The ancient proverb dictates that necessity drives invention, but that oft-quoted phrase omits the need for a creator, a visionary with the practical drive to implement change. Paul Jebely has recently recognised this hard lesson with the creation of a specialised court of arbitration and centre for mediation, specifically designed for the global aviation industry.
“I first recognised the need for a credible specialised arbitration and mediation forum in aviation about ten years ago,” he says, “and I thought it was a no-brainer that it would naturally happen under the auspices of any number of industry bodies. But, fast forward eight years, and it hadn’t happened. Sometimes when things don't naturally happen, you end up having to do it yourself.”
Jebely’s vision is clear – the global aviation industry needs specialised arbitration. A very successful aviation lawyer, currently as a partner and Global Head of Asset Finance for Withers, Jebely began working on the creation of an aviation arbitration court and mediation centre in his spare time while funding the entire project out of his own pocket. He leaned on his substantial book of industry contacts to build an experienced Advisory Board, Rules Standing Committee and Technical Standing Committee – a group that presently numbers over 70 and includes many very highly-regarded names.
“When I began analysing the different national legal regimes supporting the numerous potential seats of arbitration, I eventually came to realize that the Dutch legal regime was already nearly perfectly suited as the basis for specialised rules and procedures specific to commercial and private aviation use cases” he explains.
Jebely thus approached the Netherlands Arbitration Institute (NAI), which was established in 1949, to be the sole administrating body for disputes referred to The Hague CAA for resolution under the arbitration and mediation rules of The Hague CAA. He quickly decided that this was the perfect home for what came to be The Hague Court of Arbitration for Aviation, which is now seated in The Hague, Netherlands.
Commenting on the official launch of The Hague CAA, Jebely, who is chairperson and founder, said: “Having observed the rise and rise of arbitration as some judicial courts became increasingly removed from or oblivious to the commercial realities of the aviation industry, it became apparent that there is need that is not being served. Aviation is a global industry that accounts more than $3.5 trillion in annual economic activity, and yet is evidently the final nearly untouched frontier of arbitration that remains. By mostly overlooking arbitration, the aviation industry had done itself a disservice, and so I resolved to bring people together to bring arbitration to aviation. It will prove challenging in
some aviation industry sectors to overcome cultural factors fuelled by inertia mixed with standardized and precedent documentation, but it nonetheless must be done. The history of aviation is punctuated by innovation and paradigms that shift slowly, then suddenly. As arbitration and specialised arbitration more specifically become woven into the fabric of the globalised economy, it is time for the framework of dispute resolution in our industry – an industry that is indeed one of the great globalizers - to evolve. The Hague CAA is an innovation that the industry needs, and the paradigm begins to shift now.”
Jebely adds: “There is much that our industry needs to learn about arbitration in particular. For example: the potential scope and relative ease of enforceability of an arbitral award across jurisdictions compared to litigation is not well understood. The fact is that almost 170 countries are party to the New York Convention, and each of them broadly agrees to enforce arbitral awards made in other contracting states subject only to limited grounds for objection. The main point here is that there is simply no such wide-ranging convention providing for the enforcement of court judgments of, say, England or the United States, around the world.”
Gerard J. Meijer, President of The Netherlands Arbitration Institute, and Member of the Board of Directors of The Hague CAA, expressed his total support in the new venture: “With our more than 70 years of experience at the Netherlands Arbitration Institute, we are very proud to be able to administer the cases under the rules of The Hague CAA. We trust that this initiative will be extremely successful and we will do anything that is necessary to contribute thereto.”
Gary F. Birnberg, Chair of The Hague CAA Advisory Board, said: “We are elevating the gold standard in specialised arbitration and mediation, benefitting from the vast collective expertise of our industry-rich boards and standing committees in doing so. Our sizable and diverse global team has worked hard to assure unquestionable quality of both subject matter and process through comprising arbitration and mediation panels of the highest calibre, together with reliance on the impeccable reputation of the Netherlands Arbitration Institute.”
The Hague CAA is a truly non-profit organisation, which has already brought together nearly 70 highly diverse aviation and arbitration attorneys, aviation executives and technical experts from around the world that have generously volunteered their spare time in their personal capacity to this initiative. One industry authority, who has been assisting Jebely from almost day one, is David Power, founder and former CEO of ORIX Aviation, who is now executive chairman of Aergo Structured Products. Power is the vice-chair of the 40 member Advisory Board and chair of 17 member Technical Standing Committee, both central features of the new organisation.
“David’s role as chair of Technical Standing Committee is mission critical,” says Jebely. “The centre for mediation in particular is grounded and focused on technical issues in aviation, and so unlike most any other arbitral institution or mediation centre that I am aware of, we have a very serious aviation Technical Standing Committee.”
