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Copyright © International Chamber of Commerce (ICC). All rights reserved.
( Source of the document: ICC Digital Library )
A ferry sinks. A flight disappears over the ocean. A gas pipeline explodes. A natural disaster is magnified when a nuclear reactor is flooded.
Any mass disaster3 in the age of 24-hour news cycles brings with it weeks of 'breaking news' coverage, pundit speculation as to cause, and an international outpouring of sympathy for the victims of the tragedy and their families.
While an air crash, a reactor core failure and a gas pipeline explosion would seem to have little in common beyond the elements of media attention and the inevitability of legal proceedings, the lawyers charged with protecting the interests of potentially involved companies must quickly balance two primary charges:
1. The individual and collective commitment of all concerned to see that victims and their families receive (a) a satisfactory accounting of the cause of the disaster, (b) a commitment to measures put in place to prevent recurrence and (c) fair, full and speedy compensation4 for all proximate losses resulting from the disaster.
2. The fair allocation of responsibility5 to the parties with whom responsibility for the loss lies.
It is often (and mistakenly) considered that these are the dual and inseparable goals of the legal proceedings that follow any great tragedy. In fact, as anyone who has been involved in untangling the consequences of an accident of any kind knows, even the best-intentioned counsel nearly always face conflict between these two primary directives. Such conflict may be manufactured by another party, it may be a collectively irrational reaction to rational individual choices, or it may result from the inevitable complexity of multiple proceedings inquiring into the same corpus of facts.
While a certain degree of struggle between actors holding different views on the facts and their relative weight in the chain of causation is inevitable, and can even be healthy insofar as adversarial confrontation helps to elucidate the facts, it is difficult to find long-term collective value in the procedural wrangling and the tortuous posturing that accompanies the attempt to settle both primary liability to victims and apportionment of fault among defendants in the same litigation. This is illustrated by any of a dozen recent examples where the prime duties [Page189:] owed to the victims and their families were delayed or denied by the manoeuvring of defendants trying to secure their positions vis-à-vis each other.6
This essay makes an appeal for consideration of an alternative to current practice in mass disaster litigation. It urges defence counsel to separate proceedings dedicated to primary compensation from disputes between or among7 defendants aimed at determining the final allocation of responsibility for contribution and indemnity claims, and to submit the latter to arbitration. While the referral of all aspects of a dispute (primary and secondary liability) to arbitration has its merits, this would require a truly unique confluence of circumstances and open-minded counsel for all. This was achieved in the arbitration among victims' representatives, Boeing and AeroPeru after the 1996 crash of AeroPeru flight 603, but the case stands out as an exception. Consideration will here be given instead to the perhaps more attainable, though no less challenging, goal of submitting only the dispute over secondary liability to arbitration. That this is possible is illustrated by the ongoing confidential allocation proceedings arising out of a recent significant air crash among an airframe manufacturer, an airline and a component supplier (and their insurers), and by the indemnity proceedings among Air France, TAME, and insurers arising out of the 20 April 1998 AF 422 crash in Ecuador. Although it might not be right for every situation, recourse to arbitration between/among potentially responsible parties also offers process efficiencies and reduces the damage to corporate reputation and ongoing commercial relationships that so often follows from public legal proceedings in which primary liability and its secondary allocation among defendants are handled together.
Defendants may of course have primary liability to one another as well, not deriving from claims made against each or all of them by victims. Examples may include equipment losses, clean-up costs, investigation and legal costs. While these can amount to substantial sums, they are however seldom as financially significant and certainly not as important to the public's interest in justice as the primary liability shared among defendants following primary claims by third-party victims in the types of cases under examination in this article. In any instance not impacted by contractual or legal waivers, economic loss indemnities, or other limitations of liability effective between the parties, the result should follow the main allocation of fault. These primary claims between/among defendants can be a factor in choosing the posture for dispute resolution, but they will rarely be decisive.
Proceedings following an accident
The idea of recourse to arbitration for secondary liability disputes is not new. Individual defendant participants have often tried (sometimes successfully) to invoke arbitration clauses in existing agreements to remove a dispute concerning allocation of fault from primary liability proceedings. Before considering the legal merits of such attempts and the various defences that may be raised against them, it is helpful to consider in the abstract the predicament of defence counsel in such situations.
