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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
1. INTRODUCTION
It has been said that class arbitration - also known as 'class action arbitration' - is a '"uniquely American" device'. 1 Certainly the procedure, which combines elements of US-style class actions (i.e., large-scale lawsuits seeking representative relief in court on behalf of hundreds to hundreds of thousands of injured parties) with arbitration, reflects a strong bias towards US conceptions of collective justice. 2
Class arbitration has had its share of growing pains over the last 20 years, as an ever-increasing body of domestic US case law and commentary suggests, and the United States Supreme Court decision in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. has done little to clarify the already muddy waters. 3 However, it is by no means clear that the procedure will either fade from use or remain limited to the United States. Instead, there are at least three good reasons for thinking that the device will expand beyond US borders in one form or another in the not-so-distant future.
First, the global legal community is facing an unprecedented amount of interest in issues involving large-scale group injuries. For years, this debate has focused solely on the merits of US-style class actions as compared to European-style regulatory relief. However, changed social and political circumstances, combined with the rise of new forms of legal injury, have resulted in states considering new means for providing collective redress.
Second, class arbitration is no longer limited to domestic US disputes. For example, at least three different types of international class arbitrations have [Page183:] already been brought in the commercial realm. 4 Collective relief has been sought in other specialized arbitral contexts as well, 5 including an international investment class arbitration filed by 195,000 Italian parties against Argentina and an arbitration filed with the permanent Court of Arbitration under the Energy Charter treaty by Yukos Oil Co. shareholders that could involve up to $100 billion. 6
Third, courts, commentators and legislatures in a variety of jurisdictions have already begun to discuss the merits of allowing some form of class arbitration to develop within their borders. though no known class arbitration has yet been seated outside the United States, there have been public indications of interest in domestic and international group arbitrations in countries as diverse as Canada, Colombia and Luxembourg. 7
In some ways, interest in group forms of private dispute resolution makes perfect sense given the current legal and commercial reality. Large-scale crossborder disputes are one of the biggest issues facing the international legal community today, 8 and arbitration is uniquely situated to address two of the more difficult problems with respect to those kinds of claims: identifying a single forum that has jurisdiction over the entire dispute and providing relief that will be easily enforceable in one or more states. 9
Nevertheless, some might say it is too soon to debate the expansion of class arbitration to other states, either as a matter of probability or propriety. Certainly it is true that no long-term feasibility studies have yet been conducted on class arbitration in either the domestic or international context. 10 Furthermore, existing laws regarding class arbitration are continually in flux, even in the United States, where the Supreme Court's opinion in Stolt-Nielsen has made the issue even more of a moving target. 11
However, lawyers are often called upon to give advice in an uncertain world, and this is no exception. timely consideration of the issues is particularly important in this situation both to (1) assist any state or institutional reform efforts and (2) help parties determine whether and to what extent their own actions may actually be increasing the likelihood of being brought into a class or other collective arbitration.
Though necessarily limited in scope, this paper addresses three issues relating to the possible development of class arbitration outside the United States. First, section 2 identifies some of the concerns enunciated by opponents to class arbitration so as to set the stage for further discussion. Interestingly, much of the conflict is not about arbitration per se. Instead, the debate
[Page184:] involves larger issues - some real, some perceived - about the commercial impact of collective relief and conflicting concepts of individual rights.
Section 3 tackles one of the primary objections to class arbitration, i.e., that it is a '"uniquely American" device'. 13 Critics often appear to assume that any privatized form of collective redress will involve the class arbitration procedures currently in use in the United States. However, it is not only likely that the US approach will change over time; 14 it is also likely that different countries will develop procedures appropriate to their own national systems. Therefore this section considers what form 'collective arbitration' - a newly coined term used to distinguish these alternative forms of group arbitration from US-style class arbitration - might take if it were to develop outside the United States.
Section 4 considers a second criticism of class arbitration, namely that it will never expand beyond the United States. thus, this section examines the social, legal and political forces that influence the development of class and collective arbitration. Section 5 concludes the paper with some final observations about how mass claims in arbitration might be addressed in the future.
2. CONFLICTS REGARDING CLASS ARBITRATION - REAL AND PERCEIVED
Opponents to US-style class arbitration typically challenge the procedure on three fronts. Interestingly, only one line of argument involves issues relating to arbitration, with the other two debates focusing on matters that are more commonly raised when discussing collective relief in the judicial context.
Specialists in arbitration are often tempted to focus only on questions related to arbitration per se, both as a matter of interest and expertise. However, it has been noted that:
"[i]t would be a mistake […] for the international arbitration community to […] avoid discussion of these [other] issues. The participants in the international class arbitration debate will surely be informed by their long formed, general perspectives on both arbitration and class actions, but the convergence of class actions and international arbitration does shine some new light on old questions and require a further look."14 14
[Page185:] Thus, this section will outline all three areas of debate to set the stage for further discussion.
a. Economic issues
The most vocal opposition to class arbitration thus far has come from the international commercial community, which claims that US-style class actions (and thus US-style class arbitrations) are bad for business. Interestingly, this argument is to some extent based more on perception than reality. For example, empirical studies have shown that corporate actors' biggest criticism of US-style class actions - i.e., that class claimants routinely file frivolous suits to assert pressure to settle cases for enormous sums of money - is demonstrably incorrect. 15
In some regards, however, the claims of the business community are correct. Class actions do have an effect on business practices. For example, empirical research shows that that US-style class actions 'tend to increase the frequency and breadth of litigation' against corporate defendants, which 'raises the cost of doing business and makes the legal environment more uncertain; it also has the potential to bring questionable business practices into the media spotlight. In short, the threat of litigation constrains corporations' decisionmaking freedom.' 16
However, just because a law or action increases corporate costs or corporate caution does not mean that it harms or costs society as a whole. Indeed, corporations' focus on ex post costs of litigation alone fails to recognize the role that class actions play in a deregulated market society and the ex ante benefits enjoyed by these same corporations as a result of their having to meet very few regulatory requirements when entering the market. 17 Experts in the field of comparative civil procedure have noted the absence of any detailed empirical evidence regarding the complex cost-benefit analysis of a private system of relief for collective harm (i.e., various forms of private litigation, including class action suits) and a public system (i.e., a comprehensive regulatory regime). 18
Given the lack of relevant economic data in this area, this paper will move on to the next subject of discussion. However, it is useful to recognize from the outset that the empirical research does not necessarily support that proposition that US-style class suits are inevitably bad for business and thus bad for society. In the absence of any hard data, it would therefore be improper to dismiss class or collective arbitration out of hand as economically unfeasible. This conclusion seems particularly appropriate given that some of [Page186:] the greatest proponents of arguments against class arbitration are those whose financial self-interest augurs against the device.
b. Jurisprudential issues
The second argument against class arbitration involves the long-standing debate about the legitimacy of collective relief, particularly US-style representative relief. Traditionally, civil law jurisdictions have refused to create collective forms of action due to jurisprudential concerns about the nature of individual rights. These states have often used regulatory mechanisms to address the same types of social ills that the United States addresses through litigation brought by 'private attorneys general'.
Experts continue to debate whether private (i.e., judicial) enforcement of public rules, including the recovery of individual damages, is a more 'efficient institutional choice' than government regulation. 19 The approach used in the United States is often set in contradistinction to that used in Europe. However, this black and white, either-or dichotomy ignores the fact that both the US and European models are changing to adapt to new legal and social circumstances. Furthermore, this sort of binary thinking ignores the wide (and growing) diversity of other means of addressing group injuries, which are discussed in more detail below. 20
Critically, a society's perspective on the nature of individual rights is affected by the public regulatory structure and vice versa. comprehensive regulation allows and leads to restrictive interpretations of individual rights regarding collective relief. Broadly deregulated societies have much more permissive interpretations of individual rights. States that adopt mixed or intermediary positions on regulation - and their number is growing, according to recent empirical research 21- take an equally moderate view of the scope of individual rights to collective relief.
