Canada’s Federal System and Investment Treaty Arbitration: ICSID Ratification and Claims from Provincial and Territorial Measures [1]
This article originally appeared in the December 2012, Vol 21, No. 2, edition of the Canadian Arbitration and Mediation Journal.
Written by Barry Leon, Andrew McDougall & John Siwiec [2]
I. Introduction
The large majority of investor-state disputes arise within the context of Bilateral Investment Treaties (BITs) – known as Foreign Investment Promotion and Protection Agreements (FIPAs) in Canada. BITs provide standards of protection for investors of the contracting state and their investments in the host state. They also provide procedural mechanisms for the settlement of disputes through arbitration directly between the investor and the host state. Canada is currently a party to twenty-four FIPAs and four Free Trade Agreements (FTAs) [3] that provide for investor-state arbitration, most notably Chapter Eleven of the North American Free Trade Agreement (NAFTA) [4] between Canada, the United States and Mexico. For ease of reference, both FIPAs and FTAs that include investor-state arbitration will be referred to as Investment Treaty Agreements (ITAs).
This article addresses two issues of particular interest regarding Canada’s experience with investor-state arbitration as a federal state. The first issue relates to the fact that Canada has not ratified the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States (the ICSID Convention or Washington Convention) [5] and is therefore not a member of the International Centre for Settlement of Investment Disputes (ICSID). The second issue concerns the debate about which level of government should ultimately be responsible to pay the financial compensation awarded through investor-state arbitration where the claim arises from measures taken by a province or territory. The debate arises out of Canada’s federal structure and the fact that the Canadian federal government has increasingly been called upon to pay compensation for measures taken by its provinces and territories. The article concludes that, Canada faces some prominent issues related to investment treaty arbitration because of its federal system which it needs to address.
II. Canada and the ICSID Convention
ITAs contain the host state’s consent to arbitrate and provide the means by which a disputing investor can submit a claim. As investor-state arbitration has evolved, the ICSID Convention has established a widely accepted method for the adjudication of investor-state disputes. The ICSID Convention was formulated by the World Bank in the 1960s, and has risen to prominence as 148 states have ratified the Convention, while an additional 11 – including Canada – have signed but not yet ratified it.[6]
As is made clear in its preamble, the ICSID Convention focuses on “the need for international cooperation for economic development, and the role of private international investment” and “the possibility that from time to time disputes may arise in connection with such investment between” a foreign investor and the state in which the foreign investor has invested.[7] The ICSID Convention provides a system for investor-state dispute settlement by offering standard clauses, detailed rules of procedure and institutional support, which extends to the selection of arbitrators and to the conduct of arbitration proceedings. Article 25(1) of the ICSID Convention states that “[t]he jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre.”[8]
Perhaps the most distinguishing feature of ICSID is that it provides a binding agreement that Convention members will comply with an arbitral award rendered in a dispute.[9] Each Contracting State to the ICSID Convention is required to recognize an ICSID award as binding and equivalent to a judgment of the highest court in their country.[10] Moreover, ICSID awards are not open to appeal and are subject to limited review only by a second ICSID tribunal, known as an ICSID annulment committee, rather than by any country’s courts.[11]
ICSID also adopted Additional Facility Rules that authorize the ICSID Secretariat to administer certain categories of proceedings between states and nationals of other states that fall outside the scope of the ICSID Convention.[12] In particular, the Additional Facility Rules cover arbitration proceedings for investment disputes where only one of the parties is a Contracting State to the ICSID Convention or a national of a Contracting State. A glaring difference, and disadvantage in the eyes of foreign investors, between the ICSID Convention and the Additional Facility Rules is that an award rendered under the Additional Facility Rules can be subject to review by national courts at the place of enforcement whereas an ICSID tribunal award cannot.[13]
Given that the ICSID Convention has achieved such wide acceptance, one would expect that Canada – a G8 and G20 country with the desire to attract foreign investment and with so many businesses and individuals that invest internationally and engage in international projects – would be a party to it. ICSID membership would benefit Canada’s international investors and enhance Canada’s reputation as a foreign investor-friendly country by giving foreign investors in Canada access to the protections and benefits of ICSID arbitration.
Canada’s Investment Treaty Practice
Canada’s ITAs generally provide that an investor can submit a claim to arbitration under four sets of rules: (i) the ICSID Arbitration Rules; (ii) the ICSID Additional Facility Rules; (iii) the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules; or, (iv) another body of rules such as the London Court of International Arbitration (LCIA) Arbitration Rules.[14]
Although ICSID arbitration is specified in Canada’s ITAs as a potential dispute resolution mechanism, Canada has not ratified the ICSID Convention. As a result, both Canadian investors investing abroad and foreign investors in Canada cannot invoke the ICSID Convention to govern their arbitration. Canada’s reference to the ICSID Convention in its ITAs suggests that Canada intends to one day become a member. However, the fact remains that the ICSID Convention has been open for signature since 1965 and Canada has yet to ratify the treaty.
This is not to say that there has not been any movement by Canada. On December 15, 2006, Canada signed the ICSID Convention, and Canada’s federal government passed implementing legislation to ratify the Convention in March 2008.[15] However, the Canadian federal government has yet to issue an order that would implement it. This delay can largely be attributed to the fact that only four of ten provinces (British Columbia, Newfoundland and Labrador, Ontario and Saskatchewan) and two of three territories (Nunavut and Northwest Territories) have passed legislation to implement the Convention.[16]
Of the provinces yet to adopt supporting legislation, Alberta and Quebec stand out. The benefits of ICSID membership to these provinces could be significant given the nature of their economies and the international involvement of their companies. Both provinces have vast natural resources including oil and gas, hydro-electric power and forestry. They also have companies in these sectors and in others, such as aerospace and engineering, which are active around the world. As discussed below, Alberta and Quebec have never indicated that they oppose the substance of the Convention, leading some to believe that they have been using their resistance to adopt supporting legislation as a means to seek concessions in other areas of federal-provincial relations.
Canada’s Federal Structure
Before ratifying the ICSID Convention, it appears that Canada would prefer to have the support of all of its provinces and territories. As in most federal states, powers are allocated by Canada’s constitution between its federal government and its ten provinces and three territories.
Canada’s constitution allocates treaty-making authority at the federal level.[17] However, when the subject matter of a treaty is in a field in which Canada’s provinces and territories have authority, they have the power to implement the treaty.[18]
Whether constitutionally, by practice, or as a matter of political pragmatism, the federal government seeks provincial and territorial support when the subject matter of a treaty includes areas that fall within their jurisdiction. Because the ICSID Convention relates to areas of provincial and territorial jurisdiction, including “the administration of justice” and “property and civil rights”, provincial and territorial implementing legislation is needed or at least desirable before Canada’s ratification.[19]
This is not the first time Canada has been slow to ratify a treaty relating to international arbitration. Canada took almost 30 years to ratify the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention).[20] The New York Convention entered into force in June 1959 and provides common legislative and judicial standards for the recognition of arbitration agreements and the recognition and enforcement of foreign arbitral awards. However, unlike with the ICSID Convention, once Canada’s federal government decided to sign the New York Convention, it quickly received provincial and territorial support,[21] and was ratified in August 1986.[22]
Given the apparent desire for consensus in ratifying the ICSID Convention, the possibility exists that some provinces are using the implementing legislation as a bargaining chip in federal-provincial negotiations with regard to other issues. It is also possible that since legislative agendas are crowded, seeking consensus to put forward ratification legislation for an international treaty is simply not a political priority. Unfortunately, Canadian corporations that invest internationally have done little to press for ratification. Moreover, it may be an unfortunate political reality that treaty ratification is not a “vote-getting” issue.
Regardless of the reasons for the delay, it has never been suggested that concerns about the merits of ICSID are any part of the problem. When Canada’s House of Commons considered ratification legislation, Members of Parliament from all parties and regions generally agreed that ratification is in Canada’s interest.[23] Indeed, in the many years since ICSID came into existence, irrespective of the governing political party at any point in time, Canada’s federal government has been trying to get the provincial and territorial governments to not only commit to act, but to actually act.[24]
Moving without full support?
There are signs indicating that Canada’s federal government might move to ratify the Convention despite the lack of all provinces and territories having passed implementing legislation. One indication came during parliamentary debates and hearings when Parliament was considering federal implementing legislation.[25] Parliamentarians and officials stated that Canada could designate the provinces and territories that wish to be party to ICSID as “constituent subdivisions” in accordance with the Convention’s “federal clause.” Article 70 of the ICSID Convention would allow Canada to identify, by written notice, the provinces and territories to which the treaty would not apply. Using this approach, Canada could designate which provinces and territories the treaty would not apply to, and these provinces and territories could join subsequent to passing the proper implementing legislation.[26]
This “constituent subdivision” approach, however, is not without dissent. Some opposition members in the federal Parliament maintained that it would violate Canada’s constitutional division of powers and would constitute a “wrongful abrogation” of the federal government’s control over international relations.[27] A definitive constitutional position on the part of the Federal government, if it has one, has not been made public.
Another argument is that moving forward with the ratification process without full provincial and territorial concurrency could be seen as a deviation from Canada’s ordinary treaty implementation practice, which could have political implications in Canada. Few would disagree that unanimous provincial and territorial ratification is preferable in Canada’s federal state environment. Moreover, partial applicability of ICSID in Canada could complicate investment transactions and distort economic relations among provinces and territories.
In the absence of unanimity after an unduly prolonged time and considerable effort, using the “constituent subdivision” approach to ratify the Convention may be the best achievable option and may “put feet to the fire” in the foot-dragging provinces and territories. Given the history described above, and the benefits that would likely flow from ICSID membership, proceeding by this approach would seem to many to be in the best interests of the Canadian economy and Canadian businesses that invest internationally.
