S.I Strong, Associate Professor of Law at the University of Missouri and contributor to this blog, recently wrote an interesting article entitled From Class to Collective: The De-Americanization of Class Arbitration, Arbitration International, Vol. 26, No. 4, 2010. In the article, Professor Strong considers in detail what new forms of group arbitration will likely arise in the future. Here is the Abstract: Opponents to international class arbitration (also known as ‘class action arbitration’ or ‘classwide arbitration’) frequently characterize the procedure as a ‘ “uniquely American” device’ and take the view that the procedure never could or never should expand beyond the United States. However, a growing number of commentators believe that large-scale group arbitration can or will spread beyond US borders, although that does not necessarily mean that the procedures adopted will or should be the same as those used in US-style class arbitrations. This article considers what these new forms of group arbitration – described herein as ‘collective arbitration’ to mirror terminology used to describe collective redress in national courts – will look like in terms of procedure. The discussion also includes analysis of certain potential problem areas, using analogies to the American Arbitration Association (AAA) Supplementary Rules for Class Arbitration as a guide, and addresses the likely enforceability of awards arising out of such actions under the New York Convention. The article will appear in the December issue of Arbitration International. A draft version is currently available here (without charge) from Social Science Research Network. Other papers by Professor Strong can be found here. Technorati Tags: ADR, law, arbitration

On October 27th, 48 new mediators were sworn in to the State of Nevada Foreclosure Mediation Program (FMP). This brings the total number of authorized FMP mediators in Nevada to 293. The FMP was created by Assembly Bill 149 during the 2009 Nevada Legislature session. According to a June 21, 2010 fact sheet: The FMP applies to residential properties located in Nevada that are owner occupied and the primary home of the owners. Additional eligibility requirements include a Notice of Default (NOD) and Election to Sell that was filed with the County Recorder on or after July 1, 2009. Homeowners that received a NOD prior to July 1, 2009 and meet the other requirements listed above may agree with their lender to opt into the FMP upon written agreement to the FMP Administrator. Under the program, an eligible homeowner has 30 days after receiving a NOD to request mediation. A nonrefundable mediation fee of $200 and a “Financial Statement and Housing Affordability Worksheet” are also required from the homeowner. Once a lender receives notice that a homeowner has elected to participate in the FMP, it must participate in good faith in the mediation. After the lender pays an additional $200 mediation fee, Nevada Supreme Court Rules require that a mediation take place within 135 days. Within 10 days after a mediation concludes, the mediator must file a Mediator Statement with the FMP. If not satisfied with the outcome of mediation, either party may petition for judicial review within 15 days of receiving the Mediator Statement. Between July 1, 2009 and June 30, 2010, 79,232 Notices of Default were reported for all properties across Nevada, 8,738 FMP mediations were requested and 4,212 FMP mediations were completed. 46% of mediations completed resulted in the homeowners remaining in their homes and 89% ended with a result other than foreclosure. Prior to being sworn in, the 48 new mediators attended a two and a half day training session which focused “on the foreclosure and modification process, mediation skills and FMP procedures. The mediators consist of Nevada attorneys and professional mediators.” You can read the entire article from the Nevada Judiciary here. Over the last few months, Disputing discussed the mid-year statistics for the Third Circuit Court of Hawaii’s Foreclosure Mediation Pilot Project here, state-mandated foreclosure mediation in Florida here and Connecticut’s Home Foreclosure Mediation Program here. Technorati Tags: ADR, law, mediation

Fulbright & Jaworski has released its 2010 Litigation Trends Survey: Companies Expect More Litigation, Regulation; Continue Emphasis on Managing Legal Cost In Struggling Economy. The 2010 Fulbright & Jaworski Litigation Trends Survey was conducted from May through July by Greenwood Associates, a business research firm in Houston that has produced previous editions of the report. The survey, launched by Fulbright in 2004, is the largest polling of corporate counsel on litigation issues and concerns. Fulbright’s 2010 survey asks companies to consider, among other things, what types of litigation most concerns them, where they’re spending limited budgets and how they are adjusting approaches to litigation management as the economy struggles to emerge from the downturn. This year’s survey also delves into special topics, such as how companies are dealing with the issue of data preservation and what social technology sites are being used to advance business interests. The survey provides valuable insight including: How Should We Resolve This? Litigation versus Arbitration International Arbitration Expected to Rise: Fulbright’s latest survey found an expectation among corporate counsel that international commercial arbitration will rise in the coming year. Nearly one-fifth of all respondents (and nearly a third of U.K. respondents) expect an increase in 2011. Sector-wise, a quarter of respondents from each of the financial services, manufacturing and healthcare industries expect a rise in the use of international arbitration. International Arbitration All the Rage in U.K.: Last year, only 22% of all respondents reported having been party to an international arbitration in the previous 12 months. This year’s survey finds that overall rate more than doubled. However, the rise was due mainly to a spike in international arbitrations at U.K. companies – 52% of whom were party to an international arbitration (versus only 19% of U.S. respondents). Sector-wise, 40% of respondents from the financial services and manufacturing industries reported being party to one or more international arbitrations in the past year, with energy and technology/communications a close second with 36% of each reporting one or more international arbitration. For Domestic Disputes, Litigation Still Preferred: For disputes that are not international in nature, litigation is preferred, both in the U.S. and U.K. and across company-size and sector. But the rationale changes depending on geography: in the U.K. “lower cost” is the predominant reason for choosing litigation. Meanwhile, only 19% of U.S. respondents say lower cost leads them to choose litigation – they also point to “better results” and “reviewability” among the top reasons for choosing litigation. For the minority that prefer arbitration in domestic disputes, lower cost is the main reason. Arbitrating Labor Suits – A Special Case: More than one-quarter of U.S. respondents say they now require arbitration of employment disputes in non-union settings – that’s up from last year’s 19%. Why choose arbitration in these cases? More than 70% each of small-cap, mid-cap and large-cap companies say arbitration is beneficial for employee relations.” The full survey is available here. Disputing would like to thank Charles Rumbaugh for the link. You can find Disputing‘s blog about the 2009 Litigation Trends Survey here. Technorati Tags: law, ADR, arbitration, arbitration trends, litigation trends

