Sunday, November 7, 2010

Choices in International Arbitration - Part II

I had posted recently on factors that influence corporate choices about the main aspects of international arbitration.

Here's more on the same.

Choices Regarding Arbitrators
Most respondents in the survey (87%) preferred a 3-arbitrator panel, believing greater neutrality, better decision-making and a more balanced award would be the outcome. Another important advantage of a 3-member tribunal is the freedom to appoint one of the arbitrators of the tribunal. Cultural diversity was also one reason for preferring a 3-member tribunal, which leads to input of varied experience and, in turn, a balanced award. On the other hand, a disadvantage of a 3-member tribunal is that larger the number of arbitrators, higher the costs.

Most important qualities considered in selecting a sole arbitrator or a chair were fairness, prior arbitration experience, quality of awards, knowledge of applicable law and reputation. What is relevant to note is that respondents preferred arbitrators focussing on the commercial disposition (32%) rather than the legal disposition of disputes (24%). Selection of arbitrators are not gender, religion or nationality-driven.

62% of respondents in the survey considered confidentiality very important in international arbitration. Interestingly, 50% of corporations surveyed considered arbitration to be confidential even without a specific agreement to that effect or mention of such a clause in the arbitration rules. Yet, a large percentage (38%) of respondents still preferred to resort to arbitration in the absence of the guarantee of confidentiality. Lack of confidentiality in the traditional court system is not the primary reason for resorting to arbitration, according to most (65%).

Among the aspects to be kept confidential in arbitration, most important are the amount in dispute, pleadings and documents submitted in the case, the award, details in the award identifying the parties, the legal question to be decided and very often the very existence of the dispute.

One of the primary reasons for resort to arbitration over courts is speedy dispute resolution. Therefore, it is essential to identify reasons for delay in the proceedings. Most respondents believe that disclosure of documents, written submissions and constitution of the tribunal take the most amount of time. In some cases, rendering of awards take much longer than parties would prefer in an arbitration. Although most amount of delay during proceedings was caused by parties, they felt that the arbitral tribunal could reduce delay by making parties adhere to a schedule.

The survey report gives the methodology employed and the cross-section of corporations surveyed. It gives a good insight into various aspects of international arbitration and, though not authoritative, is definitely worth a look before signing an international arbitration agreement.

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