15th ICC New York Conference on International Arbitration

Callum Hutchinson 

On September 23rd, over 1200 participants from 100 jurisdictions joined the International Chamber of Commerce (ICC) International Court of Arbitration for its 15th annual New York Conference, as part of the inaugural CanArbWeek 2020.

Welcome Addresses

Marek Krasula (Director, Arbitration and ADR, SICANA, Inc./International Court of Arbitration) introduced the event. Alexis Mourre (President, ICC International Court of Arbitration) followed  with several announcements. First, the ICC Court is cautiously encouraging online hearings. Second, the Court is having its most productive year ever in terms of new cases: it is on track to beat its 2019 record of 841 cases. Third, the Court is embarking on several new initiatives, including releasing revised Arbitration Rules for 2021,[1] opening a case management office in Abu Dhabi, and publishing all arbitral awards since January 1, 2019 online. President Mourre viewed this last project as the first step towards “an arbitral form of jurisprudence.”

Alexander G. Fessas (Secretary General, ICC International Court of Arbitration) concluded this portion of the conference by speculating on the transition back to fully in-person hearings in the post-pandemic world.

Panel #1: Volatility in the Energy Industry

Wade Coriell (King & Spalding, Singapore) chaired a panel discussing the “perfect storm” which has hit the energy sector during COVID-19. He was joined by Kathryn Barnes (Senior Counsel, Chevron), Juan Marcos Braga (VP Legal, Americas Region, Total), and Taísa Maciel (General Counsel, Petrobras).

Coriell set the scene: the world is facing an excessive supply of oil and gas, but decreased demand, due to the general decrease in consumer activity during COVID-19. What are the key issues and trends we are seeing in response? Maciel explained how Petrobras created a crisis committee to keep the company’s operations “as normal as possible.” Meanwhile, a liquidity team focused on cutting costs. Although the situation is “severe,” Petrobras has actually reduced its net debt. Braga said Total’s operations and supply chains are largely maintained. Barnes shared similar good news, praising Chevron’s emergency response teams.

On the topic of managing asset portfolios during these difficult times, Braga said Total is re-evaluating assets with the highest operating costs, while committing to a minimum production level. They are trying to avoid selling assets if doing so would breach their production agreements or other contractual obligations to partners, host governments, or other stakeholders. Maciel said Petrobras is also preserving their relationships with joint venture partners and suppliers, since these long-term relationships are crucial in the energy sector. To that end, Petrobras is negotiating postponed payments, deliveries, and changes to agreements, rather than unilaterally terminating contracts or invoking force majeure clauses. On that note, Barnes commented that there is no consensus as to whether the COVID-19 pandemic generally constitutes force majeure: that is, whether the pandemic constitutes an unforeseeable circumstance which makes performing a contract impossible. It depends on the language of the contract and the parties’ situation.

Coriell brought up the topic of dispute resolution, especially in the context of the Singapore Convention,[2] which recognizes mediated settlement agreements as equivalent to court judgements. Barnes explained the dispute resolution clauses in Chevron’s contracts follow a step-by-step process of negotiation, then mediation, then arbitration. Each step is an attempt to resolve the dispute before going to the “endgame” of arbitration. The mediation step can be a hard sell, since Barnes has to convince businesspeople – who are often professional negotiators themselves – that they need a mediator to help resolve the matter. However, Barnes analogized a mediator to a couple’s counsellor: “When you need help in a relationship, you go to a professional.”

One audience member asked about the “acceptability” of virtual hearings during the COVID-19 pandemic. Barnes said her comfort level decreases when there are many witnesses, and she must adjust her cross-examination techniques to match the virtual setting. Maciel agreed, but she noted online hearings reduce costs and make procedures faster.

Another audience member asked if oil and gas companies are using contractual language to account for profitability risks associated with climate change. Braga answered no; instead, “you price that risk” during initial price negotiations.

The discussion concluded with thoughts on how force majeure clauses will be drafted in the future. Maciel does not expect a big change, since allocating risks between parties is “as old as time.” Barnes disagreed, suspecting new force majeure clauses will invariably contain the word “pandemic.”

Panel #2: Getting to the Truth About Witness Evidence: Practitioners Confess

Luke Sobota (Three Crowns) chaired the second panel, which examined the value of witness evidence in international arbitration proceedings. He was joined by Gerry Ghikas, QC (Independent Arbitrator, Vancouver Arbitration Chambers), Samaa Haridi (Hogan Lovells), and Rachel D. Kent (WilmerHale).

Sobota said numerous scientific studies show that memory is susceptible to distortion. So, how should counsel approach witness interviews?

Haridi explained many witnesses do not immediately remember an event. Hence, her approach is to say, “tell me what happened,” ask open-ended questions, and let them talk. Beyond increasing credibility, these strategies also reveal information that might have otherwise remained hidden.

Kent takes the opposite approach: when she needs specific information, she “refreshes” the witness’s memory of the issue with pointed questions. However, she tries to keep questions limited to general knowledge of the witness’s organization, like its goals and objectives at the time. Kent finished with the caveat that witness testimony is often overemphasized, compared to documentary evidence, since arbitrators and counsel enjoy getting to interact with real people.

Ghikas criticized over-preparing witnesses, as their “fragile” reconstructed memories can be hewn away at during cross-examination. Overall, he believes the only purpose of witness testimony is to fill gaps in the undisputed record.

