Conferencing Economic Experts: Streamlining the Process in Arbitration of Competition Disputes

First published on Kluwer Arbitration Blog, November 5, 2020

Richard Levin (Richard Levin Arbitration)
Please refer to this post as: Richard Levin, ‘Conferencing Economic Experts:
Streamlining the Process in Arbitration of Competition Disputes’, Kluwer Arbitration Blog, November 5 2020,

The intersection of competition law and arbitration has been around for thirty-five (35) years. Competition disputes are likely to be seen more frequently in arbitration today, given its flexibility, speed and cost savings potential. Notably, the recent and extraordinary US government antitrust suit in the Novelis merger highlighted just that point, as the parties agreed to arbitrate a central issue in the case—the relevant market in which the merger will be judged to be anticompetitive or not. After prevailing on the issue, Assistant Attorney General Delrahim noted: “This first-of-its-kind arbitration has allowed us to resolve the dispositive issue in this case efficiently, saving taxpayer and private resources,
while providing critical time-certainty.”

Still, up to now, most competition arbitrations are private disputes, obviously with an arbitration agreement such as a license or joint venture agreement. These disputes, like antitrust cases in the national courts, many times hinge on economic testimony of expert witnesses. I consider that these disputes can actually be more efficiently resolved in arbitration, where the tribunal has flexible devices at its disposal such as witness conferencing of competing expert economists. I focus in this post on expert witness conferencing and explain that complex competition case can many times be simplified, decided quicker and with less expense in arbitration because of that device.

Witness conferencing: background and policy developments
Witness conferencing is a process for taking evidence where two or more witnesses give evidence concurrently, essentially together at the same time. The procedure is especially useful in the taking of expert testimony, which many times is basic and critical in antitrust/competition or IP related cases as those matters frequently will be grounded in economics (or engineering).

In its landmark case on arbitration, Mitsubishi v Soler, the US Supreme Court
stated that “access to expertise are hallmarks of arbitration,” and “it is often a
judgment that streamlined proceedings and expeditious results will best serve [the parties’] needs … ; it is typically a desire to keep the effort and expense required to resolve a dispute within manageable bounds that prompts [the parties] mutually to forgo access to judicial remedies.” 473 US 614, 634 (1985).

The policy of Mitsubishi is to encourage creativity and flexibility to resolve (“streamline”) complex disputes by arbitration and this would include the area of expert testimony. Expert witness conferencing carries out this policy cleverly and effectively allows the arbitrator and parties to create a bespoke process to test competing expert theories, the essence in many complex arbitrations, such as competition related disputes.

Witness conferencing, of course, departs from the traditional sequential pattern of testimony, usually the party with the burden of proof going first, with direct testimony, then the witness is cross examined, and then the opposing party answering with direct and then cross examination. Expert economic testimony in complex arbitrations, such as seen in many competition/antitrust disputes, is simply fundamental and critical to shed light on and prove or disprove the difficult issues such as those relating to relevant market, the nature of entry barriers, competitive pricing, two sided markets, efficiencies, true integrations, fair licensing practices etc. What Mitsubishi teaches is that the arbitrator and parties’ tool kit to best offer, take and understand this difficult evidence has no tight perimeter; the arbitrator and parties can be creative to devise efficient procedures and methods to streamline and simplify this testimony, unlike the counterpart procedure in the national judiciaries which are normally bound by strict rule of procedure.

Witness conferencing might just be a most handy instrument for the parties and arbitrator to get to the “truth” faster and cheaper when it comes to complex expert economic testimony. Other procedures, such as hot tubbing of experts, or “teaching sessions” by experts are also in their tool kit and are worthy to consider in the right time for the right case, and indeed the two procedures just mentioned in some respects overlap with witness conferencing. All the procedures of course must be with everyone’s agreement and are best developed at the time of an appropriate case management conference and embodied in a procedural order.

The Chartered Institute of Arbitrators (“CIArb”) has, in fact, developed its own
Guidelines for Witness Conferencing in International Arbitration. While the Guidelines have been discussed in detail in a previous blog post, it is worth pointing out certain aspects that bear on their use in competition disputes involving economists.

In the Preamble, the Guidelines have succinctly stated the advantages to this
method of taking evidence:

“First, a conference can be a more effective means of receiving evidence than consecutive examination of witnesses by parties’ counsel. The side-by-side presentation of evidence can make it easier to compare witnesses’ different views on an issue, and for the witnesses to challenge each other’s views with direct responses or rebuttals. Second, the quality of evidence may be improved. For example, expert witnesses may be less willing to make technically incorrect assertions in front of a peer who can supply an immediate rebuttal. Third, the process can promote efficiency at an evidentiary hearing, as the tribunal can hear evidence from all the witnesses on the issues at once, rather than at different stages of a hearing as the parties present their cases.”

The Guidelines in fact note that the national courts in the UK, Australia, and
Singapore have used witness conferencing in some form, so it is not purely seen in arbitration alone, although that seems to be where it is a more robust tool, given arbitration’s informality and flexibility. And in keeping with that flexibility of arbitration, the Guidelines’ express objective is to take advantage of the “diversity of approaches that can be adopted without seeking to restrict the ability and imagination of tribunals and parties to shape a conference most suited to any given dispute.” They, in fact, comprise a practical “Checklist” of points to consider if a witness conference is the best procedure to use, “Standard Directions” of matters for consideration in a procedural order for a witness conference, and “Specific Directions” which are procedural frameworks for witness conferences led by either (a) the tribunal; (b) the witnesses; or (c) counsel.

