The Duration of Arbitration

The duration of arbitration, in addition to its cost, is an important factor claimants take into account when determining whether to start arbitration proceedings in the first place, and respondents take into account when determining whether a matter should be resolved through negotiations. A supposedly shorter duration of arbitration proceedings is one of the commonly cited benefits of arbitration when compared to litigation. Arbitration is, at least in theory, supposed to be a quicker and more effective dispute resolution mechanism. This is, unfortunately, not always the case as the duration of arbitration (i.e., the time from the commencement of arbitration until the rendering of the final award) depends on a number of different factors and each particular case.

It comes as no surprise that costs and delays are also two great areas of concern to the parties in international arbitration. As the Queen Mary University of London (QMUL) International Arbitration Survey 2021 finds, time and costs are “perennially acknowledged” as the biggest concerns for arbitration users. The 2021 Survey confirms the findings of 2018 QMUL Arbitration Survey which also concluded that time and cost continue to be seen as “arbitration’s worst feature”, whereas the wish for greater efficiency was cited as the main driver for the future evolution of arbitration.

Legitimate concerns regarding the increasing cost and duration of international arbitration have been recognized by leading arbitral institutions. For this reason, over the years they have implemented various techniques to reduce time and costs of arbitration and to increase its efficiency, amending their procedural rules in order for international arbitration to maintain its core benefits – providing a swift and cost-efficient method for the resolution of parties’ disputes while ensuring due process.

How Long Does an Average Arbitration Take?

Recognizing that the duration of international arbitration is a growing concern for its users, international arbitral institutions have been releasing data regarding the average duration of arbitrations. Even though the sampling methodology, the number of cases and the reporting period vary, the data does provide rough estimates, the median and mean duration of international arbitrations administered by respective institutions, and may be used for a rough comparison.

LCIA Arbitration

The LCIA was the first arbitration institution to release a comprehensive report on costs and duration of LCIA administered arbitrations. In 2017, the LCIA released an updated LCIA Report Facts and Figures – Costs and Duration covering all cases administered by the LCIA between 1 January 2013 and 31 December 2016.[1] The key findings of the LCIA study have shown that:

• the median total duration of LCIA arbitrations remained 16 months, whereas the mean duration of arbitration was 20 months;
• as cases get bigger, an incremental duration increase was attributable to the parties; the time required by tribunals to produce the awards remained the same, however;
• arbitrators on average took three months to produce awards; cases with larger amounts in dispute typically have a longer duration, whereas cases with smaller amounts in dispute tend to be resolved more quickly (70% of cases with an amount in dispute below USD 1 million reach a final award within a year):

SCC Arbitration

Similarly, the SCC issued a report on the costs and duration of arbitration in February 2016, which considered 80 cases administered by the SCC under the 2010 SCC Arbitration Rules where an award had been issued between 2007 and 2014. Key findings demonstrate that the median duration of an SCC arbitration was 13.5 months. The median duration of disputes decided by sole arbitrators was 10.3 months, whereas for cases with three arbitrators it was 15.8 months.

The SCC also releases yearly case statistics, including information on how many cases have been administered by the institution and the time from filing a request for arbitration to the issuance of the final award. The SCC statistics for 2020, for instance, showed a shortened time from referral to the SCC until the issuance of the final award as compared to previous years. For awards rendered under the SCC Arbitration Rules, 40% were rendered within 6 months from referral to the tribunal, and another 42% were rendered within 12 months, which is less time in comparison to 2019 (27% within 6 months and 50% within 12 months).[2]

The SCC statistics for 2021 show that 19% of the awards rendered under the SCC Arbitration Rules in 2021 were rendered within 6 months from when the case was referred to the arbitrator or tribunal, whereas another 56% of the awards were rendered between 6 to 12 months from the date of referral:[3]

SIAC Arbitration

The SIAC also released a SIAC Costs and Duration Study in October 2016, encompassing cases filed with the SIAC under the 2013 SIAC Rules.[4] The SIAC report shows that the mean duration of cases administered by the SIAC was 13.8 months, whereas the median duration was 11.7 months, which is lower than any other arbitral institution. The SIAC data also reveals slightly different durations for arbitrations with a sole arbitrator and three-member tribunal, albeit this difference is not as significant:

HKIAC Arbitration

On 22 June 2021, HKIAC released an updated report on average cost and duration of HKIAC arbitral proceedings, following reports published in 2018 and 2016. The most recent report covers all HKIAC cases in which a final award or decision was issued between 1 November 2013 and 31 May 2021, including arbitrations which were not withdrawn, settled or terminated prior to the final award.[5] The overall findings show that the median duration of HKIAC arbitration was 13 months, whereas the mean duration was 16.9 months.[6]

ICDR Arbitration

Although the ICDR does not publish its official statistics on the time and cost of arbitration, in the ICDR Time and Cost, Considering the Impact of Settling International Arbitrations Report, the ICDR indicated that the mean duration of arbitration for all ICDR tribunals was 15.4 months, whereas the median duration was 13.1 months. Interestingly, the ICDR Report, which is based on ICDR cases that closed between 1 January 2015 and 31 December 2017, reveals that 72% of ICDR arbitrations settle prior to an award being rendered and that 39% of those settled cases are resolved prior to tribunal fees being incurred. The ICDR considers that it has the quickest mean and mediation duration statistics among the arbitral institutions that publicly report duration statistics with comparable data sets, although the comparison method is not necessarily accurate as it compares different data sets and reporting time periods.