Examples Where Access to ICSID Arbitration Might be Relevant
Four gold mining companies with operations in Venezuela represent apt examples of Canadian foreign investors that could benefit from Canada’s ratification of the ICSID Convention. Before President Hugo Chavez nationalized all gold mines in Venezuela in August 2011,[28] three Canadian companies, Vanessa Ventures Ltd. (now Infinito Gold Ltd.), Gold Reserve Inc., and Crystallex International Corporation, had outstanding claims against the country.[29] A fourth company, Rusoro Mining Ltd., launched a claim on July 17, 2012.[30] Although Canada has a FIPA with Venezuela,[31] all four cases are proceeding by way of the ICSID Additional Facility Rules. Under these rules, any award in favor of an investor that the investor attempts to enforce in Venezuela would be subject to review by Venezuelan courts.
Next Steps
Canadian international arbitration and trade law practitioners have long attempted to persuade senior Canadian federal and provincial government officials that it is in Canada’s interest to join ICSID. Canada’s ratification of the ICSID Convention is now regularly raised by Canadian international arbitration and trade law organizations, including through the Canadian Chamber of Commerce and the Canadian Bar Association.[32] The availability of binding ICSID arbitration would increase investor confidence in Canada because it would reduce investor risk and make Canada an even more attractive location for foreign investment. Moreover, Canadians investing in foreign countries would similarly enjoy reduced risks and reduced costs in their foreign investment activities. The majority of countries in which Canadian companies invest most frequently and most heavily are ICSID members (excluding Mexico, India, and Brazil).
Until the necessary implementing legislation is brought into force throughout the country, or Canada’s federal government decides to proceed with ratification without all of the provinces and territories on board, the ICSID Convention does not protect Canadian international investors or foreign investors investing in Canada. Until such time, Canada is risking significant economic benefits. As one of the two G-8 countries[33] and one of the three OECD members[34] that have not ratified the ICSID Convention, Canada seems long overdue to provide foreign investors and Canadians investing internationally with the full protections and benefits that come with ICSID membership.[35]
III. ITAs and Canadian Federalism: Who’s Left Holding the Bill?
Another issue that arises due to Canada’s federal structure is who should be liable for the damages awarded against Canada in an ITA arbitration when the actions of a constituent subdivision (a sub-federal entity) amounted to the breach of the treaty obligation. This issue is illustrated by Canada’s recent settlement with AbitibiBowater. In April 2009, AbitibiBowater, a forestry company incorporated in the United States, initiated NAFTA Chapter Eleven arbitration for CDN $500 million claiming that Canada had breached its obligations as a result of Newfoundland and Labrador’s Bill 75, entitled An Act to Return to the Crown Certain Rights Relating to Timber and Water use Vested in Abitibi-Consolidated and to Expropriate Assets and Lands Associated with the Generation of Electricity Enabled by Those Water Use Rights (Act).[36] In effect, the Act expropriated most of AbitibiBowater’s investments in the province, including its timber and water rights. As with all ITAs, only a state party to NAFTA (Canada, United States, or Mexico) can be liable to compensate an investor from another NAFTA party for a breach of Chapter Eleven. One of the key investment protection provisions of Chapter Eleven is Article 1110 which prevents a NAFTA party from expropriating the investments of an investor from another NAFTA party without fair compensation.[37]
Canada settled the claim for CDN $130 million in August 2010, leading to a consent award in December 2010.[38] The settlement was not without controversy as some commentators questioned whether Canada should have settled, and the amount for which it settled.[39] The federal government could have continued the arbitration, covered all related costs, and ultimately tried to distance itself from an unfavorable award. Instead, the settlement demonstrates that the investment treaty protection system under NAFTA works and that Canada recognizes its importance and, in appropriate circumstances, the need to voluntarily honor its investor protection commitments.
The settlement highlights a particular challenge posed by ITAs, such as NAFTA, in federal states. The claim arose from the actions of a Canadian provincial government rather than those of the federal government. However, in accordance with NAFTA, the claim was brought against the federal state which had to defend and ultimately settle the claim, vividly demonstrating how a state can be financially responsible for its constituent subdivisions and left to pay for actions that it did not take but had no constitutional or practical authority to prevent.
Following the settlement, Canadian Prime Minister Stephen Harper stated that the federal government did not intend to seek reimbursement from Newfoundland and Labrador, but that in the future, “should provincial actions cause significant legal obligations for the government of Canada, the government of Canada will create a mechanism so that it can reclaim monies lost through international trade processes.”[40] There has been no clarification of what that mechanism would be or whether it would be imposed unilaterally. Nonetheless, financial arrangements between the federal government and provinces and territories are most often established by cooperative negotiation.[41]
Whatever the arrangement, the federal government may have to move quickly because NAFTA Chapter Eleven complaints continue to be brought as a result of provincial and territorial actions.[42] Many aspects of environmental, human health and property regulation fall under provincial and territorial constitutional jurisdiction and are likely to continue to be a source of future claims.
A recent NAFTA award has further demonstrated the urgency of this issue. In May 2012, a NAFTA panel ruled in favour of Mobil Investments Inc. and Murphy Oil Corp. against Canada based on measures taken by Newfoundland and Labrador. The panel found Canada responsible for breaching its performance obligations under Article 1106.[43] The exact figure of the quantum of damages to be awarded has yet to be determined, but the outcome of the case is similar to AbitibiBowater in that the federal government will once again be responsible for paying damages as a result a provincial measure violating the NAFTA.
Recent NAFTA Cases Relating to Provincial Measures
Canada had two new NAFTA notices filed against it in 2011 arising from Ontario’s environment regulations and one new notice filed in 2012 based on regulations of the British Columbia government. First, St. Mary’s Cement, a United States corporation, filed a Notice of Intent on May 11, 2011 alleging that the denial of a quarry permit by the Ontario government was discriminatory and motivated by political concerns in breach of NAFTA Chapter Eleven’s fair and equitable treatment obligations.[44] Second, Mesa Power served its Notice of Intent on July 6, 2011, complaining that Ontario’s Green Energy Act[45] resulted in denials of access to the feed-in-tariff (FIT) program for a number of wind power projects in southwestern Ontario owned by the United States corporation.[46] Mesa Power Group asserts that changes in regulations for granting access to the electricity grid and awarding wind power contracts led to a decline in the value of its projects under the FIT program and contravened Canada’s NAFTA obligations.[47] Lastly, Mercer International Inc. filed a Notice of Intent on January 26, 2012 alleging that provincial energy regulations in British Columbia have discriminated against it and are unfairly restricting it from selling self-generated power.[48]
It appears that the issue of constituent subdivision responsibility for actions giving rise to ITA claims will need to be dealt with in Canada sooner rather than later. In response to Canada’s settlement with AbitibiBowater, one lead editorial in Canada’s principal mainstream newspaper has already called for a solution:
The federal government should not simply wait for the next problem of this kind to come up. It should diplomatically, but firmly, make clear to the provinces that it is thinking about specific options. The taxpayers of Canada need some concrete assurance that they will not have to pick up another such tab.[49]
Following the recent ruling in Mobil and Murphy Oil, the same editorial echoed similar sentiments once again:
The federal government cannot simply be a guarantor for the consequences of the provinces’ actions. A compromise is needed; it would be unfortunate if Ottawa had to threaten the provinces with making deductions from its payments to the provinces – from health and social transfers or equalization.[50]
Until the federal government establishes an arrangement with its provinces and territories respecting the costs of ITA claims based on the actions of a constituent subdivision, it is left in the position of defending these claims without any assurance that its sub-federal entities will cooperate and help cover the associated financial costs. Canada’s NAFTA partners, the United States and Mexico, both of which are federal states, may also need to consider developing comprehensive solutions to this issue.[51]
V. Conclusion
Canada has been, and likely will continue to be a dynamic participant in international investment arbitration. While Canadian foreign investors are increasingly active internationally and Canada continues to be an attractive venue for foreign investment, Canada’s ratification of the ICSID Convention would only further complement both fronts. There are some encouraging signs as Canada’s business and legal communities are drawing greater attention to Canada’s failure to ratify the ICSID Convention.
Canada’s federal structure plays an important part in its situation respecting ICSID, just as it plays an important part in its inability to hold its constituent subdivisions accountable for their breaches of Canada’s ITA obligations. However, the knife cuts both ways. Critics argue that Canada’s federal government should not use its treaty-making power to impose broad foreign investor rights that constrain the ability of provincial and territorial governments to legislate and regulate on behalf of their citizens in areas of exclusive provincial and territorial jurisdiction.[52] One commentator has gone so far as to say that “[w]e are witnessing a constitutional train wreck in slow motion.”[53] Whether this train wreck will ever happen remains to be seen. In moving forward, Canada can remain confident that the dispute settlement mechanisms in its investment treaties can and do work. One thing is clear, however. Canada faces some prominent issues related to investment treaty arbitration because of its federal system that it needs to address.
[1] The original article, “Canada and Investment Treaty Arbitration: Three Prominent Issues – ICSID Ratification, Constituent Subdivisions, and Health and Environmental Regulation”, authored by Barry Leon, Andrew McDougall & John Siwiec appeared previously in the South Carolina Journal of International Law & Business, Vol. 8, Fall 2011.
[2] Barry Leon (bleon@perlaw.ca) is a Partner and Head of the International Arbitration Group, Andrew McDougall (amcdougall@perlaw.ca) is Special Counsel and John Siwiec (jsiwiec@perlaw.ca) is an Associate in the International Arbitration Group at Perley-Robertson, Hill & McDougall LLP/s.r.l., www.perlaw.ca.
[3] Listing of Canada’s FIPAs and FTAs, FOREIGN AFFAIRS AND INTERNATIONAL TRADE CANADA, available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/index.aspx?view=d (last modified Sept. 26, 2011).
[4] North American Free Trade Agreement, Dec. 17, U.S.-Can-Mex., 1992, 32 I.L.M. 605, 639-49 (1993) [hereinafter NAFTA].
