Arbitration in Banking and Finance: New Research Project Launched

Arbitration in Banking and Finance: New Research Project Launched

LexisNexis spoke to Professor Dr Klaus Peter Berger, Director of the Institute for Banking Law and Center for Transnational Law (CENTRAL) at the University of Cologne and P.R.I.M.E. Finance Expert, and P.R.I.M.E. Finance Head of Secretariat Camilla Macpherson, about a new project on arbitration in banking and finance led by Professor Berger.

Why did you set up the Arbitration in Finance project, and what do you hope to achieve?

KPB: The project is a collaboration between the Institute for Banking Law and the Center for Transnational Law at the University of Cologne. We were keen to explore the potential of ADR, especially arbitration and mediation, as methods of achieving a more cost- and time- efficient resolution of business-to-business disputes in banking and finance. We hope to improve understanding in this market of the benefits of arbitration, particularly in a world where financial markets and financial products are becoming increasingly complex and sophisticated.

Why is arbitration a good solution for solving disputes in the financial services sector?

KPB: Traditionally, we have seen some reluctance on the part of banks and other financial institutions to use arbitration and other forms of ADR. Many of the reasons for this reluctance are no longer valid. This has been confirmed, for example, in the Report on Financial Institutions and International Arbitration of the Commission on Arbitration & ADR of the International Chamber of Commerce (ICC), Task Force on Financial Institutions and International Arbitration of 2016.  Arbitration is proving popular in emerging markets, since it offers parties a neutral forum removed from local courts that may lack the expertise and efficiency required by the market. Islamic finance disputes are also particularly well-suited to arbitration. Other aspects of arbitration, such as confidentiality, can also be appealing in some cases. 

CM: P.R.I.M.E. Finance has always believed that arbitration offers significant advantages to the financial services sector. Our bespoke arbitration rules (the third edition of which will be published next year) were drafted with this sector firmly in mind. Financial markets disputes are often complex, and there is a need for decision-makers with a high level of understanding of the documents (which are often standard form) and practices of the market. Arbitration allows parties to select arbitrators with the requisite

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About the author:

Emma is head of the Banking and Finance team and the Finance Group at LexisNexis®UK.

Emma has wide-ranging experience in derivatives and capital markets with a particular emphasis on credit derivatives and structured products. Emma qualified as a solicitor with Allen & Overy LLP, working in the derivatives and structured finance teams in both their London and Paris offices before gaining experience with Deutsche Bank AG (advising the foreign exchange prime brokerage desk) and Crédit Agricole CIB (advising the fixed income and derivatives desk) before joining LexisNexis®.