1. INTRODUCTION

Dispute avoidance, management and settlement often are not the core business of businesses and in-house legal counsel until a major dispute hits. Users are familiar with litigation and arbitration and sometimes with alternative forms of dispute resolution. The objective of the 36th Annual Meeting of the ICC Institute of World Business Law was to pay attention to two forms of alternative dispute management techniques: expert determination and dispute boards.

To a certain extent the topic is novel, and raises some difficult issues. The contributions in this volume provide a variety of in-depth examples regarding these issues, including recent developments. The editors wish to thank all contributors and are grateful that they could rely on their expertise and commitment to meet demanding deadlines. Without them, the publication of this volume in the Dossiers of the ICC World Institute simply would not have been possible.

These concluding observations cannot attempt to summarize the various contributions, but will only identify a number of threads that can be found throughout this book and which relate to the impact of applicable law (Part 2), contract law issues (Part 3), procedural issues (Part 4) and the relationship between expert determination or dispute boards on the one hand and litigation or arbitration on the other hand (Part 5).

2. APPLICABLE LAW

Both expert determination and dispute boards do not operate within a global well-known pre-existing legal framework providing predictable outcomes. As to expert determination, only a limited number of jurisdictions have statutory or case law rules regarding some aspects of expert determination processes, while many jurisdictions hardly have rules and must apply contract law rules whenever parties confer upon an expert the mission of giving some kind of binding opinion. As to dispute boards, their recent emergence in practice explains that their status is entirely governed by any contractual regime the parties may have agreed upon or by any self-regulatory rules adopted by them such as the 2015 ICC Dispute Board Rules.1

Thus, the rules that apply to expert determinations and to dispute boards may vary from one jurisdiction to another. Any such rules often may be overridden by specific clauses in the contractual relationships between the parties including any adopted self-regulatory rules, but the applicable law may still be relevant if and when any contractual regime contains some gaps. For that reason, it is advisable to check whether the contractual relationship between the parties includes a choice of law clause and, if so, whether it is sufficiently broad and unequivocal for disputes regarding the expert determination or the dispute board process as between the parties to be covered by the clause. If not, or in case of doubt, it is recommended to insert any such clause in the terms of reference or similar document concluded between the parties as to the process to fill the void.

Expert determination and dispute boards as creatures of contracts between parties attempting to manage existing or future disputes not only raise obligations between the parties as to these processes, but also involves a distinct contractual relationship between the parties and the expert or dispute board members.2 For the reasons already indicated in the previous paragraph, it is important to also deal with the issue of applicable law regarding this contractual relationship. An example is Article 8 of the Model Dispute Board Member Agreement incorporated into the ICC Dispute Board Rules 20153 which specifically draws the attention of the parties to a dispute board member agreement to the issue of applicable law and provides standard language for a choice of law clause where the parties only have to select any such law.

Regarding the selection of the applicable law, much will depend on the bargaining position of the parties, but it may be recommended to have any expert determination or dispute board process governed by a law also chosen for its familiarity and expertise with these alternative forms of dispute management. In this respect, the parties may also be advised to take into consideration that the dispute resolution process may be governed by a law different from the law that applies to the other provisions of the contract.4

Absent choice of law, any expert determination or dispute board process may become frustrated when a relevant issue arises and the parties involved cannot agree on the applicable law to solve any such issue. Ultimately, the law applicable to such issue will have to be determined by the experts or dispute board members or by any other decision maker (judge or arbitrator) having jurisdiction over such issues (see Part 5). In general, the law applicable to the contract between the expert and the dispute board member on the one hand and the parties on the other hand absent choice of law, is not too difficult to localize as the most important connecting factor mostly relates to the identity of the expert or dispute board member and the country where he performs the relevant activities.5 However, the relationship between the parties as regards their expert determination or dispute board process, absent choice of law, is much more difficult to localize as the process implies mutual efforts by the parties in contributing to the avoidance of a dispute or its resolution. A connecting factor is then to be looked for in any law that is most closely connected to the relationship which may be the law that applies to the initial contractual relationship between the parties.

