REUTERS | David Gray

Surveys show appetite for TMT arbitration… but cheaper, faster, better

Technology, Media and Telecommunications (TMT) disputes have been attracting a growing level of interest in the last few years. Welcome to the global digital age: technology is everywhere, and this ubiquity is expected to give rise to a commensurate number of disputes.

However, this growth is not without its challenges. TMT disputes can be highly technical and sector-specific. What do stakeholders expect from the dispute resolution process? How can legal practitioners and mechanisms adapt to the specific demands of TMT disputes? Two recent studies have looked into these questions.

The SVAMC Study (2017) and the QMUL Study (2016)

The most recent study was published in September 2017, when the Global Technology Dispute Resolution Council and the Silicon Valley Arbitration & Mediation Center (SVAMC) published a report summarising the results of their survey on dispute resolution for technology companies (the SVAMC study). Based on a survey of corporate counsel, law firm counsel, arbitrators/mediators and users in the technology sector, the SVAMC study identifies what the respondents perceived as the main advantages and disadvantages of litigation and arbitration in resolving disputes involving technology companies.

According to the SVAMC study, survey respondents identified the top benefits of arbitration to be specialised expertise (76%), time to resolution (54%) and increased privacy (40%). Ease of multinational enforcement was also identified (by 27% of respondents) as a benefit of arbitration.

The SVAMC study, however, also shows that there is room for improvement. Fast is good, but faster is better, according to the 62% of respondents who said arbitration could be improved by an even shorter time to resolution. This may reflect a particular need for speed in the technology sector; parties may need a quick decision before they decide to invest (or continue to invest) in a particular technological development, or before the disputed technology becomes obsolete. The report also indicates that respondents identified a need for more specialised decision-making and lower costs.

The second recent study on the topic was published by the School of International Arbitration at Queen Mary, University of London (QMUL) in November 2016 (the QMUL study). The final report was based on a questionnaire completed by 343 respondents from both civil and common law jurisdictions, and on 62 personal interviews with stakeholders involved with TMT disputes from across the globe.

The QMUL study provides an in-depth analysis of attitudes towards TMT disputes. Amongst other things, the results show that although arbitration is the preferred mechanism for dispute resolution (43% of respondents, compared to 15% for litigation), in reality the mechanism that is most often used is litigation (44% of the time, against 35% for arbitration). Respondents noted some attractive features of arbitration, such as enforceability (which is “very important” for 68% of respondents), the opportunity to avoid litigation in a foreign jurisdiction (for 65% of respondents) as well as confidentiality and expertise of the decision maker (each being “very important” for 60% of the respondents).

Common themes and differences between the two studies

On a general level, both surveys confirm the importance of the “holy trinity” of criteria:

  • Speed of resolution.
  • Costs.
  • Expertise.

TMT stakeholders want less of the first two, and more of the latter.

On a more granular level, however, there are subtle differences between the two studies.

First, although both studies consider whether litigation or arbitration is best suited to the resolution of TMT dispute, the results appear to have been affected by their pool of respondents. In addition to being focussed on technology disputes (rather than media or telecommunications), the SVAMC study seems to have had more of a US-centric focus, comparing arbitration with respondents’ experiences of US court litigation. Accordingly, it identifies the disadvantages of litigation for the resolution of technology disputes as including “random jury verdicts”, the limits of “discovery”, and the enforceability of “US court judgments”. Comparing international arbitration with US court litigation only partially answers the question of the suitability of international arbitration for international TMT disputes. By contrast, the QMUL study had a more internationally diverse set of respondents, covering most regions of the globe and looking at both the civil and common law systems. Its results are therefore less clearly influenced by any single national legal system.

Similarly, while both surveys identify the need for arbitrators with specialist knowledge of TMT disputes, they seem to approach it from two different points of view. The QMUL study emphasises that “there are real concerns that it is challenging to appoint arbitrators with sufficient expertise in TMT matters”. Conversely, the SVAMC study highlights expert decision-making as the “greatest benefit of arbitration”, identified by 76% of respondents as one of the top three benefits of arbitration over litigation.

This difference in perception could again be due to the geographical focus of the studies. Initiatives in the US have sought to address the issue of expertise in TMT arbitration. For example, the SVAMC’s Tech List is a peer-vetted list of specialist “members of the Tech-focused ADR community”. Similarly, the International Institute for Conflict Prevention and Resolution (CPR), a New York-based organisation offering alternative dispute resolution (ADR) services, recently announced the launch of a new specialised panel of neutrals (mediators/arbitrators), commissioned to deal with cyber security disputes. The rolling out of such initiatives could be having a positive influence on the perceived expertise of arbitrators in TMT disputes in the US, particularly when compared to decision making by a jury in US courts.

The future is… arbitrated?

One thing is clear: there is a growing appetite for resolving TMT disputes through arbitration. In the QMUL study, a staggering 92% of those surveyed agreed that international arbitration is well suited to TMT disputes. Despite the current shortcomings highlighted in the report, 82% of respondents believe there will be an increase in the use of international arbitration in this sector.

To achieve this increase, however, practitioners would be well-advised to heed the advice expressed in the SVAMC and QMUL studies. There are practical steps that could be taken to enhance the attractiveness of international arbitration for such disputes on both sides of the Atlantic.

One would be to focus on efforts to create a solid accreditation system or roster of specialised arbitrators, building on the existing SVAMC and CPR initiatives.

Another step may be to increase the use of online dispute resolution (ODR). The QMUL study anticipates the “widespread adoption” of ODR in the future. If implemented correctly, ODR would have the advantage of killing the two birds of costs and speed with one technological stone.

Hogan Lovells Kate Wilford Marie Davoise

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