Cross-Border Disputes in the Cannabis Industry & International Arbitration

As continued legalization of cannabis across jurisdictions in the U.S. and foreign countries causes the industry to become increasingly lucrative, determining proper avenues for dispute resolution controlling underlying agreements and investments has become a critical consideration for business-owners and foreign investors alike. Foreign investment in businesses involving cannabis is subject to a complex web of oversight that could include any combination of local and foreign laws, agreements, regulations, and practices. Many foreign investors in the cannabis industry have turned to international arbitration as a method for navigating these complexities and resolving disputes that may arise from such investments and business relationships. This post explores high-level considerations for foreign investors in the cannabis industry when assessing the viability of arbitration as a means for dispute resolution.

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Get Your Dispute Resolution Clause Right! The Most Important Clause In Any Commercial Contract In Vietnam

Most contracts in North America and Europe specify in detail all of the parties’ obligations and will be closely watched for the effectiveness of its clauses. The contract’s legal enforceability, however, is widely regarded as a given.

On the other hand, contracts between foreign investors and Vietnamese entities or with a reference to Vietnam that establishes Vietnamese jurisdiction should always specify the question “what institution will decide any disputes and in which language and what national law is to be applied?”

In this circumstance, without a dispute resolution clause, Vietnamese courts will have jurisdiction over a possible dispute. However, interested parties must consider the particularities of Vietnamese courts in comparison to Western rule-of-law courts.

To read the full text of this post by Duane Morris Vietnam partner Dr. Oliver Massmann, please visit the Duane Morris Vietnam Blog.

 

Arbitration Case Management: Procedural Innovation or Getting Back to Original Intent? Cost and Schedule Efficiency

Originally promoted as a cost-efficient alternative to the public court system, International Arbitration has faced increased criticism by parties and attorneys worldwide for the increasing length and cost of arbitral proceedings. In a 2018 survey conducted by the School of International Arbitration at Queen Mary University of London (“QMUL Survey”), 67% of respondents identified cost as one of the three worst characteristics of international arbitration and 34% identified lack of speed as one of three worst characteristics[1]. Issues that were listed by respondents to this survey as possible contributing factors to the increase of the cost and length of arbitral proceedings include the lack of consequences for delay by arbitrators and/or parties and insufficient principles or guidance on the allocation of costs[2].

As a response to these concerns, arbitration institutions around the world have issued an array of new case management rules. In 2018, the International Chamber of Commerce (“ICC”), for example, issued a report on Techniques for Controlling Time and Costs in Arbitration. The ICC stated that this report “should be seen as an adjunct to the [2012 ICC] Rules” which included, among other things, additional guidance as to the mandatory initial case management conference and as to the explicit obligation on both the arbitral tribunal and the parties “to make every effort to conduct the arbitration in an expeditious and cost-effective manner.”[3]

Thereafter, in 2020 and 2021 two of the most prominent global arbitration institutions, the London Court of International Arbitration (“LCIA”) and the ICC, respectively, published new rules which both institutions announced as being designed to promote more efficient, flexible and transparent arbitrations.

Main common changes in the LCIA 2020 Rules[4] and in the ICC 2021 Rules[5]: both sets of new rules provide for (i) paperless filings and communications; (ii) remote hearings; (iii) expedited procedures; and (iv) clarification of prior rules and new rules concerning consolidation of arbitrations.

Other relevant changes in the ICC 2021 Rules: (i) ability of the tribunal to make “additional awards” where they omit to address claims in the main Award (Article 36.3); (ii) the value in dispute in order for the Expedited Procedure Rules to apply (under Appendix VI and Article 30(2)) increased from $2 million to $3 million; (iii) additional rules and transparency as to third-party funding; (iv) ICC Court discretion in “exceptional circumstances” to deviate from any agreement by the parties on the method of constitution of the arbitral tribunal and appoint the entire tribunal to avoid a significant risk of unequal treatment; and (v) more flexible joinder provisions.

Many other arbitration institutions, for example the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) in 2022, followed suit and published similar updates to their procedural rules[6]. All of these changes are a welcome development in addressing the continuing concerns of arbitrations users as to time and cost effectiveness, especially the increased use of technology, which received an additional push after the COVID-19 Pandemic.

