Brexit Fails to Dampen London's Popularity for International Arbitration
VIEW THE REPORT
London and Paris remain most popular seats, and the leading Asian hubs cement their positions in the top tier of arbitral centres.
London retains its top spot as the preferred seat of international arbitration for cross-border disputes, according to a study published today by Queen Mary University of London, in partnership with global law firm White & Case.
London and Paris have reinforced their dominance over the international arbitration landscape, ranked by more than 900 arbitrators, in-house and external counsel as the two most preferred seats (64% and 53%, respectively). London has surged further ahead of Paris by a margin of more than 10% since the last study in 2015, with the next positions going to Singapore, Hong Kong and Geneva respectively.
The new research places the same jurisdictions in the top five as appeared in the last survey in 2015, indicating these venues have cemented their reputation. London is the favoured seat in all global regions, Paris is ranked in the top four in all regions and was voted as second most preferred seat in all but Asia-Pacific, where it is in fourth place. Across the world, the five most preferred arbitral institutions continue to be the ICC, LCIA, SIAC, HKIAC and SCC.
The Brexit effect and preferred venues
55% of respondents predict London’s appeal as a seat of international arbitration will remain unchanged after Brexit, while a positive 9% think it will lead to a further rise in popularity. Among the 37% who believe London’s dominance will suffer from Brexit, 70% of these identify Paris as the main beneficiary, while 22% think Singapore or Geneva will benefit, and 15% named Hong Kong.
Professor Stavros Brekoulakis, of Queen Mary’s School of International Arbitration, commented: “Most of the arbitration community believes London’s reputation as a location of excellence for international arbitration will outweigh the challenges presented by Brexit. It is interesting to see Paris is almost 50% ahead of any other city when looking at the main would-be benefactor of any negative Brexit fall out on London’s position. This is no doubt due to Paris’ excellent reputation as a seat - consistently ranking among the top three most popular seats in both the current survey and our previous 2010 and 2015 surveys.”
In comparison to 2015, Singapore and Hong Kong have switched places with a margin of 10% between them.
Paul Friedland, Partner and Head of International Arbitration at White & Case commented: “The 2015 survey predicted the dominance of the top seats was unlikely to be challenged. This has proven to be the case. Although this year we have seen a change in preference for Singapore over Hong Kong, both of these Asian seats have affirmed their popularity as arbitration-friendly jurisdictions. As with seats, the top institutions have retained their positions, except that the SIAC has passed the HKIAC and is now in third position.”
Arbitration in conjunction with ADR
While international arbitration is by far the preferred method of resolving cross-border disputes according to 97% of the global arbitration community, high costs and lack of speed are seen as some of the top drawbacks (67% and 34% respectively). An interesting new trend shows how users are seeking to combat this by increasingly combining international arbitration with Alternative Dispute Resolution (ADR).
Compared to the 2015 findings, there has been a significant increase in the popularity of arbitration combined with ADR: almost half of all respondents expressed their preference for this combination as opposed to only 34% in 2015, and 60% of corporate counsel prefer the combined approach.
Dipen Sabharwal, Partner at White & Case said: “This research shows that corporations, through their in-house counsel, display an overwhelming preference for international arbitration, either in isolation or in conjunction with ADR, over court litigation. International arbitration however is not without its drawbacks and it’s interesting to see large global companies increasingly combining it with various other forms of ADR to find a swifter and more cost-efficient resolution of their disputes.”
Existing studies on arbitral appointments by arbitral institutions and groups such as Equal Representation in Arbitration confirm the historic imbalance of diversity across tribunals, but also reflect a change slowly coming into effect.
While nearly 60% agree progress has been made in gender diversity on arbitral tribunals over the past five years, less than a third believe this in respect of geographic, age, cultural and ethnic diversity.
Arbitral institutions are considered best placed to ensure greater diversity across tribunals (45%), followed by parties (including respondent’s own in-house counsel) and external counsel.
Mr Sabharwal added: “It’s encouraging to see recognition of the value of diversity in arbitrator appointments and the desire to expand the conversation about gender to embrace other aspects of diversity. There still though is no clear-cut position about how greater diversity is to be achieved. Parties and counsel should also be doing more considering the role they play in appointing arbitrators.”
Efficiency & technology
Looking to the future, more than half of the global arbitration community (61%) think that increased efficiency through technology will significantly affect the evolution of international arbitration. Technologies highlighted for their high potential to make the system more efficient include: hearing room technologies (98%), cloud-based storage (91%), videoconferencing (89%) and AI (78%). Current reticence to make use of IT such as AI and virtual hearing rooms is reported to centre on a lack of familiarity and high upfront costs.
Mr Friedland added: “Arbitration users are keen to increase efficiency and welcome technological innovation. But the initial cost is the main barrier. When new technologies are expensive, counsel will struggle to justify the cost to their clients. As to AI, there is currently a lack of familiarity, but there is no doubt it will play a much greater role in arbitration in the future.”
About the Survey
The research for this study was conducted from October to December 2017 by the School of International Arbitration (SIA), Queen Mary University of London. The research, which is the most comprehensive empirical study the SIA has ever conducted, was led by Professor Stavros Brekoulakis and Mr Adrian Hodis and was conducted in two phases: the first quantitative and the second qualitative. Phase one involved a questionnaire of 53 questions which was completed by 922 respondents between 10 October 2017 and 17 December 2017. The respondent group included in-house counsel, arbitrators, private practitioners, staff of arbitral institutions, academics, expert witnesses, economists, entrepreneurs, law-students, judges, third party funders and government officials. Phase two included 142 face-to-face or telephone interviews, ranging in duration from 10 minutes to 100 minutes, which were conducted between 1 November and 18 December 2017. Interviewees were drawn from a diverse group based on primary role, seniority, geographic location and experience in international arbitration.
For more information please speak to your local media contact.