Gordon: Good day to all our guests today, wherever you may be in the world. My name is Gordon Harris from the Gowling WLG Global IP Leadership Team and I'm delighted to welcome you to the eighth webinar in our series "The Life Cycle of a Smart Idea". So far we have been focused on legal rights and mainly traditional legal pathways for enforcement. But in recent years the possibilities of an alternative dispute resolution methods have been becoming increasingly attractive to many people and businesses. In the last two sessions, just before we took a summer break, we looked at the early stages of court based patent litigation. Today we're going to look down a completely different channel and look at the options for mediating or arbitrating IP disputes. Considering the question, is there a better way? Both mediation and arbitration transcend national boundaries and so do our panel of experts today. We have lawyers experienced in the arbitration and mediation of IP disputes from our offices around the world and on this occasion I'm going to step out from behind my usual moderator's desk to join the panel to discuss the question of mediation.
So let me introduce the panel to you. First of all, from Canada, I have Ron Dimock. He's a partner doing intellectual property litigation and he's also principal at DIMOCK, a business providing mediation/arbitration at expert witness services. Ron's a fellow of the American College of Trial Lawyers and a specialist certified by the Law Society of Ontario, in both civil litigation and IP law. He's a professional engineer, fellow of the Chartered Institute of Arbitrators, a certified mediator with the International Mediation Institute and an ICD director, a designation awarded by the institute of corporate directors. So a very experienced man for our panel today.
Jamie Rowlands is a partner in the international IP team based in the UK. He has significant experience enforcing and protecting intellectual property rights, in both global court disputes and international arbitrations, both institutional and ad hoc. Advising clients in the aviation, automotive, medical devices, consumer electronics and indeed telecom sectors. Jamie spent over 4 years in Guangzhou leading our China practice and his extensive experience in all aspects of the court system in Mainland China and he understands the complexities and cultural issues well.
Celine Bay, heads the intellectual property practice in Paris. She's a litigator and has been involved in huge cases across the full range of IP rights in Paris, acting for some of the worlds best known companies and brands, including the worlds major tech companies. She's well practiced in negotiating international technological partnership agreements as well.
Out in China we have Le Rong. Le Rong heads the corporate commercial team of our office in China. That team provides sound advice to clients in corporate deals, commercial contracts, employment and general compliance. An important part of her, and her teams work, is IP transactional matters. So trademark, patent licencing and so on. She has in depth knowledge about the Chinese legal framework and understands Western client's expectations. She also assists the firm's clients on commercial litigation and arbitrations in China.
Alexander Christophoroff is in our Moscow office where he has been for almost 10 years. His practice includes litigation and appeals across the full IP spectrum as well as unfair competition in trademark prosecution. His numerous court cases set many precedents. In the last century he was general counsel of the Russian Patent Office and was elected Vice-Chairman of the WIPO Committee of Experts on a settlement of intellectual property disputes. He also served as an arbitrator in dispute in Russia and arranged moot arbitrations of IP conferences.
As for me, well, I've been conducting IP litigation in the UK and European courts for over 35 years. I was an earlier doctor of mediation. I was accredited as a mediator by both the Center for Alternative Dispute Resolution and WIPO in the 1990's and I'm now one of the most experienced mediators of IP disputes in the UK as well, of course, of conducting many mediations for clients as their representative.
As we've learned from previous webinars the courts have evolved sophisticated and efficient systems and process for the conduct of IP litigation, with all the bases seemingly covered. We know that courts can grant interim and final injunctions enforceable by judicial systems. They can award damages on a variety of complex basis. They can make specific cost awards depending on conduct and outcome and they can declare IP rights invalid and require them to be removed from the record. So with all that experience and expertise on hand why would anyone look outside the court system to resolve their disputes? So the first question for the panel today is why use ADR at all? And we're going to start in Canada with Ron. Over to you.
Ron: Thanks very much, Gordon. I'm going to deal with the aspect of confidentiality and ADR offers flexibility on that issue. The court system, as well know, is premised on the open court principals whereas arbitration/mediation could be inherently private or public, as the case may be, decided by the parties in their agreement to mediate or to arbitrate. A confidentiality clause in the contract, it ensures that all information that's disclosed in arbitration or in a mediation, is kept confidential and whereas in the court it's inherently open. The court is loathe to have in camera proceedings although there are opportunities to have confidentiality and protective orders in certain circumstances. So, IP disputes involving confidential and sensitive information are probably better resolved, if they can be, through ADR because that information can be kept secret. For example, trade secret disputes. The essence of that is to keep the information confidential. In very highly disputed patent cases the development of the invention may be of very much interest to others and other competitors and so having ADR keeping that information confidential is very important. The other thing that you'd also want to do is to make sure that if you want to deter infringers you might want to litigation so that everyone is aware of the consequences of infringing your intellectual property right. But ADR does offer that flexibility and I'll turn it back to you, Gordon.
Gordon: Thanks very much, indeed. Jamie, what advantages can you see in ADR?
