Saturday, October 30, 2010

Choices in International Arbitration - Part I

A survey was recently conducted by White and Case LLP in association with The School of International Arbitration, Queen Mary, University of London on the factors that influence corporate choices about the main aspects of international arbitration. It purports to be one of the largest empirical studies of its kind.

The survey throws up several interesting results.

Law governing substance:
The law governing the substance of the dispute is the most important issue to be decided at the outset (51% of respondents). The maximum number of respondents preferred English law (40%), followed by New York law (17%). Other popular legal systems were Switzerland, France, Germany, Australia and California. Top factors which influence choice of law are neutrality and impartiality of the legal system, appropriateness for the type of contract, familiarity with and experience of the particular law.

Transnational principles and rules:
Not surprisingly, when asked about certain transnational rules and principles, most respondents had never applied general principles of law, commercial practices, fairness or equity. Not too many have applied international treaties or conventions such as the United Nations Convention on Contracts for the International Sale of Goods (CISG) (which is probably applied more often here and here). UNIDROIT Principles and International Commercial Terms (INCOTERMS) are among the popular international rules used by respondents.
Seat of arbitration:
The seat of arbitration is generally selected keeping in mind the formal legal infrastructure of the place, including the national arbitration law, the tendency of the court system to enforce arbitration agreements and awards and impartiality of the legal system. Convenience also plays a reasonably important role, which means efficiency and promptness of court proceedings, language, contacts with lawyers operating at the seat and location of the parties.
The most preferred seats of corporations turned out to be London (30% of respondents), Geneva (9%), Paris, Tokyo, Singapore (7%) and New York (6%). Singapore is clearly the most preferred Asian arbitration venue, which has come into prominence in the last few years, since a similar survey carried out by the School of International Arbitration in 2006. Other seats mentioned by respondents were Stockholm, Vienna, Hong Kong, Zurich and China. India was conspicuous by its absence. However, it was not among the lowest rated seats, which included Moscow and China.

Arbitration Institutions:
Top reasons for selecting arbitral institutions were, of course, neutrality, reputation and the arbitral rules of the institution. Costs of service were also a common concern. The most preferred arbitral institution is the International Chamber of Commerce (ICC) (50% of respondents), followed by the London Chamber (LCIA), American Arbitration Association (AAA), Japan Commercial Arbitration Association (JCAA) and the Singapore (SIAC) and Hong Kong (HKIAC) Centres. Apart from these institutes, other frequently used (though not equally popular) Institutions are the German Institute (DIS), Stockholm Chamber (SCC) and ICSID. The most unpopular centres are the Cairo (CRCICA) and Dubai (DIAC) Centres and the CIETAC (China).

Other choices regarding appointment of arbitrators, confidentiality and issues of delay will be discussed soon in a subsequent post.

Meanwhile, more about the survey and the methodology employed can be found here.

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