Choosing a forum for international commercial disputes: litigation, arbitration or mediation?

June 2025 | SPECIAL REPORT: INTERNATIONAL DISPUTE RESOLUTION

Financier Worldwide Magazine

June 2025 Issue

Some choice of forum for resolving disputes will almost always be available to the parties at the point of entering into commercial deals. It is better to choose a forum that might, in some respects, be found wanting rather than to make no choice at all or to adopt a template clause without applying one’s mind to it. The latter often results in inconsistent forum choices, a perennial issue in complex deals involving multiple agreements.

Seeking to agree a forum after the dispute has arisen often stalls because of the clash of the parties’ competing interests as a claimant or defendant. Therefore, not having a clear contractual framework in place, which governs the process for resolving disputes, introduces a high degree of risk in a commercial arrangement. Its absence will entail litigation before a court of the claimant’s choosing, with a significant risk of additional satellite litigation, anti-suit injunctions or multiplicity of legal proceedings. However remote the prospect of a dispute is at the point of entering into a commercial relationship, making an informed choice of a dispute forum matters as much as making the right choice. In cross-border dealmaking, not choosing a forum should not be an option; nor should the choice be a matter of accident.

Enforcement

The risk of not being able to enforce an award or judgment in the principal jurisdiction of your counterparty continues to be the top factor affecting the choice of litigation, arbitration or mediation, as well as of the jurisdiction where those resolution processes are to take place. Since the coming into effect of the 1958 New York Convention, commercial arbitration has been the leading forum for international disputes, especially those involving parties based in jurisdictions known for a difficult enforcement environment. In the UK, the perceived increase in the enforcement risk brought about by Brexit boosted arbitration’s popularity in contracts involving EU parties. It is too soon to tell whether this effect will endure given the UK’s accession to the Hague Conventions on Choice of Court Agreements and, more recently, on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, which comes into effect on 1 July 2025.

Mediation, a process involving an intermediary assisting the parties to reach a negotiated settlement of their dispute historically reliant on arbitration or litigation for the enforcement of settlement agreement breaches, has also received a boost in terms of cross-border enforcement by means of the Singapore Convention on International Settlement Agreements Resulting from Mediation. The Convention intended to streamline enforcement of mediated settlements without the need to bring arbitral or judicial proceedings for breach of contract has over 50 signatories, albeit some two thirds (including the UK) are yet to ratify it.

Looking ahead, notwithstanding the significant milestones in improving cross-border enforcement achieved over the last 70 years, it is conceivable that protectionist policies currently pursued around the world may augment enforcement risks in commercial disputes, including through the imposition of restrictions on the recognition and enforcement of awards or judgments obtained in ‘unfriendly’ jurisdictions.

The other factors

There are other key factors to bear in mind when deciding whether to litigate or arbitrate a dispute, as outlined below.

Nature of the dispute. The nature of the dispute and the issues that need to be resolved often affect the decision to litigate or arbitrate. By way of example, disputes relating to fraud may be better addressed in litigation (benefitting from more far-reaching disclosure, the ability to enjoin parties beyond the contractual signatories, public process backed by severe penalties for perjury) whereas specialist disputes requiring technical knowledge may be better dealt with by specialist arbitrators of the parties’ own choosing.

Many contracts will contain a choice of forum clause specifying whether a dispute should be determined by arbitration or litigation. It is not unusual for the parties’ choice at the time of entering into the contract to be unsuitable to effectively deal with the dispute that in fact arises. If a dispute involves allegations of fraud or other serious wrongdoing, it will likely not be possible for the parties to agree to a different forum than that specified in the contract (say from arbitration to litigation) once the dispute has arisen. In those situations, a party will need to carefully consider the scope of the forum clause, to identify what issues in dispute are and are not caught by it. As confirmed by the Supreme Court in The Republic of Mozambique (acting through its Attorney General) v. Privinvest Shipbuilding SAL (Holding) and Others, only matters which fall within the scope of an arbitration agreement could be a susceptible to a mandatory stay further to section 9 of the Arbitration Act 1996 if pursued outside arbitration.

Section 9 of the Arbitration Act 1996 provides for a mandatory stay in favour of arbitration where: “a party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.”

