On June 6, the law firm of Cravath, Swaine & Moore, the crème de la crème of Wall Street law firms, announced that it was increasing the salary for new attorneys just out of law school to $180,000 and for eighth-year associate attorneys to $315,000. (At the end of the eighth year an associate attorney is either chosen to be a partner or asked to leave the firm.) Such employees also may obtain annual bonuses. The average compensation for the firm’s partners, on the other hand, was $3.56 million.[1]
Cravath, according to a profile from Chambers & Partners, has offices in New York City and London with a total of 90 partners and 426 associate attorneys. The firm’s website says it hires “only the top students from the nation’s finest law schools, we train our associates through a rigorous rotation of practices, we elevate partners exclusively from within and we compensate partners in a lockstep system throughout their careers.”
I react to this news from at least three perspectives.
First, as I explained in an earlier post, immediately after law school graduation in 1966 I joined Cravath as an associate attorney with an annual salary of $9,000 ($66,941 in 2016 Dollars). In 1968 the firm jumped the starting salary to $15,000 ($104,657 in 2016 Dollars) with similar boosts to the salaries of more senior associates. I left Cravath and New York City in 1970 even though being a Wall Street lawyer was challenging and exciting as was living in the city with a wife and two young sons. I value those years, but did not want to remain another four years to compete for a chance to become a Cravath partner with all the sacrifices of time, energy and stress that would require and with all the income and prestige that it would entail. Instead I chose to move to Minneapolis to practice law with Faegre & Benson (n/k/a Faegre Baker Daniels), about which I also have written.
Second, the Cravath move to a starting salary of $180,000 is clearly an outlier in the overall U.S. legal job market. While observers speculate that other prominent Wall Street law firms probably will match this increase, law firms in other U.S. cities and business corporations, in my opinion, will not do so, and clearly governments and nonprofit organizations with lawyers will not be able to do so.
Third, this increase in compensation comes after widespread weaknesses in the demand for lawyers in the U.S. Indeed, in recent years the openings for new attorneys have shriveled. Many recent law school graduates, often with large student-debt loads, have been unable to find law-related jobs. Some recent law graduates have sued their law schools with claims they had been scammed. Law school enrollments have been declining. I hope the Cravath increase is a sign that there may be increasing opportunities for new lawyers, but I am not holding my breath.
Frank Bruni, a New York Times columnist, has high praise for President Obama’s commencement address at Howard University that was covered in a prior post. Bruni sees the speech as “a pointed, powerful civics lesson” for all of us to consider because Obama was “issuing challenges to groups—African-Americans, college students—from whom he has drawn strong support and with whom he has real credibility “ and because he speaks with “accuracy and eloquence . . . [in] diagnosing current ills.”[1]
Bruni also has high marks for similar words this year from Obama in his final State of the Union Address,[2] his speech to the Illinois General Assembly[3] and his remarks at a town hall session in London.[4] Another Obama speech that touched on these subjects came just last Sunday at Rutgers University.[5]
Emphasizing that Obama in the Howard University commencement address was giving a “pointed, powerful civics lesson . . . to all of us—to America,” Bruni says Obama was chiding some young people “for demonizing enemies and silencing opponents. He cautioned them against a sense of grievance too exaggerated and an outrage bereft of perspective.” In Obama’s words, “If you had to choose a time to be, in the words of Lorraine Hansberry, ‘young, gifted and black’ in America, you would choose right now. To deny how far we’ve come would do a disservice to the cause of justice.’”
“Enough,” Obama was saying, “with a kind of identity politics that can shove aside common purpose. Enough with a partisanship so caustic that it bleeds into hatred Enough with such deafening sound and blinding fury in our public debate.”
Here Bruni referenced Obama’s “wise and glorious” February 2016 speech to the Illinois General Assembly. There Obama said, “We’ve got to build a better politics — one that’s less of a spectacle and more of a battle of ideas.” Otherwise, he warned, “Extreme voices fill the void.”
