Volume 2, No. 2 • Summer 2009

ALSO IN thIS ISSue . . .

Dubai: Changing the Face of Arbitration in the Middle east?By Ty Laurie anddanieL Brenner . . . . . . . page 4

Book Review: International Construction Arbitration handbookreviewed By harvey kirsh and duncan gLahoLT . . . . . . page 9

two ADR Approaches under the JAMS “Rapid Resolution” umbrella . . . . . . . . . page 11

ADR Case Notes . . . . page 13

Notices and Calendarof events . . . . . . . . . page 14

JAMS Welcomes New NeutralsJames F. Nagle andDouglas S. Oles . . . . . page 15

JAMS, The Resolution Experts, is the largest private provider of ADR services in the United States, with Resolution Centers in major cities throughout the country.

The JAMS Global Engineering and Construction Group provides expert mediation, arbitration, project neutral, and other services to the global construction industry to resolve disputes in a timely and efficient manner.

See “Reshaping” on Page 2

to learn more about the JAMS Global engineering and Construction Group, go to http://www.jamsadr.com/construction-practice/

JAMS GLOBALCONStRuCtION SOLutIONSLeading adr developments from The resolution experts

See “JAMS International ADR Center” on Page 11

DIReCtOR’S CORNeR

Initsongoingefforttostriveforanunderstandingofthesourcesofdisputes,aswellasforthemostcurrentinformationastohowdisputesarebeingresolvedandcould,potentially,betterberesolved,JAMShasbeenconductingaseriesofGlobalEngineering&Construction(GEC)Roundtablesthroughoutthecountrydesignedtofindoutdirectlyfromconstructionindustryleaderswhereandwhydisputesarearis-ing,howtheyarecurrentlybeingmanaged,andhowtherecentstimuluspackagemightplayoutintheconstructionindustry.ArecentGECRoundtablewasconductedinNorthernCaliforniaattendedbytheauthorsasGECneutrals,JAMSstaff,andoursevenguests,fourrepresentativesoflargepublicentitiesandthreeprominentattorneysrepresentingvarious“sides”ofconstructiondisputes-privateowners,publicowners,designprofessionalsandcontractors. Averyinteractive,openandthoughtfuldiscussionattheRoundtablerevealedthe

Reshaping ADR Strategiesfor today’s Global engineeringand Construction MarketBy MICHAEL TIMPANE, ESq.& LINDA DeBENE, ESq.

By PhiliP l. Bruner, eSQ. Director,

JAMS Global Engineering & Construction Group

The world’s large construction proj-ects–oneverycontinentandineveryna-tion–floatonthestreamofinternationalcommerce. Each draws critical resourc-es–rawmaterials,materialsfabrication,skilled labor,equipment, risk insurance,financingcapital,andprofessionaldesignandmanagerialservices–frompoolsofcapability available around the globe.

Themultitudeofcross-bordercontractualrelationshipsalmostuniversallyprovidefor private dispute resolution arrange-ments. JAMS Global Engineering and Con-structionGroup(GEC)ispleasedtojoinJAMSPresident,ChrisPoole,inannounc-ing the creation of JAMS InternationalADR Center. Through this ADR Center,GEC will provide expert, efficient andcost-effective international mediation,

JAMS INteRNAtIONAL ADR CeNteR

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe 2

following thoughts and current is-sues: Starting with opinions aboutsources of construction disputes,incomplete or inadequate designdocuments were prominent in thediscussion. This was not a “dumponthedesigner”theme,butratheramorenuanceddiscussionofwhythis is so. Owners seem to recog-nize theprinciple that there is“noset of perfect drawings,” and thatdesignbudgetconstraintsexist,yeteachdrawingdiscrepancycansoonbecome an “error,” each changeorder requesta reason toquestionthedesign.Schedule-drivendesign,inbothprivateandpublicsettings,was also identified as a problem.Finally,ratherthanbeinginterestedincoordination,thecontractoranddesigner are essentially set againsteachotherandusuallyhaveverylittleinteractionpre-bid. Anothersourceofdispute iden-tified by the public entities is therequirement of accepting the lowbidder.ACatch-22:theownerthinksallchangeordersorRFI’sarebeinggenerated because the low bidder“missed” something, since all theotherbidswerehigher.Conversely,the lowbiddermusthavebidwithlow or nonexistent margins, andwillindeedbe“lookingfor”changeorders,convincedtheownerskimpedondesigninordertogetlowbids.Predictably, the private owner rep-resentative is aghast that anythingwouldbebuiltthisway. A common observation amongthe participants was that disputeshaveawayofemerginginthelatterstagesofaproject.Tworeasonsforthiswereidentified.One,closeout

issuesandanydeferredpaymentis-suescometothefore,subsgetshortdraws,workslowsor stops,allac-tivitiesbecome“critical,”claimsgetmade.Second, this is in significantpartbecausethepartiestotheproj-ectdonotdevoteenoughattentionand resources to the managementand resolution of disputes. Eithernothingisputinthecontract,or,ifinthecontract,itisignored.Disputesneedtobe“putoff,”so“wecangetthejobdone”–anoblethought,butoftencounterproductive. Afterabriefdiscussionoftheprosandconsofthetraditionalmethodsused by the participants to resolvedisputes, the general consensuswas clearly that mediation, and insome cases even litigation, werepreferred over arbitration. Mostparticipantshaveused,andcontinuetoroutinelyuse,mediation,thebot-tomlineviewbeingthatmediation“usually works.” However, evenwhere successful, mediation wasviewedasmoreof“aprocess”thanasinglesessionunderstoodbyalltobe a one-time attempt to produceglobal settlement. To address thisconcern,oneparticipantnotedthatin-house negotiations are a con-tractual prerequisite to mediation,and mediations are therefore onlyscheduledwhenthey“aredowntoa few issues, and ready to close adeal.”Althoughnotperfectbyanymeans,someinstitutionalpartiesstillviewingmediationasa“baby-split-ting” exercise, itwas evident fromthecommentsofparticipantsthatadeterminedfocusonattendancebytheappropriatedecision-makerswhocometomediationsessionswiththeability to make settlement calls on

thespot,andonunderstandingandmeeting the requirementsof insur-ancecarriers regarding informationandproofof liabilityareways thatADRneutralscanaidtheparties inmediation improve the efficacy ofthatprocess. What appeared to be of clearimporttothevariedparticipantswastheabilitytosolvedisputeswithra-piditywhiletheconstructionprocessisongoingthroughtheuseofdisputereviewboardorsingleprojectneu-trals.Theexperienceofthoseinat-tendancewithindependentDRB’sorsingleneutralsvaried.GovernmentalagencieshadmoreexperiencethantheprivatesectorinpastuseofDRB’s.OneagencyrepresentativedescribedusingDRB’sonallprojectsover$3million,expressingsatisfactionwiththe process. Another agency usedaformofDRB’sconsistingsolelyofcurrentemployees,itsrepresentativereporting“notmuchsuccess”withthisobviouslyslantedapproach.On

linda DeBene, esq. is a full-time mediator, arbitrator, special master, and project neutral with JAMS in Northern California. She has over 30 years of experience resolving construction industry disputes involving developers, general contractors, subcontractors, and design professionals. Email her at ldebene@jamsadr.com or view her Engineering & Construction bio online.

