A. Methods of Dispute Resolution.
Governmental dispute resolution of what were termed “private law” matters have essentially evolved from two competing procedural paradigms – the adversarial system and the inquisitorial or non-adversarial system. The hallmark of an inquisitorial system is that the decision-maker, usually the court or judge is also actively tasked with investigating the facts of the case. This contrasts with an adversarial system which places the court or judge in the role of an impartial referee between the plaintiff and the defense.
The distinction between these two systems originated from twelfth century European law. Adversarial processes could only be initiated by the action of a private party (the so-called processus per accusation), while inquisitorial proceedings could be triggered ex officio by the judicial system (the so-called processus per inquisition). Such distinction evolved in later medieval times to include other features making up the distinct procedural attributes of the two systems.
Inquisitorial systems have developed primarily in countries with civil legal systems as opposed to common law systems, the distinction between an adversarial and inquisitorial system is not necessarily related to or dependent upon whether the jurisdiction employs a civil legal or common law system.
The adversarial system is typically employed in common law countries. Two advocates prepare their respective parties’ positions, investigate the facts and marshal those facts to enhance those positions and then represent their client’s positions before a fact-finder/decision maker, usually a jury or judge, who attempt to determine the truth of the case. It is in contrast to the inquisitorial system used in some civil law systems (i.e. those deriving from Roman law or the Napoleonic code) where a judge, or group of judges investigates the case.
Having been traced to the medieval mode of trial by combat, in which some litigants, notably women, were allowed a champion to represent them, the adversarial system is at its core a contest between two sides for the fact-finder’s belief in their respective version of the “truth”. That there is a “contest’ in and of itself mandates that there be a physical locale for the conduct of the proceeding and that the facts be examined as part of the proceeding and because each of the litigants bears responsibility for introducing those facts, there must be rules of evidence and procedure to be followed. One need only harken back to ancient Rome and the roots of the adversarial system to understand that the trial itself was an entertainment event where the orators were measured by the size of their corona, literally “crown” or circle of admiring listeners. Indeed, the word actor was the formal term Roman law gave the plaintiff
Thus it is undeniable that the adversarial system requires an event (hearing or trial), a physical locale for the event, participation of the litigants both in preparation for the event and at the event, that the event is public, and that the participants and the fact-finder(s) must adhere to certain rules in presenting their positions.
The inquisitorial system is typically employed in civil law countries. In the inquisitorial system the fact-finder is actively involved in investigating the facts of the case. The inquisitorial system places greater control in the hands of the fact-finder judges who are theoretically well trained and impartial. In a typical inquisitorial proceeding, the fact-finding process is dominated and controlled by a presiding judge, who may ask the parties to produce evidence and documents, depose and examine witnesses themselves and frame and reformulate the issues. In those proceedings, the court determines the credibility and relative weight of each piece of evidence without being constrained by any strict rules of evidence.
Concepts such as “plaintiff’s case” or “defendant’s case” are unknown to the procedural systems of the civil law tradition. The direct involvement of the judge in the fact-finding and evidentiary discovery process works to avoid the consolidation of competing viewpoints arising out of the independent partisan search and presentation of the facts by the respective parties. This active participation of the judge in the gathering and evaluation of evidence also serves to blur the distinction between pretrial and trial such that in civil law jurisdictions, there is no single continuous event referred to as a “trial.” Instead, there can be several meetings or hearings in which the judge meets with the parties to gather and evaluate evidence. The judge’s ongoing involvement in the discovery process serves to foster procedural economy.
2. Private – Arbitration
Arbitration is a means of settling disputes by referring them to a neutral person, an arbitrator, selected by the parties for a decision based on the evidence and arguments presented to the arbitration tribunal. The parties agree in advance that the decision will be accepted as final and binding.
