[0:06]Uh it is a great pleasure for me to welcome our Bok Visiting Distinguished Professor Gary Born back to the Law School. Uh it is not an exaggeration nor a use of superlatives to say that Gary is by far the world's leading expert in international arbitration. Uh his book has defined the field, his practice has truly led the field in every way. He chairs WilmerHale's international litigation and arbitration group uh which involves uh over 70 lawyers in 10 or so countries and five different offices. It's truly a a arbitration and litigation Empire he has built there. But perhaps more importantly, he is someone who thinks extraordinarily deeply about the consequences, the structures and the implications of choices in litigation and arbitration, uh of about how uh it is practiced and about how international litigation and arbitration fits within and interacts with domestic systems around the world. Uh I unfortunately was away in the fall or I would have been sitting in the back of his class when he taught here last fall. Uh I'm thrilled to get to uh to hear him speak today. Uh he is also a graduate of this law school and I think a testament to what a Penn education can do to open doors and create extraordinary career opportunities. Um so uh I I thank him for being uh a part of the Penn community as an alum uh and now part of our broader faculty uh back as a visiting professor. Um and uh on that note, I don't want to waste any more of your time. I could read you a 10 page bio and the number of cases and every imaginable arbitral forum he has argued. Uh mostly, let me just welcome back a true superstar in the field, one who we are honored to have as part of our community and to you have us talk talk to us today uh about his experiences uh and about international litigation and arbitration more generally. Gary the floor is yours, thanks for being here and welcome home.
[2:22]Thank you, thank you very much Professor Finkle for that extremely generous and warm introduction. It's a real treat to be back at Penn. It's a real treat to see so many familiar faces. And uh I want to thank you all for coming out today. It's always wonderful to come to the university. Uh I do have a special, actually I probably have three confessions to make. First, for the record, I was a visiting professor last year. The reason why Professor Finkle says he didn't see me very often is because I was here for one week, in the dead of winter, teaching an intensive class. So I was quite isolated, unfortunately, and didn't get to appreciate as much as I would have wanted all of the charms and wonders of the university and the city. I was very much locked into my class, which was very rewarding but it was very intensive. Uh secondly, I am a proud alum of Penn, but I'm an undergraduate alum. So although it's true that a Penn education opens up all sorts of opportunities, that was some time ago, and it wasn't the law school that I was an alum of. So I'm also very pleased to be here in my capacity as a lawyer and practitioner. Thirdly, a confession perhaps for what it's worth. I am not drinking a glass of red wine, it is in fact Diet Coke. And uh those of you who work in law firms know that the days of drinking any form of wine during the day are long gone and far behind us. So it's Diet Coke and has been for a long time. Uh I think it goes without saying that I'm also really delighted to be here today. The theme of my presentation today is the importance of procedure in international litigation and arbitration. Now for some of you who might be new to law, or at least new to international arbitration, this might seem like a bit of a curious topic. Why would procedure be so important? But those of you who have worked with international disputes know that procedure very often is outcome dispositive. And it is something that needs to be taken very seriously and indeed requires a very high degree of sophistication and understanding to be applied in the way that it should be in international disputes. So the first point I want to make is that choice of procedure in international arbitration is more important than in domestic litigation for a whole host of reasons. The second point I want to make is that there are fundamental differences that one needs to be attuned to between the procedures that apply in international arbitration versus domestic litigation. The third point that I want to make is that procedure should very frequently, if not always, be tailored to the individual dispute. One size does not fit all in international arbitration. The fourth point I want to make is that the choice of procedure, however it occurs, whether it is in a contract, whether it is by a reference to a particular institutional rules, or whether it is developed on an ad hoc basis in a dispute, it does not stand alone. It interacts with the local law of the seat of the arbitration, and there are very often interesting and challenging conflicts of law that arise from that interaction. The fifth point I want to make is that the rules of procedure themselves have, over time, become more complex. Many years ago, when I started practice, one only needed to worry about a few pages of institutional rules and perhaps a handful of arbitral procedural decisions. Today, it's a completely different world where you have detailed institutional rules, you have detailed national laws on arbitration. You have a proliferation of soft law in the field in the form of guidelines and best practices. And it is increasingly difficult to keep up with the rules in their entirety, particularly if you are practicing in a number of different jurisdictions.
