All parties involved with a construction contract need to explore which dispute resolution option is right for them and the project, and also ensure their contract terms are as clear as possible to avoid potential problems down the road, writes Kim Slowey in Construction Dive.

In her article, Slowey covers mediation, arbitration vs. litigation, and the importance of planning.

She quotes Margaret Greene, partner and leader of the construction planning practice group at Honigman Miller Schwartz and Cohn in Detroit, who counsels that perhaps the most important aspect of dispute resolution is to minimize the chance of conflict before disagreements rise to the level of “disputes” or “claims.”

Read the article.

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Employers who don’t want employees to arbitrate employment-related claims shouldn’t bury the agreement in an employee handbook that includes a disclaimer stating that the handbook is not a contract, advises Business Management Daily.

That’s because a court could conclude that the conflicting language means the arbitration agreement isn’t binding.

The article describes a recent case in which an employer asked the court to send the case to arbitration, arguing that the employee knew about the arbitration requirement that was included in a handbook.

“The court didn’t see it that way. It reasoned that to be binding, the arbitration clause had to demonstrate clear mutual assent,” according to the article.

Read the article.

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A unanimous panel of the Sixth Circuit recently rejected a manufacturer’s attempt to compel arbitration under an expired contract in Linglong Americas, Inc. v. Horizon Tire, Inc., reports Butler Snow LLP.

Erin Palmer Polly explains that the manufacturer and its distributor entered into a collaboration agreement that contained an arbitration clause.

“The agreement expired and was not renewed, but the manufacturer and its distributor continued to work together and continued to make various representations of continued involvement,” she writes. “Approximately three years after the agreement expired, the parties’ relationship deteriorated and resulted in a federal court lawsuit.  The manufacturer attempted to compel arbitration and pointed to the arbitration provision in the collaboration agreement.”

She points to two important lessons to be learned from the case.

Read the article.

The Arbitration Nation blog provides a good example of how drafting arbitration agreements can go wrong, pointing to the Tenth Circuit’s ruling in Ragab v. Howard, in which a majority of the panel concluded that because the parties had six differing arbitration agreements, they had never reached a meeting of the minds on arbitration and their dispute would stay in court.

“The parties had six agreements that governed their business relationship. Each agreement had an arbitration agreement,” writes Liz Kramer in the Stinson Leonard Street blog. “But, those arbitration agreements did not provide for the same set of rules to govern the arbitration, or the same method of choosing an arbitrator, or the same notice period before arbitration, or the same opportunity to recover attorneys’ fees.  Even so, when Mr. Ragab sued the defendants for misrepresentation and statutory violations, the defendants moved to compel arbitration.”

Read the article.

Business Insider summarizes the major findings of a new white paper by blockchain consortium R3 and global law firm Norton Rose Fulbright on smart contracts.

The white paper explores whether blockchain-based “smart contracts” are legally binding under current legislation in different countries.

The Business Insider article discusses the variety of possible smart contract models, the effect jurisdiction has on whether smart contracts are legally binding, the enforceability issues resulting from smart contracts’ underlying technology, and the importance of embedding dispute resolution mechanisms to reduce friction.

Read the Business Insider article.

In his China Law Blog, Dan Harris writes that the dispute resolution provision in China contract may be the most important provision in the contract.

“If you put in a dispute resolution provision that makes sense, your Chinese company counter-party with whom you are contracting will be afraid to breach the contract. Conversely, if you put into the contract a dispute resolution provision that will not work, you are signaling to your Chinese company counter-party that it can breach its contract with you with impunity. Yes, it really is that important,” Harris writes in the blog post.

He explains why a provision calling for resolution in U.S. courts can sometimes be a hindrance, compared to a clause requiring dispute resolution to take place in Chinese courts.

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Drafting an arbitration clause for an agreement may seem like a straightforward matter most of the time, writes Gilbert A. Samberg for Mintz, Levin, Cohn, Ferris, Glovsky and Popeo. It may even be as simple as incorporating by reference an arbitration provision in another document or agreement. Or is it?