In all cases, policy choices are based on states' perception of how best to address legal injuries suffered within their territorial borders. These developments will likely affect official state views about the propriety of various forms of collective arbitration as well as the views of private individuals.
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c. Arbitral issues
The final argument against class arbitration invokes basic notions of what arbitration is or is not meant to be. Arbitration is routinely described as a relatively informal, inexpensive, business-oriented dispute resolution mechanism. International arbitration carries the additional benefit of being able to meld civil law and common law procedures into a cohesive whole. Class arbitration is viewed by its opponents as expensive, time-consuming, legalistic and closely tied to US civil procedure. Furthermore, the representative nature of US-style class arbitrations violates many people's views about the consensual nature of arbitration. As such, class arbitration is thought by some people not to constitute 'arbitration' at all. 22
Interestingly, the tension in this area may perhaps arise out of several important historical shifts in the international arbitral community. First, it has been said that, ever since the mid-1980s, the world of international commercial arbitration has been in the process of changing from 'an older system of private informal justice controlled by senior European law professors and judges into a more legalistic form of dispute resolution resembling US style litigation.' 23 The perceived 'Americanization' of international commercial arbitration has led to the spread of 'certain norms, ideas and principles that Anglo-American law expresses', much to some people's dismay. 24 Thus, to some extent, concern about US-style class arbitration may reflect resistance to American commercial imperialism and a real or imagined loss of control over the proper shape of arbitration.
Second, opposition to class arbitration may partially reflect a yearning for 'the good old days' of arbitration, when procedures were allegedly simple, informal and inexpensive. this type of sentiment has been expressed in other mature forms of arbitration. 25 However, like other forms of nostalgia, this view may not be factually correct (arbitration may never have been a truly inexpensive form of dispute resolution) or may draw incorrect conclusions regarding causality.
For example, some may believe that increased legalism in international commercial arbitration was brought about by Americans intent on bringing their domestic litigation techniques into the arbitral context. However, it could also be that arbitrations became more legalistic because international disputes became more complicated at the same time that US parties were becoming more inclined to participate in international arbitration. Certainly, it is well established that there has been an increase in the number of international disputes involving the complex interweaving of multiple contracts between [Page188:] two or more parties and requiring more sophisticated adjudication. 26These types of transactions are markedly different from the simple bilateral agreements of years past. Thus, to the extent that an arbitral 'paradise' ever existed, it was likely as much a reflection of the types of disputes that were at issue as it was due to the absence or presence of certain parties.
Regardless of which view one holds regarding the reason for the changes in the field, it is impossible to return to arbitration's 'golden age'. One cannot undo the changes that have been made over time, and the concept of class or collective arbitration is here to stay. 27 Evolution, however, is neither bad nor good. The only question is how the relevant communities - commercial, legal and arbitral - will respond to this new challenge.
3. POSSIBLE FORMS OF ARBITRATION-BASED COLLECTIVE RELIEF OUTSIDE THE UNITED STATES
a. Alternative forms of collective arbitration
For years, US judicial class actions appeared to be a particularly virulent form of American exceptionalism. The procedure was maligned, domestically and internationally, for a variety of reasons: abusive discovery practices, outrageous punitive damages awards and entrepreneurial counsel seeking quick settlements based on the suit's nuisance value. However, much of the international criticism focused on the belief that the United States was the only nation in the world that allowed private individuals to use widespread representative litigation to address group or collective injuries. 28
However, recent empirical research demonstrates that US-style class actions are not as unusual as once believed. 29 Although the broad, trans-substantive approach used in the United States may reflect one end of the spectrum, several other legal systems - including Canada and Australia - have adopted judicial forms of collective relief that are markedly similar to that used in the United States.30 For this reason, the author has suggested elsewhere that these two nations might be among the first to develop their own forms of class arbitration. 31
However, Canada and Australia are not the only nations to allow collective relief. As group injuries increase, so, too, has the need to provide for collective redress. therefore, the global legal community has seen rising interest in 'any procedure (public, private, self-regulatory, or even impromptu) that achieves resolution of a collective problem'. 32 At least 15 countries (in addition to [Page189:] Australia, Canada and the United States) have legislatively adopted some form of collective redress, with additional nations and regions considering the possibility. < footnote_33> Furthermore, some states have embraced judicially developed forms of collective relief in the absence of any formal statutory procedures. 34
This development is important, because the form of US-style class arbitration reflects the national biases and predilections of its country of origin. In short, the early users of class arbitration adopted procedures that were familiar to them. 35 Indeed, two of the three published rules regarding class arbitration were based explicitly on the class action provisions of the US Federal rules of Civil procedure, 36 so as to avoid problems with procedural fairness and take advantage of a large body of case law interpreting the relevant language and legal principles. 37
If history repeats itself, then it is entirely possible that different states may develop their own unique forms of collective arbitration for domestic disputes using procedures that resemble their own judicial models of collective relief. Indeed, that process may have already begun. For example, both Canada and Colombia, two nations that have enacted legislation permitting collective relief in judicial contexts, appear to have come close to adopting their own domestic forms of collective arbitration.
Thus, in Valencia v. Bancolombia, a tribunal based in Bogotá, Colombia, was faced with a class suit initiated by shareholders following the merger of two financial entities. 38 Although the claim was initially filed in court, both the civil circuit judge and the district Superior Court held that they had no jurisdiction over the matter, given the existence of an arbitration agreement in the by-laws of one of the financial entities. The plaintiffs argued that class actions in Colombia are subject to the exclusive jurisdiction of the court, but the Supreme Court of Justice rejected that argument on the grounds that the arbitration agreement did not limit the types of claims that could be submitted to arbitration and thus did not exclude class arbitrations as a matter of law. Furthermore, the Supreme Court held that arbitrators have the same duties and powers as a court and thus have the competence to resolve class claims. Although the Supreme Court did not go so far as to say that class arbitrations are permitted in Colombia in all circumstances, it did appear to state that the arbitrator could find that the existence of an arbitration agreement in a common shareholder agreement could give rise to a collective claim.
Similar circumstances have arisen in Canada. Several different Canadian courts appear to have come close to ruling on the availability of class arbitration, based on domestic Canadian class action legislation, although subsequent [Page190:] legislation in several of the relevant provinces has created some question about the continuing effect of the judicial opinions. 39 Nevertheless, the methods used by the Canadian courts suggest that the development of class arbitration outside the United States will not require reliance on the existence or use of specialized rules on class arbitration or on analogies to US arbitral or judicial procedures. Instead, the analysis will proceed on the basis of domestic legislation and policies.
It is impossible for this paper to discuss all the various forms of collective redress used throughout the world. Each system has its own individual quirks, even among European nations that are responding to European directives ostensibly intended to harmonize national procedures. 40 Furthermore, the situation is in a constant state of flux, given that states have a tendency to expand their ability to provide collective relief once even limited judicial procedures are established. 41 Nevertheless, there are certain trends that might suggest several ways in which collective arbitration might develop outside the United States.