The Northern District of Texas has refused to compel arbitration in a bankruptcy proceeding where the equities did not weigh in favor of ordering a non-signatory to arbitration, the party who sought to compel arbitration substantially engaged in adversarial proceedings and issues of bankruptcy law predominated. In Hallwood Group, Inc. v. Balestri (No. 3:10-CV-1198-K) (N.D. Tex. Oct. 21, 2010), the Hallwood Group appealed a bankruptcy court’s order which denied its motion to compel arbitration. The Hallwood Group owns half of the general partner shares and twenty-two percent of the limited partnership interest in Hallwood Energy, L.P., a Texas natural gas exploration and drilling limited partnership. In June 2008, Hallwood Energy entered into an agreement with FEI Shale (Shale Agreement) which provided that FEI Shale “would provide funding for drilling operations in exchange for a share of the proceeds from successful wells.” This agreement contained an arbitration clause as well as a provision which required Hallwood Energy and Hallwood Group to enter into a separate agreement (Hallwood Agreement) in which Hallwood Group agreed to provide $12.5 million in cash to Hallwood Energy. According to the record, FEI Shale was concerned about Hallwood Energy’s ability to meet its obligations and conditioned enforcement of the Shale Agreement on the creation of the Hallwood Agreement. In February 2009, a disagreement arose between Hallwood Energy and Hallwood Group regarding whether Hallwood group was obligated to make a payment under the Hallwood Agreement. Hallwood Group did not make the payment and Hallwood Energy filed for bankruptcy on March 1, 2009. On March 30th, Hallwood Energy initiated an adversarial proceeding against Hallwood Group for breach of the Hallwood Agreement. In June 2009, both FEI Shale and Phoenix/Inwood, Hallwood Energy’s largest secured and unsecured creditor, were allowed to intervene and prosecute claims on behalf of Hallwood Energy against Hallwood Group. Hallwood Group sought to compel arbitration against Phoenix/Inwood but the bankruptcy court denied Hallwood Group’s motion. The Northern District of Texas agreed with the bankruptcy court’s refusal to grant Hallwood Group’s motion to compel arbitration because an arbitration agreement was not included in the Hallwood Agreement and the arbitration clause in the Shale Agreement did not extend to the Hallwood Group. Additionally, the court stated the bankruptcy court did not abuse it’s discretion in holding that Hallwood Group could not invoke the arbitration clause in the Shale Agreement against a non-signatory under a theory of equitable estoppel. The Northern District approved of the bankruptcy court’s holding that, even assuming Hallwood Group possessed an enforceable right to arbitrate, it waived that right by substantially engaging in adversarial proceedings with Hallwood Energy. The court noted that Hallwood Group’s involvement was extensive, including the initiation of three depositions, participation in fourteen more, and the filing of several counterclaims. According to the bankruptcy court, Hallwood Group prejudiced Phoenix/Inwood by its participation in the adversarial proceedings. Moreover, because Hallwood Group first moved for arbitration nearly one year after the adversarial proceedings commenced and only two months before trial was scheduled, to allow arbitration would create an unfair delay to all creditors of the bankruptcy estate. Finally, the Northern District of Texas held that the bankruptcy court “correctly determined that it had discretion to refuse to enforce the arbitration provision under National Gypsum and In re Gandy because issues of bankruptcy law predominated.” Under National Gypsum, 118 F.3d 1056 (5th Cir. 1997), even if Hallwood Group had a right to arbitrate and did not waive it, a bankruptcy court would still have discretion to refuse to enforce an arbitration agreement when: “(1) the underlying proceedings derive exclusively form the Bankruptcy Code; and (2) arbitration would conflict with the goals of the Code.” The court stated In re Gandy, 299 F.3d 489 (5th Cir. 2002), was a factually similar case and noted that “though state law claims were present, the crux of the lawsuit deals with bankruptcy matters.” The court held that because Phoenix/Inwood accused Hallwood Group of forcing Hallwood Energy into a declaration of bankruptcy in order to avoid its obligations under the Hallwood agreement, the bankruptcy court properly determined that arbitration would conflict with the purposes of the Bankruptcy Code. The Northern District of Texas affirmed the bankruptcy court’s denial of Hallwood Group’s motion to compel arbitration. Technorati Tags: law, ADR, arbitration