With the growth of the economy, trade and commerce developed.

This was
true for the Indian market also. With the enlargement of the economy, and
investment into the Indian market by the foreign investors, demand for
institutional arbitration shot up suddenly. Despite the rising demand for
institutional arbitration, the growth of institutional arbitration procedures has
been slow.

But in recent times, prestigious institutional arbitration association like the

London Court of International Arbitration, The Permanent Court of Arbitration
and the International Chamber of Commerce have opened Centres in India.
This could be seen as a very positive sign because these institutes are very
well-known and prestigious and wouldn’t have opened Centres in India if
they did not see a potential growth in Institutional arbitration.

In the case of Institutional Arbitration, the disputing parties submit their

issue to an institution that has been designated to administer the
arbitrational process. The institution then arbitrates the dispute according to
the rules laid by them in front of the parties. Although, the dispute is not
arbitrated by the institution. The institute selects a panel which administers
the whole process.[5]

All the institutes do not provide the same type of services.[6] Some institute
just provides the guidelines and the rules on which the procedure will be
based (London Maritime Arbitration Association). Other provide a roster of
arbitrators to the parties but do not appoint the arbitrators themselves
(Society of Maritime Arbitrators in New York).

Certain institutions administer the whole process of arbitration (International

Court of Arbitration of the International Chamber of Commerce).[7]

Advantages of Institutional Arbitration[8]

1. Reputation

One of the biggest advantages of opting for institutional arbitration is the

reputation of the institution. Decisions given under the name of any
prestigious institution is easier to enforce as it is accepted by a majority of
other bodies.

2. Efficient Administration

One more advantages of going for institutional arbitration is that such

institutes provide trained staff to the parties for administering the whole
process. The administrative staff will lay down the rules, ensure that the time
limits are being complied to, and the process is going ahead as smoothly as
possible.

In the case of ad-hoc arbitration, when the arbitrator himself has to do all
the administrative work, it may distract him from his primary objective.

3. Clear Rules

In the case of institutional arbitration, the rules of the arbitration are

generally fixed by the institution. There is no further dispute between the
parties regarding the rules of the procedure, which might happen in the case
of ad-hoc arbitration. Also, the rules are framed keeping all eventualities in
mind, as these institutions have an experience of going through various
arbitration proceedings and know what eventualities may arise.

Also, the rules are flexible in nature. There is a mechanism to oppose any
part of the process which is not consistent.

4. Quality of Arbitral Panel

One of the major advantages of institutional arbitration is that they have an

extensive panel of experts, who acts as arbitrators. These institutions also
have arbitrators who specialize in different areas, so that any type of dispute
can be resolved.

Big institutions like ICC also have a network of national committee for
appointment of arbitrators to ensure that there is no bias based on the
country to which the parties belong.
 5. Supervision

Apart from the administration of the arbitrational process, some institute also
supervises the process, i.e., examine the award or penalty sanctioned
ensuring that due process of law has been followed, and proper reasoning
has been given to the parties for taking that particular decision.

6. Remuneration of the Tribunal

In the case of institutional arbitration, the remuneration to be paid to the

arbitrators is already fixed. The disputing parties do not have to haggle with
the arbitrators to decide the terms and amount of remuneration. The
remuneration of the arbitrators in case of institutional arbitration is based on
a fixed scale. The money is paid to the arbitrators without involving them
directly.

7. Default Procedure

Many institutional arbitrators expressly provide the rule that the proceedings
will continue and not stop in between, even if one of the parties defaults in
the course of the proceedings. For instance, Article 21 (2) of the ICC Rules
states that if any party fails to appear for the proceeding without giving any
valid excuse, even after it has been duly summoned by the institution, the
Tribunal will proceed with the proceedings.[9]

Growth of Institutional Arbitration in India

India adopted the Arbitration and Conciliation Law in 1996. India is also a
party to the New York Convention (on enforcement of arbitration award). Sec
89 of the Civil Procedure Court, 1908 also supports the Alternative Dispute
Resolution system and urges parties to settle disputes outside the court.

The Courts in India also fully support arbitration proceedings. The Supreme
Court gave a pro-arbitrational judgment in the judicial pronouncement of
Sumitomo Heavy Industries Ltd. v ONGC[10] where it stated “…..If the
conclusion of the arbitrator is based on a possible view of the matter, the
Court is not expected to interfere with the award. The High Court has erred
in so interfering. Court while considering challenge to arbitral award does not
sit in appeal over the findings and decision of the arbitrator…’’

This judgment also shows that the Courts are not very much inclined to
interfere in the process of arbitration and thereby lends its supports to this
system of Alternative Dispute Resolution.

Concluding Remarks

The growth of institutional arbitration mechanism is inevitable. Also, the

support of the Courts to the institutional arbitration mechanism gives it a
huge boost. The Arbitration and Conciliation Act, 1996 is based on the
UNCITRAL Model, which provides it with a lot of stability and uniformity, and
it is at par with international standards of arbitration, which will surely be
very beneficial for the institutional arbitration mechanism in the long run.

[1] Butterworths, HALSBURY’S LAW OF ENGLAND (4th edition, 1991)

[2] Alternate Dispute Resolution, 13 (P.C. Rao & William Sheffield eds.,

Universal Law Publishing co. Pvt. Ltd.).

[3] Gerald Aksen, Ad hoc Verses Institutional Arbitration, 2(1) ICC Bulletin

(1991): 8-14.

[4] Instances of such association are Grain and Feedstock Trade Association

(GAFTA) and London Maritime Arbitrators Association (LMAA).

[5] Alan Redfern and Martin Hunter, Law and Practice of International

Commercial Arbitration, 47(4th ed., 2004)

[6] http://www.lawctopus.com/academike/institutional-arbitration-
expeditious-justice-system/#_edn6
[7] G.K. Kwatra, Arbitration and Alternative Dispute Resolution, 59 (Universal
Law publishing co., 2008).