The first type of collective redress involves private representative claims for mass injuries. there appears to be an increase in the number of states around the world that offer some form of representative relief for group or collective injuries. recent studies suggest that approximately half of the legal systems that have adopted a form of representative relief use a trans-substantive model, which is a purely procedural device that is available regardless of the type of substantive claim made. (This is the approach used in the United States.) The remaining states restrict the ability to bring a claim for representative relief to certain limited subject matter areas, such as securities, antitrust (competition), consumer or public law. In these situations, the right to collective action is typically contained in the provisions of the substantive law rather than the code of civil procedure, as is true with the transsubstantive model. 42
Notably, the representative nature of US class arbitrations has created a number of conceptual problems for those who subscribe to a view of arbitration that requires the parties' explicit consent not only to arbitration of the dispute but to the procedure to be used in the arbitration. A similar debate may arise in other jurisdictions that consider permitting representative claims to be brought in arbitration, at least to the extent such actions are optout rather than opt-in. [Page191:]
Other variations exist regarding the type and scope of representative relief to be provided. For example, some states that have recently developed a right to representative relief do not give the right to pursue such claims to private individuals, as is the case in the United States. Instead, these jurisdictions require such claims to be brought by an intermediary entity, such as a trade association, governmental agency or public interest group, which is entitled to seek collective relief on behalf of all injured individuals.
Notably, if an intermediary entity were to bring a claim, many of the existing concerns regarding US-style class arbitration - including issues about notice to the group, opting in versus opting out of the action and the res judicata effect of an award - would be eliminated. Furthermore, only allowing intermediary entities to bring claims for representative relief would avoid many of the problems typically associated with multiparty arbitration, such as procedures for naming arbitrators and ensuring the confidentiality and privacy of the proceedings.
Finally, some states have limited the right to representative relief by only allowing injunctive relief (rather than individual damages) to be sought for collective harms. Using this type of approach in collective arbitration would seem unproblematic, given that 'arbitral awards frequently - even routinely - make awards of declaratory or injunctive relief.' 43
Representative relief is not the only means of addressing large-scale group harms. Some countries have decided to deal with collective injuries through judicial aggregation of claims. two examples of aggregate mechanisms are the group litigation order procedure used in England and the multi-district litigation procedure used in the United States. 44The English approach involves the creation of a registry of individual claims that arise out of the same fact pattern. These claims are then assigned to the same judge for management purposes. The US approach involves the collection of related claims from different federal districts and the consolidation of those claims during the pre-trial period to ensure efficiencies of scale. However, the cases are subsequently separated for individual trials on liability and/or damages.
Aggregation of claims is relatively uncontroversial in the judicial context, and many states simply apply their pre-existing procedural rules regarding joinder, intervention or consolidation when addressing the needs of mass injuries. However, consolidation, joinder and intervention are nowhere near as simple in arbitration. As with any multiparty procedure, problems may arise if the [Page192:] parties do not all consent to consolidation or aggregation. 45 However, use of a voluntary system of registration (similar to that used with English group litigation orders or certain mass dispute systems set up by the Permanent Court of Arbitration (PCA)) would eliminate virtually all of those concerns.
Once the question of consent has been addressed, the parties need to address procedural matters. Fortunately, those considering large-scale aggregate relief in the arbitral context would likely be able to proceed under existing laws and rules regarding consolidation of arbitrations. Arbitration is equipped to handle large-scale consolidation of claims (such as those involving more than 100 parties) . 46 as well as mass claims heard through the creation of special tribunals and commissions, such as those set up through the PCA. . 47
Finally, collective arbitration could take advantage of recent and proposed legislation that encourages or promotes the settlement of mass claims. Perhaps the most innovative developments in this area come from the Netherlands, which permits parties to a mass dispute to subject a settlement agreement to court approval. 48 Interestingly and somewhat controversially, the Dutch procedure uses an opt-out approach. However, an opt-out procedure can be seen to increase defendants' inclination to sign onto the agreement, since it is often in a defendant's interest to have a broad class for settlement purposes.
Parties might attempt to transform this technique into an arbitral option in situations where Dutch courts do not have jurisdiction or where the parties wish to keep the terms of the settlement itself private. of course, privacy in mass disputes may not be possible or desirable. For example, some publicity is necessary, particularly in an opt-out regime, so as to ensure the proper identification of the collective. Furthermore, states may need or want to have some public knowledge of the terms or existence of the settlement, either as a deterrent to other potential defendants or as a soft form of precedent. . 49
Parties wishing to adapt this procedure should be cautious, however. In particular, they should take care when attempting to create a collective for arbitral settlement purposes alone. Although some institutional rules appear to allow parties to transform a settlement agreement into an arbitral award, 50 and numerous arbitral rules and arbitration laws permit the entry of a consent award in situations where the parties settle their dispute during the pendency [Page193:] of an arbitration, there are concerns about whether an arbitral award based on a settlement agreement is internationally enforceable if there is not a preexisting arbitration agreement. 51
b. Creating or adapting procedures for collective arbitration
As the preceding discussion demonstrates, US class actions are not the only form of collective redress available in state courts. Thus, there is no need to conclude that US-style class arbitrations are or should be the only form of collective redress available in arbitration.
In describing the various forms of collective relief now available in courts around the world, this paper is not suggesting that arbitral institutions or individual arbitrators seeking to design new forms of collective arbitration should precisely duplicate existing judicial procedures. Indeed, the international arbitral community has worked long and hard to disabuse newcomers to the process of the notion that they are entitled to the same procedures that would be available in litigation. Furthermore, several critics of class arbitration have noted that the decision for specialized rules on class arbitration to track US civil procedure was 'uninspired and superficial 52 and that class arbitration would benefit from the implementation of 'innovative procedures that courts have been hesitant to accept'. 53
However, to the extent that arbitration is considered 'a substitute for State justice, albeit of a private nature, but nevertheless pursuing the same ends', then an arbitrator or arbitral institution may decide that some aspects of arbitral procedure could or should be similar to those used in national courts. 54 Furthermore, those who are designing new arbitral procedures may decide that reflecting certain judicial procedures is a wise course of action, so as to benefit from any judicial opinions or commentary construing certain legal principles or questions of procedure.
Even more to the point, any developments in arbitral procedure - collective or otherwise - should not outpace fundamental principles embodied in the relevant legal systems, lest the resulting arbitral awards be subject to claims that the arbitration in question violates public policy or procedural fairness. 55 For this reason, it will be easier for new forms of collective arbitration to develop domestically, as this will not only allow them to reflect the principles of the arbitral seat but will also ensure that the necessary legal structures are in place to support the arbitral award after it has been issued.
[Page194:]
It may be more difficult to come to agreement on procedures for cross-border group arbitrations unless the parties are from states that share a common understanding about the propriety of collective relief. Thus, a group arbitration that involved parties from the United States, Canada and/or Australia might be relatively easy to set up and enforce, since these three states share a common understanding regarding the availability and form of representative relief. 56 A group arbitration involving parties from one of those states and Germany might be more problematic, since German law only allows intermediary entities to bring a collective claim in a limited area of law and only permits injunctive relief in response to a group action. 57 Despite these difficulties, however, it is important that the international arbitral community consider some cross-border issues, since international class arbitrations already exist.
The next issue to consider is how these new forms of collective arbitration might develop. one possibility is that an official body, such as a domestic or international arbitral organization, will decide to amend existing arbitral rules, or create a new set of specialized rules to outline the procedures used in collective proceedings, and will convene a working group to make the necessary recommendations to the institution. That is the approach taken by several arbitral organizations in the United States following the United States Supreme Court's 2003 decision in Green Tree Financial Corp. v. Bazzle, 58 which gave national prominence to class arbitration as a dispute resolution device.