Power explains that the committee brings together the very best names in the technical aviation community that are providing their input at the very top level into definitions around disputes and issues that may arise. “I'm very excited to be able to contribute in shaping the technical definitions so that people who use this forum can have one hundred percent confidence that the court is grounded in aviation fact, reality and experience,” says Power.
Many aviation disputes that reach the court room take an inordinate amount of time explaining the minutiae of aviation technical terms and issues, but the technical committee are seeking to establish a common set of definitions that will by-pass that need, enabling the court of arbitration or indeed mediation to focus on the dispute in question, bypassing those technical explanations so needed in an everyday courtroom.
“Many of the disputes that come out of our industry are technically driven and technically related,” explains Power. “The technical standing committee’s role in first instance is to define the type of disputes that may arise, put a framework around that and create definitions for the types of issues that can be defined in advance that will be readily available to the court to reach a determination based on solid principles that are universally accepted. The forum will already have been prewired to deal with probably 70% or 80% of the type of questions that arise in a dispute. The rest of that dispute will be confined to the specific facts of that circumstance. The attempt will be made to make the court a much more facilitatory place particularly in the case of mediation for aviation disputes, which can suffer greatly from a lack of understanding by the judiciary. Meaning no offense to the courts, but it's very hard for people without specific industry knowledge, to make determinations around matters that tend to be quite complex and have years of sort of colloquial understanding built into them.”
Jebely highlights the most important benefit of arbitration and mediation in the relatively small global aviation community – the need to maintain business relationships. “Having a forum where parties can try to resolve their disputes while also recognising the importance of their continuing commercial relationship before they spend hundreds of thousands of dollars on legal fees and before emotions ratchet up.”
As a totally independent and impartial, non-profit organisation, The Hague CAA is focused exclusively on enabling the fair, private, expedited, cost-effective, binding and enforceable resolution of commercial and private aircraft operating, trading, leasing and financing-related contractual disputes. While providing deep aviation expertise and market awareness The Hague CAA nonetheless performs its essential duties for the benefit of the global aviation industry totally independently and impartially, with no allegiance to any industry participant or special interest group over another.
In response to the burning question of why the court has not been aligned or developed in partnership with an existing global aviation organisation, Jebely responds that The Hague CAA needs to be a completely neutral forum that is not aligned with any existing interests: “In addition to presenting and genuinely being a completely neutral forum for specialised arbitration, it is critical to the mission of The Hague CAA that it is present genuinely be totally "non-aligned" within the industry itself. This, and no other reason, is why The Hague CAA it is in no way the product of or associated with the likes of the AWG, ISTAT or any other aviation industry interest groups who do very good work for the group and individual interests they primarily represent, nor does it lean toward lessor, airline, lender, owner, broker, MRO, insurer or in any other direction whatsoever for that matter. It simply cannot and will not.”
Jebely adds, however: “Not being involved directly should not preclude associations or individuals from endorsing something that is clearly for the betterment of the industry, but to the extent it does then suffice it to say that this would only serve to confirm that they should not be involved.”
Albeit a court in name, The Hague Court of Arbitration for Aviation is a private non-government initiative that serves the global aviation industry by providing and promoting specialised arbitration and mediation services customised for the specific dispute resolution requirements of industry participants. The Hague CAA thus provides a neutral and private forum for consensual arbitration (the private, final, binding resolution of aviation contractual disputes by impartial specialised tribunals focused on ensuring enforceability of their arbitral awards in nearly 170 countries pursuant to the New York Convention) and/or voluntary mediation (the private conciliation-focused settlement of aviation contractual disputes, especially those involving technical subject matter, by impartial specialised facilitators).
The Hague CAA will accept requests for arbitration or mediation in August. Its initial arbitration rules entail: a tribunal composition with the parties having the option to appoint qualified co-arbitrators from the aviation markets with a tribunal chair being a senior experienced arbitrator; robust interim measures; as well as an expedited procedure leading to a final and binding award withing six months from the Case Management Conference.
The initial rules are undergoing final consultative and approval processes, and will be subject to ongoing industry and arbitration community consultation with a view to yet further innovation.
Jebely foresees and hopes that In the years to come, The Hague CAA will help to shift an archaic paradigm of dispute resolution in a vital global industry in the same manner that arbitration - and specialised arbitration more particularly - have and will continue
to do so in other industries. It is further envisaged that The Hague CAA will ultimately expand its scope to also become a leading specialised arbitration and mediation forum for contractual disputes in the global aerospace sectors, from advanced air mobility to the space industry.
In addition to providing arbitration and mediation services, The Hague CAA will also provide general arbitration and mediation training and accreditation to interested aviation attorneys and other professionals and will also host an aviation conference in The Hague annually.
From the point of view of an industry that always had so much pride in innovation, Power claims aviation is “at a turning point now that the world is re-emerging from COVID, adapting and evolving. Rene Descartes said: “Divide each difficulty into as many parts as is feasible and necessary to resolve it”. Paul has done an awesome job – follow the innovator, it’s free.”