Session Chair--Paul Meyer
United States Speaker--Elliot J. Feldman
Canadian Speaker--John A. Terry
MR. MEYER: Good afternoon. This is the session on dispute resolution.
My name is Paul Meyer. I am sort of old and new to this organization at the same time. In 1982, I was a Canada-United States Law Institute Scholar to Western. (1) I date back pretty far into the program, but I am new in the sense that I am recently rejoining it. I am on the Advisory Board, (2) and I bring a different perspective than the trade perspective to some extent. I work in the General Counsel's office of a $1.75 billion dollar publicly traded multinational corporation. (3) Our clients are primarily Fortune 500 companies or their international equivalents. (4) We specialize in workforce management. (5) We are an actuarial firm. (6) In fact, of the 300 largest corporate plans in the world, we serve as the actuarial consultant to about twenty percent of them. (7) We also do human resource management consulting for companies in areas such as health care, investment advising for pension funds, and executive compensation. Therefore, we have a fairly broad practice. (8) We operate in literally every market in the world. (9)
My role in the General Counsel's Office essentially started with a focus in risk management. When we were a $300 million dollar company, Watson Wyatt brought me in as a litigation guy. (10) At that time, about a third of our litigation was in Canada. (11) A peculiar thing, particularly in the actuarial field, is that Canada for many years was the most litigious country in the world. (12)
In my role with the General Counsel's Office, I have been involved in managing litigation over the last fifteen years. (13) Over the fifteen years, we began to see a different trend in our industry at the same time as the insurance industry. We started to see more and more actuarial malpractice claims. (14) We found ourselves having to explain actuarial aspects of pension law or insurance law to juries in Louisiana, Connecticut, Michigan, and judges in places like Regina, Saskatchewan. These finders of fact really did not know what we were talking about when we discussed complex actuarial concepts. (15)
As we progressed in managing complex litigation, we became interested in the potential of arbitration as a way to get a panel that actually understood the subject matter of the claim. In the first test case we did, we were in a case that would have gone to jury trial. Our chief actuary and I convinced the mayor of the city to go to arbitration. We had the federal rules of evidence, we had full discovery, but we also had an independent tribunal. We picked one arbitrator, they picked one, and together we picked a judge. We had at least one person who knew what we were talking about and if they decided we were wrong, we could live with that. I actually tried it myself, and it was the last case I think I tried as primary trial counsel. At the end of the arbitration, the two actuaries on the panel understood what we said. They concluded that we were not liable for malpractice, but should have explained our work better, and ordered us to refund $10,000 in fees while dismissing the $3.5 million malpractice claim. When we interviewed the panel after the ruling we were surprised that the one judge on the panel had difficulty with the technical issues, even though they were straight forward from our perspective. This is consistent with our experience in court, where the former prosecutors that typically populate the bench often have difficulty with counterintuitive technical rules. In contrast, the two subject matter experts on the panel completely understood the subtleties of our technical explanation of what occurred.
This has driven us as a standard to accept arbitration as a dispute resolution model. In the handouts I put downstairs, there is an arbitration clause we put in our standard terms and conditions in North America. (16) I have also worked in developing the standard that we use in the western hemisphere, the Asia Pacific, and the United Kingdom, but it all generally follows this approach. We do not believe that arbitration necessarily work well in any form, but it does work well if you put it together right. The way that we want to put it together, that makes sense for what we think will give us a fair shot of explaining our work, is an independent tribunal where we pick one and the other side picks one. Therefore, we know at least one person will have the subject matter expertise that we need. Another rule is there has to be a coherent body of law that they follow. In North America, we follow the ADR Institute of Canada Rules or the American Arbitration Association (AAA) rules. (17) In other countries, I use the United Nations Commercial Trade Rules, the UNCITRAL rules. (18)
The final essential element is to have it administered by an organization that is in the business of administering arbitrations. In the United States, we typically choose administration by the AAA; (19) and in Canada, the ADR Institute administers the arbitration. (20) In other countries, the International Center for Dispute Resolution administers the arbitration. (21)
We sometimes have to tailor this for different countries. We have come up with different versions for the People's Republic of China, 22 and Indonesia, (23) but the same model drives the tailoring. This helps both in keeping the dispute as a private matter between the parties and preventing misinterpretation by media or other parties that lack the full context of what occurred. To sum up, we found that arbitration is not a perfect solution for all circumstances, and we still find ourselves like any big company from time to time in court, but it has worked for us, and we like the way the model goes.
