International Arbitration: When Your Case Needs a Passport

Episode Notes

Transcript

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Dave Scriven-Young: Hello everyone and welcome to Litigation Radio. I’m your host, Dave Scriven-Young. I’m a commercial and environmental litigator in the Chicago office of Peckar & Abramson which is recognized as the largest law firm serving the construction industry with 115 lawyers and 11 offices around the U.S.

On this show we talk to the country’s top litigators and judges to discover best practices in developing our careers, winning cases, getting more clients and building a sustainable practice. Please be sure to subscribe to the podcast on your favorite podcasting app to make sure you’re getting updated with future episodes. This podcast is brought to you by the Litigation Section of the American Bar Association. It’s where I make my home in the ABA. The Litigation Section provides litigators of all practice areas and resources we need to be successful advocates for our clients. Learn more at ambar.org/litigation.

In today’s episode we will explore International Arbitration which has become an indispensable tool for resolving cross border conflicts and is gaining prominence in a increasingly interconnected world. For multinational corporations to sovereign states parties are turning to arbitration to navigate complex legal issues in an efficient manner and we’re going to be discussing International Arbitration from a practitioner’s point of view and to help with that discussion I’m pleased to welcome Aurore Nicaud to the show.

Aurore is an associate in Greenberg Traurig Miami Florida office. She has broad experience in the construction and infrastructure sectors primarily in the United States, Latin America and Asia. Aurore’s practice focuses on the representation of owners and developers of large infrastructure and real estate projects in both transactional and dispute resolution capacities. She has many years of experience in international commercial and industrial state arbitration matters particularly in construction disputes. She has represented clients and tribunals around the world including before the International Chamber of Commerce, the London Court of International Arbitration and International Center for Settlement of Investment Disputes and the International Center for Dispute Resolution. Aurore, welcome to the show.

Aurore Nicaud: Dave, thanks so much for having me on your program. I love this show. It’s an honor to be here.

Dave Scriven-Young: Oh thank you and Aurore, you’ve had quite an interesting life and career spanning from Europe, South America to the United States so tell us where you grew up and what made you want to become a lawyer?

Aurore Nicaud: In short I was raised partially in France and Tokyo, Japan and Lebanon in the Middle East and went back to France for law school. By the way, in France in the French system you go straight from high school to law school so went back to France for school and I was lucky enough that I knew since they won what I wanted to do. I knew I wanted to practice in international law. I didn’t necessarily understand what it meant from a practical point of view but at least theoretically I knew that I wanted, my focus would be international law so fast forward five years later when I’m doing my masters in international law in Paris, I then knew that I wanted to practice in International Arbitration and asked the director of my program what I should do if I wanted to pursue this carrier.

He told me you should go to Boston University, do your LM there and take Rusty Park’s classes. For everybody’s background Rusty Park is an American superstar arbitrator who helped in the 70’s. I would say shape and is part of the people who have helped shape what International Arbitration is today so I did as told and went to BU, took all the classes that Rusty Park used to teach. From there I got license in New York and started practicing at a big firm in New York in U.S. litigation and International Arbitration.

Dave Scriven-Young: Got it. What did you find in terms of the differences between you know practicing in France and or school in France and school and then practicing in the United States?

Aurore Nicaud: Yeah so France is a civil law system and switching from a civil law to a common law system can be a bit challenging at the beginning. Especially as a student but you get used to it and after a couple of years of practice I would say that in most cases not always of course, but in most cases although the reasoning to get to a result under civil or common law are very, very different. In the end the result is kind of the same so a contract is a contract, a corporation is a corporation, a joint venture is a joint venture, of course, there are many differences but and it’s mostly the reasoning to get there that’s completely different. In a civil law you are really used to it’s based on codification, on statutes mostly and the president system is not as important as in a common law system.

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Dave Scriven-Young: Got it and then in terms of like legal education what differences did you find between legal education in France and legal education in the United States?

Aurore Nicaud: Well it’s really hard to compare. First because the cost is so different and I hope everybody’s seated because the highest I paid for law school in France was $500.00 per year.

Dave Scriven-Young: Wow!

Aurore Nicaud: So you can’t really compare. The first year we were 2,000 people in the same room and then the filter is year after year so by the time you’re doing your master’s degree you are 25 people in the room so it’s more by then it’s more similar to the U.S. system where the classes are more interactive but in terms of resources, it’s obviously very, very different. The library at BU was incredible and sometimes had more material on French law that I had could have found in law school in Paris so it’s really a different experience.

