advantages of arbitration private neutral venue tribunal chosen by the parties runs on the...

Advantages of arbitration

• Private

• Neutral venue

• Tribunal chosen by the parties

• Runs on the parties’ timetable

• Tailored procedures

• Limited scope to challenge the arbitral award

• Award will be amenable to recognition and enforcement under the New York Convention.

Can settlors and testators can require disputes to be referred to arbitration?

• Section 9 of the Arbitration Act 1996: “a party to an arbitration agreement” has the right to seek a stay of court proceedings.

• Arbitration agreement defined in section 6 - "an agreement to submit to arbitration present or future disputes (whether they are contractual or not)".

• Art II(2) of New York Convention defines arbitration agreement as one "signed by the parties or contained in an exchange of letters or telegrams".

• Are arbitration clauses in trusts an agreement? Are beneficiaries (including future beneficiaries) parties to that arbitration agreement?

Trusts aren't contracts and beneficiaries aren't parties to the trust

• Trusts are not contracts.

• But contractual principles are relevant in certain situations.

• Three US decisions that trusts aren't contracts:

– Arizona Court of Appeal in Schoneberger v Oelze held that "As a matter of law, the trusts…were not contracts"

– Court of Appeal of California's decision in Diaz v Bukey

– Texas Court of Appeal decision in Rachel v Reitz [2011]

The Bahamas solution: Section 91A(2) Trustee Act

" (2) Where a written trust instrument provides that any dispute or administration question arising between any of the parties in relation to the trust shall be submitted to arbitration (“a trust arbitration”), that provision shall, for all purposes under the Arbitration Act, have effect as between those parties as if it were an arbitration agreement and as if those parties were parties to that agreement".

Ousting the inherent jurisdiction of the Court

• Schmidt v Rosewood.

• Re Raven: "it is contrary to public policy to attempt to deprive persons of their right of resorting to the ordinary tribunals for the purpose of establishing their legal rights…the provision…is unlawful and inoperative…".

• See AI v MT "insofar as the court has jurisdiction to determine issues arising out of the marriage, or concerning the welfare and upbringing of the children, that jurisdiction cannot be ousted by agreement. The parties cannot lawfully make an agreement either not to invoke the jurisdiction or to control the powers of the court where jurisdiction in invoked".

Ousting the inherent jurisdiction of the Court (cont’d)

• Trust Law Committee's Report: "…The trust concept is itself the creature of the courts (historically the courts of equity), exercising judicial discretions as described by the Privy Council in Schmidt v Rosewood…so that the legal rights of the beneficiaries and trustees can validly be determined only by the courts."

• Analogy with no contest clauses which have been held as contrary to public policy.

Minor and unborn beneficiaries can't be bound

• Section 58 of the Arbitration Act 1996

• Article V(1) (a) of the New York Convention

• Only the court has the power – under its inherent parens patriae jurisdiction or section 1 of the Variation of Trusts Act 1958 or section 41 of the Trustee Act 1925 to bind minors.

• Section 91B Trustees Act contains provision for the appointment of representative parties and of persons to act on behalf of minors and other persons under a disability.

Minor and unborn beneficiaries can't be bound (cont’d)

• 91B of the Trustee Act "The arbitral tribunal… may, in addition to all other powers of the tribunal, at any stage in a trust arbitration, exercise all the powers of the Court (whether arising by statute (including this Act), under the inherent jurisdiction of the Court or otherwise) in relation to the administration, execution or variation of a trust or the exercise of any power arising under a trust

Why mediate?

• Litigation risk• Costs• Time • Solutions beyond the legal ones – law often takes a back seat• Forward thinking• Reputation – especially for professionals• Not having to give evidence• Confidentiality• Constructive solutions• Putting family relationships first/repairing some of the damage• Tax effective solutions• Clients and not the court in control• A lot of clients settle at mediation despite themselves• Even if the case doesn’t settle on the day, it increases the prospect of it settling before

trial

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When to mediate?


Who needs to be at the mediation?


Picking the mediator

• Usually propose 3 or 4 possible mediators

• Explaining to the client that the mediator does not determine the outcome of the mediation can some take some time – the role of the mediator needs to be explained to the client before the mediation so that they understand what is likely to happen

• Usually helpful to have a mediator who understands the dispute – preference for a trust/estates practitioner

• Also think about whether a mediator’s particular style is likely to suit the type of dispute/your client is likely to take to them

• Most law firms are reasonable about picking the mediator


The position paper

• Sets out your client’s position – probably at its highest together with key documentation.

• Should only be 2-3 pages long

• Only real value is that it enables the mediator to understand your client’s point of view

• Should acknowledge the position adopted by the other side

• It should refer to any genuine impediments to settlement

• It should set out what your client wants to get out of the mediation

• It must state that your client is prepared to listen and participate constructively in the mediation process


Preparing the mediator/the mediation


The opening statements


The break out sessions/negotiation tactics


Reality checks


Preparing for settlement


Check list of issues to be dealt with after the mediation


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The power of deep listening

Feelingheard

Curiosity

Self awareness

Trust

Interdependence

Other awareness

Collaboration

Hearing

What’s important- and why

Need input from others

Perception is everything

Solving shared problems

Willingness to listen

Insight – “me”

Empathy – “you”Moral awareness – “we”

advantages of arbitration private neutral venue tribunal chosen by the parties runs on the...

Documents

arbitration agreement

trust arbitration

arbitration act

arbitration clauses

arbitration present

beneficiaries arent

future beneficiaries

trust trusts