Jamie: Okay, well, thanks, Gordon. Yes. I'm going to look at arbitration in particular around the benefit of its flexibility and the flexibility angle is often touted as one of the main attractions for arbitration. In particular I'm going to look at two issues. Firstly, just covering how is arbitration flexible and then secondly, I'm just going to touch very briefly on is flexibility always a good thing when it comes to resolving disputes. So first up, how is arbitration flexible? Well, in a general premise arbitration is generally more flexible in terms of process and procedure than the rigid structures of ... In principal, parties have a huge variety of choice in relation to the structure of an arbitration. So they can really suit the dispute in question. For example, parties can choose what language they want the dispute to be in. The location. The location is very important. Often parties want some form of neutrality for the dispute to be heard. Also things like who the arbitrators are going to be and number of arbitrations. I'm going to touch on that later on. But even going as far as how costs at the end of a dispute may be dealt with as well. Importantly, amongst all those things, there's also how will the procedural rules work from start to finish. So just drilling into the procedural of the ... are on the one hand it's actually possible to literally start from a blank piece of paper in arbitration. So parties can agree to rules and procedures to entirely fit the scope of the dispute and the technology and sector involved. In my experience it is more common, particularly in sort of larger and more complex cases, ... a slightly more formal route is worked out and that's usually by appointing an arbitration institution to help run the arbitration itself. There are many, many institutions to chose from. Just by way of example, and literally plucking out of the hat, there's the International Chamber of Commerce based in France. There's the London Court of International Arbitration based in the UK and moving further afield, very well established Hong Kong SAR, China's (hereinafter referred to as "Hong Kong") National Arbitration Center based, I guess the clue is in the name, based in Hong Kong. There are benefits to using institutions. For example, they will provide the administrative assistance around the dispute. So that's really good for efficiencies, to ensure that the smooth running of the dispute, particularly if there are procedural disputes along the way. Importantly, every institution has their own bespoke rules that parties can choose for the purpose of the arbitration. These, as I say, these rules differ and sometimes fairly significantly. Some are more rigid than others but again it's another way, if you understand the different rules, to ensure that you pick the right institution for the disputed patent and that's an attractive value. For example, WIPO's arbitration rules are particularly focused on intellectual property and technology disputes. They have procedural steps relating to the use of experiments, site visits and prime ... models. The sort of things you would typically see in an IP dispute in court. So finally, just very quickly, is flexibility always a good thing in dispute resolution? There are many benefits, I think, to having sort of flexible process and procedure. I would say beware of too much flexibility. I caution against the blank of piece of paper at the start of the dispute because, frankly, trying to agree a structural procedure for any arbitration before the dispute crystalizes is very likely to save time and protect satellite disputes later on. I suppose a point coming out of that, and something we're going to touch on later on, is the importance of getting the arbitration clause right. Thanks, Gordon.
Gordon: Indeed, we are going to come back to that later on. Thanks very much, Jamie. Let's go to Paris now, a well known arbitration center. Celine, perhaps you'd like to pick out some advantages from your perspective.
Celine: Yes, thank you, Gordon. I totally agree with Jamie that the main difference between traditional court proceeding and arbitration is flexibility, and I will even call it freedom, because it's freedom to choose the arbitrators, the applicable rules and the time frame. Choosing the arbitrators is one of the most important advantage I see of arbitration in IP. Most specifically for patents and for technological agreements which tend to be highly technical and complex. So the fact that the parties can choose the arbitrators according to their expertise and competence is really crucial for IP. It should be kept in mind that's it not total freedom. I mean that keep in mind arbitrators should always be independent. I mean partial in able to secure enforceability of the award in many countries so I always encourage my clients to disclose any potential issue in this regard. This is not an advantage. This can be a disaster if impartiality is not met and the award is annulled later on. A few words on choosing the time frame because this is also an important aspect as well as it would avoid arbitration. It would avoid lengthy litigation in complex IP disputes and this is what most of my clients are looking for today. I must say in IP is flexible, efficient and quick method of settling disputes. Yeah, that's for Paris.
Gordon: Thanks very much, indeed, Celine. That's great. Let's go on over to Russia. Alexander, you've got a few things to say about the costs of arbitration and mediation.
Alexander: Thanks, Gordon. So comparing the costs I must say that mediation is generally the cheapest way to solve issues, as you can imagine, yeah. As for arbitration, its costs are usually higher and can just slightly vary from hundred to hundred, from institution to institution. But when we take litigation it's, in some countries, the most expensive option like in the United States. But in some other countries, like Russia, it may be fairly cheap. So it can compete with the arbitration for the award of the cheapest way to solve issues. In such cases probably the costs is not the most decisive factor in choosing arbitration over litigation. As Gordon and Jamie already said costs can usually be awarded in arbitration which is also a serious factor since in litigation, in many countries, the costs are not awarded or limited award. Thanks, Gordon.
