2010 Choices in International Arbitration

The 2010 International Arbitration Survey, sponsored by White & Case LLP, is one of the largest independent empirical studies ever conducted on corporate attitudes and practices regarding international arbitration. It is the largest of the three surveys conducted by the School (the first two surveys were published in 2006 and 2008).

• Download the
  2010_InternationalArbitrationSurveyReport [PDF 607KB]
  2010_InternationalArbitrationSurveyReport [PDF 607KB] [PDF 607 KB]
  

The 2010 Survey returns to the core of the arbitration process. It focuses on the key factors that drive corporate choices about arbitration: how are decisions made about arbitration, who influences these decisions and what considerations are uppermost in the minds of corporate counsel when they negotiate arbitration clauses. It also considers other key aspects such as the appointment of arbitrators, confidentiality and time and delay.

The survey was based on an unprecedented 136 questionnaire responses with further qualitative data drawn from 67 in-depth interviews. Questionnaire respondents and interviewees were general counsel and other corporate counsel from corporations across a range of industries and geographical regions, and a significant number of corporations based in emerging markets.

Key findings

Choices about international arbitration

• 68% of corporations have a dispute resolution policy. Whether or not they have a policy, corporations generally take a reasonably flexible approach to negotiating arbitration clauses. They have strong preferences regarding confidentiality and language and reasonably strong preferences regarding governing law and seat. In all cases, the result depends on the nature of the contract and the relative bargaining positions of the parties.
• The law governing the substance of the dispute is usually selected first, followed by the seat and then the institution/rules. 68% of respondents believe that the choices made about these factors influence one another, particularly in relation to the governing law and seat.
• The general counsel is usually the lead decision-maker on arbitration clauses, although the legal department may only be brought into negotiations at a late stage.

Choice of the law governing the substance of the dispute

• Choice of governing law is mostly influenced by the perceived neutrality and impartiality of the legal system with regard to the parties and their contract, the appropriateness of the law for the type of contract and the party’s familiarity with the law.
• The decision about governing law is a complex issue to which most respondents and interviewees appear to take a considered and well thought out approach.
• 40% of respondents use English law most frequently, followed by 17% who use New York law.
• The use of transnational laws and rules to govern disputes, at least partially, is reasonably common (approximately 50% have used them at least ‘sometimes’), but use varies depending on the particular law or rules.
• 53% of respondents believe that the impact of the governing law can be limited to some extent by an extensively drafted contract, 29% believe it can be limited to a great extent.

Choice of the seat of arbitration

• Choice of seat is mostly influenced by ‘formal legal infrastructure’, the law governing the contract and convenience.
• London is the most preferred and widely used seat of arbitration.
• London, Paris, New York and Geneva are the seats that were used most frequently by respondents over the past five years. The level of user satisfaction for these seats is high. For all four seats a majority of users described them as either ‘excellent’ or ‘very good’.
• Singapore has emerged as a regional leader in Asia.
• Respondents have the most negative perception of Moscow and mainland China as seats of arbitration.

Choice of arbitration institution

• Corporations look for neutrality and ’internationalism’ in their arbitration institutions and expect institutions to have a strong reputation and widespread recognition.
• The ICC is the most preferred and widely used arbitration institution.
• The ICC, LCIA and AAA/ICDR are the institutions used most frequently by respondents over the past five years. For all three institutions, a majority of users rated them as either ‘good’ or higher.
• Respondents have the most negative perception of CRCICA, DIAC and CIETAC.

Appointment of arbitrators

• Open-mindedness and fairness, prior experience of arbitration, quality of awards, availability, knowledge of the applicable law and reputation are the key factors that influence corporations’ choices about arbitrators.
• 50% of respondents have been disappointed with arbitrator performance.
• Corporations want greater transparency about arbitrator availability, skills and experience and, to some extent, greater autonomy in the selection of arbitrators.
• 75% of respondents want to be able to assess arbitrators at the end of a dispute. Of these, 76% would like to report to the arbitration institution (if any). 30% would like to be able to submit publicly available reviews.

Confidentiality

• The responses indicate that confidentiality is important to users of arbitration, but it is not the essential reason for recourse to arbitration.
• 50% of respondents erroneously believe that arbitration is confidential even where there is no specific clause to that effect in the arbitration rules adopted or the arbitration agreement and 12% did not know whether arbitration is confidential in these circumstances.

Time and delay

• Disclosure of documents, written submissions, constitution of the tribunal and hearings are the main stages of the arbitral process that contribute to delay.
• According to respondents, parties contribute most to the length of proceedings, but it is the tribunal and the arbitration institution that should exert control over them to keep the arbitral process moving quickly.