Dave Scriven-Young: And then as I understand it your next stop was Columbia?

Aurore Nicaud: Yeah so from New York I had this amazing opportunity to join a mega construction project in Colombia that was facing huge cost overruns and delays and they were looking to file for arbitration and the contract was subject to both New York and Colombian law and I was in the process of getting, I was admitted in New York, but I was in the process of getting admitted in Colombia because I wanted to move there for personal reasons. That’s where it was a perfect fit for me because I had this dual qualification and I wanted to keep practicing in International Arbitration so I joined the project where I was for five years and then decided it was time to move back to the U.S. and I have been in Miami for a couple of years now and I’ve been at Greenberg for three years where I have been very fortunate to work with incredibly talented lawyers in International Arbitration and Construction.

Dave Scriven-Young: Excellent and we’ll get to talk more about the specific case that you had in Colombia but I wanted to talk about International Arbitration generally, can you kind of give an overview of International Arbitration and how it differs from typical arbitration or litigation in the United States.

Aurore Nicaud: Sure so there is two main types of International Arbitration. One is Commercial Arbitration and this is usually two private entities arbitrating their differences and the other one is called Investment Arbitration or Investment Treaty Arbitration and this is usually a private entity suing a government and claiming that its investment in the host country has been exfoliated although very different in nature and their origins are also very different.

Commercial Arbitration was basically shaped by merchants 100 years ago who were trading in cotton, coffee, diamonds or whatever they were trading and decided that they were probably in the best position to judge their own disputes and this is how arbitral centers emerged in Europe about 100 years ago.

Investment Arbitration is mostly developed after the Second World War when nations sought that if they were economically interrelated they would be less likely to go at war against each other so after Second World War there is a significant amount of bilateral treaties signed between countries that pledge to protect other countries investors when they invest in a host country so very different in nature, very different origins but the proceedings are more or less similar.

The way it works is also very similar to U.S. litigation so you will have a request for arbitration that initially starts the proceedings and then the tribunal will be formed and there will be pleadings exchanged with witness statements and expert reports and generally it’s similar to U.S. litigation but if you look closely it’s also very different, right?

(00:10:20)

So, the discovery is much more limited than in U.S. litigation and is usually restricted to exchange of documents. There is typically no deposition In International Arbitration. The rules of evidence are completely different. You don’t object and get sustained or overruled as much as you can do in the U.S. court system. Direct examination is almost inexistent in International Arbitration because we consider that the written statement or report of that witness or expert is the direct examination of that witness or expert. Rules of procedure are very succinct because each arbitral center has its own rules and there is 20 to 30 pages long so it gives the parties a lot of freedom to shape the proceedings the way they want to.

Dave Scriven-Young: Interesting and so if I heard you right, I think you said that there’s not a lot of direct examination in arbitrations because most of the testimony is presented by written statement so, I mean it’s interesting because typically you want to present your client live so the arbitrators or court or jury can get to know kind of your witness, your clients so how does that process work in International Arbitration? Is there some sort of cross-examination of clients and witnesses during these arbitrations?

Aurore Nicaud: Yes, yes absolutely. Okay so maybe I wasn’t clear. There is no direct but cross, actually cross takes a much bigger importance because you have cross and you have redirect but direct examination is usually very short. It’s you know, hello state your name, is this your report, yes and then you switch to cross and then you have the opportunity when you present a witness or an expert to question them on redirect.

Dave Scriven-Young: Got it that makes sense and then in terms of an arbitration panel I think in the United States you see either single arbitrator or a panel of three, how do our arbitrators get selected in an international context?

Aurore Nicaud: Yes it’s pretty much the same on large cases. You will typically see three arbitrators on smaller matters, maybe one. It depends on what the parties agreed to but typically each party will appoint one arbitrator and then the party appointed arbitrators will appoint a chairman for the tribunal and they will provide a declaration of impartiality and independence where they communicate relevant facts and information about the parties and the matter and confirm that they have no impediment to act as an arbitrator on the matter.

Dave Scriven-Young: Got it and then in terms of where do the arbitrators come from if it’s an international you know arbitration? I think, you know, typically you see you know, like for the AAA for example, they’ll give you a select number of people for you to look through and typically they’re on the United States because that’s you know for domestic arbitration, for an international arbitration that I’m assuming there’s a bigger pool, folks from different countries, how does that process work?

