Recent trends in international arbitration

25th August 2021

Partners from our Commercial Dispute Resolution team share their views on recent trends in international arbitration.

Extracts from this piece were first published in the Law Society Gazette on 28 June 2021. Please click here.

Walker Morris has a large team of specialists experienced in all aspects of commercial dispute resolution, including international arbitration, across all sectors. Two of our partners are Fellows of the Chartered Institute of Arbitrators.

If you trade internationally and/or are considering arbitration, and need any assistance or advice on drafting, dispute resolution options or strategy, please contact one of the team.

London’s success as an arbitral centre

London has been, and continues to be, a highly successful arbitral centre, whose popularity remains undimmed after Brexit. This is underlined by the results of the most recent Queen Mary University of London International Arbitration Survey. At a time of heightened competition from seats in Asia-Pacific and other regional centres globally, London was named joint first with Singapore as the most preferred seat among respondents and the London Court of International Arbitration (LCIA) remains in the top five most preferred arbitral institutions.

London is a sophisticated arbitral centre with an established reputation and first-rate facilities including the LCIA, International Arbitration Centre and International Dispute Resolution Centre. From our experience, other factors which influence parties’ choice to arbitrate in London (and indeed other national locations) include confidence in English law developed through the common law; the availability of experienced professionals (lawyers, arbitrators, experts, judiciary); the renowned arbitration-friendly approach of the English courts, including a proven track record of enforcing arbitral awards; and a supportive national arbitration law.

According to its latest statistics, the LCIA handled a record number of cases in 2020. Continuing to innovate and keep pace with its competitors, it launched an updated set of rules in October 2020 which include further provisions on expedition and early determination of issues, virtual hearings and electronic communications, and data security and regulatory compliance. We expect the popularity of both London and the LCIA to continue to thrive among arbitrating parties.

Innovative solutions to streamline the process and reduce costs

Commercial arbitration, as with court litigation and all forms of dispute resolution, has its advantages and disadvantages. Factors that can affect the duration (and therefore cost) of arbitration include availability and formation of the arbitral tribunal; parties submitting numerous and lengthy pleadings; extensive document production; multiple hearings and witnesses; and procedural challenges, delay tactics and an apparent lack of effective sanctions.

It is important to bear in mind, however, that arbitration is an inherently flexible process and this is one of its key advantages. By taking extra care at the drafting stage, and seeking to agree a suitable procedure and timetable early on, parties can help to avoid some of these issues arising in the first place and tailor the process accordingly. The arbitral institutions themselves have introduced various measures to help increase efficiencies and reduce time and cost, including standalone fast-track rules or other express provisions for expedited procedures. The newly-updated LCIA rules, for example, include an express power for the tribunal to make an early determination that a claim or defence is manifestly without merit.

One of the more innovative recent solutions is the introduction of a set of Digital Dispute Resolution Rules (see our earlier briefing for details). They offer a bespoke, streamlined arbitration procedure aimed at facilitating the rapid and cost-effective resolution of commercial disputes, particularly those involving novel digital technologies such as cryptoassets and smart contracts (although the rules can be used for any dispute subject matter). The rules are designed to provide maximum flexibility, the tribunal will use its best endeavours to determine the dispute within just 30 days, and decisions can be implemented directly “on-chain” using a private key.

Apart from the usual tribunal and other fees, parties have traditionally been required to meet the cost of hiring a suitable physical hearing venue. There are also the travel and other costs associated with attending in-person hearings. The Covid-19 pandemic has accelerated the widespread use and accommodation of virtual hearings and digital tools, and there is a related push in the form of the Campaign for Greener Arbitrations to reduce the environmental impact of international arbitrations. Parties can expect to see certain time and cost savings as a result of these initiatives, as we all adapt to new ways of operating in a post-Covid world.

How commercial arbitration has adapted to global changes, including the impact of Covid-19

Commercial arbitration’s inherent flexibility means that it has adapted well to recent global changes, in particular the Covid-19 pandemic. Arbitrations typically involve parties and/or witnesses from multiple jurisdictions. Remote communications, videoconferencing, and the use of technology to drive efficiencies were therefore already familiar concepts. Holding proceedings entirely (or almost entirely) virtually, however, has brought its own challenges. These include, for example, concerns over due process, transparency, confidentiality, security, data protection and management; the presentation of submissions in a different way; how to deal practically with multiple time zones; screen fatigue; and connectivity issues.

The major arbitral institutions issued a joint statement in April 2020, in which they invited tribunals and parties to use the full extent of the various institutional rules and any case management techniques that would allow arbitrations to substantially progress without delay. Many institutions published guides and protocols on virtual hearings, available procedural tools and other measures introduced in response to the pandemic. The newly-updated LCIA and International Chamber of Commerce International Court of Arbitration rules both contain express provisions in relation to virtual hearings and electronic communications, indicating that the technological changes accelerated by the pandemic are here to stay in one form or another.

Examples of other initiatives include a Protocol for Online Case Management in International Arbitration (the product of a collaboration between several global law firms); the formation of the International Arbitration Centre Alliance which offers global hybrid hearings; the launch of the Ad Hoc Platform by the Arbitration Institute of the Stockholm Chamber of Commerce and Thomson Reuters’ HighQ to support the online administration of proceedings globally; and the publication (a few months before the pandemic struck) of the ICCA – NYC Bar – CPR Protocol on Cybersecurity in International Arbitration.

We can expect the arbitration community to continue to adapt and innovate as it responds to users’ evolving needs and the competition from litigation and other forms of commercial dispute resolution.