Gordon: Thanks very much, indeed. That is such an important point, isn't it? That although in the UK we're used to the ability to recover costs in litigation that is not the case in many countries in the world but it can be done under the rules of an arbitration. Now, one of the countries that is picking up most on all of this, and where arbitration is a very, very popular method of dispute resolution, is China. So let's go over to Le Rong. Now, we've been having a few technical problems so fingers crossed that everything is okay. Rong, if you can hear me, away you go. We are having a problem. So, Rong is there but, Rong, can you hear me? No. Okay. Right. There's something to think about. I've got some of the highlights from Rong's script in front of me and I think part of what she was going to talk about today was around the choice of law clauses, and in particular, why a lot of people don't chose Chinese law when they're choosing to arbitrate, or Chinese companies that choose to arbitrate, and why they may not do so. Let's press on. I'll touch on mediation and we'll sees whether Rong re-emerges. I'm afraid there is a slight proneness for this to happen. So let me just wrap up on mediation then. The great thing about mediation as an option is that the parties own the process which is entirely flexible and can lead to almost any outcome. Many of the advantages which we've heard already about in relation to arbitration apply equally to mediation. Parties can choose the venue, mediator, the timing and even to some extent the cost of the process. Further, they don't have to abide by any outcome until they're happy with it so there is no decision. The mediator does not normally have that power. The outcome is only binding when agreed by both parties and encapsulated in a contract. I've always felt the most attractive aspect of mediation is the ability of the parties to craft their own solution, outside of the constraints of the usual legal remedies. There are no regular IP court can order a party to grant a specific limited licence, or to agree to trade with the other party going forward, or to dispose a part of its business to the other party. I've seen all those solutions arising at the end of mediations. Of course, the parties can always do this just by having settlement discussions but there is something about the presence of a mediator which can facilitate deals which might not otherwise arise. There's an element of formality in the way a mediation is conducted, which can allow parties to think that they've had their day in court, before getting down to the business of resolving their differences. A mediator can be a great sounding board for frustrations but at the same time providing a sanity check of the parties positions which may not be as strong as they would like to think. Another key role of the mediator is to get past obstinate lawyers. Very often lawyers have given their clients, what can I call it? Robust advice, and they're worried about stepping back from the tough position they've adopted. And they can be a real obstacle to a settlement which might actually suit their client perfectly well. So a well trained mediator can bypass the lawyers. Sometimes subtly and sometimes very obviously, indeed, to find out where the parties real interests lie. Just as example, I want a mediator to dispute of a trade name between two siblings who each inherited a branch of their father's business. Now there were times when the parties were expected moves were truly murderous and we had to take the mediation into a second day to allow tempers to soothe. But at the end the deal was done and I asked the siblings to embrace, instead of shaking hands, and they did and you never see that in court. So, mediation and arbitration don't just happen of their own volition. It's always open to the parties to a dispute to agree to arbitrate or mediate but commonly one or the other sees a hidden risk and sometimes prefers to motor on down the traditional litigation route. One way to make sure that ADR is available, at least in disputes arising out of contractual arrangement, is to insert provisions in a contract requiring the parties to use alternative dispute resolution methods, as a first, or sometimes only resort. Now the enforceability of contractual provisions regarding the requirement to arbitrate or mediate can differ around the world. So let's take a brief tour of some key jurisdictions to see what can be achieved. Jamie, do you want to kick off from the UK?
Jamie: Sure. Thanks, Gordon. So my first point is really something I said a few minutes ago which is the drafting of the arbitration clauses. It's really important. To often, in my experience, I find looking at arbitration clauses after the event that they just haven't been given the attention that they should have been. It's often, I suppose, late at night perhaps and the negotiations are going on and you get to a dispute resolution clause, or the arbitration clause, and it's sort of dealt with as another boiler plate issue. That's a dangerous game to play. So arbitration clauses, do look at them very closely. But from a UK perspective a general principal with enforceability of arbitration clauses is that they must be just clear enough to support the position that the parties intended to arbitrate. The good news is in the UK, which is a very pro arbitration jurisdiction, is the UK courts take a broad approach to the interpretation of arbitration clauses, generally. However, some disputes are not arbitrable in the UK. Up to certain employment issues, insolvency and probably unsurprisingly, criminal actions as well. Just switching the tables onto IP for a minute, there has been wide questions and debate as to whether IP disputes are arbitrable subject matter at all. Particularly the issue of validity which is a right in rem. I know this is an issue that's going to be touched on by other members of the panel so I won't dwell on it but just to say, from a UK perspective, both infringement and validity issues can be arbitrated. Just to note in relation to the question of validity, it will only bind the parties to the arbitration and will remain confidential unless, of course, confidentiality is waived by agreement. Thanks, Gordon.
Gordon: Thanks very much, indeed, Jamie. Celine, fill is on the French response to arbitration clauses.
Celine: Yes, thank you, Gordon. Like in the UK, under French law an arbitration clause does not need to be in writing, first thing, in order to be valid. Of course, as Jamie just said, it is really recommended to draft a clause because the clause need to be drafted really carefully, on many points. In France, the arbitration agreement would only be valid the same, invalid if the dispute relates to an illegible matter for arbitration such as family law, criminal law or tax law. Regarding employment relationships, France traditionally hold that regardless of a valid arbitration agreement in an international employment agreement. The employee shall always have the possibility to go before National Court. So, one should be careful with regard to international employment contract. It cannot be invoked in arbitration if the employee decides that it will go before a labour court, in France. In France which has explicit jurisdiction of employment matters. This is something really important because as in patent cases we have many employees invention related issues. So if there is a potentially this type of issue in the dispute, mind the applicable law and mind the arbitration clause because it might not be validated in France and in other countries, I guess. That's all for France, Gordon. Thank you.
