Corporate disputes typically arise out of contractual or operational matters that arise from time to time. One of the consequences of globalisation has been an increase in the number of multinational corporations. This in turn has led to a slowly growing number of significant disputes that cross multiple jurisdictions and can involve part of a group falling into dispute with part of another group.

But does international arbitration really provide solutions to disputes that cross national and jurisdictional boundaries? The comprehensive survey undertaken by the School of International Arbitration at Queen Mary University, London in 2006, which professor dr Loukas Mistelis called “by far the largest independent statistical study yet on international arbitration” contained a wide range of interesting statistics and trends. This study found that 73 percent of respondents preferred international arbitration and only 4 percent had experience with transnational litigation alone.

Putting to one side the cost implications of using international arbitration over litigation, in this article we explore the outcomes that international arbitration can offer over litigation – but it is worth remembering that there will still be certain situations that result in time-consuming and costly litigation, especially matters involving regulators or government.

So what are the primary drivers that have led to an explosion and growth in international arbitration? Globalisation is certainly the underlying mechanism that has given rise to cross-border disputes. However, there may be some more nuanced considerations that international arbitration gives rise to that are not just about the cost of litigation. For example, while the issue of legal privilege does not provide for common rules at the international level, the IBA does attempt to provide some structure. These rules would need to be adopted in whole or in part by the parties, but go some way to providing a framework that deals with evidentiary matters in such cases. This means there is significant flexibility around the process – quite the opposite from the rigid framework of court rules that exist across many different organisations.

Oct-Dec 2016 issue

Chartered Institute of Legal Executives (CILEx)