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the other hand the private ownerrepresentatives were less familiarwithusingDRB’s, but seemed veryinterestedinbothconceptsofDRB’sand/orprojectneutrals. Inlightofaconsensusthatsometypeofearly,real-timeresolutionofdisputesisgoingtobeabigpartofthe future of construction disputeresolution, Roundtable participantsnotedthattheconceptofDRB’sandprojectneutralsactuallygoesback15yearsormore,butexpressedtheviewthat,until recently, theseprocessesnever seemed to“catchon.”Earlyneutral evaluations of either tech-nical or legal issues (useful duringconstructionwhichcanultimatelybereflectedinchangeorders),akintomockjuriespriortolitigation,wereuniformlyviewedassomethinguse-ful, but, as always, subject to costconcerns. Whatalltheparticipantsseemedto be looking for was proof thatDRB’s,projectneutralsoranyrapid

ADRprocesshadactuallyworked.Ifshownthatup-frontcostsforDRB’sor project neutrals actually lead topost-completion dispute resolutioncosts,thereluctanceofownersandcontractorstotakeontheprocessesforcostreasonsmaydiminish. Theother“must” is theprofes-sionalneutralityoftheDRBmembersortheprojectneutral.InlightofpastperceptionsofDRB’sorprojectneu-tralpanelsbeing“skewed,”favoringonesideoranother,neutralityisseenas crucial, often more critical thanconstruction expertise which wasalso noted as a key consideration.Onegovernmentagencyparticipantwentsofarastoreportthat“someoftheDRBmembershaveexpressedtheir concerns that there may beanappearanceofbiasifthepersoncomesfromeitherindustryorisafor-meremployeeofthe(agency).”Thissenior construction manager sawthe neutrality of professional ADRneutrals familiar with GEC mattersasabenefit,astheprofessionalcan“indeedactasaneutralpartywithnoaxtogrind.” ItwasgenerallynotedthatsomeprofessionalADRneutralsmaylacktechnical expertise in various areasbeingconsideredbyaDRBorproj-ect neutral. Various tools can beemployedtoovercomethispotentialshortcoming,keeping inmind thatneutralityandgeneralexperienceintheconstructionindustrypracticesofacommercialorgovernmentprojectlaythegroundwork,andlackofbiasis the underlying goal. It is recom-mendedbyindustryrepresentativesthat the project neutral should bea person that is “familiarwithourtype of work so that none of thediscussion isoverhis/herhead. Forexample, since the transportationengineeringworldisoftenbrokenup

intobridgeguysandroadwayguys,canapersonthatisaroadwayguydeterminethevalidityofacomplexclaimdealingwithbridgeconstruc-tion?”Thiswasdiscussedasbeingaproblemwithavarietyofsolutions:(a) in the case of a three-personDRB,oneof thethreeshouldhavethetechnicalexpertisetodeterminethevalidityoftheclaimandcanhelptheothertwounderstandtheissue;(b) providing the professional ADRproject neutral with the ability tobringintechnicalexpertise(suchasscheduling,concreteorgeotechnicalexperts)isaflexiblewaytoaddtotheneutral’sexpertiseasneeded. Theneed for rapid,on-the-spotdeterminations in commercial andgovernmentalconstructionprojectsis only to be exacerbated by thepossibleeffectsofthefederalstimu-lus package on these matters. Allpredictedthatwhenthereislotsofmoneytospendquickly,anincreasein problems and the potential forcostlydisputeswillriseexponentiallyto the speed by which the moneyhas tobe spent.A lackof time tothoughtfullypreparedesignsand/orcontracts,andlittlemoneysetasideforreal-timedisputeresolution,willdrivemoredisputesthatlongoutlivetheprojects. The conclusions reached in dis-cussion with construction industryleaders at the Northern CaliforniaGECRoundtablehavebeencompiledand conveyed to the JAMS GlobalEngineeringandConstructionGroupwhichisdiligentlypreparingfortheeffectsoftheseeconomictimes.GECwelcomes client and neutral inputonproceduresthatcanaidthecon-structionindustryandgovernmentalentitiesinperformingtheirimportantworkunderstressfulandfiscallycon-stricteddemands.

Michael J. Timpane, esq. is a full-time neutral based in Northern California with a substantial ADR practice focusing primarily on resolving claims involving large construction projects. He is highly regarded for his ability to resolve complex construction, surety, real estate, insurance coverage and bad faith matters. Email him at mtimpane@jamsadr.com or view his Engineering & Construction bio online.

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe �

Dubai: Changing theFace of Arbitrationin the Middle east?By Ty D. LAuRIE, ESq. & DANIEL J. BRENNER, ESq.DLA Piper LLP (US), Chicago

Onceboomingwithfastpaced,innovativeconstruc-tionprojects,theconstructioncentersoftheMiddleEastarenowbeginningtofeeltheeffectsofthedeterioratingmarketeconomy.Astheeconomycontinuestodecline,parties toconstructioncontractswillbeginhavingdif-ficulty fulfilling theirobligations, leading themtoseekrelief through alternative dispute mechanisms such asarbitration.Partiesseekingtoarbitratetheirinternationalconstructiondisputeshavemanydecisionstoconsider,includingselectingtheforuminwhichtoseattheirar-bitration.Despitethefactthatanarbitrationmayarisefrom construction disputes in the Middle East, manyforeign investorswill instead choose to select anotherforumknownforitsmoremodernarbitralsystems.1Al-thoughLondon,NewYork,andPariscomprisetheleadinternationalarbitrationvenues,anumberofcountrieshavebeguntocompetetoattractinternationalarbitrationbusiness. ThemostrecentstatetoenterthefrayistheEmirateofDubai.Overthelastyear,Dubaihastakenseveralactionstohelpsolidifyitsplaceamongtheprincipalvenuesforinternationalarbitration.ThisarticlewillfocusonDubai’seffortstobecomeaninternationalcenterforarbitrationanddiscuss someof the challengesDubaiwill face inattainingthatstatus.However,beforeaddressingarbi-trationinDubai,thisarticlewillanalyzethearbitrationpracticesandproceduresinotherIslamicMiddleEasternnations.Byofferingaglimpseintothearbitralsystemsinplaceinneighboringcountries,thereadercanmorefullyunderstandjusthowfarDubaihasprogressed.

Arbitration in the Islamic Middle east To understand the arbitral systems in place in theIslamicMiddleEast,onemustappreciatetheimportantrolereligionplaysinMiddleEasternsociety.Asonescholar

put it:“Islamiclawpervadesthecommercialworld,aswellasaMuslim’swayoflife.Islamisacompletewayoflife:areligion,anethic,andalegalsystemallinone.”2SoimportantisIslamiclaw,alsoknownastheShariah,thatitconstitutesthesolesourceoflawinseveralMiddleEasterncountries.3Accordingly,it isnotsurprisingthattheShariahalsoplaysasignificantroleinthearbitrationprocessinMiddleEasterncountries.Asaresult,foreigninvestorswhoarenotaccustomedtoorfamiliarwiththeimportanceofreligioninMiddleEasternarbitralrulesmaybehesitanttoseattheirarbitrationsintheregion.4

OneareawheretheShariahinfluencesarbitrationintheMiddleEastischoiceoflaw.Althoughsomearbitralsystems strictly adhere to theShariah,many countrieshavebeguntobifurcatetheirreligiousandcivilcodes.For example, Kuwait and Jordan have attempted tomodernizetheirarbitralrulesbyrequiringarbitratorstoapplythe lawchosenbytheparties, thusallowingfortheapplicationofnon-Shariah lawtoarbitraldisputes

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe �

within their borders. On the otherhand, those states that have notbifurcatedreligionfromtheirarbitralrulesadministerarbitrationsinstrictadherence with Shariah principles.SuchstatescouldrelyontheKoran’sprohibitionagainst“riba”torefuseto enforce contractual provisionscalling for theawardof interestorusury.5

The Shariah also influenceswhether an arbitral award is bind-ingontheparties.Inthosecountrieswhosearbitral regime isbasedpri-marilyontheShariah,arbitralawardsmustcontainfourdistinctparts:“adescriptionofthedispute;thefind-ingof facts under Shariah rules ofevidence;thereasoningoftheawardwith reference to Shariah source;andthedecisionitself.”6However,inmanyMiddleEasterncountries,evenfulfilling these requirements maybe insufficient. In Bahrain, Egypt,Jordan, Kuwait, Morocco, Oman,SaudiArabia,andSyria,awardswillnothave a res judicata effectuntilregistered and approved with thestate court.7 This system of courtregistration has led one commen-tator to observe that arbitrators inIslamicMiddleEasterncountriesdonot “necessarily bring finality to adispute between parties. Sufficientroomisleft,procedurally,foreitherexpeditiousjudicialmanagementorjudicial meddling, procrastination,and delay.”8 This requirement thatarbitralawardsbebasedonsoundShariah reasoning, in addition totheuncertaintyinvolvedinthecourtregistrationrequirement,maydetersomeforeigninvestorsfromseatinganarbitrationintheMiddleEast.9

