International Arbitration Confirmed As Dominant Form Of Global Dispute Resolution
London and Paris lead the way as the most popular venues, with Asian cities closing the gap.
International arbitration, once a second choice to litigation for private dispute resolution, is now conclusively the most preferred form of dispute resolution for cross-border disputes. In a new study published today by Queen Mary University of London (QMUL), in partnership with global law firm White & Case, 90% of the 763 respondents surveyed prefer international arbitration to resolve cross-border disputes, a finding which has increased significantly from QMUL’s first international arbitration survey in 2006, where the figure was 73%. Parties now embrace international arbitration thanks to the greater enforceability of arbitral awards, the ability to avoid specific legal systems yet choose arbitrators, and the inherent flexibility of the process, among other benefits.
London and Paris continue to be the preferred venues for international arbitration, ranked by respondents as the two most used seats over the past five years (45% and 37%, respectively) and the two most preferred seats (47% and 38%). However, the study shows that Hong Kong and Singapore are gaining momentum, coming in third and fourth. Singapore is perceived to be the most improved seat for international arbitration over the past five years, with Hong Kong following closely behind.
Paul Friedland, Partner and Head of the International Arbitration Practice Group at White & Case LLP said: “London and Paris remain the most popular seats for international arbitration because of their enduring reputation as arbitration-friendly jurisdictions with high quality legal infrastructure. However, as this year’s study shows, Singapore and Hong Kong are closing the gap. Both seats have made significant investments in support of international arbitration in recent years, which have made them increasingly attractive locations for users.”
When respondents were asked to choose their three preferred institutions, just over two-thirds (68%) included the International Chamber of Commerce (ICC) in their answer, and more than one-third (37%) included the London Court of International Arbitration (LCIA), mirroring the results from the 2010 International Arbitration Survey. The Hong Kong International Arbitration Centre (HKIAC) and the Singapore International Arbitration Centre (SIAC) came in third and fourth (28% and 21%, respectively). The Survey revealed that institutions are primarily chosen due to their high level of administration, neutrality/internationalism and ability to administer arbitrations worldwide.
A call for more regulation
A hot topic among users of international arbitration is the extent to which it requires greater regulation. While 70% of respondents felt that there is an adequate level of regulation in international arbitration in general, a clear majority believed that more ‘micro-regulation’ is needed when it comes to third party funding (71%), tribunal secretaries (68%) and the conduct of arbitrators (55%).
Respondents believed that the most effective way to regulate third party funding is through guidelines, such as those issued by the International Bar Association. A majority of respondents also thought it should be mandatory for claimants to disclose the use of third party funding (76%) and the identity of the funder (63%), but only 27% thought that the full terms of the third party funding arrangement should be disclosed.
The scope of the role of tribunal secretaries was something respondents expressed concern over, with an overwhelming majority showing preference for tribunal secretaries to undertake only those tasks which are neither substantive nor related to the merits of the dispute. 70% of respondents thought the most effective way to regulate tribunal secretaries would be through arbitral institutions.
Professor Loukas Mistelis, Director of QMUL’s School of International Arbitration, commented: “While arbitration is the most preferred method of dispute resolution, this year’s research shows that the global arbitration community increasingly supports greater micro-regulation for many of the specific parties involved. At the same time the survey shows that respondents appreciate the arbitration laws and rules adopted over the last years hence considering further macro-regulation unnecessary. ”
Room for improvement?
To reduce the time and cost associated with international arbitration, 92% of respondents favoured inclusion of simplified procedures in institutional rules for claims under a certain value. A requirement that “tribunals commit to and notify parties of a schedule for deliberations and delivery of final award” was particularly welcomed.
The phenomenon of “due process paranoia” was also raised as one likely cause of increased cost and delay. Many felt that the risk of a successful challenge to an arbitral award was insufficient to justify arbitrators’ overly cautious behaviour. As such, respondents felt that arbitrators should be more willing to manage proceedings decisively.
Some 93% of respondents favoured the inclusion of emergency arbitrator provisions in institutional rules. This is despite the fact that nearly half (46%) would currently elect to have recourse to domestic courts if in need of urgent relief before the constitution of the tribunal, whereas only 29% would opt for an emergency arbitrator. Users thus prefer to have a wide range of options available to them, regardless of how often they may elect to use them.
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About the Survey
The research for this study was conducted from February to July 2015 by the School of International Arbitration, Queen Mary, University of London. The research was led by Professor Loukas Mistelis
and Mr Rutger Metsch and was conducted in two phases: the first quantitative and the second qualitative. Phase one involved a questionnaire of 80 questions which was completed by 763 respondents between March and June 2015. The respondent group included academics, arbitral institutions, arbitrators, expert witnesses, in-house counsel, private practitioners, judges, third party funders, mediators and government officials. Phase two included 105 face-to-face or telephone interviews, ranging in duration from 15 minutes to 2 hours, which were conducted between April and July 2015. Interviewees were drawn from a diverse group based on seniority, gender and experience in international arbitration.
About White & Case
White & Case is a leading global law firm with lawyers in 39 offices in 26 countries. Among the first US-based law firms to establish a truly global presence, we provide counsel and representation in virtually every area of law that affects cross-border business. Our clients value both the breadth of our global footprint and the depth of our US, English and local law capabilities. Our International Arbitration Practice is widely recognised as pre-eminent in its field, with Global Arbitration Review naming it the Number One International Arbitration Practice Worldwide in 2015.
About Queen Mary University of London
Queen Mary University of London (QMUL) is one of the UK’s leading universities, and one of the largest institutions in the University of London, with over 20,000 students from more than 150 countries. A member of the Russell Group, QMUL works across the humanities and social sciences, medicine and dentistry, and science and engineering, with inspirational teaching directly informed by its own research. In the most recent national assessment of the quality of research, QMUL was placed ninth in the UK. The School of International Arbitration at QMUL is widely acknowledged as the world’s leading postgraduate teaching and research centre on international arbitration.
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