2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process

56 Pages·2012·2.7 MB·English

2012 International Arbitration Survey:
Current and Preferred Practices in the Arbitral Process
International business people agree to arbitration
with the objective of obtaining fair, neutral and
flexible procedures that are capable of efficiently
resolving their disputes. With myriad procedural
practices existing in international arbitration, this
survey uncovers which practices in the arbitral
process are most common around the world, and
which are preferred. For the very first time, the
‘closed doors’ of the international arbitral process
have been opened up for the world to look behind.
Introduction
Paul Friedland Dr. Stavros Brekoulakis
Head of International Arbitration Practice Group, White & Case LLP Senior Lecturer in International Dispute Resolution, School of International Arbitration,
Centre for Commercial Law Studies, Queen Mary, University of London
Despite the dominance of international White & Case is proud to sponsor this survey It is a great privilege to present the fourth We are very grateful to everyone who
arbitration as the dispute resolution method for conducted by the School of International empirical survey of the School of International enthusiastically shared their time and energy
international business, little empirical evidence Arbitration. The School has produced a study Arbitration, the second sponsored by contributing to this survey – in-house counsel,
exists about what goes on in this inherently of the arbitral process which I am confident will White & Case. In this survey, we explore private practitioners and arbitrators alike.
private process. serve as a reference point for the international current and preferred practices in the arbitral The findings will provide valuable insight into the
arbitration community for years to come – process under the following seven themes: arbitral process, unavailable until now, which will
The 2012 International Arbitration Survey,
not least when arguing points of procedure selection of arbitrators, organising arbitral inform the practices and choices of all those
entitled ‘Current and Preferred Practices in the
before arbitrators. proceedings, interim measures and court involved in international arbitration. Given the
Arbitral Process’, closes this gap, providing
assistance, document production, fact and wealth of information that the survey has
empirical evidence of a quality not seen We thank Dr. Stavros Brekoulakis, Mr. Jure Zrilic
expert witnesses, pleadings and hearings, and generated, it will also serve as a basis for further
before. In a departure from previous surveys, (White & Case Research Fellow) and Professor
the arbitral award and costs. The sheer number research in the field. A more detailed analysis
views were sought not only from in-house Loukas Mistelis for their tireless work in
of this year’s questionnaire respondents and will be published in an academic article in the
counsel, but also from private practitioners and producing this publication, as well as all those
interviewees makes this survey the most American Review of International Arbitration.
arbitrators. This provided a pool of respondents who took the time to fill out the survey and to
comprehensive empirical study ever conducted
which was both highly knowledgeable of contribute their knowledge to this study. For the very first time, the closed doors of
in the field of international arbitration.
international arbitration and dramatically international arbitration – a private dispute
larger than earlier surveys. An unprecedented With countless procedural practices existing in resolution mechanism – have been opened up for
710 questionnaire responses were received international arbitration around the world, we the world to look behind. We now know which
and 104 interviews were conducted – more than sought to identify which of these practices are practices in the arbitral process are most common
a five-fold increase from the previous survey. still divergent or emerging, and which are well- around the world, which are preferred, and by
established. Equally importantly, we wanted to identifying the gaps between them we can help
This critical mass of participants provides
reveal whether the current procedural practices shape the direction of international arbitration.
authoritative empirical evidence as to what
match the preferences, needs and expectations
actually occurs in international arbitration, and We hope that you find this unique survey to
of those involved in international arbitration. This
also enabled us to go further than previous be of interest.
study examines these questions, with a particular
surveys by breaking down the results by
emphasis on the more contentious and recently
categories of respondents, whether by different
debated issues in international arbitration today.
geographic regions, legal backgrounds (common
v. civil lawyers) or roles (private practitioners v.
arbitrators v. in-house counsel).

