WELCOME TO OUR WEBINAR International Arbitration Clauses for Franchise Agreements

Transcription

1 WELCOME TO OUR WEBINAR International Arbitration Clauses for Franchise Agreements Wednesday, May 16, :00 P.M. EDT If you cannot hear us speaking, please make sure you have called the teleconference number on your invitation. US participants: Outside the US: The audio portion is available via conference call. It is not broadcast through your computer. *This webinar is offered for informational purposes only, and the content should not be construed as legal advice on any matter.

2 PANEL MEMBERS & PRESENTATION OVERVIEW CURRENTLY SPEAKING Michael Brennan Franchising Partner Erik Wulff Franchising Partner Critical Drafting Considerations Administered Versus Ad Hoc & Institutional Differences Scope of the Dispute Number of Arbitrators & Method of Selection Governing Law Language of the Dispute Seat of the Arbitration Additional Drafting Considerations Confidentiality Formal Negotiation / Mediation Interim Relief Costs J.P. Duffy International Arbitration Partner Arbitration Clauses for Franchise Agreements May 16,

3 ADMINISTERED VERSUS AD HOC ARBITRATION Administered Arbitration Supervised by a neutral third-party institution Provides administrative infrastructure Provides well-recognized procedural rules Can reduce costs and minimize enforcement challenges Ad Hoc Arbitration Supervised by the arbitrators and local courts Parties or arbitrators must provide the administrative infrastructure Typically governed by the UNCITRAL rules Debatable whether it results in cost savings Can increase the likelihood of enforcement challenges Arbitration Clauses for Franchise Agreements May 16,

4 INSTITUTIONAL DIFFERENCES More Similarities Than Differences All permit arbitrators to decide their own jurisdiction (competencecompetence) (ICDR, ICC, LCIA & Others) All authorize interim relief (injunctive relief and attachments) All require arbitrators to remain neutral Significant Differences ICC provides for review of final award by the ICC Court ICC requires advance on costs based on amount in controversy ICDR charges a filing fee based on the amount in controversy ICC arbitrators receive fixed amounts of compensation LCIA rules more akin to English High Court procedures LCIA the ONLY major institution to make proceedings presumptively confidential Arbitration Clauses for Franchise Agreements May 16,

5 SCOPE OF THE DISPUTE Determine Which Disputes Will be Arbitrated All disputes about the contractual relationship? All disputes about the contract? Something more expansive or limited and related consequences? Specific Language Has Specific Consequences Any and all disputes Arising out of or relating to / in connection with Arising under Consider Any Specific Carve Outs Desired Certain jurisdictions may limit the arbitrability of certain disputes Torts Master Franchise Agreements Other issues Arbitration Clauses for Franchise Agreements May 16,

6 NUMBER OF ARBITRATORS & SELECTION METHOD Number of Arbitrators One or Three Should be an odd number Cost considerations Method of Selection Default method Mechanism provided by the parties Other Drafting Considerations Timing for appointing arbitrators Special Qualifications Arbitration Clauses for Franchise Agreements May 16,

7 GOVERNING LAW Must State the Substantive Law of the Dispute State the law the arbitrators should employ to decide the dispute Arbitrators are free to decide if no governing law is stated Considerations Substantive law is different than the procedural law of the seat Should not nominate a specific procedural law Only one substantive law should be chosen Substantive law does not have to be stated in the arbitration clause if stated elsewhere in the contract Arbitration Clauses for Franchise Agreements May 16,

8 LANGUAGE OF THE ARBITRATION Specify the Language of the Arbitration State that the language of the arbitration shall be Do not presume it will be the language of the contact Failure to Specify Language Can Increase Costs Unnecessary disputes between the parties Increased translation costs Enforcement disputes if arbitrator lacks language skills Arbitration Clauses for Franchise Agreements May 16,

9 CHOOSING A SEAT FOR THE ARBITRATION The Seat Is the Legal Situs of the Arbitration Provides mandatory procedural rules Provides legal connection with a physical jurisdiction Determines the jurisdiction that may annul or vacate an award under the New York Convention Considerations When Selecting a Seat Signatory to the New York Convention Local arbitration laws at the seat History of judicial support for or interference with international arbitration Hearings can be held outside the legal seat Arbitration Clauses for Franchise Agreements May 16,

10 ADDITIONAL CONSIDERATIONS CONFIDENTIALITY Confidentiality Arbitration is generally NOT confidential by default LCIA Rules the only rules that make it presumptively confidential All require arbitrators to be neutral All generally authorize tribunals to issue preliminary (injunctive) relief Confidentiality Considerations Keeping all submissions and evidence confidential Limiting public statements about the facts of the dispute Mandatory disclosure requirements to which the parties may be subject Award will generally not be kept confidential if enforcement proceedings are necessary Arbitration Clauses for Franchise Agreements May 16,

11 ADDITIONAL CONSIDERATIONS FORMAL NEGOTIATION & MEDIATION Advantages Affords relevant decision makers opportunity to resolve disputes without formal arbitration Can keep parties working together in long-term arrangements Disadvantages Can merely delay arbitration where necessary Can unnecessarily increase costs of parties not vested Considerations Require short and strict deadlines Require representatives to have binding authority Avoid designating only one possible representative Choose a convenient location Arbitration Clauses for Franchise Agreements May 16,

12 ADDITIONAL CONSIDERATIONS INTERIM RELIEF Generally Most institutional rules permit arbitrators to award interim relief Injunctive relief / attachment / preservation orders Considerations Ability to quickly obtain interim relief before the tribunal is constituted Legality of interim relief at the seat Enforceability of awards granting interim relief Ability to impose specific requirements for interim relief Arbitration Clauses for Franchise Agreements May 16,

13 ADDITIONAL CONSIDERATIONS COSTS Costs Institutional rules typically permit arbitrators to assess costs Costs, including reasonable attorneys fees, typically awarded to the prevailing party Advantages of Assessing Costs Encourages parties to act economically Discourages obstructionist conduct Can dissuade parties from bringing unmeritorious claims Considerations Are parties likely to have very different costs? Interim applications Arbitration Clauses for Franchise Agreements May 16,

14 Questions & Answers Questions & Answers For Further Information, Please Contact: Michael Brennan ; Erik Wulff ; J.P. Duffy ; Arbitration Clauses for Franchise Agreements May 16,