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Conference on Rules for Institutional Arbitration and Mediation

20 January 1995, Geneva, Switzerland


Discussion: The Mediation Rules of WIPO and Others: A Ticket to Paradise or into a Better Mousetrap?

Richard Hill (Switzerland)

I have several points which I would like to combine with the indulgence of the Chair.

Dr. Lutz mentioned several things which I thought were very clear and correct. I am involved in high technology extensively, where of course intellectual property is important. I would like to stress that today, as far as I know, practically all products of any interest are produced by partnerships and product life cycles are between nine and 14 months and rapidly shrinking. We all see that when we go to buy things. So the classic arbitration scheme of two parties slugging it out over five years is probably not of great interest. There will thus be increasing need for mediation and fast-track arbitration. In the tort situation you mentioned that there are some objective arbitrability issues. But I would also like to underline that in the tort case you normally would have severe problems on the subjective side, because normally it is difficult to get the two parties to agree in a tort dispute. The injured party will typically have to go to the court because it will not be able to get the other party to agree to arbitration.

I have also a comment on Jan Paulsson’s paper. He mentioned quite clearly that, although it may be difficult to invent a better mousetrap, it is not clear that the better mousetrap will succeed in the market and he gives one particular example, which is the ICC Standing Committee on the Regulation of Contractual Relations, which was a scheme whereby people who got stuck in a contract that needed to evolve could call on the ICC to help them re-negotiate that contract. As someone involved in the actual substance of contracts, I have to say that I would not foresee any circumstances under which I would call on some external parties to help re-negotiate the substance. So I well understand where that particular mousetrap did not work in the market. On the other hand, I see a great deal of potential for fast-track arbitration because of the need to resolve high-tech disputes quickly. Dr. van den Berg mentioned rough justice, and I wonder if it would be advisable to systematically couple an amiable compositeur or ex aequo et bono clause in a fast-track arbitration.

Finally, I would like to reinforce Dr. Blessing’s comments on ADR. Many of the things he said are of course quite true. I have some experience in mediation and negotiation, and he is quite right that this is a skill acquired only through practice and not just by reading a few texts. It is a high stress activity. Those involved in it know that partly because of the time constraints mentioned by Dr. van den Berg. The key point is the difference mentioned by Dr. Blessing that I would like to stress. In mediation, you need to convince the other party, not the arbitrator. In adversarial proceedings you are pleading to convince the judge or the arbitrator of the justice of your cause. In mediation you are pleading to convince the other party of the reasonableness of your request. There are many techniques on how to do that. We have a checklist, but I will just mention five points that I think are very critical. You do not go into a mediation unless you are pretty clear on what you want, what they want, what you can give them, what they can give you and, probably the most critical point, if there is a lockout, if you fail to reach agreement, how much it is going to cost not just in terms of legal fees and court costs and so forth, but also in terms of potential lost business because the deal sours and the partnership falls apart.


Benjamin Davis (France)

The reason I am here today is because I wanted to hear the accelerated arbitration segment. One thing that I wanted to ask about is in relation to the Expedited Arbitration Rules where, as I understand, the choice is made at the time the contract is signed, so that the parties are thereby locking themselves into a sole arbitrator. I wanted to say that recently, yesterday in fact, we had a situation where it was one of these accelerated cases and the ICC Court went for three arbitrators. In fact, I think that every single fast-track arbitration at the ICC has been with three arbitrators so far.

The second thing I wanted to say is that you did not hear the term fast track three or four years ago. Now you hear people talking about it. What you heard about three or four years ago was putting a time limit in your arbitration clause. Fast-track arbitration is a little different. There are different sets of expedited arbitration rules around the world. We do not have expedited arbitration rules per se at the ICC; we just run the arbitration. In Hong Kong, what they did in their expedited rules on the domestic side was that they allowed parties to move on a fast track, but the arbitrator may decide, if the matter cannot be handled on the fast track, to switch it back into a non-fast track mode, because the case has become complicated. I wonder if that was one of the possibilities that was examined in coming up with the draft here.


Albert Jan van den Berg (Netherlands)

In answer to Benjamin Davis’ question why a sole arbitrator was chosen instead of three arbitrators, I agree with him that, indeed, the practice also for expedited arbitration is three arbitrators and the experience I have gone through confirms that. A lot of experience has also confirmed that, if you have two party-appointed arbitrators, it may well slow down the process. So what the WIPO Rules have done is focus on a sole arbitrator. But, if the parties wish to change that, they can specifically of course agree to the change, but then they have to make a specific agreement to that effect.