Another problem inherent inmanyMiddleEasternarbitralregimesrelatestotheenforcementofforeignarbitralawards.TheConventionon

theRecognitionandEnforcementofForeignArbitralAwards,alsoknownasthe“NewYorkConvention,”re-quires signatories to recognizeandenforce awards made in other na-tions.Despitethefactthat16MiddleEasterncountrieshavebecomesig-natoriestotheNewYorkConventiontodate,foreignarbitralawardsareoften refused enforcement in theMiddle East. Many Middle Easterncountries rely on the public policyexceptionintheNewYorkConven-tiontodenyenforcementofforeignarbitralawardsthatdonotcomplywithShariahprinciples.10Despitethe

factthattheInternationalLawAsso-ciationCommitteeon InternationalArbitrationstronglysuggeststhatthepublicpolicyexceptionbelimitedtonormsofinternationalpublicpolicy,asopposedtodomesticpolicy,manyMiddleEasternstateshavebeenac-cusedof interpretingtheexceptionotherwise.11 For example, in SaudiArabia,anyawardmadeabroadorusingforeignlawisdeniedenforce-mentiftheawardisdeemedcontrarytotheShariah.Asmentionedearlier,this could mean denying enforce-

mentof an entire arbitral award ifanyportionoftheawardconstitutesinterest.12

ItisnowonderwhysomeMiddleEasterncountrieshavebeguntore-formtheirarbitral systems inordertoattractmoreforeigninvestorsandcontracting parties. Unfamiliaritywiththeregion’sreligiouspracticescombinedwiththeimportantrolere-ligionplaysinMiddleEasternarbitralpractices may encourage a foreigninvestor to seathis arbitration in amore familiar venue such as NewYork,Paris,orLondon.Onescholarhasgonesofarastonotethat“asageneralrule,thepracticeofinterna-tionalarbitrationinthesestatesisstillinitsinfancy...theexperienceandtrainingofmostlawyersandjudgesin theMiddleEaston internationalarbitration issues lags far behindwhat is insuchcommercialcentersasNewYork,LondonandParis.”13

the Arbitral Regime in Dubai In an attempt to establish itselfas a center for regional and inter-national arbitration, the Emirateof Dubai has taken several actionsto address the problems found inmanyoftheMiddleEasternarbitralsystems.TheEmiratehopestocreateanarbitrationsystemwhichinspiresconfidenceinforeigninvestorsandcontracting parties by taking awaytheuncertaintyinherentinShariah-basedarbitrationrules.14TheplantoestablishDubaiasaprincipleforumforarbitrationincludesthreedistinct,well-plannedactions.First,thegov-ernment of Dubai has created theDubaiInternationalFinancialCentre(the“DIFC”).TheDIFCisa110-acre“freezone”withitsownjurisdiction,separateandapartfromthelawsof

See “Dubai” on Page 6

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DubaiandtheUnitedArabEmirates.Second,in2008,theDIFCamendedits2004ArbitrationLawtoprovideforeign parties the ability to refertheir dispute to arbitration in theDIFC.Third,theDIFCpartneredwiththe London Court of InternationalArbitrationtocreateanewarbitra-tion center in the DIFC. However,evenwiththeseachievements,somebelievethatthenewDIFCarbitralre-gimewillbeunabletocompetewiththealreadyestablishedregionalandinternationalarbitrationforums.

the Dubai InternationalFinancial Centre Free Zone The DIFC was established inSeptember2004asaninternationalfinancial center subject to its owncivil and commercial laws. LocatedintheheartofDubai’sfinancialdis-trict,theDIFCisoneofmany“eco-nomic free zones”which caters tofinancialservicesectorcompanies.15However, unlike other free zones,theDIFChasjurisdictiontopassitsowncommerciallaws.ThislegislativediscretionhasnotonlyallowedtheDIFC to establish a dispute resolu-tionregimewithinitsconfines,butalsohasallowedtheDIFCtocreateinvestor-friendlylawsinanefforttoattractmoreforeigninvestment.Forexample, theDIFCallows100per-centforeignownership,doesnottaxincomeandpermitstherepatriationofprofits.16

Anotherfactwhichmaybeofin-teresttoforeigninvestorsisthattheDIFCisgovernedbyEnglishcommonlawratherthanthecivilcodethatap-pliesintherestoftheGulfStates.17Furthermore, theDIFChas its own

court(theDIFCCourt)anditsownjudgeswhichapplyproceduralrulesbased on the English CommercialCourtrules;andthosejudgeshavegreat experience in internationalcommercial arbitration. The DIFCCourtjudgesconsistofChiefJusticeAnthonyEvans,aformerCommercialCourt and Court of Appeals judgeinEngland,andseveralotherexpe-rienced commercial judges and ar-bitrators.ThislevelofsophisticationandexperiencewillhelpfacilitatethearbitralsystemintheDIFCshouldtheDIFCCourt everbe calledupon tosupportanarbitration.Foreigninves-torsandcontractingparties shouldfeelassuredthatshouldacourtbeneededtoprovideinterimmeasuresofprotection,ruleonchallengestoarbitrators,orassistwiththetakingofevidence,thejudgesattheDIFCCourt have the requisite skill andexperiencetodoso. TheDIFC’s investor-friendly lawsand English-based legislative andjudicialregimewillsurelyhelpattractforeigninvestmentwithintheDIFC.ForeigninvestorswhoareunfamiliarwiththeShariah-basedcivil lawsinotherMiddleEasterncountrieswillfeelmorecomfortableinvestinginasystembasedonmorefamiliarlawsandpractices.Theendproductis“abusiness-friendlyenvironmentthatisregulatedbyalegalsystemwhichisbothaccessibleandfamiliartocom-mon-lawlawyers.”18

the DIFC Arbitration Law Having established a financial-free zone dedicated to attractingforeign investment, the next stageofDubai’splantobecomeacenter

for international arbitrations wasto amend its arbitration law. Untilrecently, the DIFC Arbitration Lawonlyapplied todisputesandtrans-actions having some connectionwith the DIFC. On September 2,2008,however,theDIFCArbitrationLawwasamendedtoremovethesejurisdictional limitations. The newDIFCArbitrationLawallowspartiestoseattheirarbitrationintheDIFCregardlessofwhethertheyhaveanyconnectiontotheDIFC.Inaddressingtheimplicationsofthisamendment,Dr.OmarBinSulaiman,theGovernoroftheDIFCcommented:“Byofferingarbitrationtocompaniesthroughoutthe world, the DIFC is reaffirmingits commitment to creating a legaland regulatory environment of thehigheststandardthatsurpassestherequirements of leading financialinstitutions.” ThenewlawisalsobasedontheUnitedNationsCommissiononInter-national Trade Law (“UNCITRAL”),amodel lawuniversally recognized“as theaccepted international leg-islativestandardforamodernarbi-tration law.”19 The combination ofa law based on an internationallyaccepted model with the removalofthearbitrationlaw’sjurisdictionallimitationsallowsforeignbusinessestousearbitralprocedureswithwhichtheyarefamiliarwhilealsoallowingMiddle Eastern businesses to havetheir disputes resolved within theregion. AnotherkeyfeatureofthenewDIFCArbitrationLawrelates toen-forceability.Unliketheprocessforen-forcingandfinalizingarbitralawardsinotherMiddleEasternforums,theDIFCArbitrationLawstreamlinesthis

