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Tue September 28 2021

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Study predicts rise in international arbitration

11 May 18 A new study says that there is set to be an increase in the use of international arbitration to resolve cross-border construction disputes.

The latest International Arbitration Survey has been published by Queen Mary University of London in partnership with global law firm White & Case.

London and Paris continue to dominate – ranked as two preferred seats – despite Brexit concerns.

More than four fifths (82%) of the 900 respondents predicted that the resolution of cross-border construction and infrastructure disputes by arbitration will rise. The respondents were made up of arbitrators and both in-house and external counsel.

International arbitration is by far the preferred method of resolving cross-border disputes according to 97% of the global arbitration community. Dipen Sabharwal, partner at White & Case, said: “This research shows that corporations, through their in-house counsel, display an overwhelming preference for international arbitration, either in isolation or in conjunction with ADR, over court litigation. International arbitration however is not without its drawbacks and it’s interesting to see large global companies increasingly combining it with various other forms of ADR to find a swifter and more cost-efficient resolution of their disputes.”

High costs and lack of speed are seen as some of the top drawbacks of international arbitration (67% and 34% respectively).

Michael Turrini, construction partner at White & Case, said: “Construction arbitrations are often high-value disputes that can take a significant amount of time to resolve and frequently require the resolution of complex technical issues.  Adapting arbitration to the needs of the international construction market, for example; through the adoption of specialised construction-based arbitral rules, would be a positive step that will ensure arbitration remains the preferred method of resolving these types of disputes.”

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When asked what potential changes would make arbitration an even better fit for the construction sector, respondents highlighted more sector-specialised arbitral rules (27%), wider and faster recourse to interim and conservatory measures (27%)  and publicly available rosters of arbitrators (25%).

According to the survey, London and Paris have reinforced their dominance over the international arbitration landscape; they were ranked as the two most preferred seats (64% and 53%, respectively). London has surged further ahead of Paris since the last study in 2015, with the next positions going to Singapore, Hong Kong and Geneva respectively.

More than half - 55% - of respondents predict London’s appeal as a seat of international arbitration will remain unchanged after Brexit, while a positive 9% think it will lead to a further rise in popularity. Among the 37% who believe London’s dominance will suffer from Brexit, 70% of these identify Paris as the main beneficiary, while 22% think Singapore or Geneva will benefit, and 15% named Hong Kong.

Professor Stavros Brekoulakis of QMUL’s School of International Arbitration said: “Most of the arbitration community believes London’s reputation as a location of excellence for international arbitration will outweigh the challenges presented by Brexit.  It is interesting to see Paris is almost 50% ahead of any other city when looking at the main would-be benefactor of any negative Brexit fall out on London’s position. This is no doubt due to Paris’ excellent reputation as a seat - consistently ranking among the top three most popular seats in both the current survey and our previous 2010 and 2015 surveys.”

Compared to the 2015 findings, there has been a significant increase in the popularity of arbitration combined with ADR: almost half of all respondents expressed their preference for this combination as opposed to only 34% in 2015, and 60% of corporate counsel prefer the combined approach.

The research for the study was conducted in two phases: the first quantitative and the second qualitative. Phase one involved a questionnaire of 53 questions, which was completed by 922 respondents between 10 October 2017 and 17 December 2017. The respondent group included in-house counsel, arbitrators, private practitioners, staff of arbitral institutions, academics, expert witnesses, economists, entrepreneurs, law-students, judges, third party funders and government officials. Phase two included 142 face-to-face or telephone interviews, ranging in duration from 10 minutes to 100 minutes.

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