Gordon: Thanks very much, indeed. Alexander, tell us a little bit about the Russian position on ADR agreements.
Alexander: Yeah. Thanks, Gordon. Actually, in Russia the agreement should be in writing but we exchange our messages also in writing. But not like in France. Otherwise it's generally has gone by generally the same principal as prevail in the world. So and some disputes are non-arbitrable. In Russia there's disputes arising from, we are talking about IP disputes of course, arising from collective management of copyright. Although disputes, for example, related to patent and trademark rights. So in Russia arbitrators can control validity, at least in rem, and for some, no one knows if they can do the ... I think they never tried. Yes, an arbitration agreement is presumed to ... until the opposite is proven and these are the arbitrators will decide on its validity but then it may be the court if the case goes there. For example, when the leading party comes for enforcement order and to minimize the courts view, it is highly advisable to expressly state in the arbitration agreement that the arbitrator's word will be final. Thanks, Gordon.
Gordon: Thanks very much. Now, I think we can hear from Rong, in China now. So, Rong, I didn't read our your answer to the first question. So if you want to back track a little bit and talk a little bit about the choice of law clauses in China and then move on to arbitration agreements, I'm sure everyone would like to hear what you have to say. So, over to you.
Rong: Thanks, Gordon. Sorry everyone for the technical issues that I had just now. So go back to the first question, in China the position of choosing governing law under the context of arbitration is the same as under their context of litigation. So parties are free to choose a law as per their wishes as long as there is a foreign element involved. However, what is good about arbitration process, because the first question was about what is the good thing arbitration versus litigation. So the good thing about arbitration process, on this aspect, is parties to the arbitration would be able to select arbitrators based on their choice of law. Whereas this is not possible in the litigation process. So, go to the second question that we were discussing about, actually when assessing the validity of an arbitration clause, the factors to be considered are more or less the same as what has been said by the other panelists. Such as clear scope of matters that could be arbitrated and the choice of arbitration to use must be specific. But there are two issues that I want to raise for ... so first of all is not recommended to mention both litigation and arbitration in the same agreement. I've seen dispute resolution clauses making reference to arbitration, and also unexclusive court restriction, in the same agreements. But this may work under some foreign laws but in China this clause will be very likely be regarded as invalid arbitration clause. Second point is unlike most Western countries, competence of ... principal is not totally recognized in China. Chinese arbitration laws still provide that the court can step in to decide whether the arbitration clause is valid should either party of the dispute raises the validity issue in front of a court. So, yeah. That's all from me, Gordon.
Gordon: Thanks very much and I'm glad we got to you in the end. Right. Let's go over to Canada now and hear from Ron in relation to the position in Canada and touching on the USA as well.
Ron: Right. I'm going to give the perspective here from a recent case decided by the Supreme Court of Canada. I'm actually have ... in my background in the courtrooms in the Supreme Court of Canada. The Supreme Court of Canada dealt with the issue of enforceability of an arbitration/mediation agreement as between Uber and its food deliverers. The Uber food deliverers. It was a class action brought by the deliverers against Uber for violation of local labour standards. However, Uber said that the matter should be mediated or arbitrated pursuant to the agreements in Amsterdam. The terms of that agreement provided also that the parties put up a $14,000 dollar administrative fee, more than £10,000 pounds sterling and there could be other costs of participation and that the mediation/arbitration take place in the Netherlands. That question of enforceability of those provisions were litigated and finally ended up in the Supreme Court of Canada. The majority of the Supreme Court decided that those provisions were not enforceable because they were unconscionable. There was an inequality of burgeoning powers between the Uber deliverers and Uber itself and so that resulted in an improvidence burgeon. So what the court did say is that, usually the arbitrator will decide whether or not the term is enforceable, but there are certain expectations where the court will decide that and that is usually when the terms are seen to be so unconscionable as to able the parties involved to access the arbitration panel or the mediation itself. In Canada, courts will usually back off and let the arbitrators decide whether something will move forward, but in certain cases where it's unconscionable or the parties cannot access the arbitration the courts will decide. That's it from me, the Canadian perspective, and not too much to say, as everyone has said earlier, in the United States as well. Thanks, Gordon.
Gordon: Thanks very much, indeed. Let's just touch on sources relating to mediation. The very nature of mediation, which is a non-binding process, means that any contractual provisions requiring mediation can do more than say that the parties should make an attempt and maybe behave reasonably. So there's no provision which can constitute an agreement to agree. Parties write in penalty clauses in the event of a party transparently failing to make even a modest attempt to settle but those agreements have not been enforced by the courts. The best you can do is to force the parties to go through the process, setting out how a mediator can be appointed, and the terms of the mediation confidentially, etcetera. Now, experience suggests that that maybe still be worth doing because sometimes, even a party which is most skeptical about the mediation option can get drawn into the process, and to their own surprise they find themselves negotiating in good faith when they're confronted by the other side and the mediator. The key aspects of any mediation clause would include, for example, the appointment of a mediator. This is normally stated to be by agreement between the parties. The division of the costs of the mediation, normally equally between the parties and a time limit by which a mediation must have been attempted after the dispute has been identified. Which is often around 30 days. Confidentiality is always strictly stipulated so even the fact of the mediation occurring must usually be kept confidential. So whether you're inserting provisions in a contract, or just because the parties have agreed to arbitrate or mediate, there are a number of practical considerations which need to be decided to take things forward. So for arbitration the venue is important. Who chooses the arbitrator and the panel members? What will be the applicable law? What arbitration laws will apply? For mediation, the selection of the mediator is the key consideration. So let's hear from the panel as how they go about making these decisions and some of the key factors to take into account. Jamie, you go first.
