When Is Conduct ‘Primarily and Substantially’ in Massachusetts Under Chapter 93A?
The District of Massachusetts continues to refine the contours of conduct occurring “primarily and substantially” within the Commonwealth that could give rise to a Chapter 93A Section 11 claim, as illustrated by Pro Sports Servs. FI OY v. Grossman. Courts continue to look at the “center of gravity” of the specific circumstances giving rise to the claim to determine if the conduct occurred “primarily and substantially” in the Commonwealth. In this case, the conduct giving rise to the claim did not occur in Massachusetts, and the claim was dismissed.
Plaintiff brought an action alleging, among other things, a violation of Chapter 93A arising from defendant’s refusal to satisfy an arbitration award. Plaintiff originally contracted with an agency in New York owned by defendant to represent Finnish ice hockey players. After two arbitrations related to the agency’s failure to make certain payments under the contract, plaintiff learned defendant incorporated a new entity in Massachusetts and transferred funds to that entity allegedly to obfuscate and avoid the judgment against it.
Defendant moved to dismiss on the basis that the facts giving rise to the claim occurred outside the Commonwealth. The allegations in the amended complaint connecting the claim to the Commonwealth included (1) a business entity incorporated under the laws of the Commonwealth; (2) the defendant residing in the Commonwealth; (3) the New York entity having the same address as the Commonwealth entity; and (4) the defendant’s allegedly fraudulent transfer of assets from New York to Massachusetts. The court found these facts insufficient. While they provided a connection to Massachusetts, the judgment against the New York entity was obtained in New York. Thus, the substantial conduct giving rise to the Chapter 93A claim occurred outside the Commonwealth and the claim was dismissed.
For At Least One Employer, Reliance on an Outdated Arbitration Agreement Proved to be a Losing Gamble
As we have reported time and again, California courts have applied extra scrutiny to employee arbitration agreements in recent years, and have not hesitated to deny arbitration where there is a reasonable basis for doing so. This trend demands that employers be vigilant and update arbitration agreements when developments in the law implicate them. In the recent case of Ford v. The Silver F, Inc., Cal. Ct. App. 3rd Dist., No. C099133, a casino operator learned the hard way the consequence of rolling the dice with an outdated agreement.
In the wake of Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022), which ruled that employers may compel the “individual” component of a Private Attorneys General Act (PAGA) claim to arbitration under the Federal Arbitration Act, it has become commonplace for trial courts to compel individual PAGA claims to arbitration and stay the non-individual PAGA claims in the meantime. That was precisely what the employer, Parkwest, attempted to do in Ford. Unfortunately for Parkwest, the relevant arbitration agreement was clearly written in a pre-Viking River world and did not contemplate how the law might develop.
Specifically, the Parkwest arbitration agreement stated that it “does not apply” to “claims for workers’ compensation or unemployment compensation, specified administrative complaints, Employment Retirement Income Security Act (ERISA) claims, or, as relevant here, “representative claims under [PAGA].”
The Court of Appeal affirmed the trial court’s denial of Parkwest’s motion to compel arbitration. It rejected Parkwest’s argument that the agreement should be read as excluding only “non-individual” PAGA claims, holding the carveout for “representative claims under [PAGA]” plainly referred to all PAGA claims—especially considering that the case law distinguishing between “individual” and “non-individual” claims actions did not develop until after the agreement was drafted.
While this decision is unpublished and noncitable, it serves as a critical reminder to employers to be vigilant about keeping their arbitration agreements up to date. If we’ve said it once, we’ve said it a thousand times: an arbitration agreement is not something to be gambled with.
SEC Whistleblower Reform Act Reintroduced in Congress
Last Wednesday, March 26, 2025, Senator Grassley (R-IA) and Senator Warren (D-MA) reintroduced the SEC Whistleblower Reform Act. First introduced in 2023, this bipartisan bill aims to restore anti-retaliation protections to whistleblowers who report their concerns within their companies. As upheavals at government agencies dominate the news cycle, whistleblowers might feel discouraged and hesitant about the risks of coming forward to report violations of federal law. This SEC Whistleblower Reform Act would expand protections for these individuals who speak up, and it would implement other changes to bolster the resoundingly successful SEC Whistleblower Program.
The SEC Whistleblower Incentive Program
The SEC Whistleblower Incentive Program (the “Program”) went into effect on July 21, 2010, with the adoption of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The Program has since become an essential tool in the enforcement of securities laws. The program benefits the government, which collects fines from the companies found in violation of federal securities laws; consumers, who benefit from the improvements companies must make to ensure they refrain from, and stop, violating federal law; and the whistleblowers themselves, who can receive awards for the information and assistance they provide. Since its inception, the SEC Whistleblower Program has recouped over $6.3 billion in sanctions, and it has awarded $2.2 billion to 444 individual whistleblowers. In FY 2024 alone, the Commission awarded over $255 million to forty-seven individual whistleblowers.
Under the Program, an individual who voluntarily provides information to the SEC regarding violations of any securities laws that leads to a successful civil enforcement action that results in over $1 million in monetary sanctions is eligible to receive an award of 10–30% of the fines collected. Since the SEC started accepting tips under its whistleblower incentive program in 2010, apart from a dip in 2019, the number of tips submitted to the SEC has steadily increased. In Fiscal Year 2024, the SEC received more than 24,000 whistleblower tips, the most ever received in one year.
Restoring Protections for Internal Whistleblowers
While the SEC Whistleblower Program has been successful by any measure, in 2018, the Supreme Court significantly weakened the Program’s whistleblower protections in Digital Realty Trust v. Somers, 583 U.S. 149 (2018). The Court ruled in Digital Realty that the Dodd-Frank Act’s anti-retaliation protections do not apply to whistleblowers who only report their concerns about securities violations internally, but not directly to the SEC. The decision nullified one of the rules the SEC had adopted in implementing the Program. Because many whistleblowers first report their concerns to supervisors or through internal compliance reporting programs, this has been immensely consequential. The decision has denied a large swath of whistleblowers the protections and remedies of the Dodd-Frank Act, including double backpay, a six-year statute of limitations, and the ability to proceed directly to court.
The bipartisan SEC Whistleblower Reform Act, reintroduced by Senators Grassley and Warren on March 26, 2025, restores the Dodd-Frank Act’s anti-retaliation protections for internal whistleblowers. In particular, the Act expands the definition of “whistleblower” to include:
[A]ny individual who takes, or 2 or more individuals acting jointly who take, an action described . . . , that the individual or 2 or more individuals reasonably believe relates to a violation of any law, rule, or regulation subject to the jurisdiction of the Commission . . . .
. . .