Aurore Nicaud: Right so it’s again dependent on what the parties have agreed to. You can select pretty much anybody who is qualified but there are also lists of arbitrators provided by the arbitral center. The arbitrator’s come from everywhere really. You want to obviously when you’re arbitrating and I focus on construction-related dispute so when you’re arbitrating construction dispute you want to appoint somebody who has enough experience in this field, but it would be applicable to MNA disputes or tech disputes. They come from really everywhere.

Dave Scriven-Young: Got it and that makes sense. How does the enforcement of international arbitration decisions work?

Aurore Nicaud: Yeah so you can enforce an arbitral award almost anywhere in the world and the magic really happened in 1958 when the UN adopted what we call the New York convention, which is a convention on recognition and enforcement of foreign arbitral awards and I think about 180 countries have ratified that convention and what it does is that contracting parties have the obligation to enforce International Arbitration awards in their territory and they have to give it the same value as a local judgment.

(00:15:23)

Dave Scriven-Young: And the U.S. is a signatory to that?

Aurore Nicaud: It is and the grounds to object to a recognition of an award under the convention are pretty limited so if there was no arbitration clause or there was no notice was given to the other side or the arbitrators judge the issue ultra virus. It’s really you don’t get de novo review typically.

Dave Scriven-Young: One last question kind of about International Arbitration generally, I think for the most part folks who practice arbitration sometimes feel that although the system is supposed to be more efficient than litigation sometimes it’s not and I wonder if you found kind of in International Arbitration that it’s more effective, more efficient than actually filing a lawsuit in court?

Aurore Nicaud: So I guess it depends when you see litigation where. I do think that litigation is, sorry International Arbitration is shorter than court litigation. Maybe not so much in the U.S because the court system in the U.S. works fairly quickly but it’s not necessarily the case outside the U.S. but when I went to school, let’s say you how do I say this without revealing my age on a national program but let’s say between 10 and 30 years ago to keep it general where we were told in school is that International Arbitration was cheaper, faster, confidential and all of this is still true to a certain extent.

It is still shorter than its litigation in most places, much shorter than litigation in most places. It is still cheaper than U.S. litigation for sure and confidentially is still applicable of course, because you don’t typically file things in the public records and International Arbitration but that’s not always true. Especially in Investment Arbitration since they involve governments many times the government has an obligation to publish pleadings and decisions and also when it comes to enforcement of arbitral awards whether it’s commercial or investment arbitral awards you might need to file the award in the public record.

Dave Scriven-Young: Well let’s turn to the specific arbitration that you had in Colombia it sounded like a really interesting dispute. Tell us a little bit about the case and what your role was in it.

Aurore Nicaud: Okay. Yeah, I see you did your homework, Dave. So this was the project I worked on for five years in Colombia. It was a massive multi-billion dollar EPC so engineering procurement and construction contract and when I joined the company they wanted to file for arbitration because the contractor was years late and billions of dollars outside budget and there are many, many claims in that arbitration but to make it simple we were claiming for delays and defective work against the contractor.

Dave Scriven-Young: Where did the arbitration take place and what law applied to the arbitration?

Aurore Nicaud: Yeah so the seat of arbitration was New York and the contract so the EPC contract was subject to both New York and Colombian law because most of engineering and procurement activities were carried out in out of Houston, Texas and all the construction activities were obviously happening in Columbia so the construction part of the contract was subject to Colombian law and engineering and procurement activities were subject to New York law.

Dave Scriven-Young: So a lot of things going on there so you were in-house at the construction company then?

Aurore Nicaud: Right, correct.

Dave Scriven-Young: And did you like have to hire local counsel in Colombia? How did you figure out? I mean I’m just trying to figure out from a litigator’s point of view. How do you figure out what Columbia Law is, I assume you can’t find that on Lexus. How do you go about doing that?

(00:20:03)

Aurore Nicaud: Right yeah no, we were a big team. We had local counsel for Colombian law. We had U.S. counsel for the New York part of it. We also had experts in Colombian law because some of the claims we’re very complicated under Colombian law and we had also a big team internally so I was head of arbitration for that company and it was technically so complicated that we had to coordinate internally not only the legal aspect but also on the technical aspect for all claims to be to be substantiated. It lasted eight years which is not typical at all for international arbitration but so many things happened on this project and on this arbitration to be quite honest and then COVID happened which even further delayed things of course, but I think the most, one of the most challenging thing was to be able to juggle and reconcile the fact that the contract was both subject to New York and Colombian law and sometimes it’s hard to draw the line, right?