Henry Connor (United Kingdom)

Coming from industry I suspect that I may also be one of the only non-lawyers in this gathering. I wonder if I dare mention that I suspect the very first arbitration case was an attempt to settle a dispute among industrial parties without recourse to law by taking their case to some independent expert or some independent and highly esteem party, and I suspect that the judgment was given immediately. But the legal profession heard the alarm bells ring and proceeded to hijack the arbitration process, a process which has been carried out most effectively and successfully, with the result that most of industry, and certainly big industry, perceives arbitration as not being much cheaper or much quicker than litigation. I think several speakers have already mentioned this point. One contributory factor is that all those participating, including many arbitrators themselves, are indeed lawyers and it is not an atmosphere conducive to containing costs, particularly legal costs. Thus costs multiply in a broadly speaking sympathetic atmosphere which those who ultimately pay, i.e. disputants in industry, do not much appreciate.

I should like to make one comment on Marc Blessing’s very valuable comment about mediation, because mediation is qualitatively different from the process of arbitration or judging. I would suggest that, almost by definition, most lawyers would be unsuitable to be mediators. They are by nature trained to win, and it is almost impossible to imagine that most of them will not side with one party or the other. I would suspect that the best kind of mediators are those who are knowledgeable and experienced in industrial matters and who have sympathy with the industrial cause. I would suggest that WIPO set a panel of mediators who are perhaps qualitatively different from those who are arbitrators.


Arpad Bogsch (Director General, WIPO)

We consider our rules to be innovative in the field of cost predictability and as far as deadlines are concerned. We hope that both objections to which you refer will be somewhat met by the rules. As far as the choice of the mediator is concerned, there is no rule that the mediator must be a lawyer. If the parties can agree among themselves, the mediator will be whomsoever they choose. If they do not agree and the WIPO Arbitration Center makes the appointment, we shall consider which person, who may be a lawyer or who may not be a lawyer, is the best in our judgment.


Mayer Gabay (Israel)

I asked for the floor just before the coffee break but, unfortunately, time ran out. In the meantime, I have lost some of the copyright on what I was going to say to Dr. Lutz. I am not going to take him to arbitration or to mediation for that, but I think that we should pay special attention to what has been said here.

It is very nice to revise the rules of procedures and the rules of arbitration and mediation but, unless we do something in order to promote more interest in arbitration and mediation in the area of intellectual property, I do not think that the Center will be very successful. Under the laws of many countries, it is not possible to bring to arbitration issues of patent validity or trademark validity or designs validity, while this is possible under the laws of some other countries, for instance the United States of America. It would be very useful if WIPO took up this issue in the course of, for instance, the deliberations on harmonization of patent or trademark laws, or in the context of model laws in the area of copyright, in order to promote this change in the laws of different countries which would be beneficial to the countries and to those that are involved in intellectual property.

I would like also to say a word on the question of the rules of procedure. We spoke before about the issue of the fees and the lawyers’ fees and there was an issue a question whether we should prefer the minimum/maximum system or the hourly system of payment. I have the feeling that, by accepting this system of minimum and maximum, we are going to face the same difficulties, the same embarrassment that we are going to face by negotiating this issue with the arbitrators and the parties concerned. The whole system is revised in order to prevent this kind of embarrassment, but I think that eventually we are going back to the same system, because we will have to negotiate it with the arbitrators and the parties. So it might be useful to reconsider this for the future so that we should devise one system which depends on the percentage of a fixed amount on the basis of the case at hand, and at the same time provide a further system on the basis of an hourly rate. Both of them will be very clear systems that will not call for further negotiations with the parties.

Finally, there is the question of the potential arbitrators. I believe that it would be useful for WIPO to publish, or issue at least, the list of potential arbitrators, maybe with their profiles, because otherwise the parties concerned will not know who should be the potential arbitrators or from which list they should select those arbitrators.


Arpad Bogsch (Director General, WIPO)

On the first two points, we are going to study them. As far as the list of the potential arbitrators is concerned, we do not intend to publish that list. There are many considerations for and against, but, at least for the moment, we came to the conclusion that it would be better not to publish it.


Denis Foster (Italy)

I should like to know whether the WIPO Arbitration Center has been begun administering mediations and arbitrations and, if not, when it plans to do so?


Arpad Bogsch (Director General, WIPO)

The Center commenced operations on October 1. We now have our first big meeting to make known its existence. It will undoubtedly take some time until we have the first people ready to jump in the cold water to try it, and I agree with all those who have said that it is not the rules alone which will make it work. It will be the reputation which we shall have and this reputation can only be based on complete cases.


[Speaker Unannounced]

A large number of disputes to come before the United Kingdom courts raise interesting points of EEC law. For example, Article 85 is often used by defendants as a tool to allege that the agreement under which the plaintiff is suing is void under Article 85. In that case, English judges have the right to refer the matter under Article 77 of the Treaty of Rome to Luxembourg for a ruling on the EEC aspect of the case. The only problem about that is that the facility is not available to arbitrators. I suggest that WIPO think of the possibility of lobbying Brussels to persuade them to amend Article 177 so that WIPO arbitrators have the right to refer matters to Luxembourg on difficult points of EEC law if they want to.