In the Mozambique decision, the Supreme Court held that a “matter” is a substantial issue that is legally relevant to a claim or a defence, or foreseeable defence, in the legal proceedings, and is susceptible to be determined by an arbitrator as a discrete dispute”. In other words, in certain cases it might be possible for a party to bring a claim in a court notwithstanding the existence of an arbitration clause in the contractual matrix between the parties.

Control over the proceedings. Arbitration provides parties with more control over the proceedings. Depending on the arbitration clause, each party will typically choose an arbitrator, and those two arbitrators will pick the third arbitrator to be their chair. This means that where a dispute requires specialist technical knowledge, parties may appoint arbitrators with this specialist knowledge.

Court disputes are determined by judges. Parties are not able to choose which judge will resolve their dispute, as the judge is allocated by the court. However, it is worth noting that in the High Court of Justice in England and Wales, the claimant has the option of commencing its claim in a specialist division or list.

Arbitration also allows a party to have more flexibility over the procedure for the proceedings. Commercial litigation in the courts of England and Wales is subject to the Civil Procedure Rules. There are rules also provided by the specialist business and property courts guides, such as the Commercial Court Guide, which must be followed.

Time to resolve the dispute. Typically, litigation takes longer to resolve than arbitration. This is because the litigation process up to trial is usually more onerous, and there are other court users who will also be seeking to have hearings listed to resolve issues prior to any trial. On the other hand, in respect of urgent interim matters, the courts have the upper hand in terms of timing because of the difficulties in convening hearings on short notice before the already appointed tribunal of three arbitrators. In England and Wales, the High Court will always find a judge to deal with an urgent hearing on short notice.

Disclosure. Disclosure is much more extensive in litigation than in arbitral proceedings. Disclosure of documents is a key part of English litigation and is vital to the just resolution of a dispute. A document is defined very widely “as any record of any description containing information”. In practice, this covers an enormous range from paper and electronic documents, WhatsApp messages, voicemail recordings to even post-it notes. Parties are required to identify and make available to the other parties documents that are relevant to the issues in the litigation, including documents that are adverse to their case. Arbitral proceedings, designed to deal with breaches of contracts, do not have the same onerous and intrusive disclosure requirements.

Confidentiality. Typically, an arbitration is confidential and is heard in private. Only the parties to the dispute will be aware of the arbitration. By contrast, litigation is public. Members of the public and press can attend court hearings and access documents on the court file. There are benefits and downsides to both, and depending on the nature of the dispute, a party may prefer for the proceedings to be public or confidential. For obvious reasons parties often prefer commercially sensitive and confidential dealings and affairs not to be made public.

Appeals. Broadly speaking, in respect of arbitrations seated in England and Wales, the ability to appeal arbitral awards is significantly limited to points of law and serious irregularities. In choosing arbitration, the parties agree to abide by the arbitrators’ decision, which is final. By contrast, in litigation in England and Wales, the parties are less constrained in appealing the first instance judgments to the Court of Appeal.

Mediation

As to mediation, while it outscores both litigation and arbitration on several fronts, it is the looming prospect of litigation or arbitration with the costs, stress, management time and uncertainty of the outcome involved in those processes that incentivise the parties to mediate to seek to achieve a settlement. Even compulsory mediation can only go so far as to bring the parties to a negotiating table; it cannot impose an outcome without their consent. Indeed, a party will often need to credibly demonstrate the commitment to see the proceedings through to the end, whether by completing statements of case or advancing disclosure in order to unlock the opponent’s incentive to mediate and compromise. Mediation, therefore, is better viewed as a complement to arbitration or litigation rather than their alternative. Recognising this, ongoing efforts are being made to more effectively combine mediation with arbitration or litigation to improve outcomes for the parties, notably with the growth in popularity of med-arb and arb-med-arb clauses and institutional rules in Asia and beyond.

Vlad Meerovich is a partner and Stephanie Williams is an associate at Peters & Peters. Dr Meerovich can be contacted on +44 (0)20 7822 7762 or by email: vmeerovich@petersandpeters.com. Ms Williams can be contacted on +44 (0)20 7822 7732 or by email: swilliams@petersandpeters.com.