In the Illinois speech Obama also diagnosed current ills with “accuracy and eloquence,” when he noted that “while ugly partisanship has always existed, it’s fed in our digital era by voters’ ability to curate information from only those news sources and social-media feeds that echo and amplify their prejudices. We can choose our own facts,” he lamented. “We don’t have a common basis for what’s true and what’s not.” Advocacy groups often make matters worse, he added, by “keeping their members agitated as much as possible, assured of the righteousness of their cause.”
“We must expand our moral imaginations,” Obama told the predominantly African-American audience at Howard, imploring them to recognize “the middle-aged white guy who you may think has all the advantages, but over the last several decades has seen his world upended by economic and cultural and technological change, and feels powerless to stop it. You got to get in his head, too.” This thought was also mentioned by Obama in late April at a town-hall-style meeting in London, when he said that once “elected officials or people who are in a position to start bringing about change are ready to sit down with you, then you can’t just keep on yelling at them.”
At Howard, Obama insisted that change “requires listening to those with whom you disagree, and being prepared to compromise. If you think that the only way forward is to be as uncompromising as possible, you will feel good about yourself, you will enjoy a certain moral purity, but you’re not going to get what you want,” he continued. “So don’t try to shut folks out. Don’t try to shut them down, no matter how much you might disagree with them.”
These recent speeches, Bruni concludes, bring Obama “full circle, from the audacity to the tenacity of hope.”
On May 15, President Obama delivered the commencement address at Rutgers University in New Brunswick, New Jersey.[1] Below are photographs of the President and the graduates at Rutgers.
The press naturally focused on the following remarks that indirectly criticized Donald Trump, the presumptive Republican presidential nominee:
“When you hear someone longing for the “good old days,” . . . It ain’t so. The ‘good old days’ weren’t that great.”
“The world is more interconnected than ever before, and it’s becoming more connected every day. Building walls won’t change that. . . . [To] help ourselves we’ve got to help others, not pull up the drawbridge and try to keep the world out. . . . Building walls . . . won’t boost our economy, and it won’t enhance our security either.”
“Isolating or disparaging Muslims, suggesting that they should be treated differently when it comes to entering this country . . . is not just a betrayal of our values . . . it would alienate the very communities at home and abroad who are our most important partners in the fight against violent extremism. Suggesting that we can build an endless wall along our borders, and blame our challenges on immigrants — that doesn’t just run counter to our history as the world’s melting pot; it contradicts the evidence that our growth and our innovation and our dynamism has always been spurred by our ability to attract strivers from every corner of the globe. That’s how we became America.”
“Facts, evidence, reason, logic, an understanding of science — these are good things. These are qualities you want in people making policy. Facts, evidence, reason, logic, an understanding of science — these are good things. These are qualities you want in people making policy. . . . In politics and in life, ignorance is not a virtue. It’s not cool to not know what you’re talking about. That’s not keeping it real, or telling it like it is. That’s not challenging political correctness. That’s just not knowing what you’re talking about.”
“America’s progress has never been smooth or steady. Progress doesn’t travel in a straight line. It zigs and zags in fits and starts. Progress in America has been hard and contentious, and sometimes bloody. It remains uneven and at times, for every two steps forward, it feels like we take one step back.”
“But progress is bumpy. It always has been. But because of dreamers and innovators and strivers and activists, progress has been this nation’s hallmark. I’m fond of quoting Dr. Martin Luther King, Jr., who said, ‘The arc of the moral universe is long, but it bends towards justice.’ It bends towards justice. I believe that. But I also believe that the arc of our nation, the arc of the world does not bend towards justice, or freedom, or equality, or prosperity on its own. It depends on us, on the choices we make, particularly at certain inflection points in history; particularly when big changes are happening and everything seems up for grabs.”
“You are graduating at such an inflection point. Since the start of this new millennium, you’ve already witnessed horrific terrorist attacks, and war, and a Great Recession. You’ve seen economic and technological and cultural shifts that are profoundly altering how we work and how we communicate, how we live, how we form families. The pace of change is not subsiding; it is accelerating. And these changes offer not only great opportunity, but also great peril.”
