ARBITRATOR SELECTION: STRATEGIC CONSIDERATIONS IN DRAFTING ARBITRATION CLAUSES AND BEYOND
Arbitration is an increasingly popular dispute resolution mechanism for sophisticated parties, particularly in Europe. Our ‘2023 European M&A Study’, which analysed share and asset deals that took place last year, recorded an increase of 9 percent since 2016, with 34 percent of contracts opting for arbitration in their dispute resolution clauses.
Arbitration was especially popular in the Central and East European (CEE) region, with three out of four CEE-related deals opting for arbitration. Parties are also more likely to opt for arbitration when the transaction was worth over €100m. However, even for smaller deals, parties often include arbitration clauses in their contracts, especially if the transaction is cross-border, as each party will prefer to resolve disputes in a neutral forum rather than litigating in the domestic courts of the other party.
Appointing your arbitrator
One of the reasons for arbitration’s continued popularity is the parties’ ability to select the decision maker (or at least one member of a panel of decision makers). Selecting one’s arbitrator can give parties more control over the proceedings, as ‘who decides’ the dispute can have as much, and sometimes more, impact on the course of the proceedings than the factual or legal issues before the tribunal. The choice of arbitrator can even potentially impact future enforcement actions, as issues such as a lack of arbitrator independence or arbitrator misconduct can render an award unenforceable.
Jul-Sep 2023 issue
CMS Cameron McKenna Nabarro Olswang LLP