Counsel defending the interests of a corporate actor are almost certain to face multiple proceedings covering issues surrounding liability to third party victims of the accident. The universe of proceedings that may follow mass disasters can include, among others:
• criminal investigations into the entity and its legal managing agents, senior decision-makers and/or personnel directly involved in the facts that may have given rise to the accident;
• pseudo-criminal or administrative investigations by regulatory bodies for the purpose of imposing fines or other punishments for breaches of applicable regulations;
• proceedings to review whether and under what conditions operating licences are held;
• inquiries by independent government agencies into the probable causes (primary and contributing) of the accident with the intention of making recommendations intended to prevent recurrence;
• local inquest into the causes of death;
• independent investigations under the supervision of a board of directors or appointed monitor;
• transparency-oriented investigations by independent experts or commissions created by the company to recommend improvements for the purpose of restoring public trust;
• employment claims by individuals whose conduct in relation to the accident or its aftermath may have resulted in disciplinary actions;
• product certification reviews;
• insurance coverage disputes;
• administered mediation or compensation fund allocation proceedings;
• civil liability proceedings following victims' legal claims; and, of course,
• contribution/indemnity claims to allocate final responsibility between/among defending parties.
All of these proceedings concern some (or all) of the corpus of facts that has led to the underlying event.8 The separate (but often overlapping) goals these various processes serve does not always mean that they take place separately. However, it is helpful to parse the differences between various types of proceedings to understand this essay's plea for the separation of the civil proceedings among/between defendants in a separate arbitration.
The impact of adversity
It is fair to say that all of the proceedings listed above are intended to serve certain primary goals - assurance of fair outcomes for victims, the public interest and potentially responsible parties. In so doing they inevitably overlap to some extent, such that conduct in any one of the proceedings may impact the course or outcome of all the others. Factors that will increase the influence that one of the proceedings may have on others include the manner in which the proceedings are conducted, the speed and relative timing of those proceedings, evidence adduced in any of the proceedings, publicity surrounding the proceedings, journalist access to the record and the participants, and the outcome of any given review.
But one factor predominates. It has been my experience that there is no single factor so important to all proceedings for each and all defendants as the degree of adversity between and among defendants in any given dispute setting or subset of proceedings. An increase in this one factor [Page192:] does more to damage the probability of success in achieving the goals of any of the actors, including the victims' legitimate expectations of a complete explanation, measures to prevent recurrence, and speedy, just compensation.
When allowed to flourish, adversity bleeds over and poisons inquiries even where it ordinarily has no role to play and where relative fault has no legitimate relationship to the outcome of those proceedings. Worse, that adversity distorts the purpose of reviews undertaken to improve safety and delays the compensation of innocent victims. Finally, adversity among defendants can become an end in itself. Collective commitment to fair treatment for the victims and the public at large can be lost in a morass of irrelevant accusations and procedural posturing. Truth is the axiomatic first casualty of war.9 Other losses quickly follow. With the possible exception of the media, which lose sight of the broader story but delight in the frenzy of accusations, everyone loses.
The risk of adversity may vary depending on the type of proceedings.
In proceedings involving a product review, for example, a defendant may seek to emphasize the role of another factor in the accident, but the body adjudicating the proceeding will rarely consider 'shifting the burden of the outcome' from one actor to another. This may be because the regulatory standard applicable to a product is different from that applicable to its operator (as in aviation) or because an investigating agency with jurisdiction over a final product or service does not police its constituent components. Other types of proceedings such as those relating to licences, company-initiated independent reviews, inquests and administered victims' compensation, similarly restrain adversity between co-defendants.
By contrast, there are some types of proceedings in which adversity between/among defendants is essentially unavoidable, leaving only two realistic optimization objectives:
1. Minimize the degree to which the adversity among/between defendants will delay or distort the common duties owed to the tragedy's victims
2. Resolve the defendants' contribution and indemnity claims against each other at minimal cost and damage to their ongoing commercial relationship.
The history of litigation over contribution and indemnity claims is replete with dismal examples of defendants failing on both fronts as they essentially accomplished the opposite. The worst examples of post-disaster civil proceedings are those in which defendants sought apportionment of fault in the same proceedings as victims' compensation. The results speak for themselves: years of delay in [Page193:] compensating victims, frustration of independent investigations due to the fear of their impact on litigation, and serious damage to commercial relations between parties.
There are a few apparent bright spots where the defendants agreed to share liability upfront and victims were not denied the speedy closure of both their open questions on the accident's causes and the expeditious resolution of their compensation claims. However, the shine comes off these examples when defence lawyers are privately polled about their views on apportionment ratios rashly decided at a point when information is incomplete. This can also poison ongoing relations between parties. In other words, the resentment created by lack of process can be as damaging as that created by 'too much'. Either way, major economic actors can carry wariness and indignation forward into future economic relationships.