This helps us keep talking to the clients, first by promoting mediation, but even if we are in arbitration, it is a different kind in a less adversary environment that we are usually in. Also, in arbitration, we have confidentiality that we would not have if we were on the docket of a court. Also, we have new clients who ask us to identify pending litigation. Well, if you are in arbitration that becomes a more manageable issue. We have found it is not a perfect solution and we still find ourselves like any big company from time to time in court, but it has worked for us.
Now, one thing I cannot really speak to is trade law or how this will fit into the North American Free Trade Agreement (NAFTA). We have a very qualified panel to do that. One thing I can speak to is the London Court of International Arbitration Rules. (24) One of the handouts I printed out is Article 6, which is the Arbitration Selection Rule of the London Court of International Arbitration (LCIA). (25) That is a rule that requires your arbitrators to be from a different country than the two parties in the arbitration in a case where you are in an international arbitration. (26) Now, from our perspective, that is anathema to what we are trying to achieve because we are trying to achieve subject matter experts. How can you do that if you are dealing with different countries?
For example, we are the investment adviser to a large pension scheme. If we are in a dispute with a pension scheme in the United Kingdom, an arbitrator qualified to practice in the United Kingdom could not appear under the LCIA Rules even if the subject matter would normally be governed under British pension law. (27) And it notes that our United Kingdom affiliate has an American parent, LCIA rules would preclude use of an American or a British arbitrator. (28) Therefore, you are dealing with United Kingdom legal issues, and United Kingdom customs and practices, and you have to go outside of the United Kingdom and the United States. (29) Yet, it gets worse. If you read Article 6, you will see that you cannot use anyone else in the European Union. (30) Now you cannot talk to anyone in the European Union who might have subject matter expertise. Can we look to Canada or Australia? We also have a wholly owned affiliate in Canada and Australia. (31) Does that exclude Canada and Australia? Well, if it does, it also excludes the eighty or ninety other countries where we have affiliates. (32)
Who is going to decide this dispute? It cannot be an Albania; they are in the European Union. (33) It might be an Egyptian. Under the LCIA Rules one could end up with kind of a ridiculous solution of you sre trying to find people in an unrelated jurisdiction who understand the subject matter. This is inconsistent with a primary basis to choose arbitration, to have disputes resolved by people who are competent to understand complex issues, often based on local laws to ensure a just and reasonable resolution of a dispute.
Now, to make this more relevant here, I guess Elliot will be talking more about NAFTA and how arbitration works with NAFTA, and John will follow him.
(1) See Canada-United States Law Institute, Executive and Advisory Board Biographies, http://cusli.org/about/bios/bio_meyer.html (last visited Sept. 14, 2009).
(3) See id. (briefly discussing Paul A. Meyer's current employment with Watson Wyatt Worldwide).
(4) See WATSON WYATT WORLDWIDE, INC. ANNUAL REPORT (FORM 10-K) (2007), http://www.watsonwyatt.eom/investors/2007AR/downloads/ form.pdf (commenting on the Watson Wyatt's goals and potential clientele).
(5) See Watson Wyatt, Our Firm--Putting Clients First, http://www.watsonwyatt.eom/ ourfirm (last visited Sept. 14, 2009) (describing Watson Wyatt's services).
(6) See Watson Wyatt Global, Our History, http://www.watsonwyatt.com/ourfirm/vision values.asp (last visited Sept. 14, 2009).
(7) See id. (commenting on Watson Wyatt's history).
(8) See Watson Wyatt, Our Firm, supra note 5 (describing Watson Wyatt's services).
(9) See Watson Wyatt, Global Locations, http://www.watsonwyatt.com/ourfLrm/global locations.asp (last visited Sept. 14, 2009)...