Arbitration is not always a high priority for in-house counsel, who rarely get to shape its rules and procedures to be user-friendly. Challenging this state of affairs is Jean-Claude Najar, a senior in-house counsel for GE in Paris, and founder and chair of the Corporate Counsel International Arbitration Group (CCIAG).
We're honoured to have Jean-Claude as the guest lecturer for the 2008 International Arbitration Lecture in November. He was kind enough to speak with us from his Paris office and share his thoughts on the past, present and future of in-house counsel's involvement in international arbitration.
As a self-described "very inquisitive child" with an interest in problem-solving, Jean-Claude saw a legal career as the best fit for his nature. He started off at Coudert Brothers Paris and had the opportunity to be mentored by Jan Paulsson, currently the head of the arbitration group at Freshfields but then an arbitration partner at Coudert.
"Jan instinctively felt that a person as international as me would be well-suited to international commercial arbitration and as soon as I stepped into that bath I never wanted to leave those waters again because it corresponded spot-on with what I wanted to do with my life."
"The fit is also caused, I think, by my very diverse background. I have four different grandparents - French, Italian, Swiss, and Lebanese - I was born in Paris, raised in Istanbul where I attended a German school, went to university in France, Switzerland and the UK, and always moved in a very international environment. The mixed background brings you a world-view and a hunger to learn things that are as diverse as your upbringing. Plus I was lucky enough to grow up in the melting pot of Istanbul. When I started my work in international arbitration I saw that this adaptability to various cultures was a big advantage in working with clients from different backgrounds."
When Jean-Claude began in private practice, he says, "arbitration was starting to become really international and global. During the 1980s a number of steps were taken to truly internationalise arbitration and more and more parties resorted to it. It was thrilling to be part of what was then the leading IA team - at the time not only was Jan Paulsson there but also Laurie Craig, so we were very much in the forefront of developments."
A shift to in-house followed in 1989, as Jean-Claude wanted to take more of a role in the business decision-making process and to participate in deals from beginning to end. In-house practice was likewise in a state of flux, with counsel moving from simply papering a deal to greater involvement with deal-making.
The difference between private practice and an in-house role, he found, was like being in a ship and guiding its course as opposed to sitting in a lifeboat bellowing out instructions to the ship through a bullhorn. If you are a true business lawyer, he says, you get to advise the captain as to what course to steer to avoid reef and obstacles - if the ship goes down, you go down with it. If you are in the lifeboat you can always cut the cord tying you to the ship if it steers off course.
With GE, Jean-Claude was suddenly plunged into the day-to-day reality of commercial life, particularly when he shadowed a salesman around and discovered the difficulty of life in the field.
"These new experiences brought the realisation that in-house counsel's mission is to facilitate the business objectives of their company, to anticipate risk in its broadest sense, and to preserve their company's reputation, the biggest asset the company has. You have to deal with a multitude of stakeholders who have short- and long-term interests. You prepare the best terms and conditions for your business people. They have to be user-friendly if your field people are to use them. In order to understand all of this, you cannot just sit in your office - you have to be out there in the field. You have to share the day-to-day challenges of your internal clients."
"At the same time, it quickly became apparent that there was - and still is to a lesser extent - limited in-house counsel expertise in dispute resolution and more particularly in arbitration."
This lack of experience seemed to translate into a lack of participation. Jean-Claude would attend arbitration meetings and conferences and more often than not find himself the sole in-house counsel in attendance. He began to see the need for greater participation by in-house counsel in shaping the form, processes, and rules of arbitration - hence his lead in creating the CCIAG at the end of 2006. As he points out, quoting GE's former legendary CEO Jack Welch, "if you don't shape your own destiny, someone else will..."
What are the main difficulties for in-house counsel's involvement with arbitration?
"Well, litigation traditionally was not a focus area for many companies, although this is changing. But even when there is a litigation department in the company, the business will not have sufficient means to conduct an arbitration. International arbitration has become very sophisticated, very document-intensive, and a legal department is simply not geared to handling an arbitration in all its material aspect.
"That's where the co-operation with law firms becomes essential. That's where involvement by in-house counsel in shaping rules governing arbitrations, and arbitration procedures is essential, to make them more user-friendly, more efficient, more adapted to the needs of the companies. One of the objectives of the CCIAG is to ensure that the voice of the in-house counsel, the 'primary' users of arbitration, is heard on all of these subjects."
Linked to this is the huge workload that in-house counsel always bear in advising the business and supporting deals, and ensuring corporate governance and compliance, which displaces arbitration from its place on the totem pole - "when it comes to being involved in an acquisition versus an arbitration in-house, the choice is often not very difficult (unless it is a critical litigation for the company): counsel must justify the use of their time primarily in furthering the business of their company and in anticipating risks."
"The development of legal departments, and the realisation of the importance of solving your disputes well to try to arrive at a win-win situation which would enable you to resume your business relations, have allowed businesses to understand that arbitration and litigation are important elements too, but there is still progress to be made and I hope the CCIAG will be able to work on these aspects also."
The CCIAG was granted Observer status late 2007 at the UNCITRAL Arbitration Rules Working Group, and was represented at the February New York and September Vienna meetings this year. The Rules are undergoing their first major revision in over 30 years. More generally, Jean-Claude says, the key challenges for arbitration will be to simplify arbitration and to take technology and cultural aspects into account.
In the short-term however, Jean-Claude is preparing for his first trip to Australia.
"I'm really looking forward to exploring this country with which I've had so much interaction without ever having been there. I have many Australian friends and colleagues - to cite a few, my junior, if I may call him that, in my last years of private practice was Michael Polkinghorne who's now a partner in the IA practice at White & Case, and a friend; one of my very best friends is Karyl Nairn who heads the London IA practice of Skadden Arps; and I have enjoyed working closely with and befriending Peter Turner of the Australian Corporate Lawyers Association. Whenever I've made the acquaintance with an Australian I've never had anything but good impressions so I'm sure Australia will feature highly on my list of favourite countries."
To register for this year's International Arbitration Lecture with Jean-Claude Najar, click here.
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