Witness conferencing: the practical perspective
In practice, as arbitrator in competition related arbitrations I have used witnessconferencing in connection with the provision of expert economic testimony. Expert testimony is perhaps, as the CIArb Guidelines refer, the most paradigmatic use of the witness conference procedure to test that opinion testimony, e.g. Guidelines, p. 26. This is so for many reasons, including that witnesses providing expert opinions may or should be more objective and have less of a hostile bias to the counterpart on the other side; thus, the procedure (via shoulder to shoulder comparison) is more likely to develop smoothly with fewer histrionics. Indeed, in some instances the opposing expert witnesses come together on certain points when giving testimony concurrently (“yes, I happen to agree”) and most of the times, their differences will be pronounced and not obfuscated by the close in time “side by side” comparison. To my mind, the more complex the issue to be resolved, the greater the benefit from the witness conference and the contemporaneous comparison of testimony.[fn]A somewhat similar analogue is used on occasion by the US antitrust agencies (and in the EU and perhaps elsewhere) in an investigated transaction or merger when the enforcement agencies and the parties agree to discuss the matter; many times this meeting leads to the competing economists talking through their positions and can be a successful process to avoid a contested matter or at least identify the precise issues in dispute.[/fn]

And, in fact, there is no reason why the party appointed experts might not in
advance of the witness conference hold a “meet and confer” between themselves and attempt on their own to reach agreement on certain issues in their expert reports and then subsequently record the areas of disagreement.

This form of “hot tubbing” with a written joint report is recognized by the IBA Rules on Taking Evidence in International Arbitration and would work nicely in conjunction with a follow-on witness conference. (See the “Schedule” contemplated by Guidelines to serve as an agenda for the witness conference, pp. 46-7).

The format I have followed has always involved a mixture of counsel examination as well as tribunal questioning, usually counsel’s examination first and then the arbitrator’s, and to be worked out if counsel can then pose further questions after. Also, I found the process works easier, indeed simpler, to take up each economic issue seriatim. Given the complexity of the economic issues, one seeks the easiest process to clarify and simplify the resolution of the disputed testimony. Taking only one example in the vast area of competition law, in many competition disputes in arbitration in the major legal regimes, including the US and EU, a central issue can be whether the challenged agreement in question likely harms competition by increasing the ability or incentive of one party to that agreement to profitably raise price for a significant period of time above or reduce output, quality, service, or innovation below what likely would prevail in the absence of that agreement. That is, whether the conduct in question would confer market or monopoly power on that one party in a relevant market (in both product and geography). Thus, the definition of a relevant market becomes a focal issue in the arbitration, which is an issue likely best spoken by an economic expert. Once you have that definition, then you can compute the challenged party’s share of that market to test whether there is market or monopoly power.

The proof of a relevant product market in a competition dispute can involve
several key and complex touchstones: including defining the outer perimeter of the product market through (a) analysis of whether customers will switch in response to a small but significant and nontransitory” increase in price [“SSNIP”] by a hypothetical monopolist, or (b) a related “critical loss analysis,” or (c) cross elasticities of supply (or demand), or (d) reasonable interchangeability of use, or (e) such practical indicia such as unique production facilities and distinct customers. Many other economic issues can bear on the issue such as supply side substitution and whether there are barriers to entry, where if low or insignificant, entry of a new firm into that product market could defeat or make unprofitable a hypothetical increase in price. These difficult issues, as well as market share calculations through such methods as the Herfindahl-Hirschman Index (HHI) are most frequently provided by economists in competition disputes. A good method of testing the competing and complex economic testimony is to have the experts meet and indicate the areas of agreement and then for the points of disagreement, set the matter down for witness conferencing taking each point of disagreement one at a time with each expert, using the Guidelines’ “Standard Directions” as a starting point for the procedural order governing the conference.

Final remarks
What is most remarkable is that this innovative process of simplifying one of the more complex areas of litigation is not seen, or even allowed in most national courts, other than those mentioned above. It is not a stretch to say arbitration may be a more robust forum to decide private (non-governmental) competition matters, especially those with some complexity.[fn]R Levin, On Arbitration of Competition/Antitrust Disputes, 73 Dispute Resolution Journal 39, 56 (2018). As noted above, recently, the US Department of Justice and a party, in a remarkable development, agreed to submit a single issue to arbitration (the definition of the relevant product market) to resolve an alleged anticompetitive merger dispute.[/fn] Arbitration has employed the innovation and flexibility encouraged by cases like Mitsubishi with such procedures like witness conferencing which enable the parties to find a resolution faster, easier, and with less expense than the national courts.  Our late colleague Johnny Veeder called this “procedural and evidential flexibility” and stated in 2010 “[T]he way in which expert evidence is presented and tested [in competition disputes] may very well need to be modified; it is certainly not self-evident that anything resembling full-scale ‘cross-examination’ of the experts by counsel is likely to be productive.”[fn]VV Veeder and P Stanley, in G Blanke and P Landolt (eds), EU and US Antitrust Arbitration, A Handbook for Practitioners, Kluwer, 2010, p. 106.[/fn]

Pandemic Arbitration: A Time to Sow?