Therefore, the new graduates need to participate in the political process. You need to vote. “And if participation means voting, and it means compromise, and organizing and advocacy, it also means listening to those who don’t agree with you.”
“If you disagree with somebody, bring them in and ask them tough questions. Hold their feet to the fire. Make them defend their positions. If somebody has got a bad or offensive idea, prove it wrong. Engage it. Debate it. Stand up for what you believe in. Don’t be scared to take somebody on. Don’t feel like you got to shut your ears off because you’re too fragile and somebody might offend your sensibilities. Go at them if they’re not making any sense. Use your logic and reason and words. And by doing so, you’ll strengthen your own position, and you’ll hone your arguments. And maybe you’ll learn something and realize you don’t know everything. And you may have a new understanding not only about what your opponents believe but maybe what you believe. Either way, you win. And more importantly, our democracy wins.”
“Gear yourself for the long haul. Whatever path you choose, you’re going to have some setbacks. You will deal occasionally with foolish people. You will be frustrated. You’ll have a boss that’s not great. You won’t always get everything you want — at least not as fast as you want it. So you have to stick with it. You have to be persistent. And success, however small, however incomplete, success is still success. . . . Better is good. It may not be perfect, it may not be great, but it’s good. That’s how progress happens — in societies and in our own lives.”
“So don’t lose hope if sometimes you hit a roadblock. Don’t lose hope in the face of naysayers. And certainly don’t let resistance make you cynical. Cynicism is so easy, and cynics don’t accomplish much. As a friend of mine who happens to be from New Jersey, a guy named Bruce Springsteen, once sang, “they spend their lives waiting for a moment that just don’t come.” Don’t let that be you. Don’t waste your time waiting.”
“Throughout our history, a new generation of Americans has reached up and bent the arc of history in the direction of more freedom, and more opportunity, and more justice.”
On April 23, 2016, President Barack Obama addressed a town-hall meeting of 500 young Leaders of the United Kingdom at London’s Lindley Hall. [1] Below are photographs of Obama and of some of the young leaders at the meeting.
Here is Obama’s civics lesson that is directly relevant to U.S. citizens
Post-World War II World
The U.S. and Great Britain “ultimately made up [over the American Revolutionary War] and ended up spilling blood on the battlefield together [in World War II], side-by-side, against fascism and against tyranny, for freedom and for democracy. And from the ashes of war, we led the charge to create the institutions and initiatives that sustain a prosperous peace — NATO; Bretton Woods, the Marshall Plan, the EU. The joint efforts and sacrifices of previous generations of Americans and Brits are a big part of why we’ve known decades of relative peace and prosperity in Europe, and that, in turn, has helped to spread peace and prosperity around the world.“
“And think about how extraordinary that is. For more than 1,000 years, this continent was darkened by war and violence. It was taken for granted. It was assumed that that was the fate of man. Now, that’s not to say that your generation has had it easy. Both here and in the United States, your generation has grown up at a time of breathtaking change.”
“You’ve come of age through 9/11 and 7/7 [the date of the 2005 terror attacks on a London bus and Underground trains]. You’ve had friends go off to war. You’ve seen families endure recession. The challenges of our time — economic inequality and climate change, terrorism and migration all these things are real. And in an age of instant information, where TV and Twitter can feed us a steady stream of bad news, I know that it can sometimes seem like the order that we’ve created is fragile, maybe even crumbling, maybe the center cannot hold. And we see new calls for isolationism or xenophobia. We see those who would call for rolling back the rights of people; people hunkering down in their own point of view and unwilling to engage in a democratic debate. And those impulses I think we can understand. They are reactions to changing times and uncertainty. “
“I implore you to reject those calls to pull back. I’m here to ask you to reject the notion that we’re gripped by forces that we can’t control. And I want you to take a longer and more optimistic view of history and the part that you can play in it. I ask you to embrace the view of one of my predecessors, President John F. Kennedy, who once said: “Our problems are man-made. Therefore, they can be solved by man. And man can be as big as he wants.”
