The original article Empirical Findings on International Arbitration: An Overview by Christopher R. Drahozal from the University of Kansas, discusses newly (and not so new) available international arbitration data generated through arbitration institutions, scholarly research, or commentator analysis and provides a picture of:
(i) how parties use arbitration clauses, and the frequency of international commercial and investment arbitration proceedings to resolve transnational disputes;
(ii) various arbitral procedures;
(iii) applicable law;
(iv) demographics of international arbitrators;
(v) controversies in relation to investment arbitrations;
(vi) compliance with and enforcement of international arbitration awards; and
(vii) potential precedential effects.
Use of arbitration in resolving transnational disputes
Data analysis suggests that preference for the use of arbitration clauses in transnational commerce depends on the type of contract and transaction. However, the reasons for inclusion or omission of an arbitration clause in various types of contracts have not been fully explored yet.
Litigation may be preferred over arbitration in situations where emergency relief may be required, or where applicable law to disputes under those contracts are clear or offer special procedures. Survey data indicates that parties favour arbitration for reasons such as the enforceability of awards, and avoiding specific legal systems/national courts. Reasons which favour litigation include cost, and lack of effective sanctions during the arbitral process.
While the data does not include all types of filings, or every institution, it shows that the number of filings administered by various institutions internationally, such as the ICC, continue to grow each year (indeed, the ICC reported this month that its caseload has reached record levels).
The data also indicates that there is an increase in ICC arbitration proceedings in countries following that country’s adoption of a revised international arbitration statute as well as an increase in the number of arbitrators selected from that country in ICC arbitrations.
Studies reviewed in the article describe a variety of information on procedural topics of international arbitration, such as the length of proceedings and size of tribunals, interim measures available, challenges to arbitrators, and mediation.
Reports confirm that a bulk of a party’s costs of the proceedings are made up of expenses related to witness and expert evidence, and lawyers fees and expenses. Arbitrator fees and case administration tend to make up a much smaller portion of overall costs.
While different tribunals vary in length of proceedings, on average, investment arbitration tends to take longer than a commercial arbitration from filing to award. Tribunal sizes tend to be split to roughly half of all international commercial arbitrations involving a sole arbitrator or a panel of three arbitrators.
Collected data also suggests that while requests for relief are relatively infrequent, arbitrators do have the authority to order interim measures. The use of and availability of this procedure has increased in recent years.
While there was some concern that an increase in arbitrator challenges was due to the adoption of the IBA Guidelines on Conflicts of Interest in International Arbitration, the data suggests that there is reduction of challenges as the application of the Guidelines becomes clearer.
Arbitrators from civil law backgrounds tend to be more willing to use various techniques to encourage settlement than arbitrators from common law backgrounds.
While a minority of contracts do not specify an applicable law for dispute resolution, the majority of contracts do so specify, and frequently choose English or US laws and also commonly choose laws of other European countries.
Demographics and influences
A variety of studies has shown that a majority of investment arbitrators have held careers in the legal, academic fields, or government roles. Studies have also highlighted that, European, Anglo-American and Latin-American (trained in Europe, UK, and US), men make up a majority of arbitrators.
Compliance and enforcement of awards
When taking a closer look at collection of awards, research and data suggest that a majority of awards are voluntarily complied with, including those that partially complied after renegotiating the amount post-award. Of the small percentage of awards challenged in court, relatively few were either set aside or adjusted, with the remaining being enforced.
Arbitration awards do not set binding precedent, but prior arbitral awards have been referred to in subsequent tribunals as influence for awards or reference in regards of jurisdiction and procedure in a small percentage of decisions.
While there is more information available today than ever before, there are still limitations and considerations on determinations made through what is currently available.
When one examines the data, there should be consideration given to inherent limitations such as:
(i) sample parameters and quality;
(ii) potential effects on observed outcomes due to parties’ shifting behaviours and decisions to litigate, arbitrate, or settlement of matters; and
(iii) the lack of data on the strength or weakness of underlying cases making it difficult to evaluate whether claimant win rates are too high or low.
Written by Ahsan Hasnani.
This is a summary of an academic article, the original paper is available here.
Ahsan Hasnani is an associate lawyer at Al Tamimi & Company in Abu Dhabi. Qualified in Texas in 2014, he re-located to the UAE at the beginning of the year to focus on all aspects of construction and infrastructure law. As part of the team, he works on contentious and non-contentious services including risk management strategies and dispute services, including dispute boards, expert determination, arbitration and litigation.