Transcript:

Intro: Hello and welcome to Arbitral Insights, a podcast series brought to you by our international arbitration practice lawyers here at Reed Smith. I'm Peter Rosher, Global Head of Reed Smith's International Arbitration Practice. I hope you enjoy the industry commentary, insights, and anecdotes we share with you in the course of this series, wherever in the world you are. If you have any questions about any of the topics discussed, please do contact our speakers. And with that, let's get started. 

J.P.: Welcome back to the next episode of Arbitral Insights, in which we will discuss the ICDR and its Asia initiatives with Luis Martinez and Thara Gopalan, who are both vice presidents of the International Center for Dispute Resolution, or ICDR. I'm J.P. Duffy. I'm an international arbitration partner with Reed Smith, based in New York, that acts as both counsel and arbitrator in international arbitration seated around the world under a variety of governing laws and arbitral rules. I'm qualified in New York, England, and Wales, and the DIFC courts in Dubai where I previously practiced. I also have the good fortune to be listed on the ICDR arbitrator roster and to regularly sit as an arbitrator in ICDR Matters, as well as acting as counsel in arbitration governed by the ICDR rules. We're very fortunate to have with us today a repeat guest, Luis Martinez. Luis is the vice president for the ICDR, which is the international division of the American Arbitration Association. Luis is responsible for their business development covering the East Coast of the United States, Latin America, the Caribbean, the EU, and the UK. He's co-chair of the ABA's International Arbitration Committee and an honorary president of the Inter-American Commercial Arbitration Commission. He's admitted to practice in New York and New Jersey and is a dual citizen of Spain and the United States. And our third guest today is Thara Gopalan. Thara leads the ICDR in Asia and is based in the organization's Asian headquarters in Singapore. Thara brings extensive experience in commercial disputes to the table. Prior to joining the ICDR, she was a commercial disputes attorney, representing clients in international arbitrations and at all levels of the Singapore courts. Her expertise spans a wide range of industries, and she has a proven track record of successfully navigating complex legal issues, including high stakes to bet the company disputes. So as you can see, we have excellent guests today, and Luis and Thara will be able to tell us not just about the ICDR's ongoing initiatives around the world, but in Asia in particular. So we're really looking forward to hearing their insights. Let me just set the table a bit by talking for a moment about the ICDR for those that aren't as familiar with it. The ICDR was established in 1996 and is the international division of the AAA, which was itself founded in 1926. The ICDR provides dispute resolution services to businesses and organizations around the world in cross-border matters and administers all arbitrations filed with the AAA that have an international component. While it's based in New York, the ICDR has offices in Houston, Miami, Chicago, Los Angeles, and Singapore. And it also maintains a separate group called ICDR Canada for Canadian disputes. The ICDR has some of the most modern rules in the world, which it last revised in 2021. And you can learn more about those innovations in a podcast I recorded with Luis in April 2021 that's available on iTunes, PodBean, and the Reed Smith website. Now, to give you a sense of the scope of the ICDR's caseload, it administered 848 new claims in 2023 with an amount in controversy of 5 billion. So as you can see, they're one of the largest and most active arbitral administrators in the world. And we're really fortunate to have Luis and Thara here today to talk about that. Now, let's jump right in on that caseload and those caseload statistics for a minute. Luis, of the 848 new cases filed in 2023, what were the top three industries represented? 

Luis: Well, thanks, J.P. And it's a real pleasure to join you again on this podcast series and to be here with my colleague from our Asia Case Management Center. To touch base, our statistics are available on our infographics, which we do put one together each year to give some summaries and highlights of our particular caseload. You can find them on our website at icdr.org. But the top three caseloads came in using international arbitration, the ICDR system in the technology sector, the international construction sector, and international financial services. Those are the top three groupings we saw last year in 2023. 

J.P.: Now, Luis, that's interesting to me. I think the third category you mentioned was international financial services. Can you expand on that a bit? Because that's an area that I think is underrepresented in most institutions in the international arbitration space. 

Luis: Sure. They cover a range of different subtypes in the financial sector. There could be cases involving the financing of infrastructure projects. There could be cases involving financial documents in M&A agreements or shareholder agreements. It is an interesting cross-section, and it is an area that we are focusing on, not only in the international sector, but also working with our colleagues in the domestic divisions. So I think that with the construction and the technology caseloads are areas of focus for us. 