[5] Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, Mar. 18 1965, 17 U.S.T. 1270 [hereinafter ICSID], available at http://treaties.un.org/doc/Publication/UNTS/Volume%20575/volume-575-I-8359-English.pdf.
[6] ICSID, List of Contracting States and Other Signatories of the Convention, available at http://icsid.worldbank.org/ICSID/FrontServlet?requestType=ICSIDDocRH&actionVal=ShowDocument&language=English.
[7] ICSID, supra note 5, preamble.
[8] ICSID, supra note 5, art. 25(1).
[9] ICSID, supra note 5, art. 53(1).
[10] Id.
[11] See ICSID, supra note 5, arts. 50-55.
[12] ICSID, Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for the Settlement of Investment Disputes, [hereinafter Additional Facility Rules], available at http://icsid.worldbank.org/ICSID/StaticFiles/facility/AFR_English-final.pdf.
[13] Compare Additional Facility Rules, supra note 12, arts. 52-57, with ICSID, supra note 5, arts 50-55.
[14] See NAFTA, supra note 4, art. 1137; Agreement for the Promotion and Protection of Investments, Can.-Thai., art. 13, Sept. 28, 1998, available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/THAILAND-E.PDF, Agreement for the Promotion and Protection of Investments. Can.-Jordan, art. 27, June 28 2009, http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fipa-apie/jordan-agreement-jordanie-accord.aspx?lang=eng&view=d.
[15] Settlement of International Investment Disputes Act, S.C. 2008, c. 8.
[16] See Settlement of International Investment Disputes Act, S.B.C. 2006, c. 16 (Can. B.C.); Settlement of International Investment Disputes Act, S.N.L. 2006, c S-13.3 (Can. N.L.); Settlement of International Disputes Act, S.O. 1999, c. 12, Schedule D (Can. Ont.); Settlement of International Investment Disputes Act, S.S. 2006, c. S-47.2 (Can. Sask.); Settlement of International Investment Disputes Act, S.Nu. 2006, c. 13 (Can. Nun.); Settlement of International Investment Disputes Act, S.N.W.T. 2009, c. 15 (Can. N.W.T.)
[17] The federal government’s treaty-making authority is not explicitly conferred under any constitutional provision though is a power that is recognized to have devolved upon it. This stems from Canada’s British tradition, where international relations are a prerogative of the Crown, which is exercised by the federal executive branch of the government as the Crown’s representative. See LAURA BARNETT, LEGAL LEGIS. AFFAIRS DIV., CANADA’S APPROACH TO THE TREATY MAKING PROCESS (2008), http://www.parl.gc.ca/Content/LOP/ResearchPublications/prb0845-e.htm.; see also Capital Cities Commc’ns Inc. v. Canadian Radio-Television Comm’n, [1978] 2 S.C.R. 141 (Can.).
[18] See Canada (Att’y Gen.) v. Ontario (Att’y Gen.), (1937) 1 D.L.R. 673 (Can.) (Labour Conventions Case); see also PETER W. HOGG, Q.C. CONSTITUTIONAL LAW OF CANADA, 11.5 (b), (Carswell, 5th ed. Supp. 2007).
[19] ICSID, supra note 5 (The ICSID Convention addresses issues of arbitral procedure and the recognition and enforcement of arbitral awards, both of which fall within provincial jurisdiction over the administration of justice (ss. 92(14) of the Constitution Act, 1867) and property and civil rights (ss. 92(13))).
[20] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 330 U.N.T.S. 38, (1968) 7 I.L.M. 1046, available at http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention.html
[21] Edward C. Chiasson, Canada No Man’s Land No More, 3 J. INT’L ARB. 67 (1986).
[22] E.g. Edward C. Chiasson & Marc Lalonde, Recent Canadian Legislation on Arbitration 2 ARB. INT’L 370 (1986); Chiasson, supra note 20.
[23] Canada, Parliament, House of Commons, Debates, 39th Parliament, 1st Session, vol. 141, issue 154, May 15, 2007, available at http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=2945948&Language=E&Mode=1&Parl=39&Ses=1.
[24] Id.
[25] Id.
[26] Canada, Parliament, House of Commons, Standing Committee on Foreign Affairs and International Development, Evidence. (November 22, 2007), 39th Parliament, 2nd Session, available at http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=3133571&Mode=1&Parl=39&Ses=2&Language=E#Int-2214104.
[27] See generally comments of Mrs. Vivian Barbot, MP, supra note 22.
[28] Hugo Chavez Officially Nationalizes Venezuela’s Gold Industry, HUFFINGTON POST, Aug. 23, 2011, http://www.huffingtonpost.com/2011/08/24/venezuela-gold-industry-huge-chavez_n_934968.html.
[29] See ICSID, List of Pending Cases, supra note 49, (listing Vanessa Ventures Ltd. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/04/6, Filed (Oct. 28, 2004); Gold Reserve Inc. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/09/1, Filed (Nov. 9, 2009); Crystallex Int’l Corp. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/11/2, Filed (Mar. 9, 2011)).
[30] Alison Ross, Rusoro in time to file ICSID claim against Venezuela, GLOBAL ARBITRATION REVIEW, (July 23, 2012), http://www.globalarbitrationreview.com/news/article/30710/rusoro-time-file-icsid-claim-against-venezuela/.
[31] Agreement between the Government of Canada and the Government of the Republic of Venezuela for the Promotion and Protection of Investments, Can.-Venez., Jul. 1, 1996, 2221 UNTS 7, available at http://treaties.un.org/doc/Publication/UNTS/Volume%202221/v2221.pdf.
[32] Andrew McDougall & Barry Leon, Upcoming G20 Meeting in Canada Presents an Opportunity for Canada to Join ICSID, N. AM. FREE TRADE & INV, REPORT, March 31, 2010, http://www.perlaw.ca/media/Lawyer_Articles_PDF/Published_BLeon_and_AMcDougall_Upcoming_G20_Meeting_in_Canada_Presents_an_Opportunity_for_Canada_to_Join_ICSID_Article_Only.pdf.
[33] Russia has yet to ratify the Convention though also signed the treaty in 1992.
[34] Mexico and Poland have not signed the Convention.
[35] See Barry Leon &Andrew de Lotbinière McDougall, Why has Canada Not Ratified the ICSID Convention?, KLUWER ARB. BLOG (August 24, 2010, 9:15 PM), http://kluwerarbitrationblog.com/blog/2010/08/24/why-has-canada-not-ratified-the-icsid-convention/.
[36] Abitibi-Consolidated Rights and Assets Act, R.S.N.L. 2008, c. A-1.01.
[37] Id. at art.1110(1).
[38] AbitibiBowater Inc. v. The Gov’t of Canada, (ICSID) Consent Award, Dec. 15, 2010, http://www.international.gc.ca/trade-agreements-accordscommerciaux/assets/pdfs/Abitibi_Consent_Award_Dec_15_2010.pdf.
[39] Scott Sinclair, $130Million NAFTA Payout Sets Troubling Precedent, CANADIAN Ctr. FOR POLICY ALT. (March 22, 2011), http://www.policyalternatives.ca/publications/commentary/130-million-nafta-payout-sets-troubling-precedent.
[40] Bertrand Marotte & John Ibbitson, Provinces on Hook for Future Trade Disputes: Harper, THE GLOBE & MAIL (August 26, 2010), http://www.theglobeandmail.com/report-on-business/abitibi-deal-best-available-harper/article1686431/?cmpid=rss1.
[41] See HOGG, supra note 17, at ¶ 6.9.
[42] Clayton/Bilcon (U.S.) v. Gov’t of Canada, Statement of the Claim (Jan. 30, 2009); St. Marys VCNA, LLC (U.S.) v. Gov’t of Canada, Notice of Intent (May 13, 2011); Mesa Power Group LLC (U.S.) v. Gov’t of Canada, Notice of Intent (July 6, 2011), and Mercer International Inc. v. Gov’t of Canada, Notice of Intent (January 26, 2012). See Foreign Affairs and International Trade Canada, Cases Filed Against the Government of Canada, http://www.international.gc.ca/trade-agreements-accords-commerciaux/disp-diff/gov.aspx?lang=en&view=d
[43] Jarrod Hepburn, Canada Loses NAFTA Claim; Provincial R&D Obligations Imposed on US Oil Companies Held to Constitute Prohibited Performance Requirements, INVESTMENT ARBITRATION REPORTER (June 1, 2012), http://www.iareporter.com/articles/20120601.
[44] See St. Marys VCNA, LLC v. Gov’t of Canada, Notice of Intent (filed May 13, 2011) available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/disp-diff/st_marys_vcna.aspx?lang=eng&view=d.
[45] Green Energy Act, S.O. 2009, c. 12, Sch. A (Can.).
[46] Mesa Power Group LLC v. Gov’t of Canada, Notice of Intent (filed July 6, 2011) available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/disp-diff/mesa.aspx?lang=eng&view=d.
[47] Id.
[48] Mercer International Inc. v. Gov’t of Canada, Notice of Intent (filed January 26, 2012) available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/disp-diff/mercer.aspx?view=d.
[49] Editorial, How Ottawa could avoid getting stuck with the provinces’ bills, GLOBE & MAIL, Aug. 29, 2010, http://www.theglobeandmail.com/news/opinions/editorials/how-ottawa-could-avoid-getting-stuck-with-the-provinces-bills/article1688337/.
[50] Editorial, Ottawa should not have to pay for provinces’ trade obligations, GLOBE & MAIL, June 10, 2012, http://www.theglobeandmail.com/commentary/editorials/ottawa-should-not-have-to-pay-for-provinces-trade-violations/article4246206/.
[51] See also Barry Leon & Andrew McDougall, Left Holding the Bill: Can the NAFTA Countries Recover from Their Constituent Territories?, N. AM. FREE TRADE & INV. REP., Vol. 21, No. 1, Jan. 1, 2011, available at http://www.perlaw.ca/en/newsroom/publications/2011/1/1/left-holding-the-bill-can-the-nafta-countries-recover.