If you have an engineering or construction or a procurement claim and they’re simply things that don’t exist under Colombian or New York law so for example, the contract carved out consequential damages but for the example of loss of profits, for example under Colombian law loss of profit is considered direct damages as long as you can prove them so this is the type of things and it also happens a lot not on this particular project, but it also happens a lot with liquidated damages because liquidated damages and most U.S. jurisdiction they won’t be enforceable if there are considered a penalty and under civil law or at least under French and Colombia laws, which are the ones I know best, your liquidated damages clause is called Penalty Clause so sometimes it can be really challenging to reconcile those concepts but I found that the tribunal when in doubt validated both options, they said okay, we have this claim, let’s see what’s the result under New York law, what’s the result under Colombian law and guess what it’s the same which goes back a little bit to what I was saying earlier. It’s not always but many times the solution is the same.

Dave Scriven-Young: Got it and tell us more about kind of what the result was of their arbitration.

Aurore Nicaud: Well amazing. Do you have a confetti option on podcast? Great results for my former company the tribunal found that the contractor was liable for a billion dollars in delays and defects plus interest which takes us to about $2 billion. They found that the contractor had acted in gross negligence and willful misconduct so there was a limitation of liability cap for $70 million which they found was not enforceable because the contractor had acted in gross negligence.

Dave Scriven-Young: Yeah, I mean that sounds like an amazing result that you obtained on behalf of your client a good example of the process of International Arbitration. We are coming to the end of our time together any last thoughts that you might have for our listeners about the process of International Arbitration?

Aurore Nicaud: Well thank you so much again, Dave. When can I come back? I just hope that this makes International Arbitration a bit more clear and interesting to your audience.

Dave Scriven-Young: Excellent. Well Aurore Nicaud from Greenberg Traurig, thank you so much for being on this show today.

Aurore Nicaud: Thank you, Dave.

Dave Scriven-Young: Thank you to DISCO for sponsoring Litigation Radio. DISCO makes the law work better for everyone with cutting edge solutions that leverage AI, Cloud computing, and data analytics to help legal professionals accelerate e-discovery and document review. Learn more @csdisco.com and now it’s time for a quick tip from the ABA Litigation Section so let’s welcome back Darryl Wilson to the show. Darryl is the ABA Young Lawyers Division speaker for the 2023 bar year in this role he serves as a chief policy and legislative officer overseeing the YLD Assembly. It’s great to see you again, Darryl!

(00:25:02)

Darryl Wilson: Great to be here again, Dave. Thanks for having me.

Dave Scriven-Young: So I understand you’re going to be giving us tips about the pitfalls of providing legal advice to family members so what’s your quick tip?

Darryl Wilson: Absolutely. As we approach the holidays I really want to offer these tips in regard to the potential risks that can be associated with giving family and friends legal advice. I was actually on the ABA’s website and this is really where this idea came from and I want to give credit to the author of this particular article that I was reading in relation to giving family and friends tips as it relates to this issue and it is Samuel Dangremond is the author of this particular article that I found in TYL that really started the idea for these tips so the first thing that I want to offer is you may be sitting around the Thanksgiving table or around the Christmas tree for Christmases that when your family and friends ask you for legal advice on particular issues that are legal you make sure you want to be very cognizant on you know how you provide that advice.

The first thing you want to be cognizant of is that this is the possibility of inadvertently creating an attorney-client relationship. When your family and friends ask you questions on legal advice they’re really asking you because you’ve gone to school for you know the law and to become a lawyer and you may be practicing in a law firm and so when they’re asking you these questions they may not really be thinking much of it but they really want to get that sound advice and while you may be offering it you know to try to help, you want to be sure that you are letting your family and friends know very explicitly whether or not you are creating an attorney-client relationship by providing the legal advice because one thing you don’t want to do is you don’t want a raw file of 1.1 of the ABA Modern Rules of Professional Conduct if the particular issue that you’re providing advice on is outside of your will house or your area of expertise.

