MANAGING BUSINESS DISPUTES IN THE US
CD: Do you see an increase in the use of alternative dispute resolution in the US? Are you seeing any recurring themes?
Roesser: I have always believed that the United States has been a bit behind other regions – particularly the UK and continental Europe – when it comes to alternative dispute resolution, specifically international arbitration. But now, I think the US has caught up. Across industries, we now see a preference for the use of ADR, including both mediation and arbitration. Recent studies demonstrate that together, mediation and arbitration edge out court litigation as the preferred method for resolving disputes for almost all industries. The financial services industry traditionally, has not preferred arbitration and mediation. But this too is starting to change. I am not sure if the change is a result of the global recession, the increased scrutiny of financial services institutions ever since 2008, or the ever-increasing fact of cross-border transactions, but it is becoming clear that financial services institutions are beginning to appreciate the benefits of ADR.
CD: What concerns do clients have about the use of arbitration?
Roesser: There are definite recurring themes in the concerns that clients have with arbitration. First, clients often worry that rather than coming to a ‘reasoned decision,’ on the merits of the case, arbitrators will instead ‘split the baby’, leaving both parties dissatisfied with the outcome. In my experience, this has not been a problem; it is, however, definitely a concern that clients have. Second, clients worry that arbitration is not really any quicker or less expensive than litigation, despite it being a proven benefit of the process. There is some merit to this concern, but I think with a good arbitration clause, and proper management, arbitration will provide a quicker and less expensive resolution, regardless of the complexity and sophistication of the dispute. Third, clients worry about losing the benefits of in-court litigation, including access to broad discovery measures and the ability to appeal. But often, it is not a decision between domestic litigation and domestic arbitration. Instead, clients are considering whether to arbitrate or litigate in a foreign country that does not have the same due process protections that we have in this country. In that situation, the benefits of arbitration – evening the playing field, a certain level of predictability with familiar arbitration rules, and ensuring that one party does not have a home court advantage – are clear.
Jan-Mar 2014 issue
Alston & Bird LLP