The other, perhaps more likely, possibility is that the issue will arise on an ad hoc basis as individual cases arise. Indeed, individual courts and arbitral tribunals outside the United States are already being asked to consider the ability of parties to proceed as a collective in arbitration, based on the existence of a valid arbitration agreement and the purported need to bring the claims in a single action.59 this is analogous to the situation in the United States in the 20 years prior to Bazzle. 60
Those who are asked to consider whether a collective arbitration can proceed in a particular set of circumstances must answer several key questions. The first is whether collective forms of relief are even allowed in the situation at hand. For example, a growing number of corporate entities - in the United States and elsewhere - have attempted to forestall the possibility of being [Page195:] named as a defendant in a group action by inserting a waiver of any collective relief in the arbitration agreement itself. Furthermore, the governing substantive law may prohibit parties from attempting to arbitrate these particular claims. 61
States are well within their rights to declare certain substantive matters of law non-arbitrable, so the second of these restrictions is unremarkable. On its face, the ability of parties to prohibit certain arbitral procedures also seems straightforward, so long as basic notions of procedural fairness remain in place. However, some forms of collective redress serve both a public and private purpose. In these cases, prohibitions on class or collective arbitration could be viewed as analogous to a party's attempt to circumvent a mandatory provision of substantive law. Indeed, some US courts have struck express waivers of class proceedings as violative of substantive rights. 62It may be that other countries develop similar policies regarding attempted exclusions of collective relief.
If there is no explicit bar to collective arbitration (or if an explicit bar has been struck as inappropriate), it then becomes necessary to decide whether it is possible for the parties to proceed as a group. It is commonly agreed that arbitral tribunals decide matters of procedure, and judicial opinions in the United States and elsewhere suggest that this approach will be followed in collective arbitrations as well. 63
Sometimes, the parties can come to an agreement about the collective procedures to be used. In most cases, however, the arbitration agreement will be silent as to the possibility of a collective procedure, and at least one party (typically the defendant) will object, claiming that individual arbitrations are all that should be permitted. In these situations, the question will be whether ordering the parties to proceed collectively is within the scope of the tribunal's discretion and authority. 64
This paper will now turn to the confluence of policies and principles that affects an arbitral tribunal's willingness to even consider creating a procedure to hear collective claims. these factors will not only affect the shape of the procedure to be used but will likely determine whether the arbitral tribunal decides that it has sufficient discretion to order a collective proceeding.
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4. FORCES INFLUENCING THE DEVELOPMENT OF COLLECTIVE ARBITRATION
a. Forces driving the development of class or collective arbitration
Earlier, this paper noted that the international business community is united in its opposition to class proceedings, be they in court or in arbitration. It is somewhat ironic, then, that class arbitration in the United States developed as the direct result of corporate defendants' own efforts. 65 If international commercial actors have been advised to take similar steps to avoid being named as defendants in class or collective proceedings, they should take note that they may actually be contributing to the possible rise of collective arbitration in their home jurisdictions.
Class arbitration in the United States arose after corporate entities who were concerned about being named as defendants in judicial class actions began including arbitration provisions in their contracts so as to force individual claimants to pursue relief in arbitration. 66 As anticipated, the arbitration agreements were upheld pursuant to the strong pro-arbitration policy reflected in the US Federal Arbitration Act. However, it soon became apparent that individual arbitrations did not give full effect to the overriding policy concerns reflected in many of the substantive laws at issue. In particular, it became clear that holders of small-value claims would be unlikely to proceed individually in arbitration and that to require them to do so would result in a breach of their statutory rights. 67 Though many of these issues arose in the context of consumer arbitration, the need (under US law) to proceed as a class is not limited to that area of law. 68
The failure to pursue individual claims injures more than individual claimants. Rather than create a broad regulatory scheme, the United States has chosen to give private litigants the right and the power to enforce many public laws. When that mechanism fails to operate as intended, society as a whole suffers. Not only are the costs borne by the wrong parties (i.e., the victims rather than the wrongdoers), but deterrence of risky behaviour drops when defendants realize that they will not be made fully liable for their actions.
Thus, when deciding whether to permit class arbitration, US courts and arbitrators had to weigh the relative merits of a broad policy in favour of arbitration against the policies underlying the individual legal claims at issue. Rather than choose one policy over the other, the initiators of class arbitration chose to fulfil both simultaneously.
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Critically, it was apparent in all cases that the parties had clearly agreed to arbitrate their disputes, even if they had not necessarily contemplated the form of the procedure to be used. 69 However, the only way that the parties' agreement to arbitrate could be given effect was to permit the claimants to proceed as a class.
This approach describes the 'principle of effective interpretation', which is often used in arbitrations involving pathological clauses. In these situations, the arbitral tribunal adopts the procedure that is most likely to 'establish an effective machinery for the settlement of disputes covered by the arbitration clause'. 70 to the extent that collective redress constitutes not only 'effective' but necessary machinery to resolve certain disputes, arbitrators would appear to have authority to order such proceedings. 71
Thus, the development of class arbitration in the US required both a strong bias in favour of arbitration as well as the need to provide collective relief to give full effect to the aims of the substantive law. In the United States, this also involved the absence of regulatory mechanisms that could provide alternative means of addressing the public and private injuries suffered. The following sections will discuss whether and to what extent these policies exist in other jurisdictions.
b. Arbitral policy
The first question to be addressed is whether it is necessary that the jurisdiction in question be as staunchly pro-arbitration as the United States, which has been said to favour arbitration perhaps more than any other nation in the world. 72 Certainly, any hostility to arbitration in general on behalf of the national courts or legislature would be fatal to the development of a novel form of arbitration, but there are varying degrees of commitment to arbitration.
Unfortunately, it is difficult to identify any objective standards for evaluating the extent to which any particular jurisdiction supports arbitration. Some attempt to measure global support for arbitration has been made by reference to the increased number of proceedings heard internationally or to the wide adoption of the Model Arbitration Law (MAL), which is said to have an inherently pro-arbitration bias. 73 Others would point to the inconsistent manner in which the MAl is interpreted and applied in different jurisdictions or to the potentially suspect laws or practices in the many countries that have not adopted the MAl as evidence that anti-arbitration sentiments still remain.
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However, it may be that the different interpretations of the MAl and other national legislation do not necessarily reflect varying levels of commitment to arbitration. Instead, these variations may demonstrate the range of ways in which individual countries rationalize their support of arbitration. Thus, for example, it has been said that:
"[d]ifferent competing theories have been advanced about the nature and legitimacy of arbitration […]. These differences of opinion over the theoretical basis for arbitration and the nature and legitimacy of the arbitral process, are important because the way in which […] arbitration is characterized affects the manner in which the extent and scope of applicable rules in arbitration are determined." <sup><a href="#footnote74">74</a></sup>
This suggests that asking whether a jurisdiction is 'committed' to arbitration may not be the right question when considering the possible expansion of collective arbitration. Instead, the focus should be on what theoretical approach is used by the entity (arbitral tribunal, arbitral institution, court or legislature) that is considering the use or development of collective arbitration.
Four different theories have been advanced to describe a nation's rationale for arbitration. The first emphasizes arbitration's contractual nature and gives a great deal of weight to the parties' intentions and expressed wishes regarding procedure. Those who embrace this tradition may find it difficult or impossible to craft a collective procedure absent the explicit consent of all parties.
