REUTERS | Jim Urquhart

Destination arbitration: competition in the market for justice

Earlier this month the International Arbitration Centre (IAC), a welcome addition to London’s arbitration infrastructure, opened its doors on Fleet Street. The opening of the IAC is a natural corollary of increasing competition in the “market for justice” in international dispute resolution. This competition has long existed between different arbitral seats and has encouraged jurisdictions to become more “arbitration friendly”, either through amendments to their arbitration laws or through improvements to their general infrastructure such as hearing venues.

The polished facilities offered by the IAC, including spacious hearing rooms, confidential break-out areas, catering and printing services, will further cement London’s popularity as a choice of arbitral seat, particularly for high end disputes. The London market has been missing such a venue compared to competitor arbitration hubs in Singapore and Hong Kong which have had similar infrastructure for some time.

New players in the market: specialised courts

Recently, competition in the international market for justice is also being enhanced by the proliferation of specialised commercial courts opening in various jurisdictions, the most recent being the Netherlands Commercial Court, which was launched on 1 January 2019.

2018 alone saw the establishment of the International Chamber of the Court of Appeal of Paris, the Chinese first and second International Commercial Courts and the Chamber for Commercial Matters of the Frankfurt Regional Court. These courts follow the establishment of the Abu Dhabi Global Market Courts in 2016, the Singapore International Commercial Court in 2015, the Qatar International Court in 2010, the Dubai International Financial Centre Courts in 2006 and the Hong Kong Court of Final Appeal in 1997. While a number of these courts use the term “international” in the title, they are domestic in the sense that the enforceability of any judgment rendered will depend on the domestic laws of the enforcing state.

The aim of at least some of these specialised commercial courts is to bring international dispute resolution “business” back to the domestic courts. This is through the adoption of features that mimic those that make international arbitration so popular, as well as the adoption of features to overcome perceived deficiencies with international arbitration. As an example of the former, the Singapore International Commercial Court consists of a panel of both domestic and international judges with the procedural rules allowing for the possibility of foreign legal representation in cases with no substantial connection to Singapore. Parties may apply to exclude Singaporean evidentiary law, keep the proceedings confidential and limit appeals to the relevant Court of Appeal.

As an example of the latter, the Netherlands Commercial Court is selling itself on its efficiency compared to international arbitration, both in terms of cost and time. Court fees are fixed at EUR €15,000 for a first instance decision, EUR €7,500 for summary proceedings and EUR €20,000 for an appeal. Parties can litigate in English and are subject to a specialised procedure under which the court may communicate with parties via video conferencing. Court reporters can be used to record the hearings and expert witness testimonies. The court can also apply foreign law. While there is no global equivalent to the New York Convention for domestic court judgments, most decisions of the Netherlands Commercial Court will be enforceable in over 30 jurisdictions thanks to the Brussels Regulation, the Lugano Convention and the Hague Convention. Moreover, third parties can be joined as claimants or defendants, a possibility which has proved difficult in international arbitration.

Looking forward

What impact will the proliferation of specialist commercial courts have on the future of international arbitration? Although it is still early days for many of these courts, dragging business away from international arbitration will be an uphill battle. Recent surveys show that international arbitration remains the overwhelmingly preferred choice of international dispute resolution for well-versed reasons, including the ease of enforcement of awards, the ability to avoid specific legal systems, flexibility with procedure, the ability to select arbitrators and confidentiality.

One of the major hurdles faced by specialist commercial courts will be encouraging parties to submit to the jurisdiction of these courts at the outset of a contract. The dispute settlement clause is already one of the more overlooked clauses in contract negotiations and it may prove difficult to encourage parties at such an early stage to drop the flexibility that arbitration offers. Most of the cases that have come to the Singapore International Commercial Court so far have been referred to it by the Singapore High Court as opposed to a forum selection agreement. The first hearing in the Netherlands Commercial Court took place on 18 February, 2019. While the parties’ contract entailed a choice of forum clause in favour of the court in Amsterdam, the parties subsequently agreed in writing to bring their case to the Netherlands Commercial Court and litigate in English, which is perhaps a more positive sign for the court’s future case flow.

Whatever impact specialised commercial courts end up having on international arbitration, increased competition in the international market for justice through increased choice of forum can only be a good thing. Competition between international arbitration and domestic courts will encourage the improvement of procedures and practices on both sides to meet the expectations and desires of commercial parties in the field of dispute resolution.

In the words of Ovid: “A horse never runs so fast as when he has other horses to catch up and outpace.”

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