In the article, he discusses a recent federal district court ruling, Cooperativa Agraria Industrial Naranjillo Ltda. v. Transmar Commodity Group, Ltd., that may offer a cautionary lesson  before making such assumptions.

“In Naranjillo, the decisive principle was that an offeree cannot assent to an offer unless the offeree knows of its existence. The Court found that there had been no showing that Naranjillo actually knew of the existence of the arbitration clause terms,” Samberg explains.

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Lack of precision in reinsurance contract wording has been known to engender anomalous results, points out Larry P. Schiffer in Squire Patton Boggs’ Insurance and Reinsurance Disputes Blog.

“Often a single word or phrase can cause a court or arbitrator to construe an agreement in ways unintended. In reinsurance arbitrations, when the panel majority decides how a contract operates based on its construction of a word or phrase, the losing party is likely stuck with that result even if a court might have construed the contract differently,” he writes.

He describes a recent case that illustrates his point that legalese and unnecessary words can cause a trier of fact to interpret a clause in a way that is unexpected.

Read the article.

When parties enter into a domestic commercial contract, they may not think critically enough about what will happen if the relationship goes south and how the contract provisions that they chose to include—or did not choose to include or accepted without negotiation—will affect how and where they resolve a dispute and shape the remedies to which they may be entitled, according to an article on the website of K&L Gates.

“Contractual provisions that parties choose to include in their agreement depend on a number of factors including, among others, the identity of and relationship between the parties and the size and nature of the transaction,” write Lauren Garraux, Jacquelyn S. Celender.

In their article, they identify and discuss four types of provisions commonly included in commercial contracts that can have significant ramifications for contracting parties if a dispute between them arises.

Those types include alternative dispute resolution provisions, choice of forum and law provisions and jury trial waivers, damages clauses, and insurance provisions.

Read the K&L Gates article.

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While consumers may not have many choices when signing agreements that contain arbitration clauses, commercial parties often negotiate every last term of their agreements, according to a post on Shutts & Bowen LLP‘s website.

“This includes whether to require the parties to arbitrate their disputes or take them to court. There are advantages to each, so here are five things to consider when deciding whether to include an arbitration clause in a real estate contract, such as a purchase and sale agreement or lease,” write Al LaSorte, Matthew R. Chait and Matthew S. Sackel.

Those considerations include time, money, convenience, discovery and rules. The authors discuss the finer points of each one.

Read the Shutts & Bowen article.

The Ninth U.S. Circuit Court of Appeals overturned an arbitration award in a multimillion-dollar investment case Friday because the lead arbitrator impersonated a California attorney — something he did in dozens of cases before being exposed, the San Francisco Chronicle reports.

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When it comes to arbitration provisions in employment agreements, one size does not fit all. Arbitration has significant advantages and disadvantages. Deciding whether to include an arbitration provision in an employment agreement requires thorough consideration based upon an employer’s individual circumstances, according to a post in Trenam Law’s Employment Law Update.

The article discusses some of the pros and cons of adding such provisions.

Among the pros are class-action waivers, potential time savings and privacy. On the other hand, there’s the consideration of costs, because some employment arbitration regimes allocate many of the costs to the employer.

Read the article.

A well-drafted arbitration provision can save companies from expensive and time-consuming class litigation, two defense attorneys say in a report published by Bloomberg BNA.

Mayer Brown LLP partners Kevin S. Ranlett and Archis A. Parasharami of Washington say advise that companies and their lawyers should draft service and employment contracts with recent U.S. Supreme Court rulings on arbitration.

The two helped client AT&T Mobility draft an arbitration provision that was ultimately upheld by the U.S. Supreme Court in one of those landmark cases, AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011).

The sections on the three tips are headed: “Don’t Create Uncertainty,” “Include Consumer/Employee-Friendly Terms,” and “Avoid Potentially Unconscionable Terms.”