So, what is the right approach?
Arbitration could be the answer
My basic thesis is that the use of arbitration - a flexible procedure before an acknowledged expert or experts - to determine the allocation of ultimate responsibility among potentially liable parties will lead to better results for all concerned, including the victims and investigatory authorities who do not participate.
Some of the reasons for this opinion are no different from the prime reasons that underlie the choice of arbitration for any major business dispute, namely the expertise of the decision-maker, flexibility of procedure, neutrality, confidentiality, enforceability, speed and cost.10 Based on my experience and anecdotal evidence from discussions with other in-house counsel whose views I find quite credible, I would add another factor: acquiescence by the business in the results. The word 'acquiescence' is carefully chosen as it implies some part agreement, some part resignation, and a large, important part acceptance. In any event, it indicates that the parties are satisfied that they have received due process, whatever the outcome. This acquiescence by the business in a legal result is the most important touchstone of success over time, much more so than 'winning' in any individual case. The reason is simple: it allows the business to move on and even re-engage in commercially productive contact with former legal adversaries. In my experience, [Page194:] this acquiescence is born of the confidence business people have in the process, the neutrality of the decision-maker, the quality of the written award or decision, and the speed with which it is rendered.11
However, additional advantages somewhat specific to the arbitration of contribution and indemnity claims accrue, including:
1. Heightened benefit from confidentiality. In the case of contribution and indemnity cases, confidentiality has a special importance. The voracious public appetite for news and short modern attention spans cause the parties' product and service reputations to suffer just as much from allegations eventually disproven as from ultimate proof. It is part of popular mythology among some counsel that 'legal vindication' enhances the reputation of a product or service. Even actors internal to the process can occasionally succumb to this myth if they are angry enough about the latest salvo by a co-defendant. The truth is that everybody loses. There is no 'good story' that comes out of even apparently successful public bickering.
2. Less distraction from primary goals. Compensation to the victims should focus on legitimate questions of loss quantification, not sensationalizing the fault of the 'other(s)' to diminish the percentage allocable to any one actor. Often, defence lawyers lose sight of (or simply accept as inevitable) the tendency of courtroom tit-for-tat antics12 to expand the expectations of their blameless adversaries. What may have been a zero-sum game bounded by actual, demonstrable losses morphs into one where the limits of insurance policies and leaks concerning reserve amounts fire the ambitions of those who would stoke the rivalry. Experience bears out the fact that defendants' heated and public disputes inflate the demands of counsel for primary claimants. Further, the frustration caused by delays in compensation is only increased for victims by the muddied waters of defendants playing 'he said, she said' in the courtroom.
3. Focus on the 'real' defendants. It is common practice for counsel representing primary claimants to identify a dozen or more potentially responsible parties in initial lawsuits. This may be for any number of reasons. They may be seeking a tactical advantage by citing a nominal defendant to anchor jurisdiction in what is perceived to be a favourable forum. Internal competitive dynamics among plaintiffs' lawyers may cause them to initiate early and aggressive lawsuits, filed before all facts are known, to secure a position against a raft of possible defendants. Finally, and most importantly, experienced counsel for primary claimants know that the development of their cases and expected compensation will benefit substantially from discord sown among defendants, which again encourages suits against a larger number of them. However, two or three players quickly emerge as the 'real' actors in a liability allocation. When the dispute between/among those actors is removed to arbitration, the remaining counter-, cross-, and third party claims 'die on the vine', leading to a reduction of time and cost for both primary and secondary liability proceedings.
4. Increased benefits of flexibility. The inherent flexibility of arbitration really comes into its own in a proceeding that is both highly technical and involves the allocation of large quantum. Defendants can be left to over-simplify technology or operational nuances when presenting a case to a lay jury or even a quite intelligent but non-specialist judge. The opportunity parties have to select members of a tribunal and, failing that, the preference of institutions to appoint neutrals with experience in a given field grant credibility to the process and the decision-maker. Further, the flexibility of arbitration allows the procedure to be tailored to the parties' preferences and to be made as time- and cost-effective as possible.13 The final resolution of mass disaster allocation claims in court can take twenty years and, as a rough average, takes eight to nine years.
