Archive for the ‘ADR’ Category

The Death of Alien torts ?

Monday, November 1st, 2010

  By Charles Wanguhu

The Alien Tort Claims Act was adopted in 1789 as part of the original Judiciary Act. The Alien Tort Claims Act (ATCA) allows foreign victims of human rights abuses to sue perpetrators in United States courts. In a recent development in Kiobel v. Royal Dutch Shell, the the 2nd U.S. Circuit Court of Appeals rejected outright the theory that corporations can be held liable in the United States under the Alien Tort Statute for violations of international law in foreign countries.

The doctrine was essential in holding corporation to account and one of the judges in the case Pierre Leval indicated in his opinion  that the judgment :

deals a substantial blow to international law and its undertaking to protect fundamental human rights.”

In a case in the 9th U.S. Circuit Court of Appeals  Sarei v. Rio Tinto the court appeared to sidestep the more complex legal issues by suggesting that the parties in the ten-year-old lawsuit mediate their dispute. 

The ramifications of the judgment in the 2nd circuit are yet to be felt as its decision directly conflicts with previous jurisprudence allowing claims against corporations under the Alien Tort Statute.


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The US credit card business – Credit CARD Act 2009

Monday, February 22nd, 2010

By: Carsten Lexa

On August 13th, 2009, I wrote an article here on Commercial Law International about the “secrets” of the US credit card business and about how the existing rules make it hard for customers to pay off their credit card debt. On November 3rd, 2009, I wrote in a the second article about a Goverment proposal regarding new legislation for the credit card business.

Now, coming into effect on February 22, 2010, the Credit CARD Act will apply to credit card contracts between banks and consumers. This Act adresses many of the criticisms consumers have had about credit cards and the high amount of credit card fees charged each year. Interestingly, the Act also applies to contracts made in the past. Let´s have a look at the most interesting new rules.

1. The Act requires card companies to give cardholders 45 days notice of any interest rate increases. In the past, interest rates could be changed within 15 days notice in most cases.

2. The Act gives cardholders the right to cancel their card and pay off their existing balance at the existing interest rate and repayment schedule if they get hit with an interest rate hike. Cardholders also have 3 billing cycles after the rate increase to say no to the new terms.

3. Beginning in February, the interest rate on existing balances can only be raised if a cardholder is more than 60 days late on payment. After a rate increase, if cardholders pay on time for six consecutive months, their interests rates must have returned to the rate it was before the rate increase.

4. The Act also adresses the problem of “payments above the minimum”. In the past, cardholders send in a payment for more than the minimum due – let´s say the minimum was $ 200,00 and they send in $ 300,00 and let´s also assume that they had two balances at different interest rates. The extra amount of $ 100,00, that was send in, would go to the card with the lowest interest rate.

The new law puts an end to that. According to the Credit CARD Act, the additional amount paid will go towards the higher-rated balance.

5. A long time ago, cardholders had 30 days from which to make their next payment. Over time, that grace period was reduced to 25 or even fewer days. The Credit CARD Act states that the grace period will be at least 21 days long from the date the credit card bill is delivered.

6. The Credit CARD Act finally improves the information the cardholder receives regarding the repayment of the balance. Let´s be true about that: Most cardholders have problems calculating the time they need to repay their credit card debt, if only the minimum is paid.

The Act gives cardholders mandatory information regarding repayment: It demands that creditors print on their statements if the debtor makes the minimum payment only (with no further increases in debt) how long it would take to retire the debt and how much the debtor would pay in interest combined. It also requires creditors to print on their statements the payment it would take thecardholder to retire the debt in three years, how much the debtor would pay in interest combined and the difference than if the debtor was to pay only the minimum payment.

This new Credit CARD Act is surely not the answer to everything regarding credit card debt and debt repayment. But it should relieve the US consumers of some of their burdens regarding credit card debt – and every bit helps.

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Litigation…..A New Investment Vehicle?

Wednesday, July 22nd, 2009

By: Ainsley Brown

686544_uk_coinage_3It is unquestionable that litigation is big business for lawyers, especially in complex commercial matters.

The billable hours that can be racked up can be astonishing – and unlike popular belief is not largely due to an over inflation in the billing procedures of lawyers, though no doubt this can be an issue for some at times but is rather the result of the litigation process itself (pleadings, motions, discovery, delaying tactics, etc). The ever increasing costs of litigation have forced many a meretricious claim not to be perused simply out of economics – a wholly unacceptable state of affairs.

