ODR for Industrial Disputes: Summary of Cybersettle/ICDR program being piloted by GE Oil & Gas in Italy Michael McIlwrath Senior Counsel – Litigation.

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Presentation transcript:

ODR for Industrial Disputes: Summary of Cybersettle/ICDR program being piloted by GE Oil & Gas in Italy Michael McIlwrath Senior Counsel – Litigation GE Oil & Gas 29 March 2010

Dispute resolution as a Process The GE Experience

Early Dispute Resolution (EDR) at GE 1996–’97: systematic use of mediation In 1998: company-wide Early Dispute Resolution (“EDR”) program tied to GE’s Six Sigma Quality initiative Europe: In 1999, implemented EDR at GE Nuovo Pignone, Italy (now GE Oil & Gas) Immediate and lasting results: 1999-2002, 80% reduction in litigations (143 pending litigations in 1999 to approx 25-30 in 2002, and then consistent over time)

ICDR Manufacturer / Supplier Online Disputes Resolution Programme (BETA) Notes:

Problem Statement >2,000 supplier-manufacturer claims (from over 100,000 purchase orders, $6 billion/year) Most claims < $10,000 (delivery or manufacturing defects, scraps, etc.) Large volume in Italy (Italian language as means of communication) No process to resolve fairly and quickly. (Courts and traditional arbitration expensive.)

Concept: Systemic Solution Arbitration (rapid + low cost) File Case Online Negotiation Claim Settlement In Case Online Negotiation Unsuccessful Online Arbitration (rapid + low cost) Arbitral Award

History of Implementation 2001 – Concept floated internally, faced resistance from purchasing managers 2002 – ODR system proposed to Italian-based mediation institution 2006 – System developed but not activated 2007 – New provider, ICDR (international branch of AAA) together with Cybersettle History in ODR, volume claims management 2009 – System operational; Italian engineers as adjudicators for ODR 2010 – Pilot case + inclusion of ODR in purchasing terms and conditions

Supply Chain Online Protocol ICDR WebFile Pleadings and Supporting Documentation Full support for Italian language Online Negotiation Documents Only Arbitration Arbitrators are Italian engineers

Phase 1: Online Negotiation Phase 2: Online Arbitration ODR Process & Timing Case initiation via WebFile; 12 days for responses and counterclaims Phase 1: Online Negotiation On-line Negotiation – 12 days No settlement = Online Arbitration based on documents already submitted via WebFile Phase 2: Online Arbitration Award rendered within 30 days from Arbitrator appointment

Program Highlights WebFile: – claims filed completely online – all documents uploaded/downloaded online – review case progress and view multiple cases – communicate with ICDR via message center Telephone facilitation available for: – online filing – uploading supporting documents – answering questions

Program Highlights – Continued Fair – competent arbitrators (engineers) – brief reasoned award Efficient – 36-day negotiation period + 60-day arbitration period – $500 USD negotiation fee (50% each party) – additional $1,000 USD arbitration fee – administrative cost includes arbitrator fees – fees recoverable in arbitration (loser pays)