(iv) in providing information regarding any conduct that the whistleblower reasonably believes constitutes a violation of any law, rule, or regulation subject to the jurisdiction of the Commission to—
(I) a person with supervisory authority over the whistleblower at the employer of the whistleblower, if that employer is an entity registered with, or required to be registered with, or otherwise subject to the jurisdiction of, the Commission . . . ; or
(II) another individual working for the employer described in subclause (I) who the whistleblower reasonably believes has the authority to—
(aa) investigate, discover, or terminate the misconduct; or
(bb) take any other action to address the misconduct.
With these changes to the definition of a “whistleblower,” the Act would codify the Program’s anti-retaliation protections for an employee who blows the whistle by reporting only to their employer, and not also to the SEC. Notably, the Act would apply not only to claims filed after the date of enactment, but also to all claims pending in any judicial or administrative forum as of the date of the enactment.
Ending Pre-Dispute Arbitration Agreements for Dodd-Frank Retaliation Claims
Additionally, the SEC Whistleblower Reform Act would render unenforceable any pre-dispute arbitration agreement or any other agreement or condition of employment that waives any rights or remedies provided by the Act and clarifies that claims under the Act are not arbitrable. In other words, retaliation claims under the Dodd-Frank Act must be brought before a court of law and may not be arbitrated, even if an employee signed an arbitration agreement. This would bring Dodd-Frank Act claims into alignment with the Sarbanes-Oxley Act of 2002 (“SOX”), another anti-retaliation protection often applicable to corporate whistleblowers. While the Dodd-Frank Act eliminated pre-dispute arbitration agreements for SOX claims, it included no such arbitration ban for Dodd-Frank claims. As a result, two claims arising from the same underlying conduct often need to be brought in separate forums—arbitration for Dodd-Frank and court for SOX—or an employee must choose between the two remedies.
Reducing Delays in the Program
The SEC Whistleblower Reform Act would also benefit whistleblowers by addressing the long delays that have plagued the Program, which firm partners Debra Katz and Michael Filoromo have urged the SEC to remedy and have written publicly on to raise awareness on this topic In particular, the Act sets deadlines by which the Commission must take certain steps in the whistleblowing process. The Act provides that:
(A)(i) . . . the Commission shall make an initial disposition with respect to a claim submitted by a whistleblower for an award under this section . . . not later than the later of—
(I) the date that is 1 year after the deadline established by the Commission, by rule, for the whistleblower to file the award claim; or
(II) the date that is 1 year after the final resolution of all litigation, including any appeals, concerning the covered action or related action.
These changes are important because SEC whistleblowers currently might expect to wait several years for an initial disposition by the SEC after submitting an award application, and years more for any appeals of the SEC’s decision to conclude. The Act’s amendments set clearer deadlines and expectations for the Commission and would speed up its disposition timeline—and the provision of awards to deserving whistleblowers.
While the Act does provide for exceptions to the new deadline requirements, including detailing the circumstances under which the Commission may extend the deadlines, the Act specifies that the initial extension may only be for 180 days. Any further extension beyond 180 days must meet specified requirements: the Director of the Division of Enforcement of the Commission must determine that “good cause exists” such that the Commission cannot reasonably meet the deadlines, and only then may the Director extend the deadline by one or more additional successive 180-day periods, “only after providing notice to and receiving approval from the Commission.” If such extensions are sought and received, the Act provides that the Director must provide the whistleblower written notification of such extensions.
Conclusion
The SEC Whistleblower Reform Act, which would reinstate anti-retaliation protections for whistleblowers and ensure that the Program runs more efficiently, would be a significant step forward for the enforcement of federal securities laws and for the whistleblowers who play a vital role in those efforts. The bipartisan introduction of the Act is a testament to the crucial nature of the Program.
United States Court of Appeals Enforces Arbitration Agreement Against Third-Party Non-Signatories
Arbitration agreements often seem straightforward—until they unexpectedly bind parties who never signed them. The United States Court of Appeals for the Eleventh Circuit’s recent decision in Various Insurers v. General Electric International, Inc., ___ F.4th ___ (11th Cir. 2025), underscores the reach of arbitration clauses and the courts’ willingness to enforce them against third parties. This case highlights how third-party beneficiaries—and their insurers—can be required to arbitrate disputes, even though they were not signatories to the contract. The ruling is a good reminder for businesses, insurers, and legal practitioners to carefully consider the third-party implications of arbitration clauses when drafting, reviewing, and enforcing international commercial agreements.
Background: Arbitration Battle Following a Catastrophic Failure
The dispute arose from a catastrophic turbine failure at an Algerian power plant owned by Shariket Kahraba Hadjret En Nouss (SKH). SNC-Lavalin Constructeurs International Inc. (SNC) operated the plant on SKH’s behalf pursuant to an Operations and Management Agreement. In turn, SNC had entered a Services Contract with General Electric International (GE) to supply parts and services for the power plant. The Services Contract between SNC and GE International contained an arbitration clause.
Following the turbine failure, various insurers and reinsurers, acting as subrogees of SKH, sued GE International and other General Electric companies in the U.S. State of Georgia’s state-wide business court. GE International and the other General Electric companies removed the case to federal court and then sought to compel arbitration, arguing that SKH was a third-party beneficiary of the Services Contract and, as such, its insurers and reinsurers were also bound by the arbitration clause.
The Eleventh Circuit’s Analysis: Why the Insurers Were Bound to Arbitrate
The central issue was whether SKH, as the power plant’s owner, was a third-party beneficiary of the Services Contract between SNC and GE International. If so, SKH’s subrogated insurers and reinsurers would also be required to arbitrate.
The court applied federal common law to determine SKH’s third-party beneficiary status, to hold that SNC and GE International intended “to grant SKH the benefit of the performance promised” under the Services Contract, and therefore that SKH was indeed a third-party beneficiary.
The key facts about the Services Contract that led the court to that conclusion included the following:
The Services Contract explicitly referenced SKH’s ownership of the power plant and the Operations and Maintenance Agreement between SNC and SKH, including SNC’s obligations to operate and maintain the power plant for SKH’s benefit.
SKH had decision-making authority over certain changes to the power plant’s operations that would trigger GE International’s contractual obligations.
The Services Contract allowed SKH to act unilaterally in order to limit damages and losses during emergencies.
SKH had rights to access certain reports that the Services Contract required GE International to prepare, further evidencing SKH’s direct interest in the contract’s performance.
Because SKH was deemed a third-party beneficiary, the court ruled that its insurers—via subrogation—were also bound by the arbitration clause in the Services Contract. The court distinguished two other federal decisions declining to compel arbitration against third-party beneficiaries where the arbitration clause covered only disputes between the contracting parties.
