Maximizing the use of experts in international arbitration

International arbitration is a melting pot in which the mix of different legal cultures is not always very homogeneous.  Large Anglo-Saxon law firms—Big Law—still enjoy a dominant position in the international arbitration market.  And this dominance is such that certain procedural practices typically used by litigators in common law jurisdictions have permeated and are now mainstream in international arbitration.  Party-appointed quantum experts, for instance, are nowadays ubiquitous in the adjudication of international disputes.  This practice, however, is not immune from criticism even in cases in which the presence of partisan experts may be warranted to help the tribunals award just compensation.

Arbitration users in continental Europe and Latin America are often concerned that the financial dependence of the experts on the party that appoints them could be the cause of the frequent and extreme gap that separates opposing quantum testimonies.  Other critics highlight the fact that the experts’ excessive partisanship, when coupled with the tribunals’ struggle—or failure—to assess expert testimony, could entail a high risk of unfair adjudication that frequently results in awards that do not adopt the experts’ recommendations and simply “split the baby.”  Thus, for reasons of fairness, cost, and efficiency, many of the critical voices advocate in favor of using neutral tribunal-appointed experts over partisan experts.

Research on the role of quantum experts in investment arbitration shows that the proposal to prefer neutral experts over party-appointed experts largely misses the point because while the latter appear in the quantum phase of every award examined, the former are rarely used, if at all.  Serious empirical studies also show that quantum experts are developing a sort of “repeat-players’ game” in which a few individuals, associated with even fewer firms, concentrate all of the appointments.  Interestingly, the data available from investment arbitration cases shows that the experts, irrespective of their repeat-player status, seldom manage to dictate the awards’ monetary outcomes.  In fact, the tribunals that hear investment cases award damages in a very conservative manner—less rather than more—and only rarely “split the baby.”  

While experts have little to gain from exaggerating their clients’ claims and the lawyers from encouraging such type of behavior, the so-called “battle of the experts” persists in more recent cases.  At the same time, the fees payable to the experts remain a very significant portion of the clients’ bill.

Our guiding principle at Victoria Associates is to accomplish our clients’ goals in every case and to do so at the lowest possible cost.  One way in which our lawyers honor this principle is by relying on a wealth of collective knowledge and experience navigating the procedural complexities of past cases to tailor successful strategies for the efficient use of quantum experts in future cases.  Our lawyers are knowledgeable about damages issues and will do a significant portion of the groundwork that larger firms typically entrust to the experts. 

This allows Victoria Associates to provide better legal advice to the client and better instructions to the experts with whom we work.  In the aggregate, this approach ensures that the quantum phase of an arbitration is conducted in a manner that maximizes the role of the experts we appoint and increases the overall chances of success for our clients.

Reshaping International Arbitration

A Contribution for the Improvement of Efficiency in IDR

(A work in progress)

International Arbitration has become too costly, time consuming and, therefore, inefficient. Parties from different parts of the world insist in bringing their own legal practices and traditions to arbitration. More undesirably than not, some bring their own guerrilla apparatus, ranging from raising challenges against one or more arbitrators to request lengthy and costly evidentiary production like discovery or full-fledged cross-examination of witnesses.

It is true that there is significant and fundamental progress in International Arbitration. For instance, the use of technology now allows tribunals to hold hearings remotely from virtually anywhere in the globe, and the electronic filing of motions can dispense with the telefax. However, the technological revolution has not been accompanied by procedural efficiency and swiftness in the decision-making process. Instead of a streamlined mechanism, arbitration proceedings are increasingly subject to regulation and to an undesired level of standardisation that doesn’t necessarily bring more predictability. It may also be said that, to some extent, some pieces of soft law have allowed parties to replicate in arbitration the procedures they are familiar with in state courts. The use of evidence production, and more particularly discovery (combined with “e-discovery”), by US law firms elicits this idea.

Definitely, arbitration is not what it used to be.

International Arbitration is not what it used to be

So why not take a step back whilst also keeping the positive improvements?

To do that, one needs to look at the early days of arbitration and ask what was it that made it become so popular in the first place. Why did parties started resorting to arbitration instead of going to state courts?

There are a few reasons related to the legal framework that contributed to such popularity, in particular the New York Convention on the Recognition and Enforcement of Arbitral Awards of 1958, and the UNCITRAL Model Law that made arbitration national laws seemingly similar among themselves.

However, the main reasons that led parties to opt for arbitration can be summarised in a few features:

  • Swiftness, thus reduced time and costs;
  • Flexibility of the proceedings;
  • Confidentiality;
  • Neutrality of the seat;
  • Neutrality and / or expertise of the decision-makers appointed by the parties;
  • Finality of the award.

The proceedings must of course comply with a few indispensable principles, namely:

  • The right to properly present the case;
  • Equality of arms;
  • Independence and impartiality of the decision maker.

Therefore, my notion of reshaping arbitration is to go back to a proceeding where those basic principles are observed, and where there is extensive use of new technologies, but limited similarities to state court litigation. At the same time, arbitrators must be granted – and indeed exercise – more power in managing the proceedings. And be free from any paranoia on due process.

Improving Efficiency

Accordingly, the arbitral proceeding should follow a “less is more” policy:

  • less time to file submissions and strict compliance to a timetable agreed between the parties and the tribunal;
  • less (and less lengthy) written submissions;
  • immediate production of evidence and limited requests for production of evidence;
  • first Case Management Conference as soon as possible and covering as many aspects as possible; desirably, the aim of this Case Management Conference is to produce a combination of a “terms of reference” and a “procedural order Nr. 1”;
  • use of technological protocols to exchange submissions, make decisions, and produce notices;
  • streamlined procedures in the making of procedural orders;
  • use of technology to hold hearings and other conferences.

In any event, an efficient arbitration needs to have more of:

  • predictability;
  • control of costs;
  • background on the decision-makers;
  • control on ethical conduct.

There are already a handful of profiling and procedural tools that help tribunals and parties to accomplish those results and provide the necessary information to select the best possible decision maker for each case.

Why Victoria Associates?

Why Victoria?

Victoria is a story of adventure, risk and success as the first ship to circumvent the world under the command of the Portuguese explorer Ferdinand Magellan.

When the fleet set off from Spain almost to the day 500 years ago, they could not know what they would ultimately accomplish, but Magellan and the other sailors had the courage and the will to succeed that made the ship Victoria the first to sail around the world, a miraculous accomplishment against all odds.

We chose Victoria Associates for our name as we embody the values and discipline of Magellan to achieve success for our clients regardless of the difficulty of the matter.

Victoria Associates also reflects other fundamental values of Magellan: win for and share risks with our clients.

We will guide you through the perilous straits of international dispute resolution.

Embark with us!