First published on Kluwer Arbitration Blog, July 21 2020.

The impact of the pandemic on arbitration has been the subject of several posts on this Blog (see here and here). Rightly so, this is a seismic event in history that certainly has shaken the dispute resolution process, both state sponsored judiciaries as well as arbitration tribunals and practice generally. Entities which fall victim during this time may need to pivot from court proceedings to get their cases heard as courts are struggling with their dockets and may not be equipped with the flexibility arbitration or other ADR can offer to bring their matters to resolution quicker and hopefully less expensively.

It is also a time to give arbitration a new think and stakeholders should consider to devise creative ways to accelerate the pace of improvement of the process; to push new streamlined measures not only to quicken the arbitration timeline from filing to award, but also make arbitration such that it is even more user friendly and far less expensive. This is likely an (ironically) opportune moment, a historical transition time from pandemic to immunity of some sort. In the dispute resolution market, one would hope that arbitration stakeholders would use this time to innovate and indeed capture a larger share through the appeal of arbitration which by definition can more easily absorb new technologies and new protocols and other rules about speed and expense. Indeed, the pandemic can be the very catalyst for exploring and implementing new ways to attack trouble points and issues in dispute resolution in general and, perhaps, in arbitration or ADR deal with “issues that need fixing” more quickly than in disputes in the public state courts which have built-in conflicts with social distancing. And it seems the economics of the arbitration process should begin to tilt more to the consumers of arbitration, the parties.


Starting Basics

The obvious starting point is embracing the best technology and adapting it such that it brings ADR to its laudable goals of being a real, genuine alternative to the court process by being truly faster, less expensive, and conducted by those with at least some modicum of expertise. This process should welcome in depth consideration of introducing new technologies such as artificial intelligence, ledger technology, smart contracts, in addition to the latest video and remote technology, allowing arbitration to be both travel free and print free. The merits hearing, considered to be the most difficult to change from the physical and in person, has already evolved during this time by going “virtual” today in many disputes. This has proved to be a solid substitute if not an improvement in many situations, where the tribunal can see the witnesses up close, no need to twist your neck to decipher a demonstrative exhibit, and actually there is more straight forward cross examination. Virtual hearings may indeed prove to be a major significant improvement, saving time, expense, and travel and be here to stay in many situations, and perhaps become the default choice.


The US Supreme Court: Arbitration Is Flexibility and Innovation

Thirty-five years ago, the US Supreme Court delivered perhaps its most famous arbitration decision to date, and certainly its most groundbreaking at that time in the sense of it being a call to innovation. In Mitsubishi v Soler, 473 US 614 (1985), discussed here, a case decided at the very dawn of modern international arbitration as we know it today, the US Supreme Court was presented with the issue as to whether international antitrust or competition cases were even arbitrable under the New York Convention and the U.S.’s corollary legislation, the Federal Arbitration Act. Many may not grasp the importance of that decision and prescience of Justice Blackmun writing for the majority, as arbitration had little track record and the Court was somewhat writing on a blank tablet. Yet the Court, in holding these cases arbitrable, was willing to take the chance in some respects to give the discipline the jump start to move where it is today. The Court stated “the potential of these tribunals for efficient disposition of legal disagreements arising from commercial relations has not yet been tested. If they are to take a central place in the international legal order, national courts will need to “shake off the old judicial hostility to arbitration.” 473 US at 638 (emphasis supplied). In response to the argument that competition cases are too complex for arbitration, the Court said that argument actually proves the point, that because the cases may be complex, that they are the perfect candidates for arbitration as “adaptability and access to expertise are hallmarks of arbitration.” And “it is often a judgment that streamlined proceedings and expeditious results will best serve their needs that causes parties to agree to arbitrate their disputes; it is typically a desire to keep the effort and expense required to resolve a dispute within manageable bounds that prompts them mutually to forgo access to judicial remedies.” 473 US at 633.

Thus, none other than the US Supreme Court has stated to the arbitration world that arbitration, as opposed to the courts, may be a smart alternative, with its built-in flexibility for innovation and informality, to develop a product that evolves with conditions for a simplified, less expensive process to streamline the resolution of disputes. The green light for this creative adaptation came when the Court said the parties really trade up in having their complex disputes arbitrated by ”trad[ing] the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.” 473 US at 628. The opportunity during this bleak pandemic should be seized by arbitration stakeholders to put in place a new improved process that consumers will see is as “faster, smarter, and cheaper.”

There is already some movement in this direction, but the stakeholders and other individuals and organizations should not lose this opportunity to take this farther. Many of the major arbitral institutions and organizations have issued “guidance notes” or other protocols to provide their suggested best practices to counsel and arbitrators as to how best resolve disputes that come before them during these days when social distancing is the most effective health strategy. The point is these guidance notes can be the very springboard to make long lasting streamlined improvements in arbitration. (e.g., The Seoul Protocol on Video Conferencing in International Arbitration).


The Crisis as a Time to Sow

The most widely pushed development is the concept of virtual arbitration via a video conferencing platform which in fact has been used is some form in arbitration for decades; video conferencing, even telephonic proceedings, have been prevalent for years and serve to make the process cheaper, more expeditious. Moreover, today videoconferencing and telephones will also significantly serve to avoid the heavy carbon footprint in travel and print and in addition save time and expense. That we see daily webinars and the guidance notes from institutions and protocols on virtual arbitration is a welcome development as this will keep the arbitration process moving seamlessly, as opposed to stop/starts in many court proceedings, during times when distancing is recommended.