Delegation of Arbitrability: The Role of ICC Rules
The court then addressed who should decide whether the insurers’ and reinsurers’ specific claims were subject to arbitration, the courts or the arbitrator. The Services Contract incorporated the International Chamber of Commerce (ICC) arbitration rules, which expressly delegate arbitrability decisions to the arbitrator. Citing its own precedent (Terminix Int’l Co., LP v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327 (11th Cir. 2005)), the court found that incorporating the ICC rules was clear evidence that the parties intended to delegate arbitrability decisions to the arbitrator.
This means that the arbitrator, not the court, has to decide which, if any, of the insurers’ and reinsurers’ claims were subject to arbitration.
Key Implications of the Ruling
Contracts should clearly define whether third parties—such as affiliates, subcontractors, and beneficiaries—are bound by arbitration clauses. Manufacturers, suppliers, and distributors should consider whether they are bound by arbitration clauses in vendor contracts they have not signed but for which they could be deemed third-party beneficiaries—or conversely, whether they wish to enforce an arbitration clause against a third party that has not signed it. The same holds true for parties to large-scale construction and engineering contracts involving agreements between multiple stakeholders. Insurers stepping into the shoes of an insured party will normally be bound by the insured’s arbitration obligations, potentially limiting litigation options. And because these issues may depend on which law applies to the arbitration clause, contracts should state that clearly as well.
You can read the court’s full opinion here.
Beltway Buzz, March 28, 2025
The Beltway Buzz™ is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what’s happening in Washington, D.C., could impact your business.
FMCS Cuts Staff Dramatically. Following through on President Donald Trump’s executive order, “Continuing the Reduction of the Federal Bureaucracy,” which we recently examined here at the Buzz, this week, the administration all but shut down the Federal Mediation and Conciliation Service (FMCS). FMCS is an independent agency established by the U.S. Congress in the Taft-Hartley Act of 1947 “to prevent or minimize interruptions of the free flow of commerce growing out of labor disputes, to assist parties to labor disputes in industries affecting commerce to settle such disputes through conciliation and mediation.” FMCS will reportedly retain approximately 15 employees—down from the 220 employees it maintained in 2024.
Personnel News. There were significant developments this week on the agency personnel front as President Trump seeks to install his political appointees at executive branch agencies. For example:
NLRB. Today, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit, in a 2–1 decision, ruled that President Trump was permitted to remove Gwynne Wilcox, a President Biden–appointed member of the National Labor Relations Board (NLRB), whose five-year term expires on August 27, 2028. A lower-court judge had issued a decision preventing the president from removing Wilcox without cause, but today’s appellate court ruling lifts the injunction while the litigation proceeds. The case will likely reach the Supreme Court of the United States.
EEOC. President Trump nominated Andrea Lucas, currently the acting chair of the U.S. Equal Employment Opportunity Commission (EEOC), to another five-year term on the Commission. Lucas has served as a commissioner since 2020, and her current term will expire on July 1, 2025. The Commission currently consists of Lucas and Democratic Commissioner Kalpana Kotagal, with three vacancies.
OFCCP Director. President Trump appointed management-side attorney Catherine Eschbach to serve as the director of the Office of Federal Contract Compliance Programs (OFCCP). The position does not need Senate confirmation, so Eschbach will immediately replace Acting Director Michael Schloss. With the revocation of Executive Order (EO) 11246, OFCCP now only enforces affirmative action and discrimination laws related to veterans and workers with disabilities. According to some media reports, Eschbach will lead the effort at OFCCP to review already-submitted affirmative action plans for potential discrimination. Lauren B. Hicks and T. Scott Kelly have the details.
Workplace Safety Commissions. President Trump nominated Jonathan Snare to serve on the Occupational Safety and Health Review Commission. Snare was recently appointed deputy solicitor of labor and served in various positions within the DOL from 2003 to 2009. Additionally, the president nominated Marco Rajkovich Jr. to serve on the Federal Mine Safety and Health Review Commission (FMSHRC). Rajkovich chaired the FMSHRC during President Trump’s first term.
DOL Office of Disability Employment Policy. Julie Hocker has been nominated to serve as assistant secretary for disability employment policy at the DOL. Hocker previously served as commissioner of the Administration on Disabilities within the U.S. Department of Health and Human Services.
Republican Committee Chair Outlines Suggested Policy Priorities for New Secretary of Labor. Late last week, the Republican chairman of the House Committee on Education and the Workforce, Representative Tim Walberg (MI), sent a letter to Secretary of Labor Lori Chavez-DeRemer, outlining policy issues that the committee believes are ripe for action by the new secretary. The letter specifically recommends the withdrawal or rescission of several regulatory actions issued by the Biden administration, such as:
The Wage and Hour Division’s (WHD) final rules on overtime, independent contractors, tipped workers, and Davis-Bacon regulation, among others. Also singled out is the WHD’s proposed rule eliminating the subminimum wage for workers with disabilities (Rep. Walberg underscored the importance of withdrawal of this proposal in a separate letter sent this week).
The Occupational Safety and Health Administration’s (OSHA) final walkaround regulation and electronic injury and illness recordkeeping rule, as well as proposed rules relating to excessive heat in the workplace and emergency response.
Representative Walberg also encouraged “DOL to enforce its laws while providing robust compliance assistance to workers and businesses instead of continuing the enforcement-only approach taken by the Biden-Harris administration.” The administration’s first regulatory agenda will provide a roadmap of agency priorities when it is issued in June or July this summer.
House Committee Examines Opportunities to Amend FLSA. On March 25, 2025, the U.S. House of Representatives Committee on Education and the Workforce’s Subcommittee on Workforce Protections held a hearing entitled, “The Future of Wage Laws: Assessing the FLSA’s Effectiveness, Challenges, and Opportunities.” The hearing focused on ambiguous and outdated provisions in the Fair Labor Standards Act (FLSA) and how they could be updated for the modern economy and workforce. For example, legislators and witnesses discussed legislative options to simplify the calculation of an employee’s “regular rate” for purposes of calculating overtime pay as well as a familiar bill that would allow employees to choose paid time off or “comp time” instead of cash wages as compensation for working overtime hours. Witnesses also advocated for passage of both the Modern Worker Empowerment Act and Modern Worker Security Act, as well as the readoption of the Payroll Audit Independent Determination (PAID) program, a pilot program the DOL launched during the first Trump administration that allowed employers to self-report federal minimum wage and overtime violations, but terminated in January 2021, soon after former President Joe Biden came into office.