Once issues of applicable law are settled, both contractual and procedural issues are to be discussed which will be the subject of the following sections.

3. CONTRACT LAW ISSUES

Similar to arbitration, expert determination and dispute boards are consent-based forms of alternative dispute management while they also contain some procedural elements. The consent-based aspects will be touched upon in this section; the procedural issues being reserved for the following section. With regard to the contractual elements, the involvement of a third party (the expert or the dispute board) in relation to the avoidance, management or resolution of the dispute will give rise to a duplication of the contractual relationships where a distinction is to be made between the relationship between the parties and their relationship with the third party.

3.1 Contract Elements between the Parties

Both expert determination and dispute board processes are based on consent between the parties to have identified or identifiable disputes submitted to expert determination or to a dispute board. The consent may relate to existing or future disputes and is to consider various issues creating a challenge for contract drafters. These issues include the following: (1) the identification of the issues or situations where the process is triggered; (2) how is the process to be instituted; (3) how is the expert or the dispute board to be constituted or activated; (4) how is the process to be conducted; (5) how is the process to be concluded; (6) how is the process to be financed; (7) what are the effects of the process pending the process and after its conclusion including the question as to the finality of the process and the ways of reopening it; (8) whether and to what extent is the process confidential; and (9) what is the relationship between the process with contractual and other dispute resolution processes.

As a contractual process, expert determination and dispute board clauses are capable of addressing all these and other issues, and provide for a by-and-large self-contained regime providing certainty and predictability to the process. By contrast, they will be ineffective towards third parties and will not be able to provide a title to the prevailing party which can be enforced against the losing party refusing to voluntarily comply with a binding decision. In the latter case, a contractual remedy such as specific performance (if and when available) or a money order will have to be sought in litigation or arbitration.

3.2 Contract Aspects between the Parties and the Expert or Dispute Board Member

Once the contractual threshold is triggered, an expert determination or dispute board process will commence involving an expert or dispute board member and creating a new and different contractual relationship between the parties and the expert or dispute board member. Also in this respect, some issues will have to be dealt with, often by means of an execution of a contract in writing such as letters of engagement6 which may deal with the following: (1) qualifications, independence and impartiality, if applicable; (2) scope of activities; (3) remuneration and payments; (4) liability, exemption and insurance; (5) confidentiality of the process and (6) applicable law and dispute resolution.

4. PROCEDURAL ISSUES

At first glance, it seems somewhat contradictory to raise procedural issues in purely consensual dispute resolution processes such as expert determination and dispute boards where the procedural issues are to be determined by any rules the parties have agreed upon. However, procedural rules other than those expressly agreed upon by the parties may be imported in the process by means of contract law mechanisms such as the doctrines of implied terms or the supplemental function of good faith and fair dealing. In addition, it is argued in relation to expert determination that, as binding decisions are issued, the process is subject to the guarantees of Article 6 of the European Convention on Human Rights ("ECHR") and that the fair trial standards of Article 6 equally apply to expert determination. By way of analogy, the same argument can be made in relation to those dispute board systems where the dispute board does not give a recommendation but is contractually authorized to give a provisional or a final decision.

The implications of any such Article 6 ECHR argument and any similar argument based on other human rights conventions or rules or on constitutional guarantees are not to be underestimated. The argument may import into a consensual dispute resolution process procedural guarantees regarding fair trial, due process, equality of arms and good administration of justice.

