In Corporate Disputes Magazine's April issue, Dan Bodle answers some key questions facing arbitration in the UK. The Q&A covers pressing topics such as the likely development of arbitration in the UK over the next five years, the speed of the arbitral process and the UK's status as a global centre for arbitration.
What key trends and developments have you seen in UK arbitration over the last 12 months or so?
An interesting recent indicator of the continued popularity of arbitration is the focus that has been placed on anti-suit injunctions to prevent parallel court proceedings in another jurisdiction. The ability of the English courts to prevent those proceedings continuing was dealt a blow by the ECJ's decision in West Tankers. However, the new recast Brussels Regulation, together with the Advocate General's opinion in Gazprom, could potentially change this. Should the ECJ follow the approach taken in Gazprom in the next few months, we could see the end of parties tactically starting claims in their local courts to attempt to oust the arbitration clause they agreed upon. This will give the courts back the power to protect the arbitral process in the UK.
To what extent do you believe the UK is now a less attractive arbitral location than it was in previous years? How "competitive" is it compared to other arbitration centres around the world?
London remains at the top of most people's list as a seat for arbitration and I expect to see it remain there for some time. The English courts over a number of years have done a good job in ironing out any significant issues with arbitrating in this country. However, as arbitration practitioners, we must welcome the fact that other centres across the world are becoming more sophisticated and reliable, giving parties a wider choice of seat and making it easier to arbitrate in many different jurisdictions. The growth of arbitration in Asia and the emergence of arbitration centres in Africa have been especially impressive and provide parties with realistic alternatives to the traditional locations such as London, Paris, and New York. Increased competition can only be a good thing as it means that the established centres must keep on top of their game.
What can traditional seats of arbitration such as London learn from courts in increasingly popular locations such as South East Asia, for example?
For the time being, the English courts' attitude towards arbitration remains as supportive as any in the world. However, they need to monitor and respond to the activities in other centres from around the world, including increasingly popular locations such as Hong Kong and Singapore, to maintain and build on their success. One example is the trend towards establishing specialist arbitration courts, such as that recently designed in New York. I expect to see this become standard in the most popular seats as it will be essential to have a readily available pool of judges familiar with the arbitral process and relevant jurisprudence. This is one innovation that could help keep the UK ahead of the chasing pack.
What differences in practice will you see as a result of the LCIA's General Guidelines for the Parties' Legal Representatives?
I do not think the Guidelines will make an immediate difference, particularly as most practitioners have their local professional code of conduct to maintain a standard of behaviour. However, the Guidelines should help where counsel are from jurisdictions with very different local rules and practices. One of the challenges in international arbitration is trying to find a level playing field between different nationalities, each with their different approaches to dispute resolution. Perhaps the most significant aspect of the Guidelines and the new Rules is the power given to tribunals to sanction counsel engaging in any behaviour that contravenes the Guidelines. It remains to be seen whether tribunals will be willing to exercise this power and what steps they will take but it is hoped that the threat will result in more predictable behaviour by counsel leading to faster process and fewer wasted costs.
Do you think the new LCIA Rules will be a success, and why?
Whilst it is still early days, I am confident the new LCIA Rules will be a success. In some ways, the LCIA has benefited from being one of the last institutions to update their rules in the latest cycle of major reforms. As a result, it has been able to adopt changes that have proved popular, such as the emergency arbitrator procedures, whilst adding some innovations of its own. The LCIA's main focus has been on creating a quicker and more streamlined process. At a time when tribunals are increasingly criticised for the time it takes to render an award, the new LCIA Rules are the first to impose a duty on tribunals to issue their award "as soon as reasonably possible after the last submission from the parties" and in accordance with a timetable. It remains to be seen how this will work in practice, but it should give more power to the parties to ensure they receive their award in good time.
What general advice would you give to companies seeking redress via arbitration in the UK?
First, companies should think about the enforcement of any potential award. You have to question whether to start an arbitration if you would ultimately be unable to enforce that award against the other side. If there is a risk that might be the case, it is important quickly to explore whether there is any interim relief available to maximise the chance of recovery. Often, speed is of the essence to stop your opponent disposing of any assets against which you might enforce your award. As timing can be critical, the English courts can provide this support before you have a tribunal in place. The second step is to have a coherent strategy for how to deal with the arbitration and what the company wants to achieve from it. Working closely with your counsel on this strategy means everyone is on the same page from the start of the process.
To what extent should parties give greater consideration to arbitration clauses in their contracts at the outset of an agreement? What benefits can this foresight bring and what issues should be covered?
Though it seems rather obvious to say, getting the arbitration clause right at the outset is crucial. Surprisingly, arbitration clauses are still often left until "five to midnight" and the results can cause serious problems for those trying to arbitrate under them. The last thing parties want to do when they have a dispute is spend time and money arguing about how their arbitration clause works. I have been involved in arbitrations where as much time has been spent on jurisdiction as the underlying issue, simply because not enough thought was given to the arbitration clause. A good clause makes sure that the basics are dealt with, such as a clear reference to arbitration, ensuring that the right rules and a recognised New York Convention seat are chosen, and requires a tribunal formed of the appropriate number of arbitrators. If in doubt, a simple approach works better than a complicated and prescriptive clause as the arbitral process allows flexibility even once a dispute has begun.
How do you see the UK arbitration model developing over the next five years or so? What, if anything, should concern businesses?
I expect that as a result of continuing concerns regarding the speed of the arbitral process there will be moves to make arbitration in London quicker, more efficient and cost effective. This will require a change in the mindset of the players involved, including the institutions, counsel, arbitrators and clients. I expect to see moves towards an alternative streamlined process for lower-value, less complex disputes. The ability of practitioners in the UK to adapt to any such changes will be a key step towards the continued growth of arbitration. As to concerns, one potential issue is the ability of a limited pool of potential arbitrators to deal with the growth of arbitration and if conflicts prove to be a problem. It is important for a new generation of arbitrators to come through the ranks to ensure there is a ready choice of skilled practitioners available and for the institutions and courts to take a pragmatic approach to conflicts.
Previously published in Corporate Disputes Magazine's April issue
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