Young ICCA Skills Training Workshop: Efficiency and Costs in International Arbitration

Post Event Report

By Jadranka Jakovcic (Curtis, Mallet-Prevost, Colt & Mosle LLP, New York) and Zrinka Mustafa Prelic (Divjak, Topic & Bahtijarevic, Zagreb)
 

The Young ICCA Skills Training Workshop on Efficiency and Costs in International Arbitration took place on 7 December 2018 at the premises of the Croatian Chamber of Economy just after the closing remarks at the 26th Croatian Arbitration Days. The workshop was kindly sponsored by Konrad & Partners (Vienna) and supported by ICCA. It was steered by a committee consisting of Mr. Antun Bilić, Assistant Professor at the University of Zagreb (Zagreb), Ms. Jadranka Jakovčić, Curtis, Mallet-Prevost, Colt & Mosle LLP (New York), Mr. Hrvoje Kurelec, Independent practitioner (Zagreb), Mr. Toni Nogolica, Law Office Nogolica (Zagreb), and Mr. Ivan Prandzhev, Konrad & Partners (Vienna), under the guidance of Ms. Nhu-Hoang Tran Thang, LALIVE (Geneva), and Young ICCA Co-Chair, and Mr. Panos Chalkias, Hanotiau & van den Berg (Brussels), and Young ICCA Global Events Director. The event was the first of its kind in Croatia and it was widely attended and supported by young lawyers interested in and practicing international arbitration.
 

The event was opened by Professor Emeritus Pierre Tercier delivering an inspiring keynote address on the beauty of arbitration and its professional and moral responsibility to deliver justice to parties. The workshop consisted of two sessions followed by Q&A and closing remarks. After the workshop, the speakers and the audience continued the discussion at the cocktail reception organized at a nearby venue.

FIRST SESSION: Achieving efficiency in international arbitration: dream, necessity or excuse?
 

The first session was moderated by Mr. Peter Rižnik, associate at Konrad & Partners (Vienna), and it was dedicated to the efficiency side of the balance between costs and efficiency, which international arbitration strives to achieve. The panelists were Ms. Ivana Blagojević, Deputy Counsel at the ICC International Court of Arbitration (Paris), Mr. Helmut Ortner, Counsel at WilmerHale (London), and Ms. Ioana Knoll-Tudor, Partner at Jeantet (Budapest and Paris).
 

Ms. Blagojević opened the panel discussion by giving her view on why users resort to arbitration rather than resolving their dispute by going to court. She pointed out that, generally, inefficiency of court systems is the reason that users increasingly use arbitration. On the other hand, arbitration is becoming very lengthy and expensive. For this reason, stakeholders are justifiably seeking tools to regain the efficiency and lower the cost of the arbitration process. Mr. Ortner reflected on this issue, emphasizing that the goal of arbitration is to do it right, rather than doing it with as little cost as possible. As a result, achieving efficiency is far more complicated than just “achieving the maximum by minimizing the cost”.
 

The panel further touched upon the novelties in the 2017 ICC Arbitration Rules. Among the most significant changes that are used to promote efficiency of the arbitration process is a provision providing for a fee reduction between 5 and 20 percent if an arbitrator fails to deliver the award in a timely manner.[1] Another major novelty was the introduction of the expedited procedure providing for a streamlined arbitration with reduced scales of fees.
 

The role of a well-structured arbitration clause in the context of efficiency in international arbitration was the next topic that the panelists discussed. Ms. Ioana Knoll-Tudor elaborated specifically on the issue of an arbitration clause being relegated at the end of contractual negotiations, especially in M&A transactions. To avoid defective arbitration clauses, she suggested using standard clauses as provided by the arbitral institutions and advised for a better cooperation between dispute resolution and transactional lawyers. Mr. Ortner noted that defects may arise when parties draft clauses from a claimant’s or respondent’s perspective, rather than from the perspective of its validity and efficiency.
 