Next, Sobota posed a hypothetical:

You are counsel in an ICC arbitration over a long-term supply agreement. You interview the Chief Operating Officer (COO) of the purchaser, who insists, with conviction, that the supplier never requested to receive a guaranteed profit margin under the agreement. Later, you find an email from the COO to her CEO at the time of contracting that reads as follows: “The supplier is insisting on a guaranteed 12% profit margin. I think we have no choice but to agree. Let’s discuss.” You show this email to the COO, who now acknowledges the request from the supplier, but is adamant that the purchaser did not agree. Do you believe the COO’s testimony is sufficiently reliable to offer it as evidence?

The audience was asked to share their opinion over a Zoom poll: 55% said yes, while 45% said no. Kent agreed with the majority, saying the testimony was sufficiently reliable. However, she explained that the answer depends on whether the witness has first been confronted with the documentary evidence, alerting them to any inconsistencies with their recollections. If a lawyer believes the witness is still being truthful, and the evidence being given supports a point in their argument, then the testimony should be used. Ghikas agreed.

Sobota then asked the panel how they phrase their questions to witnesses. He cited a study where one group of moviegoers was asked “How long was the movie?” and another group was asked “How short was the movie?” The first group gave estimated runtimes which were 30 minutes longer than the second group’s, proving that the way a question is framed can affect the answer.[3] Kent provided some general advice, including requesting all the relevant facts, and asking witnesses what they think the other side would say in response. Haridi, on Sobota’s prompting, considered the “illusory truth effect.” This psychological phenomenon makes memories become more “certain” with each retelling. Haridi said this is a function of how the witness is prepared, and their memory can be “contaminated” if they hear other witnesses’ testimony. Indeed, Ghikas said some witnesses are over-prepared to the point that their statement is written like the lawyer’s argument. Ghikas suggested that an agreed statement of facts can “eliminate the spin” from opposing witness statements, saving a lot of time.

A second Zoom poll asked: “Does the process for witness preparation in international arbitration need to change?” Two-thirds of the audience said change is needed – but of that group, another two-thirds said the changes should only be marginal. Haridi, by contrast, picked the “no change” option. She said she trusts the arbitration community’s own “self-regulating aspect,” and it is unfair to say lawyers “coach” witnesses. She cited the IBA Guidelines, which gives practitioners an excellent framework for witness preparation.[4]

Sobota’s final question was how effective arbitrators are at “distilling the truth” from opposing sets of witnesses. Ghikas said “he-said-she-said” scenarios rarely come up in arbitration.  He finds matters are often clarified when the arbitrator asks the questions, instead of counsel. Ghikas said arbitrators generally do a good job of assessing witness testimony, since they can compare it with the other evidence gathered.

Kent had her doubts, since awards rarely explain a tribunal’s credibility assessments. Indeed, Kent suggested most arbitrators “overestimate” their ability to assess, since it is a human skill which cannot be easily replicated by algorithm-driven arbitration software. Finally, Kent listed some factors that might bias an arbitrator: the witness’s personality, confidence level, rank in an organization, race, or gender. She said an atypical witness who contradicts themselves and constantly apologizes may be more sincere than a CEO presenting to the tribunal as if they were a Board of Directors.

For the final Zoom poll, Sobota played a video with six University of Rochester students making statements about their lives. The question: which one of them was lying?[5] 46% of the audience selected a man who claimed he had never travelled outside the United States – and they were right. Sobota opined that the arbitration community should be optimistic about their ability to discern credibility.

Closing Remarks

Nancy Thevenin (General Counsel, US Council for International Business, ICC USA) summarized the conference’s themes as “upheaval” and “uncertainties.” To alleviate some uncertainties, she reported that ICC USA is appointing new arbitrators, training them in cybersecurity and negotiation, and pushing for their database of arbitrators to become more diverse. Tina Cicchetti (Independent Arbitrator and Chair, ICC Canada Arbitration Committee) thanked the panelists and informed the audience about ICC Canada’s networking and educational programs. Marek Krasula concluded the conference and invited everyone to attend the 16th Annual ICC New York Conference on 29 September 2021 – whether online or in person!

[1] ICC International Court of Arbitration, “ICC unveils revised Rules of Arbitration,” 8 October 2020, available from https://iccwbo.org/media-wall/news-speeches/icc-unveils-revised-rules-of-arbitration/. The full 2021 Arbitration Rules, in force 1 January 2021, are available here, subject to editorial correction: https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/rules-of-arbitration-2021/.

[2] United Nations Commission on International Trade Law, United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2018) (the “Singapore Convention on Mediation”), available from https://uncitral.un.org/sites/uncitral.un.org/files/singapore_convention_eng.pdf.

[3] Harris, R. J. (1973). Answering questions containing marked and unmarked adjectives and adverbs. Journal of Experimental Psychology, 97(3), 399–401. https://doi.org/10.1037/h0034165

[4] International Bar Association Arbitration Committee, IBA Guidelines on Party Representation in International Arbitration, IBA Council, 25 May 2013, available from https://www.ibanet.org/Document/Default.aspx?DocumentUid=6F0C57D7-E7A0-43AF-B76E-714D9FE74D7F.

[5] University of Rochester, “Can you tell when someone is lying to you?” YouTube, 22 May 2018, available from https://www.youtube.com/watch?v=Jfli-6Q-13Q.