The “world, for all of its travails, for all of its challenges, has never been healthier, better educated, wealthier, more tolerant, less violent, more attentive to the rights of all people than it is today. “
“That doesn’t mean we don’t have big problems. That’s not a cause for complacency, but it is a cause for optimism. You are standing in a moment where your capacity to shape this world is unmatched. What an incredible privilege that is.”
Reject “pessimism and cynicism; know that progress is possible, that our problems can be solved. Progress requires the harder path of breaking down barriers, and building bridges, and standing up for the values of tolerance and diversity that our nations have worked and sacrificed to secure and defend. Progress is not inevitable, and it requires struggle and perseverance and discipline and faith.”
“Fighting for change that you may not live to see, but that your children will live to see. That’s what this is all about. . . . Whether in the Cold War or world war, movements for economic or social justice, efforts to combat climate change — our best impulses have always been to leave a better world for the next generation.”
Historical Perspective
Abolitionists “in the 1700s . . . were fighting against slavery, and for a hundred years built a movement that eventually led to a civil war, and the amendments to our Constitution that ended slavery and called for equal protection under the law. It then took another hundred years for those rights that had been enshrined in the Constitution to actually be affirmed through the Civil Rights Act of 1964 and the Voting Rights Act of 1965. And then it’s taken another 50 years to try to make sure that those rights are realized. And they’re still not fully realized. There’s still discrimination in aspects of American life, even with a black President.”
This history means “that if any of you begin to work on an issue that you care deeply about, don’t be disappointed if a year out, things haven’t been completely solved. Don’t give up and succumb to cynicism if, after five years, poverty has not been eradicated, and prejudice is still out there somewhere, and we haven’t resolved all of the steps we need to take to reverse climate change. “
“Dr. [Martin Luther] King [,Jr.] said, ‘The arc of the moral universe is long, but it bends towards justice.’ And it doesn’t bend on its own. It bends because we pull it in that direction. But it requires a series of generations working and building off of what the previous one has done. “ (Emphasis added.)
Passion To Highlight Societal Problems
“As a general rule, I think that what, for example, Black Lives Matter is doing now to bring attention to the problem of a criminal justice system that sometimes is not treating people fairly based on race, or reacting to shootings of individuals by police officers, has been really effective in bringing attention to problems.”
Need To Have a Strategy for Change and Compromise
But “once you’ve highlighted an issue and brought it to people’s attention and shined a spotlight, and elected officials or people who are in a position to start bringing about change are ready to sit down with you, then you can’t just keep on yelling at them. And you can’t refuse to meet because that might compromise the purity of your position.”
“The value of social movements and activism is to get you at the table, get you in the room, and then to start trying to figure out how is this problem going to be solved. You, then, have a responsibility to prepare an agenda that is achievable, that can institutionalize the changes you seek, and to engage the other side, and occasionally to take half a loaf that will advance the gains that you seek, understanding that there’s going to be more work to do, but this is what is achievable at this moment.
And too often what I see is wonderful activism that highlights a problem, but then people feel so passionately and are so invested in the purity of their position that they never take that next step and say, okay, well, now I got to sit down and try to actually get something done..”
Everyone has “to be principled, you have to have a North Star, a moral compass. There should be a [good] reason for you getting involved in social issues. . . . But you have to recognize that, particularly in pluralistic societies and democratic governments like we have in the United States and the UK, there are people who disagree with us. They have different perspectives. They come from different points of view. And they’re not bad people just because they disagree with us. They may, in fact, assert that they’ve got similar principles to ours, but they just disagree with us on the means to vindicate those principles.”
Compromise “does not mean surrendering what you believe, it just means that you are recognizing the truth, the fact that these other people who disagree with you or this other political party, or this other nation — that they have dignity too, that they have worth as well, and you have to hear them and see them.”
As discussed in other posts, vocation or calling was the overall theme of the inspiring January 26th worship service at Minneapolis’ Westminster Presbyterian Church.[1]
After the reading of the Scripture and sermon in the central part of the service—Listening for the Word—the last part was devoted to Responding to the Word. Two hymns and a choral anthem aided us in doing just that.
