The PEMEX Case: The Ghost of Chromalloy Past?

Lorraine M. Brennan, Esq.

Lorraine M. Brennan, Esq.

By Lorraine M. Brennan, Esq.

The international arbitration community sat up and took notice when a recent decision issued by Judge Alvin K. Hellerstein from the Southern District of New York in the Pemex[1] case ordered that an arbitration award that had been set aside by the Mexican courts could be enforced in the United States.  The case was particularly noteworthy because there is only one other reported case in the United StatesChromalloy[2] from 1996which ordered the same result, albeit for different legal reasons.

In most cases, awards that have been set aside at the seat of the arbitration are typically not enforced in other countries pursuant to Article V(1)(e) of the New York Convention.  In Chromalloy, the award had been set aside in Egypt, and the court used Article VII and not Article V of the New York Convention to conclude that it must enforce the vacated Egyptian award because to decide otherwise would violate clear U.S. public policy in favor of enforcement of binding arbitration clauses.  While Chromalloy was widely discussed, it was not followed here in the U.S., and several subsequent cases specifically rejected its reasoning.

In Pemex, a panel of arbitrators in Mexico City issued an ICC arbitration award worth approximately $400 million US (including interest) in favor of the petitioner, COMMISA. A subsequent judgment by the Southern District of New York confirmed the award. PEP, the respondent, appealed, and was successful in getting the award annulled in the Mexican court. In ruling, the Mexican court held that the district court for administrative matters and not arbitrators should decide cases such as Pemex, applying a law enacted after PEP and COMMISA entered into their contract. The decision also came after the statute of limitations for COMMISA to file in the district court for administrative matters had run out.

For the rest of Ms. Brennan’s discussion on the Pemex case, please read her full article from by clicking here.

New Mediation Law in UK Geared to Divorcing Couples

By Richard Birke

Richard Birke

Richard Birke

Despite the efforts of a group of 6,500 mediators and millions of pounds spent by the government on advertising and diversion efforts, divorce mediation languished in Great Britain.  The London Times reported that “only half of 4,000 adults surveyed would even consider an out-of-court solution to resolving their disputes.” [emphasis added]

A new law will require that divorcing couples with disputes about children or property will be required to attend a “mediation information and assessment meeting.”  The couples aren’t required to mediate, but merely to consider mediation.   There, they will be informed that the average mediated case in England costs 500 pounds and takes 110 days to resolve and that the averaged litigated case costs 4000 pounds and takes 435 days.   Presumably, they’ll also learn about how mediation works.   Surely, some couples will mediate who would not have without this nudge.

These small changes to the court’s approach to family law may be a harbinger of things to come.  It was certainly the case in the U.S.  that the earliest and most enthusiastic adopters of mediation in the U.S. were the lawyers and judges who worked in family law courts.   They successfully lobbied to have mandatory mediation programs in most all counties in the U.S. It wasn’t long after their success that the idea that mediation was a superior way to resolve many disputes penetrated deeply into the legal culture – into courts rules, laws, and the minds of lawyers and clients.

Lest this seem like news that the Brits don’t mediate, there’s evidence to the contrary.  Mediator friends in the U.K. report that business is brisk and that practicing lawyers understand the value of self-determination over the outcome of a dispute and a dedicated and skilled neutral.  I am always pleased to hear about mediation working well and I hope their practices continue to thrive.

But it seems that there’s still massive growth potential and it may be on the horizon.  Where the family courts go, so goes the dispute resolution culture.  After the divorcing couples have good experiences in a mediation they would not otherwise have considered (and a great many will have good experiences – that’s part of the magic of mediation), these same divorcees will go back to work running and working in companies that may have disputes – disputes that they would not have previously considered appropriate for mediation.

Family Justice Minister Simon Hughes summed it up perfectly when he said “Mediation works and we are committed to making sure that more people make use of it, rather than go through the confrontational and stressful experience of going to court.”  Let’s hope that divorcing couples have a superior experience than court and that Minister Hughes’ commitment translates into a cultural cascade in favor of increased employment of mediation.

