Module 9

MODULE 9
ARBITRATION & ALTERNATIVE DISPUTE RESOLUTION

9.1 INTRODUCTION

Law is the command of the sovereign. It controls the working of public policies, it
regulates the working of each and every known organization, it provides statutes for the
lubricated and friction-less working of the state departments, it codifies the way and the
correct/ dignified path to the resolution of personal matters as well. However people
consider law as an object of scorn and fear, the try to shun courts, they would rather live
with their problems instead of moving to any said court for seeking justice. The following
are the main reasons so as to why people tend to vary from the idea of addressing their
problems in a court of law: -1

That, the legal proceedings are costly and time consuming, the so-called justice
is delivered after mass of, hopelessly complex, and procedures are followed.

That, legal cases often tend to differ from the main idea or the main issue
involved in a dispute.

That, legal practitioners are more concerned about their fees and winning the
case instead of being concerned about finding the truth or solutions to the said
issues and problems.

That, the legal procedures often tend to increase the areas of conflict between
the parties instead of resolving the issues placed in front of them. The
aforementioned reasons tend to force people to find alternate ways of
addressing their problems and therefore they follow the Alternate Dispute
Resolution System of Arbitration, Mediation and, or Conciliation.



1 http://www.lawyersclubindia.com/articles/Merits-and-Demerits-of-the-Alternative-Dispute-Resolution-
System-5225.asp author: - Rishabh Raj

Alternate dispute resolution system, as the name suggests, is an alternate way of
resolution of disputes, issues in some cases, which a person/ legal person/corporation
may encounter.

Alternate dispute resolution system (herein after referred to as ADR) is defined in various
ways. The National Alternative Dispute Resolution Advisory Council (herein after
referred to as NADRAC, headquarters of which are in Melbourne, Australia) has defined
ADR as an ‘umbrella term for processes, other than judicial determination, in which an
impartial person assists those in a dispute to resolve the issues between them’. There are a
variety of ‘alternative’ means by which judicial officers may involve independent third
parties to assist in the resolution of cases that are being litigated. ADR techniques may be
used to determine some or all of the legal and factual issues in dispute. Some ‘hybrid’
ADR methodologies may involve a combination of different techniques or processes. In
cases, which are the subject of litigation in courts, ADR may be employed by agreement
between the parties, at the suggestion of the court or by direction or order of the court.
Sometimes the term ADR includes approaches that enable parties to manage and resolve
their own disputes without outside assistance.1

ADR is increasingly referred to as ‘appropriate dispute resolution’, in recognition of the
fact that such approaches are often not just an alternative to litigation, but may be the
most appropriate way to resolve a dispute’.2

9.2 TYPES OF ADR

The NADRAC have very prominently classified dispute resolution processes as
facilitative, advisory, determinative or hybrid.3

Facilitative processes: the dispute resolution practitioner assists the parties to a dispute to
identify the issues in dispute, develop options, consider alternatives and endeavor to
reach an agreement about some issues or the whole of the dispute. Facilitative processes



2 Department of Justice, Victoria, New Directions for the Victorian Justice System 2004–2014: Attorney-
General’s Justice Statement (2004) 33.
3 National Alternative Dispute Resolution Advisory Council, Dispute Resolution Terms (2003).

include negotiation, facilitation, conferencing and mediation.4

Advisory processes: the dispute resolution practitioner considers and appraises the
dispute and provides advice as to the facts of the dispute, the law and, in some cases,
possible or desirable outcomes, and how these may be achieved. Advisory processes
include expert appraisal, case appraisal, case presentation, mini-trial and early neutral
evaluation.5

Determinative processes: the dispute resolution practitioner evaluates the dispute (which
may include the hearing of formal evidence from the parties) and makes a determination.
Examples of determinative dispute resolution processes are arbitration, expert
determination and private judging.6

Hybrid Processes: the dispute resolution practitioner plays multiple roles. For example,
in conciliation and in conferencing, the dispute resolution practitioner may facilitate
discussions as well as provide advice on the merits of the dispute. In hybrid processes,
such as mediation-arbitration, the practitioner first uses one process (mediation) and then
a different one (arbitration).7

9.2.1 MINIATURE TRIAL:8

Distinct from any other ADR method, a Mini-Trial involves the top decision makers of
the corporations having a dispute by engaging them in the presentation of their respective
cases and the subsequent negotiating process. A mini-trial is generally not a binding
method unless the parties agree otherwise. The top executives representing each of the
businesses having a dispute hear their own attorneys argue their respective cases as if it
were a conventional trial. These executives sit in a panel of three, the third member being
a neutral, independent counselor, previously chosen by the parties themselves from a