[8] ibid

Interestingly, it’s a case that is almost a year old that has us

thinking about litigation tourism post Bristol-Myers Squibb
Co. v. Superior Court, 137 S. Ct. 1773 (2017).   We know
that plaintiffs’ forum shopping gamesmanship isn’t over. It’s
just gotten a lot more difficult now that the Supreme Court
has said non-resident plaintiffs can’t go suing non-resident
defendants anywhere they want. The most straight forward
way for plaintiffs to stay out of federal court, assuming that
is their goal, is to sue in defendant’s home state. Per the
forum defendant rule, even where diversity exists, a
defendant cannot remove a case to federal court if one of
defendants (properly joined and served) is a citizen of the
state in which the case was filed. See 28 U.S.C. § 1441(b).
Stuck in state court, which isn’t always a bad thing,
defendants then need to carefully consider forum non
conveniens and choice of law issues.

Those were both key issues defendant decided to move on

in Yocum v. Biogen, Inc., 2016 WL 10517110 (Mass. Super.
Dec. 14, 2016). The case only recently popped up in our
searches but with the likelihood of seeing more litigation
filed in defendant’s backyards, we thought it worth a quick
mention. Plaintiff brought a wrongful death suit in
Massachusetts alleging that his wife died as a result of side
effects from defendant’s drug used to treat her multiple
sclerosis. Id. at *1. Plaintiff resides in and decedent
received treatment and died in Wisconsin. Defendant’s
principal place of business is in Massachusetts. Id.  Just
because defendant couldn’t remove the case to federal
court, it still had some decisions to make. Such as, would it
prefer the case to be litigated in Wisconsin. And, if it
couldn’t move the case west, should Wisconsin law still
apply. Yes and yes were the answers for this defendant.
First up was a motion to dismiss on the grounds of forum
non conveniens.   Defendant’s argument was that not only
was Wisconsin an available alternative forum, but that both
public and private interests favored litigating there as
opposed to Massachusetts. Generally speaking, all things
being equal, courts don’t disrupt a plaintiff’s choice of forum.
So, where case-specific witnesses like treaters and
prescribers are in plaintiff’s home state and company
witnesses are in defendant’s home state – most courts see
that as a wash. See id. at *3. One set of witnesses or
another are either traveling or being put on video. That’s not
to say that this is always equal. For instance, if significant
depositions of company witnesses have already occurred
and won’t need to be repeated, maybe that helps tip things
toward the plaintiff’s home state. Or, if the relevant
company witnesses have changed jobs, retired, or otherwise
moved, the defendant home state connection becomes more
attenuated. Likewise, depending on the issues, a large
company’s principal place of business might not be where
the key company witnesses are located. These are likely the
types of things a defendant is going to have to address to
move the scales on the private interests.

Turning from the private interests to the public interests,

defendant raised two arguments – the court would need to
apply Wisconsin law and Wisconsin has a significant interest
in regulating tortious conduct alleged to have occurred
within the state. Taking them in reverse, the court found
that Massachusetts has an equally significant interest in
regulating the conduct of a resident business. Id. Another
push. Left then with only choice of law, that alone is not
enough to warrant a forum non dismissal. Defendant’s
motion was denied.

That brings us to choice of law. If defendant can’t get to

Wisconsin, it wanted to bring Wisconsin to it. Here the court
agreed with defendant. We don’t usually take a definitive
position on choice of law issues because frankly, our choice
is likely to change case to case. So, we’ll just say that
defendant did a good job of explaining why Wisconsin has
the more meaningful contacts with the issues and the
parties and that it is not an unusual conclusion for a court to
decide to apply the law of the place where the injury
occurred. Id. at *4-6.

Then we get to the substantive issues. Applying Wisconsin

law, the court dismissed plaintiff’s breach of warranty and
punitive damages claims. Wisconsin does not recognize
breach of warranty for products liability suits. Id. at *6. Nor
does Wisconsin recognize claims for punitive damages in
wrongful death actions. Id. Both categories of claims,
however, were dismissed without prejudice. Plaintiff was
given an opportunity to try to re-plead the breach of
warranty allegations as cognizable Wisconsin claims. And,
since Wisconsin does recognize punitive damages for
survival actions, plaintiff was getting another shot at that
one too.

Finally, defendant also sought dismissal of the failure to

warn claims as preempted. Defendant argued that the risks
of the drug were considered by the FDA at the time of
approval and that there was no newly acquired information
that would have allowed defendant to change its label under
the CBE regulations. Id. at *7. Therefore, it was impossible
for defendant to comply with both federal and state
requirements. But, this case is still at the pleadings stage
and the court found that plaintiff had alleged enough to
survive preemption. Specifically, plaintiff alleged that there
were factual developments post-approval regarding the risks
that would not have been considered at the time the FDA
reviewed the drug and its labeling. Id. Further, the court
found that defendant had not presented “clear evidence”
that the FDA would not have approved a labeling
change. Id. at *8.

It is worth noting, however, that the court did say that if

plaintiff was pursuing a fraud-on-the-FDA type claim (failure
to disclose risks to the FDA), that claim was
preempted. Id. at *8n.12. Given that the court’s preemption
decision was based on a very sparse record, we wouldn’t be
surprised to see a round 2 on this issue after some
discovery.

If defendants are going to see more home state litigation,

even if forum non conveniens is a bit of an uphill battle –
establishing choice of law early on may have several
benefits. Dismissing claims is certainly one of them, but
knowing what law is going to apply on issues such as
learned intermediary and causation before discovery gets
underway can be invaluable.

 
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