If you find that the question that your family or friends is asking you want to let them know one, that you’re not qualified to provide legal advice on that particular area because you may not be knowledgeable of that area and if you’re not you want to let them know that you can find a referral source for them and reach out to someone who may have better knowledge in that particular area of law so that they can better advice your family and friend because you don’t want to run into a legal issue of potential malpractice which take me to my next tip is that if you do decide that you are going to provide legal advice on the area that you may not have a lot of expertise on you have to know that if you’re providing that you have potentially created the attorney-client privilege relationship with your family or friend and that this person has relied on the advice that you gave in order to move forward with their particular issue.

So if you do that you’re potentially opening the doors for a malpractice lawsuit. You want to make sure that when you’re providing this legal advice one that you made also be following along with the Modern Rules of Professional Conduct 1.18 and the duties that are related to it in relationship to a perspective client or a potential client so when you’re offering up this legal advice you want to make sure that you’re checking with your firm to see if you have the obligation to list the recipient of this advice as a potential or perspective client because if you do this you want to make sure that you’re covered in the information that you received from that particular person because if you provide out advice on the outside issue or provide advice on an issue that is outside the scope of your job you could open yourself up to personal liability for malpractice because you’ve offered advice that someone relied on and it didn’t go the way that it should have or it was wrongly advised and they relied on you you could potentially be opening yourself up for a malpractice lawsuit and if you haven’t gone about the proper channels within your law firm to offer up that advice to list this person as a perspective or potential client you could be outside of the coverage that to provide about of malpractice insurance that is covered by your employer and so then you could potentially be opening yourself up for personal liabilities if you do not carry you know malpractice insurance on yourself that is outside of what’s provided by your employer.

As we go into the last tip that I have is really how do you respond when you’re approached by your family or friends for legal advice. The first thing you want to do is if it’s within your will house you want to create a formal attorney-client relationship. You want to do that by drafting up a representation letter and or contract for a family member or the friend to sign on behalf of the representation. You also want to be clear in that contract you want a limited scope to the particular issue that is at hand because you may be approached for additional questions that may be outside of the scope

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And as you decide what you’re offering the legal advice you want to make sure that you’re very clear on what you’re offering, you want to make sure that if this is just representation up through what may be a trial or hearing you want to do that or if you decide to handle an appeal. You want to make sure that all of this is very clear in the contract that you put together with your family and friend because you do not want to run a file of any issues where you’re offering advice that may extend beyond the relationship that you wanted to establish by the questions that may be posed to you. With that being said you also want to make sure that if you’re going to take on the legal representation that you’re running it through the proper channels through your employer to ensure that you have gained the proper approval to represent family or a friend and lastly if the question or the legal issues when that is outside of your will house or your area of expertise refer, refer, refer.

Find a referral source for your friend or family for someone who can handle the issue for them and you not taking on and create some type of discomfort that may arise between the friend and family because you may provide advice that was outside of your will house and was wrong so as you prepare for the holidays I want to make sure that you are equipped with tips and necessary tool to look at the risks that may be associated with giving family and friends legal advice on issues that you may or may not be well versed on and those had been my tips for today.

Dave Scriven-Young: Great, Darryl thank you so much for being on this show today.

Darryl Wilson: Thank you so much for having me.

Dave Scriven-Young: Well that’s all we have for our show today and I love to hear your thoughts about today’s episode. If you have comments or a question you’d like for me to answer on an upcoming show, you can contact me at [email protected] and connect with me on social at attorney DSY on LinkedIn, Instagram, X and Facebook. You can also connect with the ABA Litigation Section on those platforms as well, but as much as I’d like to connect with you online, nothing beats meeting you in person at one of our next Litigation Section events so please make plans to join us at the 2024 Environmental and Entity Mass towards and Products Liability and Litigation Communities joint regional CLE program in Avon, Colorado taking place January 31 through February 2. Join us for a plenary presentations on hot litigation topics including community specific content, broader litigation trust and ethics and in addition to agenda of diverse educational sessions there will be of course time to enjoy outdoor activities and networking with your colleagues.

To find out more for registration information go to ambar.org/jointcle. If you liked this show please help spread the word by sharing the link of this episode with a friend or through a post on social and invite others to join the show and community. If you want to leave a review over at Apple podcasts, it’s incredibly helpful, even a quick rating at Spotify is super helpful as well and finally, I want to quickly thank some folks who make the show possible.

Thanks to Michelle Oberts, who’s on staff with the Litigation Section. Thanks also goes out to the co-chairs of the Litigation Section’s Audio Content Committee, Haley Maple and Tyler Trew. Thank you to the audio professionals from Legal Talk Network and last but not least, thank you so much for listening. I’ll see you next time.

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