ANNUAL REVIEW

Commercial Arbitration 2016

May 2016  |  LITIGATION & DISPUTE RESOLUTION

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Commercial arbitration is on the rise. Efficient, discreet and flexible, it provides the key to resolving complex commercial disputes. With the increase in foreign direct investment and the growing intricacies of global trade, international arbitration is now leading the way as the preferred method for resolving disputes involving investors, businesses and states. Major corporations across various industries including construction, energy and financial services increasingly recognise the benefits of using a bespoke procedure whereby neutral decision-makers can be appointed in line with specialist experience.

 

CANADA

J. Kenneth McEwan

Hunter Litigation Chambers Law Corporation

 “While cost is often cited as an advantage that can quickly become illusory depending on the size of the panel, the willingness of both parties to restrict pre-arbitration procedure, and the willingness of the arbitrator to enforce such limits, are factors which may lead parties to choose arbitration over litigation. Other factors include controlling the venue and decision-maker, the relative privacy of the process and limited appellate intervention.”

 

MEXICO

Gerardo Ramírez Ornelas

Ramírez Ornelas, S.C.

 “Often, the specialisation of the arbitrators attending complex commercial disputes is a decisive factor that the parties take into consideration when submitting their dispute to arbitration. Parties also prefer the more secure environment arbitration offers, as well as the hope that an impartial and just decision will be rendered. Arbitration offers key advantages for cases where the parties to a contract are from different nationalities and the commercial transactions documented in the contract exceed national jurisdictions, as it provides an impartial forum that reconciles conflicts that derive from multiple jurisdictions.”

 

ARGENTINA

Ricardo A. Ostrower

Marval O’Farrell & Mairal

 “There are several key factors that would typically encourage parties to choose arbitration over litigation as their dispute resolution method. First, arbitration allows parties to have some control over the constitution of the tribunal that will settle their conflict. Therefore, the parties are able to select arbitrators with the relevant expertise in relation to each case. Another benefit of arbitration over litigation is that it can provide a neutral ground among parties from different countries, enabling them to avoid litigating in the local courts of their adversary. Additionally, arbitration tends to be more open to the use of technology in the conduct of the proceedings. Ultimately, this will facilitate a quick and cost-efficient resolution of the case.”

 

UNITED KINGDOM

Ashkhan Candey

Candey

 “The primary reason for choosing arbitration is that many countries will not recognise a judgment of a national court but nearly every country in the world will recognise an arbitral ‘award’, or judgment, as they are signatories to the New York Convention. Thus an arbitral award can be enforced before the local court in the People’s Republic of China and Iran, whereas neither will enforce a High Court judgment obtained in London. The second reason is that arbitrations are held in private and are confidential, whereas trials are held in open court. The downside is that whilst the court system provides judges on payment of comparatively modest fees, the parties to a dispute have to jointly bear the costs of arbitrators and the arbitral institution. Finally, arbitrations are usually speedier than the court process.”

 

FRANCE

Elie Kleiman

Freshfields Bruckhaus Deringer LLP

 “Avoiding lengthy and public proceedings before domestic courts is a main concern for parties to international business transactions. To overcome these hurdles and to be able to reach a neutral forum, arbitration has become the standard method for the resolution of 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 sued before their counterparty’s domestic courts. They can choose the law applicable to their proceedings, including the rules applicable to evidentiary issues.”

 

SWITZERLAND

Dieter Hofmann

Walder Wyss Ltd

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

 

LUXEMBOURG

Véronique Hoffeld

Loyens & Loeff Luxembourg s.à r.l.

“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 professionals experienced in the field relevant for the dispute. This is of particular importance if the parties are facing complex technical issues. Further, arbitration proceedings are led on completely confidential terms, which is crucial when handling disputes between internationally renowned companies. Finally, court proceedings are time consuming, whereas generally arbitration proceedings allow obtaining a decision much quicker and may be thus less expensive. Arbitration is characterised by the freedom which is given to a certain extent to the parties to adequately choose the rules which shall apply to arbitration proceedings.”