CHNV Parole Programs Terminated. On March 25, 2025, the U.S. Department of Homeland Security (DHS) published a notice terminating the parole programs for individuals from Cuba, Haiti, Nicaragua, and Venezuela (“CHNV parole programs”), “unless the Secretary [of Homeland Security] makes an individual determination to the contrary.” Individuals whose parole is terminated must leave the United States by April 24, 2025. According to the notice, the DHS estimates that 532,000 people have entered the country through these parole programs. Among other reasons for terminating the parole programs, the DHS concluded that they “exacerbated challenges associated with interior enforcement of the immigration laws.” Individuals from these countries who have Temporary Protected Status, as well as individuals residing in the United States pursuant to parole programs relating to Ukraine and Afghanistan, are not impacted by the notice. Evan B. Gordon, Daniel J. Ruemenapp, and Hera S. Arsen have the details.
One Person, One Vote. On March 26, 1962, the Supreme Court of the United States issued its pivotal decision in Baker v. Carr, which changed the process by which our political representatives are chosen. The issue concerned the drawing of legislative districts in Tennessee. At the time of the initial legal challenge, the population of urban districts had dramatically increased compared to rural districts. Plaintiff Charles Baker argued that by not redrawing or reapportioning the districts, Tennessee violated the Equal Protection clause of the U.S. Constitution because citizens in rural districts were overrepresented compared to those in the more populated urban districts. The case was initially dismissed as a “political question,” but the Supreme Court reversed, holding that apportionment of state legislatures is a justiciable matter. The decision in Baker v. Carr opened the door for a series of legislative malapportionment cases decided by the Supreme Court in the 1960s and formed the basis for the “one person, one vote” principle. But not everything about the case turned out great. The deliberations among the Supreme Court justices were so intense and exhausting that Justice Charles Evans Whittaker suffered a nervous breakdown and had to recuse himself from the case.
Mistake No. 9 of the Top 10 Horrible, No-Good Mistakes Construction Lawyers Make: Screwing Up the Hearing Exhibits
I have practiced law for 40 years with the vast majority as a “construction” lawyer. I have seen great… and bad… construction lawyering, both when representing a party and when serving over 300 times as a mediator or arbitrator in construction disputes. I have made my share of mistakes and learned from my mistakes. I was lucky enough to have great construction lawyer mentors to lean on and learn from, so I try to be a good mentor to young construction lawyers. Becoming a great and successful construction lawyer is challenging, but the rewards are many. The following is No. 9 of the top 10 mistakes I have seen construction lawyers make, and yes, I have been guilty of making this same mistake.
While the legal profession has come a long way as far as being “paperless,” with few exceptions, construction legal disputes still maintain a high level of tree killing. To be clear, clients have moved on and are at the forefront, using AI as well as project specific software (like Procore) to manage the enormous amount of documentation necessary to timely and properly design and build large projects. While I have served on a few arbitration panels where all sides cooperate and have presented exhibits exclusively via thumb drives/laptops and links, these are the exceptions and not the rule. Last year, I was on a panel for a three-week arbitration involving six parties (owner, architect, prime contractor, surety, two subcontractors). Despite pre-hearing admonitions by the panel for counsel to work cooperatively on joint exhibits, clearly labeled and numbered, the parties presented each panel member with a total of 60 black exhibit books, each more than six inches thick… and 75% of the exhibits in each side’s set were exactly the same. Precious time was wasted during the hearing dealing with redundant and poorly organized exhibits and caused a lot of confusion. A typical exchange went something like this: “Panel, please go to our Exhibit Book 23, exhibit 235, and sorry, this exhibit has 45 pages that are not numbered, so go somewhere in the middle.” Counsel and the arbitrators would then stand up, reach back to their exhibit book stack, sort through and find the right numbered book, haul it back to the table, move (or step over) the five books they just used, pull open the book with the three-hole binder (which typically gets broken), and try to find the referenced exhibit.
There’s a better way, and before the construction lawyers out there grind their teeth and shake their heads, please remember that your goal as an advocate is to persuade the arbitrator of the merits of your client’s position. Anything you can do to make the arbitrator’s decision easier (yes, treat your arbitrator like Santa) should be done. Here are just a few of the ways – some easy, some hard – that have been implemented to address this issue, especially in large, multi-week arbitrations, with hundreds of exhibits and scores of witnesses:
Go fully or even partially paperless.
This takes full cooperation and coordination with not only counsel, but the arbitrator (who may still want hard copies). Technology is great until it is not. Is the hearing room appropriate and has the necessary technology? Of course, no need to worry about a room if it is a 100% virtual arbitration (which happened many times during COVID). But, what’s plan B if something goes wrong? Chaos happens, and that’s no good especially if it happens to you (and thus your client).
Create a joint set of exhibits.
Most good arbitrators mandate in the initial scheduling order that counsel exchange a list of all possible exhibits 30 days prior to the hearings and then work together in good faith (yes, I know that can be hard) to create a joint set of exhibit books. As mentioned above, if each side prepares and brings its own set of exhibit books, it is certain that many, if not most, of the exhibits in each sides’ books will be identical. Avoiding duplication is really easier than you think. The books can be organized in sections with a joint index. By way of example: pre-hearing briefs; contracts; pay applications, pictures/videos, damages backup, summaries, specifications, expert reports; and a year-by-year chronology (notice letters and emails). Remember that generally the technical rules of evidence do not strictly apply in arbitrations, so there is no need to fight about relevancy or admissibility. Absent something unusual, all the submitted exhibits from all sides will be admitted by the arbitrator. While this process can take time and effort, setting aside the fact that it will make the arbitrator’s life easier (especially during the post-hearing award process), it has enormous benefits, including making the preparation of witnesses and examinations so much easier and more efficient. If you try it, you will like it. If the arbitrator does not suggest this process during the initial call, you should do so.
Identify the exhibit books you will be using before an examination.
Do not wait until you begin a witness examination (direct or cross) to specify which book you will be using. Tell the arbitrator (and counsel) before you start which books you will be using so everyone can pull out those books and better follow your examination. Again, this eliminates all sides going back and forth to find the applicable witness books.
Consider creating witness exhibit books.
This may seem counterintuitive if the goals is to limit the number of books, but if you have a witness with a small number of exhibits that are scattered among multiple books, consider putting together an exhibit book for that witness that has the exhibits already numbered (as well as what books they are in).
Color code the exhibit books on the front and the spine.
Most counsel use the same black exhibit books. While there may be a label on the front and sometimes the spine, especially if there are multiple books, there can be confusion and time wasted. Using a different color code on the labels, or even different color binders, can help efficiency (“Please go to book 5, the red one.”).
Make sure each page in each exhibit is numbered.
