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Michael McIlwrath Senior Counsel – Litigation GE Oil & Gas 29 March 2010

ODR for Industrial Disputes: Summary of Cybersettle/ICDR program being piloted by GE Oil & Gas in Italy. Michael McIlwrath Senior Counsel – Litigation GE Oil & Gas 29 March 2010. Dispute resolution as a Process The GE Experience. Early Dispute Resolution (EDR) at GE.

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Michael McIlwrath Senior Counsel – Litigation GE Oil & Gas 29 March 2010

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  1. ODR for Industrial Disputes:Summary of Cybersettle/ICDR program being piloted by GE Oil & Gas in Italy Michael McIlwrath Senior Counsel – Litigation GE Oil & Gas 29 March 2010

  2. Dispute resolution as a ProcessThe GE Experience

  3. Early Dispute Resolution (EDR) at GE • 1996–’97: systematic use of mediation • In 1998: company-wide Early Dispute Resolution (“EDR”) program tied to GE’s Six Sigma Quality initiative • Europe: In 1999, implemented EDR at GE Nuovo Pignone, Italy (now GE Oil & Gas) • Immediate and lasting results: • 1999-2002, 80% reduction in litigations (143 pending litigations in 1999 to approx 25-30 in 2002, and then consistent over time)

  4. ICDR Manufacturer / SupplierOnline Disputes Resolution Programme (BETA)

  5. Problem Statement • >2,000 supplier-manufacturer claims (from over 100,000 purchase orders, $6 billion/year) • Most claims < $10,000 (delivery or manufacturing defects, scraps, etc.) • Large volume in Italy (Italian language as means of communication) • No process to resolve fairly and quickly. (Courts and traditional arbitration expensive.)

  6. Concept: Systemic Solution File Case OnlineNegotiation ClaimSettlement In Case OnlineNegotiation Unsuccessful Online Arbitration(rapid + low cost) ArbitralAward

  7. History of Implementation • 2001 – Concept floated internally, faced resistance from purchasing managers • 2002 – ODR system proposed to Italian-based mediation institution • 2006 – System developed but not activated • 2007 – New provider, ICDR (international branch of AAA) together with Cybersettle • History in ODR, volume claims management • 2009 – System operational; Italian engineers as adjudicators for ODR • 2010 – Pilot case + inclusion of ODR in purchasing terms and conditions

  8. Supply Chain Online Protocol • ICDR WebFile Pleadings and Supporting Documentation • Full support for Italian language • Online Negotiation • Documents Only Arbitration • Arbitrators are Italian engineers

  9. ODR Process & Timing • Case initiation via WebFile; 12 days for responses and counterclaims • Phase 1: Online Negotiation • On-line Negotiation – 12 days • No settlement = Online Arbitration based on documents already submitted via WebFile • Phase 2: Online Arbitration • Award rendered within 30 daysfrom Arbitrator appointment

  10. Program Highlights • WebFile: – claims filed completely online – all documents uploaded/downloaded online – review case progress and view multiple cases – communicate with ICDR via message center • Telephone facilitation available for: – online filing – uploading supporting documents – answering questions

  11. Program Highlights – Continued • Fair – competent arbitrators (engineers) – brief reasoned award • Efficient – 36-day negotiation period + 60-day arbitration period – $500 USD negotiation fee (50% each party) – additional $1,000 USD arbitration fee – administrative cost includes arbitrator fees – fees recoverable in arbitration (loser pays)

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