Although arbitration has been virtual in part for a long time and has utilized the technologies in place at the time, one should not forget Justice Blackmun’s message, that the process has as its very foundation a flexible and nimble form of dispute resolution that is less expensive and quicker, and done by persons of the parties’ choosing, not by elected or appointed state officials, yet enforceable by the state. Arbitral institutions and stakeholders should use this time to craft an even better virtual proceeding as live in person proceedings are less of an option, parties’ legal spend budgets are even less during this time, and perhaps most of all, as noted above, the virtual proceeding is proving in many respects to be equal to or superior to the live proceeding (just like the recent literature that a video bench trial is more robust than a live one). Of course, the important environmental and cost savings in avoiding travel, printing, and the like must always be a key driver as well.

Examples abound in ways the stakeholders can use this crisis as a jump start to a higher, more efficient, quicker, and cost saving plateau, including the overall digitalization of arbitration. Online dispute resolution has been around for years and has evolved its technological bandwidth perhaps up to now more than traditional ADR process. Additionally, already many arbitral rules allow summary disposition of certain defenses and claims, allowing the process to be shorter, simplified, and less expensive. Likewise, rules can be amplified to allow for the consolidation of arbitrations with common issues and common parties, such as seen in SIAC Rules. Arbitration rules should consider affording flexibility in allowing arbitrators, especially in the complex case, to deal with issues in phases if to do so will lead to a faster resolution and even enhance the chances of settlement. SIAC itself has just announced it will use this time to update and improve its rules “to consider revisions dealing with multiple contracts, consolidation of claims and joinder; expedited procedures and emergency arbitration; appointment and challenge of arbitrators; tribunal powers including early dismissal; new technology and new procedures; and general trends in international arbitration rules.”



Consider using this time as a time to quicken the process and develop default “presumptions” to that end; in that way, hopefully, the economics in arbitration will greatly improve to favor the consumer of the service. Develop a process that presumptively calls for virtual proceedings and that incentivizes a mandate for page limitations on submissions to moderate counsel and arbitrator time. Consider a process that incentivizes restrictions on far reaching discovery, number of witnesses and experts, perhaps a default to a sole arbitrator, and encourage page limits on awards, which many times can run to encyclopedic proportions. These “presumptions” or incentives, to be sure can be overcome in a certain case with a proper showing, but the time is ripe to develop an even more streamlined, simplified process to cut expense, cut the carbon footprint, and cut the time from start to finish.

On Arbitration of Competition/Antitrust Disputes: A Tribute to Mitsubishi

On Arbitration of Competition/Antitrust Disputes: A Tribute to Mitsubishi is an article I recently published in the AAA/ICDR Dispute Resolution Journal that reflects back over the last 34 years since Mitsubishi v Soler was handed down by the US Supreme Court allowing for the arbitrability of antitrust cases. The Court specifically and remarkably stated in 1985 that it was an “experiment” it was willing to embark on to put the principles of party autonomy ahead of a nationalistic insistence that all international disputes must be resolved by US courts. The article discusses how the experiment has worked, and even especially in the arbitration of complex disputes like antitrust and IP cases, and in specific areas that come with that complexity, such as experts and discovery.


Posted on LinkedIn on 6/6/2019

Schools and Bullying of Kids with Disabilities

I am as worried about school administration behavior as well offensive fellow student conduct when it comes to bullying or harassment of individuals with disabilities in our schools. Schools must conduct an investigation for each potential civil rights violation and collect data and take measures to eradicate the bullying to provide students with a meaningful education that is free from bullying. It is usually best to convene an IEP (or ARD) meeting to determine if the bullying has led to changes in individual needs and assess what additional services or supports may be necessary to prevent bullying; the IEP (plan) should also consider whether there is a need to develop a particularized form of communication to reduce the long term effects associated with bullying or harassment, and an evaluation of environmental changes to reduce the potential of a hostile environment.

That said, inclusion is the rule in education, and while the IEP team should always make educational placement decisions, the team should exercise caution when changing placement as a ‘protective’ measure, as increased restrictiveness may result in a violation of the requirement for the Least Restrictive Environment. The plan should be designed to provide the maximum educational benefit, while supporting the unique needs of the student.

Posted on LinkedIn on 2/10/2019


Issues on school behaviour and emotionally disturbed kids

Issues on school behaviour and emotionally disturbed kids are particularly bothersome. The issue is raised in Jay F v Wiliam Hart School in the Court of Appeals for the Ninth Circuit.

The advocacy group COPAA of which I am a member notes: Research supports the [lower] court’s conclusion that emotional disturbance and Attention Deficit Hyperactivity Disorder can manifest in problem behaviors like verbal threats of the sort made in this case and [the school] Hart has provided no evidence or research that would show that the [lower] court’s findings were clear error. This appeal has important implications for children with emotional disturbance. Reversing the district court’s rulings for A.F. would undermine the IDEA’s protections for such children and exacerbate their already abysmal educational outcomes.


On Arbitrating Antitrust/Competition Disputes

This post was published in 2 parts by Kluwer Blog on August 20th 2018

Part 1

This note will first reflect back thirty three years on the genesis of arbitration and competition matters and the Mitsubishi case, and then, in Part 2 below, I will touch on some practical issues that frequently will arise in a competition case today and how Mitsubishi is still influencing with vigor. As the reader will see, that organic decision continues to be of great significance in the handling of complex arbitrations, especially those dealing with antitrust or competition issues.