While many of the exhibits will have their own numbers, confusion and delay occur when, for instance, there is an exhibit that has 20-60 pages, but the individual pages are not numbered. This happens with photos, long text streams and multiple invoices. There is nothing more frustrating for an arbitrator (and a witness), and it disrupts an examination, for the lawyer to say: “Please turn to book 18, exhibit 135, and if you go about ¼ of the way in, you will see a picture that looks like…” And no one can find it. Worse, halfway through your “Perry Mason-like” cross examination about that picture, the arbitrator says “Counsel, sorry, I must have been looking at the wrong picture. Can you orient me?”
Make good decisions on what exhibits go into your books, and keep up with what exhibits have been used in the hearing.
The arbitrator understands that since there is limited pre-hearing discovery in most arbitrations (sometimes no depositions), the tendency is to include every possible document or email. But be careful not to dump scores of exhibits into books that may not even be used. This will impact your credibility. And pay close attention to what exhibits are actually used during the hearing. It may be (again, treat your arbitrator like Santa) that with everyone’s cooperation, there can be scores of exhibits removed from books, or even complete books can be withdrawn.
When there will be multiple exhibit books, these simple guidelines will help you, your client, and witnesses better prepare and present your case. You can enhance your credibility by using these tactics regarding exhibits prior to your next arbitration hearing.
What California Employers Should Consider When Buying or Selling a Business
The purchase or sale of a business in California involves intricate legal considerations, particularly regarding the rights of and responsibilities to employees. Both the buyer and seller need to consider employment ramifications.
For Buyers:
As the new employer, the buyer will need to comply with a host of California requirements and disclosures. Employers new to California should pay special attention to regulatory requirements and may wish to consider arbitration agreements, employee handbooks, meal and rest break policies, timekeeping requirements, and other California-specific obligations. If the acquisition involves a reduction in force, additional considerations will be necessary. Finally, the acquirer may inherit existing policies and practices that could subject them to liability.
For Sellers:
Sellers also need to consider their obligations. Sellers of a business with employees should carefully manage the transition to ensure compliance with state requirements. This involves:
Providing written notices to employees about the sale and its implications.
Ensuring clear communication regarding any termination of employment.
Securing express written consent from employees if there is any intention to transfer obligations to the new business owner.
It is essential, whether buying or selling a business with employees, for business owners to consult with experienced employment lawyers. This ensures compliance with employment laws and helps mitigate potential risks.
Power Play: Pull the Plug on Parallel District Court Litigation, ITC Investigation
The US Court of Appeals for the First Circuit vacated a preliminary injunction, explaining that the district court should have immediately issued a statutory stay of the proceeding under 28 U.S.C. § 1659(a) because a co-pending case at the International Trade Commission involved the same issues and parties. Vicor Corp. v. FII USA Inc., Case No. 24-1620 (1st Cir. Mar. 6, 2025) (Gelpí, Thompson, Rikelman, JJ.)
Vicor filed a § 337 complaint with the Commission against Foxconn asserting power converter module patents while simultaneously suing Foxconn for patent infringement in a Texas district court. Under § 1659, at the request of the party charged in the § 337 complaint, a federal district court must stay proceedings in a civil action between the same parties “with respect to any claim that involves the same issues [as those] involved” in the Commission action. Foxconn successfully secured a stay of the Texas litigation under § 1659.
Foxconn then initiated arbitration in China before the China International Economic and Trade Arbitration Commission (CIETAC), claiming that Vicor had agreed to such arbitration under the terms of their purchase order. The Commission’s administrative law judge denied Foxconn’s request to terminate the § 337 case, finding that Foxconn had waived that defense by failing to timely raise an arbitration defense.
Vicor then sued Foxconn in a Massachusetts district court, disputing any arbitration agreement. The district court issued a temporary restraining order (TRO) and later a preliminary injunction, blocking the CIETAC arbitration. In the Massachusetts litigation, Foxconn sought a § 1659 stay and sought to vacate the TRO. Although the district court agreed that a stay would be permitted, the court rejected the motion to vacate the TRO. The court referenced the All Writs Act, which provides that federal courts “may issue all writs necessary or appropriate in aid of their respective jurisdictions,” as justifying injunctive relief. Foxconn appealed.
The First Circuit agreed that § 1659 applied in the Massachusetts litigation and found that the statute’s plain text required an immediate stay upon Foxconn’s request without granting Vicor a preliminary injunction. The primary issue before the First Circuit was whether Vicor’s claims against Foxconn at the Commission involved the same issues as those in the Massachusetts litigation.
Reviewing the text of § 1659, the First Circuit determined that Vicor’s district court claims in the Massachusetts litigation encompassed the same issues as those raised in the § 337 proceeding. In its Massachusetts litigation, Vicor sought relief under the Federal Arbitration Act to enjoin the CIETAC arbitration and relief under the Declaratory Judgment Act for a ruling that Vicor was not bound by the arbitration terms of the purchase order agreements with Foxconn. Central to both proceedings was Vicor’s argument that it had not agreed to the purchase order terms. Because this issue was common to both the § 337 proceedings and the Massachusetts litigation, the First Circuit determined that the district court needed to issue an immediate stay to Foxconn under § 1659.
Vicor argued that for § 1659 to apply, all issues in a district court case must align with those in the Commission proceeding. Vicor argued that because the Massachusetts litigation did not involve the same patent infringement claims as the § 337 investigation or the Texas litigation, the issues were not identical. Vicor also argued that § 1659 was inherently ambiguous because § 337 proceedings involve elements (such as the existence of a domestic industry) that district court patent infringement claims do not. Foxconn countered that § 1659’s plain text recitation of “the same issues” does not require complete overlap but a substantial identity of issues between the two proceedings. The First Circuit agreed with Foxconn, interpreting § 1659’s language as clear and unambiguous.
Vicor further argued that ambiguity required examination of the legislative history. Even though the First Circuit found the statute clear, it reviewed the legislative history of § 1659 and confirmed the statute’s purpose, which was to prevent duplicative litigation at the Commission and the district courts. The First Circuit also disagreed with the district court’s grant of the preliminary injunction, explaining that the All Writs Act cannot override specific congressional enactments.
“Regulations of the State Council on the Settlement of Foreign-Related Intellectual Property Disputes” Unveils Countermeasures Against Those That Use IP Disputes as an Excuse “to Contain and Suppress China”
On March 19, 2025, China’s State Council released the Regulations of the State Council on the Settlement of Foreign-Related Intellectual Property Disputes (国务院关于涉外知识产权纠纷处理的规定), effective May 1, 2025. As compared to last year’s draft, this final version unveils new articles 15-17 to counter countries, individuals and organizations that “use intellectual property disputes as an excuse to contain and suppress China” perhaps in response to Secretary Lutnick’s comments regarding Chinese IP at his confirmation hearing. This final version also maintains article 8 that “encourages law firms to…establish practice institutions abroad through the establishment of branches…”
A translation follows. The original is available here (Chinese only).