[6:14]And the last point I want to make is that notwithstanding all of this complexity and the growing importance of procedure, the actual quality of advocacy in international arbitration on procedural matters is really quite uneven. And there are some countries and some lawyers who are quite expert in this area, but there are others who frankly are not. And there is a huge learning curve and a huge challenge in that respect. So those are the six points that I'll try to unpack and hopefully illuminate a bit today.
[6:47]First, uh on the greater importance of procedure in international arbitration compared to domestic litigation. I think there are a number of reasons why procedure is more important in our field than it is, say, in litigation in the United States courts. One has to do with the consensual basis of international arbitration. Arbitration, of course, relies on the agreement of the parties to arbitrate. And that agreement of the parties is really central to everything we do. Indeed, it is the touchstone for the arbitrators' jurisdiction and for the arbitrators' powers and authority. And therefore, what the parties agree to do in their arbitration agreement in their procedural choices can be outcome dispositive. It can be important in a way that simply isn't present in domestic litigation. If you look at arbitration clauses around the world today, in the commercial context, they are becoming increasingly more sophisticated and complicated. No longer do you see what we used to call a bare bones arbitration clause, simply saying disputes will be resolved by arbitration in Paris, or London, or New York. Very often today, one has quite intricate, quite complex arbitration agreements that specify the procedure, the timing, the applicable law, and all sorts of other matters that very much dictate how the dispute will proceed. Secondly, the absence of a fixed forum. Of course, in a domestic court context, you have the judge, the same judge from the beginning to the end of the case. You have a court, a permanent court, a set of court rules. In international arbitration, of course, the tribunal is often constituted for the particular dispute. And often, the actual procedural rules, while they might have a certain structure from a particular set of institutional rules, are also to some extent created for the very dispute at hand. And therefore, there's a dynamic created where the procedures themselves become more important and more critical to defining the dispute resolution process. Thirdly, and related, there are a wide range of choices that exist in international arbitration that simply don't exist in a domestic court context. There are different choices for institutional rules from the ICC, to the LCIA, to the AAA, to the ICDR, to the SCC and others. There are different national laws, of course, for the seat of the arbitration. There are different choices for applicable law. And therefore, each of these choices dictates in important ways how the procedure is going to be formed and ultimately applied in the case. Fourthly, I would say the absence of default rules. In a domestic court system, you will always have default rules for procedure and for substantive law if the parties don't choose them. That is not necessarily the case, as many of you know, in international arbitration. You can have a gap in the arbitration agreement, and that can create significant practical problems for the parties and also significantly empower the tribunal in the dispute. Fifth, the issue of enforceability. Final arbitration awards are typically enforceable in over 150 countries under the New York Convention, often with very limited grounds for resisting enforcement. In that context, the rules of procedure themselves, and the way the arbitration is conducted, are the principal means of ensuring fundamental fairness and due process in the arbitration. In a domestic litigation system, of course, you can appeal an outcome through multiple layers of appellate review. That is simply not the case in international arbitration. So there is a heightened importance for procedural regularity and procedural fairness in the arbitral process than there is in domestic litigation. And finally, the opportunity for tactical exploitation. The greater the range of procedural choices, the greater the opportunities for parties to make choices, not just on the merits but on procedure, that provide them with certain tactical advantages over their counterparty. And so one sees a considerable amount of tactical maneuvering and strategic decision making that comes to bear on procedural choices in international arbitration. I often say that 90% of the important advocacy that takes place in an international arbitration happens in the initial procedural steps and is therefore of critical importance to the outcome. So those are the reasons why I think procedure is of critical importance in international arbitration, more so than in domestic litigation. The second set of points I want to make are related, and they have to do with the fundamental differences between international arbitration and domestic litigation. I think there are a number of