As 2019 begins we can't resist the temptation to consider what the year might bring for our international arbitration practice. Here are some of the events, trends and developments we see shaping international arbitration over the next 12 months:

1. Brexit

Let's start with the obvious. Despite various attempts to halt its progress it now appears that Brexit will be upon us in the next couple of months. As we have discussed in various articles on our website, we see Brexit as having a neutral or even net positive impact on international arbitration in London. In particular, as parties face concerns of bureaucracy and delay in navigating judicial enforcement process they may turn instead to the efficiency and predictability of enforcement under the New York Convention.

2. Anti-globalisation

Broadening our horizons beyond our borders (as international arbitration practitioners have always done) the political trend against globalisation toward more nationalistic policies leads to potential disputes particularly between investors and the states in which they have invested. Of course, last year there were significant developments on the investor-state front too with BITs and other FTAs moving away from traditional investor-state dispute resolution mechanisms such as ICSID arbitration. The EU's proposed Multilateral Investment Court establishing as a permanent body to settle investment disputes has (admittedly somewhat predictably) drawn significant criticism from those engaged in investment dispute work yet seems to be gaining favour with those agreeing investment treaties. The progress and success of any such court and other initiatives ought to be monitored during 2019.

3. Achmea

Discussion of developments in Europe leads to a 'watching-brief' following the judgment in Achmea in which the CJEU held, essentially, that all intra-EU BIT arbitrations are incompatible with EU law. In practice, the impact of the Achmea judgment is chiefly limited to the courts in the EU. On that level, there have already been numerous court decisions contemplating the impact of the Achmea decision. For example, the German court recently showing obedience to that decision in setting aside an award made in favour of a Dutch insurer based on an intra-EU investment treaty. In contrast, arbitral tribunals operating under intra-EU BITs have uniformly concluded that as a matter of international law, no tension between EU BITs and EU Law exists.

Therefore, in practice, unless the CJEU changes its position (which seems unlikely) enforcement in the EU of arbitration awards arising from investment treaty arbitrations under intra-EU BITs looks challenging. In such circumstances, successful claimants that face an EU country unwilling to honour an award would need to seek enforcement outside the EU.

The impact of Achmea is also of interest to disputes under the Energy Charter Treaty (ECT) to which the EU is a party. As the EU is a party, it is arguable that Achmea has no impact as the EU has agreed to arbitration over court-proceedings. While arbitral tribunals consistently reject the application of Achmea to ECT disputes, the enforcement of those awards within the EU will prove difficult. Again in such circumstances, an award creditor may have to enforce its award outside the EU.

4. Belt & Road Initiative

Any horizon-scanning must take into account the biggest investment programme arguably ever undertaken, namely China's Belt & Road Initiative now heading into its 7th year. The resolution of disputes arising from these often complex, large-scale, multi-party projects is unlikely to be resolved in one forum.  The HKIAC, SIAC, ICC and the Chinese courts are all continuing to argue their case for inclusion in BRI dispute resolution clauses. It is also important to take into account cultural positive attitudes toward mediation and settlement which are a significant feature of Chinese dispute resolution processes. While the institutions and courts may therefore see an increase in disputes being referred to them, it is likely that mediators and other types of settlement facilitators will have significant work to do in 2019 and beyond.

5. Dispute Funding

With Singapore now permitting third party funding in arbitration and Hong Kong's Code due to come into force in early 2019, it is easy to see that the opening up of funding in these regions may lead to an increase in particularly SIAC and HKIAC disputes work. Parties may engage in more disputes either that they previously could not afford to pursue or now feel they are able to as the risks are shared with a funder. Funders continue to back only a small percentage of the cases referred to them (and rightly so) but even a small percentage of a large market is significant.

6. Procedural developments

While we predict an increase in disputes arising out of BRI and potentially Brexit, arbitration must keep pace with the needs of its users and continue to develop and adapt. ICSID's consultation on its rules show a recognition of the need to keep a pace with the more progressive (largely commercial) institutional rules in considering provision e.g. for summary procedures to reduce the time and costs spent in arbitration (two key sources of criticism from users). Alongside the institutions arbitral bodies such as ICCA continue to progress the development of arbitration and raise important issues such as cyber-security. Often these initiatives feed their way into arbitral rules over time and certainly cyber-security in arbitration is a key issue for focus from arbitration practices now and over the next year.

The launch of the Prague Rules in December 2018 as an alternative to the IBA Rules of Evidence will show their impact this year as counsel and arbitrators make a choice as to which rules (or neither) best suit their dispute. We watch with interest whether having an alternative displaces the regular presumption of the adoption of the IBA Rules and creates discussion about the best procedure for each dispute.

Tribunals increasingly engage with other types of technology such as the use of AI in document review and disputes arising out of developing technologies such as blockchain and smart contracts. Some institutions are providing training to their arbitrators to prepare them for these potential new disputes and the likelihood of needing skilled knowledgeable arbitrators in these new technologies perhaps opens the door for new arbitrators to come to the fore.

7. London International Disputes Week

Last, but by no means least, as founder members of the first London International Disputes Week (LIDW) Clyde & Co is delighted to invite you to join us at what will be a wonderful showcase of Global Dispute resolution best practices in London on 7-10 May 2019. LIDW will bring together lawyers, judges, arbitrators, academics and others involved in using or administrating dispute resolution from around the world and hailing from numerous sectors. The event will draw on the international experience of clients and colleagues and facilitate discussions on the future of dispute resolution in London, where and how disputes will arise, how London should adapt to the changing landscape, and the future of dispute resolution globally.

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