ANNUAL REVIEW

Commercial Arbitration 2015

April 2015  |  LITIGATION & DISPUTE RESOLUTION

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We have come to embrace an era where international commercial arbitration is globally accepted by both the wider business community and states as a primary dispute resolution mechanism. The evolution of arbitration is one that seems to have organically grown to meet the needs of businesses and the globalisation of economies. In recent years we have seen the steady promotion of international trade and foreign direct investment covering a broad range of industry sectors.

 

UNITED STATES

Jonathan Fitch

Sally & Fitch LLP

“The practice of international commercial arbitration is growing at a rapid rate and is increasingly being favoured over other available dispute resolution mechanisms. Mediation is gaining increased acceptance – albeit in only limited strongholds worldwide – as a highly effective means for resolving disputes, particularly before parties resort to either arbitration or the court system. The benefits of arbitration, when compared to court proceedings, are manifest. In particular, clients recognise the benefits of cost-saving opportunities, greater measures of control over procedure, the selection of the decision-makers and hearing schedules and the ability to enforce arbitral awards in other countries. The difficulty of gaining worldwide recognition and the enforcement of mediation agreements is a major roadblock to the growth of international commercial mediation.”

 

CANADA

J. Kenneth McEwan

Hunter Litigation Chambers Law Corporation

“There has been a steady increase in the use of arbitration to resolve commercial disputes in recent years. Mediation has also gained acceptance, as parties increasingly want to control the outcome of significant disputes, this has also been driven by concerns of cost, and the time it might take to achieve a final adjudication. The increase in commercial arbitration and mediation come at the expense of the use of the courts for ordinary commercial matters, although the use of courts to resolve disputes on a class action basis, including certain kinds of commercial disputes, has grown substantially.”

 

MEXICO

Cecilia Azar

DLA Piper Gallástegui y Lozano

“In 1993, Mexico included in the Federal Commerce Code, almost identically to the UNCITRAL Model Law on International Commercial Arbitration, the Mexican Arbitration Statute. It applies to both national and international arbitration, when the place of arbitration is in Mexico. Additionally, in 1971 Mexico ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, as well as the Panama Inter-American Commercial Arbitration Convention in 1978. By doing so, the country became a friendly arbitration seat and reached the necessary requirements for joining the globalised trading system in the 1980s.”

 

ARGENTINA

Ricardo Ostrower

Marval O’Farrell & Mairal

“The demand for commercial arbitration in Argentina has undoubtedly increased in the last few decades, and we would expect this trend to continue in the foreseeable future. Parties seeking efficiency in their dispute management are coming to realise the benefits of arbitration in Argentina, particularly considering the wide array of facilities and multilingual professionals available in the country which are on the same level as other traditional arbitration centres found worldwide. Arbitration has proven to be a cost-effective mechanism and is seen as a neutral forum by foreign companies doing business in the region.”

 

CHILE

Jorge Bofill

Bofill Escobar Abogados

“The use of commercial arbitration to settle relevant contractual disputes has increased over the last few decades. The increased appetite for using commercial arbitration has been driven by a number of factors, including the use of specialised arbitrators in the subject matter of the dispute, and the fact that arbitrators generally take a less formalistic approach to both substantive and procedural law, resolve disputes at a faster pace and offer a more private mechanism of settling disputes. In Chile, the large majority of cases are still being decided by local courts. However, when it comes to sophisticated commercial transactions, arbitration is the preferred method.”

 

UNITED KINGDOM

Remy Gerbay

Enyo Law LLP

“When it comes to the resolution of cross-border commercial disputes, in-house counsel tend to prefer arbitration over court litigation or other dispute resolution mechanisms, such as adjudication or dispute boards. The position does not seem to be any different in the United Kingdom, where arbitration is very popular. For cross-border disputes, the two principal reasons behind companies’ preference for arbitration are still enforceability and neutrality. Naturally, the levels of arbitration’s popularity vary from one industry to another. The construction, energy and shipping sectors are particularly keen on arbitration in England, whereas the world of finance has yet fully to embrace it.”

 

FRANCE

Elie Kleiman

Freshfields Bruckhaus Deringer LLP

“In order to avoid congestion in the domestic courts and to be able to reach a truly neutral forum, parties to international business transactions increasingly refer their disputes to arbitration. Today, it is undeniable that arbitration has genuinely become the standard method of resolving international commercial disputes. Contrary to litigation, commercial arbitration provides business operators with a means to resolve their disputes according to a bespoke procedure. In international commercial arbitration, parties are allowed to reach a neutral forum, choose their own judges and hence avoid the risk of being brought before their counterparty’s domestic courts.”

 

GERMANY

Jan K. Schäfer

King & Spalding LLP

“In Germany, commercial arbitration is the standard form of settling disputes in the context of M&A transactions with a German target. There is hardly ever a choice of forum clause found in these types of contracts. Arbitration clauses which refer to the leading Germany-based arbitration service provider, the German Institution of Arbitration (DIS), are popular. In other areas, notably banking and finance, the courts still play a dominant role. German courts are known for their efficiency, and litigating in Germany comes at a reasonable price.”