[52] SINCLAIR, supra note 39.
[53] Id.
Seven Tips for In-house Counsel for Faster, More Cost-Effective Arbitration
This article was originally published in the December 7, 2012 issue of the Lawyers Weekly published by LexisNexis Canada Inc.
Barry Leon & John Siwiec
In this, our companion piece to “Seven tips for faster, more cost-effective arbitration” (The Lawyers Weekly, September 14, 2012, page 13) we focus on what in-house counsel who negotiate arbitration clauses or manage arbitrations can do to achieve faster, more cost effective arbitrations.
Our first article focused on procedural approaches used in international arbitration that can lead to faster and more cost-effective arbitration in Canada: an early procedural hearing; empowering and trusting the arbitrators; limiting document production; limiting oral discovery; submitting witnesses’ evidence efficiently, and agreeing on specifications for awards.
Here are seven tips to help in-house counsel realize the benefits that arbitration offers by making more informed and effective decisions both when negotiating arbitration clauses and managing an arbitration.
1. Understanding the features of arbitration
Understanding the features of arbitration and how it differs from court litigation is integral to achieving the advantages it can offer. With the growing use of arbitration, today’s in-house counsel need a basic understanding of arbitration that can be applied to negotiating arbitration clauses and managing an arbitration when a dispute arises. An understanding of arbitration should be acquired in advance, not by learning on the job.
2. Negotiating dispute resolution provisions
Because arbitration’s key feature is “party autonomy”, there is an opportunity to agree with the opposite party on almost every aspect of the arbitration. In contract negotiations, tactical advantages can be gained by taking time to consider the company’s dispute resolution objectives. Too often the dispute resolution clause is left until the eleventh hour. Consideration should be given to the types of disputes likely to arise in relation to the contract, and which dispute resolution process(es) would fit the company’s interests and objectives. If arbitration is chosen, consider the appropriate seat of arbitration, the appropriate number of arbitrators, arbitrator qualifications, the scope of confidentiality, and the use of administered arbitration.
3. Choosing arbitration counsel
The assistance of experienced and knowledgeable arbitration counsel, both when drafting an arbitration clause and for a dispute can reduce the time and costs of an arbitration. It is essential to engage outside counsel who understand arbitration and are not wedded to court rules and procedures. Outside counsel need to be open to working with the arbitral tribunal and other counsel to develop efficient procedures. Also, it should be determined beforehand whether outside counsel will have sufficient time to devote to the case.
4. Choosing the arbitral tribunal
A major benefit of arbitration is that parties have a say in the choice of their adjudicator. It begins with the arbitration clause, when the number of arbitrators and arbitrator qualifications may be fixed. The opportunity arises again when an arbitral tribunal – whether one or three arbitrators – is chosen. While tribunal selection procedures vary, in-house counsel should be involved in the opportunities available to choose the arbitrator(s).
5. Choosing procedures and timetables
In-house counsel need to stay involved and informed so that the arbitral procedures and timetables align with company priorities and objectives. Too often outside counsel are reluctant to risk “giving up rights” available under court rules and procedures when adopting arbitration procedures and timetables. In-house counsel should be present at procedural hearings to appreciate the arbitration’s dynamic, to get a feel for the tribunal, and to instruct on decisions affecting speed, cost-effectiveness, confidentiality and relationship preservation.
6. Coordinating between in-house and arbitration counsel
Once the arbitral tribunal is selected and a case timetable established, in-house counsel should coordinate with outside counsel to understand what input will be needed and when. Outside counsel need in-house counsel’s involvement when important tactical choices are being made and to ensure the availability of company personnel (as witnesses or otherwise). Coordination between in-house and outside counsel will help ensure that deadlines are met and the case proceeds as scheduled.
7. Settlement procedures
Although arbitration proceedings may have commenced, settlement procedures – negotiation or mediation – can occur at any time. Settlement is often the best outcome, saving time and saving costs. As arbitration proceedings progress, parties get a better sense of the case and the arbitral tribunal’s reactions (arbitrators live with the case throughout, unlike in court where a different judge may hear each pretrial matter), interests may change and opportunities to settle may increase. With outside counsel, in-house counsel should continually re-evaluate the case and determine whether settlement should be pursued.
The bottom line is that for a company to realize the benefits that can be achieved in arbitration, in-house counsel need to be informed and involved, starting with an understanding of arbitration, then in the negotiation of arbitration clauses, and later if a dispute arises.
Barry Leon, bleon@perlaw.ca, is an ADR Chambers Arbitrator, and a Partner and Head of the International Arbitration Group and John Siwiec, jsiwiec@perlaw.ca, is an Associate in the International Arbitration Group at Perley-Robertson, Hill & McDougall LLP/s.r.l. in Ottawa. The firm’s website is www.perlaw.ca.
Nigel Hudson :: About Author :: Email
Fairness: An Evolutionary Construct?
How important is fairness to negotiated agreements?
The question of whether fairness is a learned behavior through social or cultural influence or has an evolutionary basis may have been answered. A recent study has shown that we are not the only species to value fairness.(1) Researchers studying brown capuchin monkeys, which are a highly social and cooperative species, have found that they display an aversion to unfair behavior.
In the study, two monkey exchanged tokens with a human experimenter for a food reward. The monkeys either received a cucumber or a grape, which was the more favored food reward. The monkeys observed fair treatment where they both received a cucumber for equal effort or unfair treatment where one monkey received a grape for equal effort. When the monkeys observed unequal treatment, they responded by refusing to participate in the exchange, refusing to eat the cucumber or throwing the cucumber at the human experimenter.
The researchers postulated that nonhuman primates are guided by expectations about the way they and others should be treated and how resources should be divided.
So, the next time you find yourself or the person across the table from you reacting to unfair treatment, remember that it could be the result of deeply rooted evolutionary behavior.
For a demonstration of the experiment, please go to: http://www.ted.com/talks/frans_de_waal_do_animals_have_morals.html
1. Brosnan, S.F. & de Waal, F.B.M. Monkeys reject unequal pay. Nature 425, 297-299 (2003).
Radek Cecha :: About Author :: EmailSeven Tips for Faster, More Cost-Effective Arbitration
This article originally appeared in the September 14, 2012, issue of The Lawyers Weekly published by LexisNexis Canada Inc.
by Barry Leon & John Siwiec
A distinguishing feature of arbitration is that the procedural rules, whether legislated or set out in arbitral institutions’ rules, only provide a general framework for arbitral proceedings. Unlike court procedural rules, arbitration rules seldom include detailed provisions on such things as exchanging briefs, producing documents, conducting hearings, and whether and how witnesses should be heard.
This absence of detailed provisions may be due in large part to a desire to preserve “party autonomy”, a cornerstone of arbitration that enables parties to tailor their proceedings to fit their dispute. International arbitration organizations have complemented this freedom by issuing soft rules and guidelines to assist arbitrators, counsel and parties to conduct arbitrations efficiently and cost effectively. Examples include the “Rules on the Taking of Evidence in International Arbitration” of the International Bar Association (“IBA Rules”; www.ibanet.org/LPD/Dispute_Resolution_Section/Arbitration/IBA_Rules_Evidence/Overview.aspx), “Notes on Organizing Arbitral Proceedings” of the United Nations Commission on International Trade Law (UNCITRAL; www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1996Notes_proceedings.html) and “Techniques for Controlling Time and Costs in Arbitration” of the International Chamber of Commerce (ICC; www.iccdrl.com).
Domestic commercial arbitration in Canada, however, is often conducted as if it was taking place in court. Counsel simply agree to apply local rules of court and many arbitrators do not encourage greater procedural flexibility. By taking this approach, parties negate many of arbitration’s advantages.
The good news is that users of arbitration in Canada are increasingly aware of procedures to achieve greater time and cost efficiencies that are available in international arbitration rules and guidelines and in the rules of Canada’s arbitral institutions, such as ADR Institute of Canada and ADR Chambers, and are increasingly taking advantage of them in domestic arbitration.
Seven Tips for Faster, More Cost-Effective Arbitration
There are seven procedural approaches used in international arbitration that can lead to more efficient and cost-effective domestic arbitration in Canada.
1. Early Procedural Hearing: An early procedural hearing is regularly used in international arbitration to identify the primary disputed issues and the procedural steps required for their resolution. Holding an early procedural hearing means that procedures for the arbitration can be settled from the outset, whether by agreement or tribunal order. A preliminary timetable with the shortest and most realistic timing should be established at the procedural hearing. There can be significant saving by simply avoiding time gaps as considerable costs can be incurred each time counsel and arbitrators need to be “re-familiarized” with the dispute.
2. Empowering and Trusting Arbitrators: Parties should encourage their tribunal to be proactive and trust their tribunal to consider the parties’ procedural submissions and that they will act fairly and sensibly. This includes enabling the tribunal to proactively manage the procedure throughout the arbitration by hearing the parties’ positions and then specifying the form, timing, content and length of written submissions, the number of exchanges of briefs, and the conduct of any hearings. A cost-effective approach with a 3-member tribunal can be to empower the presiding arbitrator to determine all or most procedural matters.
3. Limiting Document Production: The IBA Rules provide a helpful guide to document production. The Rules bridge the gap between procedural rules in common law and civil law jurisdictions (where production is often limited to documents relied upon). The Rules require that the requesting party not only be specific in its requests but also demonstrate why a requested document is “material to the outcome” of the dispute. This contrasts with court rules that often require the production of all documents that are “relevant to any matter in issue”.
4. Limiting Oral Discovery: Oral discovery is generally not available in international arbitration and pre-hearing examinations of non-parties are rarely used. In order to promote efficiencies in domestic arbitration, consider limiting oral discoveries to what is really needed and utilizing alternatives such as written interrogatories.