Interestingly, adherents of the contractual theory of arbitration can be found even in nations like the United States, where arbitration is strongly favoured as a matter of public policy. 75 Indeed, this appears to be the view taken by the majority in the recent decision in Stolt-Nielsen.76
The strict contractual approach has been criticized both for failing to recognize that national courts need to maintain some control over arbitral proceedings to ensure procedural fairness and for failing to recognize arbitrators' need and ability to exercise discretion in procedural matters. 77 These problems inspired the rise of the jurisdictional theory of arbitration, which emphasizes the power of the state to regulate arbitrations seated within its borders. However, this view of arbitration has proven problematic because it fails to give proper precedence to party autonomy and is now largely discounted. 78
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The third approach to arbitration combines the best elements of the contractual and jurisdictional models, charting a middle course between the two extremes. Known as the hybrid theory, adherents of this view of arbitration recognize the role of party autonomy and consent while simultaneously noting the role of national courts in supporting and controlling the outer bounds of the arbitral procedure. 79
Though popular with many in the international arbitral community, this approach lacks the simplicity of an all-or-nothing mindset and requires adherents to explain why party autonomy should be respected in one circumstance but not another. Nevertheless, the hybrid theory provides a useful description of the rationale underlying the development of class arbitration in the United States, since this theory permits courts, legislatures, arbitrators and arbitral institutions to adopt a more nuanced view of what constitutes consent in situations where the agreement is silent or ambiguous as to certain proposed arbitral procedures. 80 Interestingly, this theory of arbitration has won adherents outside the United States as well. 81
The fourth theory of arbitration - termed the autonomous theory - could also be used to rationalize the US approach to class arbitration. This technique:
"looks beyond contextualizing arbitration within the existing legal framework and instead, focuses on the need of the transnational business community for a private and flexible means of resolving disputes. Its proponents suggest that it is important to look beyond the structure of the arbitral institution and the emphasis on either the contractual or jurisdictional nature of arbitration and instead focus on its goals, objectives and methodology." 82
In some ways, this approach hearkens back to the flexible, business-friendly model that is heralded as marking the golden age of arbitration. Furthermore, the autonomous theory could be said simply to reflect a more detailed description of the principle of effective interpretation. While it is true that a robust reading of the autonomous theory may permit a higher degree of
procedural formalism than is commonly associated with proceedings held during arbitration's heyday, it can be said that the complex needs of contemporary commercial interests often require similarly sophisticated dispute resolution devices. 83
Because the autonomous theory looks beyond traditional arbitral structures and strict contractual or jurisdictional interpretations of arbitration, it seems [Page200:] well suited to the development of collective arbitration outside the United States. this conclusion is further supported by the theory's emphasis on flexibility and the need to focus on arbitration's goals and objectives. Thus, those who adhere to this theory of arbitration would likely be amenable to the development of collective arbitration, if other circumstances were right.
No single theory has won universal acclaim, and no known research has identified which states have adopted one theory of arbitration over another. 84 Furthermore, the domestic US response to class arbitrations suggests that there will be different individuals who prefer different approaches even within one national system. 85
Thus, the possible expansion and development of any form of collective arbitration will likely result in lively debate, both within and between jurisdictions. Those persons who adhere to one of the first two theories of arbitration will be unlikely to embrace the development of collective arbitration, while those who support one of the latter two theories may be more likely to do so. However, the adoption of collective arbitration in any particular situation needs more than just an openness to new arbitral procedures, as discussed in the next section.
c. Policies regarding collective relief
Previously, this paper suggested that the development of class arbitration in the United States relied heavily on the need to give full effect to the aims of the substantive law, typically in the absence of any regulatory mechanisms that could fulfil the same duties. This suggests that new forms of collective arbitration will likely only arise in states or situations where there is not an adequate remedy for the individual and group injuries outside of collective arbitration.
Traditionally, those states with strong regulatory regimes have opposed representative or group relief in court, claiming, among other things, that US class actions and similar procedures are an abuse of individual rights. Partially this is a jurisprudential concern, in that these states have a different view of the content of various rights, and partially this is a pragmatic concern, in that these states have addressed the societal ills through regulatory mechanisms.
In other words, there is no need for mass judicial relief in these highly regulated societies.
[Page201:]
Thus, the central inquiry should be whether the legal system available to the claimant(s) addresses the injury that is the subject of the purported collective arbitration through one means or another. It may be that states with strong regulatory regimes do not and will not need to develop a form of collective arbitration for domestic disputes, thus answering the pragmatic question. 86 Furthermore, states that fall into this category are most likely to view the concept of individual rights in such a way as to prohibit the use of any collective devices.
However, not every jurisdiction has a suitably comprehensive regulatory scheme. Even those countries with strong traditions of public regulation are supplementing those systems with limited forms of private relief in the judicial context. As these states' legal structures change, so, too, do their philosophical conceptions of individual rights and their ability to address structural issues, such as the res judicata effect of judgments for mass injuries.
Even more importantly, this change in the availability of private redress for group harms demonstrates a recognition on the part of the state that regulation alone does not cure this particular injury. Instead, there is a need - limited, perhaps, but still identifiable - for this type of private cause of action. These influences are primarily experienced at the domestic level. However, the rising incidence of cross-border injuries suggests the need to develop an internationally acceptable form of collective arbitration, for all the reasons that are traditionally associated with international commercial arbitration. For example, arbitration has the ability to avoid any biases exhibited by national courts, to create a more flexible procedure suitable to parties from different legal cultures and to permit predictable enforcement of arbitral awards.
Furthermore, international class arbitrations have already begun to arise.
In anticipating what might be done in the future, it is useful to see how courts and arbitral tribunals that have contemplated the possibility of collective arbitral relief in the past have proceeded. Notably, many follow a similar pattern of analysis.
First, the court or arbitral panel considers whether the right to collective relief is procedural or substantive. If the right is merely procedural, then the parties may have waived their ability to proceed collectively, either through an express provision in the arbitration agreement or simply by choosing to proceed in arbitration. 87
[Page202:]
Interestingly, those nations that have made the most cautious inroads towards collective relief in state court by only providing for collective redress in specific provisions in specific statutes involving certain substantive areas of law may be most at risk of having those rights construed as substantive rather than procedural, since the injury and the remedy are combined in the same enactment. nations that take a broader, trans-substantive approach to collective rights might find that the right to proceed as a group is considered 'merely' procedural, since the right is located in a code of civil procedure rather than in the substantive law. However, the United States has overcome that problem by finding that the only way to vindicate certain statutorily protected rights is to permit collective relief. 88 Other states may take a similar view, allowing a purported procedural right to be transformed into a substantive right.
Next, the court or arbitral tribunal needs to consider the different ways in which the goal of the substantive law can be fulfilled. It may be that the procedures relating to collective relief are proscribed (either in the substantive law itself or in the code of civil procedure) by only allowing certain entities to pursue claims on behalf of the group or by only permitting injunctive relief.
Such provisions might suggest only a limited need for collective relief. In these cases, it may be that the combination of individual arbitration plus regulatory protections could be sufficient both to compensate victims and to deter future wrongdoing. 89 Alternatively, it may be that the aims of regulatory relief are different from those associated with group relief and that collective redress, even in arbitration, is still necessary. 90
The best analyses would not only take into account the apparent aims of the substantive law but also any underlying legal realities, including whether holders of small value claims will proceed in arbitration. 91 Although this issue may arise most frequently in consumer arbitration, it can be found in other areas of law as well. In any case, it is important to conduct an independent analysis of these issues in each case. Collective arbitrations can cover a wide range of subject matter areas, and each field of law will likely have its own unique concerns.
Although collective relief in courts need not be coextensive with collective relief in arbitration, the fact that a state has considered it necessary or at least useful to develop even a limited form of collective judicial redress suggests that the regulatory scheme is not enough to protect individuals and society at large. Although this view might increase the likelihood that collective arbitration would develop outside the United States, this expansive principle is offset by the fact that the court or arbitral tribunal should look at the type [Page203:] and scope of relief provided in state courts before deciding the type and scope of relief to be provided in arbitration.
There are two reasons this makes good sense. First, it puts the focus on whether collective arbitration is needed to vindicate the statutory rights of the claimant(s). Development of a new procedural form of relief is not something that should be done by whim. However, under either the hybrid or autonomous theory of arbitration, it is something that may be done as a matter of necessity, in accordance with the principle of effective interpretation and consistent with the larger commercial and legal context.