In Mitsubishi Motors v Soler, 473 US 614 (1985), the US led the worldwide migration to the arbitrability of competition disputes. Up till that time, most, in not all, jurisdictions around the globe considered these matters strictly for the courts. The Supreme Court in Mitsubishi began by noting the “healthy regard for the federal policy favoring arbitration” as well as, in respect to international matters, the growth of American business and trade will not be encouraged if “we insist on a parochial concept that all disputes must be resolved under our laws and in our courts.”  473 US at 629. In holding antitrust claims arbitrable (claims “encompassed within a valid arbitration clause in an agreement embodying an international commercial transaction”), the Court (per Justice Blackmun) observed with remarkable prescience in 1985 “[t]he controversies that international arbitral institutions are called upon to resolve have increased in diversity as well as in complexity. Yet the potential of these tribunals for efficient disposition of legal disagreements arising from commercial relations has not yet been tested.” 473 US at 638. Thus, the Supreme Court was willing to embrace this “experiment” and courts will have to “shake off” any hostilities to arbitration and essentially get with international notions of progress in trade and commerce.

In the commercial area, although there is always room to improve, we have certainly seen since 1985 a robust development for increased efficient disposition of these claims in arbitration, including antitrust/competition claims as will be discussed. Also, at the time of Mitsubishi, antitrust/competition advocates were concerned about ceding private enforcement authority to .arbitrators, while the arbitration bar, by virtue of language in the opinion allowing courts to have a “second look,” was unsure just what the case would mean to the very cornerstone of arbitration, party autonomy in deciding how they want their disputes resolved. More on that below as well.

Since that seminal case, cases around the world have followed suit if not extended Mitsubishi, most notably Eco Swiss China Time v Benetton Int’l1) in the EU. Furthermore, Mitsubishi has been unremarkably construed to cover US domestic as well as international disputes.2) Now, in looking back more than thirty years later, Mitsubishi, in addition to its landmark ruling on arbitrability, strikes me on fresh reread as making certain corollary points which are of significant importance to the arbitration and competition law practitioner today.

The first observation on reflection is the discussion regarding the concern that antitrust cases are too complex to be left in the hands of arbitrators. The cases “require sophisticated legal and economic analysis, and thus are alleged to be ‘ill-adapted to strengths of the arbitral process, i.e., expedition, minimal requirements of written rationale, simplicity, resort to basic concepts of common sense and simple equity.’” 473 US at 632. The Court’s dismissal of this concern was powerful. Precisely because these cases can be so complex is reason to favor arbitrability as “it is often a judgment that streamlined proceedings and expeditious results will best serve their needs that causes parties to agree to arbitrate their disputes; it is typically a desire to keep the effort and expense required to resolve a dispute within manageable bounds that prompts them mutually to forgo access to judicial remedies.” 473 US at 633. Thus, we see today many arbitral institutions have adapted to complex cases in their rules and the push for expedition in spite of complexity, as well as arbitrator selection of individuals who are comfortable if not expert in the competition arena for example. Antitrust cases many times are economic theory driven and most institutional rules as well as soft law rules such as the IBA Rules on Taking of Evidence in International Arbitration (“IBA Rules”) allow for creative and liberal use of expert testimony in the proceeding. This was recognized by the Court as well as the reference to a kind of “anyway” the cases in arbitration will most likely be vertical issues (subject to an arbitration agreement) and not horizontal price fixing cartel cases, the ”monstrous proceedings that have given antitrust litigation an image of intractability.” 473 US at 633.3) It was arbitration’s “adaptability” and “access to expertise” that swayed the Court on the over-complexity argument.

The second point that strikes me on a Mitsubishi reread are the concerns raised by the Soler party against arbitration that the private treble damage procedure is too important to the business fabric to be thus relegated and, furthermore, the arbitration process cannot be counted on enforce competition policy with arbitrators, many times foreign and many times chosen from the business community.” Just as just as ‘issues of war and peace are too important to be vested in the generals, . . . decisions as to antitrust regulation of business are too important to be lodged in arbitrators chosen from the business community – particularly those from a foreign community that has had no experience with or exposure to our law and values.’” 473 US at 632. The Court had no problem dismissing these concerns, noting what has been true today, through the party and institutional appointment process, the tribunals have for the most part remained impartial and competent, and have had no special obstacles interpreting foreign law if needed, just as a judicial body would do under Fed R Civ P 44.1.

As to the importance of the private treble damage remedy,4) the Court as well found no impediment in allowing a litigant to vindicate its full competition grievance through the arbitration process. The private right of action statute.”5) will remain just as viable in arbitration as in judicial litigation and thus as “the prospective litigant may provide in advance for a mutually agreeable procedure whereby he would seek his antitrust recovery as well as settle other controversies,” 473 US at 636. “The importance of the private damages remedy, however, does not compel the conclusion that it may not be sought outside an American court.” 473 US at 635.