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process.Absent theapplicabilityofoneoftheenforcementexceptionsintheNewYorkConvention,aforeignarbitralawardwillberecognizedasbinding within the DIFC upon theproduction of the original arbitralawardoracertifiedcopy. TheDIFCArbitrationLawhasalsosimplifiedtherecognitionofarbitralawards rendered in theDIFC. First,the award must be ratified by theDIFCCourtwhich,ashasbeendis-cussed,containsjudgeswhoareverysupportive of the arbitral process.Next,aDubai-basedcourt,whichhasnoauthoritytoreviewthemeritsoftheDIFCaward,conductsacursoryreviewoftheawardtoconfirmthatitisappropriateforenforcementandhasbeentranslatedintoArabic.Oncethisisconfirmed,theawardmaybeenforced in Dubai and the greaterUnited Arab Emirates. Moreover,because the United Arab EmiratesbecameasignatorytotheNewYorkConvention in 2006, a confirmedDIFC arbitral award automaticallybecomesenforceable inmore than140 other countries around theworld.20However,itshouldbenotedthattheproblemsinherentinenforc-ingawardsinotherMiddleEasterncountrieslargelyremain.Therefore,althoughpartiesselectingtheDIFCastheirarbitralforumcanrestassuredthattheirawardwillbeenforceablethroughoutmostoftheworld,someMiddleEasterncountriesmayrelyonShariahprinciples todenyenforce-ment.

the DIFC-LCIA Arbitration Centre TheculminationofDubai’sstrat-egy to become a lead forum forarbitraldisputesistheDIFC’spartner-shipwiththeLondonCourtofInter-nationalArbitration(the“LCIA”)in

launchingtheDIFC-LCIAArbitrationCentre.TheLCIAisoneofthemostrespected and longest establishedcommercial arbitration and media-tionadministrativeinstitutionsintheworld. Both parties hope that thecombinationof theDIFC’sbusinessfriendly legislative regime and theLCIA’s international reputation willacttoattractforeignarbitrationstothenewcentre.Thissentimentwasshared by Mohammed bin RashidalMaktoum,PrimeMinisterof theUnitedArabEmirates,attheopen-ingofthearbitrationcentre:“[t]heestablishmentoftheDIFCLCIAAr-bitrationCentreispartofastrategytopositionDubaiasaninternationalarbitrationjurisdiction.Thisisaland-markstepforDubai,reaffirmingitsstatus as one of the world’s lead-ing business hubs and creating anefficient working environment forlocalandinternationalcompaniestoprosper.” ThenewArbitrationCentrewillsupervisearbitrationsinaccordancewithamodifiedversionoftheLCIArulesandprocedures.TheDIFC-LCIArulesaresaidtobe“universallyap-plicable and compatible with bothcivil and common law systems,of-feringtheinternationalcommunity,internationallawyersandarbitratorsacomprehensiveandmodernsetofrules and procedures.”21 AnotherattractionoftheArbitrationCentreistheabilityofpartiestoaccesstheLCIA’svastdatabaseofleadingarbi-trators and experienced staff. Fur-thermore,ofadditionalsignificanceto some parties is that the LCIA,unlike the International Chamberof Commerce and other arbitralinstitutions, charges administrativeandarbitrators’feesonatime-basisrather thanasapercentageof thevalueoftheclaim.Thus,partieswith

large claims can rest assured thattheir arbitral feeswill bebasedonthetimeexpendedbythearbitratorsrather thanasapercentageof theoverallclaimindispute. AsaresultofthecreationoftheDIFC, the amendment to the DIFCArbitrationLawandthecreationofthe DIFC-LCIA Arbitration Centre,international parties now have an-other choice when selecting theirarbitralseat.Becauseofthesethreeachievements, international partiescannowtakeadvantageof“inter-nationalarbitrationconductedwithintheMiddleEastunderthesupervisionof internationally renowned judgesandwithinoneofthemostmodern,user-friendlyandtechnicallysophisti-catedcourtsystemsintheworld.”22Furthermore, the new arbitrationcentre will administer arbitrationsunderalawbasedontheUNCITRAL,an internationally recognized andaccepted arbitration law, and con-ducted pursuant to LCIA arbitralrules.Dubaiishopingtheseattractivefeatureswilldrawthosepartieswhowouldhaveotherwiseneverconsid-eredarbitratingtheirdisputesintheMiddleEast to choose theDIFCastheseatoftheirnextarbitration.

Challenges to theDIFC Arbitral Regime Despiteitsbestefforts,theDIFC’sstatusasatoparbitralforumisnotguaranteed.Standinginitswayisalonglistofcompetitors,bothregion-alandinternational.TheDIFC-LCIAArbitrationCentrefacescompetitionnotonlyfromtheleadinternationalarbitralforumsinNewYork,London,andParis,butalsofromwithintheMiddleEastitself.Forexample,theAbuDhabiCommercialConciliation

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andArbitrationCenterandtheQatarInternationalCentre forReconcilia-tionalsoseektoattractinternationalinvestors and contracting parties.Some believe that Abu Dhabi mayhaveanedgeovertheDIFCduetoits first-rate infrastructure and thelocation of the UAE Central Bankand other organizations within itsborders.23

In addition to the internationalandregionalarbitrationforums,theDIFC-LCIA Arbitration Centre mustalso compete with another Dubai-basedarbitrationcenter:theDubaiInternationalArbitrationCentre(the“DIAC”).Inanattempttokeepupwith the developments within theDIFC,theDIAChasrecentlyreleasednewarbitrationrulesbasedonUN-CITRAL, International Chamber ofCommerce, and American Arbitra-tion Association rules. The DIAC’snew rules appear to incorporatesomeofthebestprovisionsofeachoftheseinstitutionalrulesinanat-tempt toprovidea straightforwardyet comprehensive arbitral frame-work.24However,becausetheDIACislocatedoutsidetheDIFC,itcannotofferthesamebusiness-friendlyandpro-arbitration environment as theDIFC-LCIAArbitrationCentre.Intheend,onlytimewilltellwhethertheDIFC-LCIAArbitrationCentrewillbeable to compete with these otherestablishedarbitralseats.

Conclusion “The creation of the DIFC-LCIAArbitration Centre achieves DIFC’saimtobethekeysource,andsolebody, in providing unique and ef-ficient arbitration services as an

alternative way of dispute resolu-tion for thebusiness and commer-cialcommunity intheDIFC,Dubai,the region and internationally.”25Although it is still tooearly to tell,the DIFC possesses all of the toolsnecessarytobecomethenextinter-nationalarbitrationcenter.WiththenumberofMiddleEasternconstruc-tionprojectscurrentlyatriskduetolossoffinancing,partiesbreachingtheir contracts or otherwise, theDIFC-LCIAArbitrationCentreshoulddrawplentyofcontractualdisputes.ContractingpartieswillundoubtedlybeattractedtotheDIFC’spro-busi-nessenvironmentandsophisticatedjudiciary, the newly amended DIFCArbitrationLawandtheDIFC’spart-nership with one of the foremostarbitralinstitutionsintheworld.Thataside,whethertheDIFCcancompetewitharbitrationpowerhousesinNewYork,LondonandParisremainstobedetermined.

Ty D. Laurie, Esq. is a Partner with DLA Piper based in Chicago and Chair of DLA Piper’s Construction Law Group. Email him at ty.laurie@dlapiper.com. Daniel J. Brenner, Esq. is an Associate in the Litigation Group with DLA Piper based in Chicago, specializing in construction and real estate disputes. Email him at daniel.brenner@dlapiper.com.

Arthur J.Gemmell,Commercial Arbitra-tion in the Islamic Middle East, 5 SantaClaraJ.Int’lL.169,169(2006).Id.at170 (quotationandcitationomit-ted).Id.at171.Id.at169-170.Abdullah Kh. Al-Ayoub, International Commercial Arbitration in the Middle East,AmericanBarAssociationSectiononInternationalLaw,at6-7(SpringMeeting,2006), available at http://www.abanet.org/intlaw/calendar/spring2006materials.html.

1.

2.

3.4.5.

