Information Technology, Telecommunications and Intellectual Property - Arbitration

Steve White LL.B, B.Sc (Computer Science)MIPS FACICA FIAMA FACS FAICA

Resolution Institute Grade 1 ArbitratorPrincipal, White SW Computer Law, www.arbitrator.com.au

20 July 2016

Drafting

• Source of power– Commercial Arbitration Act 2010 (NSW) (Domestic), s7– Commercial Arbitration Act 2011 (Vic) (Domestic), s7– An arbitration agreement is an agreement by the parties to submit

to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

– Based on UNCITRAL• Entry is by agreement (commercial reality?)• Two entry points

– Before Dispute – parties agreeable, scope not clear– After Dispute – more difficult, scope clearer. Fog of war?

Drafting

• Appointment– Direct, your choice, you agree on arbitrator• Control• Arbitrator suits• No cost to appoint

– Indirect, agree on third party to appoint• Resolution Institute

Drafting ProblemsEquivocation Failure to agree to arbitrate and instead reserving

some rights for expert determination/litigation thereby ensuring a dispute about what disputes are arbitral and what are not.Binding/Non-bindingReserve right to appeal?

Omission Failure to specify how the arbitrator is to be appointed or which rules of appointment (if any) are applicable to the dispute.

Over Specification Too much detail on who and how to arbitrate

Unrealistic Expectations Time limits unreasonable

Litigation Envy Litigation rules are specified as being required to be followed

Overreaching This is where one party specifies all the rules which are to operate in the arbitration to its favour.

Inattention Failure to ensure that the arbitration is enforceable in the most likely state in which enforcement may be required

Minimum provisions

• Agree to arbitrate (baseline)• Method of Appointment of Arbitrator [Court]• Number of Arbitrators [1] often [3] under

rules• Seat (procedural) [to be determined by Court]• Governing Law (substantial) [to be determined

by Court]

IT Disputes Characteristics• Complex• Original documents done with haste• Lack of due diligence cf excessive due diligence (both equally

problematic from a technical perspective)• Representations (lack of clarity)• Variations

– Impact not fully considered (but required to be)– Opportunity to fix original documents (rarely taken)– Vendor profit opportunity

• Need for confidentiality• Expensive• Political

Issues to consider for Arbitration• What is your cause of action/defence?• How are you going to establish each element?

– Documents– Witnesses

• What is your loss and damage?– Documents– Witnesses

• Preliminary Question(s) – jurisdiction, etc

You need to carefully consider each of these items before the preliminary conference.In International Arbitration very detailed submissions setting out much of your claim can be expected to prepared as part of the brief before you get to the conference. Not necessarily productive. Check rules!

Directions Hearing/Conference

• Agree jurisdiction or determine timetable to determine jurisdiction or other preliminary question

• Interim Relief?• Pleadings• Discovery – normally do once pleadings are done –

otherwise classes speculative; may not be needed• Fees – quantum and liability (your)• Evidentiary Rules (if applicable)• Trial Date?

Interim Decision• Source of power cf expert determination• Unless agreed, arbitrator should determine Kompetenz

Kompetenz• Expect a separate decision – only of the very few limited

appeal rights – 30 days• Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011]

NSWSC 268 http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2011/268.html

• cf stay as procedure not alleged to be followed Oakton Services Pty Ltd v Tenix Solutions IMES Pty Ltd [2010] VSC 176 http://www.austlii.edu.au/au/cases/vic/VSC/2010/176.html

Scope of Jurisdiction (continued)

• Intellectual Property Legislation (specific powers exclude)

• Competition and Consumer Act 2010• Inter-parties cf in rem (save for property

rights)• Compare with Expert Determination

Likely Problems/Solutions during the arbitration

• Pleadings/Scott Schedule• Discovery Schedules (Redfern)/Failure to discover• Subpoenas – process and supervision• Confidentiality• Privilege – how to handle• Evidence – lay and expert• Trial• Insolvency - Larkden Pty Limited -v- Lloyd Energy Systems Pty Limited [2011]

NSWSC 1305 http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2011/1305.html

• Third Party Enforcement - Larkden Pty Limited -v- Lloyd Energy Systems Pty Limited [2011] NSWSC 1331 http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2011/1331.html

Costs

Larkden Pty Limited -v- Lloyd Energy Systems Pty Limited [2011] NSWSC 1567 http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2011/1567.html

Summary

• Right people• Commercial outcome• Pick any two– Speed– Cost– Functionality

• Go for it!

Further References

www.arbitrator.com.auwww.mediator.com.auwww.expertdeterminer.com.auwww.computerlaw.com.auwww.escrowagent.com.au