October 24, 1997, Geneva, Switzerland
The Perspective of Users
Mr. René Van Rooij
General Counsel, Oil Products, Shell International Ltd.
(London, United Kingdom)
I am going to be a bit provocative, and to start with I am going to disagree with the Chairman. I am not here talking on behalf of a large corporation. I am talking here on behalf of myself, but I am going to visualize to you what I believe some people in smaller and larger corporations may think about dispute resolution and arbitration in particular. So, if I sound offensive from time to time, I apologize in advance, and please take it out on me but not on any corporation in particular or in general.
I could be very brief because my observations have already been reiterated by Mr. Carter who said most of the things that I had in mind, so perhaps I will use some different words. In order to visualize how Users speak to audiences or hold meetings nowadays, I will use this modern technique of a screen and slides. There might be some discrepancies between what I say and what is up there, but I hope the two will meet in the end.
Going through the list of participants in this Conference I counted how many Users are amongst us, and I mean "big U" Users or their in-house counsel. As this is, of course, a gathering of the International Federation of Commercial Arbitration Institutions, there may be an explanation, but I counted 10 out of 150, which is also not uncommon in other arbitration conferences. I should like to comment later on the reasons why conferences on international dispute resolution are frequented in particular by lawyers working in law firms and by people working in arbitration institutions, and I would be very grateful for your views also.
I am now coming to my slides.
[Slide 2] The first does not need any further explanation because "big U" Users, as we call them, are not in the business of having disputes, they are in the business of doing business. They want to give a return to shareholders, and they do not want legal machineries to keep them away from that activity.
[Slide 3] I am going to talk around these eight points on the screen. They do not represent each of the desiderata but they are the chapters I am going to address briefly. Firstly, and I have been very pleased to hear this mentioned by quite a number of the speakers representing arbitration institutions, dispute resolution is a service, and the quality of this service is as essential as it is for any other service, be it the sale of chocolate bars, petrol or insurance policies. Mr. Carter and others have talked about the extent to which parties as "Users" wish to be in control; I will say a few more words about that from my perspective. I want to say a bit about binding arbitration and forms of ADR, institutional versus ad hoc. I will come back to ADR in particular connection with the ADR wave in Europe at the moment. Then there is this awful word "cost" and what Mr. Carter has also alluded to by using the American version of the word "juridification." There is one word which is not on the screen, which is "confidentiality." You might find this strange for me, talking as a so-called "User," but it is something that worries me less than some of the other issues.
[Slide 4] I work for an oil company. In some oil companies there is a concern about loss of marketshare to the "hypermarché" in France, the supermarkets and the Tescos in the United Kingdom. We ask ourselves: what are we going to do about it by finding out what the customer wants. Dispute resolution is not selling petrol, but I think the same rule prevails when you provide a service: the customer is king and you should listen to your customers wishes.
I have seen cases in my company where we have wanted to pursue a claim at all cost. One of them led to one of the larger ICC arbitrations, the ICC/QGPC, the Qatar General Petroleum Corporation arbitration which lasted for about seven to eight years; the total claim was a very large amount of money, a library of documents were produced, there were two armies of lawyers and technical experts, and so on and so forth. We did not settle. We wanted a decision because our technical integrity was at stake. The dispute was about a fire caused by an explosion in a gas liquefaction plant and it was alleged that we had been negligent. We wanted to establish we were not. Avoidance and settlement are not key under all circumstances.
However, I think as a general rule that companies do not want disputes, they want to settle. We also do not want an arbitration and ADR industry. What I have said about petrol and chocolate bars may be contradictory to what I am going to say now, because "service" is all about competition. On the other hand, I do not think companies are served by arbitration institutions trying to fight for marketshare and by ADR institutions springing up all over the place to try to get their piece of the cake. That is not the type of service that companies are looking for.
The last point perhaps does not fit in with dispute resolution as such. However, I would like to mention that there are techniques which commercial people use to improve "customer focus." I would recommend some of these techniques to arbitration institutions as well.
[Slide 5] You might wish to consider adopting professional "Quality Management" techniques. This ranges from knowing how to answer the telephone, how to conduct a meeting or a conference in an orderly way, to having transparent procedures, how to make your decisions, how to go about correspondence, etc. Being in Geneva, I would like to raise the question as to why the ICCs and the WIPOs of this world do not try to get an ISO 9000 certificate. Do you do appraisals, do you ask people who have gone through an arbitration to fill in a form and tell you how the service was? Do you do post-mortems in difficult cases, do you send them to your clients, do you ask them to respond, do you ask them to come to your office and talk about it, do you think about words like "transparency," do you tell your clients what you do, how you are doing it, do you show them your list of arbitrators, etc?
[Slide 6] The previous slide was about institutions, this one is about arbitration itself and, in part, also about institutions. The first point shown is legally incorrect; of course, there are mandatory rules in legal systems such as those relating to fair hearing, independence of arbitrators, impartiality and so on. I emphasize this point because there are quite a number of rules in the arbitration regulations which could be more facultative than they are. An example, and I know that Mr. Briner will not be surprised as he has heard me mention it before in similar gatherings, are the Terms of Reference under the ICC Rules. Even where the parties and the arbitrators do not want to use them in a particular case, they are not facultative. We had quite a bit of a discussion about that in the ICC Working Group and, at the end of the day, the terms of reference stayed in as a non-facultative element.
