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Advantages of arbitration Private Neutral venue Tribunal chosen by the parties Runs on the parties’ timetable Tailored procedures Limited scope to challenge.

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Presentation on theme: "Advantages of arbitration Private Neutral venue Tribunal chosen by the parties Runs on the parties’ timetable Tailored procedures Limited scope to challenge."— Presentation transcript:

1 Advantages of arbitration Private Neutral venue Tribunal chosen by the parties Runs on the parties’ timetable Tailored procedures Limited scope to challenge the arbitral award Award will be amenable to recognition and enforcement under the New York Convention.

2 Can settlors and testators can require disputes to be referred to arbitration? Section 9 of the Arbitration Act 1996: “a party to an arbitration agreement” has the right to seek a stay of court proceedings. Arbitration agreement defined in section 6 - "an agreement to submit to arbitration present or future disputes (whether they are contractual or not)". Art II(2) of New York Convention defines arbitration agreement as one "signed by the parties or contained in an exchange of letters or telegrams". Are arbitration clauses in trusts an agreement? Are beneficiaries (including future beneficiaries) parties to that arbitration agreement?

3 Trusts aren't contracts and beneficiaries aren't parties to the trust Trusts are not contracts. But contractual principles are relevant in certain situations. Three US decisions that trusts aren't contracts: – Arizona Court of Appeal in Schoneberger v Oelze held that "As a matter of law, the trusts…were not contracts" – Court of Appeal of California's decision in Diaz v Bukey – Texas Court of Appeal decision in Rachel v Reitz [2011]

4 The Bahamas solution: Section 91A(2) Trustee Act " (2) Where a written trust instrument provides that any dispute or administration question arising between any of the parties in relation to the trust shall be submitted to arbitration (“a trust arbitration”), that provision shall, for all purposes under the Arbitration Act, have effect as between those parties as if it were an arbitration agreement and as if those parties were parties to that agreement".

5 Ousting the inherent jurisdiction of the Court Schmidt v Rosewood. Re Raven: "it is contrary to public policy to attempt to deprive persons of their right of resorting to the ordinary tribunals for the purpose of establishing their legal rights…the provision…is unlawful and inoperative…". See AI v MT "insofar as the court has jurisdiction to determine issues arising out of the marriage, or concerning the welfare and upbringing of the children, that jurisdiction cannot be ousted by agreement. The parties cannot lawfully make an agreement either not to invoke the jurisdiction or to control the powers of the court where jurisdiction in invoked".

6 Ousting the inherent jurisdiction of the Court (cont’d) Trust Law Committee's Report: "…The trust concept is itself the creature of the courts (historically the courts of equity), exercising judicial discretions as described by the Privy Council in Schmidt v Rosewood…so that the legal rights of the beneficiaries and trustees can validly be determined only by the courts." Analogy with no contest clauses which have been held as contrary to public policy.

7 Minor and unborn beneficiaries can't be bound Section 58 of the Arbitration Act 1996 Article V(1) (a) of the New York Convention Only the court has the power – under its inherent parens patriae jurisdiction or section 1 of the Variation of Trusts Act 1958 or section 41 of the Trustee Act 1925 to bind minors. Section 91B Trustees Act contains provision for the appointment of representative parties and of persons to act on behalf of minors and other persons under a disability.

8 Minor and unborn beneficiaries can't be bound (cont’d) 91B of the Trustee Act "The arbitral tribunal… may, in addition to all other powers of the tribunal, at any stage in a trust arbitration, exercise all the powers of the Court (whether arising by statute (including this Act), under the inherent jurisdiction of the Court or otherwise) in relation to the administration, execution or variation of a trust or the exercise of any power arising under a trust

9 Why mediate? Litigation risk Costs Time Solutions beyond the legal ones – law often takes a back seat Forward thinking Reputation – especially for professionals Not having to give evidence Confidentiality Constructive solutions Putting family relationships first/repairing some of the damage Tax effective solutions Clients and not the court in control A lot of clients settle at mediation despite themselves Even if the case doesn’t settle on the day, it increases the prospect of it settling before trial LOREM IPSUM DOLORES | XXTH MMMM YYYY9

10 When to mediate? As soon as the dispute arises? Once they have received the lawyers’ letter When the other side are most likely to cave? After proceedings have been issued? When completing the allocation questionnaire? After exchange of disclosure? After exchange of witness statements? Shortly before trial? Once neither side can afford the lawyers fees any more? Answer: At any of the abovementioned times – it is never to early or too late to mediate LOREM IPSUM DOLORES | XXTH MMMM YYYY10

