JAMS clauses in entertainment sector foreign-related contracts

By Zhao Yunyun, Merits & Tree Law Offices
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Judicial Arbitration and Mediation Services Inc (JAMS) is a dispute resolution company founded in 1979, as proposed by Judge Warren Knight, which offers diversified dispute resolution including mediation, arbitration, neutral analysis and evaluation, corporate legal ADR (alternative dispute resolution) programmes and online dispute resolution. JAMS is headquartered in the US and has 28 dispute resolution centres around the world.

dispute resolution
Zhao Yunyun
Partner
Merits & Tree Law Offices

In the entertainment sector, it is common for the dispute resolution clauses of JAMS arbitration to be enacted in foreign-related contracts. During negotiations, some Chinese clients directly accept the JAMS arbitration clause proposed by the foreign party, as they consider their status in commercial negotiations or are accustomed to focusing on the terms of the transaction.

The author doesn’t believe that the JAMS arbitration clauses are the most appropriate method of dispute resolution for every contract, or every Chinese party to the contract. Before accepting the clauses, it is necessary to conduct research and analysis on the JAMS clause. In order to help clients and related industry personnel, this article introduce JAMS arbitration clauses and the factors worth pondering when selecting them.

Examples of JAMS clauses are:

“Dispute resolution. In exchange for the benefits of the speedy, economical and impartial dispute resolution of arbitration, the parties, with the advice and consent of their selected counsel, choose to waive their right to resolution of their disputes in a court of law by judge or jury, and instead elect to treat their disputes, if any, pursuant to the Federal Arbitration Act and/or California Civil Procedure Code; and

“The parties agree that any controversy, dispute or claim (dispute) arising out of or relating to this agreement will be settled by a confidential, final and binding arbitration in Los Angeles, California administered by JAMS pursuant to the JAMS Comprehensive Arbitration Rules and Procedures (Comprehensive Rules) then in effect. The obligation to arbitration survives the termination of this agreement.”

Entertainment and sports are very important sectors in the scope of JAMS services. The “neutral third persons” on the books of JAMS are generally former senior judges, former entertainment lawyers, and members of industry associations. The main sectors related to Chinese clients include:

  1. Film co-production: including joint investment agreements; finance, copyright chain/ownership chain; labour agreements (playwright, director, actors); production agreements, distribution agreements and intellectual property matters related to the above-mentioned issues.
  2. Music: labour agreement (composing, lyrics, singing, etc.); producer agreement, synchronization rights, and music industry-related negotiations on intellectual property rights.
  3. New media: protocols such as digital text, images and videos based on the internet.
  4. Multimedia: including software licence agreements and production agreements on video game development, etc.
  5. Sports law: including sports contracts, broadcasting rights, sports safety and related intellectual property rights, as well as labour, anti-monopoly, drug testing and infringement, and other legal fields, as well as issues such as defamation and privacy.
  6. Visual art design: including the consignment of art works, art management, industrial design, and the protection of graphic design.

The following factors should be considered before choosing whether the JAMS clause is applicable to the contract.

What are the favourable locations for us. In the entertainment and sports contracts, it is necessary to consider, “when a dispute arises, which geographical location is beneficial to the parties to resolve the dispute through arbitration as soon as possible”.

Taking film co-production as an example, JAMS is not a good choice for Chinese investors participating in foreign-led film investment, whereas the China International Economic and Trade Arbitration Commission (CIETAC) or the Beijing Arbitration Commission (BAC) and other arbitration institutions are close to mainland China and have frequent exchanges, including the Hong Kong International Arbitration Centre (HKIAC) and the Singapore International Arbitration Centre (SIAC) are the most favourable forums for Chinese parties.

Our understanding of the culture, rules and governing laws of arbitration institutions. Different arbitration institutions have different cultures and rules, and jurisdiction laws in different regions vary greatly. The author recommends that Chinese clients choose the arbitration institution and the applicable law they are more familiar with. If the client has limited access to international co-operation or overseas lawyers, it’s better to consider using domestic arbitration institutions.

The convenience of temporary measures. For Chinese clients, it is extremely important whether the other party can apply for preservation of their property through the arbitration process at the time of the dispute, whether they can apply for the preservation of the other party’s property through the arbitration process, and whether the property preservation can be truly enforced. However, this factor is quite often ignored when selecting an arbitration institution in the early stages.

Remedies to and enforceability of the effective ruling. Arbitration applies the system of “first award being the final”. The quality of arbitration is closely related to the culture of the arbitration institution and the professional quality of the arbitrator. If an improper arbitration institution was chosen, the parties will bear a lot of risk. Therefore, Chinese clients need to weigh the choices of litigation versus arbitration, and domestic versus overseas arbitration institutions. In addition, after the ruling is made, the winning party needs to take into account the enforceability of the court ruling.

CONCLUSION

In the fields of entertainment and sports, when JAMS arbitration clauses are proposed by foreign parties, Chinese clients should first understand the rules thoroughly and take into account the risks that may arise in their co-operation to comprehensively judge whether to accept the clauses.

Zhao Yunyun is a partner at Merits & Tree Law Offices

dispute resolution

Merits & Tree Law Offices
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