4 Ibid.
5 Ibid.
6 Ibid.
7 Ibid.
8 adrresources.com/adr-methods/mini-trial#sthash.TwoLWPCq.dpuf

panel who acts as moderator of the process, as a judge would. The neutral counselor may
act as a mediator or conciliator after the case has been presented to help the executives
reach a mutually satisfactory settlement. While Mini-Trial rules and procedures are
nowhere as strict as applicable rules of evidence or procedure in a regular court trial, a
meaningful exchange of documentation between the parties will always contribute to
strengthening confidence in the process, thereby encouraging a fruitful dialogue on
settlement options between the executives involved in the process. However, protocols
for the exchange of documentation are agreed to by the parties prior to the
commencement of the Mini-Trial. Both parties must be represented by legal counsel.
The independent counselor acting as President of the Panel must be a licensed practicing
attorney, and his functions are limited to:

Managing the bureaucratic aspect of the process in accordance with a provider's
Mini-Trial procedures;
Issuing a report based on the argument of counsel for the parties, which details the
likely outcome of the controversy in a court of law in his own professional
opinion;
Engaging the acting executives in a settlement negotiation based on the offers for
settlement previously advanced by each executive to the other;
Assisting the executives in their negotiating process.

9.2.1.1 THE PROCESS

Both parties present their respective arguments in writing at a time set by the neutral to
do so. At a minimum, written arguments set forth both factual and legal arguments
supported by whatever evidence they deem appropriate. The neutral sets a date for a
hearing where the presence of counsel for the parties and the top decision makers of each
company will be required. The attorney for each party presents his client’s case in an
abbreviated manner previously arranged by the parties with the assistance of the neutral
as set forth in the provider's procedures. After having heard counsel’s arguments, the
executives commence settlement negotiations with the aid of the neutral acting as a
mediator. If the executives are unable to reach an agreement, the neutral counselor writes

an independent report describing the likely outcome of the matter, were it tried before a
regular court of law. Said report generally contains his recommendations for a settlement
of the issues presented. In accordance with most procedures, the executives meet a
second time to continue assisted negotiations based on the neutral’s report after having
been afforded an opportunity to consult with their respective legal counsel. If this second
stage fails to produce a settlement, then the parties may abandon the process, or they may
present their respective final settlement offers to each other through the neutral. Should
the parties opt to present final proposals, the neutral issues a second and final report
containing his recommendations to each of the parties individually. If no agreement is
reached at this stage, the Mini-Trial may be deemed concluded, and the parties are free to
explore additional ADR options.

9.3 ARBITRATION:9

Arbitration is one of many ADR mechanisms through which two or more parties may
obtain a final and binding resolution to their dispute by an expert and independent
professional of their own choice.

For the arbitration process to be legally valid and ultimately binding, the parties must
agree to using arbitration of their own free will and must signify their resolve to abide by
and perform the award of the arbitrator.

While simpler than traditional litigation, the arbitration process may appear complex to
the uninitiated. Most arbitration rules contain several dozen articles regulating the process
from initiation to the delivery of the award to the parties. Between initiation and award,
the process may not necessarily take place as smoothly as one may anticipate for a
number of reasons unique to each case.

While most arbitration laws and rules allow parties to arbitrate unrepresented, they
should seriously consider engaging expert counsel to guide them through the process.


9 adrresources.com/adr-methods/arbitration#sthash.tCh2SYXa.dpuf

Mistakes made as a result of unfamiliarity with procedure and/or law cannot easily be
cured after an award is rendered. Not having been represented by legal counsel does not
constitute a ground in and of itself to vacate an arbitral award
Arbitration has two distinct modalities, that is, institutional and ad hoc.

9.3.1 INSTITUTIONAL ARBITRATION

This occurs when the parties name an ADR provider in their agreement who administers
the entire process in accordance with a set of rules.

Institutional arbitration is appropriate for parties not familiarized with arbitration in
general or with arbitration practice and law in a given jurisdiction. The advantage of
choosing a reputable ADR services provider resides in their expertise and knowledge of
procedure and applicable law, and also in the fact that it appoints reputable, experienced
and trained neutrals in accordance with a known set of guidelines or rules. The
disadvantage is the cost of providing the service, which can be substantial depending on
the nature of the dispute.

9.3.2 AD HOC ARBITRATION

This is administered by the arbitrator himself or through a secretary who performs
bureaucratic duties directly under the supervision and responsibility of the named
arbitrator.

