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– Written by Dmitry Davydenko* A Settlement Agreement is usually defined as an agreement by which parties settle a dispute or a legal uncertainty in their relations, normally through reciprocal concessions. It is expressly governed in the civil codes of France, Italy, and several other states as a sui generis contract. Its causa, therefore, consists in the settlement (extinguishing) of a dispute or legal uncertainty. The issue of determining the law applicable to an international settlement agreement becomes relevant when a dispute arises out of or in connection with such agreement, or its validity is challenged. Then it may become necessary to interpret the agreement and determine the rights and duties of the parties. Applicable law turns out to be relevant and even crucial in the context of enforcement of the settlement agreement. For instance, United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention) provides in Art. 5(1)(b)(i) that the competent authority of the Party to the Convention may refuse to grant relief at the request of the party relying on the settlement agreement if the other party furnishes to the competent authority proof that the settlement agreement is null and void, inoperative, or incapable of being performed under the law to which the parties have validly subjected it or, failing any indication thereon, under the law deemed applicable by the competent authority of the Party to the Convention where relief is sought. Meanwhile, the issue of law applicable to the international settlement agreements is studied insufficiently compared to various other issues of private international law/conflict of laws. This article proposes a brief analysis of basic principles of conflict-of-laws analysis to determine law applicable to settlement agreement with a foreign element (resulting from cross-border relations). Connecting factors analysis should start from lex voluntatis. Indeed, express or implied choice of law by the parties should be respected. However, parties sometimes do not choose applicable law in settlement agreement for various reasons, e.g. such agreement is concluded at the “eleventh hour” after difficult talks when the parties’ negotiators areexhausted and wish to quickly conclude the agreement before any of them changes their mind. They may also consider choice-of-law clause unimportant on the ground that dispute is already settled. If no law is chosen, then several other connecting factors need to be considered. Law of the place of conclusion of the settlement agreement (lex loci contractus) may be considered relevant presuming that the parties should reasonably take into account the law of the jurisdiction where they enter into their agreement. However, such a place may be simply random and chosen merely out of convenience. It hardly has any bearing on the parties’ relations. Furthermore, an agreement may be concluded through electronic communication, without a personal meeting of parties. Therefore, thisconnecting factor appears not satisfactory. Another approach would be to rely on characteristic performance of the parties. Such test underlies, e.g., Article 4(2) of Rome I Regulation: “Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points (a) to (h) of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.” However, then a question arises what kind of performance should be considered characteristic of a settlement agreement. Its purpose consists in extinguishing a dispute: a claimant party usually waives their right of claim in exchange for some reciprocal step from the other party, such as accord and satisfaction. Therefore, waiver of rights/claims may often be characteristic of such agreement. Indeed, for instance, the United States tends to consider the settlement agreement as a special contractual type with consideration granted specifically for termination of a legal dispute.However, both parties may undertake to waive certain rights to settle the dispute. Consequently, application of characteristic performance test will not always be appropriate. Third option to explore would be lex loci solutionis (place of performance). Unlike the previous approach, this one features not the place of the performer, but the place of the performance itself. However, both parties may undertake to make certain steps to perform a settlement agreement. The agreement may also consist in refraining from actions (e.g. recognition of certain property title of the other party; a non-compete obligation) rather than active performance. Therefore, the test may not always be possible to apply. Fourth option relies on accessory nature of settlement agreement. Indeed, it is a derivative agreement, which is always based on some previous relations of the parties. Consequently, it appears to be logical to apply the same law as to the underlying relations (contractual or other). The same legal regulation of previous and subsequent relations, e.g., a contract and its modification by settlement agreement, gives the parties greater confidence in the existence, exact content and enforceability of their rights. Where a settlement agreement creates completely new obligations, rather than modifies previous relations, it would be more appropriate to apply the closest connection test. For instance, Article 4(4) of Rome I Regulation provides that “Where the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country with which it is most closely connected.” To determine the law most closely connected to the settlement agreement one should consider the subject and circumstances of the conclusion and performance of the settlement agreement, both previous and subsequent, e.g. place of negotiations; in which state the main part of the obligations under the terms of the settlement agreement is to be fulfilled (lex loci solutionis); parties’ places of residence/center of business; other relevant factors. Based on the forgoing the author’s conclusion is that, unless the parties agreed otherwise, and unless otherwise follows from the settlement agreement, it shall be subject to the law applicable to the relations which gave rise to the settled dispute. However, the settlement agreement may deal with a complex conflict. That is, the underlying relations may be