Dubai: Changing the Face of Arbitration continued from page 7

Arthur J.Gemmell,Commercial Arbitra-tion in the Islamic Middle East, 5 SantaClaraJ.Int’lL.169,184(2006).Id.at185.Id.Id.at169-170;TomCanning,Unique Ar-bitral Regime to be Established in Middle East,DLAPiperInt’lArb.Newsl.(DLAPiperLLP(US)),Feb.11,2008.Arthur J.Gemmell,Commercial Arbitra-tion in the Islamic Middle East, 5 SantaClaraJ.Int’lL.169,188-89(2006).Abdullah Kh. Al-Ayoub, International Commercial Arbitration in the Middle East,AmericanBarAssociationSectiononInter-nationalLaw,at6(SpringMeeting,2006),availableathttp://www.abanet.org/intlaw/calendar/spring2006materials.html.Id.at6-7.Id.at14.TomCanning,Unique Arbitral Regime to be Established in Middle East,DLAPiperInt’lArb.Newsl.(DLAPiperLLP(US)),Feb.11,2008.ClaudiaT.Salomon,J.P.Duffy&TomCan-ning,The New Dubai International Arbitra-tion Law,NewYorkL.J.,Nov.18,2008.Id.JonathonAmes,Dubai: The World’s Next Great Arbitration Centre?,TimesOnline,Apr.7,2008,availableathttp://business.timesonline.co.uk/tol/business/law/ar-ticle3698046.ece.Id.Arbitration in DIFC: Recent Develop-ments, Gulf Construction Worldwide,Dec. 1, 2008, available at 2008 WLNR23095366.ForalistofsignatoriestotheNewYorkConvention, see the United NationsCommission on International Trade Lawwebsiteathttp://www.uncitral.org/uncit-ral/en/uncitral_texts/arbitration/NYCon-vention_status.html.Launch of the DIFC LCIA ArbitrationCentre,Feb.17,2008,availableathttp://www.ameinfo.com/147193.html.JimDelkousis&TomCanning,Doing Busi-ness in the Middle East: Problem Solved,DLAPiperInt’lArb.Alert(DLAPiperLLP(US)),Sept.4,2008.JonathonAmes,Dubai: The World’s Next Great Arbitration Centre?,TimesOnline,Apr.7,2008,availableathttp://business.timesonline.co.uk/tol/business/law/ar-ticle3698046.ece.PhilipChong&TomCanning,Dubai: The Next Big Thing,DLAPiperInt’lArb.Newsl.(DLAPiperLLP(US)),Summer,2007.Launch of the DIFC LCIA Arbitration Centre,Feb.17,2008,availableathttp://www.ameinfo.com/147193.html (quot-ingDr.OmarBinSulaiman,GovernoroftheDIFC).

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JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe 9

See “Book Review” on Page 10

Reviewed by HARvEy J. KIRSH, ESq.

and DuNCAN W. GLAHoLT, ESq.

Wehavebeenworkingwiththisbookforanumberofmonthsnowandeachofushasbeenbackandforththroughitanumberoftimes.Wecanhonestlysaythatwehaveourfingerprints all over JohnHinchey’sandTroyHarris’superiorguidetoin-ternationalconstructionarbitration.Frombothpracticalandintellectualperspectives, this is a well-written,reader-friendly, and thoroughlyresearched book. It offers practicalguidelines and authoritative com-mentary,andisoneofthosebooksthatyouwanttokeeponthecornerofyourdeskforconstantreference. In the early 1980’s, there wereonly a few available books on thepracticeofinternationalcommercialarbitration, let alone internationalconstruction arbitration. In theseearlyyears,booksfocusedexclusivelyonconstructionarbitration(see,forexample,StuartFarber’s“ArbitrationHandbook”(1982),ArnoldM.Zack’s“ArbitrationinPractice”(1984),andJamesAcret’s“ConstructionArbitra-tion Handbook” (1986)). In 1986AlanRedfernandMartinHunterfirstpublishedtheir“LawandPracticeofInternational Commercial Arbitra-tion,”nowwidelyregardedasthelo-cusclassicusinthearea.Ayearlater,thefirsteditionofwhatisnowthetwo-volume“Bernstein’sHandbookofArbitrationandDisputeResolutionPractice”waspublished,dealingwiththemorepracticalaspectsof inter-nationalcommercialarbitration.This

bookhasalsogonethroughatleastone reprinting and four editions,most recently in conjunction withThe Chartered Institute of Arbitra-tors,editedbyJohnTackaberryQ.C.andArthurMarriottQ.C.Itisanotherclassicwork,butstillaworkwithamuchbroaderfocus.Noneofthesebooksfocusedoninternationalcon-structionarbitration. The1990’ssawthepublicationofBertholdH.Hoeniger’s“CommercialArbitrationHandbook”(1990);KarlMackie’s “A Handbook of DisputeResolution:ADRinAction”(1991);Mark Huleatt-James’ and NicholasGould’s “International CommercialArbitrationHandbook”(1996);andthe“HandbookofArbitrationPrac-tice”(1997),acollaborativeeffortbyRonald Bernstein, John Tackaberry,ArthurMarriottandArnoldM.Zack.Thenewmillenniumopenedappro-priatelyinJanuaryof2000withthepublicationofathirdeditionofCraig,Park and Paulsson’s “InternationalChamberofCommerceArbitration,”updatingtheiralreadyclassicworktoaccommodatethe1998ICCRulesofArbitration. In 2004,HarkHuleatt-James and Phillip Capper enteredthe field with their “InternationalArbitration:AHandbook,”followedin2006byThomasCarbonneauwith“AAA Handbook on InternationalArbitrationandADR”and in2007byRufusRhoades,DanielM.Kolkey,andRichardChernick’s“Practitioner’sHandbookonInternationalArbitra-tionandMediation.”Mostrecently,the“HandbookofICCArbitration”

waspublishedbyMichaelW.BuhlerandThomasH.Websterin2008,butnoneofthesebooksfocusedonin-ternationalconstructionarbitration. Tofindsomethingoninternationalconstructionarbitrationonehadtoknowtheirwayaroundconstructionlaw textbooks. For example, notedengineer, arbitrator, mediator andconciliatorProfessorNaelBunnifirstpublished his “The FIDIC Forms ofContract”in1991(nowinitsthirdprinting)containinganexpert’sviewof construction arbitration. It wasProfessorBunniwhocoinedtheterm“disputology”todescribethisarea,a term that authors Hinchey andHarrisadoptintheirwork.Adecadelater in the United States, Philip L.Bruner and Patrick J. O’Connor Jr.published their magisterial seven-volumetreatise“Bruner&O’ConnoronConstructionLaw”devotingtwofullchapterstoarbitrationandinter-nationalconstructionlawasdiscretesubjectsofinquiry. Theproblemforconstructionlaw-yers,therefore,wasthatduringthisperiodofintenseintellectualactivityintheareaof internationalarbitra-tion, the more practical aspects ofactuallyconductinganinternationalconstruction arbitration were notdirectlyaddressed.Thisproblemwascompoundedbythefactthatduringthe three decades described, therewasanabundantoverlayofdirectlyapplicableofficialandquasi-officialrules,protocols, commentariesandothersimilarmaterialsbutnowhere

Book review

International Construction Arbitration handbookwritten by John w . hinchey and Troy L . harris • st . paul, Mn: Thomson/west, 2008

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe 10

were they collectedand rationalized.Themostcurrentversionsoftheseofficialpubli-cationsarenowboundintotheHinchey/Har-risHandbook. A u t h o r s J o h nHincheyandTroyHar-ris have distilled thismass of informationinto a single volumereference work con-tainingallofthema-terialnecessarytotheconductofaninternationalconstruc-tion arbitration. The core principleof the Handbook is to make thiscomplexareaaccessible.Theauthorsmakethepointintheirprefacethatthe Handbook is a “guide to thesubjects, issues and considerationsapplicabletointernationalconstruc-tion arbitration” and that theirintention was to “attempt to becomprehensivein[identifying]thosetopicsandissues,beginningwiththeroleofconstructionandconstructionarbitrationintheworldmarketplaceoftoday”thatariseinthefieldoc-cupiedbyinternationalconstructionactivities.Theauthorshaveachievedtheirgoal. Thedeepresearchandreadingofthe authors is evident throughout.TheHandbookdoesnotadvanceordefendanyparticularcriticalpointofview,withtheonepossibleexceptionoftheirrecognitionthatprivatedo-mesticdisputeresolutioninthecon-structionindustryisbeingchallengedbothongroundsofwhatonemightcall “legitimacy” and “efficiency”principles. Instead of dwelling onsuchesotericsubjects,however,the