Ad hoc arbitration is employed in some occasions by experienced corporations and
counsel who trust a specific individual and therefore name him/her to hear a controversy
and administer the case. By choosing ad hoc arbitration, parties eliminate the cost of
having the dispute administered by an ADR service provider. Also, parties are able to
choose suitable neutrals not necessarily affiliated with a particular case administering
institution. The disadvantage occurs when the neutral, while an expert in a particular area

of the law, is not a competent case administrator as well.

Additionally, arbitration may take place in equity or at law. Arbitration at law can only
take place before a licensed, practicing attorney who must reason the award in
accordance with the law. Equity arbitration allows any professional to act as an arbitrator,
rendering an award based on trade/industry usage and practice.

9.4 INTERNATIONAL STANDARDS

9.4.1 POSITION OF ADR IN AUSTRALIA

Mediation is the main form of ADR used in Australian Courts (Victorian). The Victorian
Courts refer cases to conferences, which are normally pre hearing conferences,
conciliation and sometimes arbitration. Mediation is a process in which the conflicting
parties discuss, formulate and reach to a conclusion with the help of a mediating person
known as the mediator. The mediator does not decide or advise, he has no advisory role
in the proceedings. He, however, does advise on determining the process of mediation.
Mediation can be followed voluntarily, by the order of the Hon’ble Court and or
existing contractual agreement.10

The Supreme, the Magistrates’ and the County Courts have the right to order any part of
the proceeding or all of the proceeding to mediation, with or without the consent of the
parties.11

9.4.2 POSITION OF ADR IN UNITED STATES - CALIFORNIA

The California Code of Civil Procedure sets out extensive provisions regarding the
appointment of a referee, including when and how a referee is appointed and how
referees are paid.

When the parties to a contract have voluntarily agreed that any dispute between them will


10 National Dispute Resolution Advisory Council, Dispute Resolution terms (2006).
11 Supreme Court (General Civil Procedure) Rules 2005 r 50.07(1), County Court Act 1958 s 47A,
Magistrates’ Court Act 1989 s 108 (1), Magistrates’ Court Civil Procedure Rules 1999 r 22A.01.

be resolved by judicial reference, the court will appoint a referee to hear and determine
any or all of the issues in an action or proceeding, whether of fact or of law’ and to issue
a decision.12 A referee may also be appointed by agreement between the parties or, if
they cannot agree, by the court.13 The parties may choose a referee. If chosen by the
parties, the referee can be any person mutually acceptable to them and does not need to
be a judge or a lawyer. If the court is required to select a referee, it must obtain up to
three nominees from each party and then choose from among those nominees one that a
party has not objected to.14

9.5 THE ASSOCIATION FOR INTERNATIONAL ARBITRATION15

The Association for International Arbitration (AIA) is a non-profit organization, devised
in Paris in 2001 by Johan Billiet. The Association for International Arbitration has an
aggregate number of members among arbitrators and mediators of intercontinental
backgrounds.

The Association was established with the aim of simplifying arbitration, mediation and
broad-spectrum basis of dispute resolution internationally. Today, the AIA has urbanized
into an organization dealing in the private international law field to meet the requisites of
the fast-growing evolution of dispute resolution within the international community. AIA
provides information, training and educational accomplishments to expand the promotion
of arbitration and ADR globally by means of securing partnerships with assorted
organizations and parties to get involved in the life of the overtone. The association
constantly works to develop partnerships in the international realm and to provide the
international community of arbitrators and ADR authorities with continuous exposure to
the latest international developments, activities and breaks in the field.

9.6 POSITION OF ADR IN INDIA



12 California Code of Civil Procedure (Cal. Code of Civ. Proc.) 638.
13 Cal. Code of Civ. Proc. 638.
14 Cal. Code of Civ. Proc. 640.
15 Rishab Raj, Merits and demerits of Alternate Dispute Resolution system,
http://www.lawyersclubindia.com/articles/Merits-and-Demerits-of-the-Alternative-Dispute-Resolution-
System-5225.asp

Section 89 of the Code of Civil Procedure, 1908 talks about “Settlement of disputes
outside the court”. The contents of the said section are as follows:16

Where it appears to the court that there exists elements of a settlement which may be
acceptable to the parties, the Court shall formulate the terms of settlement and give them
to the parties for their observations and after receiving the observations of the parties,
the court may reformulate the terms of a possible settlement and refer the same for-

(a) Arbitration; (b) conciliation ; (c) judicial settlement including settlement through Lok
Adalat; or (d) mediation.

9.7 WHERE ADR CAN BE USED – EXAMPLE:

9.7.1 ALTERNATIVE DISPUTE RESOLUTION SYSTEM AND
INTELLECTUAL PROPERTY

In the recent past, the value of Intellectual Property and the rights associated with it have
increased several folds. The globalization of information shall be associated as the chief
cause of the same. Digitalization can also be associated with the increase in the value of
information and can be placed on the same footing as globalization. ADR is fast
becoming the actual tool for resolution of disputes rather than being the alternative one.

