Does London pass the CIArb test?

Does London pass the CIArb test?

penciltickLast month, Barry Fletcher reported on CiArb’s 10 Principles for an efficient and effective seat for arbitration. In the spirit of exam results season being upon us, we share some thoughts on how London fares when put to the test.

1. Law

Test: A clear, effective and modern arbitration law that recognises and respects the parties’ choice to arbitrate by providing a framework for facilitating fair and just resolution of disputes through the arbitration process

Response: While the Arbitration Act 1996 (AA 1996) respects party autonomy, a key aspect of arbitration, it does contain some mandatory requirements regarding matter such as immunity, payment of fees, enforcement and appeals. It also contains provisions for the powers of the tribunal in cases where parties default.

It is also worth noting that where the parties agree to an institutional arbitration, governed by an organsiation such as the London Court of International Arbitration (LCIA), or CiArb’s City Dispute Panel, they will have to abide by the rules of the institution, though these rules generally provide for a sufficient level of flexibility that respects party autonomy.

Result: Pass

2. Judiciary

Test: An independent judiciary experienced in international commercial arbitration and respectful of party autonomy

Response: The English courts have a wealth of experience in dealing with complex and multi-jurisdictional disputes involving international parties and provide robust support to arbitral proceedings under AA 1996. In its 2010 international arbitration survey, Queen Mary University found that London was respondents’ preferred seat of arbitration, with 30% favouring London.

The popularity of English law has impacted on the choice of arbitral seat.  Although parties can choose a seat of arbitration anywhere in the world, a significant number of agreements provide for London as the seat, particularly when the underlying contract is governed by English law.  The Queen Mary Survey found that the second most important influencer in a party’s choice of seat was the law governing the substance of the dispute.

Result: Pass

3. Legal expertise

Test: A legal profession experienced in international commercial arbitration and international dispute resolution, offering choice to those seeking representation in arbitration and before the national courts

Response: More than half the world's leading law firms have chosen London as their headquarters, which means that London has the largest concentration of judicial expertise anywhere in the world. Few, if any, other cities offer this combination of experienced lawyers, specialists, business and financial professionals and experts. There are a high number of skilled arbitration practitioners in London, in chambers and law firms, and dedicated arbitration practices as well as those who practice independently. Parties are therefore afforded a great degree of choice in counsel.

Result: Pass

4. Education

Test: A commitment to education of all key players and to the development of learning in the field

Response: London has a wide breadth of education opportunities in arbitration both as a field of study (perhaps most notably the dedicated school of arbitration at Queen Mary University) and also for professional development.

Result: Pass

5. Right of representation

Test: A clear right for parties to be represented in arbitration by party representatives of their choice whether from inside or outside the seat

Response: AA 1996, s 36 provides for the right to representation in an arbitration.

Similarly article 18.1 of the LCIA 2014 rules provide for the right to representation. However, under article 18.4 of the LCIA’s 2014 rules the tribunal ‘may withhold approval of any intended change or addition to a party’s legal representatives where such change or addition could compromise the composition of the Arbitral Tribunal or the finality of any award’. This is aimed at preventing parties from changing their representation for tactical purposes (for example to delay proceedings or to conflict a tribunal member) s opposed to limiting freedom of representation.

For further information, please see our previous blog post by Gary Born on the topic of legal representation in arbitration.

Result: Pass

6. Accessibility and safety

Test: Easy accessibility, adequate safety and protection for parties, their documentation and information

Response: While London faces challenges as any global city does, it is a ‘safe’ place to visit and to do business. It is a global hub for travel and is accessible from all parts of the globe. Those visiting and working here can expect to be treated with respect and those in the legal field to have high professional standards.

Response: Pass

7. Facilities

Test: Functional facilities for the provision of all services required to run an effective and efficient arbitration

Response: The arbitral institutions located in London have excellent facilities. Further, as London is a legal and financial hub, there are a number of other locations such as hotels and office spaces that are suitable for the purpose of conducting an arbitration and provide all the amenities required to do so. Any requirements for internet connections, video links etc can be easily arranged in London.

Result: Pass

8. Ethics

Test: Professional and other norms embracing a diversity of legal and cultural traditions and the developing norms of international ethical principles governing the behaviour of arbitrators and party representatives

Response: Lawyers from this jurisdiction are subject to high ethical standards set out by the Solicitors Regulation Authority and the Bar Council. Those practising here will be subject to their own regulatory standards but a high standard will be expected by any London-seated tribunal.

With the introduction of ethical guidelines by both the IBA and the LCIA in 2014 (broadly along the same lines) and a great deal of discussion in London (as well as globally) about the importance of ethical standards in arbitration, it is clear that London, particularly now led by the LCIA, takes this very seriously.

Result: Pass

9. Enforceability

Test: Adherence to international treaties and agreements on the ready recognition and enforcement of foreign arbitration agreements, orders and awards made at the seat of the arbitration in other countries

Response: As a signatory to the New York Convention (and other relevant treaties) England & Wales has demonstrated its commitment to the enforceability of awards which comply with that Convention. The courts have repeatedly demonstrated their pro-arbitration stance and the presumption that an awards made in a contracting state will be enforced subject only to very narrow categories of defence.

Result: Pass

10. Immunity

Test: A clear right to arbitrator immunity from civil liability for matters done or omitted to be done in good faith in capacity as arbitrator

Response: AA 1996, s 29 safeguards the immunity of an arbitrator for ‘anything done or omitted in the discharge or purported discharge of his functions as arbitrator unless the act or omission is shown to have been in bad faith’.

Similar protection is afforded to arbitrators under article 31.1 of the LCIA 2014 rules which state that no arbitrator ‘shall be liable to any party howsoever for any act or omission in connection with any arbitration, save: (i) where the act or omission is shown by that party to constitute conscious and deliberate wrongdoing committed by the body or person alleged to be liable to that party; or (ii) to the extent that any part of this provision is shown to be prohibited by any applicable law’.

Result: Pass

London’s grade?

Overall, London has all the hallmarks of an efficient and effective seat of arbitration, as per the 10 CiArb Principles. However there are a few areas in which it can seek to improve in order to retain its standing as a preferred seat:

The strong legal tradition in London has supported the growth of arbitration, but there is a concern that the procedural approach favoured by the LCIA is ‘too English’, and alienates foreign parties. Has London also perhaps become too complacent and ‘newer’ seats (Singapore springs to mind) are stealing a march?

The sanctions imposed on Russia have already pushed Russian business towards Asia, and the impact of such sanctions on the London arbitration market are discussed in our earlier blog post. Will this drive arbitration business away from London and, if so, when will this impact be felt?

Arbitration is a ‘big business’ for London, not only in terms of prestige but also in terms of the revenue it generates. London has never really needed to ‘promote’ itself in the way that other jurisdictions have but maybe, in the future, it will need to.

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