The anthem was “Forth in Thy Name, O Lord, I Go”[2] with these moving words of Charles Wesley:
“Forth in thy name, O Lord, I go, my daily labor to pursue; thee, only thee, resolved to know in all I think or speak or do.
The task thy wisdom hath assigned, O let me cheerfully fulfill; in all my works thy presence find and prove thy good and perfect will.
Preserve me from my calling’s snare and hide my simple heart above the thorns of choking care, the gilded baits of worldly love.
Thee may I set at my right hand whose eyes my inmost substance see, and labor on at thy command and offer all my works to thee.
Give me to bear thy easy yoke, and every moment watch and pray, and still to things eternal look,
And hasten to thy glorious day; for thee delightfully employ whate’er thy bounteous grace hath given.
And run my course with even joy, and closely walk with thee to heaven.”
The anthem clearly treasures the every-day vocations of the hymnist and everyone else.
It also recognizes the dark side of daily labor with these words, “Preserve me from my calling’s snare and hide my simple heart above the thorns of choking care, the gilded baits of worldly love.” In other words, being involved in the everyday world often leads to idolizing the rewards of the secular world (“the gilded baits of worldly love”), which are the seductions of my daily labor (“my calling’s snare” and the “thorns of choking care”). (Emphasis added.)
The same thoughts are found in the hymn “How Clear Is Our Vocation, Lord” that was sung earlier in the service. Its second verse says, “If worldly pressures fray the mind And love itself cannot unwind Its tangled skein of care: Our inward life repair.”
Another hymn is brought to mind by the first phrase of Charles Wesley’s line (“my calling’s snare“). It reminds us of the third verse of John Newton’s Amazing Grace: “Through many dangers, toils and snares…we have already come. T’was Grace that brought us safe thus far…and Grace will lead us home.” (Emphasis added.)
The word “snare” is not much used today so I looked it up. “Snares” originally were anchored cable or wire nooses set to catch wild animals such as squirrels and rabbits. More generally the word means something by which an unwary person is entangled, involved in difficulties, or impeded.
Thus, “my calling’s snare,” for me, means the traps that are commonly associated with my calling or profession. As a former lawyer who personally knew at least three lawyers who were convicted of crimes and served time in prison, I can say that “my calling’s snares” include embezzlement of funds entrusted to the attorney, being involved in promoting or concealing fraudulent activities of others, trading securities based on undisclosed inside information and lying or shading the truth of factual representations.
The Lord’s Prayer speaks directly to these snares or traps when it says, “Lead me not into temptation and deliver me from evil.” And the verse of “Amazing Grace” quoted above clearly acknowledges that God’s grace, rather than our own efforts, is the reason why so far we have survived the “dangers, toils and snares.”
Charles Wesley (1707-1788) was an English Anglican clergyman and a leader of its Methodist movement that subsequently became the independent Methodist Church. He was the son of Samuel Wesley, an Anglican clergyman and poet, and the younger brother of John Wesley, also an Anglican clergyman and a co-leader of the Methodist movement.
Both Wesley brothers were graduates of Oxford University’s Christ Church College, where in the early 1960’s I attended lectures and saw their portraits in the College’s beautiful dining hall.
Many years later I was walking near St. Paul’s Cathedral in the City of London and saw the Aldersgate Flame sculpture marking the spot where John Wesley on May 24, 1738, “felt my heart strangely warmed. I felt I did trust in Christ, Christ alone, for salvation; and an assurance was given me that He had taken away my sins, even mine, and saved me from the law of sin and death.”
The music for the anthem was a Scottish melody arranged by Howard Helvey. Born in 1968, he is a composer, arranger and pianist and also serves as the organist and choirmaster of Calvary Episcopal Church of Cincinnati, Ohio.
