The latest survey on the progress of arbitration has found that business firms largely prefer international arbitration to resolve cross-border disputes.
Dubbed, “The Evolution of International Arbitration,” the 2018 International Arbitration Survey, conducted by White & Case LLP and the School of International Arbitration at Queen Mary University of London, indicate that the choice of preference for international arbitration is influenced by the quest of parties to avoid unfavourable country-specific laws.
The 2018 International Arbitration Survey, entitled “The Evolution of International Arbitration”, identifies the principal drivers and stakeholders that the arbitration community expects to influence the future direction of international arbitration.
Trends investigated in earlier empirical studies have also been revisited in order to ascertain changes in user preferences and perceptions.
The survey, which collated views from a diverse pool of participants in the international arbitration sphere, including in-house counsel, arbitrators, private practitioners, representatives of arbitral institutions, academics, experts and third party funders, presents a breakdown of results by categories of respondents, such as by their primary role or the geographic regions in which they principally operate or practice, providing unique insight into the range of views expressed by different stakeholders of international arbitration.
- 97% of respondents indicate that international arbitration is their preferred method of dispute resolution, either on a stand-alone basis (48%) or in conjunction with ADR (49%).
- “Enforceability of awards” continues to be perceived as arbitration’s most valuable characteristic, followed by “avoiding specific legal systems/national courts”, “ﬂexibility” and “ability of parties to select arbitrators”.
- “Cost” continues to be seen as arbitration’s worst feature, followed by “lack of effective sanctions during the arbitral process”, “lack of power in relation to third parties” and “lack of speed”.
- An overwhelming 99% of respondents would recommend international arbitration to resolve cross-border disputes in the future.
Evolution of seats and institutions
- The five most preferred seats of arbitration are London, Paris, Singapore, Hong Kong and Geneva.
- Preferences for a given seat continue to be primarily determined by its “general reputation and recognition,” followed by users’ perception of its ‘formal legal infrastructure’: the neutrality and impartiality of its legal system; the national arbitration law; and its track record in enforcing agreements to arbitrate and arbitral awards.
- More than half of the respondents think that Brexit will have no impact on the use of London as a seat. They believe that its ‘formal legal structure’ is likely to remain unchanged and to continue to support arbitration.
- 70% speculate that Paris will be the seat to benefit the most from any negative impact of Brexit on London.
- The five most preferred arbitral institutions are still the ICC, LCIA, SIAC, HKIAC and SCC.
- Respondents continue to prefer given institutions primarily for their general reputation and recognition. Preferences are also decisively shaped by an assessment of the quality of administration and of the institutions’ previous experience.
- The UNCITRAL Arbitration Rules are the most popular choice for ad hoc arbitration.
- Respondents were unsure whether there is any causal connection between the diversity across a panel of arbitrators and the quality of its decision-making, or even whether this is a relevant enquiry to make.
- Whilst nearly half of respondents agreed that progress has been made in terms of gender diversity on arbitral tribunals over the past five years, less than a third of respondents believe this in respect of geographic, age, cultural and ethnic diversity.
- Arbitral institutions are considered to be best placed to ensure greater diversity across tribunals, followed by parties (including their in-house counsel) and external counsel.
- To encourage diversity, all stakeholders should expand and diversify the pools from which they select arbitrators; more education and awareness is required about the need for, and advantages of, diversity; and legal education and professional training in less developed jurisdictions should be improved to lead to a larger, more diverse pool of arbitrators.
- 70% of respondents stated that they have access to enough information to make an informed choice about the appointment of arbitrators. The most used sources of information about arbitrators include “word of mouth”, “internal colleagues” and “publicly available information”.
- Respondents would like to have access to arbitrators’ previous awards, know more about their approach to procedural and substantive issues and have a clear picture of their availability to take on new cases.
- 80% of respondents would like to be able to provide an assessment of arbitrators at the end of a dispute. Nearly 90% would do so by reporting to an arbitral institution.
Funding, efficiency and confidentiality
- 97% of respondents are aware of third party funding in international arbitration. The majority of respondents have a generally ‘positive’ perception of third party funding, particularly those who have actually used third party funding.
- 85% of respondents are aware of other types of external funding in international arbitration and most perceive such funding in a ‘neutral’ or ‘positive’ light. Most of those who have used other types of external funding hold a more ‘positive’ perception.
- Respondents are almost evenly split as to whether a successful party who is in receipt of external funding should be able to recover any contingency or success fees as part of a costs order in their favour (52% say “yes“ and 48% say “no“).
- “Due process paranoia” continues to be one of the main issues that users believe is preventing arbitral proceedings from being more efficient.
- Respondents also believe that an increased use of technology would lead to more efficiency in the conduct of arbitration proceedings.
- 87% of respondents believe that confidentiality in international commercial arbitration is of importance. Most respondents think that confidentiality should be an opt-out, rather than an opt-in, feature.
- Respondents believe that the use of international arbitration is likely to increase in the Energy, Construction/Infrastructure, Technology, and Banking and Finance sectors.
- 66% of respondents think that the use of international arbitration to resolve investor-State disputes will increase in the future.
- Technology is widely used in international arbitration, and an overwhelming majority of respondents favour the greater use in the future of “hearing room technologies,” cloud-based storage, “videoconferencing”, “AI” and “virtual hearing rooms.”
- A large majority of respondents (77%) expressed that existing sets of arbitration rules “contain about the right level of prescription” in terms of the guidance they offer on how to conduct proceedings. Only 5% believed that these rules are “too prescriptive“.
- Respondents think that arbitration rules should include provisions dealing with arbitrator conduct in terms of both standards of independence and impartiality and efficiency (or lack thereof).
- A significant majority of respondents (80%) consider “arbitral institutions” to be best placed to inﬂuence the future evolution of international arbitration.
- More than half of respondents (61%) think that “increased efficiency, including technology” is the factor that is most likely to have a significant impact on the future evolution of international arbitration.
By Edmund Mingle/ adrdaily.com