2021 International Arbitration Survey: Adapting arbitration to a changing world
The field of international arbitration is dynamic by nature. Its hallmarks of flexibility and party autonomy allow it to develop and adapt in response to the needs of its users. Recent times have seen an increased focus on drivers of change such as diversity, technology, environmental considerations and information security. The COVID-19 pandemic has also presented challenges to the way in which the international arbitration community interacts.
The 2021 International Arbitration Survey, titled 'Adapting arbitration to a changing world,' explores how international arbitration has adapted to these changing demands and circumstances. The survey investigates trends in user preferences and perceptions, and identifies opportunities for international arbitration to adapt more and better. This edition saw the widest-ever pool of respondents, with 1218 questionnaire responses received and 198 interviews conducted. Views were sought from a diverse pool of participants in the international arbitration sphere, including in-house counsel from both public and private sectors, arbitrators, private practitioners, representatives of arbitral institutions and trade associations, academics, experts and third-party funders.
White & Case is proud once again to have partnered with the School of International Arbitration. The School has produced a study which provides valuable insights into how international arbitration has adapted, and what more needs to be done by and for its diverse stakeholders. I am confident that this survey will be welcomed by the international arbitration community.
We thank Norah Gallagher and Dr Maria Fanou (White & Case Postdoctoral Research Fellow in International Arbitration) for their exceptional work, and all those who generously contributed their time and knowledge to this study.
Abby Cohen Smutny
Global Head of International Arbitration Practice Group
White & Case
It is with a sense of relief that I present the 2021 International Arbitration Survey on 'Adapting arbitration to a changing world'. In fact, that is exactly what happened just after we started work on the draft questionnaire in early 2020—the world changed due to COVID-19. We could not have known at that time quite how big an impact the pandemic would have globally. In such uncertain times, we had to postpone the launch of the survey for several months. We had no way to assess how long we should wait to start and how it might impact on the survey results.
The strength of the survey is entirely based on the level of participation by the arbitration community. It was an anxious time to see whether COVID-19 would adversely impact the numbers. I was truly grateful for the support of the international arbitration community as the largest number of people ever completed the survey—more than 1,200. Dr Fanou also interviewed almost 200 candidates from 29 countries to provide nuance and context for some of the findings. We thank all of the respondents for making this survey so comprehensive—a true success despite the pandemic.
This is the 12th empirical survey conducted by the School of International Arbitration at Queen Mary University of London and the fifth in partnership with White & Case LLP. The results reflect an interesting snapshot of change in arbitral practice during a time of global upheaval. The arbitration community had to adapt quickly, and some of these changes will remain after the pandemic recedes. Virtual hearings and increased reliance on technology are clear examples of changes that will persist. It has been a challenging yet rewarding process, but we are pleased with the interesting results.
This survey may also prompt further discussion on future changes to arbitral practice and procedural rules.
Deputy Director, School of International Arbitration, Centre for Commercial Law Studies,
Queen Mary University of London
“The field of international arbitration is dynamic by nature. Its hallmarks of flexibility and party autonomy allow it to develop and adapt in response to the needs of its users.”
- International arbitration is the preferred method of resolving cross-border disputes for 90% of respondents, either on a stand-alone basis (31%) or in conjunction with ADR (59%).
- The five most preferred seats for arbitration are London, Singapore, Hong Kong, Paris and Geneva.
- 'Greater support for arbitration by local courts and judiciary', 'increased neutrality and impartiality of the local legal system', and 'better track record in enforcing agreements to arbitrate and arbitral awards' are the key adaptations that would make other arbitral seats more attractive.
- The UNCITRAL Arbitration Rules are the most popular regime for ad hoc arbitration.
- The five most preferred arbitral institutions are the ICC, SIAC, HKIAC, LCIA and CIETAC.
- Respondents chose 'administrative/logistical support for virtual hearings' as their top choice adaptation that would make other sets of arbitration rules or arbitral institutions more attractive, followed by 'commitment to a more diverse pool of arbitrators'.
- Arbitration users would be most willing to do without 'unlimited length of written submissions', 'oral hearings on procedural issues' and 'document production' if this would make their arbitrations cheaper or faster.
