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ANNUAL REVIEW

Commercial Arbitration 2018

March 2018  |  LITIGATION & DISPUTE RESOLUTION

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Commercial arbitration has emerged as a popular alternative to litigation thanks to its perceived cost and time efficiencies. However, there are many other advantages to choosing arbitration, including confidentiality, choice of arbitrator and the ease of enforcing awards. The number of arbitration institutions, seated in different jurisdictions, is increasing. Leading international institutions find themselves competing with new regional hubs. Forums in jurisdictions such as the United Arab Emirates are challenging the status quo, establishing themselves as viable alternatives, much as Hong and Singapore did in the past.

 

UNITED STATES

Todd J. Ohlms

Freeborn & Peters LLP

“Factors that influence parties in their choice of arbitration over litigation include the subject matter of the potential dispute, whether the client perceives a benefit to maintaining the confidentiality of the information likely to be exchanged in the dispute and whether they are willing to exchange reduced discovery and grounds for appeal for speed of resolution. Importantly, we are continuing to see complex commercial arbitrations stretch out as arbitrators struggle to enforce discovery rules and deadlines on litigants and try to reach a middle ground, instead of ruling on well-founded discovery motions.”

 

COLOMBIA

Felipe Piquero Villegas

Esguerra Asesores Jurídicos

“There are three main factors that typically influence parties in their choice of arbitration over litigation as a dispute resolution mechanism. The first factor is the duration of domestic court proceedings. Compared to court proceedings, arbitration is short and expeditious. Arbitral tribunals in Colombia usually settle disputes within two years. The second factor is the expertise of the arbitrators. Parties can select arbitrators based on the subject matter of the dispute, particularly in highly specialised cases, such as construction, financial matters, natural resources or project finance, among others. The third factor is the availability of the arbitrator.”

 

ARGENTINA

Ricardo A. Ostrower

Marval O’Farrell & Mairal

“The tension between litigation and arbitration is certainly one of the main trends in the dispute resolution area. Neither choice is inherently better or worse than the other. The pros and cons of whether a complex business dispute is better suited to litigation in a public courtroom or private arbitration should be weighed on a case-by-case basis. The major advantage that will generally favour the choice of arbitration over litigation relies on the international recognition and enforceability of arbitral awards. The New York Convention of 1958, ratified by 157 countries, including all Latin American countries, allows for the enforcement of an arbitral award as if it were a local judgment with limited grounds for challenge.”

 

UNITED KINGDOM

Paul Ferguson

SCA Ontier LLP

“Large commercial entities will always have their own reasons for choosing arbitration over litigation, but in our experience, two factors stand out. The first concerns enforcement, where the New York Convention, in particular, offers comfort and certainty. The second is confidentiality, with many companies preferring to keep their disputes out of the public eye. Arbitration is also generally considered to be less costly and time consuming than traditional litigation in the UK and more flexible, which can be attractive to international parties, especially where time difference is a factor.”

 

FRANCE

Serge Gravel

FLV & Associés

“The usual benefits of international arbitration 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, whose judges are elected by the local business communities and, in most cases, are not trained as lawyers. 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.”

 

SWITZERLAND

Dieter Hofmann

Walder Wyss Ltd

“Several key factors may influence parties’ choice of arbitration over litigation. First, a lack of trust in the counterparty’s home jurisdiction and, hence, the goal to avoid having to litigate a dispute in that jurisdiction. Second, the confidentiality of the arbitral proceedings, which is, in contrast to what many parties believe, not a quasi-automatic feature of every arbitration. Third, the possibility of taking part in the appointment of the tribunal and, hence, the opportunity to ensure that, at least some of the arbitrators have the background, expertise and experience necessary to deal with the dispute at hand. Fourth, speedier proceedings which take into account potential appeal possibilities in state court litigation.”

 

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 not an issue. Yet, in many commercial disputes, parties 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 in place, most notably the Brussels I Regulation, which facilitates enforcement in all EU states.”

 

SWEDEN

Krister Azelius

Advokatfirman Vinge KB

“One of the key benefits of arbitration is the ability to choose an arbitrator and to be able to customise the expert knowledge you require during a tribunal. Time is of the essence. Swedish courts are very slow compared to arbitration proceedings. Furthermore, the Swedish Code of Judicial Procedure provides very limited scope for parties to obtain disclosure of specific documents. These rules are not applicable in arbitration and document production is increasing year-by-year in Swedish arbitration. Swedish arbitral proceedings tend to be efficient, especially if the proceedings are initiated under the SCC Institute, which provides tough but realistic time frames.”

 

HONG KONG

Damien McDonald

Fangda Partners

“The key factor influencing parties to choose arbitration over litigation is that arbitration is a uniquely international dispute resolution mechanism. By contrast, if the parties are in the same country and the court system is independent, competent and predictable then arbitration may not be appropriate. The international aspect is relevant in two key areas. The first is that it enables parties to resolve their disputes privately and outside the national courts of their counterparty. The second is the ability to enforce their awards across borders in most countries under the New York Convention, or, in the Hong Kong-mainland China context, the Arrangement Concerning Mutual Enforcement of Arbitral Awards.”

 

AUSTRALIA

Ben Luscombe

Clifford Chance LLP

“Unlike the courts in many jurisdictions, arbitration provides parties to cross-border transactions with a bespoke dispute resolution process that gives them the freedom to select a tribunal that knows their world, a process that they have control over and a private and confidential forum for their dispute. Most importantly, international arbitral awards are relatively easy to enforce in all jurisdictions that are signatories to the New York Convention or, in an investor-state context, against states that have signed up to the convention on the settlement of investment disputes between states and nationals of other states, known as the ICSID Convention.”


CONTRIBUTORS

Advokatfirman Vinge KB

Clifford Chance LLP

Esguerra Asesores Jurídicos

Fangda Partners

FLV & Associés

Freeborn & Peters LLP

Marval O’Farrell & Mairal

SCA Ontier LLP

Skadden, Arps, Slate, Meagher & Flom LLP

Walder Wyss Ltd


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