Ruggero Rubino-Sammartano of LawFed BRSA takes part in Negotiating Effective Contracts & Dealing with Disputes

QUESTION ONE – What is your best practice approach when advising General Counsel, to ensure dispute resolution clauses are to their real advantage and do not obstruct enforcement proceedings?

Discussing and understanding the needs and the targets of the client is key. Confidentiality, speed, costs, final decisions, win-win solutions, issues of principle, multi-party disputes, are the main topics to address with the client, in order to identify which dispute resolution mechanism to select. Clarifying what comes next is fundamental to reduce the risk of unpredictability.

Once the priorities have been identified, there is still a long way to go. You need to check them in light of the various interests at stake (business, finance, legal, shareholders). There is rarely a way forward that does not have drawbacks, and the interaction between priorities may have a significant impact on the eligible solution. Planning and making strategy may have a significant impact on the transaction. If a risk of dispute exists, it has to be properly assessed and addressed.

What fundamentally drives the decision, in my view, is enforceability. If it does not lead to a ‘product’ that may properly be enforced, then it may be a waste of time and money. If the goal of a dispute resolution clause is to solve a problem, let us make it possible.

Do not be tempted to draft the dispute resolution clause in a way that it makes it impossible for the other party to accept it. This can lead to ‘a dispute within a dispute’ with all the related disadvantages of such a scenario.

The simpler the clause, the better. This does not mean that it must be short, but it is preferable to avoid complicated language that can create objections from the opposite party.

Francis Bacon said power is knowledge. You must be sure that the decision makers among your clients know the terms of the dispute. Make sure that the dispute is a well-reasoned conclusion for the client and not a mistake.

Counsel, in spite of their talents, cannot always solve all the issues, since they are often too involved in the dispute. The answer is to find someone else who is technically and psychologically able to help you to find acceptable solutions for both parties (mediation).

If you cannot find a mutually acceptable common ground, then be ready to fight. Be careful in choosing the battlefield though (arbitration/court proceedings).

QUESTION TWO – Are there any particular rules around funding litigation in your jurisdiction that General Counsel should be aware of?

There are no specific rules on this in Italy. However, the lack of good faith on one side and abuse of law on the other might be considered as the boundaries of third-party funding.

Conflict of interest is the main concern. Funding a suit just to obtain confidential information, or to undermine a competitor may be against the system and as such may be subject to hurdles.

QUESTION THREE – What techniques are typically used by international counterparties in your experience when attempting to gain the initiative during a dispute? How important are civil procedural rules?

In chess, each move, if well played, is the outcome of a strategy. The same applies to dispute proceedings.

Getting an interim order or determination, delaying tactics, joining third parties, attempts to replace the deciding body, focusing on collateral arguments. There are all tools which impact on a dispute. To stay ahead of a dispute, you do not need to be a football manager to apply ‘the best defence is a good offence’ golden rule.

I was recently involved in a significant dispute on behalf of an Italian State-owned entity, facing an unfounded claim related to intellectual property (IP) rights, that was threatened by a US company. Instead of waiting to be served a writ to appear before the US Court, my firm advised the client to immediately institute proceedings against the US company before the Italian Courts, seeking a negative declaratory judgment. After we had served the writ of summons in the US, the opposite party realised that it had lost the advantage of the initiative and we were able to get rid of the claim quickly. This allowed us to win the fight efficiently. The client enjoyed a positive result without incurring significant legal fees that would have deprived the success of its sweet taste.

Rules are made to protect the members of the community. Knowing them allows you to be in control of the situation. Recently one of the most influential Italian Justices of recent years told me that judges are motivated to be defenders of the judicial system, even more than to be fair vis-à-vis the parties. You do not have to fear the rules, but use them to your client’s advantage.

This is the art of the process.

TOP TIPS FOR: Successful negotiations

Study the screenplay and its actors

Check where the counterparty comes from and where it is heading to.

Listen to the soundtrack

Pay attention to how negotiations are conducted.

Confess to yourself

Know your final aim and the viable options available to you.

Have a vision

Understand what the transaction really means and its impact on a larger scale.

Think outside the box

The shortest path is not always a straight line. Look for alternatives for your side, as well as for the opposite side.