Handbooksimplymovesforwardandsynthesizes a tremendous amountof primary and secondary materialintoawell-organizedexpositorytext.Thereisalsostrengthandvalueinthefootnotes.Thebookiswellworthitspricemerelyasastand-alonebibliog-raphyinthisnarrowarea.Asbefitsabookentitled“InternationalCon-struction Arbitration Handbook,”the sourcesquotedarewide rang-ingandinternationalwithfrequentrecoursetoCanadian,U.K.andAsianresources. Importantly,theHandbookhasastrongandusefulinternalstructure.It is fully indexed and extensivelycross-referenced. The Handbooklists “Practice Tips” and includes“Case Examples.” The publisher

has included gener-ous material in theappendices, five ofthemintotal,occupy-ingapproximately750pagesoftext,includ-ing AppendixI: Con-ventionsandTreaties;Appendix II: Arbitra-tion Laws; AppendixIII: Arbitration Rules;Appendix IV:Arbitra-tionGuidesandPro-tocols;andAppendixV: Sample Provisionsand Other PracticeMaterials. As of thedate of publication,

thisisauniqueandusefulcollectionofthesematerialsofeverydayrefer-ence. Whentheauthorsdealwithcaselaw,itistreatedwithprecisionandcare.HincheyandHarrisdiscussthemutualityoftherighttoarbitrate;in-ternationaltreatiesandlegalsystemsas sources of jurisdiction (section4:6);interimrelieffromthetribunal;decisions involving the selectionofexperts, includingstandardsofreli-ability and independence (section6:30);rulesofevidence,burdensofproof, and presumptions (section9:5); and recognition and enforce-mentofawards,primaryandsecond-aryjurisdictions(section12:3)inallofwhichcasesreferencetodomesticcaselawisappropriate,andinmostinstancesmandatory.Unfortunatelythe Handbook was at press at thetime of the March 25, 2008 U. S.SupremeCourtdecisioninHall Street Associates, L.L.C. v. Mattel, Inc.whichisrelevanttosection2:37(Ap-pealsandjudicialrelief)andsection12:4(Recognitionandenforcementof awards – Actions to set aside).Hall Streetdoesappearasafootnote

The core principle of the international construction arbitration handbook is to make this complex area accessible . . . . The authors have achieved their goal .

Book Reviewcontinued from page 9

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe 11

tosection12:4,butonlyasbeingacaseonappealtotheU.S.SupremeCourt. This is something that theauthorsandpublisherwillnodoubtwant to address in supplementingthisvolume. Asonewouldexpectfrompracti-tionersoftherecognizedinternation-alstatureofJohnHincheyandTroyHarris,thechaptersonthepracticeofinternationalconstructionarbitra-tionareparticularlystrong.Chapter6,DevelopingtheCaseforArbitra-tion, including section 6:9 ReverseEngineeringtheAward,section6:16Reconstructingtherelevanthistoryoftheproject–Usingtherulesofprob-abilityandcoherence, section6:35Reconciling effective preparationwithcasebudgets,andChapter10“Fast Track” Construction Arbitra-tions with section 10:10 Tips andtechniquesfor“fasttracking”areallparticularlyvaluable. Aswesaidat theoutset, this isa book to keep on the corner ofyour desk as a constant reference.All too often in international con-structiondisputeswe see aqualityofengagementbestdescribed inaquotation attributed to Napoleon:“Jem’engage,etaprèsça,jevois”,“Iengage,andafterthatIseewhatIdo.”WithJohnHincheyandTroyHarris’treatiseatyourdisposal,youwillbeabletoturnthispropositionaround.

Reprinted by permission of Carswell, a division of Thomson Reuters Canada Limited.

Mr. Kirsh is a mediator, arbitrator, and project neutral with the JAMS New York Resolution Center, and a partner at Osler, Hoskin & Harcourt LLP in Toronto, Canada. Email him at hkirsh@jamsadr.com or view his Engineering & Construction bio online.

Mr. Glaholt is a partner at the Toronto construction law firm of Glaholt LLP. Email him at dwg@glaholt.com.

arbitrationandotherdisputeresolu-tionservicestotheglobalengineer-ing and construction industry. TheADRCenterwillbeheadquarteredinRomeandNewYorkwithadditionalhearinglocationsinGeneva,LondonandBrussels. Noexistingarbitrationcenterelse-whereintheworldrivalsTheJAMSInternational ADR Center in depthof engineering and constructionexpertise.Itishometosomeofthe

The AIA’S “Initial Decision Maker” Concept and theConsensusDoCS “Dispute Mitigation and Resolution” Process:

two ADR Approaches under theJAMS “Rapid Resolution” umbrella

continued from page 1

world’smosthighly skilled interna-tionalarbitratorsandmediatorswithexceptionalexperienceonmajoren-gineeringandconstructionprojectsinEurope,theMiddleEast,AsiaandtheWesternHemisphere.Combinedwith extensive experience of GECmembers as arbitrators, mediators,projectneutrals,DRBmembersandcreativeproblemsolvers,thecenteroffers anunparalleled combinationof industry knowledge and ADRskills.

US Contact Information:www.jamsinternational.comor 1-212-607-2799

EU Contact Information:www.jamsadrcenter.comor (+39) 06 6938 000

By PhiliP l. Bruner, eSQ.

The year 2007 will be remem-beredbyastheyearinwhichtheU.S.construction industry rejected anddiscardedthecentury-olddisputeres-olutionprocessthatrequiredclaimsanddisputestoberesolvedeitherbythedesigners’ initialdecisionorbybindingarbitration.Ina“shotheardroundtheconstructionworld,”boththeAmericanInstituteofArchitects(AIA) and the Associated GeneralContractorsofAmerica(AGC)issuedin2007industrycontractformsthatalteredpastpracticesandleftlitiga-tion as the “court of last resort”unlessthepartiesthemselvescrafted

andagreedupontheirownfavoreddisputeresolutionprocedures. The construction industry nowrecognizesthatrapidearlyresolutionofclaimsanddisputesisahallmarkof a successful project, that “onesizeofADRdoesnotfitalldisputes,”andthatthepartiesthemselvesarein thebestposition to agreeuponADRproceduresmostsuitedtotheirsituation.Thusin2007,boththeAIAandAGCConsensusDOCScontractforms substituted voluntary in lieuof mandatory dispute resolutionpractices Onecrucial2007change toAr-ticle 15 of the AIA A201 General

See “Two ADR Approaches” on Page 12

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe 12

ConditionsofContractwastoallowthepartiestoselecttheirowninde-pendent “Initial Decision Maker”(IDM)–inlieuoftheprojectarchitect–astheINITIALdeciderofdisputesandclaimsbetweenownerandcon-tractor.Foroveracentury,theprojectarchitecthadbeenmandatedastheinitialdeciderofdisputes,andtheAIAdocumentshadsanc-tioned the architect’s three(oftenconflicting)historicrolesastheindependentdesignpro-fessionalofrecord,theowner’sconstruction agent/observerandtheostensiblyneutralini-tialdisputedecider.Inrecentdecades, many have ques-tionedwhether any architectcan have the independenceandbackgroundtobeaneu-tral initialdeciderofdisputesbetweentheownerandcon-tractor,andparticularlyofdis-putesthatimplicatedthearchi-tect’sownservicesorinvolvedlegalorfactualissuesbeyondthe architect’s professionalcompetence.Suchquestionsencouraged parties to by-pass thearchitect initial decider role and toallowdisputestopileupduringthejob for resolution by arbitration attheendof theproject inone typi-callylongandexpensiveproceeding.Moreover,manyarchitectscandidlyadmittedtobeinguncomfortableintakingpositionsonclaimsadversetoownerswhopaidfortheirservices,orindecidingdisputesinvolvingcriticallegalandfactualissues(suchasthelegalproprietyandfactualmaterial-ityofgroundsallegedasabasisforcontractterminationfordefault)thatcouldcreatepotentialliabilities. Fromthecontractors’2007per-