5. Limiting Hearings: Minimizing the length of hearings is valuable in reducing time and costs. Consider approaches such as evenly splitting the hearing time (sometimes called the “chess clock” method). For procedural hearings and motions, consider telephone and video conferencing. Many motions can be argued in writing where email communications directly with the tribunal can save time and reduce costs.
6. Use of Witnesses: Hearing fact and expert witnesses quickly adds to costs, particularly with oral evidence. Techniques used in international arbitration include using witness statements instead of direct examination, and witness conferencing. Minimize the number of experts and reports and consider using a single tribunal appointed expert.
7. Specifications for Awards: Consider agreeing to realistic timing for a tribunal to render an award, the length of the award, and whether written reasons are even required. Institutional arbitration rules and legislation often provide that the parties are free to determine whether the tribunal needs to render a reasoned award.
These seven procedural approaches, commonly used in international arbitration, can lead to faster, more cost-effective domestic arbitration. Users of domestic arbitration should consider these approaches in their next arbitration.
Barry Leon, bleon@perlaw.ca, is a Mediator and Arbitrator at ADR Chambers and Partner and Head of the International Arbitration Group and John Siwiec, jsiwiec@perlaw.ca, is an Associate in the International Arbitration Group at Perley-Robertson, Hill & McDougall LLP/s.r.l. in Ottawa. The firm’s website is www.perlaw.ca.
Radek Cecha :: About Author :: EmailIn Defence of Opening Statements at Mediation
There has been a strong movement lately to get rid of Opening Statements (sometimes called Storytelling or an Opening) at the beginning of mediations. Lawyers tell me that they each understand the other side’s case, and won’t be persuaded by each other’s arguments, so don’t see the point in having an Opening. They also suggest that the Opening Statements will polarize and unnecessarily antagonize.
Many mediators agree and dispense with Openings, especially if the parties have gone through discovery.
While I agree that there are situations where an Opening is unnecessary, I think this is an unfortunate trend and that lawyers are missing an important and unique opportunity when they dispense with the Opening Statement.
Lawyers are not wrong when they say that won’t persuade each other. But that is not the purpose of the Opening.
The most important purpose of the Opening, in my opinion, is to help the other side understand the case that you will present in court that a judge could accept. In order to make concessions to you and to your client, the other side doesn’t need to be convinced that your client is right or will win, they just have to see the risk that a judge will find against them or, in their view, ‘get it wrong’. If they perceive that risk, they will make concessions. The more risk they see, the more concessions they’ll make.
So your Opening should be focused on what arguments you would make in court, what evidence you’ll be relying on, what law you’ll use to convince the judge that your client could win, not on why your client is right or why your client will win in court.
The distinction is subtle, but important. For example, if there is a credibility issue in your case, your Opening should not focus on the fact that your witness is telling the truth, but rather that your witness is believable. A lawyer at a mediation I was at said recently, “I wasn’t there; I don’t know who’s telling the ‘truth’; but I do know that my witness sounds believable. If a judge believes my witness, we’ll win the case”. The issue in a credibility case is not who is telling the truth, but whom a judge will believe. If the other side believes that your side’s witness could be believed (even if they are convinced that your side’s witness is lying), they may perceive a risk and see the benefit of making compromises.
And that’s where the mediator comes in. If lawyers present in the way I’ve suggested, the mediator can use what was said in caucus to discuss with each side the risks of a judge finding against them. The mediator doesn’t have to focus on who will win; just on the risk of a judge finding against them based on the arguments presented at the Opening.
If you present the arguments you’ll be making as opposed to arguing that your client is right and will win, that will significantly remove the risk of polarizing and antagonizing. After all, you are just presenting what you will be arguing in court, not suggesting the outcome in court. There’s nothing for the other side to argue about because you’re not saying that your arguments are the ‘objective truth’ or the ‘fair result’ (two of the common antagonizing themes in Openings), you’re just telling the other side what you’ll be arguing.
So in determining whether an Opening would be helpful, you should ask yourself whether the other side’s lawyer has explained your case to his or her client as well and as persuasively as you could. If the answer is yes, there is little value in the Opening. I’ve yet to have a lawyer tell me that the answer is yes.
Allan Stitt
Allan Stitt is the President of ADR Chambers where he mediates and arbitrates. He also teaches ADR with the Stitt Feld Handy Group.
Allan Stitt :: About Author :: EmailA Mediator’s Take on U.S. Stalemate
Toronto Star - Toronto, Ont.
Author: Nicki Thomas Date:
Jul 28, 2011
Democrats and Republicans are dead locked over how to raise the country’s $14.3 trillion (U.S.) debt ceiling before an Aug. 2 deadline. With both sides at an impasse, the Toronto Star asked Allan Stitt, a Toronto-based mediator and arbitrator who lectures on conflict resolution, for some insight into high-stakes negotiations.
Q. Is this one of the worst examples of a stalemate that you’ve ever seen?
A. “It’s one of the worst because the impact is so severe,” Stitt said. The gridlock has caused the U.S. dollar to fall and threatens to damage the country’s credit rating. But, Stitt said, stalemates like this happen all the time. “They are very common because both sides are trying to out-think the other side in terms of what they’ll be willing to do and when they’ll be willing to cave.”
Q. What drives a situation like this?
A. Stitt said it often gets to the point where both sides could theoretically say Yes to what the other side is offering but each thinks they can cause the other side more pain by holding out. “They believe that if (they) holdout a bit longer, the other side is going to cave,” he said, adding that in moments of honesty, they might admit they would be better off accepting what the other side has to offer.
Q. So how do you break through that?
A. Mediators always look for ways their clients can save face while getting what they really want -rather than what they say they want - without forcing them to go to the other side’s position. That’s the best-case scenario and a solution that’s so often open to people and they don’t explore it,” Stitt said. More commonly, both sides end up making concessions until they hit middle ground. “People start to realize that they’re hurting everybody and in this case, they’re hurting an entire country by continuing to be obstinate.”
Q. Is there any way for the two sides in the U.S. to save face?
A. “Definitely,” Stitt said, but they have to get creative. If both sides could get together privately, with a promise that discussions would not be leaked to the media, they could talk honestly about what they really want and need.
Q. Do you think it’s more likely they’ll start making concessions instead?
A. “Unfortunately, the practical reality is they just start giving on issues,” he said, adding that the real problem is posturing from both sides. “Nobody really knows which issues are really important to either side because they’re all pretending that every issue is extremely important.”
Q. What are some of the other classic mistakes made in negotiations?
A. “They get caught up in their own rhetoric” Stitt said.” Over time, they become so entrenched in their positions that it becomes a matter of principle and they’re unwilling to budge, he said. “That’s really what’s happening here”.
Q. This is a pretty juicy negotiation. Would you like to be stuck in the middle of this?
A. “The truth is, I would,” Stitt said. “Maybe it’s the eternal optimist in me but I do believe that there are creative ways to overcome some of these difficulties. Sometimes you need someone in the middle to take the pressure on them instead of on the parties.”
Is Timing Everything?
First published in Up-Date Magazine, May 2011 issue
Written by Shireen Sondhi, Stitt Feld Handy Group
When should you go to mediation?
The short answer is that mediation can be conducted at any stage of the dispute resolution process. However, there are many different factors that can help you to determine when it is most beneficial.
Ideally, the best time to consider alternative methods of dispute resolution is before a dispute arises. You may, for example consider including a dispute resolution clause in all of your contracts that provide for certain processes to be followed before resorting to litigation. These types of clauses can be included in both internal contracts with employees and external contracts with suppliers, service providers, other businesses, etc.
As an organization, you may choose to design an internal conflict resolution system. The extent of the system will depend on a number of factors, including the size of your organization, the time frame available to resolve disputes, confidentiality requirements and the types and number of disputes your organization faces. Any size organization can have a dispute resolution system. It can be as small as a single individual or large as a whole department.
An organization considering implementing a conflict resolution system should think about why they want the system and what they want it to accomplish. Some common organizational goals include:
• To reduce time and costs
• Improve or maintain the relationship
• Achieve a satisfactory outcome
• Deal with emotions
• Avoid future disputes
A conflict resolution system can include many different types of processes – training, negotiation, mediation, arbitration, neutral evaluation, etc. and should meet the specific needs of your organization. Once you have determined your objectives, there are many experts in the field of ADR who can assist in creating a conflict resolution system that best fits your organization’s corporate culture.
If, however, you are faced with an existing dispute, when you go to mediation depends on a number of factors, such as whether there is a court proceeding.
If you are involved in a court proceeding, your case may be subject to mandatory mediation requirements. In Toronto, Ottawa and Windsor, the vast majority of all civil cases are subject to mandatory mediation. Under the Rules of Civil Procedure, these mediations must be conducted within 180 days of filing the defence.
If you are not subject to mandatory mediation, you may have more flexibility as to when to mediate, given that both parties consent to the mediation. If one of your objectives to mediate is to save money, you may want to consider conducting the mediation before the discovery stage since that is where most legal costs are incurred. You may be more hesitant to settle if you have invested a large amount of time or money in the dispute up to that point. You may also become more grounded in your position and less willing to compromise if you are facing mounting legal costs.
However, if you are hesitant to settle before finding out the strengths and weaknesses of your opponent, you may want to wait until after the discovery process. Through the discovery process, you may find out that you underestimated their position and/or overestimated your position, which may encourage you to settle quickly. They also may have underestimated your position and/or overestimated their position, in which case it will become easier for you to encourage them to settle.
If your dispute has not reached the level of litigation, you may be required to attend mediation by statute or contract clause. The statute or contract clause may provide some guidance as to when to commence the mediation. If you are not bound by statute or contract, mediation can be conducted as soon as both parties agree to the process. Mediation has several advantages and mediating as soon as possible can allow you to get the most out of these benefits. For example, mediation can:
• Allow for creative solutions that are not available in the court system
• Set the groundwork for future settlement
• Reduce cost
• Reduce time spent involved in the dispute
So the answer to the question, “When should I mediate?”, is not so straightforward. However, in deciding when to mediate, it is important to look at your objectives and expectations and to start thinking about dispute resolution as early as possible.