Jamie: Thanks, again, Gordon. So I've been involved in a number of different kinds of international arbitrations from the ... common and non-complex disputes all the way up to very, at your call, disputes requiring significant amounts of evidence. I think, obviously, you're going to have different considerations depending on the dispute in issue. The consideration I wanted to pick up today, actually, is involving a choice of arbitrators but it's really just a question as do you pick one or three arbitrators for your panel, which is the usual consideration that you have to make. Just some logistical points, really, I mean there is obviously a very significant cost benefit in appointing just a single arbitrator. For very good reason that good arbitrators tend to be extremely expensive and the arbitration process can even, for simple disputes, be relatively time intensive so costs of arbitrators due tend to be a significant part of costs as a whole. So, you know, a simple low value dispute is always worth these considerations for a single arbitrator will be sufficient. On the flip side of that, you usually, in my experience in more complex or high value of arbitration cases, parties tend to agree a panel of three arbitrators. There are immediate benefits to that in larger cases. But what I said about that is just be careful about how you decide interim hearing should be ... because, again, due to arbitrators, so if you have three of them, are quite difficult to rally round and get into a room, whether physical or virtual, at the same time. For interim applications during the arbitration process, some of those are going to be very urgent and it's going to be important that you get an arbitrator to hear that issue asap. So when it comes to interim applications, even if you fit a panel of three, be sure to try to agree that a single arbitrator can deal with those ... Thanks.
Gordon: Thanks very much, indeed. Celine, from your perspective.
Celine: Thank you, Gordon. Yes, of course I agree that a great care, as I said, should be taken in the drafting of the clause. Intellectual property matters I always recommend to choose the applicable law according to the IP right in question and according to the place, or the main place or places, where the award is to be enforced. Because, of course, the objective in the end is to get an enforceable award. So if we take an example, the example of French corporate law. It is an awful friendly law and according to this law an author can never waive his moral rights. Moral rights are considered, under French law, as being of international public policy. So this means that an arbitrable award that would hinder the moral rights of an author, as considered by French law and French courts, would not be recognized by a French judge so you never get an enforcement. So, if your award is to be enforced against a French author, and of course it works with any law in any nationality, but in this example if you're to enforce the award against a French author it's useless to try to choose a less restrictive law because your word in the end will not be enforced against him in France. In addition, what I advise is to consider in the clause whether they are ... or cannot access the validity of the IP rights in question. Jamie talked about it and I think, Gordon, that we'll discuss this later on again.
Gordon: Thanks very much, indeed. Rong, I hope you can hear us okay now. How do you go about some of these practical issues in China?
Rong: Yeah, thanks, Gordon. Just two practical suggestion or advice from Chinese perspective. First of all, make sure you get the name of the arbitration institution right because if the audience know a little bit about Chinese Arbitration Commissions, you will know that CIETAC is the most famous one in China and this is a countrywide arbitration commission, and you also have SHAIC in Shanghai, SCIA in Shenzhen, but both of them used to be part of CIETAC. So there were dispute about whether which one is actually the two parties has chosen. So make sure that you get the name right so that there's no confusion about which one you choose because if there's any confusion about that then your arbitration possibly be rendered valid. That's first as a suggestion. Second one, again, choice of arbitrator. It is the same in other countries as well. In China, what I want to mention is that, referring clients it might not be absolutely better to chose a foreign arbitrator. By saying foreign arbitrator I mean arbitrator has foreign nationalities. You all know that there are more and more Chinese legal professionals having been educated in foreign countries. Have been working in the international environment in international companies. They can speak very good foreign languages. They might have been qualified in Western countries but they do have the expertise. And also, in China, using foreign arbitrator is way more expensive than choosing Chinese arbitrators. So I just want to give you a suggestion. Maybe choosing a Chinese arbitrator could be an option as well. That's all from me.
Gordon: Thanks very much. Thank you. That's really good. Ron, IP disputes tend to be technical in nature so is that a factor in choosing a mediator?