On the other hand, the impact of fair trial guarantees should not be overstated. First, some self-regulatory rules already provide for certain guarantees, for instance Article 21 (6) 2015 ICC Dispute Board Rules, which refers to a duty of a dispute board to act fairly and impartially and to give a reasonable opportunity for a party to present its case. In addition, case law of the European Court of Human Rights on arbitration suggests that the Strasbourg Court takes a pragmatic approach to the application of Article 6 ECHR to arbitration cases and is aware of the features of arbitration, its virtues and available control mechanisms by courts at the places of arbitration and enforcement.7 Although no case law seems to exist regarding expert determination, dispute boards or similar consensual dispute resolution mechanisms, an analogous application of the arbitration case law of the Strasbourg Court would imply that primarily the requirements of independence and impartiality of experts and dispute board members and of fair trial might cause Article 6 concerns. On the other hand, the Strasbourg Court on that same basis also seems to defer much in relation thereto to the applicable law and the control mechanisms exercised thereunder by domestic courts and, one might add, by arbitral tribunals, thus leaving a wide margin of appreciation to local standards as applied by domestic courts and arbitral tribunals. Strasbourg deference, thus, translates into review and control at a national level and anticipation of such review and control by experts and dispute boards in exercising their functions of dispute adjudication.

The developments above – certainly as they relate to fair trial – potentially have a big impact on expert determination and dispute board processes. However, these developments occurred in the field of arbitration and the question arises whether they can be transposed by analogy to expert determination and dispute boards. On the one hand, expert and dispute boards are contractual creatures providing, unlike arbitration, for a pure contractual form of dispute resolution with no enforceable title at the end of the process, and having only contractual remedies in case of non-compliance with a binding decision of an expert or dispute board. On the other hand, like arbitration, expert determination and dispute board processes lead to binding decisions. Considering these two angles, the question arises whether and to what extent expert determination and dispute board processes are governed by identical or similar standards of fair trial as prevail in arbitration. It is submitted that there is no "one size fits all" solution to this question and that a variety of circumstances (e.g., the nature of the dispute, the industry involved, the usages and courses of dealing of the parties, the required qualifications of experts or dispute board members) are to be taken into account in addressing this issue and in assessing its outcome.8 The potential application of open-ended procedural standards such as fair trial, due process, equality of arms and principles of good administration of justice to expert determination and dispute boards processes and the uncertain implications of such application certainly warrant further reflection upon developing templates to address these standards in a more concrete way in order to balance these standards with the need for efficient and flexible processes.

5. RELATIONSHIP WITH DOMESTIC COURTS AND ARBITRATION

A recurring theme regarding expert determination and dispute boards concerns their relationship with traditional forms of dispute resolution such as litigation and arbitration. The problem is much less acute regarding dispute boards as these have developed as an important tool to avoid and anticipate disputes and, for that reason, contract rules contemplate that any recommendations or decisions by dispute boards may not finally solve any issues or disputes and, thus, that the relationship between a dispute board process and final resolution of disputes through litigation or arbitration is to be dealt with. Examples are Articles 4 (6) and 5 (5) ICC Dispute Board Rules 2015 that provide that a party dissatisfied with a recommendation, respectively a decision by a dispute review or dispute adjudication board, may refer the dispute to arbitration if the parties have so agreed or, if not, to any court of competent jurisdiction. Similarly, Article 5 (4) states that non-compliance by a party with a decision by a dispute adjudication board authorizes the other party to refer the non-compliance to arbitration if so agreed or otherwise to a court having jurisdiction. By and large, dispute board rules attempt to assure a seamless coordination between the dispute board process and arbitration or litigation.

