CPR Expands Arbitration Options with Newly Released Administered Arbitration Rules (NYSBA Lawyer)

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Olivier P. André is Special Counsel and Director of Dispute Resolution Services

The International Institute for Conflict Prevention and Resolution (CPR) officially launched its inaugural set of administered arbitration rules at a reception held on May 13,2013, at the New York office of Simpson Thacher & Bartlett L.L.C.

The launch of these new rules, which have become effective on July 1, 2013, is a major development for the field of arbitration and for CPR. When it comes to arbitration, CPR has championed the use of non-administered arbitration to resolve disputes in an efficient and cost-effective way since its creation by Fortune 500 General Counsel in the late seventies. With the promulgation of its administered arbitration rules, CPR is again expanding the range of options to consider when tailoring a dispute resolution process best adapted to the parties' interests and needs.1

The CPR non-administered arbitration rules2 have been used for years in large B2B complex commercial disputes by users who appreciate the flexibility they offer while reducing the costs. Nonetheless, parties may prefer the ongoing involvement of an administrative organization for certain categories of disputes. With these new rules, CPR is responding to the request expressed by its members3 and users to also offer an administered arbitration option.

The CPR Administered Arbitration Rules (the "Rules") are based on CPR's well-tested and comprehensive non-administered arbitration rules, an attractive alternative to the UNCITRAL arbitration rules.4 They have been carefully drafted by arbitration experts from CPR's Arbitration Committee5 to meet business needs and offer only what parties need from an administering institution, and no more. CPR will assist the parties during the critical arbitrator selection phase, handle all billing and advances on costs with the input from the Tribunal, address any arbitrator challenge that may arise,6 and perform a limited review of the award before it is issued. The administrative services are designed to make these rules cost-efficient. For example, submissions of filings and pleadings to CPR will be in electronic format only. To streamline the process, the Tribunal will interface directly with the parties for scheduling matters and advise CPR of the status. Attorneys already on staff with CPR, and experienced with arbitration, will assist the parties and administer cases out of CPR's New York office. Below is a short description of some of the key features of the Rules.

Arbitrator Selection

Parties using the Rules will have access to the elite Panel of CPR Distinguished Neutrals7 worldwide. All CPR arbitrators have proven experience conducting arbitrations for complex commercial disputes and are strictly vetted and evaluated before being admitted to the CPR Panels8.


Under the default arbitrator selection process, the Tribunal consists of 3arbitrators. Each party designates a party-arbitrator candidate for appointment in the notice of arbitration or the response.9 CPR queries the party-designated arbitrator candidates for conflicts, availability, and rates. If no objection to their independence or impartiality is raised and sustained, those candidates are appointed by CPR. The Chair is appointed by CPR using a list-ranking process with the parties' participation.10

The rules offer numerous other arbitrator selection options to ensure that the parties have a range of options to address their specific needs and ultimately maintain control over the process. As a variation of the default process, the parties can, for example, provide in their arbitration clause that the two party-appointed arbitrators will designate the Chair11 or that all three arbitrators will be appointed by CPR using a list-ranking process with the parties' participation. The clause can also provide that the unique CPR-screened process for the appointment of party-appointed arbitrators will be used. Pursuant to the screened process provided by Rule 5.4, the parties each select their own party-appointed arbitrator without that arbitrator knowing which party has appointed them because CPR acts as a "screen" during the selection phase. Finally, the parties can also specify in their arbitration clause that they will use a sole arbitrator instead of a three-member tribunal. In that case, the clause can specify whether the arbitrator will be jointly designated by the parties-with CPR's assistance only if the parties are unable to agree-or selected by CPR using a list-ranking process with the parties' participation.

Administrative Fees, Advance on Costs, and Arbitrators' Fees

The administrative fee schedule has been designed to be user-friendly and offer certainty to arbitration users. The claimant is required to pay a flat filing fee of $1,750 and there is no separate filing fee for counterclaims. In addition to the filing fee, the parties are required to pay a flat administrative fee12 based on a scale of amounts in dispute.13 rather than a percentage of the amount in dispute.14 The fee schedule is also designed to encourage efficiency. The administrative fee is based on the delivery of the final award by the Tribunal to CPR for review within 12 months of the initial pre-hearing conference.15  CPR must approve any scheduling orders extending beyond this period, and has discretion to convene a call with the parties and arbitrators to discuss the factors relevant to such an extension. CPR may charge an additional $2,000 administrative fee for each additional 6-month period.