Ron: Certainly it is, Gordon. Technical expertise is very important for the mediator or the arbitrator to have in deciding, either facilitating the negotiation or deciding the matter of arbitration. I wanted to touch on something that Jamie talked about before when you have one or three arbitrators. If you cannot decide on who that single arbitrator might be, you can refer it to an independent party, or to another institution to decide. Where you have three arbitrators, what the usual practice is is that each side gets to choose its arbitrator, and of course that arbitrator has to show impartiality and independence of course, and then those two arbitrators decide on the third arbitrator who usually becomes the Chair of that panel. I'd like to talk about international IP disputes and if you have a patent that's infringed in several different countries, it may be very expensive and difficult to try to enforce that around the world. If you have an agreement between the parties involved to have it resolved by mediation or by arbitration you can pick the particular jurisdiction. You can pick a particular law and you may want to pick law that's more predictable or more settled, and so on, and by having a single decision maker or mediator to resolve the dispute, can save parties a great deal of time and money. So ADR has that advantage. Thanks, Gordon.
Gordon: Thanks very much, indeed, Ron. Anything from Russia to add to this?
Alexander: Yeah, thanks, Gordon. Actually the peculiarity in Russia is that recently Russia would trade off most Arbitration Commissions. So there are only four left. If we set aside Maritime Arbitration Commission, which has nothing to do with IP, then we only have three. International Court of Arbitrators. International Court of Arbitration then Arbitration Center and Arbitration Center of RSPP, which stands for Russian Union of Industrialists and Entrepreneurs. So you can find many outdated websites which clears other arbitration tribunals but they are now defunct. So if you put it into the agreement you don't get an arbitration. Like everywhere, I think parties are free to choose between that panel or a single arbitrator. In Russia they also can choose between a decent ... in the tribunals. Or a simplified procedure. They can of course pick the place and language for arbitration, etcetera. They are free to choose governing law but it is advisable that their choice is somehow justified since a totally ... appointed a law can be ignored. I must repeat that it is important to expressly state the award will be final, if you want that. Thanks.
Gordon: Thanks very much, indeed. Just touching on mediation then. I said in relation to the question of mediation clauses in contracts that the identity of the mediator is usually somewhat optimistically stated to be by the agreement of the parties. If the mediation arises without any contractual basis then obviously that's the default position. But it can be very hard to identify someone acceptable to both parties. The mind set goes something like this. Anyone suggested by the other side must be unacceptable to us. They must have their reason for choosing or proposing that person. So choosing an external party to make the choice is often the best way forward and people often approach either a mediator service provider or a technical institute for this purpose. In an IP dispute the parties will usually want someone with some experience of IP to help guide the parties during the process. Of course, the mediators are not normally arbitrators. They don't have the power to make a decision or a finding. However, my experience as a mediator is that I'm almost always asked at some point what my view of the case is. Now any answer has to be hedged with provisos but it can be very influential on the outcome. So experience of IP is important. Most of what we've discussed so far can apply to any mediation or arbitration of a commercial dispute. But this is an intellectual property event. So what are the specific considerations that need to be taken into account in the arbitration and mediation of IP disputes, particularly those involving registered rights which are subject to so many of their own rules? Let's go quickly through this, if we can, please panel. Ron, do you want to kick off on the subject of global enforcement?
Ron: Thanks, Gordon, and I'll be very quick. With arbitration and mediation you can have one stop shopping, as I said a moment ago, and the parties can take a combination of different remedies from different jurisdictions and put them into one dispute and decide that by mediation or by arbitration. We touched on validity of an intellectual property registration or right, for example, in patent. Jamie talked about how there's a difference between an in persona and in rem remedy and courts in Canada, and United States, can direct the Commissioner of Patents to declare a patent invalid but an arbitrator can't do that. So you could have a provision in your agreement whereby the parties would agree between themselves that the patent is invalid, cannot be enforced in disputes around world as between those parties. But it wouldn't apply across the board. I also think it's important that arbitration and mediation provides for a settlement which is clear, whereas if you have litigation in several different jurisdictions you could have different outcomes and different jurisdictions which doesn't make for a very good resolution of the disputes between the parties. So, for global settlement purposes mediation and arbitration are ideal. Thanks, Gordon.
Gordon: That's right. Thank you. Alexander, anything from Russia?
Alexander: I must say, exactly the same from Russian perspective.
Gordon: Okay. That's great. That's very nice and quick. Thank you. Celine, Paris.
Celine: Yes, thank you. I'd like to talk a bit about validity, again, of IP rights because it's certainly a very interesting topic in arbitration. The fact that the IP right is subject to many of their own rules can render, really, the decision of the arbitrators quite complicated and it can also reduce the interest of arbitration in certain cases. So the possibility for arbitrator to rule the validity of IP rights, for example, national trademark of patents, really depends on national laws. We've seen that. Under French law arbitrator can appreciate the value of a patent provided that it is part of a counterpane in an infringement dispute. We've heard from Jamie that it's the same in the UK. It seems to be the same in the US and in Canada, for example. But it's not the same, for example, in Sweden. It's not the same in the Netherlands, in Australia or in Spain. All of the validity of a patent is regarded to be of public interests. So only national courts or administrations can decide on the validity of a patent and can cancel a patent, an invalid patent. There is a debate in Germany and Italy because there is not that settled on this issue so you see that when you are in a patent related dispute, involving several countries, and the validity of the patent is challenged, or likely to be challenged, what do we do? What should the arbitrator do? Should he apply the law provided for in the arbitration agreement? But the risk is, in that case, if the law in question allows the arbitrator to decide on the validity, the risk is that the decision may not be enforceable in some countries. Should the arbitrator then assert it's competence to assess the validity of the patent by applying each national law corresponding to each patent. Of course, this may raise difficulties and also this may lead to conflicting decisions amongst all countries, and of course, this is difficult to conceive in arbitration. This is not what we want. We would like an award applicable the same way everywhere. It may be important and validity is important. I have to provide for a non-challenging prose in licence agreement, for example. Or to consider the problem of validity in the arbitration clause, at an early stage, to decide on whether the arbitrator will, or will not, assess validity for all the countries.
