ANNUAL REVIEW

Commercial Arbitration 2017

March 2017  |  LITIGATION & DISPUTE RESOLUTION

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Time and cost savings derived from arbitration are often cited as key drivers behind its rising popularity over litigation as means of resolving commercial disputes. Other benefits include confidentiality, choice of arbitrator and the ease of enforcing awards. The number of possible venues for arbitration is also contributing to its proliferation around the world. Traditional seats such as London, Paris and New York have, and will remain, preeminent – particularly as the courts in these jurisdictions are pro-arbitration and host an ecosystem of lawyers, arbitrators and specialised facilities. However, other markets are getting in on the act. As international trade and foreign investment grow, Hong Kong, Singapore and Dubai, among others, have developed world-class arbitration facilities. Although these regions have some way to go before they usurp traditional seats, their importance is undeniable.

 

UNITED STATES

Thomas M. Ventrone

International Centre for Dispute Resolution (ICDR)

“Many in the field are prone to say that the factors that most influence choosing arbitration over litigation are the time and cost savings. Although these issues are often the case, they are not the only factors involved. There may be a myriad of reasons parties choose arbitration besides time and cost savings. These include: party-autonomy and having control of the process, especially in selecting their decision-maker, choosing an arbitrator rather than having a judge assigned; confidentiality; finality; limits on discovery; the ease of enforcing arbitration awards – especially in international matters; choice of law; and the increased possibility of maintaining business relations.”

 

CANADA

Bogdan-Alexandru Dobrota

Woods LLP

“Celerity, neutrality, the ability to choose the decision-makers, confidentiality and flexibility are among the most prominent benefits of arbitration. Among those, flexibility is worthy of particular mention. Subject to the imperative rules of the law of the seat of arbitration, parties in arbitration are generally free to craft a procedural framework tailored to the specificities of their dispute, including customised rules on time periods, discovery, object and format of pleadings and the conduct of the hearing. This procedural flexibility is in keeping with a greater responsiveness by arbitral tribunals to the parties’ needs than certain state courts are typically able to provide.”

 

ARGENTINA

Ricardo A. Ostrower

Marval O’Farrell & Mairal

“The choice of arbitration versus litigation should always be made on a case-by-case basis, taking into account the nature of the dispute and the parties involved, among other strategic aspects. However, there are at least three key benefits that would typically tip the balance in favour of arbitrating rather than litigating disputes. First, enforcing an arbitral award in another jurisdiction is generally easier than state court judgments, thanks to the New York Convention – which has been ratified by more than 150 countries, including Argentina. This is a crucial concern in the context of cross-border disputes.”

 

UNITED KINGDOM

Seamus Andrew

SCA Ontier LLP

“Confidentiality and speed to final decision are still the most important factors for most commercial parties considering arbitration as a dispute resolution mechanism. To these I would add, in the context of large-scale international disputes, the desire of parties to choose a neutral forum. For instance, if one party is a Brazilian corporation and the other a European business, each side might regard the other’s home court, rightly or wrongly, with a degree of suspicion. Instead, the parties can put in place a high-quality international arbitration panel made up of former senior judges from jurisdictions acceptable to them both.”

 

FRANCE

Serge Gravel

FLV & Associés

“There are the usual benefits of international arbitration that come to mind: neutrality, confidentiality and speed. Neutrality is a major concern in the context of the French judicial system. The courts that have a general and exclusive jurisdiction in France over business matters are the commercial courts – Tribunaux de Commerce – whose judges are elected by the local business communities and in most cases are not trained as lawyers. Those special commercial courts were instituted in France as early as the 15th and 16th centuries. Needless to say, foreign enterprises are reluctant to accept the sort of jurisdiction which is perceived as being, by definition, highly biased or partial, not to mention the potential for conflicts of interests.”

 

SPAIN

Alfonso López-Ibor

Ventura Garcés & López-Ibor

“Broadly speaking, arbitration is more common in commercial contracts which involve the intervention of experts. In Spain, banks are reluctant to submit to arbitration and usually prefer the jurisdiction of local courts, except in certain specialised areas such as derivatives, where contracts may have arbitration clauses. In Spain, a key benefit of arbitration has been its speed compared to ordinary court proceedings which tend to be time consuming – Spanish courts are often overloaded with work and lack adequate resources to cope with this situation.”

 

GERMANY

Dr Anke Sessler

Skadden, Arps, Slate, Meagher & Flom LLP

“In Germany, court proceedings are often just as fast – or lengthy – as arbitration. The partiality of judges is also hardly an issue. Yet, in many commercial disputes, parties often opt for arbitration. For all disputes with an international element, language and enforceability play a pivotal role. While a limited number of courts offer the possibility of holding the hearing in English – if both parties agree – written submissions still need to be drafted in German. In terms of enforceability, Germany has some agreements with other countries in place, most notably the Brussels I Regulation, which facilitates enforcement in all EU states.”

 

INDIA

Naresh Thacker

Economic Laws Practice

“Delays in obtaining finality in court litigation have resulted in parties’ preferring arbitration in India. One of the prime benefits of arbitration under the amended statutory framework is that they are now statutorily time bound, requiring the rendition of an award within a maximum period of 18 months. Statutory monitoring of arbitrators’ fees is another significant step, which will keep costs in check. Furthermore, under the amended act, the grounds on which an award may be set aside have also been narrowed – especially a challenge on grounds of breach of public policy of India. There is also a push from the government to promote institutional arbitration.”


CONTRIBUTORS

Economic Laws Practice

FLV & Associés

International Centre for Dispute Resolution (ICDR)

Marval O’Farrell & Mairal

SCA Ontier LLP

Skadden, Arps, Slate, Meagher & Flom LLP

Ventura Garcés & López-Ibor

Woods LLP

 


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