For the past two years, Lawrence Newman has chaired a Working Group at the CPR Institute studying determination of damages in arbitration, and he advises that the group’s end product, a Protocol on Determination of Damages in Arbitration, has now been released. Its full text is linked below.
Typically, this CPR Working Group is an elite selection of the great and the good, focusing on a timely topic in a definitive manner. Mr. Newman explains:
Too often damages are not dealt with early enough in arbitral proceedings, with the presentation of damages evidence left until near the end of the case. In such situations, the damages evidence that is presented may be based on theories that have not been previously articulated by the parties presenting them. Moreover, the presentation of damages evidence has frequently been left to accounting, financial and econometric experts whose presentations often fail to communicate with clarity to the arbitrators.
The Damages Protocol addresses these difficulties in two ways. First, it prescribes that arbitrators address, in or about their initial conference with the parties, the subject of damages, having the parties articulate their theories of compensation and their defenses, including mitigation of damages. Addressing these matters early in the proceeding, instead of leaving them in the background for presentation at later stages, enables the arbitrators to have a greater understanding of the relevance of evidence presented to them and may enable both parties and arbitrators to understand better the legal and factual aspects of the dispute.
Second, the Protocol sets out prescriptions for the presentation by experts of their damage calculations, requiring that they make their presentations in a way that permits the arbitrators to understand not only the results, but also the methodology by which the experts reached their conclusions and how different assumptions may alter the calculations.
The work is solid and the recommendations have been endorsed by some of the most insightful practitioners in the field. We hope readers will find the Protocol of value.