Guiding resolution in arbitration: Should the court intervene at this juncture?
In the realm of international arbitration, techniques aimed at fostering settlement discussions are increasingly being adopted across various legal systems. Although there are shared practices, differences persist between common law and civil law jurisdictions due to procedural traditions and legal frameworks.
Encouraging Settlement through Arbitration Techniques
Many arbitral institutions, such as those governed by the ACICA Rules and SIAC Rules, utilise the first case management conference to encourage settlement talks. This initial stage provides an opportunity for the tribunal to highlight the advantages of settlement and establish a procedural timetable conducive to negotiations [1].
A mid-stream conference, like the "Kaplan hearing," can also serve as a valuable tool. This structured meeting, where both parties present their cases before the merits hearing, allows parties to reassess their positions and consider settlement [1].
The flexibility afforded by arbitration can be leveraged to facilitate settlement discussions tailored to the needs of the parties. This autonomy enables the parties to shape the process in a way that encourages dialogue and compromise [3].
The neutral nature of arbitration can make it more conducive to settlement compared to domestic litigation, as it reduces the perceived advantage of litigating in a home jurisdiction [2].
Navigating the Differences Between Common Law and Civil Law Jurisdictions
Common law jurisdictions tend to favour more adversarial approaches, whereas civil law jurisdictions often emphasise more collaborative and inquisitorial methods. However, both types of jurisdictions are becoming more open to settlement facilitation techniques [1].
In common law jurisdictions, the tribunal may be more inclined to actively intervene in settlement discussions, as seen with mid-stream conferences [1]. In contrast, civil law jurisdictions may place a stronger emphasis on procedural rules and less active intervention in settlement discussions.
The specific legal frameworks regarding arbitration procedures can vary, influencing the extent to which settlement facilitation techniques are adopted [3]. The enforceability of arbitration awards under the New York Convention provides a strong foundation for settlement across both common and civil law jurisdictions [2].
As arbitral institutions continue to evolve, they may establish more detailed parameters related to settlement efforts during the proceeding. Contemporary tribunals are becoming more comfortable in guiding parties towards settlement options, a shift from the traditional view that a tribunal had no role in settlement efforts.
Tribunals wishing to play a more active role in encouraging settlement can give their "preliminary views" to the parties, which are non-binding and can help the parties to realistically assess their prospects. The ACICA Arbitration Rules (2021) require the tribunal to raise the possibility of using settlement techniques at a preliminary meeting, and the SIAC Rules empower the tribunal to make any necessary directions, including a suspension of proceedings, for the parties to adopt any amicable dispute resolution methods.
In civil law jurisdictions, arbitrators have historically been more willing to encourage parties to engage in settlement talks compared to common law jurisdictions. The tribunal can include a window for mediation within the procedural timetable, ensuring that the parties will have a dedicated opportunity to explore amicable resolution at a moment when the dispute should be ripe for settlement.
For arbitration to remain the preferred method for resolving cross-border business disputes, active case management by tribunals, including in relation to settlement, is essential. However, concerns over arbitrator impartiality remain. Any settlement conference chaired by an arbitrator should be subject to "settlement privilege," which means the tribunal could not refer to or rely on those discussions when making an award.
In 2023, the ICC Commission on Arbitration and ADR published guidance on the steps arbitrators can take to facilitate settlement. Tribunals are generally reluctant to set down a mediation window unless both parties agree, and some parties (particularly respondents) may not have a detailed understanding of their prospects at the first case management conference and may be unwilling to engage meaningfully with settlement proposals.
In conclusion, while both common law and civil law jurisdictions employ similar settlement facilitation techniques, differences in procedural traditions and legal frameworks can influence the approach and effectiveness of these techniques. As arbitration continues to evolve, it is likely that we will see more institutions and tribunals adopting practices that foster settlement and make the process more accessible and efficient for all parties involved.
References: [1] International Arbitration: Law, Practice and Skills (2020) [2] The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) [3] Comparative Arbitration Law (2018)
Businesses and finance play integral roles in determining the success of settlement discussions during international arbitration. The flexibility and neutral nature of arbitration, compared to domestic litigation, make it an appealing platform for fostering settlement, as it encourages dialogue and compromise (autonomy) and reduces the perceived advantage of litigating in a home jurisdiction. This design allows parties to shape the process in a way that best facilitates settlement conversations. On the contrary, differences in procedural traditions and legal frameworks between common law and civil law jurisdictions can impact the extent to which settlement facilitation techniques are adopted, with arbitral institutions and tribunals adjusting their practices accordingly to ensure efficient and amicable dispute resolution for both parties.