When defendants agree
In cases where the 'real' defendants all agree that the arbitration of allocation claims is a better path than resolving them in the framework of primary litigation, the truly difficult work for counsel representing defendants in liability proceedings14 effectively ends here. There remains the technical work (not to be underestimated but certainly quite feasible given that the parties agree in principle to arbitrate) of cleaning up the litigation landscape to prepare for the arbitration by drafting an arbitration agreement that, within the limits of party autonomy:
• sets forth how the parties will terminate or suspend the parties' cross-, counter, and third-party litigation claims vis-à-vis one another,
• prophylactically tolls any applicable statutes of limitations,
• provides for an arbitral framework,
• perhaps implements a non-aggression pact in the primary litigation to prevent an overspill of residual animosity,
• orders the confidentiality of the proceedings and notes any specifically required exceptions (e.g. under insurance policies or corporate/securities law),
• addresses any specific enforcement concerns raised upfront, and
• may or may not, depending on the parties' obligations under relevant insurance policies, require the agreement of insurers (whose involvement is always advisable but not always strictly required).
It is not necessary to obtain agreement from all defendants to join this framework. Those defendants that either evolving facts or contractual obligations (such as indemnities) will exclude from serious liability can effectively be 'left behind'. This can be accomplished, depending on the circumstances, by different means, including:
• an individual or collective agreement by one or all of the 'real defendants' who have agreed to arbitrate their allocation claims to indemnify the defendants who 'remain behind' in exchange for control of their litigation posture,
• a joint defence agreement specifying the conditions of a non-aggression pact, including protections against parallel evidentiary initiatives (whether within existing litigation or through measures taken under mechanisms like 28 U.S.C. § 178215), or
• simply leaving them behind.
Experienced counsel seeking primary liability have little incentive to retain and pursue non-core defendants and are generally willing to drop them once the likelihood of their liability has been excluded and they have served any procedural function they may have had (e.g. as an anchor for jurisdiction). Victims' counsel may not always be willing to see reason on this point. However, the benefits to the parties 'departing' the litigation greatly outweigh the risks of leaving behind a cadre of parties with apparently minimal factual liability and few incentives to expend resources to pursue the case against the 'departed' defendants. For those not regularly involved in such proceedings, this approach can seem unlikely, even naïve. However, cash is king, and even in those jurisdictions fraught with uncertainty, the tales of pursuit by primary claimants' counsel of factually blameless defendants are more legend than truth. Repeat players (and most of them are) understand the tremendous costs involved in proving theories of liability and the usefulness of a focused, rather than scattershot approach.
When defendants do not agree
Alas, history has shown that, despite the dismal outcomes in terms of publicity, drawn-out proceedings, poisoned relationships, etc., defendants rarely suggest, and much less agree, collectively to take charge of defining the framework of their dispute.16 So the allocation of responsibility among primary defendants in arbitration remains [Page198:] quite rare. Yet, the defined mechanisms of arbitration in the insurance and reinsurance sphere and their quite common usage in allocation of secondary/tertiary responsibility for the insurance aftermath of mass disasters (through subrogation or assigned rights) should surely provide sufficient examples of how such allocation is rationally handled. Maybe the white-knuckled intensity of defence counsel present on the front lines of the various proceedings may blind them to the usefulness of this example from further down the chain. Or, perhaps the resistance comes from the fact that insurance actors have the luxury of defining the manner in which disputes are initiated, whereas defence counsel on the front lines must react to the opening gambit of the victims' lawyers as primum mobile. Suffice it to say that, while counsel representing insurance companies may not always agree to arbitration as a means of resolving sharing disputes, they at least nearly universally recognize the potential value of this approach. Primary defence counsel could learn from them.
Although, as in the AeroPeru case mentioned earlier, parties have been known to agree specifically on the use of arbitration to determine the allocation of responsibility, it is more often the case that an enlightened party has used a pre-existing arbitration agreement to remove contribution and indemnity claims between two defendants from litigation first filed in court. In nearly all such examples, the success (as subjectively assessed by the pro-arbitration party) lies in wresting the dispute out of the litigation initiated by primary claimants, where the claims between/among defendants had been in the form of cross-, counter-, and third-party claims. Rarer still are those matters involving multiple defendants and multiple arbitration agreements that are removed from the judicial realm to arbitration under compulsion of one or more (but not by agreement of all) of the parties. This is not impossible, as confidential ongoing proceedings among an airline, an airframer and a parts supplier regarding a major aviation loss illustrate.