Enforcement of rights conferred under Intellectual Property are getting difficult to be
enforced with the passage of time. High legal proceeding costs and extended period of
litigation is forcing parties in an Intellectual Property dispute to turn towards ADR.

ADR is perhaps most required in the field of Intellectual Property than in any other field.

Reasons for rise of ADR in Intellectual Property Issues.

The acceleration effect.


16 S. 89 (1), C.P.C. 1908.

The digitalization effect.17
The complexity effect.18
The multi-jurisdictional effect.
The trademark and Private Standards.

The acceleration effect:

Both globalization and Information Age Technology have accelerated the pace of
innovation and creative expression, which in turn force IP rights to be generated at a
particularly faster rate. However, the increase in the generation rate of such rights, legal
systems have a number of problems in enforcement of each and every of such right.

The Digitalization effect:

The digitalization of information means that the cost of copying a particular piece of
information, after it was processed and innovated in the inception stages, is virtually zero,
which would in turn lead to the original creator being distressed for he will have no way
of competing with the ‘virtually-zero’ price tag of the distribution and copying of the said
material.

Digitalization has done nothing but made the illicit infringement easier and highly
profitable. This in turn makes the artists vulnerable to more and high rate of exploitation.

The Complexity effect:

Excessive costs of infringement cases increase seven fold in proportion to the excessive
time needed to explain to the courts/ tribunals the technical issues of the case for
Intellectual Property now is more or less a part of IT.



17 ipo.gov.uk/ipresearch-economics-201005.pdf
18 colorado.edu/economics/mcguire/workingpapers/cwrurev.doc

The Multi-Jurisdictional effect:

Globalization has been, in a way, able to bind people of different countries on paper in
the form of contracts. IP contracts normally attract a lot of rights, which, in case of an
international agreement, spill across the face of different countries, and thus the question
of jurisdiction of courts of a particular country is always persistent. Each country,
therefore, wants the veto of the application or denial of such rights as and when the issue
arises in front of the tribunal of the country of a contracting party.

The trademarks and Private Standards effect:

Assurance given to the customers in respect of the products they purchase has affected
the pace and parcel of globalization to a small but significant effect. The skeleton use of a
trade mark is to inform the purchaser about the source of the product whereas behind the
said trademark lies unspoken assurances of the quality as well as the conditions of the
product’s manufacturer and even safety concerns. However due to the globalization of
the product distribution, trademark infringement has taken its toll.

9.7.1.1 ADR IN COMMERCIAL COPYRIGHT AND SOFTWARE DISPUTES

A copyright dispute typically involves the issue of whether or not an infringing party has
infringed a copyright.19 A key issue in such a dispute is usually the question of whether
the infringer has unlawfully "copied" or derived his own work from a work protected by
copyright. The dispute typically involves weighing the evidence of the infringing party's
access to the original work and the degree of substantial similarity between the particular
expressions of the original work and the infringing party's work.20

Usually, the case arises in a less-than-exact setting, for example, consider the situation
where the author of a book sues a movie company alleging that a movie infringed his



19 Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 837 (Fed. Cir. 1992); see also Jessica Litman,
Copyright As Myth, 53 U. Pitt. L. Rev. 235 (1991).
20 Atari Games, 975 F.2d at 844.

copyright in the book, or a writer of an old song sues the writer of a new song alleging
that the other writer copied his song. Normally, of course, the name of the infringer's
work and any characters, as well as the setting, plot and words, are not identical to their
purported counterparts in the earlier work. If such were the case, the dispute would in all
likelihood be settled quickly. Accordingly, the arbiter of the dispute must decide whether
the accused party copied the expression fixed in the earlier work. This is accomplished by
examining the accused author's access to the earlier work; and the degree of similarity
between his work and the earlier work. A strong determination on the first element will
mitigate the need to find a strong showing on the second.21

Copyright cases are not technical and are usually fairly constrained in scope and
complexity. Rarely do these cases require extensive discovery or documentation. Because
similarity is viewed from the perspective of the "ordinary observer", no particular
expertise is required or appropriate for deciding these types of cases.22

