BRIEFING
[ 10 August 2018 ]

Arbitration
If you want to argue, come to London. Because it is the city where the world resolves its disputes.

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The right city for an argument?

When it comes to international disputes, corporations prefer international arbitration ahead of litigation because it provides a neutral expert forum to resolve disputes without requiring either party to agree to the other’s court jurisdiction. The ability to avoid a specific legal system is critical in the decision to arbitrate.


An independent judiciary, the English language, the prevalence of English law in contract and finance transactions: just some reasons why the world comes to the UK to resolve such disputes, fairly and certainly.

The arbitrators’ choice

When it comes to choosing where the arbitration takes place, London is the number one. According to the International Arbitration Survey, published by Queen Mary University of London and global law firm White & Case, London is the most preferred “seat” among arbitrators: it’s cited by 64 per cent, ahead of second-placed Paris (see the chart below from the survey).


The respondents’ preferences are influenced by “general reputation and recognition,” perceptions of the ‘formal legal infrastructure’: the neutrality and impartiality of its legal system; the national arbitration law; and the track record in enforcing agreements to arbitrate and arbitral awards.

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The law, in numbers

Revenue generated by legal activities in the UK was £31.5bn in 2016, according the representative group TheCityUK. Legal services make up 1.5% of the UK economy. The courts and London arbitration play a crucial role in this sector.

Let’s hear it for the law

English common law is clear, fair and predictable, and based on precedent. Together with the UK legal system, this is, and has always been, flexible. English law is currently used in 40 per cent of all global corporate arbitrations, and more than 200 foreign law firms currently have offices in the UK.

London Courting

The London Court of International Arbitration (LCIA) received 285 arbitration referrals in 2017. Over 80 per cent of parties involved were from outside the UK, with a growing number from the USA. The most popular type of disputes referred to it are in the fields of banking and finance, energy and resources, transport and commodities. It’s the second-most preferred arbitral institution in the world, according to the International Arbitration Survey - the LCIA and the Paris-headquartered ICC are the two giants in this field. One nation that is a particular heavy user (and fan) of the LCIA - Russia.

The role of the Rolls

Opened in 2011, the Rolls Building houses 31 court rooms, including three ‘super courts’ to handle the very largest international and national high value disputes and four courts configured in ‘landscape’ format for multi party cases; and 55 consultation rooms. It describes itself as “the largest specialist centre for the resolution of financial, business and property litigation anywhere in the world.”

"Banks are starting to doubt that the courts are best placed to provide certainty and predictability in a fair number of jurisdictions and a growing number of patent licence cases or other types of IP disputes are going to arbitration."

Gary Born, chair of international arbitration group at law firm Wilmer Hale (quoted in Legal Business)

Learn to arbitrate

London is stuffed to the gills with arbitration know-how. There’s the London Maritime Arbitrators Association (LMMA), the Grain and Free Trade Association (GAFTA), the School of International Arbitration at Queen Mary University of London, and the International Dispute Resolution Centre (IDRC) in Fleet Street (which describes itself as the "finest dispute resolution centre in the world.") The Chartered Institute of Arbitrators (CIArb), a professional membership organisation founded in London in 1915, now has 15,000 members in more than 133 countries.

A Brexit effect? Arguable.

London will remain one of the world’s most commonly selected places - or “seats” - for arbitration. Arbitrators believe that the English legal system will continue to be perceived as neutral and impartial. Factors such as a large, highly qualified legal community, the presence of the London Court of International Arbitration and other leading arbitral bodies, a clear legislative framework and a pro-arbitration judiciary, all contribute. Besides, the UK will continue to be a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards - the platform upon which modern international arbitration is based.


According to the International Arbitration Survey, 55 per cent of respondents reckoned that London’s appeal as a seat of international arbitration will remain unchanged after Brexit, while nine per cent actually think it will lead to a further rise in the city’s popularity.


How Brexit might be an advantage for London arbitration was observed by Lord Justice Gross in a recent lecture where he described some “troubling aspects of the CJEU [European Court of Justice] jurisprudence,” which perhaps appeared to put “doctrinal purity ahead of commercial practicality.”

But look eastwards
If any city is to gain at London’s expense because of Brexit, it will likely be Paris. But the other competitor to watch is Singapore. The number of case filings at the Singapore International Arbitration Centre (SIAC) has increased by more than 300 per cent in the past 15 years, particularly by Asian companies. Maybe that’s not surprising: English is spoken, and it’s a common law jurisdiction, and the city-state has loads of smart legal brains. Rather like London, then.

Verdict

One thing’s for sure, everybody in this world loves a good argument. Courts and judges fret that because many arbitral disputes are resolved behind closed doors and are kept secret, this is a block to public understanding of the law, and debate over how it should be applied. How can common law develop, if it is starved of cases? When can you have the right to appeal against an arbitral award? Yes, arcane stuff. But this debate is at the heart of what makes the UK a global leader in arbitration - and keeping the balance right is what will keep it there.

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