The twelfth empirical study of the School of International Arbitration, Queen Mary University of London, in partnership with White & Case LLP, the 2021 International Arbitration Survey (“International Arbitration Survey”), explores recent trends in international arbitration and especially how international arbitration practice has adapted and continues to adapt to the global changes wrought by the COVID-19 pandemic.
The 2021 International Arbitration Survey has seen the widest pool of respondents to date, with more than 1,200 written responses and almost 200 oral interviews with different stakeholders from around the world. At these times of continued uncertainty, the results of the survey are particularly important as they reflect some of the major changes in international arbitration practice, demonstrating that, thanks to its inherent flexibility, international arbitration has managed to keep pace with and rapidly adapt to the altering global circumstances.
The Most Preferred Seat of Arbitration
A notable development in comparison to previous years is the change in the ranking of the most popular seats of arbitration. The five most preferred seats of arbitration remained London, Singapore, Hong Kong, Paris and Geneva. The top five choices do not come as a surprise looking at previous surveys. What is an interesting change, however, is the notable rise of Asia, including Singapore and Hong Kong, as international arbitration hubs. This is the first time that Singapore, for instance, shares the top position with London – as both have been chosen as top picks by 54% of respondents. The increase in popularity of Asia as an arbitration hub is also demonstrated by Hong Kong being in third place (50% of respondents), followed by Paris in fourth place (35% of respondents), and Geneva in fifth place (13% of respondents). Other traditional seats of arbitration, such as New York, continued to gain popularity (12% of respondents), whereas Stockholm dropped from seventh place to ninth place in comparison to the results from previous years (merely 6% of respondents). While the survey cannot be said to be scientific, it does suggest an increasing preference for seats of arbitration in Asia, largely at the expense of Europe.
The 2021 International Arbitration Survey further reveals that, while the “global powerhouse” seats of arbitration continue to be popular, there are many regional seats which are growing in reputation and popularity. These include, for instance, for the African Region – Cairo and Nairobi, for the Asia–Pacific Region – Shenzhen, and for the Caribbean/Latin American Region – São Paolo, Miami, Madrid and Lima.
The Most Preferred Arbitral Institutions
The ICC was indicated by a majority of the respondents as the preferred arbitral institution (57%), closely followed by the SIAC (49%), the HKIAC (44%) and the LCIA (39%). Interestingly, this year the CIETAC has also made it to the top-five most preferred seats of arbitration for the first time (17%). Other institutions which fall within the top ten picks include the ICSID (11%), the SCC (7%), the ICDR (6%), the PCA (5%) and the LMAA (5%) (on “How to initiate LMAA Arbitration” see our previous comments). The results of the survey show a general trend, also noticeable in 2018, of a significant increase in the popularity of both the SIAC and the HKIAC and, as of recently, also the CIETAC. Another noticeable development is a drop in the popularity of the LCIA and the ICC (for instance, the ICC dropped considerably from 77% in 2018 to merely 57%).
When respondents were asked about their top choice adaptation that, in their opinion, would make other seats or arbitration rules more attractive, most respondents chose “administrative/logistical support for virtual hearings” as their top choice. The second criterion was the arbitration center’s commitment to a more diverse pool of arbitrators. The UNCITRAL Arbitration Rules remained the most popular rules for ad hoc arbitrations.
Arbitral Tribunals: Diversity
Diversity in international arbitration was unsurprisingly also one of the topics included in the survey. While 61% of respondents agreed that some progress has been made in relation to gender diversity, this was notably not the case for other categories, such as geographic, age, cultural and particularly ethnic diversity. In fact, in relation to geographic, age, cultural and ethnic diversity, less than 1/3 of respondents agreed that some progress has been made. Respondents were also asked which initiative they considered to be most effective in encouraging greater diversity in terms of arbitral appointments. The majority of respondents indicated that “appointing authorities and institutions adopting an express policy of suggesting and appointing diverse candidates as arbitrators” played a major role (59%). Many respondents also felt that opportunities to increase the visibility of diverse candidates should be encouraged through various different initiatives, for instance, through education and promotion of arbitration in jurisdictions with less developed international arbitration networks (38%), more mentorship programs for less experienced arbitration practitioners (36%) and speaking opportunities at conferences for less experienced and more diverse members of the arbitration community (25%).
Use of Technology in International Arbitration
It also comes as no surprise that the International Arbitration Survey found a dramatic increase in the use of virtual hearing rooms, with 72% of users indicating that they have participated in virtual hearing rooms. The use of virtual hearing rooms is a direct result and best example of how the practice of international arbitration has rapidly adapted to the COVID-19 pandemic. Respondents were also asked a frequent question most practitioners faced (and are still facing) during the pandemic, namely, if the hearing can no longer be held in person, would they rather postpone the hearing or proceed with a virtual hearing. 79% of respondents indicated that they would rather proceed at the scheduled time with a “virtual hearing”, while only 16% would prefer to postpone the hearing until it could be held in person. Merely 4% of respondents indicated that they would proceed with a documents-only award.
When asked about the biggest advantages and disadvantages of virtual hearings, the responses were diverse and included:
Pros of Virtual Hearings
- The potential for greater availability of dates for hearings (65%);
- Greater efficiency through the use of technology (58%);
- Greater procedural and logistical flexibility (55%);
- Less environmental impact than in-person hearings (34%);
- Fewer distractions for advocates and arbitrators and the potential to encourage greater diversity across tribunals (13%);
- Better view of people’s faces than at in-person hearings (12%).
Cons of Virtual Hearings
- Difficulty of accommodating multiple or disparate time zones and the impression that it is harder for counsel teams and clients to confer during hearing sessions (40%);
- Difficulty of controlling witnesses and assessing their credibility (38%);
- Technological malfunctions and/or limitations (including inequality of access to particular and/or reliable technology) and more difficulty for participants to maintain concentration due to “screen fatigue” (35%);
- Confidentiality and cybersecurity concerns (30%);
- The view that it is more difficult to “read” arbitrators and other remote participants (27%).
The survey also demonstrates that, moving forward, most respondents would prefer a mixture of in-person and virtual formats for most types of interactions, including meetings and conferences. When it comes to hearings, the central phase for most arbitrations, most respondents would prefer to keep an option of in-person hearings, rather than purely remote ones.
International Arbitration Going “Green”
The International Arbitration Survey has also identified a number of positive changes making arbitration practice more “green” and reducing the environmental impact of international arbitration. These positive changes include, inter alia:
- Embracing paperless practices – production of documents in electronic format, rather than in hard copy; use of electronic rather than hard-copy bundles; in addition, several arbitral institutions have moved in this direction as well (for instance the 2020 LCIA Rules, which provide for electronic communications by default (Article 4); the same for the 2021 ICC Rules; the SCC platform which started to administer SCC filings since 2019, etc.);
- More “green guidance” from tribunals in the form of soft law– even though only 13% of respondents declared to have experienced such guidance, 40% indicated that such directions should generally be used;
- Travelling – the environmental benefits of remote participation and virtual hearings, albeit recognized, are not the main reason behind respondents’ decisions on whether hearings should take place virtually or in-person (only 24% of respondents indicated that environmental considerations are a factor they would take into account).