Likely the part of Mitsubishi that has engendered the most discussion from scholars and counsel has been the important reference in that opinion to the role of the national courts. The Court stated: [h]aving permitted the arbitration to go forward, the national courts of the United States will have the opportunity at the award-enforcement stage to ensure that the legitimate interest in the enforcement of the antitrust laws has been addressed. The [New York] Convention reserves to each signatory country the right to refuse enforcement of an award where the “recognition or enforcement of the award would be contrary to the public policy of that country.” 473 US at 638. This is the language that spawned the so-called “second look” doctrine although the Supreme Court does not use that phrase. As well, the ECJ affirmed in Eco Swiss that the national courts in the EU should grant annulment of any award where “its domestic rules of procedure require it … for failure to observe national rules of public policy.

Having the benefit of thirty three years of hindsight, if the look means a stare vs a glance, we should probably quietly turn the lights out on the “second look” doctrine as there really is no proper “second look,” the Supreme Court did not mean for there to be a proper ”second look,” and we do nothing to further the laudable goals of competition policy or arbitration policy to keep that doctrine breathing. The doctrine could have very well originated at a time in the 80’s when there was perhaps less confidence in the process of international and even domestic arbitration (recall it had not been “tested”), and you can see this in the strong Mitsubishi dissent of Justice Stevens, an eminent jurist to be sure, joined by Justices Brennan and Marshall. 473 US at 665. But I do not think the majority was reticent to the “experiment” when stating that “national courts will need to “shake off the old judicial hostility to arbitration.” 473 US at 638.

There is no issue that in most countries competition law forms an integral part of a state’s public policy, its ordre publique that defines its core values to the rule of law. As adherence to a state’s public policy is at the heart of the New York Convention dealing with enforcement of arbitral awards, the national court at the award-enforcement stage has the opportunity to “look” at the award and determine if it comports with the state’s public policy. NY Convention V (2) (b). Furthermore, in meeting the expectations of the parties, the Tribunal should do its best to issue an enforceable award, which goal is embodied in some institutional rules, such as Article 41 of the ICC Rules. Thus, the Tribunal must consider the different competition regimes which touch the controversy; ie in jurisdictions where the award will be enforced and its public policy.6)

It comes down to what kind of “look” does the enforcement court engage? I don’t have the space allotment to discuss this in detail, only to say Professor Radicati has well laid out the “maximalist” and “minimalist” approaches of scholars and the national courts in the article cited in footnote 7.7)Moreover, Justice Blackmun for the Court was quite clear in stating that this “look” is “minimal”: “[w]hile the efficacy of the arbitral process requires that substantive review at the award-enforcement stage remain minimal, it would not require intrusive inquiry to ascertain that the tribunal took cognizance of the antitrust claims and actually decided them.” 473 US at 638.

Following that, one of the most respected appellate judges Frank Easterbrook on the US Court of Appeals for the 7th Circuit noted in Baxter Int’l v Abbott Laboratories, 315 F 3d 829 (7th Cir.2003), the very minimal review of the national courts if the arbitration process is going to work or be given a chance to work, as implied strongly by Mitsubishi. “Legal errors are not among the grounds that the Convention gives for refusing to enforce international awards” Judge Easterbrook noted and “Mitsubishi did not contemplate that, once arbitration was over, the federal courts would throw the result in the waste basket and litigate the antitrust issues anew.   That would just be another way of saying that antitrust matters are not arbitrable.”  315 F 3d at 832. And to the same effect are cases across the Atlantic, perhaps the most notable being Thales v Euromissile8) in the Paris Court of Appeal in 2004, where the court refused to consider a competition law infringement allegedly that “creve les yeux,” but was not even examined for better or for worse by the “yeux” of the arbitrators. The court followed Eco Swiss and French procedural rules and refused to set aside the award.9)

References to Part 1

1. Case No C-126/97, [1999] E.C.R. I-3055 (E.C.J.)
2. ABA Antitrust Law Developments (8th ed. 2017), p. 813
3. Horizontal price fixing cases have since been held to be arbitrable disputes. See, e.g. JLM v Stolt-Nielsen, 387 F. 3d 163 (2d Cir 2004).
4. Of course government enforcement (eg criminal enforcement and merger enforcement) would not be arbitrable. On the European front, there has been discussion of arbitration of behavioral remedies in merger cases, but this has not really taken hold. See L.G. Radicati, Arbitration in E.C. Merger Control: Old Wine in a New Bottle, European Journal of Business Law 2007. We have seen recently in the US the use of arbitration proposed by parties seeking government approval in a merger case (ATT and Time Warner). US v ATT et al. (at pages 41, 149 fn. 51).
5. Section 4 of the Clayton Act, 15 USC sec 15.
6. Professor Radicati has written well on “which competition law.” Arbitration and Competition Law: The Position of the Courts and Arbitrators, 27 LCIA Arbitration International 1 at page 19 (2011); Professor Mayer stated in 1986 that even though arbitrators “are neither guardians of the public order nor invested by the State with the mission of applying its mandatory rules,” they should “pay heed” to the “future” of the award and thus apply all mandatory rules of law to develop an award that can be enforced. Pierre Mayer, Mandatory Rules of Law in International Arbitration, 2 J. Int. Arb. 274, 284-86 (Kluwer 1986).
7. The reader is also referred to the thorough compendium on this general subject put together by G Blanke and P Landolt (eds), EU and US Antitrust Arbitration: A Handbook for Practitioners, Kluwer, 2010. The chapters by A Mourre, L Radicati, as well as this writer, all very much state the law has adopted and should adopt the minimalist standard of review of awards. See Chapters 1, 22, and 39.
8. Cour d’appel de Paris, 1re Chambre, section C, 18 Novembre 2004 (n° 2002/19606SA Thalès Air Défense c/ GIE Euromissile et EADS
9. See also Gary Born, International Commercial Arbitration (2d ed.2014, Kluwer) at p.3322 where he notes that “[p]ublic policy has generally been invoked only in cases of clear violations of fundamental, mandatory legal rules, not in cases of judicial disagreement with a tribunal’s substantive decisions or procedural rulings.”

