By Jean-Georges Betto, Lovells
It is commonplace to say that arbitration is the preferred mechanism to resolve international commercial disputes. The growing number and diversity of cases submitted to arbitration together with the use of arbitration clauses in the vast majority of international contracts are particularly convincing evidence of this current trend.
The reasons why international companies keep turning away from national court systems are equally well-known. Arbitration is the most appropriate mechanism of dispute resolution for complex international matters involving a high level of expertise and aspects of foreign law together with a large number of documents to be analysed and handled as exhibits in the course of the arbitration proceedings.
For the past few decades, arbitration has gained strength as a private system able to fulfil the parties’ expectations and needs and strike the most perfect combination between flexibility and efficiency in the resolution of disputes.
Arbitration has evolved and expanded. While it has always been praised for granting parties a great deal of autonomy in the administration of their cases, it is the recent phenomenon of institutionalisation which has contributed to making it so attractive and successful.
Indeed, major arbitration institutions such as the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), International Centre for Settlement of Investment Disputes (ICSID) or the American Arbitration Association (AAA), which handle thousands of new cases every year, have developed a sophisticated set of rules that guarantee a rational, fair and efficient treatment of international disputes. This has contributed to reinforce the confidence placed in the process, arbitration no longer being perceived as an obscure or dubious means of dispute settlement.
Despite this success, some practitioners have recently voiced concerns that arbitration may be on the decline. Among the reasons often cited to support these views are (i) the progressive disappearance of confidentiality motivated by an accrued transparency in cases involving important “public interest” and (ii) the length and rising costs associated to the proceedings, due to the use of increasingly complex procedures sometimes based on national court procedures (e.g. discovery process imported from US litigation model).
Arbitration today faces important challenges which deserve careful consideration. In particular, it is of fundamental importance that a creative approach to the needs of the parties is adopted by providing tailor-made and adapted dispute settlement tools, rather than following the path of imitating other domestic court systems.
The relative drawbacks do not provide sufficient grounds for pessimistic or absolute predictions about the future of arbitration. Rather, some recent moves provide encouraging signs of a strong dedication to still offer innovative and attractive solutions to international companies.
The recent release of reports and guidelines aiming at controlling time and costs and simplifying procedures (such as the 2007 Report of the Commission on Arbitration) are but a few examples of the strong commitment to constantly respond to the concerns of those that are involved in arbitration proceedings.
Jean-Georges Betto is Partner at Lovells. Lovells is one of the largest international business legal practices, with over three thousand people operating from 27 offices in Europe, Asia and the United States.