Article 1 These Regulations are formulated in order to strengthen intellectual property protection, promote citizens and organizations to handle foreign-related intellectual property disputes in accordance with the law, safeguard the lawful rights and interests of citizens and organizations, promote high-level opening up to the outside world, and promote high-quality economic development.
Article 2 The department of the State Council responsible for the management of intellectual property rights such as trademarks, patents, and copyrights (hereinafter referred to as the intellectual property management department) and the commercial authorities shall strengthen guidance and services to citizens and organizations in handling foreign-related intellectual property disputes, and other relevant departments of the State Council shall perform related work in accordance with their division of responsibilities.
The relevant departments of the State Council will strengthen work coordination and information communication, and jointly do a good job in handling foreign-related intellectual property disputes.
Article 3 Local people’s governments at or above the county level and their relevant departments shall, in light of the actual conditions of their respective regions, do a good job in handling foreign-related intellectual property disputes.
Article 4 The intellectual property management department of the State Council and relevant departments such as commerce and judicial administration shall, in accordance with their respective responsibilities, promptly collect and publish information on foreign intellectual property legal systems, improve the public service system for intellectual property information, and provide foreign intellectual property information query services to the public.
Article 5 The intellectual property management department and the commercial department of the State Council shall, in accordance with their respective responsibilities, strengthen tracking and understanding of key information such as changes in foreign intellectual property legal systems, conduct analysis and research on typical cases, issue risk warnings in a timely manner, and provide the public with foreign-related intellectual property warnings.
Article 6 The intellectual property management department and the commercial department of the State Council shall improve the guidance work institutions and work procedures for handling foreign-related intellectual property disputes in accordance with the division of responsibilities, and provide response guidance and rights protection assistance to citizens and organizations in handling foreign-related intellectual property disputes.
Article 7 Support commercial mediation organizations and arbitration institutions to participate in the resolution of foreign-related intellectual property disputes, provides citizens and organizations with efficient and convenient channels for resolving foreign-related intellectual property disputes, and encourages and guides citizens and organizations to quickly resolve foreign-related intellectual property disputes through reconciliation, mediation, arbitration, etc.
The judicial administrative department of the State Council will strengthen guidance on the mediation and arbitration of foreign-related intellectual property disputes.
Article 8 Encourage law firms, intellectual property service agencies, etc. to improve their foreign-related intellectual property service capabilities, establish practice institutions abroad through the establishment of branches, joint operations, etc., and provide high-quality and efficient foreign-related intellectual property services to citizens and organizations.
The judicial administrative department and the intellectual property management department of the State Council will take measures together with relevant departments to create conditions for law firms, intellectual property service agencies and other organizations to strengthen foreign-related intellectual property related services.
Article 9 Support enterprises in establishing mutual assistance funds for the protection and maintenance of foreign-related intellectual property rights, encourages insurance institutions to conduct foreign-related intellectual property rights-related insurance business in accordance with market principles, and reduces the costs of rights protection for enterprises.
Article 10 Encourage chambers of commerce, industry associations, cross-border e-commerce platforms and other organizations to build foreign-related intellectual property rights protection assistance platforms, open service hotlines, and provide public services such as consultation and training.
Article 11 Enterprises shall enhance their awareness of the rule of law, establish and improve internal rules and regulations, strengthen the reserve of intellectual property talent, and intensify the protection and use of intellectual property rights; when entering foreign markets, they shall take the initiative to understand the legal system and intellectual property protection status of the country or region where they are located, carry out production and business activities in accordance with the law, and actively safeguard their legitimate rights and interests.
The intellectual property management department and the commercial department of the State Council, together with relevant departments, focus on the intellectual property protection needs of enterprises in their foreign-related production and operation activities, carry out publicity and training for enterprises around key areas and key links of foreign-related intellectual property disputes, and introduce experiences and practices in handling foreign-related intellectual property disputes in accordance with the law based on typical cases, so as to enhance enterprises’ awareness of foreign-related intellectual property protection and dispute resolution capabilities.
The judicial administrative departments of the State Council shall, in accordance with the requirements of the legal education responsibility system of “whoever enforces the law shall educate the public on the law”, strengthen legal publicity and education related to intellectual property rights, and comprehensively enhance citizens’ and organizations’ awareness of intellectual property protection and their ability to safeguard their rights in accordance with the law.
Article 12 The service of documents and investigation and collection of evidence within the territory of China shall be handled in accordance with international treaties concluded or acceded to by China, as well as the Civil Procedure Law of the People’s Republic of China, the Law of the People’s Republic of China on International Criminal Judicial Assistance and other laws. No organization or individual may violate the laws of China when serving documents or investigating and collecting evidence within the territory of China.
Article 13: Organizations and individuals within the territory of China that participate in overseas intellectual property-related litigation or are subject to overseas judicial or law enforcement investigations and need to provide evidence or related materials to overseas countries shall comply with laws and administrative regulations on maintaining state secrets, data security, personal information protection, technology export management, judicial assistance, etc. If approval by the competent authority is required according to law, relevant legal procedures shall be followed.
Article 14 The competent commerce department of the State Council may, in accordance with the Foreign Trade Law of the People’s Republic of China, investigate the following matters and take necessary measures:
(1) Imported goods infringe intellectual property rights and endanger foreign trade order;
(2) The intellectual property rights holder prevents the licensee from questioning the validity of the intellectual property rights in the licensing contract, conducts compulsory package licensing, stipulates exclusive re-grant conditions in the licensing contract, etc., and endangers the fair competition order in foreign trade;
(3) Other countries or regions fail to accord national treatment to Chinese citizens and organizations in terms of intellectual property protection, or are unable to provide adequate and effective intellectual property protection for goods, technologies or services originating from China.
Article 15: Where foreign countries violate international law and basic norms governing international relations, use intellectual property disputes as an excuse to contain and suppress China, adopt discriminatory restrictive measures against Chinese citizens and organizations, and interfere in China’s internal affairs, the relevant departments of the State Council may, in accordance with the Foreign Relations Law of the People’s Republic of China, the Anti-Foreign Sanctions Law of the People’s Republic of China, and other laws, include organizations and individuals that directly or indirectly participate in the formulation, decision-making, and implementation of discriminatory restrictive measures in the countermeasure list and adopt corresponding countermeasures and restrictive measures.
Article 16 No organization or individual may implement or assist in the implementation of discriminatory restrictive measures taken by foreign countries against Chinese citizens or organizations under the pretext of intellectual property disputes.