Second, consideration of the scope and type of relief available in the courts helps ensure that the form of collective arbitration to be developed keeps pace with that state's jurisprudential approach to individual rights and with the overall regulatory regime. Expanding collective relief in arbitration beyond what is necessary and beyond what is permitted in the state courts can lead to difficulties; however, an unduly narrow approach to the development of these types of procedures can allow individual defendants to upset the state's regulatory regime by fleeing to arbitration. That, certainly, was never the intent or purpose of arbitration. 92
Relying on a strict statutory analysis of needs, goals and available remedies does not elevate judicial forms of relief over arbitral forms, or vice versa. Instead, this analytical approach reflects the view that arbitration and litigation are equally competent in vindicating the rights of parties.
It should be noted in passing that the policies regarding collective relief in arbitration do not necessarily mirror the policies regarding what might now be considered more 'traditional' forms of multiparty and multicontract arbitration (i.e., those typically involving three to five parties). For example, Julian Lew has suggested that multiparty arbitration should proceed when to do so would encourage procedural economy, avoid inconsistent awards, increase fairness by facilitating fact-finding and presentation of legal and factual arguments, address any confidentiality concerns and uphold the equal ability to choose arbitrators. 93
Although these policies would support the use of collective arbitration, these issues were not considered as central to the question of whether to develop class arbitration in the United States. In particular, collective arbitration does not rely on the need to create an efficient mechanism to resolve the parties' dispute, at least not in the way the term is commonly understood. 94 Thus, it is suggested, these rationales need not be central to the development of other [Page204:] forms of collective arbitration. Instead, the question should be whether the relief sought in this particular arbitration can only be realistically provided through collective action.
5. CONCLUSION
The rise of class arbitration in the United States has been highly controversial, both inside and outside the United States, and many people do not want to see this particular procedural device expand to other countries. However, it is impossible to put the genie back into the bottle once it has escaped, and the better course of action may be to adapt the device to better suit parties and societies outside the United States.
Although this paper takes no view on whether collective arbitration is necessary or merited in any particular circumstance or jurisdiction, it does take the view that the development of one or more forms of collective arbitration outside the United States is likely, given recent interest in new forms of collective relief, both judicial and arbitral, in a variety of states, including those that have traditionally shunned such mechanisms. Therefore, the discussion in this paper has focused on what those alternative procedures might look like and what forces might drive a particular jurisdiction to adopt such measures.
One topic that has not been discussed is whether class or collective proceedings in arbitration are preferable to similar proceedings in court. Some commentators have suggested that 'opposing parties […] may not necessarily be at odds concerning the desirability of resolving a class action in arbitration rather than litigation', 95 and certainly there are many issues to consider, since each procedure has its advantages and disadvantages. For example, arbitration may not require the same kind of heightened pleading that could lead to successful motions to dismiss in court, but proceeding in arbitration may allow for more limited discovery. Similarly, the unavailability of appellate review in arbitration may be problematic, but concerns about errors in liability or damages determinations may be offset by the absence of juries in the trial phase. Certain commercial realities may be such that no local court will have jurisdiction over all injured parties, meaning that a crossborder group arbitration is the only mechanism for effectively dealing with the claims. However, opponents to class and collective arbitration can identify an equally long list of reasons why such procedures are logistically, economically or jurisprudentially problematic 96. Therefore, that debate is best left until another day.
[Page205:]
The limited nature of this paper has required a focus on generalities rather than specifics. However, the discussion is useful to the extent that it helps shape the debate about whether and to what extent collective arbitration is necessary in any particular circumstance. It also demonstrates that the tools for creating such a device - i.e., an expansive theory of arbitration and a legal structure that contemplates the possibility of some form of collective relief in state courts - already exist in many jurisdictions. Whether this is good or bad is somewhat in the eye of the beholder. However, regardless of one's views on the propriety of class or collective arbitration, it is certain that the coming years will bring some very interesting developments.
[Page206:]
1 'The president and Fellows of Harvard College Against JSC Surgutneftegaz', PLI/Litigation 770 (2008) p. 127.
2 This paper will not outline those procedures, though further reading is available. See, e.g., gary W. Jackson, 'prosecuting Class Actions in Arbitration', Annotated 2006 Association of Trial Lawyers of America ClE 1 (2005) p. 829. It is also possible that procedures will change in the wake of recent U.S. Supreme Court decisions, including Stolt-Nielsen. See Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758 (2010); see also In re American Express Merchants' Litigation 554 F.3d 300 (2d Cir. 2009), vacated and remanded sub nom. American Express Co. v. Italian Colors Restaurant, 78 U.S.l.W. 3642 (2010).
3 Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758 (2010). Although Stolt-nielsen purports to limit the availability of class arbitration in cases where the arbitration agreement is silent as to group treatment, closer reading of the decision demonstrates the narrowness of the opinion and the likelihood of further litigation on a variety of outstanding issues. See S.I. Strong, guest post, 'Stolt-nielsen opens More doors than It Closes', available at:<http://www.karlbayer.com/blog/?p=8880>.
4 These include: (1) class arbitrations that include at least one defendant from a country other than the seat of the arbitration; (2) class arbitrations that involve defendants that may be based in the arbitral forum but that also hold significant foreign assets, which may be relied upon at the enforcement stage; and (3) class arbitrations that include claimants from outside the arbitral seat.
5 See, e.g., Sheibani v. United States, 1 Iran-US Claims tribunal reporter 946, para 2 (2003); Howard Holtzmann and Edda Kristjánsdóttir (eds.), International Mass Claims Processes: Legal and Practical Perspectives (2007); Scott Armstrong Spence, 'organizing an Arbitration Involving an International organization and Multiple private parties: the Example of the bank for International Settlements Arbitration', Journal of International Arbitration 21 (2004) p.316.
6 Beccara v. Argentine Republic, ICSId case no. Arb/07/5, Investment Treaty News, 27 April 2007; Mariel dimsey, The Resolution of International Investment Disputes: Challenges and Solutions (2008) pp. 203-218 (describing a second possible group investment arbitration); veijo Heiskanen, 'Arbitrating Mass Investor Claims: lessons of International Claims commissions', Multiple Party Actions in International Arbitration (2009) p. 298; Andrew E. Kramer, 'A victory for Holders of yukos', New York Times, 1 december 2009; Sofia lind, 'Shearman and Cleary gear Up for Mammoth yukos Arbitration', legal Week, 4 April 2008; Elizabeth Whitsett, 'the Merits of Former yukos Shareholders' Expropriation Claim Will be Heard', Investment Treaty News, 13 January 2010.
7 See, e.g., Manitoba law reform commission, report no. 115, Mandatory Arbitration Clauses and Consumer Class Proceedings (April 2008) pp. 3-4, 22-23; J. brian Casey, 'commentary: class action arbitration should be available', the lawyers Weekly 25(44), 31 March 2006, p. 9; Ian Meredith and Sean Kelsey, 'treasury and budget Minister of Luxembourg chapter 10 malinvaud_chapter 10 malinvaud 13/08/10 19:53 Calls for Arbitration of Madoff Claims', available at: <http://www.globalfinancialmarketwatch.com/2009/06/articles/treasury-and-budget-ministerof- luxembourg-calls-for-arbitration-of-madoff-claims/> (4 June 2009); infra notes 38-39 and accompanying text.
8 See, e.g., The Annals of the American Academy of Political and Social Science: The Globalization of Class Actions 622 (March 2009) pp. 7, 25 (hereinafter, 'the Annals'); Jonathan Hill, Cross-Border Consumer Contracts (2008) pp. 6-8; richard A. nagareda, 'Aggregate litigation Across the Atlantic and the Future of American Exceptionalism', vanderbilt law review 62 (2009) pp. 20-28.