Part 2

Now that we know the “second look” is not so much a look but a glance, what does this mean for arbitrators in these cases, frequently highly complex disputes infused with economics? In brief, it places a very heavy burden to get it right. The mandatory public policy of competition law which would by contract be delegated to an arbitration tribunal involves the very fabric of “democratic capitalism” and is of “national interest” to at least the US economy, as Mitsubishi notes, 473 US at 635-36 and there is no reason to think the disputes are less important in most other countries. The importance is heavy, the policy is real, even such that arbitrators, in the view of some scholars, have the duty to raise and apply the relevant competition regimes on their own motion.1) Thus, I will touch on a few issues I have experienced, noting that Mitsubishi has had a long and wide effect, and its fundamental policy of the nature of arbitration may help practitioners evolve the issues the cases present to lead to “efficient disposition” as predicted by Mitsubishi; the focus will only be on discovery, experts, and summary disposition in complex competition disputes, but you could obviously expand this list.

The Supreme Court noted in Mitsubishi, as referenced above, that “vertical restraints which most frequently give birth to antitrust claims covered by an arbitration agreement will not often occasion the monstrous proceedings that have given antitrust litigation an image of intractability. In any event, adaptability and access to expertise are hallmarks of arbitration.” 473 US at 633. And of course, we have seen horizontal restraint allegations in arbitration2) and many IP cases will involve licenses on a horizontal level and contain arbitration clauses, such as Abbott Laboratories, discussed above. In any case, these are not disputes like nationwide grand jury price fixing or market allocation investigations or dawn raids seen in the EU that involve truckloads of hard drives, paper, etc. Nor are they merger investigations, involving Second Requests. These “monstrous proceedings” are not seen in arbitration. Thus in my experience in arbitrations, in both vertical and horizontal issues, I have latched on the “adaptability” point of Justice Blackmun and have so far been able to successfully conclude disputes with tailored discovery; my guidepost has been the IBA Rules referenced in Part 1. For the sake of expedition and to keep the expense reasonable, depositions are not generally allowed, unless that witness is critical to the case and/or cannot appear live. And while tailored document exchange is the preferred method of information exchange, I would very much agree with two leading practitioners “because arbitral procedures are flexible, it is always possible for a tribunal, if persuaded that it is necessary, to make searching orders for the production of documentary evidence, short of “fishing” exercises.”3) All this said, this is arbitration, not court litigation, and broad discovery is not necessarily a given.4)

In any case, discovery of some dimension is usual, especially in a complex arbitration, like a competition based arbitration. Many institutions have adopted rules to deal with the complexities of competition cases, an example being the AAA’s Procedures for Large, Complex Commercial Disputes as well as the soft law guidance of the IBA Rules. Furthermore, the privilege issues that can come up in international disputes can be daunting and I have previously written on my position and the importance of keeping a level playing field between the different parties who may face different privilege national laws and protocols.

Justice Blackmun also notes the importance of “access to expertise” as being a “hallmark” of arbitration; the Court refers both to arbitrator expertise as well as expert opinion testimony, “arbitral rules typically provide for the participation of experts either employed by the parties or appointed by the tribunal.” 473 US at 633. Antitrust and competition disputes are expert driven as the jurisprudence in major antitrust regimes throughout the world has trended to be grounded in solid economics.5) The IBA Rules again have detailed and well thought out procedures in Articles 5 and 6 of the Rules.

I have found after years of dealing with competition/economic experts in court, in the agencies in the US and the EC, and in arbitration, that the very “adaptability” which the Supreme Court considers also to be the “hallmark” of arbitration, allows for a better avenue to truth than the courts provide and, therefore, we hope, justice. Messrs. Veeder and Stanley refer to this as “procedural and evidential flexibility.”6) The time honored method in many juridical systems of cross examination alone by advocates just may not be the best way of testing economic opinions regarding a definition of a relevant market, has there been more competition over time, has new entry occurred or can it occur in spite of not having occurred, and has there been a prices increase and why not, the list goes on. As noted by the above esteemed barristers, “[i]t is certainly not self-evident that anything resembling full-scale ‘cross-examination’ of the experts by counsel is likely to be productive.”7)

While I am not certain of the benefits of tribunal-appointed experts, as contemplated by Article 6 of the IBA Rules, I completely agree that simple or rigorous cross examination of party appointed economic experts alone is wasting the very tools of flexibility that arbitration offers. Therefore I have used and have found very beneficial to the tribunals of which I have been a part, a form of witness conferencing with experts as the most robust method to arrive a comfortable resolution, and with any luck, wisdom and truth. I have used this with experts after their testimony and cross examination to pin point them down on point A, then asking the opposing expert her views on that point, then moving to Point B. I have also had simultaneous back and forths as well, just that the tribunal needs tightly to control this process, some with counsel participating, some after the witness’ testimony, with the tribunal only questioning. I have used this most recently with opposing experts on foreign competition legal regimes. Of course, “hot tubbing,” an in vogue procedure, also puts to use the flexibility of arbitration and this is contemplated by the IBA Rules as well in Article 5.4. These procedures and other creative ways at approaching economic expert testimony, of course, should be established in advance at an appropriate case management conference.

