The latest International Arbitration Survey has just been published and the results are interesting for our industry, generally, and in the Gulf.
Construction and arbitration go together, for reasons we have discussed before: not least the need for specialist tribunals that understand construction esoterica; cross-border enforcement and confidentiality. Arbitration is, by some distance, the most popular means of resolving disputes in major projects. And, not surprisingly, construction is the largest single customer for many commercial arbitration centres globally.
The International Arbitration Survey is carried out by the School of International Arbitration at Queen Mary University of London, in partnership with White & Case. More than 2,400 users, lawyers, arbitrators, arbitral institutions and academics participated in it.
On the basic preferences for resolution of cross-border disputes, the headline is not a surprise: 87 per cent of respondents prefer arbitration. What is surprising is the reduction of respondents preferring arbitration in conjunction with ADR (Alternative Dispute Resolution) mechanisms such as Expert Determination or Dispute Boards. Preferences for that combination (as opposed to arbitration on its own) have dropped from 59 per cent to 48 per cent of respondents in just four years. That translates to a decline of almost 20 per cent. This is sobering for us advocates for ADR but this may not be the full picture for construction: the survey acknowledged construction as an area that has embraced ADR more firmly than others.
The most popular choices for the seat of an arbitration have not changed much but beneath the headlines there is some interesting detail for us in the Gulf region. London remains globally the most popular seat – its highest popularity globally is in the Middle East.
Dubai ranks fourth in the Middle East section. The big news is that Dubai has also appeared for the first time in the rankings for African disputes. As the survey reports, seat choices continue to be made on the basis of seeking neutrality and impartiality of the local legal system, laws and courts that support arbitration and willingness to enforce arbitral awards. The rankings indicate confidence in Dubai, on those criteria.
The survey reports the vast majority of respondents being in favour of confidentiality in arbitration proceedings, especially in commercial arbitration, although there are concerns about confidentiality being used to cover State wrongdoing. And, linked to this, there is increased support for the idea of publishing redacted awards in arbitrations involving States. But outside of that specific concern, the benefits of confidentiality are strongly confirmed by the survey. That preference is underlined by the increasing trend towards the opening up of court proceedings to public scrutiny, including a just-announced pilot scheme in the London Commercial Court requiring parties to file documents (including skeleton arguments and witness statements) in a file open to the public. So, whatever your inclination, either towards or away from “Open Justice” it is clear that this is an increasing point of difference between litigation and arbitration.
Finally, regarding cost and time involved in a full-scale arbitration, the survey asked respondents to give their view of the main cause of inefficiency. The five options were: ‘Counsel focusing on adversarial rather than collaborative approaches’; ‘Lack of proactive case management by arbitrators’; ‘Counsel over-lawyering (for example, over-detailed or long submissions)’; ‘Excessively delayed or lengthy awards’; and ‘Excessive procedural formalities’. Given that the range of respondents covered users, lawyers, arbitrators and arbitral institutions, everyone was being asked which of the others was most to blame!
The top three answers were closely-bunched: adversarial approaches adopted by counsel (24 per cent), lack of proactive case management by arbitrators (23 per cent), and over-lawyering (22 per cent). The main lesson lawyers must take is that almost half of the responses (46 per cent) primarily blamed counsel for this lack of efficiency. And this tendency was more pronounced among experienced users, with a majority of them blaming counsel. Specific complaints about counsel were also familiar: multiple and overlong submissions, repetitive arguments, presenting baseless alternative arguments and adopting adversarial “litigation tactics”.
Counsel, on the other hand, primarily blamed arbitrators for not being proactive enough. Some interviewees said that arbitrators are too busy to be proactive, having taken on too many matters.
As to the cure, there was strong support for both expedited procedure (for low value disputes) and early determination of manifestly unmeritorious claims or defences. However, respondents also voiced familiar concerns about these cures, including:
• A low value dispute is not necessarily simple to resolve;
• Unmeritorious applications for early determination are another tactical weapon; and
• Arbitrators might lack the courage and willingness to make quick decisions on early determination.
In my view, that takes us back to ADR. There is always a “quality of decision” trade-off when parties want cheaper, quicker decisions from (say) a Dispute Board or Expert Determination but at least the decision-makers are signed up to give decisions on a simplified and short process.
* Dubai-based Stuart Jordan is the Global Head of Construction for Baker Botts, a leading international law firm. He has extensive experience in the Middle East, Russia and the UK.