The Growth of ADR in Brazil

ADR has been gaining momentum in Brazil for many years, sparked in part by a rise in foreign investment, the export of capital abroad, and distinct public policy shifts.  The Brazilian Supreme Court affirmed the constitutionality of the Arbitration Act in 2001, and the country adopted the New York Convention in 2002. There have been several advances since, including the recognition and enforcement of foreign arbitration awards, the creation of court centers devoted to administering and incentivizing ADR, and the development of ADR programs in law schools.

Arbitration in particular is increasingly used as a substitute for Brazil’s historically slow and somewhat disjointed legal process.  Mediation so far is primarily employed in small claims areas, such as family and criminal cases, and has not yet gained momentum in commercial cases.  This is because federal law on mediation is still in development. However, there has been progress. The new Brazilian Civil Code of Procedure, likely to take effect in 2014, mandates that parties first try mediation in an attempt to resolve disputes. The Brazilian Senate has also appointed a commission to prepare a mediation bill for the country’s Congress, which will be another crucial step in moving mediation forward.

From what we can see, arbitration is relatively well established in Brazil.  However, the development of new laws on mediation, likely followed by slow implementation means that mediation may not be widely accepted there for several years.  The developments for ADR in Brazil are very positive — and as ADR gains acceptance, and Brazil sees the impact on the judicial efficiency as well as the economy, its use is likely to spread even more.

Spreading ADR Best Practices around the World

By Chris Poole

Weinstein Fellows

Chris Poole and Judge Weinstein meet with three members of the 2013 Weinstein JAMS Fellows class.

Although many countries have not developed formal ADR processes as part of their legal systems, dispute resolution practices have been in place practically since the beginning of time. These practices have taken on many forms in different societies and they continue to evolve and mature. While many of us think of ADR only in a legal and commercial context, some of the most effective systems in the world exist in some of the least developed economies. Systems like conciliation, negotiation and adjudication are already built into many community structures.

In more developed nations there has been a lot of progress over the past several years aimed at increasing the use of mediation and arbitration in legal disputes. This is often driven by inefficient court systems or perhaps just to reduce the cost of disputes. In some countries the time it takes to get to court and achieve a litigated resolution can stretch over many years and when settlements are reached outside of court, the courts are not always willing or able to enforce them. Consumers in many countries don’t have access to alternatives to long and sometimes expensive legal proceedings.

While governmental bodies in the European Union, India, Singapore and elsewhere continue to use their influence to make ADR more accessible and attractive in settling disputes, the JAMS Foundation has taken a more creative approach. Through its Weinstein JAMS International Fellowship program, the foundation has brought more than 50 individuals from 44 countries to the U.S. since 2009 to learn more about the best practices in the American ADR system so that they can return to their home countries to “spread the word.” Judge Weinstein conceived of and funded the Fellowship Program to provide opportunities for ADR professionals from throughout the world to learn more about dispute resolution in the United States. Now in its fifth year, the current class of 2013 includes 11 Fellows from various countries including Egypt, Mexico, Iran, Israel, Afghanistan and Turkey.

These individuals come from all walks of life. Some are judges, many are lawyers and others just want to pursue a life of dispute resolution. Their goals may be to improve the efficiency in their home court system, set up a commercial ADR business or – in the case of one former Fellow from Bhutan, to “educate communities of the existence of our traditional dispute resolution system known as Nangkha Nangdrik.” Each of these individuals function as a sort of “Johnny Appleseed” to spread the word of conflict resolution and to promote more effective practices in their home countries.

Recently, Judge Weinstein and the Foundation partnered together to continue administering the Fellowship program. The funding provided by Judge Weinstein and the JAMS Foundation will provide a minimum of $6 million over the next 20 years. By that time, hundreds of Fellows from scores of countries will potentially have done more to promote ADR around the world than any regulation or law. It is a refreshing and inspiring approach.