J.P.: That's great to hear. Now, Luis, tell me a bit more, too, about the technology sector and the types of cases you're seeing there. 

Luis: Sure. And that has been an expanding caseload for us in the last several years. The largest subtypes of these cases, they include, for example, software system developments. We have cases in related to that with partnership and joint ventures. You could have subcontracting agreements with independent contractors and, of course, licensing disputes. An interesting fact that goes with that is that over two-thirds of these technology cases, they actually settle prior to an award hearing and 28% prior to incurring any arbitrator compensation at all. As you know, we do a great deal at the outset to try to explore any procedural efficiencies. As we covered in the rules, the mediation step is actually obligatory with us unless the parties opt out. We will be amenable, of course, especially if the case falls within the appropriate range, use the expedited rules. So whatever the institution can do to bring the parties together and try to get these things settled at the earliest possible step is something that we try to explore. 

J.P.: That's really interesting. And I guess it's unsurprising to me that the technology sector would be so highly represented in the case statistics, because we really are seeing a lot more cross-border technology transactions, both in software, hardware. I mean, I think all the different facets of the technology sector, which is really, really broad. So that's pretty interesting. What are some of the other industries, Luis, that you're seeing cases come from? 

Luis: The other top leaders that use our rules are the real estate. We have entertainment cases. We actually are the administrators for the International Film and Television Alliance that also has opted to use our rules. Insurance, energy is very important. We have subgroups, by the way, that we've created joint teams internally, combining international and our commercial colleagues to focus on various sectors. So energy, construction, life sciences, financial services are all areas where we're pooling our resources and studying the market and seeing how best to position our domestic and international services. Energy is very important. And I think, you know, the subtopic of that, of course, obviously the upstream and downstream types of disputes, but certainly the ESG-related claims that we're going to be seeing and we're forecasting that that's going to be on the rise, Cases brought to mandate perhaps climate change-related policy or conduct. Cases brought to seek financial redress for damages associated with climate change, etc. And I think the energy sector is going to see a surge on that and probably some other sectors too because it's not limited only to the energy sector. 

J.P.: That's really interesting. And just to circle back on one of the earlier industries you mentioned, it's kind of fascinating to me. I've had the opportunity to sit as an arbitrator and to act as counsel in a few entertainment cases. And that's a sector globally that I think gets overlooked on occasion. People tend to not realize how broad that industry is and how much cross-border activity there is in that industry. So pretty fascinating. 

Luis: It also plays a large part in our history. I mean, as you mentioned, the ICDR was started in ’96, but going far back as 1927, we had a foreign division. And in the 50s, we also worked with the motion picture industry, which really helped us establish offices throughout the country because they wanted to have local offices in many locations where they have theaters. And that really led to our national infrastructure to provide ADR services in the United States. 

J.P.: Interesting. I was not aware of that history, but that makes an awful lot of sense. Now, let's turn to Thara for a minute, just to sort of talk about that caseload as well. Thara, how many of those cases had an Asian component to them? 

Thara: So we're seeing about 351 Asian parties use our services in 2023. A lot of these parties come out of China, about 174 Chinese parties. And our second largest user is India at about 32 parties. We've got some uses in Central Asia as well as Southeast Asia and Korea as well. Those tend to really focus on construction as well as energy projects. 

J.P.: Interesting. So just my sort of back of the napkin calculation, a little over 40% of the cases have an Asian component to them, if I've understood you correctly. 

Thara: Absolutely right. 351 out of 848. 

J.P.: That's great. And then of those users, predominantly China first and then India second. 

Thara: That's correct. So China from really all over the Chinese market, whether that's Beijing, Shanghai, Shenzhen, and Hong Kong parties as well. But we're seeing that across a whole gamut of industries, a lot in technology, but quite a significant number in construction as well. 

J.P.: That makes a lot of sense. And I would assume, I may have missed you saying it, but I would assume energy is a relatively significant one there as well. 

Thara: That's absolutely right. You'll find that a lot of Chinese, Japanese, and Korean contractors are building some of the energy projects that we're seeing in Southeast Asia. And there's a big sort of energy transition era that's going on in Southeast Asia. So a lot of Chinese parties are involved in that, and we're seeing some of that work come to us. 

J.P.: That's great. Now, amongst the Indian parties that you're seeing, what sectors do those cases typically fall into, if any? 