- More than half of respondents agree that progress has been made in terms of gender diversity on arbitral tribunals over the past three years. However, less than a third of respondents believe there has been progress in respect of geographic, age, cultural and, particularly, ethnic diversity.
- Respondents are divided as to whether there is any connection between diversity on a tribunal and their perception of the arbitrators' independence and impartiality. Just over half of the respondents (56%) stated that diversity across an arbitral tribunal has a positive effect on their perception of the arbitrators' independence and impartiality, but more than one-third (37%) took a neutral view. Others consider the enquiry redundant, on the basis that the call for more diversity does not require further justification.
- 59% of respondents emphasise the role of appointing authorities and arbitral institutions in promoting diversity, including through the adoption of express policies of suggesting and appointing diverse candidates as arbitrators. However, the significance of the role of counsel is highlighted by about half of respondents, who included 'commitment by counsel to suggesting diverse lists of arbitrators to clients' amongst their answers. In-house counsel also bear the onus of encouraging diversity through their choice of arbitrators.
- Many respondents feel that opportunities to increase the visibility of diverse candidates should be encouraged through initiatives such as 'education and promotion of arbitration in jurisdictions with less developed international arbitration networks' (38%), 'more mentorship programmes for less experienced arbitration practitioners' (36%) and 'speaking opportunities at conferences for less experienced and more diverse members of the arbitration community' (25%). Building visibility is particularly important in light of the general perception that users prefer arbitrator candidates about whom they have some knowledge or with whom they have previous experience.
- The general consensus amongst respondents is that caution should be exercised when exploring whether adaptations in arbitral practice experienced during the COVID-19 pandemic may have an impact on promotion of diversity objectives, as it can go both ways. Virtual events, meetings and hearings may facilitate participation by more diverse contributors, but this may be hindered by unequal access to technology and the challenges of building relationships remotely.
- Technology continues to be widely used in international arbitration, particularly 'videoconferencing' and 'hearing room technologies', but the adoption of AI still lags behind other forms of IT.
- The increase in the use of virtual hearing rooms appears to be the result of how the practice of arbitration has adapted in response to the COVID-19 pandemic, as users have been forced to explore alternatives to in-person hearings.
- If a hearing could no longer be held in person, 79% of respondents would choose to 'proceed at the scheduled time as a virtual hearing'. Only 16% would 'postpone the hearing until it could be held in person', while 4% would proceed with a documents-only award.
- Recent (and, in many cases, new) experience of virtual hearings has offered an opportunity to gauge users' perception of this procedural adaptation. The 'potential for greater availability of dates for hearings' is seen as the greatest benefit of virtual hearings, followed closely by 'greater efficiency through use of technology' and 'greater procedural and logistical flexibility'.Aspects that gave respondents most cause for concern included the 'difficulty of accommodating multiple or disparate time zones', the impression that it is 'harder for counsel teams and clients to confer during hearing sessions' and concerns that it might be 'more difficult to control witnesses and assess their credibility'. The fallibility of technology and the phenomenon of 'screen fatigue' were also cited.
- Going forward, respondents would prefer a 'mix of in-person and virtual' formats for almost all types of interactions, including meetings and conferences. Wholly virtual formats are narrowly preferred for procedural hearings, but respondents would keep the option of in-person hearings open for substantive hearings, rather than purely remote participation.
- Respondents show a willingness to adopt paperless practices, such as production of documents in electronic rather than hard-copy form; providing submissions, evidence and correspondence in electronic format; and the use of electronic hearing bundles. Many respondents would also welcome more 'green' guidance, both from tribunals and in the form of soft law.
- While the environmental benefits of remote participation rather than in-person participation are recognised, this this is not the primary motivation behind the decision as to whether interactions should be remote or in-person.
- There appears to be increasing awareness of the need to embrace 'greener' practices. However, the overall message from respondents is that the reduction of environmental impact is a welcome side-effect of their choices throughout the arbitral process, rather than a priority in and of itself.
- Even though users generally acknowledge data protection issues and regulations may have an impact on the conduct of arbitrations, the extent and full implications of that impact are not understood by all. 34% of respondents predicted that data protection issues and regulations have 'limited impact at present but [this is] likely to increase'.
