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Complex Litigation | MONDAY, MAY 22, 2017 | S11
the law of a foreign legal system [that follows the English Rule] would alter the general rule in this country not to award a prevailing liti- gant attorneys’ fees.”17 Those decisions then engaged in a con ict of laws analysis under New York law.
In Atomi, the court justi ed its rejection of the English Rule primarily on a single consid- eration that underlies New York’s substance- procedure analysis, namely the state’s pub- lic policy. Relying on a statement from the New York Court of Appeals, the Atomi court observed that the American Rule is part of
Courts have not displayed a uniform approach to resolving the interplay between attorney fees and choice-of-law clauses, and there is a noticeable
split of authority within the Southern District of New York.
New York’s “fundamental policy” and that applying the English Rule would contravene that policy.18 Accordingly, the Atomi court determinedthat“aNewYorkcourtwouldcon- clude that the [English Rule] is procedural” and not subject to the French choice-of-law clause in that case.
In Deutsche Bank, the court likewise found that the American Rule expresses a fundamen- tal policy of New York, and as such, “weighs strongly against nding the English rule on fees to be substantive.” It also stated that “[a]pplying the English rule to this case could impair judicial ef ciency[,] as the Court would have to determine the amount of fees to be awarded under English law.”19 The court rec- ognized the prior decisions in RLS and Katz, in which fees had been awarded, but found those to be distinguishable because the appli- cation of the English Rule there was found to be consistent with the parties’ expectations. In contrast, the court in Deutsche Bank con- cluded that applying the English Rule would be unfair because, in its view, the contract was not clear that the losing party would be responsible for fees, notwithstanding the choice-of-law clause.
Conclusion
Courts have not displayed a uniform approach to resolving the interplay between attorney fees and choice-of-law clauses, and
there is a noticeable split of authority within the Southern District of New York.20 Until the law on this issue becomes settled, contracting parties and their counsel should be aware that entering into a contract governed by a law that follows the English Rule might lead to liability for attorney fees. To reduce that risk, parties should consider negotiating for provisions that expressly allocate or disclaim the parties’ responsibilities for legal fees in the event of litigation over the contract. In the meantime, practitioners can expect the law on this question to continue developing, and should be alert to the possibility that a contract that makes no mention of attorney fees may still result in a departure from the American Rule.
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1. Theodore Eisenberg and Geoffrey P. Miller, “The English Versus the American Rule on Attorney Fees: An Empirical Study of Public Company Contracts,” 98 Cor- nell L. Rev. 327, 329 (2013).
2. 464 F. Supp. 2d 206 (S.D.N.Y. 2006). 3. Id. at 210.
4. Id. at 214.
5. Id. at 215 (emphasis in original).
6. Id. at. 218-19.
7. Id. at 219.
8. No. 93-2447-JWL, 1995 WL 655183, at *1 (D. Kan. Oct.
24, 1995).
9. Prod. Design Servs. v. Sutherland-Schultz, No. 3:13-
CV-338,2015WL12743607,at*7(S.D.OhioJuly24,2015). 10. No. CIV. A. 12083, 1994 WL 728816, at *1 (Del. Ch.
Dec. 16, 1994).
11. El Paso, 1994 WL 728816 at *5.
12. Section 187(1) of the Restatement (Second) of
Con icts provides that “[t]he law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in the agreement directed to that issue.”
13. No. 96 CIV. 8695 (JGK), 2000 WL 959721, at *7 (S.D.N.Y. July 10, 2000).
14. Id. In a recent decision in Maale v. Kirchgessner, the Southern District of Florida accepted the notion that contractually chosen law should control the issue of attorney fees if that law adopts the English Rule. No. 08-80131-CIV, 2011 WL 1565912, at *1 (S.D. Fla. Feb. 18, 2011). In that case, the prevailing defendant sought fees because the contract at issue was governed by the law of Turks and Caicos, which was shown to follow the Eng- lish Rule. The magistrate judge in Maale recommended that fees should be awarded to the defendant based on the parties’ choice of law, and that recommendation was adopted by the district court. Maale v. Kirchgessner, No. 08-80131-CIV, 2011 WL 1549058, at *4 (S.D. Fla. April 22, 2011).