Thara: Some of those cases are pure commercial cases, things like contractual disputes, partnership disputes. But we are seeing some technology cases, especially from parties situated in Bangalore. And we've got a small number of construction and infrastructure cases as well. 

J.P.: Interesting. I would suspect that you're going to see many more technology cases. And I'm also surprised to hear that there aren't more life sciences cases. But I think that is probably coming as well, because those are two sectors I see an awful lot in the Indian market. Unsurprisingly, given the makeup of the Indian economy. 

Thara: Yeah, you're absolutely right. I think pharmaceuticals, life sciences is a really big economic driver for India for some time now. And we probably will expect to see a lot more of cases that come out of those regions. But for the time being, really a lot of the stuff that we are seeing is in that technology and construction space.

 J.P.: That makes a lot of sense. That makes a lot of sense. Now, amongst the caseload or the 2023 caseload, how many cases were emergency cases? 

Thara: Right. So we've actually had about 160 cases up till the end of 31st December 2023 that are emergency arbitration cases. And quite a lot of these disputes, we had 72, I think, where emergency relief was granted either partially or in full. 24 of those cases, parties settled. 21 cases, the application was withdrawn. 

J.P.: Interesting. Well, it's such a high number of cases settling at the outset. I think that's a real testament to how the ICDR does things because I'm not sure that's the case with every institution. So kudos to the ICDR for its administration plans. 

Thara: You know, some of the things that are really interesting about the ICDR, and I love sharing this number because it's just astonishing, really. We have 72% of cases settle out of all arbitrations that are filed with us, and over 30% of those settle without any arbitrator compensation. That's based on a study that we commissioned in 2016, and we are in the process of updating that, but we expect those statistics to be roughly similar. 

J.P.: Interesting. Now, will those statistics also break out? I know you said about 30% of those cases will settle without any arbitrate or compensation. Will it also break out, for instance, cases that settle before the final hearing or after the preliminary hearing conference? It would be interesting to see. And I don't even know how you would capture that easily, but the various stages of which cases settle. 

Thara: Well, I've got to discuss that with my data analytics team. I don't think they're going to be my best friends if I make them do all that work. But certainly 72% before final award is just kind of remarkable. I don't think I've seen comparable statistics anywhere else. 

J.P.: Yeah, I certainly haven't heard of any, so that's pretty amazing. 

Luis: I will add that technology that we are implementing, incorporating AI, has been the focus for us, especially with the arrival of Bridget McCormack, who's really emphasized the need to update and focus on innovation, on the incorporation of AI. We're really looking at what we can do to simplify the capture and tracking of our data with these new tools. And the team has been increased, including adding some data scientists as well. So we all know that data is king, especially in this field. Obviously, we're bound by confidentiality to a great extent. But where we can pull relevant data from the actual process without revealing the identity of the parties, I think will really be helpful for the marketplace to understand the ICDR caseload and system. So it's an exciting time for us with this focus on AI. 

J.P.: Yeah, that's really great to hear because it's such an interesting dichotomy that confidentiality is so important and such a valuable aspect of the process, but it does hinder some of the ability to get transparency and understanding from the outside. So finding a happy medium there with tools like AI is really important. Let's transition a bit to talk somewhat more about the ICDR's Asia plans. Thara, you've obviously been on the ground in Singapore for quite a while. Why don't you tell us a little bit and tell the audience a little bit more about the ICDR's presence in Asia? 

Thara: Thanks, JP. So we've actually been in Asia since February 2006, where we were invited to come into Singapore to help them with their plans to grow Singapore as a hub for arbitration. We officially started an Asia case management center in 2019, and that's staffed with full-time case managers who handle a substantial portion of our Asian caseload. Apart from our sort of formal setup, what we've been doing in the last couple of months is really establishing inroads into the markets directly across Asia. We've refreshed something called the ICDR Asia Advisory Council, And that's chaired by a leading arbitration practitioner, former president of the CIArb, Francis Xavier Senior Counsel. And we've also set up national committees in Singapore and the greater China region. We will shortly be setting up a committee in India. And we're really excited about that because the whole gamut of AAA-ICDR is actually going to descend on India to launch that in a couple of weeks. 