Accordingly, these cases often are amenable to resolution through ADR, but no more or
less so than most of the relatively straightforward commercial disputes. Although
involving more complicated subject matter, disputes involving duplication or derivation
of computer software and other highly technical issues can also be appropriate candidates
for ADR. As parties recognize the benefit of utilizing an arbiter with a particular
technical background and ability to understand the subject matter at hand, ADR becomes
a more attractive means of resolution. ADR also provides the parties with the opportunity
for far greater protection of trade secrets and other proprietary or sensitive information
during the proceedings itself. Unlike a trial, ADR allows the parties to determine for
themselves the degree to which such information will or will not be made publicly
available. This would likely be considered a substantial advantage in disputes regarding
computer software, for example, where continued confidentiality is often a primary
concern.23

9.7.1.2 ADR IN COMMERCIAL PATENT DISPUTES


21 Shaw v. Lindheim, 919 F.2d 1353, 1361 (9th Cir. 1990).
22 Hupp v. Siroflex of Am., Inc., 122 F.3d 1456, 1464 (Fed. Cir. 1997).
23 Jay E. Grenig, Alternative Dispute Resolution § 1.2 (2d ed. 1997 & Supp. 1998).

Patent disputes, especially those involving complex technological issues, are often
particularly well suited for resolution through ADR. For instance, an arbitrator selected
by the parties may be better situated to address the technical aspects of an invention.
Resolving a patent dispute involves addressing the patent's validity and subsequent
infringement. To address these issues, the decision maker must examine the technical
aspects of the patent, including the claims and specification from the perspective of a
person "skilled in the art" of the patent's subject matter. Because many of the patents
issued and involved in litigation today deal with biotechnology, pharmaceuticals,
computer hardware and software (often referred to as "high technology"), the ability to
select a neutral arbitrator, with training sufficient to understand the subject matter at
issue, can prove a considerable advantage.24

In cases presenting a more "level playing field" between disputants, many of the typical
advantages of ADR over litigation simply become more prominent. Both sides may
appreciate the ability to control substantially the amount of time, effort, intrusion and
expense of the litigation. For example, an average patent dispute arbitration rarely
exceeds 12 to 15 months, and often concludes within six months. Also, since many such
patent cases do not require that only one party may be deemed the victor, both parties
may appreciate the opportunity to use ADR instead of litigation as a way to find the
appropriate middle ground. For example, a mutually agreeable license arrangement
benefits both parties and may be preferable to an all or nothing outcome.25

Lastly, patent litigation has a well-deserved reputation for being costly. In patent cases,
attorney fees easily can 'go through the roof'. ADR allows parties to resolve their disputes
in a more efficient manner, without significantly depleting their budgets. One expert said
that arbitration, conducted with skill and experience, should cost less than 50 per cent of
a patent infringement suit. As ADR is becoming more popular in patent disputes, specific
materials are now available to assist the practitioner, ensuring a more successful



24 E.g. Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1579 (Fed. Cir. 1996).
25 John R. Kahn, Negotiation, Mediation and Arbitration in the Computer Program Industry: Why play
hardball with software?, pt. III.B (1989).

process.26
9.7.1.3 ADVANTAGES OF ADR IN IP:27
Alternative dispute resolution (ADR) procedures offer several advantages:

A single procedure. Through ADR, the parties can agree to resolve in a single
procedure a dispute involving intellectual property that is protected in a number of
different countries, thereby avoiding the expense and complexity of multi-
jurisdictional litigation, and the risk of inconsistent results.

Party autonomy. Because of its private nature, ADR affords parties the
opportunity to exercise greater control over the way their dispute is resolved than
would be the case in court litigation. In contrast to court litigation, the parties
themselves may select the most appropriate decision-makers for their dispute. In
addition, they may choose the applicable law, place and language of the
proceedings. Increased party autonomy can also result in a faster process, as
parties are free to devise the most efficient procedures for their dispute. This can
result in material cost savings.

Neutrality. ADR can be neutral to the law, language and institutional
culture of the parties, thereby avoiding any home court advantage that one of the
parties may enjoy in court-based litigation, where familiarity with the applicable
law and local processes can offer significant strategic advantages.

Confidentiality. ADR proceedings are private. Accordingly, the parties can
agree to keep the proceedings and any results confidential. This allows them to
focus on the merits of the dispute without concern about its public impact, and
may be of special importance where commercial reputations and trade secrets are
involved.


26 Tom Arnold, Contracts to Arbitrate Patent and Other Commercial Disputes, CPR's Alternatives to the
High Cost of Litigation, December, 1992.
27 http://www.wipo.int/amc/en/center/advantages.html

Finality of Awards. Unlike court decisions, which can generally be
contested through one or more rounds of litigation, arbitral awards are not
normally subject to appeal.

Enforceability of Awards. The United Nations Convention for the
Recognition and Enforcement of Foreign Arbitral Awards of 1958, known as the
New York Convention, generally provides for the recognition of arbitral awards
on par with domestic court judgments without review on the merits. This greatly
facilitates the enforcement of awards across borders.