ICC Arbitration

The ICC does not publish precise data on the average duration of all cases administered by the ICC. However, according to the ICC statistics for 2020, the average duration of proceedings in cases that reached a final award in 2020 was 26 months calculated on the basis of all said cases, including those where the proceedings were suspended by the parties for any length of time. The median duration of proceedings at the ICC was 22 months, according to the ICC Report.[7]

Tips for Reducing the Overall Duration of Arbitration: ICC Commission Report

Recognizing that the time and costs of international arbitration are a growing concern for its users, in 2018 the ICC published the ICC Arbitration Commission Report on Techniques for Controlling Time and Costs in Arbitration (Second Edition), following its first edition in August 2007, providing a set of useful techniques to tribunals and parties aimed at increasing the time and cost efficiency of international arbitration. While the techniques indicated in the report are in no way supposed to be exhaustive, they provide useful guidance on how time and costs may be reduced, from the pre-arbitration stage to the issuance of the final award. Some of the techniques recommended by the ICC include:

• Fast Track Procedures – the ICC recommends that the parties give consideration to fast-track procedures, with much shorter time limits; these are designed to enable arbitrations to proceed quickly;
• Time limits for rendering the Final Award – certain institutions provide for time limits within which the final award must be issued (a certain number of weeks or months from the commencement of arbitration); the ICC points out, however, that such specific time limits may create problems during the enforcement stage, if it turns out that the time limit specified is unrealistic or not clearly defined;
• Select counsel with experience – parties also want to choose counsel who has the necessary skills and experience at handling arbitrations, and is sensitive to the need to reduce time and costs; the parties also want to ensure counsel has enough time and capacity to handle the case properly;
• Use of sole arbitrator – the parties may also want to try to agree on a sole arbitrator instead of a three-membered tribunal, if appropriate in light of the complexity of the case and the amount in dispute; this might not only reduce the costs by nearly 2/3, but may minimize the time that would otherwise be spent on three arbitrators’ discussions and correspondence;
• Avoiding unnecessary procedural objections – any type of procedural objections, especially objections to the appointment of an arbitrator, will unnecessarily delay the constitution of the tribunal and the proceedings; the parties want to reconsider whether any challenge of an arbitrator is necessary and its objective chances of success;
• Setting out the case and defense at early stages of an arbitration – the parties should also ensure that the Request for Arbitration and the Answer comply with the mandatory requirements, as provided under respective procedural rules;
• Reconsider need for physical meetings and conduct online case management conferences – the parties also want to consider whether it is appropriate to organize virtual case management conferences, including virtual hearings, if appropriate; the parties want to make effective use of modern technologies to make the arbitration more efficient;
• Procedural timetable – compliance with the timetable, fixing the hearing dates as early as possible and conducting a pre-hearing conference with the arbitral tribunal to make any hearing arrangements as early as practicable also helps conduct an arbitration more efficiently;
• Written submissions – the parties also want to set out a detailed statement of case, with all relevant supporting documents, which will help conduct the case management of arbitration more efficiently; the parties should also try to avoid needless repetition of arguments; the parties should also consider if it would be useful to limit the length of written submissions including their number, and whether they will be simultaneous or sequential;
• Documentary evidence – the ICC in its Report provides some useful tips for dealing with documentary evidence, such as proper organization, production of documents relied upon, establishing the procedure for document production requests and avoiding duplication as well as unnecessary translations;
• Witness Statements and Expert Evidence – limit the number of witnesses and rounds of witness statements to what is truly useful and necessary, consider appointment of a single or joint expert;
• Hearings – minimize the length and number of hearings, choose the best location, consider virtual hearings, re-consider the need for witnesses to appear, consider witness conferencing, limit cross-examination and consider if closing submissions are required or post-hearing briefs are more effective;
• Consolidation – most procedural rules provide for consolidation of two or more separate arbitrations when the parties agree to it; considering this may lead to more efficient dispute resolution.

Conclusion

Notwithstanding the differences in data collection methodologies and sampling, including reporting periods, certain rough conclusions may nevertheless be drawn. The SIAC and HKIAC still appear to be the most efficient institutions, followed by the LCIA:

A common trend, recognized by most arbitral institutions, is that there is generally a need to reduce both the time and cost of international arbitration, which is why institutions are working on implementing various techniques for controlling time and cost in arbitration and updating their procedural rules accordingly.

It should finally also be noted that, while the time and costs of arbitration are often interrelated, as costs typically depend on the time spent by tribunals and legal counsel on the case, this is not always the case. Different arbitral institutions have different methodologies for calculating their administrative fees and the fees of arbitral tribunals (see The Costs of Arbitration). In addition, certain arbitration law firms offer capped fee arrangements to their clients for the entire arbitration, instead of billing their clients on an hourly basis, which can not only lead to a significant cost reduction but also demonstrates that the time and cost of arbitration are not always linked.

[1]              LCIA Releases Updated Costs and Duration Analysis, 3 October 2017.

[2]              SCC Releases Statistics for 2020, 21 May 2021.

[3]              SCC Statistics for 2021.

[4]              Duration was calculated as full period between the date of commencement of arbitration and the date of issuance of the final award, inclusive of any stay periods.

[5]              HKIAC Releases Average Costs and Duration, 22 Jun 2021.

[6]              As HKIAC clarified, the median is the middle number of a set of values. The mean is the sum of all of the values in a set of data, divided by the number of values. Given the distribution of the data concerned, HKIAC considers that the median value is the more meaningful and robust value, as it minimizes the skewing effect of outliers.

[7]              ICC Dispute Resolution Statistics 2020, available at request at: https://iccwbo.org/publication/icc-dispute-resolution-statistics-2020/