J.P.: That's great to hear. That's great to hear. Well, Francis Xavier is certainly an excellent person to help with that effort. And it's really wonderful to hear about the India Initiative, because that is such an important market. It's one I've practiced in or dealt with, I should say, more accurately for well over 20 years. And it's just such a rich market that really has so much possibility. So really wonderful to hear. Now, in addition to India and China, what are some of the other markets that the ICDR is focusing on? 

Thara: Well, we're really looking at sectors, I want to say. So technology and construction are the focus, and we're sort of looking at geographic markets based on those sectors. So for the time being, apart from China and India, there's actually a lot that's going on in Southeast Asia at the moment. Malaysia, Indonesia, and Vietnam all have a ton of infrastructure projects that are up incoming and plans for the construction of significant infrastructure in the next five to 10 years. And a lot of that is being built by Chinese contractors, Japanese contractors, and Korean contractors, in addition to the very large domestic players in each of these markets. So that's really where a lot of our attention is going to be focused on for the next couple of years. 

J.P.: Wow, that's really impressive. That's really impressive. Now, what are some of the other initiatives that the ICDR has to strengthen its ties in Asia? 

Thara: What we're really focusing on now is trying to spotlight thought leadership that's coming out of Asia. We've got a ton of really clever lawyers all over Asia, and we're trying to give them better opportunities to have a greater voice, rather, on the global stage. So that's something that our national committees are working really hard to do. In Singapore, that's led by Theo Shen Yi Senior Counsel, and in Greater China, that's led by Dr. Zhang Lixia. So there's a bit of a focus on trying to ensure that there's pathways for younger practitioners who are up and coming in the market, that we tap on the expertise of our extremely qualified and senior international panel of arbitrators, but also that we spotlight or we shine the spotlight rather on groups that may not necessarily have as much access to high-powered arbitration careers. So in some jurisdictions, that might be minority racial groups, and in other jurisdictions, that might be gender-diverse groups like women in arbitration, for example. So those are some things that we're really trying to do to ensure we make a positive difference in the market, but also that we're spotlighting local practitioners as we engage in our efforts in those markets. 

J.P.: That's excellent to hear. Now, let me drill down on that a bit because some jurisdictions are obviously very well known in Asia for being thought leaders. And the one in which you sit is an obvious one to me. India is certainly an obvious one, and you see a great deal of thought leadership coming out of China as well. But what are some of the specific ways that you're trying to increase visibility for practitioners in those jurisdictions? Is it through increased speaking opportunities, increased publication opportunities. How are you going about that? 

Thara: So you've hit the sort of nail right on the head. Speaking opportunities and publications are the main focus of these committees. We will be bringing really substantive programs that involve genuine thought leadership, not purely sort of anecdotal recollections through to major cities across China as well as India. In China, that's Beijing, Shanghai, Shenzhen, Hong Kong. In India, for a start, that's going to be Bombay, Chennai, Bangalore, and Delhi. And of course, in Singapore, we're fairly small in Singapore. So that's really going to be all over Singapore that we're trying to do these programs. But apart from programs, we do have publications that have always been run by the AAA-ICDR, and we're looking to increase Asian content on those publications. Be that the AAA-ICDR blog for sort of short-form contributions up to about 2,500 words, or the AAA-ICDR dispute resolution journal, which is for slightly longer-form content. 

J.P.: Excellent to hear. Excellent to hear. And let me put a very quick plug in for the dispute for the DRJ, which is the journal. I published articles in there. I always encourage our associates at Reed Smith to do so. It's a really excellent publication. It's really wide reaching. And it's a huge, huge benefit to you personally to put something in there in the audience. So definitely submit articles. It's a really top-notch publication and a wonderful way to increase your exposure yourself. So excellent to hear that you're going about that. Now, I'm sure we could talk all day. And what I'm going to do is rather than continue to do that, I'm going to reserve my right to call you guys back. But let me move on before I do that to some of the ICDR's other plans. I don't want to lose sight of those before we conclude this podcast today. So one of the things that's really amazing is the AAA has been very active recently. Luis, you mentioned Bridget McCormack taking over as president about a year and a half ago. You talked about some of the IA initiatives. There's been the recent ODR.com acquisition. With all that and the fact that the AAA is coming up on its centennial anniversary in 2026, which is an incredible achievement, there's a natural opportunity there for the organization to reflect upon its future objectives. What would you like to see the ICDR accomplish in the next five years? 