Contents
Executive Summary 2 Appendices 43
The Study 4 Methodology 44
1 Selection of arbitrators 5 School of International Arbitration, Queen Mary, University of London 46
2 Organising arbitral proceedings 10 White & Case International Arbitration Group 47
3 Interim measures and court assistance 16 White & Case International Arbitration Partners 48
4 Document production 20 Acknowledgements 50
5 Fact and expert witnesses 24
6 Pleadings and hearings 32
7 The arbitral award and costs 38
2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process 1
Executive Summary
One of the hallmarks of international Selection of arbitrators Organising arbitral proceedings Interim measures and
arbitration is its procedural flexibility, court assistance
■■ A significant majority of respondents (76%) ■■ The IBA Rules on the Taking of Evidence
and its ability to adapt to the differing
prefer selection of the two co-arbitrators in International Arbitration (‘the IBA
needs and expectations of parties from ■■ Despite being the subject of significant
in a three-member tribunal by each party Rules’) are used in 60% of arbitrations:
legal commentary, requests for interim
diverse legal backgrounds and cultures.
unilaterally. This shows that the arbitration in 53% as guidelines and in 7% as
measures to arbitral tribunals are relatively
This has allowed for the development of community generally disapproves of binding rules. In addition, a significant
uncommon: 77% of respondents said they
myriad practices and procedures throughout the recent proposals calling for an end majority of respondents (85%) confirm
had experience with such requests in only
many parts of the world. to unilateral party appointments. that they find the IBA Rules useful.
one-quarter or less of their arbitrations.
However, as international arbitration has ■■ There has been a long-standing debate ■■ Tribunal secretaries are appointed in 35% Even rarer are requests for interim measures
grown and flourished in recent decades, about whether pre-appointment interviews of cases. Only 10% of arbitrators said that in aid of arbitration to courts: 89% of
and cross-fertilisation of these practices and with arbitrators are appropriate. The survey tribunal secretaries appointed in their cases respondents had experience with them in
reveals that two-thirds of respondents have prepared drafts of substantive parts of only one-quarter or less of their arbitrations.
procedures has occurred, to what extent
been involved in them,2 and only 12% find awards, and only 4% said tribunal ■■ Only 35% of all interim measures
are truly harmonised practices emerging in
them inappropriate. The chief disagreement secretaries discussed the merits of the applications addressed to the arbitral
international arbitration? And if such practices are is not on whether such interviews are dispute with them. tribunal are granted. Of those applications
emerging, do they reflect the preferred practices appropriate, but on the topics that may
which are granted, the majority are
of the international arbitration community? properly be discussed. ■■ The most effective methods of
complied with voluntarily (62%) and
expediting arbitral proceedings are
To answer these questions, we have sought ■■ Almost three-quarters of respondents (74%) (in order) ‘identification by the tribunal of parties seek their enforcement by a
believe that party-appointed arbitrators court in only 10% of cases.
to identify both the current and preferred the issues to be determined as soon as
should be allowed to exchange views with
practices in the international arbitral process. possible after constitution’, ‘appointment ■■ There is no consensus on whether
their appointing party regarding the selection
In so doing, we have highlighted the gaps of a sole arbitrator’, and ‘limiting or arbitrators should have the power to
of the chair.
between them and have compared the results excluding document production’. order interim measures ex parte in
certain circumstances. Just over half of
from different categories of respondents ■■ The survey reveals that, even though respondents (51%) believe that arbitrators
(i.e., by their legal background, role, geographic fast-track arbitration is regularly cited as a
should have such a power, while 43%
location and industry sector).1 We sought views prime method of cost control, in practice it
believe they should not (6% were unsure).
not only from in-house counsel, but also from is not commonly used. The vast majority of
private practitioners and arbitrators – thereby respondents (95%) either had no experience
creating a much larger pool of respondents with fast-track arbitration (54%) or were
involved in only 1-5 fast-track arbitrations
to give empirical weight to our findings.
(41%). However, 65% of respondents
The results of the study are set out are either willing to use fast-track clauses
under seven thematic chapters. for future contracts (5%) or willing to do
so depending on the contract (60%).
1. Results are broken down by category of respondents only where major differences (>10%) exist between them.
2. All findings in this survey regarding respondents’ experiences in international arbitration refer to their experiences
over the past 5 years. Please note that due to rounding, some percentages shown in the charts may not equal 100%.
