2015 Improvements and Innovations in International Arbitration

The 2015 Survey ‘Improvements and Innovations in International Arbitration’, is the sixth carried out by the School of International Arbitration at Queen Mary University of London, as part of a major empirical investigation into arbitration practices and trends worldwide. We were pleased to be partnering again with White & Case LLP on this survey. With 763 questionnaire responses and 105 personal interviews, the 2015 Survey was our largest pool of respondents to date.

The survey considers improvements and innovations in the arbitral process. Whereas previous surveys focused on the views of a particular group of actors within international arbitration, this survey researched the sentiment of the arbitration community as a whole. All stakeholders were therefore invited to share their perspectives, regardless of whether their experience with international arbitration was based on activities as a private practitioner, in-house counsel, arbitrator, judge, government official, academic, or through work for an arbitral institution.

Download the full survey here [PDF 10,801KB].

Survey finding

Views on international arbitration

• 90% of respondents indicate that international arbitration is their preferred dispute resolution mechanism, either as a stand-alone method (56%) or together with other forms of ADR (34%).
• “Enforceability of awards” is seen as arbitration’s most valuable characteristic, followed by “avoiding specific legal systems,” “flexibility” and “selection of arbitrators”.
• “Cost” is seen as arbitration’s worst feature, followed by “lack of effective sanctions during the arbitral process”, “lack of insight into arbitrators’ efficiency” and “lack of speed”.
• The majority of respondents do not favour an appeal mechanism on the merits in either commercial or investment treaty arbitration.  A growing concern in international arbitration is a perceived reluctance by tribunals to act decisively in certain situations for fear of the award being challenged on the basis of a party not having had the chance to present its case fully (“due process paranoia”).

Preferred and improved seats

• The five most preferred and widely used seats are London, Paris, Hong Kong, Singapore and Geneva.
• The primary factor driving the selection of a seat is its reputation and recognition.
• Respondents’ preferences for certain seats are predominantly based on their appraisal of the seat’s established formal legal infrastructure: the neutrality and impartiality of the legal system; the national arbitration law; and its track record for enforcing agreements to arbitrate and arbitral awards.
• Respondents expressed the view that the most improved arbitral seat (taken over the past five years) is Singapore, followed by Hong Kong.

Preferred and improved institutions

• The five most preferred arbitral institutions are the ICC, LCIA, HKIAC, SIAC and SCC.
• Respondents’ preferences for certain institutions are predominantly based on an assessment of the quality of their administration and their level of ‘internationalism’. Institution-specific distinguishing features are considered to be less important.
• An institution’s reputation and recognition is essential to its commercial appeal. Respondents will select an institution because of its reputation and their previous experiences of that institution.
• Respondents expressed the view that the most improved arbitral institution (taken over the past five years) is the HKIAC, followed by the SIAC, ICC and LCIA.
• Respondents feel that arbitral institutions could contribute to the improvement of international arbitration by publishing data not only on the average length of their cases, but also on the time taken by individual arbitrators to issue awards. Respondents also welcome increased transparency in institutional decision-making on the appointment of, and challenges to, arbitrators.

Reducing time and cost

• The procedural innovation perceived as most effective at controlling time and cost in international arbitration is a requirement for tribunals to commit to a schedule for deliberations and delivery of final awards.
• 92% of respondents favour inclusion of simplified procedures in institutional rules for claims under a certain value: 33% would have this as a mandatory feature and 59% as an optional feature.
• Few respondents have experience with emergency arbitrators and some expressed concerns about the enforceability of emergency arbitrator decisions. 46% of respondents would, at present, look to domestic courts for urgent relief before the constitution of the tribunal, versus 29% who would opt for an emergency arbitrator. Nonetheless, 93% favour the inclusion of emergency arbitrator provisions in institutional rules.
• Respondents believe that arbitration counsel could be better at working together with opposing counsel to narrow issues and limit document production, encouraging settlement (including the use of mediation) during an arbitration, and not ‘overlawyering’.
• When arbitration and mediation are used in conjunction, it appears that a minimal overlap between the two processes is preferred.
• It is inconclusive what effect conventions on enforcement of mediation agreements and settlement agreements resulting from mediations might have in practice, particularly in terms of encouraging the use of mediation.

Soft law and Guidelines

• Respondents generally have a positive perception of guidelines and soft law instruments in international arbitration. These instruments are seen to supplement existing rules and laws, and to provide guidance where little or none exists.
• 70% of respondents are of the opinion that there is currently an adequate amount of regulation in international arbitration.
• Of various specific instruments put to respondents, the IBA Rules on the Taking of Evidence and the IBA Guidelines on Conflicts of Interest were the most widely known, the most frequently used and the most highly rated.

Role and regulation of specific actors

• A clear majority of respondents think that tribunal secretaries (68%) and third party funding (71%) are areas which require regulation.
• A small majority of respondents (55%) think that the conduct of arbitrators requires more regulation.
• Tribunal secretaries are widely used in international arbitration: 82% of respondents have either used their services or have seen them used. Most respondents (72%) believe that arbitral institutions should offer the services of tribunal secretaries. A vast majority do not consider it appropriate for tribunal secretaries to conduct substantive or merits-related tasks.
• Respondents are generally of the opinion that it should be mandatory in international arbitration for claimants to disclose any use of third party funding and the identity of the funders involved, but not the full terms of any funding agreement.

Contact

Further information can be obtained from:

Rutger Metsch, White & Case Research Fellow in International Arbitration
School of International Arbitration
Centre for Commercial Law Studies
Queen Mary University of London
67-69 Lincoln's Inn Fields, 
London WC2A 3JB
UK

Tel: +44 20 7882 5083
Fax: +44 20 7882 8101  
Email: r.metsch@qmul.ac.uk