spective,theconstructionindustry’sfavorable experience with earlymediationanddisputereviewboardnon-binding decisions (which, ac-cording to The Dispute ReviewBoardFoundation,haveresulted intheresolutionof98%oftheclaimssubmitted) confirmed the wisdom

ofhavingthepartiesengageinearlydisputeresolution–withoutanyin-volvementwhatsoeverofthedesignprofessional. In Article 12 of the2007ConcensusDOCS200GeneralConditions,contractorsoptedforatieredADRprocessthatbeginswithstructurednegotiationsbetweenthecontractorandowneratincreasinglyhigherlevelsofmanagerialauthority.Disputesnotsettledbynegotiationaresenttoeithera“projectneutral”oraDisputeReviewBoardasagreedbythepartiesforanon-bindingdeci-sion.TheProjectNeutralandtheDRBthusplaya rolecomparable to theAIA’sIDM.Failureofthepartiesto

agreeuponselectionofaneutralorDRBwillresultinmandatorymedia-tionundermediationrulesagreedbytheparties.Anunsuccessfulmedia-tion leads tocourt litigationunlessthepartiesagreeonbindingarbitra-tion. Whethercalledan“initialdecision

maker”ora“projectneutral”ora“mediator,”thecrucialin-gredientsofeachrolearetrueexpertiseinthesubjectmatterin dispute and consummateskill in reasoning with andbringing parties’ perspectivestogether. The objective is toget the issues settled rapidly.There isnoneed tobuild in-flexible“verticalsilos”aroundADRrolesthatwouldimpedeorincreasethecostofachiev-ingsettlement.Instead,aflex-ible,straight-forward,practicalADR process can be craftedthat brings the best disputeresolver(s) to bear upon theproblemathand. The“RapidResolution”pro-cess offered by JAMS Global

EngineeringandConstructionGroup(GEC)isaflexible,straight-forward,practical ADR process that invokestheADRmethodsbestsuitedunderthecircumstancestoresolveprompt-lyalldisputesatissue.BoththeIDMandthe“ProjectNeutral”fallunderthe JAMSGEC“RapidResolution”umbrella.

Mr. Bruner is a JAMS mediator, arbitrator, and project neutral based in Minnesota. Email him at pbruner@jamsadr.com or view his Engineering & Construction bio online. JAMS Global Engineering and Construction Group may be reached at its Rapid Resolution “one call” national number: 866-956-8104.

two ADR Approaches under the JAMS “Rapid Resolution” umbrella continued from page 11

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe 1�

u.S. Supreme Court per-mits a nonsignatory to an arbitration agreement to enforce arbitration under the FAA against a signatory party where state law so allows: Arthur Anderson LLP v. Carlisle, 129 S. Ct. 1896 (May 4, 2009). Under the law of variousstates, a non-signatory to acontractneverthelessmaybepermittedtoenforcethecon-tract’sarbitrationclauseundertheories such as third-partybeneficiary, waiver and estoppel,assumption, agency, subrogation,assignment,alterego,jointliability,and incorporation by reference orimplication.See6 Bruner & O’Connor on Construction Law20:63–20:71.UnderSection3oftheFederalArbi-trationAct (FAA),acourtmaystaylitigation only of claims “referableto arbitration under an agreementinwriting.” InArthur Anderson,theU.S.Su-premeCourt,ina6-3decision,ruledthattherightsofnon-signatoriestoenforce written contracts were tobedeterminedunderstatelaw,andreversedaholdingoftheU.S.CourtofAppealsforthe6thCircuitthattheFAAonlyauthorizedacourttostaylitigationbetweenactualsignatoriestoawrittenarbitrationagreement.TheCourtthusbroadenedconsider-ablyopportunitiesofnon-signatoriestostaylitigationandcompelarbitra-tion under the FAA. The decisionis consistent with the Court’s prior

decisions leaving to state law thequestionofwhetheravalidarbitra-tionagreementexists.See,e.g.,First Options of Chicago Inc. v. Kaplan,514U.S.938,943(1995)

A non-signatory to an arbitration clause with vicarious liability for the award is deemed bound by the award by participating in the arbitration: Jadhav v. Ackerman, 878 NyS 2d 766 (Ny App. Div. May 12, 2009). Avicariouslyliablenon-signatorytoanarbitrationclauseneverthelesswasdeemedboundbyanarbitrationaward rendered inaproceeding inwhichthenon-signatoryparticipat-ed,albeitonlyinanallegedcorpo-ratecapacity.Byparticipatingintheproceeding, the non-signatory wasdeemed tohavewaivedobjectionsastolackofnoticeorserviceofthedemand.

A non-signatory surety cannot be compelled to arbitration pre-

dispute claims pursuant to an arbitration clause in the bonded contract but can be bound by its post-dis-pute agreement to an ar-bitration award against its principal: Dodson Brothers Construction Co. v. Ratliff, Inc., 2009 WL 806800 (D. Neb. February 27, 2009). Afterasurety’scontractor/principal and subcontractor/paymentbondclaimantwereorderedtoarbitratetheirdis-putespursuanttoanarbitra-

tionclause,thesubcontractorthensuedthesuretyinaseparateactionandmovedthecourttoconsolidatethe two arbitrations. The surety’spaymentbondcontainednoagree-ment to arbitrate. Finding nothingin the prime contract, subcontractorbondsthatexpresslyrequiredthesuretytoarbitratethesubcontractor’spaymentbondclaim,theCourtruledthatthesuretyhadnoobligationtoarbitratepre-disputeclaims.ButtheCourt also found that the surety,after the payment bond claim hadbeen asserted, that the surety hadagreed informally to be bound byanarbitrationawardinfavorofthebondclaimantandagainstitsbondprincipal,andthereforegrantedthemotion tocompel to theextentofthesurety’spost-disputeconsenttobebound.Seegenerally6 Bruner & O’Connor on Construction Law20:71and Restatement (Third) of Surety-ship & Guaranty67(2)(1996).

receive The newSleTTer elecTronically

Tosignupforyourcomplimentaryelectroniccopyof

JAMS Global Construction Solutions,

pleaseemailconstructionsolutions@jamsadr.com.

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe 1�

uPCOMING eVeNtSSEPT. 11, 2009:Mediation Seminar at Pearlman 2009Woodinville,WA• http://www.thepearlman.net

MICHAEL J. TIMPANE and KENNETH C. GIBBS,JAMS,willpresentamediationseminarduringthisannualeventforthePearlmanAssociation,anassociationofmajorsuretiesandtheconsultantsandattorneyswhoservicethem.

SEPT. 14-15, 2009:Surviving and Prospering on construction Projects under the new administrationAtlanta,GA• http://www.constructionchannel.net

Associated owners & Developers 2009 National Conference East•Sponsored by JAMS

JoHN W. HINCHEy,JAMS,isapanelmemberofSession7,Day2,9AM,on“ManagingtheRisksandObligationsofElectronicDiscovery:Sanctions,SpiralingCostsandAccessibility.”

oCT. 4 – 9, 2009: international Bar association annual conference 2009Madrid,Spain• http://www.int-bar.org/conferences/Madrid2009/info_7.cfm

HIS HoNouR HuMPHREy LLoyD qC,JAMS,willchairasessionoftheInternationalConstructionProjectsCommitteeon“TimeandAccelerationIssuesAffectingInternationalConstructionProjects,EspeciallyConcurrentDelay.”

oCT. 16, 2009:The next wave of construction Dispute resolutionAtlanta,GA•http://www.theseminargroup.net/seminar.lasso?seminar=09.CDRGA

The Seminar Group•Program Chair:JoHN W. HINCHEy,JAMSandKing&SpaldingLLP

FacultyIncludesJAMSneutralsPHILIP L. BRuNER,JESSE B. “BARRy” GRovE III,andRoy S. MITCHELL

oCT. 30, 2009:a national Summit on Business-to-Business arbitrationWashington,DC•http://www.thecca.net or Deborah.Rothman@aya.yale.eduorsyusem@morrisclemm.com

The College of Commercial Arbitrators•organizer:CCAPresident-ElectHoN. CuRTIS voN KANN, (RET.),JAMS

opening Address:THoMAS J. STIPANoWICH,PepperdineUniversitySchoolofLawandJAMS

Luncheon Keynote:Hon.JudithS.Kaye,RetiredChiefJudgeofNewYorkCourtofAppeals,FormerPresidentoftheConferenceofChiefJustices,nowOfCounseltoSkaddenArps

NOtABLe MeNtIONSKENNETH C. GIBBSwasrecognizedasoneoftwohighlightedintheConstructionMediators–Californiacategoryinthe2009editionofChambers USA.