2
Document production Fact and expert witnesses Pleadings and hearings The arbitral award and costs
■■ Requests for document production are ■■ In a significant majority of arbitrations ■■ Not only does sequential exchange of ■■ How long should a tribunal take to render an
common in international arbitration: (87%), fact witness evidence is offered substantive written submissions occur much award? For sole arbitrators, two-thirds of
62% of respondents said that more by exchange of witness statements, more regularly (82%) than simultaneous respondents believe that the award should
than half of their arbitrations involved together with either direct examination at exchange (18%), there is also a strong be rendered within 3 months after the close
such requests. the hearing (48%) or limited or no direct preference for this type of exchange (79%). of proceedings. For three-member tribunals,
examination at the hearing (39%). 59% of 78% of respondents believe that the award
■■ The survey confirms the widely held view ■■ The survey reveals that only a small minority
respondents believe that the use of fact should be rendered either within 3 months
that requests for document production are (15%) of merits hearings are held outside
witness statements as a substitute for (37%) or within 3 to 6 months (41%).
more frequent in the common law world: the seat of arbitration.
direct examination at the hearing is
74% of common lawyers, compared to only ■■ A common criticism of arbitration is that
generally effective. ■■ The most common duration of a final merits
21% of civil lawyers, said that 75-100% of tribunals unnecessarily ‘split the baby’.
hearing is 3-5 days (53%), followed by
their arbitrations involved such requests. ■■ The vast majority of respondents believe Overall, respondents believe this has
6-10 days (23%), 1-2 days (19%) and
that cross-examination is either always or happened in 17% of their arbitrations, while
■■ Notwithstanding the differing traditional 10+ days (5%).
usually an effective form of testing fact those actually making the rulings – the
approaches to document production
(90%) and expert witness evidence (86%). ■■ Civil lawyers have traditionally claimed arbitrators – said this occurs in only 5% of
in civil and common law systems,
that their hearings are shorter than their arbitrations.
the survey reveals that 70% of ■■ While mock cross-examination of witnesses
those of common lawyers – the survey
respondents believe that Article 3 of prior to their appearance at a hearing is ■■ Tribunals allocate costs according to the
confirms this to be true. 31% of civil
the IBA Rules (‘relevant to the case considered unethical in some legal cultures, result in 80% of arbitrations, and leave
lawyers said the average duration of their
and material to its outcome’) should be the survey reveals that it is commonly parties to bear their own costs and half
merits hearings was 1-2 days, compared
the applicable standard for document done and often considered acceptable the arbitration costs in 20% of arbitrations.
to only 9% of common lawyers.
production in international arbitration. in international arbitration. 55% of However, only 5% prefer this latter
respondents reported that there was mock ■■ Time limits are imposed for oral approach, which shows there is a desire
■■ How important are disclosed documents
cross-examination of witnesses in their submissions and/or examination of for tribunals to allocate costs according to
to the outcome of the case? The survey
arbitrations, and 62% of them (civil and witnesses in two-thirds of arbitration the result more frequently than they are
shows that they are crucial in a statistically
common lawyers alike) find it appropriate. hearings. Most respondents prefer some currently doing.
significant percentage of arbitrations: a
form of time limits (57%), while only
majority of respondents (59%) stated that ■■ In the vast majority of arbitrations, expert ■■ An overwhelming majority of respondents
6% prefer no time limits at all (34% said
documents obtained through document witnesses are appointed by the parties (96%) believe that improper conduct by a
it depends on the case).
production materially affected the outcome (90%) rather than by the tribunal (10%). party or its counsel during the proceedings
of at least one-quarter of their arbitrations. However, respondents’ preferences are less should be taken into account by the
stark: only 43% find expert witnesses more tribunal when allocating costs. This sends
effective when they are appointed by the a strong message to arbitrators that they
parties, while 31% find tribunal-appointed are expected to penalise improper conduct
experts more effective. when allocating costs.
2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process 3
The Study
1 Selection of arbitrators
Unilateral party appointments are the preferred method of
selecting co‑arbitrators in a three‑member tribunal
What are the preferred methods Interviewees explained that they prefer Chart 1: By what method do you favour
Summary Chart 1: By what method do you favour
of selecting arbitrators? unilateral party appointments of the two sseelleeccttiioonn ooff tthhee t twwoo c coo-a‑arbrbitirtaratotorsr sin i na a
■■ A significant majority of respondents (76%) co-arbitrators for the following reasons: tthhrreeee-‑mmeemmbbeerr a arrbbititraral lt rtirbibuunnaal?l?