Gordon: Thanks very much, indeed. Jamie, do you want to touch on one of the big issues in IP, which is very commonly arbitrated, which is the settling of fair reasonable and non-discriminatory licence terms?
Jamie: I'm going to spend about an hour 30 seconds on this because I am unconscious of time, Gordon. But yeah, absolutely agreed that the issue of FRAND licence determine an arbitration is hot to trot. Even in light of the fact that obviously in the UK we've just had the Supreme Court decision in an ... panic but the Court of Appeal decision was upheld which said that the UK court does have jurisdiction to settle global FRAND terms under certain fact pattern. Great for the UK court. But even in light of that I think arbitration of these types of disputes is really attractive. Very, quick reasons for that. Firstly, it allows very complex licencing issues to be resolved in front of a panel, can be specially chosen because of knowledge of sector and issues. Secondly, it provides a forum where this global issue, again, can be resolved without having to start separate litigations throughout the whole world so there is an efficiency to it. Thirdly, and lastly, the dispute can be resolved confidentially which is in many cases is a big plus.
Gordon: Yeah, very important and leading. You don't want to set unfortunate precedents around the world. Mediations can result in any outcome. The parties are free to choose whatever terms they want to settle the case, under the guidance of the mediator, who may apply cautionary messages about things like anti-trust law. But ultimately it's up to the parties. That can include the change of ownership of IP rights or even an agreement that a registered right is in effect invalid. That can just be dealt with in persona between the parties or I have it seen it done, to put it in a contract, that can clearly contract of compromise at the end of the mediation, to say that the party who owns the IP right will actually apply to have it taken from the register. Whether that would be enforceable or not is another question. A good mediator will not let the parties leave the mediation venue before an agreement is signed. Because you could have spent all day negotiating and get really close to why, but if you let the parties go home without actually signing up, then it's very dangerous and the next day somebody changes their mind or talks to someone else. The whole thing falls off. Even though it can sometimes take as long as the mediation itself, until a settlement agreement is signed, the settlement is effectively unenforceable and worthless. Sometimes the parties anticipate the breakdown of the mediation process and make provision for the mediator to change hat and become an arbitrator. This is known as the Med-Arb. This can be provided for in a contractual provision but it is not without risk. Unless the secondary arbitration process is conducted in accordance with some established and recognized arbitration rules the decision is not likely to be binding in its own right. Maybe the answer to that is too incorporate that arbitration finding in a contract but it is still slightly dangerous. Right. Very briefly, we're going to run around the panel for one last shot. It is in the nature of IP disputes that they're frequently multi-national and although both arbitration and mediation are easily susceptible to international coverage, local issues are still important, with any given country recognize and enforce an arbitration finding, for example. So, let us run around now, very quickly for one key point from each jurisdiction. Starting in France with Celine.
Celine: Yes, thank you, Gordon. I would like to take your word on the enforcement and execution. As you know, most countries are part of the New York Convention on recognition and enforcement of foreign arbitral awards, which lists the grounds on which an arbitral award might be set aside and which include violation of due process or non-compliance with the arbitrator's mandate, for example. The New York Convention also allows the application of national law that is more favourable to the recognition and enforcement of the award. In this respect French law is considered to be more favourable, compared to the Convention, in that it provides with fewer grounds for non-recognition. This means that an award which has been set aside in the country will not systematically be set aside in France and may be recognized an enforced in France. That's for France, Gordon.
Gordon: Thanks. Thanks very much, indeed. That's great. Ron. In Canada.
Ron: Okay. <laughter> Thanks very much, Gordon. As opposed to Ron, in China. Canada and the United States are both contracting parties to the New York Convention, as Celine has mentioned, and that recognizes and enforces arbitration awards very efficiently and effectively. As we've talked about mediation, the parties can make it final, and it usually is. With an arbitration, Canada and the United States, it's very unlikely that an arbitration award that's done according to the principles of arbitration can be appealed. One of the things though that is important to recognize, at least in Canada where you have a Federal jurisdiction, is the matter of limitations. You have a certain time within which to enforce an arbitration award. For example, in Canada we have Provinces and Territories. In Alberta you have only 2 years to bring a matter before the court to have it enforced. Whereas in Ontario, where I am, you have 10 years. Be cautious of waiting too long to enforce your arbitration award. Mediation is final and you can resolve it as quickly as you want, can, anywhere and at any time. So there's are my comments from Canada and I'll turn it back to you, Gordon, in the UK.
Gordon: Thanks very much. So Ron it would seem to be that getting local advice is very important. Presumably the same applies in the USA. You may get different provisions State by State.
