gathering of Evidence 78 4. Hearings on the Merits 81 a. Scheduling 81 b. Witness Testimony 83 c. Experts 83 d. Pleadings 84 5. Making of the Award 84 6. Overall Durationof the Process 85 a. "Typical" Duration 86 b. "Fast-Track Arbitration" 86 7. Conclusion 88 III. The Cost Structure of International Arbitration 89 1. Composition of the Costs of Arbitration 89 a. Costs of the Tribunal 89 b. Costs of the Parties 90 2. How Fees are Calculated 91 a. Fees of Lawyers 91 b. Fees of Arbitrators 91 c. Fees of Arbitration Institutions 94 d. Security Deposits 94 e. Effect of a Settlement on the Fees 95 3. Allocation of Costs in the Award 96 a. Costs Subject to Allocation 96 b. Principles Governing the Allocation 97 4. Conclusion: Factors Influencing the Costs of Arbitration 98 IV. Recent Trends in International Commercial Arbitration 101 1. Modernization of Arbitration Laws 101 2. Multiparty Constellations 101 3. Focus on Evidence 102 4. Increasing Role of Alternative Settlement Techniques 103 5. Rising Empirical Work on ICA 104 V. Conclusion 104
ARBITRATION AND MEDIATION IN INTERNATIONAL BUSINESS Chapter 4 Two Surveys on Arbitration and Settlement 105 I. Design of the Surveys 106 II. Summary of Most Relevant Findings 107 1. Function, Costs and Delays 107 2. Settlement and the Role of Arbitrators 110 3. Combining Arbitration with Mediation 123 III. Conclusion to Part Two 128 PART THREE: ALTERNATIVES TO ARBITRATION Chapter 5 Conflict and Negotiation Theory as a Conceptual Framework for Conflict Management 131 I. Conflict 132 1. Types of Conflicts 133 2. Waysof Dealing with Conflict 134 II. Negotiation 136 1. Interdisciplinary Research and Theory 136 2. Some Basic Findings and Distinctions 138 a. Integrative and Distributive Bargaining 138 b. Strategie Choice 140 c. The Human Factor in Negotiation 141 d. "Dispute" and "Rule-Making" 148 e. Power in Negotiation 149 f. The Organizational Dimension 152 3. Prescriptive Approaches 153 a. Principled Negotiation 154 b. Negotiation Analysis 158 c. Comment 164 III. Conflict Management in Context 164 IV. Conclusion 166 Chapter 6 Alternative Dispute Resolution Techniques 169 I. Business ADR in the United States 171 II. Common Features of" Alternative" Techniques 174 1. Party-Autonomy 174 2. Flexibility 174
CONTENTS 3. Focus on Interests 174 4. Management Involvement 175 5. Focus on Relationship 175 6. Confidentiality 175 7. Limited Transaction Costs 175 III. Mediation - the Prototype of ADR-Procedures 176 1. Definition 176 2. Traditional Mediation vs. Modern Mediation 177 3. How Modern Business Mediation Works 180 a. Different Stages of the Mediation Process 180 b. Role of Caucuses in Business Mediation 184 c. Various Roles of the Mediator 186 d. Techniques of the Mediator 190 e. Interest-Based and Rights-Based Mediation 193 f. Multiparty Mediation 194 IV. Other ADR Techniques and Combinations 195 1. Mini-Trials 195 2. Fact-Finding and Related Procedures 197 3. Variations of Mediation 199 4. Variations of Arbitration 200 5. Early Intervention Mechanisms 201 V. Conclusion: Strengths and Weaknessesof ADR Procedures 203 1. How Mediation/ADR facilitates settlement 204 2. Costs and Benefits of Mediation /ADR 206 3. WhatTypesof Disputes aresuitable for ADR? 209 Chapter 7 Tools and Techniques to support Business Mediation 211 I. MindMapping 211 1. Basic Concept 211 2. Application in Mediation 212 II. Litigation Risk Analysis 212 1. Basic Concept 212 2. Use in Mediation 216 3. CaseStudy 218 4. Comment 219 III. Brainstorming 220 1. Basic Concept 220
ARBITRATION AND MEDIATION IN INTERNATIONAL BUSINESS 2. Application in Mediation 221 Chapter 8 The Legal Framework for (International) ADR 223 I. Model Conciliation and Mediation Procedures 224 1. ICC ADR 224 2. AAA Mediation 226 3. LCIA Mediation 227 4. UNCITRAL Conciliation 227 5. World Bank/ICSID Conciliation 228 6. CPR Minitrial Procedure 228 II. Legal Issues Arising out of International ADR 228 1. NatureandEffectsofADRClauses 229 a. Ensuring Participation 229 b. Excluding Competing Procedures 231 c. Suspension of Limitation Periods 232 2. Conducting the Procedure 232 a. Conduct of the ADR Neutral 233 b. Minimum Due-Process Standard 233 3. The Importance of Back-up Dispute Resolution Processes 234 4. Maintaining Confidentiality 234 5. Enforcing the Result 235 6. Conclusion 236 III. Integrating ADR into Arbitration Framework 238 1. Initiating / Excluding Competing Procedures 238 2. Conduct of the Procedure 239 3. QualityofResults 240 4. Effective Termination of the Dispute 240 5. Advantages of Using the Arbitral Framework 241 IV. Conclusion 242 PART FOUR: SYNTHESIS Chapter 9 Designing Procedures for Effective Conflict Management 247 I. The Arbitrator's Dilemma 248 II. Strategies of Integrating the Processes 251 1. Pre-Arbitral Mediation 251
CONTENTS a. Concept 251 b. Comment 252 2. Post-Arbitration Mediation 254 a. Concept 254 b. Comment 255 3. Complete Integration: The IBM-FUJITSU Example 255 4. Mediation Windows 259 a. Concept 259 b. Comment 263 5. Conclusion 263 III. A Dynamic Approach to Dispute Resolution Process Design 265 1. The Task of Dispute Resolution Process Design 265 2. Guiding Principles 266 3. Basic Elements of the System 266 4. Dynamics of the System 267 PART FIVE: CONCLUSION 269 Appendix 1: List of Individuais 271 Appendix 2: List of Institutions 279 Bibliography 283 Index 305