International arbitration
April 2022 | ROUNDTABLE | LITIGATION & DISPUTE RESOLUTION
Financier Worldwide Magazine
April 2022 Issue
The international arbitration space has been subject to a raft of key developments in recent years, dominated by the shift to virtual hearings and backdropped by continuing pandemic-related disruption. Arbitrators have also had to adapt to revised arbitration rules, including those of the International Chamber of Commerce, Delos and the International Centre for Settlement of Investment Disputes. As arbitration evolves, parties and practitioners seeking to resolve disputes must concurrently adapt to a new normal.
FW: In your opinion, what key developments have dominated the international arbitration space over the past 12 months or so? Have you noted any sector-specific trends, for example?
Paschalidis: Much like in 2018, the international arbitration space in Europe has been dominated over the past 12 months by its relationship with European Union (EU) law. In its 2021 Komstroy ruling, the Court of Justice of the European Union (CJEU) extended the Achmea reasoning to the Energy Charter Treaty (ECT), finding that the arbitration clause contained in Article 26 of the ECT must be interpreted as not being applicable to intra-EU investor-state disputes. In early 2022, the CJEU delivered its judgment in the Micula appeal finding that Romania’s consent to arbitration under the International Centre for Settlement of Investment Disputes (ICSID) Convention had lost its legal force as of the date of Romania’s accession. While Achmea could be understood as a policy change with respect to intra-EU investor-state dispute settlement (ISDS) for the future, Komstroy and Micula indicate a willingness to retroactively change the meaning of multilateral treaties. These are highly controversial matters that will occupy our field of work for months to come.
Odigie: Key developments in the arbitration space have been visible in the recognition and acceptance of the value of technology in the arbitral process, as well the value of arbitration in the financial technology sector. Examples of this are the guidance issued in response to the disruption caused by the recent coronavirus (COVID-19) pandemic and arbitral venues and rules employed in blockchain technologies transactions.
Petit: The past 12 months saw an unprecedented volume of cross-border disputes, driven by extensive disruptions in global supply chains, which has resulted in an increase in arbitration being the preferred form of dispute resolution. There has also been a marked increase in states arguing that either an arbitration or the underlying contract in a dispute has been tainted by corruption. Russia, Nigeria and Kazakhstan have all recently used this argument, and where substantiated, it could prove to be an effective defence to an arbitral award. As ever, it is important for lawyers to keep an eye on sanctions across the world and keep in mind how this might affect clients.
Ramirez: Over the past 12 months or so, several key developments have dominated the international arbitration space. One such development is the increase of virtual hearings. Prior to the outbreak of COVID-19, the arbitration community was somewhat reluctant to hold hearings in a virtual format, as some practitioners questioned whether virtual hearings breached a party’s due process rights. The pandemic forced arbitration practitioners to think outside the box and to manage new technologies such as ‘trial pad’, so they could preserve a party’s right to a hearing while maintaining everyone’s safety. Now virtual hearings have become standard practice, not only because they are an effective option, but because they help reduce costs. We have also seen an uptick in the revision of arbitration rules, particularly when it comes to conducting an arbitration in an expedited manner and filing everything electronically and without the need for hard copies.
Rhie: Third-party funding has been gaining traction in the international arbitration space over the past year or so, including in Hong Kong. While Hong Kong has, for a long time, specifically permitted third-party funding for arbitrations, the effects of the pandemic are likely to have catalysed companies to consider seeking third-party funders for their disputes. This development has also spurred discussions over transparency concerns, and whether the existence and identity of a third-party funder should be disclosed. Following in the steps of the 2018 Hong Kong International Arbitration Centre (HKIAC) rules, both the 2021 International Chamber of Commerce (ICC) Rules and the 2021 Delos Rules of Arbitration now require that the existence of the third-party funder be disclosed. Similar provisions have been proposed for the ICSID Arbitration Conciliation Rules.