Luis: Well, I really like the direction we're going in with exploring our traditional caseloads. Of course, we always start from the position that we want to make sure our services, the administration of arbitrations and mediations are at the top level that they can be. And we've looked at that and how to improve those mechanisms and the related technology in our administrative platforms. But I think there's so many new opportunities for us. You were discussing some particular caseloads. Certainly, you're aware of all our initiatives in the life sciences sector. We have an advisory committee that focuses on that particular market. We're looking at enhanced arbitrator selections and lists that have high levels of experience for those particular types of disputes. Other markets that I think are important is we're seeing a surge in cases that we administer involving sovereigns, states, state-related entities, for example, in Latin America, in construction and infrastructure projects, where the participating sovereigns actually design the arbitral provision they're going to offer perhaps a potential for an investor. And we've been selected to administer a number of caseloads following that type of mechanism and example. The ODR acquisition, which is relatively new, presents us with a number of opportunities. The ODR platform is incredibly sophisticated. It has some incredible features to be able to customize really on a dime for the needs of a particular sector or a caseload. It has language capabilities. And we're looking now as a team, all of us to explore in our assigned regions, what potential opportunities there are to handle caseloads that we would be hard pressed to bring in because we didn't have a tool such as odr.com. So I think that opens the door for us to explore some emerging markets. So looking at technology, looking at emerging markets, looking at cases with sovereigns and the focus on the sectors are all very promising directions for us. And I should really mention, by the way, that the AAA itself has invested considerably and expanded the ICDR team. We now have three new people working in just the business development side. And I think that expansion will allow us to explore opportunities that there were just not enough hours in the day before to do. 

J.P.: Wow, that's a very ambitious program. And that's wonderful to see. Not surprising given the trajectory that the AAA ICDR is on, but wonderful to hear. Now Thara, where would you like to see the ICDR in Asia in the next five years? 

Thara: You know, I think apart from innovations in procedure and technology, where I think we've really been leading the charge, what I do want to see is us focusing on a lot more appropriate dispute resolution, as opposed to purely alternative dispute resolution. The AAA ICDR really does have the full suite of dispute resolution services, everything from neutral evaluation, mediation, arbitration, as well as disputes, avoidance boards for construction. So we want to see parties have the information and have the resolve to be able to use the most appropriate mechanism for resolving their disputes across all disputes that they come across. 

J.P.: Excellent. That is truly, truly, again, a very ambitious and sage outlook. And I'm quite certain you're going to accomplish it with the efforts that you're putting behind it. Well, one thing I just wanted to circle back on quickly is Luis mentioned ODR.com. We are going to have an episode released in the near future where I speak with Jeff Zaino, who's the vice president of the commercial division for the AAA. And he discusses the ODR acquisition a bit more as well. I definitely recommend that to listeners because it's a truly innovative move by the AAA and a really, really good reflection on how forward-thinking the AAA ICDR is. Well, we've got a pretty good idea of what the ICDR has been doing around the globe and in Asia in particular, and we've got a very good sense of where the ICDR would like to see itself in the next five years. So I would definitely like to reserve my right to bring you both back to hear how that's gone because I'm quite certain with all the forward-thinking and all the effort behind it that the ICDR will be highly successful in all its initiatives. But with that, that will then conclude our update on the ICDR and its Asia initiatives. I want to thank our guests, Luis Martinez and Thara Gopalan from the ICDR for their invaluable insights. And I want to thank you, the listeners, for tuning in. You should feel free to reach out to Luis or Thara with any questions you might have, as I'm sure they'd be happy to speak with you directly. You should also feel free to reach out to Reed Smith about today's podcast with any questions you might have. And we look forward to having you tune in to future episodes in the series. So thank you, Luis. Thank you, Thara. And we do hope to have you back soon. 

Luis: Thank you. 

Thara: Thanks so much for having us, J.P. 

Outro: Arbitral Insights is a Reed Smith production. Our producers are Ali McCardell and Shannon Ryan. For more information about Reed Smith's global international arbitration practice, email arbitralinsights@reedsmith.com. To learn about the Reed Smith Arbitration Pricing Calculator, a first-of-its-kind mobile app that forecasts the cost of arbitration around the world, search Arbitration Pricing Calculator on reedsmith.com or download for free through the Apple and Google Play app stores. You can find our podcast on podcast streaming platforms, reedsmith.com, and our social media accounts at Reed Smith LLP. 

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