Radek Cecha :: About Author :: EmailFirst Recipient of the Executive Certificate in Conflict Management
Press Release by the Tax Appeal Board of Trinidad and Tobago
The Tax Appeal Board of Trinidad and Tobago is pleased to announce that the Honourable Chairman of the Court, HH Anthony D. J. Gafoor, certified mediator with the Mediation Board of Trinidad and Tobago, has been awarded the Executive Certificate in Conflict Management by Stitt Feld Handy Group and the Faculty of Law, University of Windsor, Canada.
The Honourable Chairman, who is the first recipient of the Certificate internationally, was formally presented with it by Mr. Peter Dreyer, Senior Associate, Stitt Feld Handy Group on 7th February 2011. This Canadian firm specializes in the design and delivery of Alternative Dispute Resolution services and training internationally and has been offering negotiation, mediation and communication workshops here in Trinidad and Tobago for over 12 years to government ministries, public agencies, as well as to private sector organizations.
The Honourable Chairman was greatly honoured and humbled to be the first such recipient of the Certificate and considers it to be yet another first for the Court and the wider Caribbean. The Tax Appeal Board is a Superior Court of Record and a designated mediation agency under the Mediation Act of Trinidad and Tobago.
Mediation in Barbados - interview with Peter Dreyer
Originally published in the Barbados Advocate, January 10, 2011
RuthMoisa Allayen
“Mediation [as an alternative form of dispute resolution] is becoming more and more widely used in governments, the courts and corporations as a means of facilitating their negotiations and resolving disputes.” So says Mr. Peter Dreyer, of Stitt Feld Handy Group, the training arm of ADR Chambers, one of the largest mediation groups in Canada. Dreyer, in an interview with the Barbados Advocate, pointed out that mediation – where two or more parties would employ a third neutral party to facilitate negotiations in an attempt to reach a resolution, and without losing ownership their interests and settlement – could translate into significant savings of time, cost and stress associated with going taking the dispute to court.
The firm’s lead faciltator in the Caribbean has for the last twelve years conducted training in Barbados, Trinidad, St.Lucia and the Bahamas where he has designed and delivered numerous Alternative Dispute Resolution (ADR) workshops. Amoung those organisations to benefit from these intense training sessions were Banks Holdings, Caribbean Development Bank, Arawak Cement Co. Ltd and the Barbados Judiciary in Barbados, Atlantic LNG, Petrotrin and Neal and Massy Holdings in Trinidad, and various governmental ministries within the region.
Dreyer was pleased to report that over the years, more businesses within the region were investigating mediation as a worthy option in conflict management, as is evident in the rise of occurences of mediation clauses within employee and other business contracts.
Pertaining to sales negotiation techniques and collective bargaining arising in Union-Management disputes, he spoke of the need to shift from traditional adversarial approachs - where one party came out the winner, at the expense of the other party - to seeking a win-win situation that could only be achieved when both parties worked together to get their interests met. Overall, companies who used the ADR approach, according to Mr. Dreyer, were able to find different ways of handling disputes, save money and were able to develop a more effective strategy for their sales teams.
When asked what this year’s participants of the ADR workshops could look forward to, Dreyer spoke of the development (or enhancement) of a new and transferrable skill set that could be used not just at work, but also at home and within their communities. These skills would allow them handle challenging issues and emotional people, mediate disputes while preserving relationships, and negotiate their way through difficult situations. From Principled Negotiation to the art of persuasion, The workshops promise to offer a superior product and participants will be challenged to work hard to reap the gain thereof while, through it all, having an enjoyable learning experience.
Peter Dreyer :: About Author :: EmailNegotiating when you have nothing to give
How can you negotiate well when you have already been committed to a limit, either by your previous actions or by someone else?
Consider this example: a general contractor works out an agreement with a landowner to build a custom home at a remote location in a vacation area during the next building season. He lines up tradespeople, and gets commitments from them on costs and timing for their work. He enters into a fixed price contract with the owner based on these commitments. When the building season starts, he starts the project and for a few weeks all goes well. Then several of the tradespeople come to him and say they want more money.
The contractor is stuck: the tradespeople are in great demand, and if he alienates them he risks them walking off the job. In this situation he will not be able to complete the project, therefore becoming subject to penalties; just as importantly, he will lose credibility and reputation and future business. If he lets the tradespeople walk away or get more money, he fears being taken advantage of in the future by them. He is not willing to go back to the owner at this point because he has already committed to the price as a condition of the contract, and any change will result in a financial penalty. If he simply tries to absorb the cost increases, he will not make any money on the project himself.
He decides to have an initial conversation with the tradespeople to investigate the reasons for the demand. He decides not to express his concerns at the outset; instead, he resolves to take on an attitude of being curious, and to investigate without worrying about who is right or wrong or what the contract says. What he discovers after some digging is that the increase in the price of motor vehicle fuel between the time he set up the contracts and the time building started has created a significant burden for the tradespeople, who all have to drive their large vehicles and supplies to the remote worksite every day. With this information, he sits down with them and generates a new question: is there a way we can deal with the fuel price problem without me paying you more money? The solution they come up with together is to work a four day week: each day will be longer, so the total work time and the schedule for the project is the same, but the tradespeople save one round trip every week, or about 20% of their fuel use, and several hours of travel time in total.
With this change they end up receiving the profit they anticipated because they have lowered their costs, and the contractor fulfills all his interests in completing the house on time and on budget. During the long days of summer the tradespeople are happy to have Fridays off, and light and temperature conditions are safe to work in.
What can we take from this kind of example? First, don’t assume a preset limit or your constraints will automatically prevent you from dealing effectively with a situation: you must understand what is driving the constraint or demand, not just what the constraint or demand is. Second, look for creative solutions first, solutions that do not require you to give up your constraints or compromise to meet them, but solutions that allow you to accomplish your goals as you work within the constraints. To do this, you need to enlist the creativity of the other negotiator and frame the situation as a joint problem to be solved. Third, if there are no ideal solutions, work to find other measures to mitigate the impact of the limit: for instance, a budget freeze may still allow you to make non-monetary changes that benefit staff. Finally, even if compromises are necessary, searching sincerely with the other party for solutions can reinforce your good intentions and maintain your working relationships. People who are dealt with this way will remember your efforts, even if you are not completely successful, and work with you again in the future.
Frank Handy :: About Author :: EmailInternal Mediation Systems
Many organizations have considered trying to resolve disputes with mediation by using internal resources and staff rather than external fully independent mediators. Proponents argue that the cost will be lower, that mediators will know more about the organization’s operations and will therefore be able to assist disputants more easily (for instance with information about internal resources), that resolutions are more likely to be practical for the organization, that follow up systems will be easier to implement and monitor, and that increased access will allow more use of mediation, greater acceptance of mediation and better conflict management skills generally in the organization. Those concerned about this approach argue that without true independence mediations will not be as effective because disputants will be concerned about potential breaches of confidentiality, about the interests of the organization being more important than those of the disputants, and about suppressing widespread complaints with ad hoc responses.
The “ideal” mediation process has a number of characteristics: it is party-centered and voluntary for the parties in both deciding to attend and whether to settle, the mediator is fully independent and impartial, the parties have sufficient information to make good decisions about resolution, and the process is confidential and without prejudice for the participants. In designing any mediation system, choices must be made that will affect the “ideal” mediation process: in designing internal mediation systems, designers must strive to maintain as many of the ideal characteristics as they can and mitigate the concerns to the extent possible.
People looking to create a mediation system should consider design issues from three perspectives: impact on participants, mediator, and outcome. For participants: will they feel the process is effective in resolving the dispute, respecting their privacy, and in limiting the risk of causing greater damage to their relationships and legal position? For the mediator: will the process allow the mediator to work effectively, act in an impartial manner, and not be in effect an interested party acting on behalf of another entity? In regard to the outcome: will the final decision be that of the parties, and can they reach it free of inappropriate pressure from the process or others?
For an organization considering an internal mediation process, assuming the benefits are accurately stated, maximizing the “ideal” characteristics can be achieved in the following ways.
First, clear policies should be drafted that set out what the process is, what disputes it will cover, what limitations it may have in terms of outcomes (e.g., any outcome that requires an operational change will be subject to management approval), what protections it will include for participants and the mediator, and how records (if any beyond those legally required) will be kept and who will have access to them. Communication and education about the system should address the concerns of potential participants and the organization must show itself to be committed to the principles of the process.
Second, policies and design should address the major concerns of impartiality and confidentiality explicitly. For maximized impartiality, confidentiality, and self-determination, for instance, a pool of internal mediators can be established from various departments, and a rule instituted that the disputants may choose any mediator so long as he or she is not in the same department as any of the disputants.
Third, confidentiality should be assured by having participants explicitly sign a confidentiality agreement, and by having the limits of confidentiality explained. Within an organization, confidentiality may have different limits than in say the litigation context. For instance, behavior that is contrary to organizational policy, if disclosed during the mediation, may be subject to discipline or other sanctions and the mediator may be under an obligation to report it. For the parties, the choice to disclose information can therefore be made consciously with full knowledge of the risks: this approach preserves their autonomy, and allows the mediator to fulfill a neutral role within the limits of the organization’s rules.
Fourth, the parties and mediator must understand the limits of their respective authority and roles in the process. As examples, parties may not have the power to implement changes in their workplace without managerial action; personnel records may require some notation about steps that people have committed to implement so that managers will be able to support the changes and any time frames that have been established can be respected; reports may have to be made or records kept for statistical or management or supervisory purposes in the event a participant changes positions or a new manager becomes responsible for the affected staff. Any and all of these terms may be acceptable: the significant point is to make sure all terms and expectations are known as parties enter the process, so that the credibility and utility of the process will be maximized.
Finally, of course, design is only the beginning; use of the process must be monitored, its effectiveness assessed and improvements implemented to make it attractive and effective as a way to resolve disputes at minimum cost to an organization.
