Damages in International Arbitration - Part 5 Chapter 38 - The Practice of International Litigation - 2nd Edition
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
If a jury goes haywire and awards excessive damages, the judge may take steps to modify the verdict. In arbitration, however, there is little that can be done after an award that is excessive – even grossly excessive. With international arbitration frequently involving more complex, “big ticket,” matters, parties and arbitrators alike need to be especially mindful of the potential that exists for disasters or bonanzas, depending on one’s point of view. But, in their efforts to establish or defeat liability, the parties may give a lower priority to issues of damages. The allocation of such lower priority is probably unwise, however, from the point of view of both the claimant and the respondent.
Arbitrators are often willing to let the parties present their cases as they wish, without being assertive in requesting information early in the proceedings as to the parties’ positions regarding damages. Should arbitrators be more active in seeking disclosure of the party’s positions on damages? The recent thinking of a group of international arbitration practitioners, professors and arbitrators reflects a concern that there should be earlier disclosure and discussion of damages issues in arbitration proceedings, in the interests of clarity and efficiency. The International Institute for Conflict Prevention and Resolution (CPR) has, through its Arbitration Committee,1 recently issued a draft “Damages Protocol,” which has as its purpose guidance to arbitrators (and correlatively to parties’ advocates) with respect to dealing fairly and efficiently with damages issues in arbitration.