The key in attempts to compel a recalcitrant party to arbitration may lie in broadly drafted arbitration clauses in the contracts governing pre-existing relationships among defendants, allowing the parties' allocation claims to be seen as 'arising out of or in connection with' the agreements that linked them together in the first place and which placed all of them at the scene of the disaster. The importance of the precise facts of the parties' relationship, beginning well before the accident occurred, is central to the analysis, so much so that the only admonition that can be given is to keep an open mind and, in close cases where interpretation of party intent and party autonomy allows, consider seriously the advantages of the resolution of the defendants' dispute in arbitration.
Below is a catalogue of objections that are likely to arise and a view on each from a pro-arbitration standpoint. Effectively all objections a party may raise to being compelled to arbitrate are grounded in the basic theory of arbitration itself and will be immediately familiar to any practitioner. However, the uniqueness of the circumstances presented [Page199:] in separating a liability allocation dispute make it useful to run through some of the more immediate objections in the abstract. Even when the product or service contract underpinning (in part or in whole) the claims for indemnity or contribution contains an arbitration clause, some of the legal arguments that a champion of an arbitrated solution may have to overcome are as follows:
• The arbitration clause is not broad enough to encompass the legal bases on which contribution or indemnity is sought, which may include principles of tort, administrative liability, common law fault, etc.
• The contract does not ground fault-based indemnity claims but only the allegedly narrow assignment indemnity claims as they are commonly drafted, especially in services contracts.
• The losses for which contribution or indemnity is sought sees the parties stepping into the procedural shoes of victims, exercising subrogated rights or otherwise putting the objecting party outside the scope of any arbitration agreement with the party or parties seeking to compel arbitration.
• Necessary parties, including insurers, guarantors or potentially co-responsible parties lie outside the circle of parties that may potentially be referred to arbitration.
• Relevant conventions, regulations or treaties limit jurisdictions in which claims may be pursued or prevent the use of arbitration to resolve claims made pursuant to these instruments.
• Conservatory actions (e.g. appearances in multiparty suits, filing of affirmative defences, actions to preserve claims and defences subject to a statute of limitations) taken by a party seeking to compel arbitration have had the effect of 'waiving' that party's right to seek the arbitration of allocation claims.
• An award in an arbitration would incompletely resolve the claims among the parties, cause confusion and waste judicial resources.
• While referral to arbitration may be proper for the allocation of contractual liability, a referring party seeking a declaration of non-liability pushes the tribunal beyond its mandate.
Any one of these arguments is worthy of deeper analysis, yet such analysis would necessarily remain entirely abstract given that both the arguments and their resolution are closely dependent on the facts of the particular case. That said, there are a few principles that should encourage counsel seeking to overcome the objections of a recalcitrant adversary opposed to separating allocation claims from pending legal proceedings and referring them to arbitration.
1. While a review of judicial and arbitral interpretations of the wording of arbitration agreements and the distinction between 'arising out of', 'arising in connection with' and 'arising under' goes beyond the scope of this essay, it is fair to say that judicial interpretations [Page200:] err on the side of breadth17 when considering arguments against arbitrability based on such distinctions. The nature of arguments alleged to lie beyond the jurisdiction of an arbitral tribunal (i.e. tort claims) has no bearing on the arbitral tribunal's jurisdiction to hear claims that are couched in contractual terms. In other words, while the nature of any argument made by a pro-arbitration claimant may cause the tribunal to decline to follow the argument, the jurisdictional question itself must be resolved in favour of hearing the matter as a whole to the extent that the proponent of arbitral jurisdiction asserts a basis on which the tribunal could grant the relief sought. Thus, the theoretical fact that an argument supportive of a claim may be made in tort, or on grounds of administrative liability or some other extra-contractual theory, will not in itself prevent a tribunal jurisdiction from hearing the claim.
2. Any alleged access by 'necessary parties' (including insurers, guarantors or third parties whose fault may be invoked) to an individual arbitration is not fatal to referring the thrust of a dispute to arbitration. Experience shows that such arguments are a smoke screen. Their fallacy is nearly always revealed as such when the resolution of a core issue of liability has the effect of driving rapid settlements that follow the main result when a dispute is arbitrated between/among core parties whose potential liability truly underlies the heart of the matter. This again reinforces the desirability of shedding the extraneous baggage that encumbers judicial dispute resolution in favour of a streamlined arbitration that focuses attention on the main issues of the allocation of responsibility. In an arbitration the underlying chain of contracts channels liability to its proper final destination. If necessary, non-parties may be summoned in further proceedings, and insurers often have the right to control an assured's legal defence in arbitration by virtue of policy language. Besides, institutional rules on the joinder of parties have recently been loosened18 to allow a broader understanding of party autonomy to involve parties with an essential role to play. However, coverage issues aside, there is rarely more than one Gordian knot concerning the allocation of liability in a dispute, and the cutting of that knot nearly always leads to the resolution of claims that flow therefrom.