Frank Handy :: About Author :: EmailMANAGING ORGANIZATIONAL CONFLICTS WITH ADR SYSTEMS
Public and private entities worldwide are increasingly using conflict management and dispute resolution procedures as a standard way of handling a wide variety of costly and disruptive conflicts, from legal or quasi-legal cases to workplace struggles to simple product and service complaints. Practical guidelines for designing and redesigning dispute resolution systems are increasingly necessary if organizations are to adapt effectively.
Broadly framed, the purpose of ADR system design is to develop effective processes to prevent, manage, and resolve claims, conflicts, and disputes. The challenging part in any system design is to determine what will be ‘effective’ in any given situation. Much of what makes a system effective is its ability to satisfy the goals of the stakeholders who are using, administering and affected by the system. One of the key benefits in ADR (Alternative Dispute Resolution) system design is the ability to find effective ways to prevent disputes and to minimize the severity and cost of the disputes that still occur.
One of the great dangers, particularly in the private sector, is that dispute resolution processes will be developed that reflect the mandate of the implementing organization but that ignore or minimize core goals/concerns of users and other stakeholders. This would be less of a concern if not for the fact that many private sector organizations can effectively impose their system, so they are not required to seek broad input. Modifying dispute systems without proper design processes, however, can create significant costs, tension, and pushback from stakeholders affected by the systems in question, and limit the usefulness of the system ultimately implemented. Customers using such systems are already in a conflict of some kind, and they become further frustrated with the organization in charge if they feel the system is biased against them. The cost of dealing with dissatisfied customers in an adversarial setting is high on both sides, with one of the primary costs to the organization being the lost time and stress.
ADR Systems come in various forms, each with its own challenges, including:
• Intra-Organizational Systems that apply to stakeholders within a single organization, and over which that organization has full control, such as an internal workplace grievance procedure at a single company.
• Extra-Organizational Systems that apply to stakeholders external to a single organization, but over which that single organization has full control, such as many governmental systems like workers compensation claims procedures.
• Inter-Organizational Systems apply to two or more organizations, with no one organization having unilateral control. Examples include nation-to-nation treaties like NAFTA, or inter-corporate agreements like the CPR Banking Industry DR protocols.
• Trans-Organizational Systems are used by two or more organizations and apply not only to those organizations but to other external stakeholders as well, such as the IDAC system administered by ADR Chambers (e.g. all signatory companies handle client complaints through a single dispute resolution system).
Organizations around the world, both governmental and private sector, are actively incorporating alternative dispute resolution (ADR) processes like mediation, negotiation, coaching, arbitration etc. into their methods for handling claims, conflicts and disputes (Ury et al. 1988; Wildau et al. 1993; Moore 1994; Costantino and Merchant 1996; Stitt 1998; Rowe 1997; SPIDR 2000; Bingham and Pitts 2002; Bertschler 2004; Katz Jameson and Johnson 2004; Bingham et al. 2009).
Having worked on a broad range of system design projects (from legal, to workplace, to contractual issues, and both public and private sector), the Stitt Feld Handy Group has a wealth of experience on which to draw in helping guide organizations through the system design process. There are 5 broad phases of system design, which vary in complexity and importance from one project to another, but which should be part of any system design project. The five phases, which are described in more detail below, include:
• Phase I: Clarify Mandate
• Phase II: Diagnosis
• Phase III: Design
• Phase IV: Implementation
• Phase V: Evaluation, Monitoring and Improvement
This classification is task-based, and in actuality there may be loopbacks or overlaps between the phases. It is not unusual, for example, to be laying the groundwork for Implementation (by lining up possible monitoring processes and personnel) even before the Design is fully approved. An experienced system design professional can help identify what tasks are most appropriate to the system design project in question - which stakeholders to consult, what questions to ask, what design options to consider and why, etc.
In a world of expanding ADR processes, the future of such ADR system design projects involves organizations increasingly a) borrowing from other successful systems to put such processes in place; and b) in ADR mature organizations, refining the systems already in place by ongoing improvement after monitoring and evaluation. The importance of these changes in saving money and generating greater stakeholder satisfaction should not be underestimated. In one case, for example, the implementation of mediation into a grievance procedure saved millions of dollars in system costs by significantly reducing the number grievance arbitrations and related lost time from work. The earlier cases can be resolved, generally the less entrenched parties become in their views, and the more likely that relationships can be salvaged, which is a key factor in avoiding poisoned workplaces.
Flexibility in the system allows it to adjust to the range of conflicts faced. In another corporate example that SFHG worked on, the use of mediation and other interest-based processes was tailored to the company’s circumstances by using HR staff as mediators (to save costs) but using HR staff from a different “neutral” location (to increase the appearance of neutrality and fairness), with the option for using external mediators in certain high sensitivity cases such as sexual harassment (when the need for neutrality was highest and justified the additional cost). Understanding the underlying concerns of the stakeholders helps focus efforts on optimal strategies. In a third project, our consultation with the client revealed that arbitration decisions were both expensive and ultimately hard to enforce. The losing party would return to the workplace and flaunt the decision. Brainstorming ideas with the key stakeholders led to the design of a peer review process that was less costly, incorporated greater knowledge of the context, and had the added benefit of a built in enforcement mechanism (peer pressure when back at work).
With the growing use of ADR processes in a variety of sectors, public and private, comes the need for practical guidance on effective dispute resolution system design. While every system design project is different, a coherent model to approach the design process provides helpful guidance to administrators at organizations contemplating system changes. There is clearly value to be had in reducing the number, duration and severity of conflicts. The question is how to secure that value without creating further costs and challenges, and an experienced ADR system designer can help answer that question.
Feel free to contact me at paul@adr.ca if you have any questions about ADR system design.
Paul Godin :: About Author :: EmailUnderstanding What Makes Conversations Difficult
The key to doing better in our challenging conversations is to begin with an understanding of what makes them challenging in the first place. Once we understand the cause, it is easier to plan a response that is likely to succeed. Remember also that with challenging situations, they are by nature, well, challenging. As a result, we cannot expect a magic bullet response that will make these conversations ‘easy’. The realistic goal is to make them easier than they would otherwise be, and to make them more productive than they would otherwise be. To achieve that goal, we need to understand the key contributions to our difficulty with such conversations.
In their book, Difficult Conversations, Stone et al. suggest that difficult conversations have their roots in three sources - the What Happened conversation, the Feelings Conversation, and the Identity Conversation. The What Happened conversation creates tension because people disagree on factual issues. Their stories differ, or appear to differ. The Feelings conversation involves tensions caused by strong emotions. Many people are uncomfortable dealing with strong emotions, either their own emotions, those of others, or both. The Identity conversation involves difficulties arising when people have their pride and sense of self challenged (like in a performance review). Most people get upset and/or defensive when their sense of self is challenged, directly or indirectly. When these tensions erupt, conversations are far more challenging for all concerned.
To those categories, my surveys of about a thousand students over the years have identified three other general sources of difficulty in conversations - Past History, Conflicting Goals, and Challenging Communication Processes.
When people have a Negative Past History (personally or organizationally), it creates a negative filter through which any current conversation is seen, and that makes productive conversation much harder. People cannot listen to the other person’s story when they have already written it themselves. A union-management discussion does not take place as an empty slate, in which each person is heard entirely on the merits. In many labour settings, people are wearing glasses with lenses tinted by 20 or more years of perceived antagonism. Everything said and done is seen through those lenses. There is often a sense of prejudgment in the air. Since people don’t feel it is fair to be prejudged, this often provokes further identity and emotional reactions.
When people perceive the other party to have Conflicting goals or to be a barrier to achieving their goals, the competitive element of conversations is ratcheted up significantly, and the other side may be seen as the enemy. As human beings we often assume there will be opposition to our goals from the very beginning, and we then treat people as enemies to our goals. For example, you go to a complaints desk expecting them to defend the company line and block your request, so you take an aggressive tone (leading to a defensive identity reaction on their side), or you take an extreme position and lock in, or you withhold information from them which makes you look untrustworthy. When competition is our only focus, we may lose the opportunity for a cooperative response, and receive mirror-image competitive responses instead, making it a fight for both sides.
Finally, if there are Communication Process Challenges, productive conversation can be very hard to achieve even with good intentions. A phone conversation is more challenging for many of us than a face-to-face dialogue simply because we are lacking so many visual signals. Communicating in writing leads to serious interpretation issues. Put a conversation in front of an audience and it is not the same conversation anymore. A rushed conversation is rarely as effective as a planned one. As an example, one friend of mine, who is bright and interesting, is a close-talking person, and I have noticed that even people who have just met her quickly begin avoiding her because her method of communication puts them off. It takes a great deal of patience to stay in the conversation and look past its form.
In reality, all of the six challenges are potentially linked, as each one can generate the others. When a conversation is rushed (Process), it may generate significant frustration (Feelings) and if that pressure appears to be preventing you from reaching your goal (Conflicting Goals), you may become angry (Feelings) or feel like you will lose face (Identity). If an old adversary (Past History) confronts you with a raised voice in a public place (Process) with a disagreement about past events (What Happened), you might become defensive/fearful/angry (Emotions) because your sense of self is being threatened (Identity).
Understanding the cause of the difficulties in conversations helps us deal with them and still have productive meaningful conversations. Once we understand the cause of the difficulty, we can choose the appropriate response to use.
Several tools are good initial responses to try (a conversational first aid kit as it were), because they are low risk approaches with a high potential to improve the challenging behaviour. These include: a) asking good sincere open-ended questions (and listening sincerely to the response); b) not reacting negatively oneself; and c) taking a break even for a few minutes to calm down and plan your response (do this analysis). Even these low risk tools however, are dependent on how they are communicated. If someone is upset and you brush them off saying “I can’t talk now.” don’t be surprised when they get more upset. Contrast that with saying, in a sincere tone:
“All right, I can see this issue has got you very upset. I do want to see if we can work through this together, and I would really appreciate it if you could give me just five minutes to lay this stuff down, and gather my thoughts because I want to devote proper attention to this with you. I just need to clear my head of this other stuff first if you don’t mind.”