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A federal judge has ordered that attorneys representing private individuals and companies who entered into economic and medical claims settlements with BP stemming from the Deepwater Horizon disaster are entitled to be paid $555.2 million to cover their legal fees and remaining court costs, reports The Times-Picayune of New Orleans.

U.S. District Judge Carl Barbier pointed out that award represents about 4.3 percent of the estimated $13 billion that BP is expected to pay under the ongoing settlements. That compares to the average 9.92 percent of awards paid as fees and court costs in 21 similar “super-mega-fund” settlements totaling more than $1 billion, he said in an order.

“In weighing the award against local billing rates, Barbier said it would be the equivalent to an average $450 per hour legal fee, after being weighted for the intensity of effort involved in the case,” writes reporter Mark Schleifstein. “That compares to average nationwide rates of $604 for partners and $370 for associates in 2014, and to the $600 per hour paid by the state of Louisiana to its attorney in the BP case, Barbier said.”

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Arbitration clauses seriously harm many consumers. Yet it is nearly impossible to avoid signing them, if a person wants or needs to use the internet, phone, credit cards, loans, medical or long-term care services, and so on, according to an article posted by Newsome Melton on its Arbitration Law blog.

But lately, many state and federal government representatives, judges, politicians, and interest groups have been speaking up about arbitration, the article adds. Some have publicly pulled away from upholding universal “forced arbitration.”

“Individual arbitration clauses are now on the radar of many attorneys, judges, politicians, regulators, journalists, and consumers. It is too soon to tell whether the new or proposed regulations and rules preserving court trials and permitting class actions for consumers will be upheld or overturned,” the article says.

Read the article.

Practical Law will present a webinar titled “Ethics Issues in International Arbitration” on Thursday, Oct. 6, at 1-2:30 p.m. EDT.

In a release, the company said the seemingly straightforward process of appointing a neutral tribunal of three arbitrators and conducting the hearings may, in fact, give rise to a multitude of issues counsel and their clients must be aware of. How extensively may the parties communicate with their prospective arbitrator? How must the prospective arbitrator comport himself while being interviewed for the appointment? What are the rules regarding counsel’s interactions with witnesses? Are the rules different depending upon the jurisdiction?

Practical Law, the International Institute on Conflict Prevention & Resolution (CPR), and Jenner & Block will present international arbitration experts Richard Ziegler and Noah Hanft discussing ethics in international arbitration.

During this webinar, attendees will be walked through a hypothetical international arbitration, in which the presenters will consider:

• The parameters of party communications with a party-appointed arbitrator.
• The prospective arbitrator’s duties to maintain neutrality.
• Counsel’s duties in dealing with witnesses, including:
  • preparing witnesses for the hearing; and
  • communicating with witnesses after the hearings have started.
• The power of the tribunal to determine and redress ethical violations.
• The same ethical issues if the events occurred in the US.

A short Q&A will follow.

Ethics credit are available in multiple states.

Presenters:

Richard F. Ziegler, Partner, Jenner & Block LLP
Richard F. Ziegler is Co-Chair of Jenner & Block’s International Arbitration practice and a former Managing Partner of the firm’s New York Office. He is a former Chairman of the New York State Bar Association Committee on Professional Ethics, and served as Senior Vice President, Legal Affairs, and General Counsel of the 3M Company in St. Paul, Minnesota from 2003-07. Mr. Ziegler is also a member of CPR’s Board of Directors.

Noah J. Hanft, President and CEO, International Institute for Conflict Prevention & Resolution
Noah J. Hanft is the President and CEO of the International Institute for Conflict Prevention & Resolution. Prior to joining CPR, Mr. Hanft was General Counsel and Chief Franchise Officer for MasterCard, where he was responsible for overseeing legal and regulatory affairs, public policy, compliance and many business functions. Mr. Hanft currently serves on the boards of the Legal Aid Society and the Network for Teaching Entrepreneurship and is a member of the Council on Foreign Relations.