[1] The Bulletin for the January 26th service with the words to the anthem is available online along with the text and audio recording of the sermon as well as a video recording of the service. Prior posts have discussed this service’s (a) Prayer of Confession; (b) an anthem beginning with the words “God be in my head;” (c) passages from the Bible’s book of Acts and the sermon’s drawing on them for comments concerning the vocations of Tabitha, Peter, Lydia and Paul; (d) a passage from Paul’s epistle from a Roman prison and the sermon’s drawing on them for comments about the preacher’s and her people’s vocations; (e) a hymn, “How Clear Is Our Vocation, Lord;” and (f) another hymn, “Give Thanks, O Christian People.” Clicking on “Westminster Presbyterian Church” in the Tag Cloud at the top right of the blog will give you all of the posts about the church in reverse chronological order of posting.
[2] This same anthem was sung by the Westminster Choir in April 2013, and a prior post reviewed that performance.
As previously noted, I have a strong professional preference for mediation and arbitration as methods for resolving disputes between manufacturers and distributors or dealers.[1] This assumes that the parties have tried and failed to resolve their disputes through direct negotiation, which is the least expensive and least time-consuming method and which enhances the possibility of amiable future relationships.
The reasons for preferring negotiation, mediation and arbitration hold as well for commercial disputes between entities in different countries.
Mediation (or conciliation as it is called in the international arena) where a neutral third-party assists the disputants in trying to settle their disputes is the first option after negotiation. This was my preferred dispute resolution method because it empowered the parties themselves to settle their disputes, because it opened the way for creative solutions that were not possible in court or in arbitration and because it was the least expensive option.[2]
Only if mediation (or conciliation) failed, would such a contractual provision call for submitting the dispute to arbitration under one of several general sets of arbitration rules where the arbitrator resolves the dispute. Arbitration was preferred to court litigation because the former eliminated the expensive pre-trial discovery and other processes of the court and because the parties participated in selecting the arbitrator who was seen as a safer decider than an unknown judge or jury. On the other hand, the costs of international arbitration are significant, especially with three arbitrators from different countries and international travel.[3]
Moreover, there are additional reasons why arbitration is a preferred method for international commercial dispute resolution. First, there is fear of prejudice against the foreigner by a court or jury of another country. But such fear is less with an arbitrator or arbitrators that the sides help to choose. Second, there is a multilateral treaty that makes arbitration awards (the final decision in an arbitration) easier to enforce in other countries.[4] In contrast, it is more difficult to enforce one country’s courts’ final judgments in other countries. This is very important. For example, an arbitration award or a court judgment might hold the defending corporation (the respondent or defendant) liable to the complaining corporation (claimant or plaintiff) for $1 million for breach of contract, and most of the respondent or defendant’s assets might be in a different country than where the arbitration or litigation took place.
At Faegre & Benson, I frequently drafted dispute resolution provisions for international contracts prepared by other lawyers in the firm. In addition, I was counsel for two foreign companies in international arbitration proceedings under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).[5] Each of these cases illustrated interesting facets of such proceedings.
Turkish distributor vs. U.S. (Minnesota) manufacturer.
In the first case, I represented the Turkish terminated distributor of medical devices that were manufactured by a Minnesota company. Their written agreement, written by Minnesota lawyers, called for Minnesota law as the governing law and arbitration in Minnesota under the UNCITRAL Arbitration Rules with three arbitrators and with English as the language of the arbitration.
Under Article 5 of the UNCITRAL Rules there are three arbitrators unless the parties agree to have only one arbitrator. When there are three arbitrators, the claimant (here, the Turkish company) selects the first arbitrator; the respondent (here, the Minnesota company) picks the second; and then these two arbitrators select the third and presiding arbitrator. Although the first two arbitrators are selected by the two parties, the arbitrators are to be independent, not representatives or advocates for the parties that selected them.
My Turkish client and I thus had to go first in selecting an arbitrator. My ideal candidate was a Minnesota lawyer from Turkey who was bilingual in English and Turkish and who knew Turkish business customs and circumstances, but not surprisingly I could not find such a person. I then called the Turkish consulate in Chicago and Embassy in Washington, D.C. for recommendations for such an arbitrator. I eventually found a U.S. (and Turkish) lawyer in New York City who was born in Turkey, who was bilingual and who knew its business customs and circumstances, and the Turkish company appointed him as arbitrator. The Minnesota company then appointed a professor from a Minnesota law school as the second arbitrator. The two of them then appointed a retired chief justice of the Minnesota Supreme Court as the third and presiding arbitrator.