15. No. 14-CV-7456 VEC, 2015 WL 1433229, at *1 (S.D.N.Y. March 30, 2015).
16. No. 1:15-CV-3869-GHW, 2016 WL 5719783 (S.D.N.Y. Sept. 30, 2016).
17. 2015 WL 1433229, at *5; 2016 WL 5719783, at *14. 18. 2015 WL 1433229, at *5.
19. 2016 WL 5719783, at *14-15.
20. That split may soon be resolved by the Second Cir-
cuit as one of the parties in Deutsche Bank is presently pursuing an appeal from the denial of its application for fees.
Customize
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realize that it may be less expensive to simply hold a hearing.
The Hearing
The rst question to ask is whether the arbitration requires a hearing or whether the case can be decided on papers or through a dispositive motion. There are instances where a case involves only a legal issue, and can be addressed by the arbitrator without the need for oral testimony. This should be con- sidered where the amount in dispute does not justify the cost involved in holding an in-person hearing.
It is very useful to discuss with the arbitra- tor at the start of the case how the hearing will be conducted. Are all exhibits in evidence? Does counsel need to lay a foundation? How will hearsay objections be addressed?
Two important ways to streamline the hearing is for counsel to agree on a joint set of exhibits, which can avoid objections and the need to introduce foundation evidence. Counsel can also agree in advance on whether the exhibits are in evidence. It is always a good idea to discuss with the arbitrator his orherpreferenceforhandlingobjectionsto evidence.
Another way to achieve ef ciency is for counsel to present a stipulation of facts. Even an agreement as to some basic facts is helpful in this regard.
There are interesting ways to streamline testimony at a hearing, which should result in cost savings and ef ciencies. With expert testimony, for example, consider whether the experts’ written reports can be admit- ted as their direct testimony. The proponent could “walk” the expert through the opinion in summary, brief fashion, and then make the witness available for cross-examination (and re-direct). Another way of handling expert testimony is to present the expert and rebut- tal expert side-by-side, so that they each can answer the same questions (one after the other) and even ask each other questions. We refer to this as “hot-tubbing” the experts. This presentation of witnesses can ensure that they speak to the same issues.
Non-party witnesses can present a chal- lenge. Because a party cannot compel a non- party who is beyond the subpoena power of the venue to attend an arbitration hear- ing, counsel need to be creative in present- ing such testimony. Most arbitrators will preclude the use of an af davit to present
testimony, unless the witness is made avail- able for cross-examination. A witness can be presented remotely, too, whether by Skype, video-conferencing or telephone. Discuss the arrangements in advance (and with the arbi- trator, too), to ensure that the logistics are worked out. Will the witness be sworn in by a court reporter remotely or by the arbitrator? Have you made arrangements for the arbitra- tion exhibits to be available—including exhib- its that your adversary intends to use? How will impeachment exhibits be made available to the remote witness? Addressing these mat- ters in advance will ensure that roadblocks are avoided. Video-conferencing should also be tested through a dry-run in advance of the actual hearing.
Counsel should discuss whether the arbi- trator prefers oral closing statements, post-
It is very useful to discuss with the arbitrator at the start of the case how the hearing will be conducted. Are all exhibits in evidence? Does counsel need to lay a foundation? How will hear- sayobjectionsbeaddressed?
hearing briefs or both. Some arbitrators may ask the parties to address speci c issues in the post-hearing submissions. Consideration of page length and what issues are addressed can go a long way to ensuring a less costly arbitration.
Conclusion
Because arbitration is the parties’ process and the product of agreement, there are many opportunities for counsel to create a custom- ized process for presenting a party’s case to the arbitrator. There is no “one size ts all” in arbitration. Counsel should give thought in advance as to how to present a case so that the ef ciencies of arbitration will be realized.
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