Gerald Aksen (United States of America)

I just wanted to make a few comments on some of the very interesting remarks made by the two or three previous speakers.

There has been the same debate that has gone on in the United States now for the past 15 or 20 years. Remember my remarks now concern disputes within one country with one culture and one language. The business community is the moving factor in the United States behind coming to the conclusion that international arbitration is a device for lawyers and by lawyers and is not much better than litigation. It was not the Bar that invented the ADR movement, but the American business community. I say that for a number of reasons. One is that the experience in the United States has been that we do not know yet who make the best mediators. There was a debate on this subject in New York and the retired judges felt that they made the best mediators rather than practising lawyers, because they had the overall experience of understanding all the nature and problems of a dispute. There was also a very large segment of the professional community, non-lawyer professionals, architects, engineers and scientists, who felt that, in technical intellectual and industrial property cases, they indeed made the best mediators because they understood all of the various aspects of the case. So we do not know the answer yet in the United States. We do know that what is called the ADR movement--and we use to think that it was American Depository Receipts, we now know that is alternative dispute resolution--has not yet reached the level of knowing answers as to where it is going. We do not even know whether or not our courts will continue it. The American courts right now are experimenting with compulsory mediation forcing, everybody into mediation to try to resolve disputes and that way to keep them out of court. We do use many non-lawyers in the United States as mediators, but I cannot tell you who makes the best mediators.

I can tell you, for those of you who want to go into the field, it is the hardest thing you will ever do. When I come home from a mediation I am exhausted and swear that I will never do another one again, because you are meeting with parties who sometimes are forced to come to the process by the court and do not really want to go through it. Other times you are doing it because one party wants to do it and the other party is doing it for window dressing. The mediator has kind of a built-in incentive to make it work because his reputation is on the line as to whether or not he is going to be an effective mediator. So I recommend to you that you have a dozen of mediations, because you will not understand the complexity of human nature and people until you have a dozen since the experiences are quite different and quite fascinating. But it is not like being a judge. It is a totally different process than arbitration where you sit back and listen to the briefs of the parties and just decide. Some mediators feel that it is their role to recommend a solution to both parties, and an equal number of mediators feel that it is not their role, but their role is to force the parties to come together to settle the dispute themselves. We do not know which one is the more effective. We do know that mediators disagree on the process and we are all learning as we go through this on a daily basis. I can only tell you it is complicated within one culture. To do it internationally is even more fascinating and more challenging. Dr. Lutz has really put his finger on it, because I know companies that know the present system of 20 years in litigation and they use it, because they know whether they are the infringer or not. They know how it is going to work and they can use the process.

In the United States we have amended our laws to make all patent and trademark infringement disputes arbitrable, which would cure Dr. Lutz’s very important point that, in half of the countries of Europe, they may not be arbitrable. So here I suggest that the European business community, if not WIPO, go to its various States and Parliaments and legislators and convince them that there should be a uniform rule to allow mediation of these disputes and even arbitration and you cure the whole problem in one process. But, as I said this morning on the rules, that too will take another 10 years.


Shoshana Berman (Ms.) (Israel)

Since judges who are retired were challenged, I would like to say a few words about our experience in mediation. Under our common-law system, we felt in almost every civil case the desire to try our luck to reach an agreement between the parties. I agree with the last speaker that it is a very subtle task, one that needs a lot of wisdom, psychology, philosophy and a little bit of law in order to bring the parties to an agreement. The timing is also very important. I remember myself sitting with a lot anxiety before I came up with a suggestion. You have to learn quite a bit about the parties, you have to hear their arguments, you have to listen very carefully and to tune in within your mind to what they are aiming at. All these matters have to be taken into account and you have to find the right timing to come up with your suggestion that may be accepted by the parties. I have felt, within my experience of 25 years on bench, that whenever I managed to bring the parties to an agreement by mediation this was the biggest success in my work.


Arpad Bogsch (Director General, WIPO)

I would like to conclude the proceedings by thanking you for your patience. I thank particularly the panelists and the speakers for the time and effort they put into preparing their interventions and for sharing with us their vast experience. For many of you, this is your first experience with WIPO. We realize that it will take some time for this venture to get off the ground. But, if we are in such good company as the Swiss Arbitration Association, then we are confident that this period will not be too long. We thank, in particular, the Swiss Arbitration Association for its moral support and hope that that Association, as well as the others in this field, will continue to cooperate with us in the future. We all have one common goal, I suppose, and that is to convince business circles that mediation and arbitration are very useful instruments. If there are well applied, the credibility of the whole intellectual property system will profit by it, and that is the basic objective of this Organization.


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