areas where procedures in our field are distinct from domestic litigation in the United States, and often in England, for that matter. The first is the role of party autonomy. Of course, in international arbitration, the parties' agreements are often paramount. They often take precedence over institutional rules and often even over mandatory national law rules that apply at the seat of arbitration. The procedural choices made by the parties can therefore shape what would otherwise be a particular course of proceedings. And indeed, in some cases, and this is a complicated subject I won't go into in great detail, the parties can even agree to opt out of the procedural rules that would otherwise apply at the seat of arbitration. So there's a powerful role for party autonomy that simply is not present in domestic litigation. The second is the absence of judicial assistance. In a domestic litigation system, you have all sorts of ways that judges assist the parties and the process. You can get discovery orders, you can get injunctions, you can get various forms of provisional relief. In international arbitration, by contrast, the arbitral tribunal is typically without those powers. It can issue orders to the parties, but typically it cannot issue orders to third parties. It cannot issue binding injunctions and it cannot enforce any of its orders in a direct fashion. And therefore, that means that the arbitral procedure itself must be extremely well-designed and it must provide for ways for the parties to get around these inherent limitations on the arbitral tribunal's powers. That's also a significant distinction with domestic litigation. The third point is the absence of coercive powers. Related to the absence of judicial assistance is the fact that arbitral tribunals can't issue warrants, they can't bring in parties, they can't sanction parties in the same way that a national court can. And therefore, again, this reinforces the need for extremely well-designed procedures that will operate on the basis of party good faith and party cooperation. The fourth point I want to make is the absence of a fixed or exclusive set of applicable procedural rules. I touched on this a bit before, but it's important to underscore it. There are different choices of institutional rules, there are different choices of seat of arbitration, and that allows the parties and often requires the parties, to pick and choose among a wide range of different sources of procedure. There's not a single fixed comprehensive set of rules like there is in domestic litigation. And this again places a heightened premium on careful drafting of the arbitration agreement, on careful choice of procedural rules in the arbitration. Fifth, the issue of bifurcation. Now, bifurcation exists to some extent in domestic litigation, but it's certainly not as common as it is in international arbitration. Very often in international arbitration, particularly in investor state cases, the issues of jurisdiction, admissibility, and liability are separated from those of quantum and damages. And that means that the strategic and tactical issues surrounding bifurcation become of critical importance in international arbitration. Sixth, the issue of confidentiality. Of course, international arbitration is typically considered a confidential process. Domestic litigation, by contrast, is very much an open and transparent process, with full public record. And this again places a premium on the procedural choices made by the parties, whether to provide for confidentiality or to provide for transparency in certain ways. Seventh, the issue of consolidation and joinder of third parties. In domestic litigation, of course, courts have broad discretion to consolidate claims, to join third parties, to create comprehensive, unified proceedings. That power is typically extremely limited for international arbitral tribunals. And again, this places a particular focus on the procedural choices of the parties to ensure that these issues are properly addressed in their arbitration agreement. Eighth, the issue of sovereign immunity. Many international arbitrations involve states or state entities. And in that context, the issue of sovereign immunity is a paramount consideration. It raises issues of immunity from jurisdiction and also immunity from enforcement. And again, this means that the procedures themselves must be carefully crafted to anticipate and deal with these sorts of issues. Ninth, the issue of choice of applicable law. Of course, in international arbitration, the parties' choice of law for the substantive dispute is typically respected by the arbitral tribunal. And there are issues in this area about whether that choice includes the procedural law, for example, for the dispute, and whether that choice is exhaustive of the parties' rights. And then finally, the enforcement process itself. Final awards, of course, are enforced in national courts. And the manner in which they are enforced is often extremely important to the success of the arbitration. And the procedures involved in that enforcement process are different in different jurisdictions. And those must be