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UK and international businesses continue to opt for arbitration with institutions like The London Court of International Arbitration (the LCIA) when it comes to arbitrating commercial disputes. Even if parties don’t use LCIA or another institution’s facilities and personnel they may still choose to adopt LCIA or other  rules to determine how to arbitrate and resolve the dispute. Nath Solicitors regularly handles cases run under the auspices of the LCIA and other recognised arbitral bodies. Our offices are close to the LCIA and we have access to a trusted group of specialist barristers that we rely on in appropriate cases. We have discussed previously how the LCIA managed in the context of the Covid19 pandemic. Here we look at the LCIA’s most recent report into its work. It highlights some of the emerging trends in the area of commercial arbitration.

While the report is specific to the LCIA it’s likely that other bodies like the International Chamber of Commerce (the ICC) and the International Bar Association (the IBA) are experiencing similar developments. In broad terms the information contained in the LCIA report is useful because it demonstrates that arbitration remains a respected and popular way of resolving disputes. If you  are considering arbitration, it’s worth consulting a solicitor who works regularly with bodies like the LCIA and who understands how the institution functions on   a day to day basis.

DO WORLD EVENTS HAVE AN IMPACT ON ARBITARTION?

In common with other legal dispute mechanisms arbitration cannot operate in a vacuum. Inevitably real-world events impact those involved in legal disputes as much as the rest of the population. THE LCIA’s 2021 Annual Caseload Report makes this clear. It may be too soon to accurately assess what effect the war in Ukraine for example will have on the LCIA, other arbitral bodies and those international businesses that may wish to arbitrate under its rules. In relation to Covid however, two years after initial restrictions started to bite the LCIA is able to report that although cases it managed were down from 2020 it expects referrals to rise again more in line with the level seen pre pandemic.

Worldwide, Covid19 is still used as a basis of many arbitration claims. Parties commonly argue the pandemic and its effects represent a force majeure event or have resulted in the frustration of a contract. Notably however arbitrators across the board are increasingly reluctant to accept such claims believing that Covid restrictions – particularly those imposed after the first wave of the disease –  were ‘foreseeable’ from a legal point of view.

WHAT TYPES OF AGREEMENT MOST COMMONLY RESUT IN ARBITRATION?

According to the LCIA the most common commercial agreements that become the subject of arbitration disputes are:

  • Sale of goods agreements
  • Service agreements
  • Loans or other loan facilities
  • Shareholders/share purchase/joint venture agreements

From the perspective of anyone who may be considering arbitration, it’s interesting to note that most (74% in 2021) cases referred to the LCIA relate to disputes over contracts that had been in existence for five years or less.  In 2021 the figure was 74% of all arbitrations in the LCIA. While there was a jump in cases being arbitrated within two years of the commencement of a contract at the outset of the Covid pandemic, the LCIA believes this is a temporary spike.

ROBUST DECISION MAKING

Challenges to decisions of LCIA-appointed arbitrators are extremely rare – in 2021 less than 2% of decisions were challenged and of these only a small minority of challenges actually succeeded. This certainty of decision making in arbitration is one reason why many businesses prefer it. Opportunities for litigation-type appeals are limited. Although appeals against an arbitrator’s decision are certainly possible on several grounds, in general arbitrated cases are less likely to drag on through a series of expensive and time consuming appeals to different courts.

Contact Our Arbitration Lawyers London

For advice on arbitration and other forms of ADR please contact Shubha Nath at Nath Solicitors on 44 (0) 203 983 8278 or get in touch with the firm online. While we are regularly instructed to act in cases being run under LCIA rules we are familiar with most institutional arbitration rules and are happy to advise on all arbitration matters

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