IDS Center, Minneapolis
The hearings were held in a conference room of the Minneapolis office of the presiding arbitrator in the IDS Tower and lasted several days. The Minnesota company was represented by its in-house lawyer and two lawyers from its outside law firm while I was by myself for the Turkish company. (This was a role reversal for me.) The atmosphere was tense in the conference room. The husband of the couple who owned the Turkish company had been an arbitrator in his own country where things were handled much differently, and yet he enjoyed the battle in the Minneapolis conference room. His wife who was also involved in the business and was a witness, however, was appalled by the hostile questioning of the other side’s lawyer.
Several weeks after the hearing, I received in the mail the two-page award of the arbitrators requiring the manufacturer to pay a sum of money to the Turkish company. Thereafter the money was paid, and the case was over. My client and I were very pleased.
Under Article 32(3) of the UNCITRAL Arbitration Rules, the arbitrators are required to provide a statement of the reasons for their award unless the parties waive this requirement. In this case, the requirement was waived because a relatively small amount money was claimed and because both sides wanted to avoid the expense of paying for the time of the arbitrators to prepare such a statement of reasons.
U.S. (Minnesota) Buyer vs. Asian manufacturer
In the second case, I was counsel for an Asian manufacturer responding to an arbitration claim for over $26 million for breach of contract and other alleged wrongs. The contract at issue had been prepared by a non-lawyer employee of a Minneapolis foreign-trade consulting firm. It had what I regarded as a very inartful arbitration provision. It called for arbitration under the rules of “the United Nations Uniform Commercial Codes,” which do not exist. Nor did it specify where the arbitration should be held or the number of arbitrators or the language of the arbitration.
The Minnesota company first suggested there be only one arbitrator and that a specified retired Minnesota state trial court judge be that sole arbitrator. Although I had experience before that individual when he was a judge and had full confidence in his ability to be a fair arbitrator in this case, my Asian client did not want to have the case decided by one person from Minnesota. Therefore, I told opposing counsel that we did not agree to only one arbitrator.
Nothing more was heard from opposing counsel, and I thought the case had died on the vine. I was greatly surprised, therefore, when I received a letter from the Permanent Court of Arbitration at The Hague, Netherlands. The letter said that under Article 7 (2)(b) of the UNCITRAL Arbitration Rules, it was the designating authority for appointment of arbitrators when a party defaults in so doing and that the Asian company had defaulted in appointing the second arbitrator. In response, I recited the above history and stated that the Minnesota company had never appointed the first arbitrator and that, therefore, the Asian company had not defaulted. An official at the Permanent Court said I should tell that to the person it was designating as the appointing authority, a barrister in Melbourne, Australia. I reiterated my argument to the barrister to no avail when he appointed the head of an Asian international arbitration center and a former attorney general of that country as the second arbitrator.
Thereafter, these two arbitrators appointed a Danish lawyer from Copenhagen with extensive experience in international commercial arbitration as the third and presiding arbitrator.
On behalf of the Asian company, I filed a motion to dismiss the arbitration as it had never agreed to arbitration under the UNCITRAL Arbitration Rules, and the panel set a hearing in Minneapolis on this motion. Several weeks before the hearing, I was startled to receive a letter announcing the resignation of the second arbitrator (the Asian lawyer). My Asian co-counsel and I then immediately appointed a Queen’s Counsel barrister from London as the second arbitrator. (Later I found out that the Asian arbitrator had resigned because his fellow arbitrators refused to authorize him to fly first class (at substantial expense) to Minneapolis for the hearing.)
The hearing on the dismissal motion was held in Minneapolis, and the panel denied the motion. They did so even though their decision recognized that the “United Nations Uniform Commercial Codes” did not exist and under a strict interpretation, the arbitration clause had no effect. Nevertheless, the order concluded that the clause must be understood as referring to the UNCITRAL Arbitration Rules.