There are, of course, circumstances in which court litigation is preferable to ADR. For
example, ADR's consensual nature makes it less appropriate if one of the two parties is
extremely uncooperative, which may occur in the context of an extra-contractual
infringement dispute. In addition, a court judgment will be preferable if, in order to
clarify its rights, a party seeks to establish a public legal precedent rather than an award
that is limited to the relationship between the parties. In any event, it is important that
potential parties, and their advisors are aware of their dispute resolution options in order
to be able to choose the procedure that best fits their needs.

9.7.2 CASE LAW:

Morgan Freeman v. Mighty LLC 28
This involved Morgan Freeman’s name which was used in a domain name and linked to
an entertainment site, which apparently sold Viagra. Mr Freeman sent demand letters to
the cyber squatter requiring the transfer of the domain name to him.

The domain name at issue was identical to Mr Freeman’s MORGAN FREEMAN
trademark except for the “.com” suffix which was found not to be sufficient to serve as a
distinguishing feature.

The panel found that Mr Freeman had strong common law trademark rights in MORGAN



28 WIP Case No. D2005-0263.

FREEMAN based on his extensive use of the name in connection with his career in the
entertainment business for more than 40 years. While the name was not registered as a
trademark, he was able to rely on common law rights in the name built up over a number
of years.

The domain name was registered after Mr Freeman had established strong rights in his
name and mark and there was no contractual relationship arising between the parties as
regards a license allowing the cyber squatter to use the name legitimately.

The panel agreed with Mr Freeman’s argument that the mark was so well known that it
was not reasonably possible for the cyber squatter to demonstrate any legitimate interest
in the domain name. The cyber squatter was held to have registered and used the domain
name in bad faith.

A WIPO Software Trademark Arbitration: 29

A North-American software developer had registered a trademark for communication
software in the United States and Canada. A manufacturer of computer hardware based
elsewhere registered an almost identical mark for computer hardware in a number of
Asian countries. Both parties had been engaged in legal proceedings in various
jurisdictions concerning the registration and use of their marks. Each party had
effectively prevented the other from registering or using its mark in the jurisdictions in
which it holds prior rights. In order to facilitate the use and registration of their
respective marks worldwide, the parties entered into a coexistence agreement which
contains a WIPO arbitration clause. When the North-American company tried to register
its trademark in a particular Asian country, the application was refused because of a risk
of confusion with the prior mark held by the other party. The North-American company
requested that the other party undertake any efforts to enable it to register its mark in that
Asian country and, when the other party refused, initiated arbitration proceedings.



29 http://www.wipo.int/amc/en/arbitration/case-example.html

Following proposals made by the Center, the parties appointed a leading IP lawyer as
sole arbitrator. In an interim award the sole arbitrator gave effect to the consensual
solution suggested by the parties, which provided for the granting by the hardware
manufacturer of a license on appropriate terms to the North-American company,
including an obligation to provide periodic reports to the other party.

A WIPO Pharma Patent License Arbitration30

A French pharmaceutical research and development company licensed know-how and
patented pharmaceuticals to another French company. The license agreement includes an
arbitration clause that provides that any dispute will be resolved under the WIPO
Arbitration Rules by an arbitral tribunal consisting of three members in accordance with
French law. Faced with the licensee’s apparent refusal to pay the license fee, the R&D
company initiated arbitration proceedings.

A WIPO Expedited Arbitration of a Trademark Coexistence Dispute31

A European company had registered a trademark for luxury goods in different countries.
An Asian manufacturer started to sell fashion products under a similar registered
trademark. The Asian company filed a court case and administrative cancellation
proceedings in two European countries alleging non-use by the European company of its
trademark. After the court case went to appeal, the parties settled their dispute by
concluding a trademark coexistence agreement which included a WIPO expedited
arbitration clause. When the European company used its trademark in a trade fair, the
Asian company initiated WIPO expedited arbitration proceedings claiming infringement
of the coexistence agreement.

Following consultations between the parties and the Center, a European trademark
specialist was appointed as sole arbitrator. After two rounds of pleadings, the arbitrator


30 ibid
31 Ibid

conducted a one-day hearing in Munich (Germany) and issued an award six months after
the commencement of the proceedings. Finding partial infringement of the coexistence
agreement, the arbitrator granted the primary remedy claimed and ordered the European
company to refrain from such infringing behavior.

A WIPO Patent License Arbitration32

A European inventor holding patents in Australia, Canada, Europe and the United States
licensed patent rights and know-how to an Asian company. The license contained a
WIPO arbitration clause providing for a three-member tribunal.
The parties disagreed on who should pay the renewal fees of the patents. Eventually the
Asian company terminated the license whereupon the European inventor filed a request
for arbitration, claiming damages and requesting a declaration that he was free to use the
patents.

