Catching the Rising Tide International Arbitration in South Carolina, 0915 SCBJ, SC Lawyer, September 2015, #30
| Author | By Michael S. Cashman |
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\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Arbitration is not a strange concept to South Carolina lawyers. Most business litigators are generally familiar with the South Carolina Uniform Arbitration Act1 and the Federal Arbitration Act.2 Many transactional attorneys advise their clients on the use of arbitration clauses in contracts. These lawyers are equipped to explain to their clients the general concept of arbitration as the contractual obligation to use a binding, private forum to resolve disputes. Such an explanation would inform clients that any resulting award or judgment from the arbitration is generally enforceable, if necessary, by the South Carolina courts or the courts of other states. But what if your client, or the other party to the transaction, does not reside in the United States? Does that complicate the risks of doing business? In many cases the answer is: considerably. Correct application of international arbitration practices can enable clients, both foreign and domestic, to navigate these seas to their advantage—no matter what side of the ocean they reside.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Foreign commerce in South Carolina on the rise3]
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0If this issue has not presented itself in your practice yet, you may question how this topic concerns South Carolina lawyers. The key word in that sentence is "yet." According to the S.C. Department of Commerce, South Carolina is now second in the nation for workforce employment by foreign companies. Foreign investment in the state for the years 2011-2014 has totaled $11.9 billion. Firms doing business in South Carolina which are majority owned by foreign companies employ over 115, 900 South Carolinians, approximately 7.6 percent of the private workforce. There are over 1, 200 businesses from 40 countries with operations in South Carolina. If your only experience with potential international representation has been a suspicious e-mail from a overseas businessman asking you to assist with the collection of a debt, that is likely to change ... and soon.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0House of Delegates recommends adoption of new rules on foreign attorneys
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0In recognition of South Carolina's expanding world trade, the South Carolina Bar House of Delegates recently approved recommendations from the International Law Committee for certain limited instances of admission for foreign lawyers to practice in South Carolina. In its proposal the committee noted that some states, including Georgia and Texas, have already adopted new rules for the limited practice of law, and that "foreign investment in South Carolina will be aided if foreign companies can have greater access to the advice and involvement of lawyers admitted in their home countries ..." Presently, there are five general categories for the practice by a foreign lawyer within the jurisdiction of any state.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0As noted in the chart above, presently South Carolina permits what is referred to as the "foreign legal consultant" rule, which allows certain qualified foreign attorneys to apply to the S.C. Supreme Court and provide limited legal services within the state.4 If adopted by the Supreme Court, the proposed changes to this rule would allow a foreign lawyer, subject to certain restrictions, to associate with legal counsel in South Carolina and provide certain legal services on a temporary basis, including those related to an arbitration within South Carolina. In recommending these changes, the International Law Committee noted that other states that have already made these changes recongized how they would contribute to "enhancing] the state's business climate and attractiveness for foreign trade and investment."5
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Why international arbitration?
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The trend line is clear: the world continues to become flatter and more foreign businesses are conducting commerce in South Carolina, as well as other states throughout the southeast. If our clients want to stay competitive, they need excellent counsel on how to manage risk. This means understanding their particular needs and concerns in conducting business with foreign entities. International arbitration remains an attractive option, particularly for those businesses conducting international trade who do not have a strong presence in the foreign nation where they want to conduct business. Some of the reasons for this are obvious, but as outlined briefly below, they are numerous:
• Neutral forum: Faced with the threat of litigating disputes in another party's courts, many foreign companies choose to avoid what they perceive is a "home court" advantage. Domestic courts, regardless of the jurisdiction, are generally believed to weigh questions of public policy or public interest more heavily than an arbitration panel. Perhaps more worrisome than perceived threats of partiality is the challenge of negotiating the legal morass that can be a foreign country's legal system. What procedural laws will apply? What prejudice will result if claims are not brought or pursued properly? What substantive law will apply to claims and defenses? Will vast amounts in legal fees be spent before the merits of claims are reached?
• Ability to select arbitrators: While many national courts have now opened specialty courts for certain claims, arbitration can allow for the freedom of selection of arbitrators based upon their knowledge and familiarity with relevant legal issues, commercial practices or trade usages—opening the door to select arbitrators with relevant expertise or experience.
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