Hypothesis 1: arbitration counsel with hourly rate, have little motivation to settle the disputed issues amicably, i.e., by negotiation or mediation.
Hypothesis 2: arbitration counsel with hourly rate, have little motivation to conduct the arbitration proceeding as efficient and speedy as possible.
In a 2015 arbitration case under the ICC rules, in which I represented the Iranian Claimant, after the Spanish Respondent submitted the answer to Request, I found the case very suitable for amicable settlement. The disputed amount was rather small (around 350,000 EUR) and it was mainly a sort of misunderstanding between the parties, as well as the matter of hacking of the emails, which was clearly, none of the parties’ fault.
I reviewed the Respondent’s counsel’s profile and found that he has a degree in ADR related matters, which brought to my mind that maybe he would be open to a settlement solution. After discussing the matter with the client and receiving his approval, I wrote to the Respondent’s counsel and asked that we, the counsels, have a telephone talk, off the record. He accepted and in the telephone call, I suggested that we give a try to mediation, as the case seems prepared for that. Although pretending that he is, in principle, very interested in amicable solutions, he categorically rejected my suggestion as he believed “the case is more complicated and the parties are in a more adversarial positions” that the matter can be amicably solved. I did not agree with in any of his reasons, but I was aware that I should not persist, as it could be interpreted as weakness of my client’s position.
We proceeded with the arbitration, and the Respondent threw every possible stone to prolong the proceeding. After 2.5 years, the Sole Arbitrator awarded around 200,000 EUR in favor of my client. Believe it or not, this was exactly the amount I had in mind to suggest that parties agree on in the amicable way.
When the parties submitted their statements of costs in the arbitration, I noticed that the counsel to Respondent had an hourly-basis agreement, while I had agreed with the client on a lumpsum amount, plus that if the case was resolved by settlement, I was entitled to the half. It goes without saying that I was more motivated to settle the dispute amicably than the Respondent’s counsel was. Also, clear that I was way more motivated to conduct the proceeding in an speedy and efficient way than he was.
The same story happened recently in another ICC case. I will talk about the case later, but the two above hypotheses came to my mind. While I am not yet sure about the accuracy of the hypotheses, I am confident that the agreement of counsel and client could have serious effects on the time and costs of the client, as well as the way that the case would later move forward.