The three arbitrators appointed possessed substantial IP expertise and the necessary
language skills allowing them to consider evidence in different languages.

Following a series of evidentiary exchanges, the tribunal rendered an award 14 months
after commencement of the arbitration. Finding that the Asian company had not been
entitled to terminate the contract as it did, the tribunal ordered it to pay damages and to
return to the inventor the prototypes, plans and documents that had been communicated
in the context of the license.

9.8 ADR METHODS IN GENERAL

There are multiple solutions to one single issue but choosing the best possible alternative
for any particular situation, strictly depends upon the nature of the said issue. Some of the
general methods are discussed herein under.



32 Ibid.

Prevention:

To avoid and control costly disputes, contracting parties are increasingly employing
various preventive techniques. These include incentives to encourage cooperation,
equitable risk allocation, partnering, standing neutrals and collaborative lawyering. They
are also using early resolution devices such as litigation pre-nups, step negotiations and
expert non-binding evaluations.33

Yet another intermediary, who can help in the prevention of multiple issues, would be the
in-house counsel. The in-house counsels will always find/ try to find ways of the
resolution of dispute outside the court and therefore his psychology will always ascertain
of prevention of the issue, which might lead to a suit in near future. For such kind of
prevention, the contracts will determine the fate of the said strategy. Deciding upon costs
and damages in the initial stages always prevent greater loss later on.

Adjudication:34

Adjudication involves an independent third party who considers the claims of both sides
and makes a decision. The adjudicator is usually an expert in the subject matter in
dispute. Also, adjudicators are not bound by the rules of litigation or arbitration. Their
decisions are often interim ones, i.e., they can be finalized using arbitration or another
binding process.
Adjudication decisions are usually binding on both parties by prior agreement. In other
words, adjudication is generally binding for an interim period of time in order to resolve a
dispute quickly, but the specific issues settled may be arbitrated at a later time at the
request of a party for a definitive binding solution.

Adjudication offers immediate, binding and affordable relief, win or lose, with the


33 http://www.cpradr.org/Resources/ALLCPRArticles/tabid/265/ID/743/Innovative-Alternative-Dispute-
Prevention-and-Early-Resolution-Techniques-Practical-Law-Company.aspx
34 adrresources.com/adr-methods/adjudication#sthash.vwrqoyac.dpuf

opportunity of later revisiting contested issues in arbitration.

Negotiation:35

Negotiation is the “simplest” and oldest ADR technique. Negotiation is technically an
ADR mechanism because it occurs without the intervention of the Judiciary or any third
neutral party.

Negotiation techniques vary from person to person, country, and jurisdiction. For this
very reason it is advisable to familiarize oneself with local customs before engaging in
bilateral or multilateral negotiations without the aid of a facilitator.

Hybrid Procedures (Mediation/Arbitration):36

As its very name indicates, Med/Arb employs mediation first; then arbitration.

First, the parties submit their dispute to mediation before a mutually acceptable mediator.
If an issue remains unresolved after mediation (or a number of issues), then the mediator
acts as an arbitrator to resolve outstanding issues on a binding basis through an award.
Generally, the award contains both mediated/settled issues, as well as, of course, the
issues that had to be submitted to binding arbitration.

It isn’t all that frequent to find Med/Arb clauses in commercial contracts. However,
multi-tier dispute settlement strategies are gaining corporate favor.

Inherent to Med/Arb is the fact that the mediator is also the arbitrator if need be.
Although this person’s independence from the parties may be objectively established, it is


35 adrresources.com/adr-methods/negotiation#sthash.eb3sqJzA.dpuf
36 adrresources.com/adr-methods/med-arb#sthash.3GKSJTP3.dpuf

not so easy to guarantee his/her impartiality as an arbitrator having previously mediated
between the parties. Additionally, some jurisdictions expressly prohibit mediators from
acting as arbitrators in the same matter.

Neutral Evaluation:37

The concept of neutral evaluation may be summarized as a process through which the
parties may obtain an initial expert and neutral assessment of the merits of their
respective cases at the very initial stage of a dispute, as well as an independent
recommendation regarding settlement options. Neutral evaluation, therefore, intends to:

Ø Restore or facilitate communication between the parties on the basis of the
analysis and recommendations of the expert evaluator;

Ø Obtain a highly specialized neutral analysis of each particular dispute submitted
to this process;

Ø Help the parties reach lasting agreements.

Neutral Evaluation is suitable for any business having a dispute with another regarding
their contractual rights and obligations.

