Insight

How to Advise Clients in International Arbitration and Mediation

Karl Pörnbacher discusses how his firm stays at the forefront of advising clients.

An Interview With Hogan Lovells
Best Lawyers

Best Lawyers

January 27, 2020 08:00 AM

This interview was conducted as part of the 2020 Edition of The Best Lawyers in Germany “Law Firm of the Year” award recognitions. Our partner Handelsblatt, also published these awards on June 27, 2019, online and in print in their June 2019 edition.

From Hogan Lovells—Germany's 2020 “Law Firm of the Year” in Arbitration and Mediation—Karl Pörnbacher joins Phillip Greer, CEO of Best Lawyers, to discuss how his firm stays at the forefront of advising clients.

In your experience, why have you found arbitration and mediation to be preferable, and is that almost always the case?

Karl Pörnbacher: Generally, I see arbitration more as an alternative, as one of the potential possibilities for conflict resolution. But sometimes it is indeed a better alternative compared to litigation because you can easily use it for trans-border, international disputes. You can enforce the resulting awards easier than you could enforce a court judgment. You can use English as the language of the proceeding. And the flexibility of arbitration allows you to find a compromise between different legal systems and rules.

Can you describe what the process is like when advising clients to go down the path of arbitration?

KP: Clients live in an increasingly global environment and even medium-size or small size companies do business not only across Europe but globally. If you're in the car manufacturing industry, if you're an automotive supplier, you may need to produce in China, or you import from China even if you're a middle-sized or small business. Therefore, everybody needs to think about dispute resolution in international business relations. That has changed drastically. Some 10 years ago, we wouldn't have had that discussion. Now, let's say for somebody who isn’t experienced with respect to national arbitration, then international arbitration might be a scary proposition. So clients need to be educated about their options and what would work best in their situation, be it arbitration or litigation. Arbitration, of course, is a matter of agreement, so it needs to be implemented in the contract. Once a dispute has arisen, the parties could still agree on arbitration but less likely.

In any event, before we go down the road of formal proceedings, be it arbitration or litigation, we try to find an alternative way to resolve the dispute, such as negotiations or mediation. Make no mistake—arbitration is no fun for the client. It requires a firm investment, not only in terms of money but more importantly in terms of internal manpower. These internal costs and efforts are often underestimated and rarely compensated. A well-organized mediation can not only help get rid of the dispute and save these costs but also salvage the business relationship. It also allows the parties to focus on business issues without having to take legal positions.

If a quick commercial solution is not possible, then we switch to the arbitration mode. A series of strategic decision needs to be taken. Efficiency is key. To that end, we sit down with the client to understand the strengths and weaknesses of the case. The client and counsel put together a joint team and come up with a budget. Most importantly, the client and counsel together have to determine what the ultimate goals are. Based on that, we devise a game plan and implement it by focusing on the most important issues. That may include identifying appropriate arbitrators, experts, and witnesses. Another issue is whether all documentary evidence is available or if document disclosure from the other side is needed. Interim relief, sometimes sought from the courts, could be another component.

What are your thoughts on the practice of forced arbitration that some employers have instituted? We're seeing this is a hot topic in the U.S. right now. How much is this affecting or prominent in Germany?

KP: I think that is more a U.S. topic. I know that my firm has been successful in a recent case in the United States. In continental Europe, and especially in Germany, we sometimes discuss arbitration clauses for management members, and some of them do have arbitration clauses in their employment contracts, but we rarely see them in contracts with regular employees. Is that good or bad? The European or the German approach to arbitration would be that arbitration is something in the way we do it here in Germany. I know that employment arbitration is done differently. Our arbitration is rather perfect for business—for the B to B disputes and is less adequate for employment arbitration. I think if we were to introduce that on a broader basis, we would have to adapt the process to achieve acceptance.

You have significant experience in the energy industry. What are the most common types of cases that you've been encountering lately in that field?

KP: In the last years we have seen many disputes in the oil and gas industry as well as relating to electricity. Many long-term supply contracts had to be adapted in the aftermath of the financial crisis. Oil and gas prices have changed drastically as did storage costs. So often, the underlying mechanism got out of balance or triggered price-reopener thresholds—at least in the opinion of one of the parties.

