Attention to international arbitration data and metrics is a recent phenomenon. In a recent annual survey, users identified new areas of development that will be at the center of debate for the foreseeable future.
International Arbitration Data: Measured Popularity and Flaws
The Pros
97% of respondents support arbitration as the preferred method for cross-border disputes. There is a split, however, between proponents of arbitration combined with alternative dispute resolution and others who prefer only arbitration. The difference likely relates to the crystallization of the dispute. For example, if there is a fundamental dispute between the parties, then tiered dispute resolution provisions may simply be a waste of time. On the other hand, if the parties’ positions are not yet crystallized, then negotiations and settlement may be beneficial.
A potential solution would be to customize dispute provisions to the needs of the parties. Some parties mistakenly believe that arbitrators will strive only to meet their mandate. This is untrue in litigation inasmuch as it is in arbitration and should be rectified through users’ counsel.
The two most valuable characteristics of arbitration, according to users, is the enforceability of awards and a neutral venue. Flexibility received the third-highest vote, despite fairly boiler-plate proceedings worldwide, as Jan Paulsson noted in a recent lecture. Finality ranked seventh, which may indicate a concern for parallel proceedings, appeals or annulments. Such oversights, however, may cost parties years of time, costs and peace of mind.
The Cons
Cost remains by far the least popular feature of arbitration. Institutions such as the ICC and ICDR have updated their rules on expedited proceedings, but cost remains a primary concern. True, some cases may suffer from rudimentary clauses that did not match a case’s unique circumstances, or enforcement may prolong the process. One critical problem, however, may lie in procedure. Toby Landau stated that arbitration has adopted the most economic costly processes from both common and civil law traditions. It would make sense, then, to eliminate the overlap and save everyone time and effort. As the primary cost component of arbitration is legal fees, however, striking a good bargain with external legal counsel is also warranted.
Arbitrators
Efforts on Diversity
Moving to the decision-makers, several dilemmas persist. The first is whether tribunal diversity enhances how members come to a judgment. Although diversity has numerous benefits in a university setting, the purpose of a tribunal is to resolve a dispute. Therefore, diversity may provide benefits in instances of technical complexity or when dealing with an obscure national law.
Nearly all respondents agree that gender diversity has improved over the last five years. However, less than a third believe the same to be true for ethnic, age and cultural diversity. The problem, it has been suggested, stems from different interests. As a one-time player (in most cases), a client will be mainly concerned with winning. On the other hand, repeat players such as counsel and arbitrators will be more sensitive to other legitimacy concerns.
Users consider arbitral institutions to be best-suited to ensure diversity. However, counsel can play a more active role. In the same lecture mentioned above, Jan Paulsson proposes having the parties agree on the chair of the tribunal rather than having each pick an arbitrator. This would not only let parties engage in procedure but would potentially allow either the chairperson or an institution greater discretion to select from a wider net of qualified individuals.
Access to Information
Only 70% of respondents felt that they had enough information to decide on a particular candidate. Typically, this knowledge came from word of mouth, especially between in-house and external counsel. While nearly half of users supported access to prior decisions, 80% approved of a peer-assessment review following a dispute, with almost 90% agreeing to it via an institution. This form of peer review is already common among many lawyers throughout the world – why not expand it to arbitral tribunals?
The Future – Now?
While some have argued that we are in the midst of the “golden age” of arbitration today, there is room for further optimism. Respondents believe that arbitration will grow in key areas, such as energy, construction, technology (such as blockchain) and banking. This optimism has spilled over into investment cases, with 66% of respondents believing that investor-State disputes will increase in number.
Whether or not there will be further growth, users today can take advantage of new technologies. For instance, incorporating the use of cloud-based storage and virtual hearing rooms would limit costs on parties and avoid logistical issues such as visas and bookings.
If the 2018 survey has shown us anything, it is how far arbitration has come – and how far it can go.
Thomas W. Davis, Aceris law.