Intheinauguraledition(2009-2010)of“CrossBorderConstructionandProjectsHandbook”(publishedbyPLCPracticalLawCompany,London),JoHN W. HINCHEywaslistedasoneofthetopconstructionlawyersinGeorgia,andHARvEy J. KIRSH wastiedforthetitleoftopconstructionlawyerinCanada.

HIS HoNouR HuMPHREy LLoyD qC,JAMS,wasawardedanHonoraryDoctorateofLaws(LLD)byLeedsMetropolitanUniversityonJuly13,2009aspartofSummerGraduationcelebrations.

THoMAS J. STIPANoWICH,JAMS,hasbeendesignatedtheWilliamH.WebsterChairinDisputeResolutionatPepperdineUniversitySchoolofLaw.

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Notices & Calendar of events

JAMS GLOBAL CONStRuCtION SOLutIONS • SuMMeR 2009 • PAGe 1�

ReCeNt ARtICLeS AND PAPeRS“Taming Construction Disputes Through Rapid Resolution”byJoHN W. HINCHEy,JAMSandKing&SpaldingLLP,wasrecentlypublishedbyEngineering News-Record inJuly.

“Global Engineering and Construction ADR: Meeting An Industry’s Demand for Specialized Expertise, Innovation, and Efficiency”byPHILIP L. BRuNER, JAMS,appearedinthe2009editionoftheJournal of the Canadian College of Construction Lawyers.

“A Report Card on the quality of Commercial Arbitration: Assessing and Improving Delivery of the Benefits Customers Seek”byHoN. CuRTIS E. voN KANN (RET.),JAMS,and“Arbitration and Choice: Taking Charge of the ‘New Litigation’”byTHoMAS J. STIPANoWICH,JAMS,willbepublishedintheDePaul Business & Commercial Law Journal.

“Arbitration: The ‘New Litigation’”byTHoMAS J. STIPANoWICH,JAMS,willbepublishedinJanuary2010.

For more information or copies of these articles, please contact jherrera@jamsadr.com.

ReCeNt SPeAkING eNGAGeMeNtS AND PROGRAMSJAMS GLoBAL ENGINEERING AND CoNSTRuCTIoN GRouPhosteditsfirstseminar-aday-longprogramonU.S.andCanadiancross-borderconstructionindustryADRinconjunctionwiththeSocietyofIllinoisConstructionAttorneysinChicago,Illinois,onMay28,2009.TheeventwasheldintheJAMSChicagoResolutionCenterandwaswellattendedbyJAMSandSOICAneutralsandattorneys,aswellasmembersoftheCanadianCollegeofConstructionLawyers.Aspecialthankyouto Lorence Slutzky,thePresidentofSOICA,forhelpingorganizethissuccessfulevent.

PHILIP L. BRuNER, JAMS,presentedoninternationaldisputeresolutionandtheEnergyCharterTreatyattheAnnualMeetingoftheInter-PacificBarAssociation,intheManila,Phillippines,onMay2,2009.

HARvEy J. KIRSH,JAMS,organizedapresentationfeaturingTheRightHonourableBeverleyMcLachlin,ChiefJusticeoftheSupremeCourtofCanada,whospokeon“JudgingLitigationintheConstructionIndustry”atOsler,Hoskin&HarcourtLLPinToronto,CanadaonApril30,2009.Mr.Kirshspokeon“AlternativestoLitigationintheConstructionIndustry.”

THoMAS J. STIPANoWICH,JAMS,andHoN. CuRTIS voN KANN,JAMS,presentedattheDePaulUniversityLawSchoolentitled“WindsofChange:SolutionstoCausesofDissatisfactionwithArbitration”inMarch2009.

the JAMS GLOBAL eNGINeeRING & CONStRuCtION GROuP WeLCOMeS tWO NeW NeutRALS

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JaMeS F. naGle, eSQ. Mediator • Arbitrator • Project Neutral

Nationallyrenownedforhisexpertiseinfederalcontracting,particularlyintheareaofconstructioncon-tracts,Mr.Naglehasservedasaneutralinmanycomplex,multi-million-dollardomesticandinternationaldisputes.HehasworkedexclusivelyingovernmentcontractsasapartneratOlesMorrisonRinkerBaker,LLPsince1990andfor11yearspriortothatintheU.S.Army.Hespecializesinresolvingbusiness/com-mercial,construction,engineering,andgovernmentalandregulatorymatters.

DouGlaS S. oleS, eSQ. Mediator • Arbitrator • Project Neutral

ApartneratOlesMorrisonRinkerBaker,LLPsince1987,Mr.Olesisrecognizedasanationalleaderinthepracticeofconstructionlawandinvariousareasofpublicandprivatecommercialcontracts.HehasextensiveexperienceinbothlitigationandtransactionalworkintheU.S.aswellastheU.K.,China,Brazil,andtheNetherlands.Mr.Olesspecializesinresolvingcasesinvolvingbusiness/commercial,construction,engineering,intellectualproperty,andrealestatedisputes.

newsletter Board of editors

PhiliP l. Bruner, eSQ.*Director, JAMS Global Engineering and Construction Group

harvey J. KirSh, eSQ.*JAMS Global Engineering and Construction Group

JoHN J. WELSH, ESq.JAMS Executive Vice President and General Counsel

JAMS Global Construction Solutionsseekstoprovideinforma-tionandcommentaryoncurrentdevelopmentsrelatingtodisputeresolutionintheconstructionindustry.Theauthorsarenotengagedinrenderinglegaladviceorotherprofessionalservicesbypublicationofthisnewsletter,andinformationcontainedhereinshouldnotbeusedasasubstituteforindependentlegalresearchappropriatetoaparticularcaseorlegalissue.JAMS Global Construction SolutionsispublishedbyJAMS,Inc.Copyright2009JAMS.Photocopyingorreproducinginanyforminwholeorinpartisaviolationoffederalcopyrightlawandisstrictlyprohibitedwithoutthepublisher’sconsent.

JAMS GLOBALCONStRuCtION SOLutIONSLeading adr developments from The resolution experts

AdditionalmembersoftheJaMS Global engineering

& construction Group

ViggoBoserup,Esq.•Hon.WilliamJ.Cahill(Ret.)

GeorgeD.Calkins,II,Esq.•RichardChernick,Esq.*

Zela“Zee”G.Claiborne,Esq.•RobertB.Davidson,Esq.*

LindaDeBene,Esq.•BruceA.Edwards,Esq

DavidGeronemus,Esq.•KennethC.Gibbs,Esq.*

JesseB.(Barry)GroveIII,Esq.*•KatherineHopeGurun,Esq.*

WilliamE.Hartgering,Esq.•JohnW.Hinchey,Esq.*

GeraldA.Kurland,Esq.•HHHumphreyLLoydQC*

Hon.CliffordL.Meacham(Ret.)•JosephT.McLaughlin,Esq.

RoyS.Mitchell,Esq.•JamesF.Nagle,Esq.

DouglasS.Oles,Esq.•DonaldR.Person,Esq.

AlexanderS.Polsky,Esq.•CarlM.Sapers,Esq.

VivienB.Shelanski,Esq.•ThomasJ.Stipanowich,Esq.*

MichaelJ.Timpane,Esq.•EricE.VanLoon,Esq.

Hon.CurtisE.vonKann(Ret.)•CatherineA.Yanni,Esq.

MichaelD.Young,Esq.

*GEC Advisory Board Member

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