9 Nagareda, supra note 8, at pp. 32-41.
10 Dana H. Freyer and Gregory A. Litt, 'desirability of International Class Arbitration', Contemporary Issues in International commercial Arbitration and Mediation: The Fordham Papers 2 (2008) p. 171; see also brief of American Arbitration Association as Amicus Curiae in Support of neither party, Stolt-nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758 (2010) (no. 08-1198), at pp. 22-24 (hereinafter, 'AAA brief '); Christopher r. drahozal, 'Arbitration Costs and Forum Accessibility: Empirical Evidence', University of Michigan Journal of Law Reform 41 (2008) pp. 837-839.
11 The majority opinion authored by Justice Alito leaves several significant gaps that will necessarily lead to litigation (indeed, the Court has already remanded one case to the Second Circuit for proceedings consistent with its decision in Stolt-nielsen). See In re American Express Merchants' Litigation 554 F.3d 300 (2d Cir. 2009), vacated and remanded sub nom. American Express Co. v. Italian Colors Restaurant, 78 U.S.l.W. 3642 (2010). For example, although the Court held that '[a]n implicit agreement to authorize class-action arbitration . . . is not a term that the arbitrator may infer solely from the fact of the parties' agreement to arbitrate', the decision also stated that '[w]e have no occasion to decide what contractual basis may support a finding that the parties agreed to authorize class-action arbitration'. Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1775 (2010). This issue will surely lead to numerous judicial disputes. Some questions could be resolved through legislative means, but none of the proposed reforms have yet been adopted. See, e.g., Arbitration Fairness Act, H.r. 2010, 111st Cong. (2009) (proposed).
12 See PLI/Litigation, supra note 1, at p. 127.
13 See AAA brief, supra note 10, at p. 16-17. Among other things, the practice of permitting intermediate judicial review of certain arbitral rulings styled as 'final partial awards' was criticized by Justice ginsburg in Stolt-Nielsen as being inconsistent with recent Supreme Court precedent. Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1779 (2010) (ginsburg, J, dissenting) (citing Hall Street Assoc., L.L.C. v. Mattel, Inc., 552 U.S. 576, 588 (2008)).
14 Freyer and litt, supra note 10, at p. 175.
15 Elizabeth Chamblee Burch, 'Securities Class Actions as pragmatic Ex Post regulation', Georgia Law Review 43 (2008) p. 85.
16 Deborah R. Hensler, 'the globalization of Class Actions: An overview', the Annals, supra note 8, at p. 25; see also Freyer and litt, supra note 10, at p. 171.
17 Burch, supra note 15, at p. 77. the loss of the ability to bring collective proceedings in both judicial and arbitral contexts would have widespread ramifications, both to individuals (in that access to justice would be limited) and society as a whole (in that states' overall regulatory schemes would be upset). See Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1783 (2010) (ginsburg, J, dissenting).
18 Christopher Hodges, 'What Are people trying to do in resolving Mass Issues, How Is It going, and Where Are We Headed', the Annals, supra note 8, at p. 333.
19 Burch, supra note 15, at p. 74.
20 See infra notes 28-51 and accompanying text.
21 Hensler, supra note 16, at pp. 7-12.
22 This view appears to be adopted by the majority in Stolt-Nielsen. Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1775 (2010) (claiming 'class-action arbitration changes the nature of arbitration'); see also Sir Michael J. Mustill and Stewart C. boyd, Commercial Arbitration (1989) p. 283 (noting problems with procedures that are 'fundamentally different' from established notions of arbitration).
23 Katherine Lynch, The Forces of Economic Globalization: Challenges to the Regime of International commercial Arbitration (2003) p. 18.
24 Ibid., at p. 19.
25 Gerold Herrmann, 'power of Arbitrators to determine procedures under the UnCItrAl Model law', the Annals, supra note 8, at pp. 39-40; cf. dennis r. nolan, 'disputatio: "Creeping legalism" as a declension Myth', 2010 Journal of Dispute Resolution 1; see also laura J. Cooper, 'the process of process: the Historical development of procedure in labor Arbitration', Arbitration 2005: The Evolving World of Work (2006) pp. 99-120.
26 See, e.g., Joachim g. Frick, Arbitration and Complex International Contracts (2001) pp. 3-8; bernard Hanotiau, complex Arbitrations: Multiparty, Multicontract, Multi-issue and Class Actions (2005) p. 101.
27 Lynch, supra note 23, at p. 302.
28 More limited forms of representative relief have long been available in other jurisdictions. Hensler, supra note 16, at p. 13.
29 See the Annals, supra note 8; see also global Class Actions Exchange, available at:<http://www.law.stanford.edu/library/globalclassaction/index.html>.
30 Hodges, supra note 18, at p. 331.
31 S.I. Strong, 'Enforcing Class Arbitration in the International Sphere: due process and public policy Concerns', University of Pennsylvania Journal of International Law 30 (2008) pp. 24- 25.
32 Hodges, supra note 18, at p. 338.
33 Hensler, supra note 16, at p. 13.
34 Hodges, supra note 18, at pp. 339-340; see also S.I. Strong, 'the Sounds of Silence: Are US Arbitrators Creating Internationally Enforceable Awards When ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?', Michigan Journal of International Law 30 (2009) 1031.
35 See Carole J. buckner, 'toward a pure Arbitral paradigm of Classwide Arbitration: Arbitral power and Federal preemption', Denver University Law Review 82 (2004) pp. 320-323; AAA brief, supra note 10, at p. 10.
36 Compare Federal rule of Civil procedure 23 with: American Arbitration Association, Supplementary rules for Class Arbitrations, available at: <http://www.adr.org/sp.asp?id=21936>; Judicial Arbitration and Mediation Services, JAMS Class Action procedures, available at: <http://www.jamsadr.com/rules/class_action.asp>; and national Arbitration Forum, Class Arbitration procedures, available at: <http://www.adrforum.com/users/naf/resources/Arbitration%20Class%20procedures%202007.pdf>; see also Meredith W. Nissen, 'Class Action Arbitrations: AAA vs. JAMS: different Approaches to a new Concept', Dispute Resolution Magazine 11 (2005) p. 19.
37 AAA policy on Class Arbitrations, available at: <http://www.adr.org/Classarbitrationpolicy>.
38 Valencia (Colombia) v. Bancolombia (Colombia) (24 April 2003) - Arbitral tribunal of the Bogotá Chamber of commerce, digest by Eduardo Zuleta for Institute of transnational Arbitration (ItA), available at: <http://www.kluwerarbitration.com>.
39 McCarthy Tétrault, Defending Class Actions in Canada (2007) pp. 107-113; Geneviève Saumier, 'Consumer Arbitration in the Evolving Canadian landscape', 113 Penn St. l. Rev. 1203, 1204-22 (2009); Strong, supra note 34, at pp. 1032-1034.
40 See, e.g., Unfair commercial practices directive 2005/28/EC, oJ 2005 l 149/22; Cross border Injunctions directive 98/27/EC, oJ 1998 l 16/51; see also White paper: damages actions for breach of the EC antitrust rules, COM (2008) 165 (2 April 2008); green paper: Consumer Collective redress, COM (2008) 794 (27 November 2008); Hill, supra note 8, at p. 166; Laurel J. Harbour and Marc E. Shelley, 'the Emerging European Class Action: Expanding Multi-party litigation to a Shrinking World', AbA Annual Meeting: the Emerging European Class Action, 3-6 August 2006.
41 Hensler, supra note 16, at p. 15.
42 Ibid., at p. 14.
43 Gary Born, International commercial Arbitration (2009) p. 2482.
44 Hensler, supra note 16, at pp. 10, 13, 16-17.
45 For further reading on issues in consolidation, see Hanotiau, supra note 26, at pp. 49-196.
46 Barry R. Ostrager et al., 'Andersen v. Andersen: the Claimants' perspective', American Review of International Arbitration 10 (1999) p. 443 (describing ICC arbitration with over 140 parties).