- Only around a quarter of respondents said they have 'frequently' or 'always' seen cybersecurity measures being put in place in their international arbitrations. The majority (57%) encountered such measures in less than half of their cases.
- The IT security measures and tools most used or recommended by respondents include 'cloud-based platforms for sharing electronic or electronically submitted data'; 'limiting access to prescribed individuals'; 'data encryption'; and 'access controls, e.g., multi-factor authentication'. Almost half of the respondents recommended the use of 'secure/professional email addresses for arbitrators rather than web-based email providers (i.e., no Gmail, Yahoo, Hotmail, etc.)'.
- Respondents appreciate being able to rely on specialist IT support and systems to ensure robust cybersecurity protections are in place.
- Although there are encouraging signs that users are mindful of cybersecurity issues and the need to address them, there is nonetheless ample scope for more engagement on this front.
International arbitration is the preferred method of resolving cross-border disputes, with London, Singapore, Hong Kong, Paris and Geneva topping the list as the most preferred seats for arbitration. ICC, SIAC, HKIAC, LCIA and CIETAC were named as the top five arbitral institutions.
Undoubtedly, progress has been made in terms of gender diversity on arbitral tribunals over the past three years. But despite the increased focus on diversity issues and initiatives, respondents clearly feel that this has not as yet translated into actual or sufficient positive change.
While technology in the practice of international arbitration has become increasingly commonplace, particularly when it boosts efficiency, the adoption of AI still lags behind other forms of IT. It is also seen as the factor most expected to influence the future evolution of international arbitration.
There has been increased focus on the environmental impact of international arbitration in recent years. Reducing the environmental impact of international arbitration is a serious objective but how 'green' are arbitration users willing to go in practice?
The School of International Arbitration of Queen Mary University of London would like to thank White & Case LLP for its financial support and substantive assistance, in particular Mona Wright and Clare Connellan, both in London, who coordinated the project on behalf of White & Case and provided invaluable input. We are also grateful for the guidance of Sheena Sarkar (Paris), Jonathan Brierley (London), Fiona Candy (Paris), Melody Chan (Hong Kong), Jorge Mattamouros (Houston), Alexandre Mazuranic (Geneva), Damien Nyer (New York), Petr Polasek (Washington, DC), Aditya Singh (Singapore), and the White & Case Business Development and Creative Services teams in London, Paris, and Moscow.
We would further like to thank our external Focus Group for their generous and valued feedback on the questionnaire and methodology, including (in alphabetical order): Dr Mohamed S Abdel Wahab (CRCICA, Zulficar Partners), Olivier André (Freshfields, formerly CPR), Diana Bayzakova (TIAC), Domenico di Pietro (BCLP), Artem Doudko (Osborne Clarke), Geraldine Fischer (ICSID), Eric Franco (Engie Peru), Manuel Gonçalves (MG Advogados), Professor Silvina González Napolitano (Faculty of Law, University of Buenos Aires), Joe Liu (HKIAC), Mark Luz (Global Affairs Canada), Annette Magnusson (Climate Change Counsel, formerly SCC), Luis M. Martinez (ICDR-AAA), Kevin Nash (SIAC), Dr Emilia Onyema (SOAS), Maria Irene Perruccio (Webuild Group SpA), Professor Peter Sester (CAM CCBC), Olasupo Shasore SAN (Lagos Court of Arbitration), Tulio Toledo (PCA), and Dr Jacomjin van Haersolte-van Hof (LCIA).
We are also grateful for the assistance of several organisations and individuals who helped promote the questionnaire, in particular: Kluwer Arbitration, Transnational Dispute Management/OGEMID, Global Arbitration Review, Thomson Reuters, LexisNexis, Professor Stavros Brekoulakis, Dr Rémy Gerbay and Professor Loukas Mistelis.
Most importantly, we would like to thank all stakeholders (private practitioners, arbitrators, in-house counsel, academics, third-party funders, government officials and other respondents) who generously gave their time in completing the questionnaire and/or being interviewed.
International arbitration is a complex and evolving field of law, and the need for deeply knowledgeable legal counsel is paramount.