However, it is important to keep in mind that establishing these case management rules is not necessarily an innovation to the International Arbitration practice, but is a necessary adaptation to challenges presented by the welcome growth of use of International Arbitration to resolve cross-border disputes. Moreover, delays can start to set in from the beginning of an arbitral proceeding, especially in complex matters, and, although the flexibility of arbitration is also part of its original appeal, too much flexibility can lead to increased time and cost[7].

Accordingly, even though many International Arbitration institutions do not prescribe specific timelines in their rules for all stages of arbitration, the most prominent International Arbitration Rules have been determining mandatory case management hearings in order for the Arbitral Tribunal, with the agreement of the parties, to determine case management procedures, which is a positive feature. Similarly, the availability of specific expedited procedures, for example, is a welcome development, but there are many other changes that arbitration users would like to see, such as (i) more tailored procedures for complex and multi-party arbitrations; (ii) cost sanctions for delay by arbitrators; (iii) rules giving extensive case management powers to arbitrators including robust sanctions in relation to the behavior of parties and counsel; and (iv) limitations on length of written submissions and oral hearings on procedural issues, etc[8].

It is noteworthy that users generally still believe that International Arbitration is a better method of dispute resolution than the courts, and it is clear that institutions around the world are and should continue working on addressing concerns that this general belief might change. Although time and cost are still some of the main concerns between users of International Arbitration, in the most recent 2021 QMUL Survey, International Arbitration is still the preferred method for an overwhelming 90% of respondents to resolve cross-border disputes, either on a stand-alone basis (31%) or in conjunction with ADR (59%)[9].

As long as both, arbitration institutions and parties, maintain the focus on the original intent of International Arbitration as a flexible, time and cost-effective alternative to public court systems, new rules and updates on case management features should continue to be published for this purpose. And, of course, it is important that the parties themselves also understand the institutions and procedures best suitable for their case.

[1] See 2018 International Arbitration Survey: The Evolution of International Arbitration, available at:  www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-Arbitration-Survey—The-Evolution-of-International-Arbitration-(2).PDF), at pg. 8.

[2] See Id. At pg. 34.

[3] See International Chamber of Commerce (ICC) Commission Report, ‘Techniques for Controlling Time and Costs in Arbitration’ (2d ed. 2018), at pg. 4.

[4] See 2020 LCIA Arbitration Rules, available at: https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2020.aspx.

[5] See ICC Rules of Arbitration entered into force on 1 January 2021, available at: https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/.

[6] See 2022 ICSID Convention, Regulations and Rules, available at: https://icsid.worldbank.org/sites/default/files/documents/ICSID_Convention.pdf.

[7] See International Chamber of Commerce (ICC) Commission on Arbitration and ADR, “Effective Management of Arbitration: A Guide for In-House Counsel and Other Party Representatives” (1st ed. 2018), at pg. 3.

[8] See 2021 International Arbitration Survey: Adapting Arbitration to a Changing World, available at: https://arbitration.qmul.ac.uk/media/arbitration/docs/LON0320037-QMUL-International-Arbitration-Survey-2021_19_WEB.pdf, at pg. 12 

[9] See Id., at pg. 12.

What’s in a Clause: What to Consider when Adopting an Arbitration Clause in Construction Contracts

Many in the construction sector are hesitant to dwell on dispute resolution clauses.  After all, when your goal is to build something together, anticipating conflicts at the outset of the relationship can feel unseemly.  But this hesitance relies on a misconception of what dispute resolution is: it isn’t the anticipation of conflicts, but instead the development of proactive systems to work through those conflicts with minimal disruption much in the same way that change orders or design modifications are managed in the ordinary course.  Proactive management of the dispute resolution process thus is not only consistent with a collegial working relationship but is imperative to achieving the environment of collaboration and partnership that are at the core of so many projects.

There are a myriad of popular form contracts in the construction sphere, including AIA and ConsensusDocs domestically and, internationally, the JCT, NEC, and FIDIC suites.  The benefit of relying on such contracts is obvious: their mechanisms and allocations of risk are widely understood, relieving the parties of the need to debate routine provisions.  But dispute resolution, although often considered such a provision, is anything but routine.  The dispute resolution clause can be one of the most important provisions in a contract, and even minor changes can significantly impact the course of a project and the cost, duration, and inconvenience of any resulting disputes. Jurisdictional and geographic variations can further modify the impact of even standard language.  In fact, dispute resolution clauses are one place where it is most important for a contracting party to be proactive in ensuring that its interests are met. Although the benefits of form agreements are manifest, it would be ill-advised to sign off on a dispute resolution provision without at least considering its material terms.  There is no one-size-fits all solution, but the following are some of the key issues that warrant consideration.