9.9 THE PROCESS

The process is initiated as a result of a joint filing by the parties submitting to neutral
evaluation. Once appointed, the evaluator will set the date for the parties to submit
documentation and written arguments. The oral hearing does not generally take the
breadth and dimension of a conventional arbitration hearing. It is less formal and there is
almost never any live expert testimony introduced. It does, however, provide an
opportunity for the parties to comment further on the written arguments presented
beforehand. Given the fact that this technique is generally utilized at the very early stages
of a dispute, the oral hearing usually becomes the first time that the disputants meet face
to face with their respective counsel. Generally, the neutral evaluator will solicit written
conclusions once the parties have been exposed for the first time to the arguments of the



37 adrresources.com/adr-methods/neutral-evaluation#sthash.zvgV6P3E.dpuf

other regarding perceived facts and applicable law. Within a specified time period from
the date of the submission of written conclusions, the evaluator presents a written report
commenting on the merits of each party’s case. This report also contains the neutral's
own recommendations regarding a settlement of the dispute.

Confidentiality and Impartiality

All evaluators must be impartial and they must document their impartiality with regard to
the parties involved.

Evaluator

The evaluator is the professional who will hear the parties' arguments, but he is not
empowered to render a decision enforceable upon the parties. Evaluators are
professionals engaged in diverse professional activities. Evaluators may be licensed
practicing attorneys or not. This is the parties' choice entirely. However, if the parties
expressly wish an analysis of legal issues or consequences, then the evaluator will be a
practicing attorney. Regarding the report submitted by the evaluator to the parties, each
professional will apply, at a minimum, the standards of practice governing his profession.

9.10 CHECKLISTS

Checklist of areas to consider.

1. Method of Alternate Dispute Resolution System: Choosing the apt resolution scheme
often leads to a successful arbitration.

2. Option clauses: Parties sometimes wish to provide an option for one or more parties to
choose between referring a dispute to arbitration or the courts. The party including such
clause must always weigh down the exceptions in case the other party takes on either of
the options given to them.

3. The capacity and/ or authority of the signatories: The Signatory power/ authority of the
signatories involved in any such mechanism should be confirmed and checked. For
purpose of illustration, some specific laws require governmental entities (tribunals and
the like) to obtain parliamentary (or other as necessary) approval before executing an
arbitration (arbitrator) agreement.

4. Mandatory requirements: The rule of the land talking about the said/ related
proceeding, the governing law of the arbitration proceeding and any such guideline
issued by any authority authorized to do so should be considered thoroughly.

Arbitrators have to follow certain procedures to ensure that their decisions are not
overturned and thereby leading to increased costs for the parties concerned. The parties
can also ensure the following has been followed. 38

Introduction of all the participants.
Explain the adjudicatory nature of the proceeding and his/her background as an
unbiased attorney approved by the court and local bar.
Take stipulations.
Swear in witnesses.
Allow all sides to present relevant information.
Make a determination based solely on the evidence presented and either call a “no
cause” or award full value.
Complete the written award ensuring that brief findings of fact and conclusions of
law are included and that the absence of parties, or relevant evidence, or of items
of incomplete discovery is noted.
Absent exceptional circumstances, deliver the award in the presence of the
parties.
If the arbitrator conducts a settlement conference prior to rendering a decision on
the merits of the case, he or she should not continue the arbitration process, but
should instead turn the arbitration over to another arbitrator. Otherwise, the



38 http://www.judiciary.state.nj.us/civil/ChecklistForArbitrators.pdf

arbitrator should not engage in settlement negotiations until after the award form
is completed and only with the parties’ consent.

Some very explicitly state that Alternative Dispute Resolution is the face of modern
litigation and the arbitrators and mediators are the new face of judges, I have no choice
but to agree. Piles after piles of cases being filed over every small detail in life. Such
details including petty thefts and matters of minor violence. Our own ‘comprehensive’
legal system is mostly responsible for such scenario. Globalization and acceleration
knowledge of information, as aforementioned, has led to global contracts, partnerships,
and agreements and so on and so forth. Question to jurisdiction of courts, questions to the
rule of law and law of land have always been scarred in judicial history. Such problems
can only be, as for the present scenario, solved by means of competent alternative
remedies that are supposed to extract the issue and undo it in front of the parties to the
issue.

Alternative dispute resolution offers many distinct advantages. As so eloquently stated by
Abraham Lincoln, part of the role of an attorney is to "persuade your neighbors to
compromise whenever you can. Point out to them how the nominal winner is often a real
loser-in fees, expenses and waste of time."39



39 Quote by Abraham Lincoln.