Arbitration Organizations Best-Suited for Resolving Social Entrepreneur Disputes

I’ve had many conversations with transactional attorneys who work with social entrepreneurs. These professionals are responsible for drafting the contractual obligations which will establish a legal framework of relationships for mission-driven companies.

Several of these attorneys have mentioned that when they are considering including an arbitration clause into a social enterprise contract, they have not reviewed much analysis assessing which arbitral organization might be best-suited to preside over these disputes.

My firm focuses on resolving commercial disputes involving mission-driven companies, with a particular emphasis on arbitration & mediation – so I thought it natural that I should take up this analysis. 

This article is intended to begin this process by setting out some initial observations, with the hope that this can be expanded into a more detailed paper on the subject over the course of the next weeks and months. I would be grateful to receive relevant feedback.

Based on my initial consideration & discussions, two key areas which are relevant for mission-driven disputes are an institution’s procedural rules relating to (i) expedited proceedings; and (ii) publication of awards.

Expedited Procedure Rules

Many arbitral institutions have provided for expedited proceedings in their rules. These rules allow for much more efficient dispute resolution as they place limits on phases such as discovery, hearings and the issuance of the award. Expedited proceedings have led to reduced costs and a more streamlined process.

Some arbitral institutions have a damages threshold under which the parties must utilize expedited proceedings. For example, the American Arbitration Association (“AAA”) Procedural Rules require expedited proceedings in cases where no claim exceeds $75,000.

This is a relatively low number, as there are many disputes which could fall above this figure in damages, yet still be appropriate for expedited proceedings. Other arbitral institutions have much higher thresholds, but do not automatically require the parties to use expedited proceedings.

For example, the Singapore International Arbitration Centre (“SIAC”) allows any party to apply to utilize expedited procedure rules if the value in dispute is below S$6 million. While this is not a requirement, I believe the intent of the rule is for disputes below this threshold to lean towards utilizing expedited proceedings.

Other arbitral institutions do not specify a monetary threshold for expedited proceedings. For example, the JAMS rules allow for expedited proceedings provided (i) the parties have agreed to expedited proceedings; or (ii) one party makes a successful application for expedited proceedings at the outset of the arbitration.  

The International Council for Commercial Arbitration prepared a memo in April 2019 which includes an annex setting out the expedited procedure rules of several arbitral institutions. This is a useful reference.

Publication of Awards

One of the most frequently cited benefits of arbitration is that it is generally confidential in nature—certainly more so than court litigation. However, this can also be seen as a disadvantage in the context of mission-driven company disputes because there is currently a very limited amount of caselaw relating to innovative, multi-stakeholder companies such as benefit corporations.

In common law countries, legal regimes develop through an iterative process where transactional lawyers create obligations, which are then litigated and ultimately decided upon by judges (or arbitrators). This process creates a mature legal system where obligations are created, tested, refined and validated. If decisions involving social entrepreneurs are not made available to the public, it’s more difficult for the law relating to mission-driven companies to mature.

While this might not present a problem to any individual company, many mission-driven companies are committed to maturing the industry as a whole given their belief in the value of conscious capitalism. For this reason, some entrepreneurs might be more-inclined to contribute to the maturation process of social enterprise law. If you’re preparing a contract for a company that considers this an issue, then it’s important to understand which institutions allow for arbitral awards to be published.

The International Chamber of Commerce (“ICC”) Arbitration Rules allow for arbitration awards to be published unless the parties choose to keep the awards confidential. This “opt out” approach is not necessarily the norm, as many other institutions, such as the LCIA, ICSID and UNCITRAL, allow for publishing of awards only when the parties choose to “opt in”.

Either approach allows for the publication of the award at the parties’ discretion. This provides a level of control over confidentiality issues while still allowing for the awards to be potentially published and to contribute to the maturation of social enterprise law.

If you’re considering a particular arbitral institution to handle a social enterprise dispute, you should be aware of their position regarding publication of awards.

Conclusion

Based on these initial thoughts, there doesn’t seem to be one arbitral institution which is best-suited for resolving mission-driven company disputes. On the contrary, as in most areas of law, this answer will depend largely on the specific client’s needs and expectations.

I look forward to considering these issues further over the coming weeks and months – and I would be happy to speak to any professionals who are also interested in these issues.

Disclaimer: The information in this article is provided for informational purposes only. You should consult with an attorney before you rely on this information. This information should not be seen as legal advice and does not create an attorney-client relationship. This article is meant to be a general discussion and may not include all relevant information regarding the issues covered.