Continue reading “What’s in a Clause: What to Consider when Adopting an Arbitration Clause in Construction Contracts”

UK Government announces intention to sign and ratify the Singapore Convention on Mediation

On 2 March 2023, the Ministry of Justice published the UK Government’s response (“Consultation Response”) to the consultation on the United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2019) (the “Singapore Convention on Mediation”, or the “Convention”) concluding that “it is the right time for the UK to become a Party”.

In some measure, the Singapore Convention on Mediation seeks to replicate the success of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). Continue reading “UK Government announces intention to sign and ratify the Singapore Convention on Mediation”

A Review of Two Recent Cases: Arbitration Against Consumers in Digital Asset Disputes

There are many reasons (both commercial and legal) as to why a party or parties might elect to refer a dispute as between them to arbitration. In cross-border cases, this could be to ensure that a dispute is determined within a certain jurisdiction, language or otherwise pursuant to specific laws. In addition, and in the absence of a flagrant disregard of the relevant terms or the referral to Court for assistance, the arbitration will be confidential (which could be important).

To read the full text of this post by Duane Morris attorney Chris Recker,  please visit the Duane Morris London Blog.

Reaping the Awards – Avoiding the Pitfalls of Enforcing Arbitral Awards

By Charlyn Cruz

As with litigation, a successful arbitral award is a hollow victory if the responding party refuses to honour it, and enforcement proceedings are necessary. Given the international nature of arbitration, a number of things could go wrong at this stage and put a downer on a successful award. There are matters that ought to be considered strategically at the outset at contract stage and beyond to be ready to deal with a reluctant party after the award. It is therefore crucial to take certain steps at various stages to ensure you cross the finish line and reap those awards. Continue reading “Reaping the Awards – Avoiding the Pitfalls of Enforcing Arbitral Awards”

The Glass Ceiling Looms Large – Gender Diversity in Arbitration

In a previous blog, we looked at diversity, specifically in relation to gender parity, in the context of adjudication.[1] Although we have come a long way in this arena, the issue of gender diversity still casts a long shadow. It should therefore be no surprise that the world of arbitration suffers much of the same problem. Continue reading “The Glass Ceiling Looms Large – Gender Diversity in Arbitration”

Jurisdictional challenges and arbitration clauses – that old chestnut! – The UK perspective

By Oliver Kent

Picture this. You are a Director at a substantial widget manufacturing company. One of your key materials suppliers, with whom you’ve had a relationship for many years, is causing you grief. There have been a number of complaints from customers in recent times about a decline in widget quality, which appear to be the fault of your supplier. However, you’re behind on your payments to the supplier and they are starting to threaten supply, with disastrous effects for the company. A dispute is brewing.

You have been involved with litigation before and have experience of court proceedings. However, when you check with your legal team about next steps, you learn that your agreement with the supplier contains a clause which appears to indicate that all disputes must be referred to arbitration. The clause is perhaps not drafted with the certainty it should and could have been, and it is not clear the extent to which it is enforceable. The issue usually is framed on the basis of whether there is a valid and enforceable agreement to refer disputes to arbitration.

There are also commercial considerations that may be relevant. Is it preferable to litigate in the domestic courts or arbitrate? This may be a commercial call, just as much as a legal one. This blog shares some of the practical considerations around these issues.
Continue reading “Jurisdictional challenges and arbitration clauses – that old chestnut! – The UK perspective”

Expedited Arbitrations: Can We Learn Anything from Adjudications?

By Luis Duhart

Introduction

Construction projects are a ripe ground for disputes. When these disputes arise, they often threaten to bring the project itself to a halt if not resolved expeditiously. However, many large-scale construction projects (particularly international ones) provide for their disputes to be referred to arbitration. Continue reading “Expedited Arbitrations: Can We Learn Anything from Adjudications?”

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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