If any organization or individual violates the provisions of the preceding paragraph and infringes upon the legitimate rights and interests of our citizens or organizations, our citizens or organizations may, in accordance with the law, bring a lawsuit to the people’s court and demand that it stop the infringement and compensate for the losses.
Article 17 The relevant departments of the State Council shall strengthen coordination and cooperation, and take corresponding measures in accordance with the National Security Law of the People’s Republic of China, the Foreign Relations Law of the People’s Republic of China, the Anti-Foreign Sanctions Law of the People’s Republic of China and other laws against those who use intellectual property disputes to endanger China’s sovereignty, security and development interests; those who abuse intellectual property rights to exclude, restrict competition or implement unfair competition shall be dealt with in accordance with the Anti-Monopoly Law of the People’s Republic of China, the Anti-Unfair Competition Law of the People’s Republic of China and other laws.
Article 18 These Provisions shall come into force on May 1, 2025.
CJEU Ruling on Asymmetric Forum Selection Clauses
The Court of Justice of the European Union (CJEU) has recently ruled on the validity of asymmetric forum selection clauses, which grant one party the right to bring proceedings before multiple alternative jurisdictions while restricting the other party to a single forum
On 27 February 2025 (Case C-537/23), the CJEU clarified that, under the principle of contractual autonomy set out under Article 25 of Regulation (EU) 1215/2012 (known as Brussels I-bis), the imbalance characterizing any such clauses does not automatically invalidate them, provided that the parties have freely negotiated and consented to them.
The Case
The dispute arose from a supply contract for cladding panels between two individuals (the “Clients”) on one side, and the French company Agora SARL (Agora) and the Italian company Società Italiana Lastre (SIL) on the other. The contract included a forum selection clause stating that “[for] any dispute arising from or related to this contract,” the “Court of Brescia [Italy]” would have jurisdiction, except that SIL retained the right “to bring proceedings against the purchaser before another competent court, in Italy or elsewhere” (the “Clause”).
A dispute arose with respect to contract performance and the Clients brought an action before the Tribunal de Grande Instance of Rennes (France) against Agora and SIL. Agora brought an action on a guarantee against SIL. Invoking the forum selection clause, SIL opposed that action on a guarantee and challenged the French court’s jurisdiction in favor of the Italian court, “on grounds of a lack of international jurisdiction.” The Tribunal rejected the objection, declaring the Clause unlawful under French law due to its unbalanced and imprecise (i.e., purely discretionary) nature, which was contrary to the principle of foreseeability.
The decision was upheld by the Cour d’Appel de Rennes (France), leading SIL to seek review before the French Cour de Cassation, arguing that the Cour d’Appel had misinterpreted Article 25(1) of the Brussels I-bis Regulation, according to which the validity of an agreement conferring jurisdiction should be assessed in light of the law of the Member State whose courts are designated pursuant to that agreement. Hence, SIL argued that the validity of the Clause should be assessed under Italian law – the law of the designated jurisdiction – rather than French law.
The Cour de Cassation sought clarification from the CJEU on the proper legal framework for assessing the validity of an asymmetric forum selection clause. The Court requested a preliminary ruling on three key questions: (i) whether the substantive validity of an asymmetric clause should be assessed autonomously according to EU law criteria or according to the lex fori electi (i.e., the national law of the Member State where the Court designated in the clause sits), and whether the substantial validity of such a clause under Article 25(1) of the Brussels I-bis Regulation strictly refers only to grounds such as fraud, error, violence, and incapacity, (ii) if the assessment is based on EU law, whether asymmetric forum selection clauses remain valid in light of the principle of foreseeability and legal certainty set forth by Article 25(1) of the Brussels I-bis Regulation, and (iii) alternatively, if the lex fori electi applies, which Member State’s law should govern the assessment of the validity of an asymmetric forum selection clause when multiple courts are designated or the party (having the right to choose) has not yet exercised this choice at the time the case is brough before the court.
The Decision
On the first issue, the CJEU clarified that, in light of the Brussels I-bis Regulation’s objective to “unify the rules on conflicts of jurisdiction in civil and commercial matters,” issues concerning the alleged imprecision or imbalance of the asymmetrical forum selection clause must be assessed according to “autonomous criteria” derived from Article 25 of the Brussels I-bis Regulation (i.e., the principles of foreseeability and legal certainty), rather than substantive invalidity criteria defined by Member States’ laws (which typically address issues like fraud, capacity, or error.)
Regarding the second issue, the CJEU clarified that asymmetric forum clauses are not inherently invalid, provided they meet the Brussels I-bis Regulation’s requirements of certainty and foreseeability. Specifically, asymmetric clauses are valid to the extent that:
(i) they are the result of the parties’ free determination (rather than unilateral imposition) and they designate courts in EU Member States or countries parties to the Lugano II Convention;
(ii) they do not undermine the Brussels I-bis Regulation’s objectives of transparency and predictability, ensuring that the court having jurisdiction is identifiable with sufficient certainty based on clear, objective criteria; and
(iii) they comply with the limitations and requirements expressly imposed by the provisions of the Brussels I-bis Regulation concerning insurance, consumer, and employment contracts, and they do not conflict with the rules on exclusive jurisdictions under Article 24 of the Brussels I-bis Regulation.
Conclusion
With this ruling, the CJEU reinforced the central role of contractual autonomy, while clarifying the criteria for assessing the validity of asymmetric forum selection causes. The CJEU confirmed that the evaluation should be based on both the formal criteria set out in Article 25 of the Brussels I-bis Regulation – such as clarity and precision, the designation of courts within EU Member States or Lugano II Convention countries, and compliance with exclusive jurisdiction rules–as well as the substantive criteria, including contractual freedom of the parties, foreseeability and predictability.
Hence, businesses entering international contracts should ensure such clauses are clearly drafted, mutually agreed upon, and aligned with Brussels I-bis Regulation’s principles to avoid enforceability challenges in cross-border disputes.
Employers Should Watch Drafted Bipartisan Bill to Benefit Unions
A bipartisan group of senators introduced the Faster Labor Contracts Act on March 4, 2025. The proposed legislation would amend the National Labor Relations Act (“NLRA”) to require employers to begin negotiating a collective bargaining agreement with a union within 10 days of the union’s request to bargain following the National Labor Relations Board’s (“NLRB”) certification of the union as the representative of the employer’s employees. It would further require the union and employer to agree to a collective bargaining agreement within 90 days of beginning bargaining, and in the absence of agreement either side would have the right to request mediation. If mediation fails within 30 days, the dispute would then be referred for binding arbitration to secure an initial collective bargaining agreement. It is certain that if this amendment to the NLRA becomes law, employers, and their employees whom unions purport to represent, would be affected.