3. Waiver is generally narrowly construed.19 A party resisting referral to arbitration on grounds of waiver will generally have to show true and affirmative actions that express a genuine will to waive a right to arbitrate. These actions will certainly have to extend beyond the mere preservation of rights, privileges and defences20 that are typical of the early stages of any action that follows a mass disaster. If the party invoking an arbitration clause has remained generally cautious in responding to lawsuits by victims, cross-claims or third-party claims, it would be both contrary to precedent and highly surprising that such typical defensive actions would be seen to imply the waiver of a right to arbitrate invoked later. Even more 'aggressive' actions, such as affirmative assertion of rights in a judicial suit by a claimant that later seeks to refer a matter to arbitration will not necessarily be fatal, to the extent that they can be explained as consistent with a will to arbitrate the claim21 and do not proceed beyond a certain early procedural stage. This may be the case, for example, when a claimant that later seeks referral to arbitration has first filed a lawsuit to avoid an argument that a potentially applicable statute of limitations was otherwise waived.
These selected points are intended only to serve as guideposts and perhaps encouragement to those who see the advantages of arbitrating allocation issues among two or more key defendants and perhaps have a path to do so in the form of a contractual arbitration clause. While those who share the view that this will do most to contribute to the overall resolution of the dispute can provide spiritual support, most of the issues that will determine the success or failure of any individual attempt are endogenous to the specific case.
'More freedom for you there'- a final word
The legal claims that follow among many actors after a mass disaster should really be understood in terms of an attempt to impose an explanatory framework on the events that caused the losses that are the subject of those proceedings. Civil claims, whether by victims or by the defendants seeking to allocate responsibility for damages, are an extension of that framework in economic terms. It is right to ask what means produce results that meet efficiency criteria broadly defined to include the speed with which all actors can seek to move beyond the disaster and the overall recognition that the resolution was just and fair for all parties. The recognition that responsibility has settled where it properly lies is as important to society's perception of the effectiveness how a disaster has been addressed as a complete understanding of the causes and the assurance that remedial measures have been put in place to prevent recurrence.
Notwithstanding all the time and energy the author and those likely to read these words have spent promoting the cause of arbitration, resolution of disputes through arbitration is not an end in itself. However, there are specific advantages in separating the allocation dispute between/among defendants into an arbitration which, in my experience, will contribute to efficient and acceptable outcomes for all parties interested in the resolution of the legal claims that follow a mass disaster. While not yet common, some have blazed this trail, and others will follow.
See infra note 22.
Karl Hennessee is Vice-President, Public Law & Technology at Halliburton Energy Services in Houston, USA and also serves as the Chairman of ICC's Governing Body for Dispute Resolution Services; email@example.com. The views expressed in this article are entirely personal in nature and should not be ascribed to either Halliburton or ICC. This article also draws on his previous experience as Vice-President, Litigation & Regulatory Affairs at Airbus SAS in Toulouse, France but also does not necessarily reflect the views of Airbus or any of its employees.
While defined only loosely, the characteristics that define a 'mass disaster' for purposes of this piece are: a sudden catastrophic event with significant loss of life and/or injury; substantial media coverage; a complex chain of potential causation involving alleged human error by multiple actors as potential defendants; victims who are acknowledged to be entirely or nearly entirely blameless for losses suffered (no legitimate allegations of victims' co-responsibility or contributory fault); parties represented by a specialized class of lawyers focusing on large-scale claims; substantial (potentially insured) issues; andperception of a large potential pool of compensatory funds. This list is only suggestive. Through the course of the essay, the purpose is to draw on this list to show how these characteristics not only define the class of events but also serve to frustrate attempts by defendants to resolve the civil liability arising therefrom. This is especially true when the chosen legal forum is public and attempts to resolve both primary and secondary liability questions.
Speedy settlement at levels deemed fair by all parties being the best of all possible outcomes, consideration must be given to how most expeditiously to achieve the conditions for such settlement.
