Drafting International Dispute Resolution Clauses

On December 5, 2018, Skadden hosted the webinar "Drafting International Dispute Resolution Clauses." Topics included the importance of dispute resolution clauses, choosing between litigation and arbitration, drafting arbitration clauses, multiple-party and multiple-agreement transactions, and the intersection between arbitration and courts. The panelists were Skadden International Litigation and Arbitration partners Julie Bédard, Lea Haber Kuck, Gregory A. Litt and Timothy G. Nelson.

Importance of Dispute Resolution Clauses

After introductions by Ms. Bédard, Mr. Litt kicked off the webinar with observations about the importance of properly drafted dispute resolution clauses. He observed that if parties overlook dispute resolution clauses when drafting complex commercial agreements, they may lack the tools to effectively protect their rights and interests in the transaction when the need arises, particularly if they need to enforce their rights across borders in one or more foreign countries.

Mr. Litt noted that taking the time to negotiate effective dispute resolution provisions in the transaction documents at the outset can ultimately save significant time and costs. Once a dispute arises, the parties may be unable to negotiate a dispute process or forum, and may find themselves facing protracted litigation over issues of jurisdiction, venue and forum non conveniens.

Choosing Between Litigation and Arbitration

Ms. Kuck next gave an overview of considerations in international business transactions for choosing to resolve disputes in litigation or arbitration. Ms. Kuck explained that international arbitration strives to be transnational in nature and has incorporated aspects of both the civil and common law systems, which can be tailored to suit the needs of the parties and the dispute. Ms. Kuck noted that even where a party might convince its opponent to litigate in the party's home forum, this may not be the best course. More than 150 countries have implemented treaties providing for the enforcement of international arbitration awards, most notably the Convention on Recognition and Enforcement of Foreign Arbitral Awards, known as the "New York Convention." The United States is not party to any treaty providing for the enforcement of court judgments.

Ms. Kuck then discussed differences between international arbitration practice and U.S. litigation, including: (1) pleading standards, as international arbitration generally requires greater detail than what is commonly expected under notice pleading standards in U.S. litigation; (2) the relative unavailability of dispositive motions in arbitration, as compared to U.S. litigation; (3) the much more limited scope of "disclosure" (i.e., discovery); (4) the confidentiality of proceedings in arbitration, (5) the narrowly limited...