A disquisition on the ‘Stovepipe Program’ Like moths to a flame, conflicts are a necessary component of human relationships, to which workplace relations are not immune. The workplace houses a gamut of individual interests that are bound to clash. From the way a colleague opens the door (you’d be surprised at certain pet peeves that some people have) to the usage of unprofessional email salutations all the way down to employment termination. The workplace clashes range from personal interests to aggregate interests to financial interests among a list that is supposedly endless. Well, the stovepipe program is not for the resolution of pet peeves, or is it? This piece outlines and discusses the stovepipe program. It is an employment dispute resolution system agreed upon prior to a dispute by parties, between the employer and employee usually, that utilises arbitration administered by neutral institutions. The 21st-century workplace, particularly the big corporations, has shifted its recourse from reactionary measures like resorting to litigation to proactive measures where disputes are mutually deliberated upon and wisely so. For context, eLawForum, a premier business-to-business exchange for legal services, estimates that the total cost of litigation spent by Fortune 500 is to be $210 billion, equivalent to one-third of the after-tax profit of the Fortune 500, in the past 8 years thereby dwarfing CEO compensation. So much for so little; what is at best integrated reactionary measures such as the ombudsman program and open-door policies were subsequently popular as compared to proactive measures like the stovepipe. However, these integrated reactionary measures have one problem in common. Structural bias is a general concern for the employee where these measures are utilised. The reason being both the systems are financed by the company itself, and consequently, the company’s interest in the scheme of things may surpass that of the claimant. The thought of it might just be likened to reporting a culprit to himself, more often than not he’d take his own side! Moreover, the satisfactory resolution of conflict may engender a sense of fairness that structural bias incinerates: that the claimant has been heard, treated with respect, and interests met or at worst acknowledged. In considering dispute resolution generally, it could be administered by one sole party, by the two parties, or by a third party. The first two measures are designed and masterminded by one of the disputing parties. The other party may not feel a sense of fairness in this process compared to the remaining parties. Alternate Dispute Resolution methods such as mediation generally fall within the purview of the second measure in which case both parties shoulder the responsibility of resolving the dispute to a neutral third person. Both the parties can easily succumb to the resolution achieved faster because of the inclusivity it affords. The third measure allows parties to submit their dispute to a neutral party for resolution like the stovepipe program. The institution that administers this resolution may or may not be privatized. An example of a public institution is the Equal Employment Opportunity Commission which hears cases related to employment disputes in America. While an example of a private institution is the International Institute for Conflict Prevention and Resolution, their Administered Employment Arbitration Rules go so far as necessitating the arbitrator to justify the rationale behind the decision arrived at. While the success of this program in workplaces is debatable, however, in theory, it best serves commercial needs of expediency. One last feature about the Stovepipe program; remember Santa Claus and the myth that he gets into the house on Christmas eve through the chimney, also called stove pipe? The stove pipe is a long pole that only filters out smoke and that is how tight and confidential the Stovepipe Program is considered to be; nothing can go in or out. Except, of course, Santa.

What ECI thinks of: Relevance of Counsel Ethics in International Arbitration Program ~Authored by Prantika Dutta  “International arbitration dwells in an ethical no man’s land…where ethical regulations should be, there is only an abyss.”‘Counsel Ethics’ is presently identified as a gray area of arbitration which delves into the code of conduct the counsels are required to adhere to for fair and just adjudication in arbitration proceedings. The development of international arbitration over the past century is of unique character – despite being connected to various State jurisdictions, it is autonomous in its own nature. In its developing stages, the world of international arbitration was majorly obscured due to multiple countries’ transnational complexities. However, in its history of existence, international arbitration has entered a crucial juncture where cognizance is being taken by the global nations to analyse its nature, purpose, and legitimacy thereby making the role of counsels and their ethical compass ever-prominent. Transnational dealings of affairs are a breeding ground of ensuing problems in international arbitration in the absence of backing of foolproof laws and regulations. There is a compelling need and relevance for the enactment of a fair Code of Ethics in international arbitration and its recognition by transnational institutions. In tandem with its growing popularity as a viable alternative to traditional courtroom litigation, the international arbitration community has noticed the need for certain changes in the law to make the system more just for the parties who opt for international arbitration, and in turn, be attuned to the changes in the contours of arbitration. International arbitration is less recognizable as a form of “alternative dispute resolution” than as a type of “offshore litigation” This transformation has been both celebrated and decried as the “judicialization” of arbitration.The core ethical issues raised regarding the arbitration are consent, choice, confidentiality, and conflicts of interest. Scholars believe what encompasses core ethical values in an arbitration question can be answered along the lines of maintaining truthfulness, fairness, independence, loyalty and confidentiality by the parties involved in the arbitration including the arbitrators and the counsels. However, what constitutes ‘core ethical values’ majorly depend on cultural and ethnical background along with legal backdrop. Studying counsel ethics is a complex issue due to the underplay of not only different laws but also incompatible laws at one issue. There exist vast differences between the treatment of counsel ethics across civil law and common law countries that are bound to clash in an international arbitrational setup. The system of international arbitration has come under fire for its lack of code of conduct for counsels which in turn challenges the delivery of justice to the parties involved. There are no well-structured legislations governing the ethical codes for counsels appearing before an international arbitration. It is regulated under laws such as International Chamber of Commerce (“ICC”), London Court of International Arbitration (“LCIA”), SIAC (“Singapore International Arbitration Centre”), but they are yet to deliver a concrete regulation on counsel ethics despite it being a hot potato in the field of international arbitration. The presence of clear ethical codes affirms the existence of a dependable system of arbitral enforcement that the parties from various nations can resort to in order to resolve their transnational disputes. It has to be evolved into a fully operational international adjudicatory procedure, which aims to effectively guide and monitor the conduct of the counsels who take part in this discourse. The implementation of proper ethical codes ensures that inappropriate behaviour of the counsels will be viewed as an ‘aberration’ in an otherwise healthy system rather than it being a “symptom of lurking systemic pathologies” which risks jeopardizing the credibility of an entire mechanism of transnational dispute resolution.