The problem arises, thus, primarily as to the relationship between expert determination on the one hand and arbitration or litigation on the other, where contract drafters sometimes do not clearly define this relationship. This problem is exacerbated by different traditions in civil and common law jurisdictions as to the relationship. In common law, the expert determination clause in a contract, unless indicated otherwise, is perceived as a separate collateral dispute settlement process independent from a general forum selection or arbitration clause. Non-compliance with requirements of the expert determination clause then leads to a non-binding decision, but does not terminate contractual obligations to have a binding decision determined through expert determination effectively obliging a party to resubmit a dispute to fresh expert determination proceedings unless the process had irretrievably broken down. The civil law perspective is different and looks less to the wording and structure of the expert determination clause and more to the context of the contract and broadly interprets forum selection and arbitration clauses to the effect that they also cover and encompass any disputes with regard to the expert determination process.9 Because of these different traditions, it is important, if not imperative, that a dispute resolution clause is drafted to clearly express whether any issues or disputes regarding the expert determination process are settled independently from a contract’s general dispute resolution clause or whether it falls within the scope of any such clause. This is all the more so as expert determination and dispute board processes do not bring about an enforceable title, and attention should be paid to the follow-up question as to obtaining an enforceable title in relation to contractual remedies sought for non-compliance with a binding decision issued by an expert or dispute board.

6. CONCLUSION

The contributions of this book confirm that there is a business need for techniques that attempt to avoid disputes, that are capable of managing any emerging differences and disputes and that resolve disputes other than through litigation or arbitration. In this respect, this book has addressed primarily two techniques: expert determination and dispute boards in their various manifestations and their different consequences. It also has shown that the demand of corporate and other users of these kinds of dispute services is met by the supply of tailor-made services endorsed by self-regulatory rules such as the 2015 ICC Expert Rules and the 2015 ICC Dispute Board Rules. Both expert determination and dispute boards as alternative dispute management techniques are often found in practice: many contracts provide for these alternatives and they are often used in practice to avoid, manage or resolve disputes.

The international legal framework for expert determination and dispute boards is, unlike arbitration, by and large solely based on contracts including incorporated self-regulatory rules. In many jurisdictions, a properly elaborated legal framework is lacking which emphasizes the need for careful contract drafting, including giving due consideration to a choice-of-law clause of a jurisdiction with developed rules regarding expert determination or dispute boards. Furthermore, attention should be paid to the question of whether and to what extent the contractual regime ought to incorporate procedural guarantees regarding a by-nature contractual dispute resolution process. Finally, it is imperative that seamless coordination between expert determination and dispute boards on the one hand, and litigation or arbitration on the other, be developed in order to avoid jurisdictional challenges regarding decisions made by expert or dispute boards.

1
ICC Publication No. 873.

2
There also may be a third relationship between the parties, the expert or dispute board and an institution providing services to the expert determination or dispute board process. This third relationship falls outside the scope of this contribution

3
Ibid., p. 48.

4
For English law, see Sulamérica CIA Nacional de Seguros S.A. v Enesa Engenharia S.A., [2012] 1 Lloyd’s Rep 671, [2012] 2 All ER (Comm) 795, [2013] 1 WLR 102, [2012] EWCA Civ 638 (Court of Appeal May 16, 2012).

5
Compare to the contractual relationship between the parties and an arbitrator, Hollander, P., Aspects de droit international privé (européen) du contrat d’arbitre et du contrat d’organisation de l’arbitrage, b.Arbitra 2013, 405-431.

6
See more general, Dubout, H. and Leroy, V., Les lettres de mission ("Engagement Letters") de prestataires de services intellectuels: des contrats à responsabilité très limitée, Cahier du Juriste 2015, 97-107.

7
De Ly, F., Arbitration and the European Convention on Human Rights, Liber Amicorum en l’honneur de Serge Lazareff, Paris, Pedone, 2011, 181-205. See also more recent case law as for instance ECHR March 1, 2016, Case No. 41069/12, Nouredinne Tabbane/Suisse.

8
One may refer in this respect to case law of the Dutch Supreme Court endorsing this approach and providing for a gliding scale between the two extremes of no application of procedural guarantees and their full application (Dutch Supreme Court, May 20, 2005, NJ 2007/114 and March 24, 2006, NJ 2007/115).

9
De Ly, F., Applicable law and dispute resolution clauses: a preliminary report, in Les grandes clauses des contrats internationaux, Brussels Conference, March 11-12, 2005, Commission Droit et Vie des Affaires, Paris/Brussels, FEC/Bruylant, 2005, 199.