11 Who needs to be at the mediation? The main protagonists? Trustees – directions? Representatives for minors and others that need separate representation – representation orders? Insurers? Others? LOREM IPSUM DOLORES | XXTH MMMM YYYY11

12 Picking the mediator Usually propose 3 or 4 possible mediators Explaining to the client that the mediator does not determine the outcome of the mediation can some take some time – the role of the mediator needs to be explained to the client before the mediation so that they understand what is likely to happen Usually helpful to have a mediator who understands the dispute – preference for a trust/estates practitioner Also think about whether a mediator’s particular style is likely to suit the type of dispute/your client is likely to take to them Most law firms are reasonable about picking the mediator LOREM IPSUM DOLORES | XXTH MMMM YYYY12

13 The position paper Sets out your client’s position – probably at its highest together with key documentation. Should only be 2-3 pages long Only real value is that it enables the mediator to understand your client’s point of view Should acknowledge the position adopted by the other side It should refer to any genuine impediments to settlement It should set out what your client wants to get out of the mediation It must state that your client is prepared to listen and participate constructively in the mediation process LOREM IPSUM DOLORES | XXTH MMMM YYYY13

14 Preparing the mediator/the mediation Pre- mediation discussion with the mediator important – mainly to discuss any particular issues that would be helpful to achieve a successful mediation. Making sure that any non obvious issues that your clients might have are explained to the mediator beforehand. For instance it may be that the mediator will think that a plenary session is not likely to assist matters at the outset or that the mediation must finish by a particular time. Making sure that the mediator has everything that they need beforehand and on the day Making sure that the rooms/ environment is suitable for a mediation Making sure that there is sufficient food for the mediation – possibly into the evening. LOREM IPSUM DOLORES | XXTH MMMM YYYY14

15 The opening statements Can often be a waste of time if they are used to repeat the position paper – should not be more than 5 to 10 minutes. Sometimes they can set the tone for the mediation – I have heard the word “sorry” being effectively used at the outset of a mediation by a client. Sometimes gaps in the understanding of the position adopted by one side or other can be raised at the outset. Occasionally the opening session can be the platform for a constructive dialogue – I’ve heard comments from clients in estate/trust cases such as “I didn’t realise until now how upset such and such was about x” Often just an ice breaker and a chance for the mediator to set the ground rules for the day and for the client to state his/her position LOREM IPSUM DOLORES | XXTH MMMM YYYY15

16 The break out sessions/negotiation tactics Prepare the client for boredom/frustration and periods when nothing seems to be happening Engaging the client in constructive discussions as to how to resolve thorny issues Dealing with the resolvable issues first and then dealing with the more difficult issues as the mediation gains momentum Engaging with the mediator Engaging in effective negotiations with the other parties LOREM IPSUM DOLORES | XXTH MMMM YYYY16

17 Reality checks Preparing the client for what the mediator is likely to say to them about reality checks, i.e. Best Alternative to a Negotiated Agreement Possible financial up side to determination by trial Possible financial downside to determination by trial Other possible issues – such as removal for a trustee – reputational damage Explaining what the other parties are telling him/her – the mediator is not an advocate for them. The mediator is looking for a positive outcome for the day – not for a winner or loser Looking at lines in the sand – are they real or not? Potential tax pitfalls/solutions – particularly in 1975 Act/probate claims LOREM IPSUM DOLORES | XXTH MMMM YYYY17

18 Preparing for settlement Prior to the mediation line up possible draft settlement agreements in outline Heads of terms Draft compromise agreements Tomlin Orders Access to computers and printers Putting colleagues on standby who may need to input into the settlement agreement Explaining to the clients that nobody is committed until they are physically signed up Taxis home or to a nearby bar! (cf there is a Burlesque bar opposite Macfarlanes’ offices which will sell you champagne at 1am!) LOREM IPSUM DOLORES | XXTH MMMM YYYY18

19 Check list of issues to be dealt with after the mediation Filing of any order with the court? Blessing for minors, unborns, trustees from the court? Putting the agreement into effect Making sure that the deal doesn’t fall over – keeping up momentum Getting paid! LOREM IPSUM DOLORES | XXTH MMMM YYYY19

20 Copyright familydr Limited 2012 The power of deep listening Feeling heard Curiosity Self awareness Trust Interdependence Other awareness Collaboration Hearing What’s important - and why Need input from others Perception is everything Solving shared problems Willingness to listen Insight – “me” Empathy – “you” Moral awareness – “we”


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