We also do quite a lot of work in central Europe where disputes under production-sharing agreements have arisen. This is very exciting work and challenging under every aspect. Given what is at stake, the damages can quickly reach billions of dollars.

Another big area is renewable energy. Germany has seen some huge projects in the North Sea, in particular, wind farms. During the first few projects, many of those involved were lacking the required experience, which led to considerable challenges. Many parties struggled with keeping deadlines and commitments and now face the corresponding damages claims—often hundreds of millions of Euros. Some of these cases are being heard in court since the underlying contracts—for political reasons—have no arbitration clauses.

This brings us back to what we said in the beginning: Ideally, these cases would be dealt with in arbitration by arbitrators who have the required expertise. To have a state court judge—who lacks such experience and who, in addition, has his or her normal caseload—work through briefs that are sometimes hundreds of pages long, is nor fair to him or her or to the parties.

This interview has been edited for length and clarity.

Related Articles

It’s a Gas, Gas, Gas


by Best Lawyers

Michael Polkinghorne discusses why arbitration or mediation is a better option.

An Interview With White & Case LLP

Announcing The Best Lawyers in Germany™ 2023


by Best Lawyers

The results include an elite field of top lawyers and firms from Germany.

Black, red and yellow stripes

Destiny Fulfilled


by Sara Collin

Was Angela Reddock-Wright destined to become a lawyer? It sure seems that way. Yet her path was circuitous. This accomplished employment attorney, turned mediator, arbitrator and ADR specialist nonpareil discusses her career, the role of attorneys in society, the new world of post-pandemic work and why new Supreme Court Justice Ketanji Brown Jackson represents the future.

Interview with Lawyer Angela Reddock-Wright

Announcing the 2022 Best Lawyers™ in Germany


by Best Lawyers

The results include an elite field of top lawyers and firms, including our inaugural Best Lawyers: Ones to Watch recipients.

Announcing the 2022 Best Lawyers™ in Germany

The Company They Keep


by Best Lawyers

Thomas Richter discusses the idea of corporate criminal liability.

An Interview With HammPartner

Easy Being Green


by Best Lawyers

Markus Deutsch discusses the impact of climate change on the firm and its clients.

An Interview With Dolde Mayen & Partner

Impact of Climate Change on Real Estate Law


by Best Lawyers

Dr. Christian Schede discusses rent in large cities, the effect of Airbnb, and more.

An Interview With Greenberg Traurig

This German Firm Protects Their Clients in the Face of Emerging Technologies


by Best Lawyers

Johannes Heselberger discusses theft of trade secrets, the pharmaceutical industry, and fake goods.

An Interview With Bardehle Pagenberg

The Future of German Technology


by Best Lawyers

How Germany's Law Firm of the Year in Information Technology is leading the way.

Isabell Conrad Schneider Schiffer Weihermulle

Hengeler Mueller on How German Firms Can Compete in the Global M&A Arena


by Best Lawyers

Germany's 2020 “Law Firm of the Year” honoree in Mergers and Acquisitions Law

An Interview With Hengeler Mueller

An Interview With Gleiss Lutz


by Best Lawyers

Germany's 2020 “Law Firm of the Year” in Labor and Employment Law

An Interview With Gleiss Lutz

An Interview With Latham & Watkins


by Best Lawyers

Germany's 2020 “Law Firm of the Year” honoree in Banking and Finance Law

An Interview With Latham & Watkins

An Interview With Egorov Puginsky Afanasiev & Partners


by Best Lawyers

Russia's 2020 "Law Firm of the Year" in Arbitration & Mediation Law

An Interview With Egorov Puginsky Afanasiev

A Startup Accelerator Program Sets Cuatrecasas Apart


by Best Lawyers

Miguel de Almada and Frederico Bettencourt Ferreira from the Portuguese firm discuss their 2019 "Law Firm of the Year" award for Litigation and Arbitration.

Cuatrecasas "Law Firm of the Year"

An Interview With Rainer Krause of Hengeler Mueller, 2019 “Law Firm of the Year” Award Recipient for Corporate Law in Germany


by Best Lawyers

Rainer Krause discusses the unique training approaches that make Hengeler Mueller one of Germany's top firms.