Historically, commercial arbitration was used in resolving controversies between medieval merchants in fairs and marketplaces in England and on the European continent and in the Mediterranean and Baltic sea trade. The increased use of commercial arbitration became possible after courts were empowered to enforce the parties’ agreement to arbitrate. The first such statute was the English Arbitration Act of 1889, which was later consolidated into an act of 1950 and adopted by arbitration statutes in most countries of the British Commonwealth. It was followed in the United States by an arbitration statute of the state of New York in 1920 and the Federal Arbitration Act of 1925. The latter dealt with the enforcement in federal courts of arbitration agreements and awards in maritime transactions and those involving interstate and foreign commerce. Most U.S. states adopted, sometimes with minor changes, the Uniform Arbitration Act of 1955, as amended in 1956, which had been promoted by the Commissioners on Uniform State Laws and recommended by the American Bar Association. This act provided for the judicial enforcement of an agreement to arbitrate existing and future disputes and thereby made the arbitration agreement no longer revocable, as it had been under common law. It also provided for the substitution of arbitrators in the event of a party’s failing to select an arbitrator and for a suspension of any court action instituted in contravention of a voluntary arbitration agreement. The courts thereby play an important role in implementing arbitration agreements and making judicial assistance available against a recalcitrant party. This concept of modern arbitration law, which recognizes the irrevocability of arbitration agreements and the enforceability of awards, also prevails in the arbitration statutes of nearly all countries.
When arbitrations were first gaining favor, they claimed to be fast, inexpensive, private, final and somewhat equitable method of resolving disputes. The usual rules of evidence did not apply and there was no discovery. Arbitrators often “split the baby.” As arbitrations in the United States evolved, they became more influenced by the lawyers conducting them or serving as arbitrators. In that regard, their adversarial nature spawned more demands for discovery and increased presentation of evidence to support reasoned awards, which themselves could be the subject of appeals. This evolution has been described as the process of judicializing arbitration.
Like judicial trials, adversarial arbitrations place the burden upon the litigants to marshall and present the facts to the decision-maker, who in an arbitration is the arbitrator. Most arbitrations today are adversarial. Arbitral organizations all have rules by which they conduct arbitrations. Many have different rules that apply to different types of disputes such as international transactions, consumer transactions, commercial transactions and specialized rules associated with specialized claims. For example, the American Arbitration Association lists seventy-two (72) different rules on its website rules search. These rules have become ever more numerous and ever more complicated due to the process of judicializing arbitration.
The process of judicializing arbitration has also reformed the way international arbitrations are conducted. The procedural rules of international arbitrations have shifted to some extent the control over the arbitral process from the arbitrator to the parties so much so that even in civil law countries, arbitrations were being conducted in a common law adversarial fashion with pre-hearing discovery, oral hearings and witness cross-examinations.
Similar to the convergence between the public judicial adversarial and civil law systems, arbitration procedures of certain of the various arbitral bodies have likewise shifted more to a mix between civil and adversarial procedures.
B. The Problem With Governmental Dispute Resolution?
The prevalence of arbitrations as the predominant dispute-resolution forum largely springs from the perceived failings of the civil justice system. Litigants and commentators frequently cite to the following attributes of the civil justice system as being problematic:
a. Public non-confidential;
b. Length of time to initial decision;
c. Lack of finality;
d. Expense; and
e. Location based.
C. What We Have Done Thus-far To Attempt To Solve The Problem Through Arbitration?
Traditional arbitration sprung from a desire for an ADR method that was inexpensive, fast and less-rule laden. Arbitration’s roots run historically deep, commencing long before the twentieth century. King Solomon was an arbitrator. Philip the Second, who was the father of Alexander the Great, used arbitration as a means to settle territorial disputes with the southern states of Greece as far back as 337 B.C. In England, arbitration is older than the common law system, later adopted by United States courts. England first used arbitration as the prevailing means of commercial dispute resolution as far back as 1224. In ancient Rome arbitration was also a preferred method of settling disputes and continued to be so through the Middle Ages. Even early Native American tribes used arbitration as a means to resolve both inter and intra-tribal disputes.
The reason why arbitration is so attractive is that it grants to the parties to a dispute a larger degree of autonomy, confidentiality, a quicker resolution, a less expensive resolution, a greater control over scheduling and the rigidities of litigation in state courts, as well as the peculiar uncertainties of international litigation (including jurisdictional, choice-of-law and enforcement disputes). Another important feature of arbitration is the absence, in most cases, of appellate review of arbitral awards. Judicial review of arbitration awards are usually confined to issues of procedural fairness, jurisdiction, and public policy. Any judicial scrutiny of the arbitrators’ substantive decisions is ordinarily highly deferential. While limited appellate review obviously reduces both litigation costs and delays, on the other hand, it also means that outlier or simply wrong, arbitral decisions cannot be corrected.
D. Why Traditional Arbitration Is Failing To Solve The Problem And Is Actually Moving Away From The Goals It Was Designed To Foster?
