Why is arbitration so popular in international disputes? 

9 January 2024
London International Disputes Week
Why is arbitration so popular in international disputes? 

The precise wording of a legally binding agreement can often be forgotten when the agreement performs exactly as intended. However, when turbulent times hit and a party stops performing their obligations, then the first thought may be to reach for the written agreement to see what it says about that particular situation. Perhaps long after the agreement has been entered into, the parties may realise the importance of the wording used in the contract, and the provision for resolving disputes made in the contract.  

The Law Society recently released a report considering the position of the legal sectors in England and Wales. It was found that London is considered a global centre for commercial dispute resolution.  It also highlights that English law is the preferred governing law for transactions1. The Law Society’s report also concludes that the legal services trade as an export has been steadily increasing since 2011. Further, the Law Gazette report that the stability and quality of the courts in London are key reasons for England being the preferred jurisdiction for resolving disputes2 

On the international stage, London is seen as being particularly inviting as a location to arbitrate disputes because of the wealth of experience, knowledge, skills and investment within this field. Further, an Arbitrator will be knowledgeable in their area of expertise, making Arbitration an excellent remedy for especially technical commercial disputes. The skills of a highly experienced Arbitrator can therefore save considerable time and money for the parties involved.  

Arbitration as a remedy in International Disputes 

As with domestic issues, it remains important to have a robust written contract to stipulate the terms of which the agreement will rely. Within the agreement, it is prudent for the parties to make provisions for alternative dispute resolution, to avoid the high costs of litigation. The International Chamber of Commerce advises that the arbitration clause should prevent ambiguity. The ICC also suggests that the contract names “a number of arbitrators” as appointment of a sole arbitrator is the presumption of the ICC3. This list should be given genuine consideration in order to include the most suitable potential Arbitrators who may be able to assist in the event of any dispute.  

There are a number of institutions that are commonly used in Arbitration in England and Wales, who are also able to assist with international disputes. Some examples include International Chamber of Commerce, London Court of International Arbitration, London Maritime Arbitrators Association, Grain and Free Trade Association and London Chamber of Arbitration and Mediation.  

There are clear advantages to utilising Arbitration as a form of dispute resolution. Arbitration can enable the parties to avoid specific legal systems or national courts of particular jurisdictions, which may be preferable for the parties. The parties have the flexibility to select a particular arbitrator who may be especially knowledgeable about the specific area of dispute along with procedural flexibility throughout the Arbitration proceedings, and any outcome of Arbitration. Parties considering engaging in Arbitration should be aware that it can be a lengthy process between the commencement of the Arbitration and the publication of the final award, although cases may still reach settlement throughout the Arbitration procedure. Further, Arbitration tribunals can be reluctant to implement rigorous case management on the matters that come before it. 

Once an Arbitral award has been made, whether in England and Wales or in a foreign jurisdiction, the typical enforcement limitations of either 6 or 12 years apply depending on whether the Arbitral award was signed as a deed. Therefore, international Arbitral awards can be enforced in the courts of England and Wales. The ability to enforce international Arbitral awards combined with the wealth of legal experience available in London is a significant benefit of the Arbitration process.  

If there are no objections to the enforcement of the Arbitration award, then there is a summary process for enforcement. However, if there are objections, then a regular application would need to be made to the court to enforce a judgment. TV Edwards LLP has experience of successfully enforcing foreign judgments. 

There are clear benefits to agreeing the relevant jurisdiction to resolve disputes, along with options for dispute resolution. Although, parties should strongly consider their legal advisor’s credentials and expertise to steer a case successfully through Arbitration.  

Reform to the Arbitration Act 1996 has been proposed. The broad intention of the reforms would be to cement the UK as a world-leading location for Arbitration. Should these proposals proceed, a draft bill may be introduced into Parliament. If this occurs, it would likely make for worthwhile reading to consider these proposals if you are involved in, or utilise arbitration.  

The Law Commission consulted on this area between 2022 and 20234 and established. In summary, the Law Commission found that changes should be made as the following “major initiatives”: 

  1. Codification of the statutory duty of disclosure 
  1. Strengthening of arbitrator immunity around resignation and applications for removal 
  1. Introduction of a power to make an arbitral award on a summary basis 
  1. An improved framework for challenges to awards under section 67 on the basis that the tribunal lacked jurisdiction 
  1. A new rule on governing law of an arbitration agreement 
  1. Clarification of court powers in support of arbitral proceedings and in support of emergency arbitrators. 

Provided that the Arbitration Bill, as announced in the King’s Speech, incorporates the full recommendations from the Law Commission, this would provide new powers to arbitral tribunal to award costs in the circumstance that a party wrongly brings the proceedings. This would be the case even if the tribunal does not have jurisdiction. Recovering costs from proceedings wrongly brought, even if outside the tribunal’s jurisdiction, is a key development in arbitration by making it an explicit statutory provision. It would ensure that there are cost consequences for spurious claims and remove the ability to hide behind jurisdiction arguments.  

At TV Edwards LLP, we will carefully follow these developments as the Amendment Bill progresses and consider how new statutory provisions can be used to effectively assist our client in international arbitral disputes.  

Adam Haffenden

Adam Haffenden is a Partner and Head of Dispute Resolution at TV Edwards LLP. Adam has significant expertise dealing with high value and complex multi-jurisdictional commercial, civil and property litigation.

Adam’s cases range from small matters in the County Courts and other Tribunals, to multi-million pound disputes in the High Court and Court of Appeal which often have a cross border element to them. Through Adam’s quality of work and his ability to build lasting relationships, he is often instructed on multiple occasions by his clients, ensuring he always goes the extra mile to achieve the best possible outcome for them.

Adam will fight his client’s corner and look for the most efficient resolution to a dispute, whilst having the client’s practical and commercial interest’s firmly in mind.

Simon Fielding 

Simon is a Trainee Solicitor at TV Edwards LLP. He joined as a Paralegal in January 2022 and started his training contract with TV Edwards in September 2023.

Whilst working as a paralegal and trainee solicitor, Simon achieved positive outcomes for clients.

During his training contract he has worked on a range of Housing, Community Care and Court of Protection cases. Currently, Simon is a trainee solicitor with the Dispute Resolution team where he can draw on his past litigation experience, alongside his excellent client care skills, to assist clients with a wide range of legal disputes.