taken into account in conducting the arbitration, in selecting the seat of the arbitration, and indeed, in drafting the arbitration agreement in the first place. So all of these factors make it more important, I think, to understand procedure in international arbitration than in domestic litigation. The third set of points I want to make is that procedure should be tailored to the individual dispute. I often say, and I believe quite strongly, that one size does not fit all in international arbitration. And therefore, what might be suitable for a small commercial dispute, say between two individuals in different countries, may be entirely unsuitable for a major investor state case between a foreign investor and a host state, or a major commercial dispute involving billions of dollars. And therefore, it's very important to keep this in mind as you think about how to draft arbitration agreements or how to engage in the dispute resolution process. One of the most unfortunate features of our current arbitration system is that parties adopt arbitration clauses in major, complicated, high-stakes transactions, either without thinking about them, or adopting a generic clause from one source or another. And that generic clause is suitable for neither a small case nor a mega-case. And therefore, it's very important to think carefully about the needs of a particular type of dispute. And I'll come back to that point because I think there are significant implications for the kinds of guidelines that we should be issuing to practitioners and to the market more generally. The fourth set of points I want to make has to do with the interaction between arbitral procedure and national law. And here, I think it's fair to say that what you often find is that you have gaps in arbitration agreements and even gaps in institutional rules. And therefore, it's very important to be aware of what are the default rules, if any, that apply where there are gaps. Typically, those default rules come from the procedural law of the seat of arbitration, but those default rules often vary quite a bit from jurisdiction to jurisdiction. There are also, of course, mandatory rules of procedure that apply at the seat of arbitration. And these are rules that the parties cannot opt out of, the arbitrators cannot ignore. And so again, this provides another important layer of procedural rules that need to be carefully understood and taken into account when one is engaged in international arbitration. The choice of seat of arbitration, of course, is a very important choice. It determines what national procedural law applies, it determines what national courts have supervisory jurisdiction over the arbitration, and it determines the applicable set of laws for challenging or enforcing an arbitral award. And all of these issues have important procedural implications that need to be understood in our field. Now the fifth point I want to make is the increasing complexity of rules of procedure. It used to be that the field was very simple. There was a UNCITRAL model law on international commercial arbitration that was adopted in 1985, and that set out, more or less, a skeletal set of rules. Most countries didn't have detailed national laws on arbitration. Most institutional rules were quite short and relatively straightforward. That is completely changed in the last 20 to 30 years. The UNCITRAL model law itself was revised in 2006 to increase the complexity of that basic skeletal framework. Many national laws have become extremely complicated and detailed in the way that they prescribe arbitral procedures and arbitral processes. And in the last 10 to 15 years, there's been a proliferation of what we call soft law or guidelines from various arbitration institutions and organizations on how to conduct international arbitrations. So there's a huge volume of potentially applicable rules and guidelines that have to be understood and applied in our field. And finally, I want to come back to the point I made at the beginning, which is the uneven quality of procedural advocacy in international arbitration. I think it is still very much the case that some national legal systems place a very high premium on procedural advocacy. Lawyers in those systems are very accustomed to navigating complex procedural rules, in anticipating procedural challenges, in making procedural applications to a tribunal. In other countries, frankly, lawyers have very little experience in this area. Their national systems do not provide for detailed procedural advocacy and they do not foster procedural sophistication among the practicing bar. And so you often find that when you have an international arbitration, the quality of advocacy on procedural matters is quite uneven. And therefore, that is a substantial challenge in the international arbitration system. And it is indeed one of the things that I try to educate younger lawyers about so that they can be better equipped to deal with these challenges. So that is why procedure is important, and that is why procedure in international arbitration is different from and indeed more complex than in domestic litigation. Thank you very much.