In the US, dispositive motions (summary judgment motion practice) play a critical part in the development of the antitrust law, mainly as a result of several Supreme Court antitrust decisions, including one a year after MitsubishiMatsushita Elec v Zenith Radio, 475 US 574. (1986) (a plaintiff at the dispositive motion stage “must show that the inference of illegal conspiracy is plausible if there is a competing explanation) and, more recently, Bell v Twombley, 550 US 544 (2007), (a plaintiff at the pleading stage must allege facts showing allegations of illegal conspiracy are plausible not merely conceivable). And today in arbitration practice, dispositive motion practice has become an important topic in light of the concern for expedition and expense and many institutional rules have begun to adopt these procedures.8)

In Mitsubishi, Justice Blackmun noted that “[b]y agreeing to arbitrate a statutory claim, a party … trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.” 473 US at 628. There is no sound reason why the new interest in this summary process in arbitration and the judicial trend in the Supreme Court in competition cases cannot meld together such that more institutions can come on board, especially in these complex disputes. For one, Justice Souter noted in Twombley, that a policy behind the decision is to avoid the potentially enormous discovery expense absent a solid plausible claim for violation. 550 US at 558-60. Moreover, dispositive motion practice plays a much more benign or intrusive role in arbitration as the same fact finder, the tribunal, will resolve the case—with or without a plenary evidentiary hearing; in the US at least, a summary judgment takes the decision process away from the jury.

We see a convergence of policies when considering dispositive motions in complex arbitrations, such as competition cases. At one time arbitration, antitrust, dispositive motions, needed discovery, complex disputes were words not used in the same paragraph. These cases have traditionally been heavy document oriented and involved massive discovery, and for many years dispositive motions were discouraged because “the proof is largely in the hands of the alleged conspirators, and hostile witnesses thicken the plot.” Poller v CBS, 368 US 464, 473 (1962). Then in 80s, the courts became chary of simply green lighting expensive antitrust claims with no plausible basis and at the same time, with the groundswell of arbitration, Mitsubishi asked “why not” bring simplicity, informality, and expedition to these same disputes? As the penumbra of Mitsubishi has developed, scholars and institutions have advanced the idea of achieving the policy of Mitsubishi through devices as dispositive motions. To be sure, the case must be a correct one for a dispositive motion, and the tribunal must keep in mind Article V (I) (B) of the New York Convention ensuring procedural fairness (a right to be heard) in the arbitration.9) A dispositive motion, when used properly, can potentially reduce the time and expense in a case, which is consistent with the goals of arbitration.10)

Mitsubishi was a landmark decision in the area of arbitration, and especially complex arbitration. One can hope that our judges, arbitral institutions, scholars, and policy makers continue to push the envelope and walk through the door that it has opened.

References to Part 2

1. See Radicati, op. cit.fn.7, at p.21
2. E.g., Stolt-Nielsen, op cit. fn.3.
3. Veeder and Stanley, in EU and US Antitrust Arbitration: A handbook for Practitioners, op cit. fn. 8, ch. 3 at p.105.
4. Judge Easterbrook noted in a recent domestic US case on the Seventh Circuit “nothing in the Federal Arbitration Act requires an arbitrator to allow any discovery. Avoiding the expense of discovery under the Federal Rules of Civil Procedure and their state-law equivalents is among the principal reasons why people agree to arbitrate. That Hyatt’s attorneys’ fees in the arbitration exceeded $1 million shows that plenty of discovery occurred; an argument that the arbitrator had to allow more rings hollow.” Hyatt Franchising v Shen Zhen
5. In the United States, see US v ATT, et al, op cit. fn. 4; Ohio v American Express, 585 US ____; 138 S. Ct. 2274 (2018).
6. See Veeder and Stanley, op cit. fn. 8, ch.3 at p. 106.
7. Id.
8. See, e.g., Article 39 of the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce; Rule 29 of the SIAC (Singapore) Rules; Rule 33 of the AAA Commercial Rules.
9. Gary Born’s treatise is particularly helpful on this score. Op cit. fn. 10 at pp. 3492-541.
10. This writer first wrote an article on dispositive motion in competition arbitrations about a decade ago (pre-Twombley), 24 J. Int. Arb. 2 (Kluwer 2007), Certain Procedural Issues in Arbitrating Competition Cases, (dispositive motion discussion at pp. 201-209), (with Kurkela, Liebscher, and Sommer).



Merck v Equador

The new award in Merck v Ecuador: one of the most interesting, if not the most, aspects of international {investment} tribunals is what was stated in Loewen:”The line may be hard to draw, but it is real.” When should an international tribunal, composed of individuals not accountable to any electorate, insert itself into the domestic affairs of a state to correct what it perceives to be serious injustice and act as a super appellate body. While I do not know the Merck case other than what summaries I read, I do recall the old con law cases of “substantive due process” and the like. What I read is the facts are awful in Merck as they were in Loewen.

First posted on LinkedIn 24th March 2018