MANAGING COSTS IN INTERNATIONAL ARBITRATION
Legal costs can be a significant issue. Regardless of the type of dispute resolution method employed, they can quickly escalate. Arbitration is sometimes perceived to have lower costs than litigation. The general absence of a right to appeal against an arbitration award in international arbitrations may make this true overall, but the costs at first instance can often be similar.
According to a 2015 White & Case survey, 90 percent of respondents noted that international arbitration is their preferred dispute resolution mechanism, thanks to enforceability, flexibility and the ability of the parties to select arbitrators. It seems that the popularity of arbitration is not so much about costs savings.
However, recently, its supposed speed advantage has proven to be something of a fallacy. Despite its earlier reputation for efficiency and expediency, arbitration is no longer viewed as a quicker and more cost efficient means of dispute resolution by many parties. Equally, the increased use of arbitration to resolve international disputes, particularly complex issues, has increased the overall cost of arbitration. With more complex cases turning to arbitration, parties have found timescales and costs spiralling. According to the London Court of International Arbitration (LCIA), the average duration of an arbitration with three arbitrators is 21 months.
Oct-Dec 2017 issue
Richard Summerfield