London retains its top spot as the preferred seat of international arbitration for cross-border disputes, according to a study published today by Queen Mary University of London, in partnership with global law firm White & Case.
10 May 2018
London and Paris have reinforced their dominance over the international arbitration landscape, ranked by more than 900 arbitrators, in-house and external counsel as the two most preferred seats (64 per cent and 53 per cent, respectively). London has surged further ahead of Paris by a margin of more than 10 per cent since the last study in 2015, with the next positions going to Singapore, Hong Kong and Geneva respectively.
The new research places the same jurisdictions in the top five as appeared in the last survey in 2015, indicating these venues have cemented their reputation. London is the favoured seat in all global regions, Paris is ranked in the top four in all regions and was voted as second most preferred seat in all but Asia-Pacific, where it is in fourth place. Across the world, the five most preferred arbitral institutions continue to be the ICC, LCIA, SIAC, HKIAC and SCC.
55 per cent of respondents predict London’s appeal as a seat of international arbitration will remain unchanged after Brexit, while a positive 9 per cent think it will lead to a further rise in popularity. Among the 37 per cent who believe London’s dominance will suffer from Brexit, 70 per cent of these identify Paris as the main beneficiary, while 22 per cent think Singapore or Geneva will benefit, and 15 per cent named Hong Kong.
Professor Stavros Brekoulakis, from Queen Mary’s School of International Arbitration, said: "Most of the arbitration community believes London’s reputation as a location of excellence for international arbitration will outweigh the challenges presented by Brexit. It is interesting to see Paris is almost 50 per cent ahead of any other city when looking at the main would-be benefactor of any negative Brexit fall out on London’s position. This is no doubt due to Paris’ excellent reputation as a seat - consistently ranking among the top three most popular seats in both the current survey and our previous 2010 and 2015 surveys."
In comparison to 2015, Singapore and Hong Kong have switched places with a margin of 10 per cent between them.
Paul Friedland, Partner and Head of International Arbitration at White & Case said: "The 2015 survey predicted the dominance of the top seats was unlikely to be challenged. This has proven to be the case. Although this year we have seen a change in preference for Singapore over Hong Kong, both of these Asian seats have affirmed their popularity as arbitration-friendly jurisdictions. As with seats, the top institutions have retained their positions, except that the SIAC has passed the HKIAC and is now in third position."
While international arbitration is by far the preferred method of resolving cross-border disputes according to 97 per cent of the global arbitration community, high costs and lack of speed are seen as some of the top drawbacks (67 per cent and 34 per cent respectively). An interesting new trend shows how users are seeking to combat this by increasingly combining international arbitration with Alternative Dispute Resolution (ADR).
Compared to the 2015 findings, there has been a significant increase in the popularity of arbitration combined with ADR: almost half of all respondents expressed their preference for this combination as opposed to only 34 per cent in 2015, and 60 per cent of corporate counsel prefer the combined approach.
Dipen Sabharwal, Partner at White & Case said: "This research shows that corporations, through their in-house counsel, display an overwhelming preference for international arbitration, either in isolation or in conjunction with ADR, over court litigation. International arbitration however is not without its drawbacks and it’s interesting to see large global companies increasingly combining it with various other forms of ADR to find a swifter and more cost-efficient resolution of their disputes."
The research for this study was conducted from October to December 2017 by the School of International Arbitration (SIA), Queen Mary University of London. The research, which is the most comprehensive empirical study the SIA has ever conducted, was led by Professor Stavros Brekoulakis and Mr Adrian Hodis and was conducted in two phases: the first quantitative and the second qualitative.
Phase one involved a questionnaire of 53 questions which was completed by 922 respondents between 10 October 2017 and 17 December 2017. The respondent group included in-house counsel, arbitrators, private practitioners, staff of arbitral institutions, academics, expert witnesses, economists, entrepreneurs, law-students, judges, third party funders and government officials.
Phase two included 142 face-to-face or telephone interviews, ranging in duration from 10 minutes to 100 minutes, which were conducted between 1 November and 18 December 2017. Interviewees were drawn from a diverse group based on primary role, seniority, geographic location and experience in international arbitration.
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