What if there was a way to externally fund your claim, just like how you would find an investor to fund the start-up or expansion of a business?

Enter three enterprising UK lawyers and you get not only funding for litigation but a potential investment opportunity as well. George Brown, John Byrne and Neil Purslow know a good opportunity when they see one. This is why they launched Therium, a third party litigation fund which intends to invest between £100,000 and £5 million per case with an expected return of 250% on its investment. The fund will be commercial litigation and arbitration focused.

Moreover, Therium intends to raise £50 million by going into the capital markets and with a potential 250% rate of return it should be very attractive to many investors, institutional and individual alike. Given that London is a leading centre for the settlement of commercial disputes, Therium is posed to reshape the business dispute resolution scene in England.

However, while the concept of third party litigation is no longer a crime or a tort in England and Wales since 1967 it is still frowned upon in many circles. It is true that maintenance, the intermeddling of third parties that have no interest in the outcome of a case and champerty, the maintenance of a case with a view for profit, might have been abolished long ago but their influence on the English legal profession remains very strong.

Times they are however changing; the establishment of Therium is proof positive of this.


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Shell & The elephant in the room

Tuesday, June 9th, 2009

By Charles Wanguhu

A report by the Economist Intelligence Unit indicates that protecting a firm’s reputation is the most important and difficult task facing corporations. With the development of global media and communication channels, managing reputational damage is seen as crucial with events undertaken in even the remotest areas affecting the international brand of a corporation.

For Shell the stark reality of reputational damage is all too clear. After years and years of denial and expressing its innocence of the Ogoni affair (it still maintains its innocence), Shell has decided to settle a case brought against it out of court for a sum of 15.5 Million US $. The lawsuit had accused the company of colluding with Nigeria’s former military regime over the execution of Ken Saro-Wiwa and other peaceful anti-oil protesters.

Like Nike before it Shell remains in many minds as the poster child of a lack of corporate responsibility especially in big multinationals. The Saro Wiwa case is largely sited not only in commercial classrooms but across NGO conferences worldwide. Multinationals are viewed as bulldozing their way with the help of corrupt and dictatorial regimes to fulfill their interests with complete disregard to vulnerable communities.

The perception of Shell as the irresponsible corporate persists despite the fact that it has invested millions in engaging communities in areas that it works in and has increasingly taken on human rights in its business models and stakeholder engagement strategies.

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In response to the case filed Malcolm Brinded, Shell’s executive director for exploration and production, was quoted,

“While we were prepared to go to court to clear our name, we believe the right way forward is to focus on the future for Ogoni people, which is important for peace and stability in the region.”

The settlement could be seen as a magnanimous move by Shell in some quarters with some already hailing the move as groundbreaking in terms of holding corporations accountable. However when looked at broadly the settlement will be seen as a coup for Shells PR team: instead of having weeks, months or even years of a contested trial where Shells actions or lack of thereof would be once again stirred up in everyone’s mind globally, a quick settlement offers a quick escape route.

All in all $15.5Million may well be considered a bargain when factoring in legal costs, reputation risks and lost revenue. There could well have been some champagne popped at Shell HQs but am sure downstairs in the legal department the wait is on with baited breath to see whether the floodgates have been open.


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New Flat Rate ADR Service Launched In Toronto

Thursday, March 5th, 2009

By: Ainsley Brown

For a $6, 000 flat rate companies and individuals that agree can now have their disputes resolved within a 2 and half month – now that is both cheap and speedy.

The new services launched by ADR Chambers Inc. looks to resolve business disputes an expeditious and cost-effective manner. By agreeing to an expedited arbitration process disputants hope to avoid paying the money or spending the time battling it out in the courts. This service is, therefore ideal for disputes in the range of $150, 000 – $250,000, where legal fees can consume a large portion of any court award, says Mr. Allen Stitt, president of ADR. Mr. Stitt also expects that the service to be very popular between companies who wish to maintain their existing relationship and keep their dispute private by avoiding the public specter of an open court.

The service basically works like this: the parties agree to bring their dispute to ADR, where their case will be heard by former judges or senior lawyers – adding gravitas to any ruling. The parties are responsible for paying their own lawyers and agree to follow strict rules as to timelines and volume of materials filed. The parties then submit a written brief and present their case orally before the arbitrator. The arbitrator then makes his/her ruling and must give reasons. There is no right of appeal; however, the parties do have the right to turn to the courts if they believe that they have been denied natural justice.

Disputes are therefore resolved in an expeditious and cost-effective manner.


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