Actions relating to the allocation of responsibility may take many forms, grounded in tort, contract, public policy, or even pseudo-criminal law. In this essay such actions will be referred to collectively as 'contribution and indemnity claims' or 'allocation claims'. The nature of the action is not the central issue here. However, it may acquire importance if the initiative by one of the parties to compel the arbitration of allocation claims is resisted by another on grounds of the scope of a pre-existing arbitration agreement (e.g. does an agreement to arbitrate 'any and all disputes arising out of or in connection with' a product sale agreement bring what the resisting party characterizes as tort claims within the ambit of an arbitration?). Of course, no academic answer can exist that obviates the need to examine the unique facts and circumstances of a given case to determine the will of the parties as expressed in the agreement, while acknowledging current jurisprudence favouring a broad interpretation of arbitration agreements.
Counsel decisions in this area can also be illustrated in a theoretical framework as representing objectively rational choices in what is known in game theory as a Nash equilibrium. The idea is that a player chooses the action that maximizes his expected pay-off in light of his beliefs about the strategies of the other players. However, the beliefs of a player are not specified ex ante, rendering certain assumptions above dominant strategies necessary to the reliability of the solution. Such assumptions can be posited on the basis of experience. In ongoing work (K. Hennessee, Unmasking Irrationality: Representing Counsel Choices in Arbitration as Nash Bargaining Solutions, forthcoming 2015) I seek to extend to counsel choices in dispute resolution previous ground-breaking research in the application of econometric science and game theory in litigation reform (see e.g. S.W. Salant & G.J. Rest, 'Litigation of Questioned Settlement Claims: A Bayesian-Nash-Equilibrium Approach', Rand paper (Santa Monica, CA: Rand, 1982), http://www.rand.org/pubs/papers/P6809; P.L. Hersch, 'Indemnity, Settlement, and Litigation: Comment and Extension' (1990) 19:1 The Journal of Legal Studies 235).
The terms 'between' (implying two defendants) and 'among' (implying more than two defendants) can have tactical significance. They mark a distinction between what some defence counsel affectionately call 'grudge match' cases (one on one) and 'monkey cage' cases (three or more defendants - the image was born of the grimly amusing idea of monkeys locked in a cage throwing missiles and trying to avoid being hit). However, such tactics are no substitute for the strategically preferable alternative of removing the defendants' dispute to an arbitration forum more conducive to resolution than to gamesmanship.
Although the proceedings listed all seek to establish the factual sequence of the accident and its causes, their purpose in doing so is different and is generally accepted to fall into one of the three following categories: regulatory action or recommendation to prevent recurrence; punishment; or compensation from parties at fault to parties injured. Some authors add a fourth purpose: the establishment of factual sequence for its own sake. While a deeply interesting topic in its own right, an exploration of these issues exceeds the scope of the present article. On the prime motivations behind post-accident legal proceedings see e.g. R. Gilson & E. Facci, 'Forensic Aviation Human Factors: Accident/Incident Investigations for Legal Proceedings' in J.A. Wise et. al., eds., Handbook of Aviation Human Factors, 2d ed. (2009) at 29.3.
This idea is self-evident, and its own truth is amusingly illustrated by the 'war' over attribution of the original quote to half a dozen individuals ranging from Aeschylus to Dr Samuel Johnson, US Senator Hiram Johnson and others besides.
As highlighted e.g. by the 2013 International Arbitration Survey by the School of International Arbitration, Queen Mary, University of London, Corporate Choices in International Arbitration: Industry Perspectives (PwC, 2013) at 7, available at http://www.pwc.com/gx/en/arbitration-dispute-resolution/assets/pwc-international-arbitration-study.pdf.
The 2010 International Arbitration Survey by the School of International Arbitration, Queen Mary, University of London, Choices in International Arbitration (http://www.arbitration.qmul.ac.uk/research/2010/index.html) reported that 20% of respondents who had been unhappy with arbitration gave 'bad decision or outcome' as the reason for their disappointment (page 26). It cannot be considered that 80% of users emerged victorious from the process, yet 80% apparently seemed to acquiesce in the results, which reflects my own qualitative experience. As it is not the purpose of this essay to make a general plea for arbitration over litigation, I will leave to others the job of convincing readers of the general merits of arbitration and focus my arguments on its particular usefulness in cases involving the allocation of defendants' liability for mass disasters.
A partial (or at least occasional) answer to the question posed in the 2004 article by Professor Mistelis, 'What is wrong with litigation?' (L. Mistelis, 'International Arbitration: Corporate Attitudes and Practices' (2004) 14 The American Review of International Arbitration 525 at 539).