At the same time we also had a dispute as to the venue (or “seat”) of the arbitration due to the inartful arbitration clause’s not specifying such; my side argued for Hong Kong; the other side, London; and the arbitrators decided on London. The arbitrators also decided that the language of the arbitration would be English, which was not specified in the clause, but all agreed to English.)
In U.S. trials and arbitrations, witnesses are cross-examined on inconsistencies, real or apparent, between their testimony at the trial or hearing and prior testimony or statements. However, in this arbitration, the panel told the attorneys it was “not necessary during examination or cross-examination of witnesses for them to examine the witnesses on matters already in the written materials.” This was a surprise for me and a problem in preparing good cross-examination questions.
In the Fall of 1997, the hearings on the merits (or the trial) were held in three different cities. Minneapolis was first for the testimony of certain witnesses. I then flew to the Asian city where my client was located for hearings for the testimony of other witnesses. I then returned to Minneapolis for a brief stay, and then it was on to London.
Law Courts, LondonSt. Paul's Cathedral, London
London was the city for closing arguments. They were held in a conference room of an arbitration center in “legal London,” on the Strand near the Law Courts and the Inns of Court. The attorneys for the Minnesota company went first. Then my Asian co-counsel and I made our arguments.
I prepared for the closing arguments in Faegre & Benson’s London office, which is just several blocks from St. Paul’s Cathedral. Working on a Sunday morning, I could hear the pealing of the Cathedral’s bells and wished that I were in the church, rather than in the office.
Approximately four months later I received the 27-page Award that dismissed all of Claimant’s claims and all of my client’s counterclaims. One of the key points was the conclusion that the Claimant’s predecessor-in-interest and assignor had waived all claims for breach of contract and that its conduct did not fall within the wording of a non-waiver clause in the contract.
Thereafter Claimant submitted a motion for correction and interpretation of that key point, which my client resisted. On the basis of the papers the panel decided, 2 to 1, that there was no need for any interpretation or correction of the Award. At last, the case was over.
Not surprisingly this was not an inexpensive arbitration. In addition to the fees and expenses of each side’s attorneys, the bill of the three arbitrators for their fees and expenses was $302,000 to be split equally by the two parties.
[1] Post: Resolving Disputes between Manufacturers and Distributors/Dealers (Aug. 9, 2011).
[2] One example of rules for this method of dispute resolution is the UNCITRAL Conciliation Rules, which cover all aspects of the conciliation process, providing a model conciliation clause, defining when conciliation is deemed to have commenced and terminated and addressing procedural aspects relating to the appointment and role of conciliators and the general conduct of proceedings. The Rules also address issues such as confidentiality, admissibility of evidence in other proceedings and limits to the right of parties to undertake judicial or arbitral proceedings while the conciliation is in progress. (UNCITRAL, 1980–UNCITRAL Conciliation Rules, http://www.uncitral.org.)
[3] Post: Resolving Disputes between Manufacturers and Distributors/Dealers (Aug. 9, 2011).
[4] The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also called “the New York Convention” or treaty) now has 146 of the 192 U.N. member states as parties, including China, Korea, Japan, India, Indonesia and other major trading partners of the U.S. The treaty requires courts of contracting States to give effect to an agreement to arbitrate when seized of an action in a matter covered by an arbitration agreement and also to recognize and enforce arbitration awards made in other States, subject to specific limited exceptions. (UNCITRAL, 1958–Convention on the Recognition and Enforcement of Foreign Arbitral Awards, http://www.uncitral.org.)
[5] The UNCITRAL Arbitration Rules cover all aspects of the arbitral process, providing a model arbitration clause, setting out procedural rules regarding the appointment of arbitrators and the conduct of arbitral proceedings and establishing rules in relation to the form, effect and interpretation of the award. (UNCITRAL, 1976–UNCITRAL Arbitration Rules, http://www.uncitral.org.)