prefer selection of the two co‑arbitrators in
In view of the current debate on the best (i) it gives the parties control over the
a three‑member tribunal by each party
unilaterally. This shows that the arbitration method of selecting the arbitral tribunal, constitution of the tribunal and inspires 7% 1%
community generally disapproves of the we asked respondents which methods confidence in the arbitral process, which 7%
recent proposals calling for an end to they prefer. For three-member tribunals, a consequently raises the legitimacy of the
unilateral party appointments.
substantial majority of respondents (76%) final award; (ii) parties are better placed
8%
■■ There has been a long‑standing debate said they prefer selection of the two co- to know what skills and knowledge are
about whether pre‑appointment interviews arbitrators by each party unilaterally. This required for resolving the dispute; and
with arbitrators are appropriate. The survey
method of selection was favoured by all (iii) many interviewees expressed some
reveals that two‑thirds of respondents
have been involved in them, and only three categories of respondents, but notably distrust in arbitral institutions selecting
12% find them inappropriate. The chief more by private practitioners (83%) than by arbitrators. In particular, they were
disagreement is not on whether such in-house counsel (71%) and arbitrators (66%). concerned about the small and static 76%
interviews are appropriate, but on the
These figures show that there is general pool from which some institutions pick
topics that may properly be discussed.
disapproval of the recent proposals calling their arbitrators, and of the fact that By each party unilaterally 76%
■■ Almost three‑quarters of respondents
(74%) believe that party‑appointed for an end to unilateral party appointments. not all institutions are paying sufficient By each party from an exclusive list of arbitrators 8%
arbitrators should be allowed to exchange The remaining methods of selection were attention to the availability of arbitrators. By agreement of the parties 7%
views with their appointing party By an arbitral institution or appointing authority 7%
evenly distributed, with 8% preferring
regarding the selection of the chair. Other 1%
selection of the co-arbitrators by each party
from an exclusive list of arbitrators, 7%
favouring selection by an arbitral institution
or appointing authority and 7% in favour of
selection by agreement of the parties.
2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process 5
1 Selection of arbitrators (cont.)
As to the method of selecting the sole Chart 2: By what method do you favour How common and appropriate Chart 3: Do you consider
Chart 2: By what method do you favour Chart 3: Do you consider
arbitrator or the chair in a three-member sesleelcetcitoionn o of ft hthee s osolele a arbrbitirtaratotor ro or rt hthee c hair are pre‑appointment interviews prpe‑rae-pappopionitnmtmenetn itn itnetrevriveiwews sw ith
tribunal, 54% of respondents prefer selection inc haa tihr riene a‑m thermeeb-emr eamrbbiterra al rtbriibtruanl atlr?ibunal? with potential arbitrators? powteitnht ipaol taernbtitiaral taorrbsit araptporrosp arpiaptreo?priate?
by agreement of the parties, 27% prefer
2%
selection by an arbitral institution or appointing 8% There is a long-standing debate about
12%
authority and 10% prefer selection by the whether pre-appointment interviews with
10%
parties from an exclusive list of arbitrators. arbitrators are appropriate. The survey
reveals that two-thirds of respondents
The fact that there is less desire for party
have interviewed or been interviewed as 46%
autonomy when selecting the sole arbitrator
potential arbitrators. Those most experienced
or chair (54%) when compared to selecting
54% with pre-appointment interviews are
the co-arbitrators (76%) may be explained
27%
from North America (87%), Latin America
by the difficulties parties can face when 40%
(70%) and Western Europe (67%), while
seeking to agree on an arbitrator with their
those least experienced with them are
opposing party. Interestingly, the release of
from Africa and the Middle East (48%).3
party autonomy was almost entirely in favour
By agreement of the parties 54% Yes 46%
of selection by an arbitral institution or Overall, 86% of respondents consider
By an arbitral institution/ 27% Sometimes 40%
appointing authority. This method, which appointing authority pre-appointment interviews to be either No 12%
was preferred by only 7% for the selection of By the parties from an exclusive 10% appropriate (46%) or appropriate sometimes Unsure 2%
the co-arbitrators, was preferred by 27% for list of arbitrators (40%). During our interviews with survey
the selection of the sole arbitrator or the chair. Other 8% respondents, most private practitioners and
in-house counsel explained that they find
pre-appointment interviews to be useful
as they assist in providing a clearer picture
of the candidate’s availability, personality
and knowledge or experience in the
specific field relevant to the dispute.
3. All regional breakdowns of findings are based on respondents’ business location.
6