The final topic of the first session was the arbitrator selection process. Mr. Ortner pointed out that an efficient arbitrator selection process is about (i) trusting the arbitrator candidate, and (ii) establishing cooperation between the parties from the beginning of the proceedings. In respect of the efficiency in the arbitrator’s decision making, parties should select an arbitrator who is a good listener, independent and who will exercise efficiency in regard to, for example, parties’ overly long submissions that skyrocket the cost of the proceeding.
 

The first panel discussion concluded with Q&A session, followed by a coffee break.
 

SECOND SESSION: Minimizing costs in international arbitration: tips and tricks.
 

Ms. Veronika Korom, Associate at Bredin Prat (Paris), moderated the second panel, which focused on the issue of costs in international arbitration. The panelists were Mr. Filip Boras, Partner at Baker McKenzie (Vienna), Mr. Dalibor Valinčić, Partner at Wolf Theiss (Zagreb), and Ms. Elisabeth Vanas-Metzler, Deputy Secretary General at Vienna International Arbitration Centre (VIAC, Vienna).
 

The topic of this panel discussion was introduced by the fact that costs, which are perceived as one of the biggest drawbacks of international arbitration, are in constant rise. There are four stakeholders in determining costs in international arbitration: (i) counsels, (ii) arbitrators, (iii) parties and (iv) arbitral institutions. The panelists agreed that the stakeholders should generally aim for reduced costs, but not at all costs.
 

Ms. Vanas-Metzler discussed the issue from the perspective of an arbitral institution and spoke about the institution’s efforts in incentivizing and assisting parties and arbitrators to minimize costs. Offering his views from the perspective of a counsel, Mr. Valinčić pointed out that good communication between a counsel and a party is instrumental in managing costs efficiently.
 

Technology as a tool for costs reduction was the following topic that the panelists elaborated on. As Mr. Boras stressed out, the advantages of technology are continuously raising with the increased amount of data that, for example, a counsel has to deal with. On the other hand, where the database is rather small, technology can be a burden instead of a useful tool. Where this is the case, technology could lead to additional costs, rather than to cost-efficiency. Other panelists agreed that introducing technology in our daily work represents a challenge, and that we are still far from using artificial intelligence as a tool for costs reduction.
 

Mr. Valinčić noted that the interests of lowering costs and increasing efficiency are not necessarily aligned. For example, improving efficiency by introducing new software may make the proceedings more expensive. In this regard, he emphasized that an adequate management of seniority levels and constitution of a flexible team is instrumental in being efficient as a counsel.
 

The panel further discussed how parties can contribute in keeping costs low. Mr. Valinčić and Mr. Boras suggested how counsels can help their clients in reducing costs. Ms. Vanas-Metzler remarked that much depends on the drafting of the arbitration agreement and the conduct of the parties, i.e. clients and counsels, during the proceedings. Mr. Valinčić’s final remark was that clients could also be braver by, for example, not answering to every single point of their counterparty’s exhaustive submission.
 

The panelists concluded this second session by offering their views on the role and level of use of the expedited procedure in reducing costs. Mr. Boras pointed out that the practice suggests that parties are generally not convinced that the expedited procedure is cheaper. Quite on the contrary, parties usually think that a short and quick procedure is more expensive than a regular one.  According to the statistics from VIAC on the use of expedited procedure, this reasoning seems to rest on legitimate grounds. 
 

The discussion concluded with a dynamic Q&A session, after which the panelists and the audience moved to a nearby venue for the networking reception, and the discussions continued in a pleasant atmosphere.
 

[1] An award must be rendered within six months from the date of the last signature by the arbitral tribunal or by the parties of the Terms of Reference, or within the time limit fixed by the Court as provided for by Article 31(1) of the ICC Arbitration Rules. If an award is not rendered in a timely manner, fee reduction can take place, in the amount and under the circumstances as prescribed in Section VIII (A) and (B) of the Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Arbitration Rules.