 

SWITZERLAND

Dieter Hofmann

Walder Wyss Ltd

“In many cases, arbitration is clearly the preferred choice for resolving commercial disputes on an international level. Key factors influencing the parties’ choice of arbitration over litigation include the lack of trust in the counterparty’s home jurisdiction and hence avoiding having to litigate a dispute in that jurisdiction, confidentiality of the arbitral proceedings, the chance to take part in the appointment of the tribunal and hence the opportunity to ensure that arbitrators have the background, expertise and experience necessary to deal with the dispute at hand, speedier proceedings, and the opportunity to choose the language of the proceedings.”

 

LUXEMBOURG

Véronique Hoffeld

Loyens & Loeff Luxembourg

“Luxembourg is a major financial and business centre, a founding member of the European Union, and hosts numerous European institutions, including the European Court of Justice (ECJ). This inevitably enhances the international character of the country and makes it an adequate place for arbitration, with a panel of experts available in situ to act as arbitrators. Arbitration provides significant advantages compared to litigation and to mediation proceedings. Indeed, the settlement of disputes by way of arbitration allows the parties to have recourse to a specific category of professionals relevant for the dispute, where the parties are, for example, facing complex technical issues, which requires highly qualified and experienced arbitrators in a particular given field.”

 

ROMANIA

Florian Nitu

Popovici Nitu & Asociatii

“Arbitration, and particularly international commercial arbitration, remains the key alternative to the state judiciary, at least in disputes involving concurrent applicable laws and jurisdictions. There are certain sectors prone to arbitration, such as concessions, the construction industry, public-private arrangements and corporate joint-venture type of investment schemes. Predominantly, these sectors continue to favour arbitration over litigation or mediation. This is primarily due to the complexity of these types of matter and the intricacies of cross-border commercial disputes, where experienced international arbitrators are better placed and equipped to deal with all relevant issues.”

 

TURKEY

Noyan Göksu

Göksu Avukatlik Bürosu

“We have seen a growing tendency towards commercial arbitration as a means of dispute resolution, which has picked up speed in the last decade in particular. It also appears that a common theme is emerging within the business community that major disputes require rapid, objective and at times tailor-made solutions. The desire leaves little room for protracted courtroom battles. Arbitration, on a tight leash, can be the magic formula for efficient dispute resolution. Our observations are confirmed by publically available statistics.”

 

HONG KONG

Brooke Holden

Gall

“Hong Kong remains the preferred seat of arbitration regionally, given its independent and robust legal system, user-friendly legislation and world-class facilities. Hong Kong’s arbitral regime conforms to international best practices and is supported by a judiciary which maintains a policy of minimal intervention. Finality offered by arbitral awards and the extent of their recognition compares favourably with court judgments. However, cost remains an ongoing matter of concern. Whilst it is often assumed that arbitration is less expensive than litigation, that is not always the case. Mediation is often less expensive and speedier than other techniques and has proven quite successful, particularly in the construction industry in Hong Kong.”

 

REPUBLIC OF KOREA

Lance B. Lee

Lee International

“Commercial arbitration in Korea is steadily increasing as a preferred means of resolving disputes. Two salient factors have contributed to this growth, the first being the gradual evolution of arbitration as an institution in Korea and the second corresponding to the exponential growth in cross-border investments by Korean companies. The region’s main arbitral institution, the Korean Commercial Arbitration Board, has expanded to a full-service international arbitration service, complemented by the opening of the Seoul International Dispute Resolution Centre (SIDRIC) in 2013. This evolution, coupled with the dramatic increase in outbound investment from the region, has resulted in a greater capacity to handle arbitrations and an increased preference for arbitrations to efficiently resolve disputes.”

 

VIETNAM

Tony Nguyen

EP Legal

“In business, time is of the essence, and commercial arbitration is still one of the most transparent, efficient and discreet means by which parties can resolve commercial disputes. Commercial litigation through arbitration may, in a best case scenario, require only three months to reach a final decision – not to mention the expedited procedure options which are available in several arbitral centres. The arbitration award is final and binding upon both parties while the court judgment has two-level adjudication regime. Furthermore, bringing a lawsuit in court also means the disclosure of commercial information which is either secret or of commercial importance. The appetite for commercial arbitration in Vietnam is high, primarily due to the limitations of the Vietnamese judicial system, and the lack of available expertise and impartiality of its judges.”


CONTRIBUTORS

Bofill Escobar Abogados

DLA Piper Gallástegui y Lozano

Enyo Law LLP

EP Legal

Freshfields Bruckhaus Deringer LLP

Gall

Göksu Avukatlik Bürosu

Hunter Litigation Chambers Law Corporation

King & Spalding LLP

Lee International

Loyens & Loeff Luxembourg

Marval O’Farrell & Mairal

Popovici Nitu & Asociatii

Sally & Fitch LLP

Walder Wyss Ltd


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