The challenge for traditional arbitration is to ensure that arbitration delivers the various advantages associated with it, notably speed, economy, informality, technical expertise, and avoidance of national fora, while producing awards that withstand judicial challenge and otherwise enjoy legitimacy. Nevertheless, the potential of arbitration as an effective and economical process alternative to litigation is diminishing so that arbitration is slowly becoming like litigation, so much so that some claim that arbitration is simply “litigation in another guise”. The primary factors that are crippling today’s arbitrations are increasing delays and costs. A key reason for the increased delays and cost is that arbitrations have become too formal—with too much discovery, too many motions and challenges, and an evidentiary gateway which is too wide and open to irrelevant tangents.
The problems that commentators and litigants ascribe to current arbitrations are:
a. More rule oriented;
b. Longer timeframes for decision;
c. More adversarial;
d. Less responsive to ADR objectives; and
e. Less focused.
E. Why A Non-adversarial Inquisitorial Model Would Better Fit Our Current Societal And Business Needs?
A non-adversarial inquisitorial model would better fit our current societal and business needs because such a model benefits from the following attributes:
a. No significant rules;
b. Time to decision dictated by the parties;
d. Totally responsive to ADR objectives;
g. Non-location based/On-line.
On-line arbitration is a practice that has already been defined and studied. Today’s technology allows and facilitates remote witness interrogation and confrontation through programs such as Skype, GoToMeeting, and FaceTime.
F. Why Civil Law Notarial Arbitration Would Be The Best Non-adversarial Inquisitorial Alternative For Incorporation Into Contracts?
As we all now realize, the needs of digital age has far surpassed the abilities of the civil justice system to resolve business disputes in a fast, inexpensive, confidential, and final manner. Likewise, even traditional arbitration has become cumbersome, expensive, delayed, overly adversarial and just as “rule-based” as the civil justice system. The Civil Law Notary Alternative Dispute Resolution approach puts all of the fact-finding and decision-making power in the hands of a quasi-public official – the Civil Law Notary, who, in the inquisitorial style of civil law systems acts as the prosecutorial judge in engaging in necessary fact-finding to reach a reasoned decision. This approach obviates the need for an adversarial presentation of facts, traditional discovery, hearings, participation of lawyers and greatly reduces both costs as well as the length of time to a decision. Equally important is the ability to maintain the confidentiality of both the proceedings and the proprietary documents involved in the dispute. Finally, because the decision of the Civil Law Notary will be expressed in the form of an “Authentic Act”, upon being Apostilled pursuant to the Hague Convention of October 5, 1961, the determination should require no further legalization in signatory countries.
G. How would the Civil Law Notarial Arbitration model work in practice?
The Civil Law Notarial Arbitration model would work much in the same fashion as existing traditional arbitrations as far as the appointment of an arbitrator. Once the arbitration was appointed, the difference would be more pronounced because from that point forward the process of “fact-finding” and case analysis would be exclusively in the hands of the civil law notary arbitrator. Thus, any conferences, in-person appearances, visits to company headquarters, document reviews or other discovery-type activities would be up to the arbitrator. To the extent any expert testimony is needed by the arbitrator, it would be the arbitrator’s decision regarding whether to engage such an expert and, if so, which expert to engage.
By limiting the arbitrators to quasi-judicial civil law notaries, the parties gain the reassurance that the individuals deciding the action are learned attorneys who have been approved by the state to make factual findings and to issue “authentic acts”. Moreover, such officials hold a status that is internationally recognized and respected. All parties in many international jurisdictions can have confidence in allowing Civil Law Notaries to decide their disputes fairly and within the law. Finally, the authentic acts of civil law notaries will be recognized as valid when properly apostilled in accordance with the Hague Convention of 1961 (CONVENTION ABOLISHING THE REQUIREMENT OF LEGALISATION FOR FOREIGN PUBLIC DOCUMENTS).
As globalization increases at an ever advancing rate and as technology affords us the freedom of remote meetings and easily managed data-sharing, the need for increased speed, increased efficiency, reduced costs and soundly reasoned yet fairly investigated and decided alternate dispute resolution mechanisms become an ever-increasing, yet largely illusive un-met need. Civil Law Notary arbitration meets that need and can be an effective mechanism to take alternate dispute resolution into the digital age.
August 21, 2015
David H. Charlip, B.C.S.
Charlip Law Group, LC
11900 Biscayne Blvd., Suite 200
North Miami, FL 33181
Tel: (305) 354-9313
Fax: (305) 354-9314