[Slide 7] What do "big U" Users think about binding versus non-binding? I have attended a number of gatherings on ADR during the last couple of years. There is a tendency to say that mediation and other forms of ADR are by definition better forms of dispute settlement than binding methods like international arbitration. My personal view is that there is no religious rule about that; you should approach each dispute on its merits. There is merit in providing for a form of ADR in your contract. Personally, I do not recommend my in-house clients to put such clauses into their contracts. I would rather wait until there is a dispute (and fortunately there are fewer disputes than there are contracts and dispute resolution clauses), and then see whether the other party would be prepared to make an attempt at settling the dispute through ADR techniques. Where one does put it into the contract, it is very important to have a clear cut-off date so that you do not have precontractual or predecisional good-faith disputes, involving the question whether or not the parties have tried hard enough to settle by ADR.
[Slide 8] We could talk the rest of the day about advantages and disadvantages of institutional arbitration. What I need first and foremost from an arbitration institution is appointment support. I need arbitrators, if they are good I will have a good arbitration, if they are not, I will not have a good arbitration. I need an institution or an appointing authority to help me with issues where an arbitrator has been challenged. I need support in connection with truncated tribunals. I am challenging you by saying that it is all I need. Small is beautiful: does one need very large institutions in order to help commercial parties to settle disputes?
Information technology has been mentioned very frequently this morning. Some companies now work on what is called a "virtual basis." I am involved in the restructuring of the oil products organization of Shell companies in Europe, and we are establishing a "virtual office" which is an office where people work where they happen to be at a particular moment in time, where they have a computer. They do not have their own individual office in a particular place. I wonder, with the world becoming as globalized as it is, whether arbitration institutions and also international arbitration could become more "virtual" and thereby more efficient and cost-effective.
[Slide 9] My definition of ADR is structured negotiation, which can help you to arrive at a settlement. It takes two to tango, and that is why I said earlier on that it is difficult to make general rules about dispute resolution. Where parties decide to use ADR, they are prepared to make a genuine attempt to arrive at a settlement. That, in my view, explains the ADR success rate of 80 percent of cases in the United States, because those were cases where parties effectively decided to "tango"; where they do not, it might just be a waste of time. There is an ADR wave going over Europe; in the Netherlands alone, we now have five or six ADR institutions and the industry got worried about that. We are now putting together the seventh ADR institution, which is the Dutch ADR platform for industry that combines the other initiatives!
[Slide 10] The cost of dispute resolution is its nuisance value. A major dispute keeps managers away from what they are paid to do by their shareholders, which is to earn money in an honest way. Of course, there is the additional cost of conducting the arbitration as well (registration fees, arbitrators fees, remuneration of counsel). In general, in my experience, it is the cost of counsel which is predominant, sometimes being even 10 times higher than the other fees.
[Slide 11] Another point which I would like to mention is discovery. There is nothing, as you know, as disruptive in a company as having a document search, be it in the context of litigation or a request by anti-trust authorities. It is an absolute nightmare and I think all involved in international arbitration should try to avoid it.
[Final slide] I am honored to be here amongst you: if I may call you that, the platform of arbitration institutions. I do not think a counterpart (a Users platform) actually will ever exist. Why are Users absent in the arbitration world? Is it a lack of interest, or is it because there are no disputes? Well, we all know that the latter is not the case. Is it because companies and in-house counsel leave disputes and arbitration to the law firms? Is it seen as a specialization? Or is it a form of resignation and feeling of: let us see what happens if there is a dispute and then make the best of it. I do not have answers to these questions, maybe you do. When the ICC rules were revised I was honored to have been invited to participate in the Working Group and I tried to generate an interest for our work with colleagues in other companies in vain. Everyone said that the ICC is too expensive, full stop. Apart from that, "we have better things to do and we do not really litigate or arbitrate very much."
Finally, I would like to summarize my key message: international arbitration is a service and the customer (the "user") should be king, as is the case in any service industry. There are quite a few things which I have heard in this Conference so far which indicate that this message has been heard in the arbitration world.
Text of Slides
Slide 1: International Dispute Resolution - A Users View
Slide 2: International Dispute Resolution - A Users View
"Disputes as A(n) (Un)Necessary Evil"
Slide 3: Users Desiderata - General
- Dispute Resolution is a Service
- Quality is of the Essence
- Parties in Control
- Binding vs. Non-Binding
- Institutional vs. Ad Hoc
- ADR as Deus ex Machina
- Cost: Fact & Fiction
- Avoid "Juridification"
Slide 4: Dispute Resolution is a Service
- Customers Wishes Paramount
- Avoidance & Settlement Key
- Users dont need an Arbitration/ADR Industry
- Lawyers Training in Customer Focus
Slide 5: Quality is of the Essence
- Quality Management
- ISO 9000 for Institutes
- Appraisal/Post Mortems
Slide 6: Parties in Control
- Any Arbitration Rules Facultative
- Listening is Key
- In Dubio Abstine
Slide 7: Binding vs. Non-Binding
- Approach Each Dispute on ITS Merits
- Pros and Cons of ADR Clauses
- Cut-off Date - "Pre-Decisional Good Faith
Slide 8: Institutional vs. Ad Hoc
- Users need Appointment Support
(UNCITRAL vs. WIPO/ICC)
- Small is Beautiful (NAI vs. ICC)
- "Virtual Institutes"
Slide 9: ADR as Deux ex Machina?
- ADR = Structured Negotiation
- ADR Needs Two to Tango
- The ADR Wave: Does Europe Need ADR?
- ADR as Marketing Tool
Slide 10: Cost: Fact & Fiction
- Cost of Arbitrators
- Cost of Institutes
- Cost of Counsel
- Cost of Management Time/Nuisance Value
Slide 11: Avoid "Juridification"
- Jurisdictional Issues
- Choice of Law
- Common Law vs. Civil Law Procedure
Slide 12: A Global Users Platform for Dispute Resolution