The arbitrators set their own fees on a reasonable basis, and those fees are fully disclosed to the parties prior to appointment. Advances on costs are determined by CPR with input from the Tribunal.16

Conservatory and Interim Measures Pursuant to Rule 13, a party may request the Tribunal to take any interim measures of protection it deems necessary, including measures for the preservation of assets, the conservation of goods or the sale of perishable goods.17 Pursuant to Rule 14, a party may also seek any interim measures of protection permissible under the contract or the applicable law prior to the constitution of the Tribunal by requesting CPR to appoint a Special Arbitrator. The Special Arbitrator can be appointed within 2 business days of the request for interim relief from a list of arbitrators maintained by CPR for that purpose.18 This mechanism for emergency relief automatically applies under the Rules unless the parties agree otherwise. If the parties opt to go to court for judicial interim relief, the agreement to arbitrate is not waived.19

Discovery

Under Rule 11, the Tribunal"may require and facilitate" appropriate discovery as deemed necessary under the circumstances, taking into account the needs of the parties and the desirability of making discovery expeditious and cost-effective. It is to be noted, however, that an arbitration clause can always be customized to provide specific discovery provisions tailored to the parties' needs. To do so, the parties can adopt one of the modes provided for in the CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration.20 This Protocol, released in 2009 by the CPR Arbitration Committee provides different degrees of document disclosure-including electronic documents and presentation of witnesses. Parties may also refer to the IBA Rules on the Taking of Evidence in International Arbitration (2010).21

The Tribunal may issue orders to protect the confidentiality of proprietary information, trade secrets and other sensitive information disclosed in discovery.22

Award and CPR Limited Review of Award

Unless otherwise agreed, the award must be written and reasoned.23 The Tribunal may grant any remedy or relief, including specific performance, within the scope of the agreement or the law(s) or rules of law applicable to the dispute.24 The dispute should in most circumstances be submitted to the Tribunal for decision within 6 months after the initial pre-hearing conference.25 The Tribunal should in most circumstances submit the final award to CPR within 30 days after the close of the hearing and CPR should deliver the award to the parties promptly thereafter.26 CPR must approve any scheduling orders or extensions that would result in a final award being rendered more than 12 months after the initial pre-hearing conference.27

Under the Administered Arbitration Rules, CPR performs a limited review of the award for format, clerical, typographical or computational errors28 before it is delivered to the parties. After the delivery of the award, the parties have a limited 15-day period during which they may request the Tribunal to clarify the award before it becomes final and binding.29

Settlement and Mediation

A provision directly built into the Rules allows the Tribunal to suggest that the parties explore settlement or mediation at any time during the arbitration.30 This provision has long been a part of CPR Non-Administered Arbitration Rules and can lead to consensual resolution opportunities spotted by arbitrators during the proceeding.
If mediation is used, the mediator shall be a person other than a member of the arbitral Tribunal.

Pre-Dispute Model Clause

Any dispute arising out of or relating to this contract, including the breach, termination or validity thereof, shall be finally resolved by arbitration in accordance with the International Institute for Conflict Prevention and Resolution ("CPR") Rules for Administered Arbitration (the "Administered Rules" or "Rules") by [a sole arbitrator] [three arbitrators, of whom each party shall designate one, with the third arbitrator to be appointed by CPR] [three arbitrators, of whom each party shall designate one, with the third arbitrator to be designated by the two party-appointed arbitrators] [three arbitrators, of whom each party shall designate one in accordance with the screened appointment procedure provided in Rule 5.4] [three arbitrators, none of whom shall be designated by either party]. The arbitration shall be governed by the Federal Arbitration Act, 9 U.s.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The place of the arbitration shall be [city, state].


Existing Dispute Submission Agreement

We, the undersigned parties, hereby agree to submit to arbitration in accordance with the International Institute for Conflict Prevention and Resolution ("CPR") Rules for Administered Arbitration (the"Administered Rules" or "Rules") the following dispute:

[Describe briefly]

We further agree that the above dispute shall be submitted to [a sole arbitrator] [three arbitrators, of whom each party shall designate one, with the third arbitrator to be appointed by CPR] [three arbitrators, of whom each party shall designate one, with the third arbitrator to be designated by the two party-appointed arbitrators] [three arbitrators, of whom each party shall designate one in accordance with the screened appointment procedure provided in Rule 5.4] [three arbitrators, none of whom shall be designated by either party]. [We further agree that we shall faithfully observe this agreement and the Administered Rules and that we shall abide by and perform any award rendered by the arbitrator(s).] The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The place of arbitration shall be [city, state].


