By Stephanie Papazoglou
There seems to exist a consensus that arbitration has become a big legal business. The growing use of arbitration has led to a burgeoning number of arbitral institutions. Every institution is thus competing to expand its own share of the arbitration world. This article reflects on implications of such competition and on the predominant criteria for choosing an arbitral institution.
Choosing an institution
Given the rising competition among arbitral institutions, it is important to understand the elements that drive parties’ decisions in choosing an institution for their dispute. Ziadé has stressed that efficiency and legitimacy are two factors that will determine any future role for arbitration institutions. While the issue of efficiency has been subject of many works, legitimacy has also gained its own spot, and is now being considered as a key factor for the success of any arbitral institution.
Accordingly, the following factors should be taken into account: (a) whether a dispute calls for an international or local institution; (b) the level of interference by the institution; and (c) other key features, such as reputation, costs, expertise and level of transparency.
Firstly, it is of paramount importance that parties evaluate whether they need the seal of a globally recognised arbitral institution, or those of regional presence can satisfy their needs. Many arbitral institutions enjoy a growing reputation for administering disputes and have an increasing caseload. Regional institutions are thus on the rise, attracting users from established international ones.
Secondly, when choosing a body that will administer their disputes, parties should take into account that each institution has its own level of intervention. Gerbay observed that ICDR is regarded as a centre with “medium intervention”, while HKIAC and SIAC can be described as institutions with “limited intervention”. Gerbay considered LCIA and ICC to be of stronger intervention.
Thirdly, several other key features are usually considered in a decision on an institution. According to a 2015 study, interviewees assigned most importance to “high level of administration”, being related to the pro-activeness and responsiveness of the institution’s staff. “Neutrality/internationalism” and “global presence/ability to administer arbitrations worldwide” with a proven track record of international practice were ranked second and third respectively.
These top three features are fairly generic performance indicators rather than objectively distinguishable institutional features. Nevertheless, it is inevitable that most practitioners will make a choice based on their familiarity with the applicable rules and geographic convenience.
New institutions vs. recent revisions of existing rules
New arbitral institutions have been set up in places such as Asia and Africa.In 2018, the Tashkent International Arbitration Centre (TIAC) was established in Uzbekistan, which is supposed to be a viable alternative to Paris or London based institutions. TIAC’s paradigms of success are cost, efficiency, compliance with international best practices and top-class arbitrators. TIAC arbitration rules adopt the latest thinking in arbitration. For instance, the rules enhance transparency and legitimacy by giving additional powers to arbitrators.
In 2019, the African Court of Mediation and Arbitration (CAMAR) was established. The Court, aiming to open new perspectives and a better-organized legal framework, handles disputes involving states, African companies operating in the continent. As rightly observed by Travaini, CAMAR “could well be a contributing step towards the “Africanization” of arbitration”.
The ever-expanding list of new institutions, has provoked strong competition among the existing and new institutions. Internationally accredited and well-known institutions, notably in Europe and Asia, have responded with significant efforts in revising their respective arbitral rules.
Implications of competition
As Rogers has correctly observed, such competition between institutions could be a paradigm of “a race to the top or a race to the bottom”. Competition could be considered as a healthy way to ensure that these institutions provide a higher level of service quality and, second, to stay abreast with the international community’s developing needs. Similarly, while arguing that diversity is generally a good thing, Pendell notes that increasing the number of institutions should increase “innovation and a general advancement of standards”. The use of technology could be an innovative service, by striving towards efficiency and low costs.
However, the surplus of arbitral institutions has some negative effects. The perceived efforts to attract users by offering an increased number of services and tailor it to their needs may have an impact on the efficiency of the proceedings by leading to unnecessary delays and costs. A risk of greater concern is that “sham” institutions or even institutions that have no expertise to administer arbitrations properly will may also harm the profile of established institutions and international arbitration in general. A recent example is the 18 billion Egyptian pound award administered by the Cairo-based International Arbitration Centre (IAC), where the Egyptian criminal court sentenced to prison both, the executive director of the IAC and the administrative secretary to the IAC of the arbitral institution.
Competition or Cooperation?
In 2017, the Singapore International Arbitration Centre (SIAC) launched its Proposal on Cross-Institution Cooperation for Consolidation of International Arbitral Proceedings . By way of inspiration, AFSA and the Shanghai International Arbitration Center have created the China-Africa Joint Arbitration Centre (CAJAC) in Johannesburg and Shanghai. Other innovative efforts for cooperation include the Memorandum of Understanding (“MoU’s”) signed by the ICC aiming to facilitate knowledge sharing and best-in-class services on this field. More recently, Saudi Arabia’s Center for Commercial Arbitration (SCCA) and Dubai International Financial Center (DIFC) Courts have also signed a MoU. These “mutual assistance” agreements mark a milestone in the cooperation of arbitral institutions all over the globe, as they strive towards harmonization.
This need for cooperation has become more than ever a matter at stake. Recent events arising from the pandemic have reinforced the demand for cross-border conferencing facilities to ensure that dispute resolution services, are able to continue without disruptions. The importance of inter-institution cooperation providing for distance video-conferencing for virtual hearings have thus, come to the forefront.
Some of the innovative solutions have already being implemented by arbitral institutions. Indeed, the ICC conducts virtual hearings with the assistance of the Secretariat. The HKIAC has likewise an online platform to conduct e-hearings and online filing system. In developing these new approaches, a number of existing soft law instruments assist including IBA soft law rules, which provide for videoconferencing services, as well as the Chartered Institute of Arbitrators Guidelines for Witness Conferencing in International Arbitration, promulgated in 2019 or the current drafting of the Seoul Protocol on Video Conferencing in International Arbitration, which could represent an inspiration for other institutions to adopt similar standards for video conferencing.
A view to the future
Legitimacy and the aforementioned key features contribute to the success of an arbitral institution. Nevertheless, a successful institution does not prevent others’ success: many institutions record a growth in caseload, demonstrating that recourse to institutional arbitration is being preferred. This means that one institution’s gain is not necessarily another’s loss. A healthy competition is necessary for continuous improvement, but it could also be wise to cooperate in some circumstances. A combination of both may develop the best conditions for international arbitration to excel as a mean for dispute resolution.