Victoria Kummer, Senior Legal Editor, Practical Law Arbitration (Moderator)

Register for the event.

NBC News reports that a class-action lawsuit filed against Wells Fargo might be hamstrung at the starting line, legal experts say.

Martha C. White writes that mandatory arbitration contract clauses may protect the bank from class-action suits brought by customers who had bank or credit card accounts opened in their names without their knowledge.

“Five years ago, a Supreme Court ruling said it was legal for companies to shield themselves from lawsuits by requiring that customers address grievances through a private arbitration system. Since then, consumers seeking redress from banks, even earlier cases against Wells Fargo in California, have been effectively stopped at the courthouse door,” according to the report.

“There’s no question that it’s very difficult to overturn an arbitration clause, although the facts in this case are pretty damning,” said Ed Mierzwinski, consumer program director for U.S. PIRG.

Read the article.

Juan C. Enjamio and Robert Scavone Jr. of Hunton & Williams report that the Eleventh Circuit recently addressed a novel issue: What should courts do when faced with an employment contract containing provisions that run afoul of a statute aimed at protecting the rights of men and women who serve in the armed forces?

The Eleventh Circuit answered this question in Bodine v. Cook’s Pest Control Inc., and held that an arbitration agreement in an employment contract is enforceable despite the fact that certain provisions of the arbitration agreement violate the Uniform Services Employment and Reemployment Rights Act of 1994 (USERRA).

They explain that Congress enacted USERRA in part “to prohibit [employers from] discriminat[ing] against persons because of their service in the uniformed services.”

Rodney Bodine brought suit against his former employer under USERRA and state law, alleging, inter alia, that Cook’s discriminated against him because of his military service. Bodine argued that the entire arbitration agreement of his employment contract was void under USERRA’s nonwaiver provision because the statute of limitations and attorneys’ fees provisions of the arbitration agreement conflicted with USERRA.

The appellate court affirmed the district court’s order and concluded that “USERRA’s nonwaiver provision should not be read to automatically invalidate an entire agreement with USERRA-offending terms.”

Read the article.

Having a mechanism for resolving disputes short of litigation is critical — particularly when working with foreign IT services providers. That’s why incorporating an effective arbitration clause into international outsourcing contracts is critical, writes Stephanie Overby for CIO magazine.

“Every international arbitration organization offers a standard clause IT service buyers can put into their contracts. Such clauses typically state that all disputes arising under or in connection with the agreement shall be resolved by arbitration under the rules of a specific international arbitration organization,” according to the article.

Overby quotes B. Ted Howes, partner and leader of Mayer Brown’s U.S. International Arbitration practice, “While such a standard clause is enforceable, more is required to make the arbitration clause workable and to minimize disagreements at the time of arbitration.”

Read the article.

In an article in the Polsinelli blog “Polsinelli at Work,” shareholder James C. Sullivan writes about how unsettled the law is on employer/employee arbitration provisions containing class/collective action waivers. For now, some guidance on the issue may depend upon where a case is filed, and the Supreme Court likely will resolve the conflicting lower court decisions on the issue.

“Five years ago, the United States Supreme Court in AT&T Mobility LLC v. Concepcion ruled, in a 5-4 decision written by Justice Scalia, that state laws prohibiting the enforcement of consumer contracts containing an arbitration provision with a class action waiver were contrary to the Federal Arbitration Act. Within a year of that decision, the National Labor Relations Board in D.R. Horton ruled that Concepcion did not apply in the context of employee rights under the National Labor Relations Act, specifically § 7 which vest employees with the right to engage in ‘concerted activities,’ ” writes Sullivan.

The Fifth Circuit, the Second and Eleventh Circuits have ruled that class/collective action waivers in employer-employee arbitration agreements are enforceable. But in June 2016, the Seventh Circuit  turned the tide, becoming the first federal court of appeals to adopt the NLRB’s rationale in D.R. Horton. And later the Ninth Circuit adopted the reasoning of the Seventh Circuit.

Read the article.