Hengeler Mueller “Law Firm of the Year” Q&A

Family Matters


by Kathryn Graves

Early case management and alternative dispute resolutions seek to simplify some separations in Minnesota.

Family Matters

Trending Articles

Presenting The Best Lawyers in Australia™ 2025


by Best Lawyers

Best Lawyers is proud to present The Best Lawyers in Australia for 2025, marking the 17th consecutive year of Best Lawyers awards in Australia.

Australia flag over outline of country

Legal Distinction on Display: 15th Edition of The Best Lawyers in France™


by Best Lawyers

The industry’s best lawyers and firms working in France are revealed in the newly released, comprehensive the 15th Edition of The Best Lawyers in France™.

French flag in front of country's outline

How To Find A Pro Bono Lawyer


by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

How Palworld Is Testing the Limits of Nintendo’s Legal Power


by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

Announcing The Best Lawyers in New Zealand™ 2025 Awards


by Best Lawyers

Best Lawyers is announcing the 16th edition of The Best Lawyers in New Zealand for 2025, including individual Best Lawyers and "Lawyer of the Year" awards.

New Zealand flag over image of country outline

Announcing the 13th Edition of Best Lawyers Rankings in the United Kingdom


by Best Lawyers

Best Lawyers is proud to announce the newest edition of legal rankings in the United Kingdom, marking the 13th consecutive edition of awards in the country.

British flag in front of country's outline

Announcing The Best Lawyers in Japan™ 2025


by Best Lawyers

For a milestone 15th edition, Best Lawyers is proud to announce The Best Lawyers in Japan.

Japan flag over outline of country

The Best Lawyers in Singapore™ 2025 Edition


by Best Lawyers

For 2025, Best Lawyers presents the most esteemed awards for lawyers and law firms in Singapore.

Singapore flag over outline of country

Announcing the 16th Edition of the Best Lawyers in Germany Rankings


by Best Lawyers

Best Lawyers announces the 16th edition of The Best Lawyers in Germany™, featuring a unique set of rankings that highlights Germany's top legal talent.

German flag in front of country's outline

How Much Is a Lawyer Consultation Fee?


by Best Lawyers

Best Lawyers breaks down the key differences between consultation and retainer fees when hiring an attorney, a crucial first step in the legal process.

Client consulting with lawyer wearing a suit

Celebrating Excellence in Law: 11th Edition of Best Lawyers in Italy™


by Best Lawyers

Best Lawyers announces the 11th edition of The Best Lawyers in Italy™, which features an elite list of awards showcasing Italy's current legal talent.

Italian flag in front of country's outline

Presenting the 2024 Best Lawyers Employment and Workers’ Compensation Legal Guide


by Best Lawyers

The 2024 Best Lawyers Employment and Workers' Compensation Legal Guide provides exclusive access to all Best Lawyers awards in related practice areas. Read below and explore the legal guide.

Illustration of several men and women in shades of orange and teal

Things to Do Before a Car Accident Happens to You


by Ellie Shaffer

In a car accident, certain things are beyond the point of no return, while some are well within an individual's control. Here's how to stay legally prepared.

Car dashcam recording street ahead

Combating Nuclear Verdicts: Empirically Supported Strategies to Deflate the Effects of Anchoring Bias


by Sloan L. Abernathy

Sometimes a verdict can be the difference between amicability and nuclear level developments. But what is anchoring bias and how can strategy combat this?

Lawyer speaking in courtroom with crowd and judge in the foreground

The Push and Pitfalls of New York’s Attempt to Expand Wrongful Death Recovery


by Elizabeth M. Midgley and V. Christopher Potenza

The New York State Legislature recently went about updating certain wrongful death provisions and how they can be carried out in the future. Here's the latest.

Red tape blocking off a section of street

Attacked From All Sides: What Is Happening in the World of Restrictive Covenants?


by Christine Bestor Townsend

One employment lawyer explains how companies can navigate challenges of federal and state governmental scrutiny on restrictive covenant agreements.

Illustration of two men pulling on string with blue door between them