This represents a drastic change to the NLRA’s framework that has been in place since the NLRA was first signed into law in 1935. While the NLRA requires employers and unions to bargain in good faith with one another, it does not require either party to agree to any particular proposal or to otherwise make a concession. 29 U.S.C. § 158(d). If this proposed legislation becomes law, parties would be forced, through binding arbitration, to contract proposals they would not have been obligated to accept under current law.
Moreover, under the existing framework, both the union and employer have the right to challenge the results of a representation election. While it is not entirely clear what the ramifications of this amendment would be, the proposed language seems to suggest that employers would lose their ability to have an Article III court review the NLRB’s certification of a union as the collective bargaining representative of its employees. Effectively, this would mean that employers likely would no longer be able to challenge unfair actions by unions during the course of union representation elections.
The effects of this legislation would be significant. It eliminates the concept of “voluntary agreement,” which is a fundamental principle of United States labor law. Under that principle, only the parties to a collective bargaining agreement should determine the terms of the agreement. But the proposed legislation takes that control out of the hands of the parties and turns it over to the federal government. The mediators and arbitrators who would determine the contours of imposed collective bargaining agreements would not have the benefit of institutional knowledge and experience, but would still be determining the terms and conditions of employment for employees whose workplaces they do not fully understand.
This proposed legislation is clearly designed to benefit unions, at the expense of both employers and the employees the same unions are theoretically supposed to represent. Given this dynamic, it is noteworthy that two Republican senators have co-sponsored the legislation. If passed into law, we expect a variety of legal challenges to arise, including potentially to the constitutionality of a mandatory interest arbitration requirement that would essentially result in government-imposed contract terms on private parties. Stay tuned.
Why Midsized Companies Should Consider International Arbitration to Enforce Their Cross-Border Contracts
For midsized companies engaged in cross-border trade—whether selling overseas or purchasing from foreign suppliers—the ability to enforce contracts is critical. After all, if a contract cannot be enforced, it’s not worth the paper it’s written on. But the unfortunate truth is that relying on courts to enforce cross-border contracts can cost significant time and money. Large companies often can sustain those costs and are accustomed to dealing with foreign courts. That frequently is not the case for midsized companies, however. And under current global economic circumstances—including a weakening dollar—cross-border contract (and other commercial) disputes may increase as trade flows and foreign investment patterns shift. It is therefore all the more important for midsize companies to reduce the risks associated with their cross-border transactions where possible. One potential tool for doing so is international arbitration.
An international arbitration clause can provide a midsized company with a practical and enforceable mechanism to resolve disputes, thereby reducing legal uncertainty and minimizing risk. The benefits of an internation arbitration are discussed below.
Avoiding the Risks of Foreign Litigation
One of the biggest risks in cross-border trade is being forced to defend a dispute in a foreign court. Litigating in a foreign jurisdiction can mean navigating an unfamiliar legal system, dealing with different laws and procedures, facing potential prejudice as an outsider, defending yourself at a distance from home, and overcoming language barriers—all of which increase uncertainty, cost, and risk. By choosing international arbitration, companies can ensure that disputes are resolved in a neutral and more predictable forum, avoiding the pitfalls of foreign litigation.
Expert Decision-Making
Unlike litigation, where a case is often decided by a judge or jury with no expertise in the subject matter, arbitration allows parties to select arbitrators with specialized knowledge in the relevant industry or legal field. This leads to well-informed decisions that take commercial realities into account, improving the quality and fairness of dispute resolution.
Confidentiality
Unlike court proceedings, which are typically public, arbitration is private. This helps to keep sensitive business information, trade secrets, and contractual disputes confidential, reducing reputational risks and protecting competitive advantages.
Flexibility and Control
Arbitration allows parties to shape the dispute resolution process to meet their needs. Companies can select arbitrators with the right expertise, agree on procedural rules, and choose the seat of arbitration—all of which provide greater control over how disputes are handled compared to litigation.
Use Your Own Lawyer Regardless of Arbitration Location
A significant advantage of arbitration is that, if your lawyer has international arbitration expertise, they can represent you no matter where the arbitration is seated. Unlike litigation, where local court rules often require hiring local counsel, arbitration allows you to retain the legal team you trust, ensuring consistency in legal strategy and cost efficiency.
Possibility of Remote Arbitration
Many arbitration institutions now offer the option for hearings to be conducted remotely via video conferencing. This reduces the need for costly international travel and allows businesses to participate fully in dispute resolution with minimal disruption to operations. Remote arbitration can also streamline proceedings, making the process more efficient and cost-effective.
Limited Discovery
Discovery in international arbitration is far more limited, less invasive, and less expensive than in U.S. litigation. Depositions are rarely allowed, and document production is typically restricted to materials that are relevant and material to the outcome of the case. This contrasts sharply with U.S. litigation, where broad and costly discovery – and resolution of the disputes that inevitably arise over such discovery – can significantly extend the length and expense of proceedings.
Faster Resolution
International arbitration is often more time-efficient than litigation, helping businesses avoid prolonged court delays that can disrupt operations. With streamlined procedures and limited appeals, arbitration enables companies to resolve disputes more quickly and move forward with their business.
Cost-Effectiveness
While arbitration involves costs, it is generally more predictable and cost-effective than navigating lengthy court battles across different jurisdictions. The ability to choose efficient procedures, avoid excessive discovery, and limit unnecessary delays makes arbitration a more practical choice for midsized businesses.
Finality of the Award
Unlike court judgments, arbitration awards are final and binding, with very limited grounds for appeal. This means that once an award is issued, the losing party has little ability to delay or overturn the decision, providing businesses with greater certainty and closure.
Enforceability of Awards
International arbitration awards are widely recognized and enforceable in over 170 countries under the New York Convention. This makes arbitration a more reliable mechanism for cross-border contract enforcement than court judgments, which may not be easily recognized or enforced in foreign jurisdictions.
The “Loser Pays” Rule
Unlike litigation in U.S. courts—where each party typically bears its own legal costs—international arbitration often follows the “loser pays” rule. This means that the losing party is generally required to cover the prevailing party’s arbitration costs and legal fees. This discourages frivolous claims and ensures that businesses can recover their costs when they prevail.
Implications for Midsized Companies
For midsized businesses engaged in international trade, arbitration offers a strategic advantage by ensuring contract enforceability, reducing legal uncertainty, and avoiding the complications of foreign litigation. By including arbitration clauses in cross-border contracts, companies can protect their interests and minimize risks while benefiting from a more predictable, cost-effective, and expert-driven dispute resolution process.