 

SWEDEN

Krister Azelius

Advokatfirman Vinge KB

“In my opinion, one of the key benefits of arbitration is the possibility to influence who will settle the dispute and to be able to customise what expert knowledge you need in a tribunal. Although Swedish courts have generally shortened their handling time over the last decade, arbitral proceedings are still normally quicker than court proceedings. Swedish parties are less likely to use extensive discovery than common law parties due to the fact that the Swedish Code of Judicial Procedure provides a very limited possibility to obtain disclosure of specific documents. However, these rules are not applicable in arbitration, unless otherwise expressly agreed. Swedish arbitral proceedings tend to be efficient. This fact, together with the very limited possibilities to challenge an award, often leads to lower legal costs for both parties.”

 

POLAND

Maciej Józwiak

Wierzbowski Eversheds

 “The most frequently mentioned incentives for arbitration are time and cost efficiency. In my opinion, one key factor should be added: the power of control. In arbitration, everything is in the hands of the parties. In 2015, the number of cases brought to public courts in Poland exceeded 15 million; the courts are overloaded. This fact influences both speed of the proceeding, as well as the merit. Statistically, the number of cases which continue for longer than one year increases each year, in 2015 it was up to 13 percent, and the average time for recognition of a commercial dispute in a public court is two to four years. In arbitration, parties are able to set up all key elements of the process, including the length of the proceedings, number of instances and costs of the trial. The final factor – the predictability of costs – seems to be the most important factor for our clients.”

 

TURKEY

Orçun Çetinkaya

Moroglu Arseven

“In Turkey and for Turkish companies choice of arbitration over litigation mainly depends on the sector and the parties to a contract. Construction, for instance, is the sector where arbitration is not an alternative but rather the principal dispute resolution method. Turkish contractors use arbitration as a method to solve their disputes in Turkey and abroad, chiefly because construction is a complex and multi-layered sector within which a large number of goods and service providers have competing interests. It is difficult to avoid conflict, if not disputes, between those layers of the supply chain which might potentially affect the entire process and timelines, regardless of how tiny the problem is. This is perhaps why, unlike other sectors in Turkey, the necessity for efficient dispute resolution in the construction sector leads players to arbitration. Courts in Turkey therefore receive few construction related disputes other than employment cases.”

 

SINGAPORE

Lim Tat

Aequitas Law LLP

 “The factors which influence parties can be both legal and non-legal. Legal factors include the rights to determine the choice of arbitrator, rules of arbitration and pace of proceedings – all of which should be set out in the arbitration agreement. There is also the confidentiality implied in arbitration proceedings, the assistance of the national court in aid and support of arbitration and recognition of foreign arbitral awards under the New York Convention. Non-legal factors depend on the seat of arbitration, the venue of arbitral hearings and the rules of the arbitral institution, and may include flexibility, speed, efficiency and cost-effectiveness of the arbitration process compared with litigation. In recent years, there has an increased focus by businesses and arbitration institutions on ensuring that arbitration continues to provide speed and cost effectiveness as a means of dispute resolution.”

 

VIETNAM

Tony Nguyen

EP Legal

 “The choice of arbitration over litigation is usually influenced by the advantages of arbitration, including the independence and impartiality of arbitrators, the enforceability of an arbitration award, the confidentiality of the arbitration process, the reasonable timeframe, the cost, and the flexibility in choosing arbitrators, place, time, governing law and language of arbitration. In the context of dispute resolution practices in Vietnam, the key benefit of the arbitration process, in comparison to litigation, is the impartiality and independence, given that the Vietnamese courts have long been considered biased and politically influenced. Another main benefit is the enforceability of arbitration awards as Vietnam ratified the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards in 1995, under which signatory countries began to show acceptance by allowing the enforcement of foreign arbitral awards.”


CONTRIBUTORS

Advokatfirman Vinge KB

Aequitas Law LLP

Candey

EP Legal

Freshfields Bruckhaus Deringer LLP

Hunter Litigation Chambers Law Corporation

Loyens & Loeff Luxembourg s.à r.l.

Marval O’Farrell & Mairal

Moroglu Arseven

Ramírez Ornelas, S.C.

Walder Wyss LTD

Wierzbowski Eversheds


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