47 See, e.g., Holtzmann and Kristjánsdóttir, supra note 5.
48 Lanika Tzankova and Daan Lunsingh Scheurleer, 'the Netherlands', the Annals, supra note 8, at pp. 153-155; see also Hodges, supra note 18, at p. 342.
49 Burch, supra note 15, at pp. 114-120.
50 See, e.g., Article 12 of the rules of the Mediation Institute of the Stockholm Chamber of commerce, adopted on 1 April 1999.
51 See Christopher Newmark and Richard Hill, 'Can a Mediated Settlement become an Enforceable Arbitration Award?' Arbitration International 16(2000) pp. 81-87.
52 Hans Smit, 'Class Actions and their Waiver in Arbitration', American Review of International Arbitration 15 (2004) p. 211.
53 W. Mark C. Weidemaier, 'Arbitration and the Individuation Critique', Arizona Law Review 49 (2007) pp. 95-98.
54 Pierre Mayer, 'comparative Analysis of power of Arbitrators to determine procedures in Civil and common law Systems', in Albert Jan van de berg (ed.), planning Efficient Arbitration proceedings: the law Applicable in International Arbitration, vII ICCA Congress Series no. 7 (1996) p. 26.
55 See Strong, supra note 31 (discussing the issue in the context of international enforcement).
56 See Jasminka Kaljdzic et al., 'Canada', the Annals, supra note 8, at pp. 41-52; Vince Morabito, 'Australia', the Annals, supra note 8, at pp. 320-327; Nicholas M. Pace, 'group and Aggregate litigation in the United States', the Annals, supra note 8, at pp. 32-40; Strong, supra note 31, at pp. 24-25.
57 See Dietmar Baetge, 'Germany', the Annals, supra note 8, at pp. 126-128, 131; nagareda, supra note 8, at pp. 33-41.
58 539 US 444 (2003) (plurality opinion).
59 See supra notes 38-39 and accompanying text.
60 AAA brief, supra note 10, at p. 10.
61 For example, several national courts have decided that pre-dispute arbitration clauses in consumer cases violate the European Union's Unfair terms in Consumer Contracts directive. Hill, supra note 8, at p. 215. Similarly, the relevant arbitral rules may preclude some forms of collective arbitration. Spence, supra note 5, at p. 316.
62 Ramona l. Lampley, 'Is Arbitration Under Attack? Exploring the recent Judicial Skepticism of the Class Arbitration Waiver and Innovative Solutions to the Unsettled legal landscape', Cornell Journal of Law & Public Policy 18 (2009) pp. 492-500.
63 Green Tree Fin. Corp. v. Bazzle, 539 US 444 (2003) (plurality opinion); supra notes 38-39. but see Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1772 (2010) (casting doubt on the effect of the plurality decision in bazzle but declining to address the issue).
64 The concept of contractual 'silence' and what would be necessary to support a finding that class arbitration was proper was discussed but not decided in Stolt-Nielsen. Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1776 n.10 (2010). the author has previously identified a method of interpreting arbitration agreements that are silent as to the possibility of class treatment so as to decide whether group treatment is permissible. Strong, supra note 34. the interpretive approach described therein relies on principles and practices commonly used in international arbitration and would, it is suggested, be suitable for use in collective arbitrations seated outside the United States.
65 Lampley, supra note 62, at pp. 510-518.
66 See, e.g., Jean r. Sternlight and Elizabeth J. Jensen, 'Using Arbitration to Eliminate Consumer Class Actions: Efficient business practice or Unconscionable Abuse?', Law and Contemporary Problems 67 (2004) p. 75, n.1.
67 Justice Ginsburg takes the view that any new restrictions or rules laid down by the majority decision in Stolt-Nielsen - rules which are, at this point, extremely unclear - do not in any event apply to 'contracts of adhesion presented on a take-it-or-leave-it basis', as would be the case with many consumer contracts. Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1783 (2010) (ginsburg, J, dissenting).
68 The American Arbitration Association (AAA) has administered 283 class proceedings since 2003. of these, 37% involved consumer actions, 37% involved employment actions, 7% involved franchising, 7% involved healthcare, 3% involved financial services and 11% involved other business-to-business concerns. AAA brief, supra note 10, at pp. 22-24.
69 The majority in Stolt-nielsen has framed the pertinent question not as what procedure is to be adopted by the arbitral tribunal but 'with whom' the parties agreed to arbitrate. Stolt- Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1774 (2010).
70 Emmanuel Gaillard and John Savage (eds.), Fouchard, Gaillard, Goldman on International commercial Arbitration (1999) para. 478.
71 Hanotiau, supra note 26, at pp. 5-6 (arguing against the 'restrictive' reading of arbitration agreements).
72 Bernard Hanotiau, 'groups of companies in International Arbitration', Pervasive Problems in International Arbitration (2006) p. 287.
73 UnCItrAl Model law on International commercial Arbitration, United nations commission on International trade law, 18th Sess., Annex 1, U.n. doc. A/40/17 (21 June 1985), revised by: revised Articles of the UnCItrAl Model law on International commercial Arbitration, UnCItrAl, 39th Sess., Annex, U.n. doc. A/61/17 (7 July 2006); born, supra note43, at pp. 68-71.
74 Lynch, supra note 23, at p. 65.
75 See green tree Fin. Corp. v. bazzle, 539 US 444, 458-459 (2003) (rehnquist, J., dissenting); Yuen v. Superior Court, 18 Cal. rptr. 3d 127, 132 (Cal. Ct. App. 2004) (Mosk, J., concurring).
76 Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1773-74 (2010) (noting arbitrators' and courts' duty 'to give effect to the intent of the parties').
77 Lynch, supra note 23, at p. 68; see also Hanotiau, supra note 26, at pp. 5-6.
78 Lynch, supra note 23, at p. 70.
79 Ibid., at p. 71.
80 See, e.g., Green Tree Fin. Corp. v. Bazzle, 539 US 444, 452-53 (2003); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 US 614, 626-37 (1985).
81 See, e.g., ibid.; see also gaillard and Savage, supra note 70, at para. 480; Hanotiau, supra note 26, at pp. 5-6.
82 Lynch, supra note 23, at p. 72.
83 Ibid., at pp. 20-21, 72-73; see also Herrmann, supra note 25, at pp. 39-40.
84 Lynch, supra note 23, at p. 74.
85 compare Green Tree Fin. Corp. v. Bazzle 539 US 444, 450-451 (2003) (breyer, J.,) with ibid. at 458-459 (rehnquist, J., dissenting).
86 Freyer and litt, supra note 10, at p. 176; Hodges, supra note 18, at p. 373.
87 Justice ginsburg sees this result as highly problematic if it also robs claimants of the ability to proceed collectively in court. Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 130 S.Ct. 1758, 1783 (2010) (ginsburg, J, dissenting) (questioning whether the 'class-action prospect' can or should 'vanish' as the result of an arbitration agreement).
88 Lampley, supra note 62, at pp. 499-502.
89 Burch, supra note 15, at pp. 88-114.
90 Ibid., at pp. 97-105.
91 Lampley, supra note 62; Sternlight and Jensen, supra note 66, at p. 86.
92 Lampley, supra note 62, at p. 494.
93 Julian d.M. lew et al., Comparative International commercial Arbitration (2003) para. 16-92.
94 Strong, supra note 34, at pp. 1045-1055.
95 Freyer and Litt, supra note 10, at p. 175; Strong, supra note 34, at pp. 1052-1053.
96 See supra notes 14-27 and accompanying text.