ARBITRATION (INTERNATIONAL): An Introduction to Global Market Leaders

Global Arbitration Review 

International arbitration has traditionally been the preferred method of dispute resolution for clients seeking to resolve cross-border disputes, whether they arise out of commercial arbitration agreements, or under Bilateral Investment Treaties (BITs). This remains true today as the global industry emerges from the restrictions of the COVID-19 pandemic. The enduring durability of international arbitration as a dispute resolution mechanism is underscored by its popularity with clients not only in traditional sectors, such as energy, construction, or banking and finance but also in a variety of niche sectors including art and sports, and extending to the new fields, such as cryptocurrency. At its core, arbitration is founded on consent, and on allowing the parties to a dispute to determine the most efficient mechanism for the resolution of their dispute. This flexibility, and the autonomy that it grants the parties to a dispute, remain international arbitration’s most alluring characteristics. As a result of this flexibility, international arbitration is well placed to adapt to changes in the modern economy, such as those driven by the increased focus on, and investment in, green technologies. At the same time, it also provides a challenge to law firms and legal representatives, who are pressed to develop bespoke approaches to individual disputes, rather than adopt cookie cutter solutions across cases. This is one of the reasons why, as the Chambers guide makes clear, international arbitration is one of the few practice areas in which specialist firms occupy leading positions in the rankings.

Below, we highlight some of the key developments and trends affecting the international arbitration market at present.

Economic Uncertainty 

Although the inflationary pressures and supply chain issues that dominated headlines at the beginning of 2023 have eased somewhat, inflation remains a sticking point across several jurisdictions, and persistently high interest rates continue to impact both the budgets of individual companies as well as the prospects of entire sectors of the global economy as a whole. With several large elections scheduled for 2024, the global economic outlook remains uncertain.

Nevertheless, the market for arbitration disputes remains buoyant. At the time of writing, both SIAC and ICSID had indicated an uptick in the number of disputes being submitted to arbitration, and given the inherent strengths of the arbitral process, this trend is likely to be reflected in comparable institutions around the world.

Legislative, Institutional and Judicial Developments 

2023 has been marked by several important developments in the arbitration space, which together show how arbitration continues to evolve and innovate in order to meet the needs of its users around the world.

Law Commission of England and Wales Report 

Following an extensive consultation process, the Law Commission of England and Wales published its final report on the Arbitration Act 1996 on the 5th September 2023. On the 21st November 2023, the UK Government introduced an Arbitration Bill to give effect to the Law Commission’s recommendations. The Arbitration Bill proposes to modify the legal framework governing arbitration in England and Wales in several ways: it clarifies the rule on the law governing an arbitration agreement; codifies the arbitrators’ duty of disclosure; extends the immunity of arbitrators; introduces a default power of summary disposal; seeks to aid the enforcement of orders issued by emergency arbitrators; and it restricts the scope of challenges to the tribunal’s jurisdiction in circumstances where the tribunal has already ruled on this issue. Given London’s prominence as an arbitral venue of choice, the proposed changes, which are likely to be enacted over the course of 2024, will be of particular interest to the arbitration community as a whole.

The SCC Arbitration Institute Rules 

The SCC Arbitration Institute introduced a new set of rules to apply to arbitrations commenced on or after the 1st January 2023. Changes include clarifications on the content of the statement of claim and statement of defence, an explicit right for arbitral tribunals to decide on remote hearings and the possibility for a tribunal to terminate proceedings by way of an order instead of by an award, including in circumstances where the advance on costs has not been paid.

The Saudi Center for Commercial Arbitration (SCCA) also published new arbitration rules in 2023, with changes impacting a range of issues including the role played by the SCCA Court, the method for the appointment of arbitrators, provisions for the early disposition of claims or defences, representation by foreign counsel, the publication of awards and the mechanism for online dispute resolution. The development of the SCCA, along with other arbitration institutions across Asia, Africa and Latin America, suggests that the established centres of arbitration are likely to come under increasing pressure from previously unheralded venues, underscoring the shift towards a decentred, transnational approach to international arbitration.

The Role of Courts 

Courts continue to play an important role in determining the approach of individual jurisdictions to arbitration. Two recent decisions with potentially far-reaching ramifications are the judgments of the UK Supreme Court in R v Competition Appeal Tribunal and others requiring that litigation funding agreements comply with the regulations governing damages-based agreements, and the Indian Supreme Court in Cox and Kings v SAP India & Anr affirming that non-signatories may be bound by arbitration clauses under the “group of companies” doctrine.

Specialised courts too play an increasingly important role in supporting arbitration proceedings, as evidenced by the model clause unveiled by the Singapore International Commercial Court and adopted by SIAC, which provides for arbitration-related litigation arising under Singapore’s international arbitration legislation to be referred to that court at first instance. The continued growth of such specialised courts is likely to play an important role in the development of international arbitration across the world.

Challenges 

Notwithstanding the growing acceptance of arbitration as a preferred dispute resolution mechanism across the world, questions marks remain about its ability to rise to the challenge of addressing public order concerns, including, for example, as regards corruption. This was highlighted by the judgment of the High Court of England and Wales in the P&ID case, where Justice Knowles felt compelled to remark that “[q]uite apart from the consequences for the parties, the matter touches the reputation of arbitration as a dispute resolution process”.

Ultimately, whether arbitration is able to effectively tackle corruption and other forms of illicit conduct will determine the extent and pattern of its growth in the years to come.