The volume of commercial transactions between nations is rapidly increasing, and a concurrent trend has been a noticeable expansion in the multi-dimensional scope and weight of cross-border disputes related to those transactions. We spoke to Lance Lee, Partner and Head of Litigation & Arbitration, Lee International IP & Law Group, to find out how they are creating innovative new ways of meeting these challenges.
Global commerce is at a critical defining moment in its history owing to the expansion of complex cross-border disputes and their long term impact. The result of a case often has implications far exceeding the language of a standard arbitral award. In the high-tech industry for example, the outcome of an international arbitration such as the case of Microsoft Corporation vs. Samsung Electronics Co Ltd before the International Chamber of Commerce (ICC), has potential to impact the extent to which new products are sold on a global level, and to which patented technology can be introduced into new markets, spanning several continents. Thus, such outcomes will inevitably have a major impact on the finance community worldwide. In the recent international arbitration of Hanwha/ORIX/Macquarie vs. KDIC, one of the largest international arbitrations to date heard before the ICC, a highly relevant issue that emerged was whether a party could acquire shares in a company having potential to transform the financial landscape in the region.
Given what is at stake, the time has now come to step outside of the box and to redefine what a cross-border dispute is, in terms of how it is viewed and thus handled. The traditional standard operating procedures involving parties of different countries has become limited in terms of fully meeting the challenges faced by global companies, and it has become necessary for companies and practitioners to view their disputes in terms of the larger commercial context. Cross-border disputes are no longer simply about winning the case, but about winning in a way that will maximize the long-term growth of a company in a given region.
Within this backdrop, innovation has become an essential element. Simply put, when faced with a cross-border dispute, Lee International IP & Law Group recognized that solutions needed to look ahead of the game, and to apply innovative strategies that invariably would be highly relevant later.
INNOVATION AND THE FUTURE
The extent to which a particular tactic builds upon the larger context has been an important factor in deciding on a dispute strategy. The primary focus is not so much in simply resolving an immediate need for the short term. In the rush to try to win a dispute for the short-term, companies may often face losing sight of their original goal, which should be to create and provide the best product or service specifically tailored to the needs of a particular region’s customer base. Thus, when faced with such challenge, the key has been to implement a customer-oriented paradigm, identifying the needs of the customer base, and tackling how to meet those needs first and foremost, through the process of dispute resolution.
“In response to market challenges, I have made efforts to redefine the game in cross-border dispute resolution by incorporating innovative corporate growth strategies to resolve newly emerging issues. What I have developed is a new practice of law called the Dispute Innovation Practice. This operates by introducing financial acquisition strategies and M&A methods into the space of a dispute. For example, newly discovered facts and evidence via financial due diligence and fact-finding methods that emerge in international arbitrations provide important keys which pave the way for continuation of that financial transaction and related commercial growth that can far exceed day to day processes to increase revenue.” As noted above, the international arbitration of Hanwha/ORIX/Macquarie v. KDIC, an important finance issue that emerged was whether a party could exercise a put and call option to acquire shares in a company. Foreseeably, through Dispute Innovation, facts identified through M&A fact-finding methods in that arbitration would likely have major relevance toward the successful financial acquisition of a company’s shares, as well as the successful growth of that company post-acquisition.
IDENTIFYING CORE DEVELOPMENTS
“Identifying the core developments and trends in dispute resolution, and building upon those to create a new paradigm for handling disputes has been most essential. As one example in the international arbitration space, the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration (the “Rules on Transparency”) has set a new precedent towards how arbitration is perceived, and has the potential to trigger a movement to reshape international arbitration as an institution. Prior to the Rules on Transparency, international arbitration proceedings were largely confidential, and privately resolved between commercial parties through regulated proceedings. However, the Rules on Transparency have changed the picture by making investor-state arbitration public.”
THE VALUE OF RESOLUTION
Public access will continue to subject investor-state arbitration proceedings to heightened scrutiny, especially given the large-scale economic and political stakes involved. This heightened scrutiny will in turn likely have an effect on the manner in which the arbitration is conducted. Rules of evidence, such as establishing a proper foundational basis for submitting evidence, may be more strictly enforced so as to not result in potential due process issues. Proper service of process in line with international treaties will also become more carefully scrutinized by triers of fact and law. Based on these core developments, shifting the dispute resolution paradigm from one that is written submission centred to one that is more procedure focused will likely provide a heightened advantage to future dispute resolution practitioners and companies alike. Procedural rules and arguments will become as important, if not more important, than the substantive legal issues of a case. Furthermore, an issue will likely emerge in the future as to whether or not to extend the Rules on Transparency to other types of high-stakes arbitrations and litigations. Keeping closely informed of these core developments in the practice, and anticipating the likely implications thereof, will provide an important opportunity for parties and practitioners to successfully adapt to those developments.
STAYING AHEAD WITH ‘CROSS-PRACTICE’
“Rather than sticking to one industry area and not looking back, to expose oneself to other industry areas so as to develop better ideas of improving one’s main line of work. As the former General Counsel of a multinational business conglomerate, I found that exposure to the other side of the corporate fence, i.e., what is truly important to the company and how major decisions are made within it, allows for better service and solutions coming from this side of the fence. Finally, actual implementation of ideas is critical, independent of circumstances. In other words, even if in current immediate circumstances, it may appear untimely to raise “larger issues of concern,” stepping outside daily convention and typical routine by taking some form of concrete action, small or large, to promote a transformational idea often results in the day-to-day affairs naturally being resolved in that overall process.”
THE LONG TERM APPROACH
In the rapidly-evolving global business environment, a long-term innovative approach has become an essential element towards helping companies successfully resolve their disputes. The financial landscape is transforming daily, and how we view and handle emerging new issues in that process of transformation will determine success or failure going forward. By introducing innovative strategies that focus on value creation for a company in a given region, we can pave the way for a commercial quantum leap to take place in the form of long-term corporate growth.