Again, there are no magic bullets, so we must ask:
1. What is the difficulty?
2. Why is it happening?
3. How might I respond effectively, if that is the root cause? And finally;
4. Try the response that is most likely to help the conversation, and least likely to do further harm.
Remembering these simple steps will help make any conversation more productive and less stressful for all involved. Every conversation is different, and what works for one person may not work for another. What works at work may not work at home. If we can avoid leaping to negative assumptions about the other person and their behaviour, our ability to choose responses that might actually work is greatly improved. And if your first attempt to improve a conversation fails, don’t give up, learn from the response to what you tried, and try something else.
Paul Godin :: About Author :: EmailNEGOTIATING FUNDING: USING FACTS TO PERSUADE
First Published in the CBA Aboriginal Law Section Newsletter, January 2010
Aboriginal organizations seeking funding from third party sources can take a page from the negotiator’s book to get better results. Many aboriginal groups negotiate funding arrangements with a variety of third party sources (“Funders”) such as the federal and provincial governments, companies negotiating impact benefit agreements and other interested organizations. Funding arrangements relate to all manner of projects from resource development to education and capacity building, to social programs and more. Over the years, we have consulted with and trained several organizations on such funding negotiations, seeing both the Funder and the Applicant sides.
One key area in which organizations seeking funding can make major improvements to their ability to secure funds, is on the use of factual support (legitimacy) in proposals. While not a negotiation in the traditional sense, the process of applying for and securing funding is still a negotiation, and you need to persuade the Funder to commit their funds.
One of the most powerful tools to persuade the other side in a negotiation is the use of legitimacy (objective criteria, independent third party standards of fairness, benchmarks, comparables). People often put forward their subjective opinions or simply put positions out with no justification, a characteristic of many funding proposals that I have reviewed. Legitimacy can be thought of as the factual proof or evidence as to why a given proposal is correct or fair.
Many funding proposals make requests for very large sums while providing the Funder with only a minimal breakdown for the use of the funds, and even less support for the need for those funds. As one example, a proposal for a social welfare/medical project listed approximately $50,000 for “Office Equipment” as one line item in a proposal totaling almost a million dollars. Another line item relating to staff was “Travel Expenses” listed for approximately $100,000. No further explanation was supplied.
The Funder reviewing such a request has several options. One is to reject it as being too vague to justify such high amounts. The second is to accept the proposal and hope that the amounts are justified and will be well spent. The third is to go back to the Applicant and ask for supporting information. In a world of tight timelines, tighter resources and overworked staff, not many funding organizations can spend the time to make an Applicant do its homework, which leads them back to the first two choices. If someone else did a better job of persuasion, they will get the funding.
If you want to ensure the path to funding is as smooth as possible, make it easy for the Funder to say ‘yes’ to your proposal as opposed to others. Think like a funding agency. Provide the supporting documentation to answer a few key questions that will always be in the Funder’s mind:
1. Why is the project worth funding? What is its purpose?
From the very beginning of your proposal, state the project’s purpose in a way that clarifies your goal and communicates why that goal is worth achieving. Your purpose statement is your hook. If the Funder is not convinced your goal is a worthwhile one, they will have little interest in funding it. Did the first sentence of this article make you read further. If so, you were hooked.
2. What specifically will the money be used for?
If you are asking for more than a few thousand dollars, a diligent Funder will want some detail on what their money will buy. Provide a line item breakdown of all proposed spending with sufficient detail that the Funder can see where the money is going. Saying “Office Equipment – $50,000” is too broad.
Example:
Office Equipment
Computers (6 laptops x $1500 each)1 $6000
(4 desktops x $1000 each) $4000
Desks (4 desk sets x $500 each) $2000
Etc.
3. For each line item, why is that item necessary?
Prove to the Funder how that particular good or service is necessary to the underlying goals. Give them a valid reason for that part of the request. Why are computers needed? Why 6 instead to 2? If there is an obvious concern, like “Why do you need laptops instead of cheaper desktops?” give the Funder a rational answer.
Example:
Computers: Six laptops are required, one for each new field agent being hired (as recommended in the pilot project report). Although more expensive than a desktop unit, the nature of their work is that field agents will be spending 40-60% of their time visiting the remote communities in their field area (6-8 communities each). Based on the pilot project results in the attached report (see page 27), field agents’ ability to compile and work with the data gathered will be severely compromised without laptops. Four desktop units are required, one for each regional sub-office in ….
4. For each line item, why is that amount necessary and appropriate?
Don’t make the Funder take your word that the estimated amount is correct. Make their review easy and back it up with corroborating information in an objective form they can verify.
Example:
Attach copies of quotations for the computers from a computer supplier (ideally attach 3 competing bids); attach a photocopy of the catalogue page for the item, etc. For the travel, produce quotes from a travel company to support the cost per trip, and records of the previous year’s travel for a typical field agent to support the number of trips.
5. Are you the person/organization I can trust to manage and spend my money wisely?
Demonstrate the trustworthiness of your organization. Show the Funder that your organization is competent enough to perform the tasks required to meet the goals in a cost effective way. One way to do so is to document the credibility of your staff. Another is to document successful past projects of a similar nature.
Example:
Attach resumes of your key staff, copies of reports on past projects, reviews from other funding agencies or third party agencies of your work.
By doing a good job on organizing and submitting the funding proposal and documentation, you will benefit in three major ways. One, your proposal will be far more convincing. Two, in gathering the documentation, you will gain a greater understanding of the strengths and weaknesses of your own proposal, and you will make it stronger. Three, by impressing the Funder with the caliber of your proposal, you have already taken a giant leap towards a ‘Yes’ under question number 5 above. You are proving your ability in a very concrete way by coming to the table with answers in hand.
While there are many skills in putting together a successful funding proposal, don’t forget the power of adding legitimacy to your request. No funder wants to spend money unless they know they will be getting value. Don’t try and sell them, show them.
Paul Godin, Stitt Feld Handy Group/ADR Chambers
Paul Godin :: About Author :: EmailA mandate for training is a mandate for survival
Governments and businesses are under enormous pressure due to the financial challenges we are experiencing internationally. A besieged mentality is all too common and many organisations are responding with drastic monetary and staffing cuts. For many in Human Resources, they see their training budgets disappearing. The question arises, as to how can we keep our competitive edge while not offering training and development opportunities to staff? The answer is not complicated - we cannot.
I would argue that significant cuts in our training and development (T & D) budgets are a very short term and, in fact, short sighted reaction to the economic pressures we are facing. In fact, I suggest that a mandate for training is a mandate for survival.
As we attempt to ride out this international economic crisis, we should be focusing more and more on human resource development. How successful an organisation will be in surviving these times will depend on increasing efficiency. That will depend on how successful an organisation is at making best use of its key resource, its employees.
Enhancing, not reducing, training and development opportunities for employees is the most significant contributor to efficiency and survival. In order to achieve the competitive edge, organisations, and this includes both businesses and governments, must commit to enhancing the quality of their employees by investing in effective and relevant training programs. As the Chief Executive Officer of the Cave Hill School of Business, Dr. Jeannine Comma, stated, “The successful companies are the ones that recognise that an organisation is only as great as its people and the only true source of competitive advantage is in its human capital”.
If your T & D department budget has been cut significantly, and more significantly than other departments, chances are your organisation hasn’t fully recognised the value of training. Your work as manager of Human Resources is not done until the organisation sees training and development as an investment rather than as a cost, and recognises that its health, durability, and success depends as much or more on well developed staff than anything else.
But if your organisation needs to reduce costs, arguments should be made as to why the T & D budget should be maintained even in these challenging times. The arguments will generally focus on the need for your best resource, that is your staff, to be efficient, effective and willing and able to deal with change. There are numerous sound arguments for maintaining a healthy T & D budget, some of which are as follows.
First, with cutbacks and uncertainty, morale is low. Unlike cosmetic spending that can been seen as a waste, effective training spending indicates commitment to those who remain, and can raise morale. Staff members feel more confident that your organisation will weather a crisis if it demonstrates a longer-term perspective by maintaining training and development opportunities that will help people do their work better. Training shows that the organisation thinks there is a future, and that staff will be part of it.
Second, an effective organisation may well use downtime or shifts in resources to prepare for recovery and the longer term. Training is the way to develop people who already have valuable information and background experience in the organisation and help them into new roles, or give them the next generation of skills they will need to help the organization recover and flourish. The cost of training or retraining existing staff is far less than the cost of recruiting and training people who have no experience in your organisation, and you will be a step ahead of the competition and able to take advantage of opportunities more quickly than others.
Third, today’s successful organisations must reflect a commitment to learning if they are to retain people who remain mobile even in bad times, or those who, because of uncertainty, may be looking for other opportunities that appear more secure. Paying lip service to training instead of really committing to training damages the credibility of an organisation in other areas as well. “Stay loyal to us while we cut our commitments to you” is not a recipe for success. In addition to damaging loyalty, such behavior adds cynicism to the workplace atmosphere.
Finally, do not forget that there are ways now to deliver learning that are less costly than in the past. In-house training departments can develop intranet or Internet tools for delivery with fewer travel or logistical concerns. External consultants for periodic programs can be less expensive than maintaining a full learning department but still deliver high quality for specific skill topics. Training organisations understand the pressures and challenges that exist today; they are often prepared to make special arrangements to accommodate cost concerns, such as adjusting the length of programs, the number of instructors, the timing of payments, and so forth.
Remember that embracing the concept of continual training and development is an investment in the future of your organisation and contribution on the road to recovery. I wish you the very best in your T & D budget negotiations!
Peter Dreyer
Senior Associate
Stitt Feld Handy Group / ADR Chambers