Endnotes
1. With its Corporate ADR Pledge, signed by over 4,000 corporate
entities, and its recently promulgated 21st Century Corporate
ADR Pledge©, already signed by 26 major multinationals, CPR
advocates for a global, sustainable and systemic approach to
dispute resolution and prevention by corporations. Such an
approach should systematically utilize, as needed, all options
available in the dispute resolution process toolbox, including
non-administered and administered arbitration. More information
about the CPR Pledges is available at http://cpradr.org/About/
CPRPledges.aspx
.
2. The CPR Non-Administered Arbitration Rules (2007) and their
counterpart for international disputes, the CPR Rules for NonAdministered
Arbitration of International Disputes (2007), are
designed to provide users with maximum control over the
proceedings. Any aspects of the rules can be customized to fit
the parties' specific needs and CPR only gets involved when
necessary (e.g., when there is a non-responding respondent, a
deadlock in the selection of the arbitrators under the default
mechanism, a challenge raised against a particular arbitrator, or
there is a need to appoint a special arbitrator for interim measures
of protection prior to the constitution of the tribunal) or when
the parties require it in their contract (e.g., when the parties have
decided to provide for an arbitrator selection mechanism which
involves CPR's assistance). There is no filing fee to commence an
arbitration and, when CPR gets involved, it charges a fee based
on the service rendered. Because the arbitrators directly handle all
administrative aspects ofthe proceedings, the parties do not have
to pay any administrative fees.
3. CPR membership comprises General Counsel and senior
lawyers of Fortune 1,000 organizations, attorneys from the top
law firms around the world, leading ADR practitioners and
academics, highly experienced neutrals, sitting and retired
judges, and government officials. This sophisticated, executive-level
community of leading practitioners and thought leaders is
dedicated to advancing ADR in their particular industries.
4. While the Administered Arbitration Rules can be adapted by
parties for use in cross-border disputes, CPR is currently working
on a set of Administered Arbitration Rules specifically tailored for
international disputes.
5. The Drafting Subcommittee was led by Robert Smit, Esq.,
of Simpson Thacher & Bartlett LLP, Co-Chair of the Firm's
International Arbitration and Dispute Resolution Practice. The
CPR Arbitration Committee is currently chaired by Ank Santens,
Esq., of White & Case LLP, and Felix Weinacht, Esq., Head of
Industry Litigation at Siemens serves as Vice-Chair.
6. All arbitrators appointed under CPR Rules must be independent
and impartial, with no exception (Rule 7.1). Challenges to the
independence and impartiality of appointed arbitrators are
decided by the CPR Challenge Officer or a CPR Challenge Review
Committee in accordance with the CPR Challenge Protocol,
available at http://cpradr.org/Resources/ALLCPRArticlesl
tabid/265 lIDI 619I CPR-Challenge-Protocol.aspx.

7. CPR Members can also access the Panel of Distinguished Neutrals
24/7 online, search for neutrals using a variety of criteria and
display their biographies.
8. All CPR Distinguished Neutrals undergo a highly selective vetting
and evaluation process, which involves user and peer review
of applicants, before being admitted to the Panel. To facilitate
arbitrator selection in complex cases, CPR also maintains more
than 20 specialty panels composed of arbitrators possessing
specific practice experience and background. The Global Panel
comprises highly qualified arbitrators in more than 20 countries
and the National Panel is an elite panel comprising CPR's
most distinguished neutrals who are nationally recognized for their success and experience across the ADR spectrum. More
information about CPR's Panel of Neutrals is available at http:/ /
cpradr.org/FileaCase/ CPRsNeutrals.aspx
.
9. CPR will provide a list of candidates from the CPR Panel upon
request of a party. However, a candidate designated by a party
does not have to be a member of the CPR Panels of Distinguished
Neutrals. See Rule 5.1(b).
10. CPR convenes a conference call with the parties to determine the
profile of the best chair candidates for the case at hand. See Rule
5.2.
11. In this case, CPR appoints the Chair using a list ranking process
with the parties' participation only if the two party-appointed
arbitrators are unable to designate a Chair for appointment. See
Rule 5.2(b).
12. The administrative fee is capped at $32,250 for disputes over
$500 million at issue. See the CPR Administered Arbitration
Schedule of Costs at http://www.cpradr.org/FileaCase/
CPRScheduleofAdministeredArbitrationCosts.aspx.

13. Calculated from the amounts in dispute in the claim(s) and
counterclaim(s).
14. Unless otherwise agreed, the fee is split equally among the
parties and is subject to allocation among the parties by the
Tribunal in the award.
15. Pursuant to Rule 9.3, the Tribunal is required to hold an initial
pre-hearing conference call with the parties for the planning and
scheduling of the proceeding promptly after its constitution.
Disputes should in most circumstances be submitted to the
Tribunal for a decision within 6 months after the initial pre-hearing
conference. See Rule 15.8.
16. See Rule 17.
17. See Rule 13.1.
18. See Rule 14.5.
19. See Rule 14.13.
20. See http://www.cpradr.org/Resources/ALLCPRArticles/
tabid/265/ ArticleType/ ArticleView / ArticleID/ 614/Default.aspx.
21. See http://www.ibanet.org/Publications/publications_IBA_
guides_and_free_materials.aspx#takingevidence
.
22. See Rule 11 and also Rule 20 which provides that, unless
otherwise agreed, the parties, the arbitrators and CPR shall treat
the arbitral proceedings, any related discovery and the decisions
of the Tribunal as confidential, except in connection with judicial
proceedings ancillary to the arbitration.
23. See Rule 15.2.
24. See Rule 10.3.
25. See Rule 15.8.
26. Id.
27. Id.
28. See Rule 15.5.
29. See Rules 15.6 and 15.7.
30. See Rule 21.

Olivier P. Andre is Special Counsel and Director of Dispute Resolution Services, International Institute for Conflict Prevention & Resolution (CPR).

NYSBA New York Dispute Resolution Lawyer I Fall 2013 I Vol. 6 I NO.2 35

Reprinted with permission from: New York Dispute Resolution Lawyer, Fall 2013, Vol. 6, No. 2, published by the New York State Bar Assocation, One Elk Street, Albany, NY  12207