Ron: Oh yes. That's right. Exactly. So beware of that. As I said in any foreign, where you have a Federal jurisdiction such as United States and Canada.
Gordon: Yup. Thanks. Jamie, what about the UK? Briefly.
Jamie: Noted. Very little to add actually. The UK is also a member of the New York Convention. As I've said before, the UK and the English courts are very pro arbitration. So reality is there are some criteria by which recognition, enforcement can be denied but on the whole, if it can do so, foreign ... awards will be recognized.
Gordon: Thanks very much, indeed. Rong, what about the position in China?
Rong: Yeah. I will be very quick as well. This is really very recent news and is a milestone, Chinese student ... president. So from now on it is possible to directly enforce a arbitration award rendered by a foreign Arbitration Commission in China - ie: the Arbitration Commission is foreign but the seat of arbitration is in China. Before it's not possible and now it is possible and this foreign arbitration award does not need to go through the recognition procedure. Which is very good news for International Arbitration, Arbitration Institution or International Clients.
Gordon: That's right. Thanks very much. Quick word from Russia, Alexander.
Alexander: Russia is also a party of New York Convention so Russian courts easy enforcement order ... ... of Article V of the Convention. Obviously every country applies public order or public ... ... but it probably deserves separate event to discuss.
Gordon: Thanks very much indeed. <laughter> We haven't got time for a special event now. Just a couple of questions that we've had that came up on the Q&A there. In one of the patent litigation sessions we had before the summer break there was quite a lot of talk from Paris about the ... ... procedure. Very attractive way of gaining evidence. How does that fit in with arbitration? So, Celine.
Celine: Yeah, yeah. This is a good question. Yes. ... ... is a powerful tool to get evidence together prior to litigation. It cannot apply in arbitration because it is ... jurisdiction from the president of the court. We'll appoint a bailiff so it's very official procedure and when we go by surprise at the premises of the defendant to gather evidence. So this cannot be done, of course, in arbitration. In arbitration there are other means of gathering evidence, of course. The arbitrators, depending on the law, the rules, but it's given full power to get evidence from the different parties during a course of arbitration. So this is not a tool that we can use in arbitration but there are other means that we can use.
Gordon: Thanks very much. That's useful. Ron, last question for you. Apparently the Federal Court handles pretty much all patent cases in Canada as well as other trademark copyright cases. What is the approach of the Federal Court to ADR?
Ron: The approach is that it strives to settle as many cases as it can without going to trial and it's very successful at doing that. One of the unique services that it offers to the parties is to provide a court official to mediate the dispute for free. You don't have to go out and hire an expensive mediator like any one of us on this panel. You can have the court official just mediate the dispute. Another really unique feature of the Federal Court practice is to provide a judge at the early stages of a lawsuit to provide an early neutral evaluation of the dispute. What that judge would do is give an indication to the parties after hearing submissions as to whether or not one side would likely prevail at trial or not, as the case may be. It's not binding and, of course, it stays confidential but from my experience, that type of proceeding does provoke settlement in most cases.
Gordon: Thanks very much, indeed. I'm going to ask one more question actually. This is really more for my own interest but for Rong, in China, Hong Kong has historically been a real center for arbitration and very important Arbitration Commission there. We have a difficult micro-political environment right now. Would you still recommend Hong Kong?
Rong: I think the answer is yes. I would still recommend Hong Kong because first of all the reason is that Hong Kong still has lots of legal professionals. You have lots of choice of good arbitrators who has specialized in different type of foreign law and, secondly, Hong Kong is a jurisdiction, although it's not like judicial jurisdiction. It's different from Mainland China but Chinese companies will still treat Hong Kong Arbitration Commission as an arbitration which is more closer to the Mainland China entities, than the other like Singapore or UK or ICC. Chinese parties will easily accept the Hong Kong Arbitration Center. Also the other thing which is quite important is that I think arbitration is not affected by this political problems. So they will still stay very private and neutral. If you have any contracts going on with Chinese companies and they don't accept any US or UK Arbitration Commission, Hong Kong IAC is still a very good choice for foreign clients.
Gordon: Thanks very much on that ... advice. Thank you to the panel and to everyone who's attended today for your attention. I really hope that you got what you wanted from this session. My take away message is that there is really an alternative way of resolving an IP dispute. Both mediation and arbitration should be kept very much in mind. You've heard a lot about the advantages today and the flexibility and the confidentiality and all the things that make these methods of dealing with disputes attractive. We're going to step away from the mainstream of this webinar series now and we're going to be returning to the world of patents and trade secrets, early in 2021. We said at the outset that there would be branches and the next few webinars in this series follow the question of how to get the subject of our smart idea to the market. So we're going to be looking at issues around brands, designs and advertising. So watch out for those invitations and they'll be coming up in the next few weeks.
A recording of today's event will be appearing on our website shortly and on our dedicated IP platform, goexcel.gowlingwlg.com, where it will join all of the previous webinars in this series so if you'd like to see one again, catch up on one you missed or recommend the series to a colleague then please go ahead. Thank you, once again, for your very kind attention today. We look forward to seeing you again soon. This broadcast will close automatically in just a few moments. Thank you very much.