São Paulo Arbitration Week 2024
THE AUTHOR:
Lara Fernanda Yokota, Doctoral student at the University of São Paulo & Associate at Toledo Marchetti Advogados
On 17 October 2024, during São Paulo Arbitration Week, the Clube dos Arbitralistas Lusófonos (CAL), the Club Español e Iberoamericano del Arbitraje (CEIA), and Cescon, Barrieu, Flesch & Barreto Advogados (Cescon Barrieu) co-organized a panel to explore how the in-house counsel can enhance efficiency in arbitration.
The panel, moderated by Gabriel Seijo (Cescon Barrieu), featured Carolina Fonseca (Construcap), Gabriel Costa (Shell) and Hannah Tung (CGN Energy). Ana Gerdau (Derains & Gharavi) and Fernando Marcondes (MAMG) delivered the opening remarks, while Bruno Rodrigues (Sciences Po) delivered the closing remarks.
The discussion emphasized the importance of involving in-house counsel in strategic decision-making throughout the arbitration process. The panel offered valuable insights into the reasons behind this involvement and the practical ways in which in-house counsel can improve efficiency in arbitration.
This post highlights some of the key takeaways from the event.
The In-House Lawyer as the “Project Manager” of Arbitration
The panel opened the session by introducing the concept that the role of the in-house lawyer in arbitration is akin to that of a project manager. This is because a company’s objectives in arbitration may extend beyond merely securing a favorable decision, and the in-house lawyer plays a crucial role in identifying and achieving these objectives.
As the panel explained, companies are primarily focused on running their business and delivering optimal results for their investors. In this context, a company’s objective in a dispute may go beyond obtaining a favorable decision. A company might pursue the performance of a contractual obligation, reimbursement of damages, mitigation of losses, preservation of business relationships, or other goals. Naturally, these objectives shape the company’s litigation strategy.
When a dispute arises, it falls to the in-house lawyer to propose potential solutions, considering the dispute’s significance to the business and the associated risks. With deep knowledge of the company’s operations and strategic objectives, the in-house lawyer is well-positioned to manage the allocation of resources and offer strategic guidance to the external law firm, ensuring that the arbitration is conducted in a way that aligns with the company’s goals. Thus, the in-house lawyer can easily be compared to a project manager.
How In-House Lawyer Can Contribute to the Efficiency of Arbitration
Once established that the in-house lawyer has a leading role in the arbitration process, the panel moved on to discuss the various ways the in-house counsel can contribute to efficiency in arbitration proceedings. One of the ways this can be done is through strategic decision-making.
The in-house counsel can exercise this decision-making role on a few different occasions. The panel indicated three main instances:
- the negotiation of the arbitration agreement;
- the early stages of the dispute;
- the strategy during the evidence production process.
In the early stages of the dispute, for instance, the panel suggested some of the key decisions to be made by the in-house lawyer involve the initiation of arbitration proceedings, the execution of a settlement agreement, the selection of an external law firm, the early production of evidence and the nomination of a co-arbitrator. In this respect, the panel further detailed that the in-house counsel decision should consider the candidate’s credentials, experience, reputation, prior opinions, diversity of profile and background, and likely preferences for a presiding arbitrator, as well as the external law firm’s advice.
Similarly, in respect to evidence production, the panel pointed out that the in-house lawyer should decide the moment and the specific procedure to produce evidence.
- Would it be best to carry out an evidence production procedure before or after the written submissions?
- Is it necessary to submit an expert opinion to better explore the content and the implications of the evidence produced?
- Is it desirable for the arbitral tribunal to have its own expert?
These are just some of the questions the in-house lawyer should ponder when determining the evidence production strategy.
Another way the in-house lawyer can contribute to the efficiency of arbitration is through the compilation of lessons learned from previous disputes and the development of internal guidelines or processes.
To illustrate this, the panel explored initiatives such as the creation of a well-defined guideline to determine whether to initiate arbitration proceedings or not, the creation of an internal database documenting the company’s experience and views on the performance of the arbitrators, external law firms and expert witnesses, the creation of an internal process or workgroup to collect and organize the documents of every venture in case a dispute arises, and the replication of successful practices in other ventures or arbitrations.
This last initiative was exemplified by the panel through a clause that sought to bring efficiency to evidence production. In arbitration, it is common for both parties to submit reports by party-appointed experts, leaving the arbitral tribunal to either appoint its own expert or reconcile the differences between the expert reports submitted by the parties. To mitigate the risks and costs associated with this, an alternative could be including a clause in all its contracts requiring the contracting parties to jointly appoint a single independent expert which would act during the performance of the contract and whose report would be the only one to be submitted in the event of arbitration. This way, the parties mitigated both the risk of uncertainty regarding the expert opinion that should be considered by the arbitral tribunal and the cost of retaining additional experts. Another alternative would be to have only party-appointed experts, which would have to be subject to more stringent rules as to their impartiality and independence in domestic arbitrations seated in Brazil.
Conclusion
Similar to a project manager, the in-house counsel is uniquely positioned to ensure that the conduction of the arbitration aligns with the company’s objectives. In this capacity, the in-house counsel can contribute to the efficiency of arbitration through strategic decision-making and the development of internal guidelines and processes. For instance, the panel explored the decision on the moment and the method to produce evidence as well as the creation of internal processes to collect and organize documents, as measures that could enhance the company’s ability to substantiate its claims in arbitration. In short, the discussions carried out by the panel were rich and succeeded in demonstrating both the in-house counsel’s leading role in arbitration, and the several ways the in-house counsel can contribute to the efficiency of arbitration.
ABOUT THE AUTHOR
Lara Fernanda Yokota is a Doctoral student at the University of São Paulo. She is an Associate (Arbitration) at Toledo Marchetti Advogados. She holds a bachelor’s degree in law from the University of São Paulo and a master’s degree in conflict of laws and international business law from the University Paris 1 – Panthéon Sorbonne.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