Most arbitration rules now place an obligation on the parties and the tribunal to tailor the process to save time and cost; see e.g. ICC Arbitration Rules, Art. 22(1) and (2) and Appendix IV (Case Management Techniques); LCIA Arbitration Rules, Art. 14.5; UNCITRAL Arbitration Rules, Art.17(1); ICDR International Arbitration Rules, Art. 20.2. By contrast, only criminal defendants have a right to speedy trial in state courts, and cost-control never goes beyond purely aspirational statements.
David Rivkin recently put it nicely: '[O]ften parties are their own worst enemies when it comes to agreeing procedures that most efficiently resolve the dispute.' D.W. Rivkin & S. Rowe, 'The Role of the Tribunal in Controlling Arbitral Costs' (2015) 81:2 Arbitration 116 at 123.
§ 1782 is a powerful US procedural/evidentiary tool (controversial in arbitration circles) that gives participants in separate legal proceedings - including private commercial arbitrations outside the United States - the ability to acquire evidence for these non-US proceedings.
I have written elsewhere on the behavioural irrationality inherent in that missed opportunity. Failure to grasp the opportunity to define disputes more often than we do stems much less from enlightened self-interest than from a natural willingness to pay a high price to keep options open. See K. Hennessee, 'ICC's New Aid to In-House Counsel in Charting a Course for Dispute Resolution' (2014) 25:1 ICC International Court of Arbitration Bulletin 19; see also J. Shin & D. Ariely, 'Keeping Doors Open: The Effect of Unavailability on Incentives to Keep Options Viable' (2004) 50:5 Management Science 575. My plea in the present essay can be seen as a plea for defendants to have the courage to frame the means of resolution themselves rather than allowing events to define the arena of the dispute. Classically, parties in this position will fail to act on the basis that they fear the appearance of weakness. Kennedy disposed of that pathetic excuse rather nicely: '[C]ivility is not a sign of weakness, and sincerity is always subject to proof. Let us never negotiate out of fear. But let us never fear to negotiate.' John F. Kennedy, Inaugural Address, 20 January 1961.
Premium Nafta Products Limited and others v. Fili Shipping Company Limited and others,  UKHL 40, where it was held that rational parties can be assumed to have intended that a single tribunal judge any dispute arising out of their relationship and that clear language to the contrary was required for this not to be the case. See generally G. Born, International Commercial Arbitration: Commentary and Materials (Kluwer, 2011) at 298.
E.g. ICC Arbitration Rules, Art. 7; ICDR Arbitration Rules, Art. 7; LCIA Arbitration Rules, Art. 22.1(viii).
The US has the most explicit statement on why and the degree to which waiver is narrowly construed: '[A]s a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay or a like defense to arbitrability.' Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1 (1983). Practice is different by jurisdiction, but the presumption against waiver is a constant force and just a matter of nuance and degree.
'[T]he question to be considered is whether the claims presented before the … courts involved a substantive examination of the dispute.' This was the formulation of the Paris Court of Appeal in Uzinexport-Import Romanian Co. v. Attock Cement Co., 7 July 1994. US courts are guided by the Supreme Court to be deferential on this point to arbitral tribunals themselves: '[T]he presumption is that the arbitrator should decide allegation[s] of waiver, delay, or a like defense to arbitrability.' Howsam v. Dean Witter 537 U.S. 79 (2002).
French Court of Cassation, 3 November 1993, Bull. civ. 1993 II No. 302,169, available at http://www.legifrance.gouv.fr/affichJuriJudi.do?oldAction=rechJuriJudi&idTexte=JURITEXT000007031545&fastReqId=1284860021&fastPos=1.
The quotation above and the title quotation are from the opening verse of Borodin's Polovtsian Dances which, I hope, is an appropriate metaphor for this essay and a recollection of a wonderful evening spent at the Metropolitan Opera with John Beechey, a true friend and mentor. The full text may be illuminating on both counts: 'Fly away on wings of wind
To native lands, our native song,
To there, where we sang you freely,
Where we were so carefree with you.
There, under the hot sky,
With bliss the air is full,
There, to the murmur of the sea, mountains doze in the clouds.
There, the sun shines so brightly,
Bathing [our] native mountains in light.
In the meadows, roses bloom luxuriously,
And nightingales sing in the green forests;
And sweet grapes grow.
There is more freedom for you there, song…
And so, fly away!'