MacKinnon: The pandemic continued to disrupt the world’s return to normality last year. It hit the Latin America region particularly hard at a time when there have also been sweeping political changes in several countries, including Mexico, Peru and Chile. These political changes have led to the passage of a number of legislative and regulatory measures with potential impacts on businesses in sectors like oil & gas, energy and construction. Some of these measures have already been subject to scrutiny in local proceedings before national regulatory and judicial bodies, including most notably in Mexico, and it is possible – though far from certain – that we will see investor-state arbitrations or commercial disputes involving parties who perceive that their interests have been impacted or harmed because of the measures.
“Generally, arbitral award enforcement is still robust, though it is dependent on several factors, including which jurisdiction or jurisdictions you are ultimately seeking to enforce in.”
FW: Have any recent arbitration cases gained your attention in particular? What can they tell us about the current international arbitration environment, and what impact could they have on future cases?
MacKinnon: One of the recent ICSID cases filed against Chile, ADP International S.A. and Vinci Airports S.A.S v. Republic of Chile, is particularly noteworthy. In this case, ADP and Vinci Airports, the main shareholders of a consortium with a 20-year concession for Santiago’s international airport, brought claims under the Chile-France bilateral investment treaty (BIT) arising from losses allegedly caused by measures the Chilean government took in response to the COVID-19 pandemic. While many practitioners predicted a flood of COVID-19 cases stemming from governmental measures and force majeure declarations back in 2020, this is one of the first – if not the first – treaty case aimed at challenging a government’s COVID-19 response under international law. It will be interesting to see whether this case heralds a wave of investor claims because of a government’s pandemic measures.
Petit: One significant decision from late 2021 was the Kabab-ji decision in the UK Supreme Court. This decision concerned the enforcement of an arbitration award against a non-party to an arbitration clause. The Supreme Court was asked to determine what was the law governing the arbitration agreement and, if this turned out to be English law, whether there was any real prospect that a court might find at a further hearing that KFG became party to the arbitration agreement in the FDA. It was also questioned, as a matter of procedure, whether the Court of Appeal was justified in giving summary judgment refusing recognition and enforcement of the award. The case showcases the UK Supreme Court’s attitude to arbitration clauses and to enforcement of arbitration agreements under Article V(1)(a) of the New York Convention, which establishes two conflicts of laws rules. Firstly, that the validity of an arbitration agreement is governed by the law to which the parties subjected it. And secondly, that if the agreement is silent on the choice of governing law, the law of the country where the award was made applies.
Ramirez: There has been an increase in the number of investment arbitration matters related to climate change and the rights of indigenous people recently. Climate change cases have led to a clash between the rights of investors and the actions taken by a state to implement climate change policies and protect the environment. Disputes involving indigenous people’s rights have gained more recent attention. There are various states around the world whose constitutions provide that indigenous communities must be consulted prior to developing foreign investments. As a result, major mining or energy investment projects that do not comply with these consultations may encounter resistance in these states, which may eventually lead to new arbitration disputes. Decisions in all these cases will impact the development of future investments in these sectors.
Rhie: In Tenke Fungurume v. Katanga, decided in December 2021, the English High Court rejected the proposition that the arbitral tribunal had exceeded its powers by awarding the third-party funding costs as a component of “legal and other costs of the parties” under the English Arbitration Act. In the same decision, the court also held that it will not generally interfere with the tribunal’s decision to refuse an adjournment of the main hearing on grounds related to COVID-19. The case is significant in two ways. First, this decision may encourage future tribunals to allow similar sorts of recovery. It may also further incentivise parties who are considering third-party funding. Second, arbitral tribunals are becoming, overall, more reluctant to postpone key deadlines or the main hearing for COVID-19-related reasons. This decision signals that the English courts consider this approach to be reasonable. The Hong Kong courts are likely to adopt a similar stance. Consequently, parties and their legal representatives will need to find viable alternatives to minimise the potential risks associated with COVID-19.
Paschalidis: The arbitration recently initiated by Huawei against Sweden is certainly noteworthy. It arises from the Swedish government’s decision to exclude Huawei from the rollout of 5G network technology on the basis of the Chinese government’s alleged use of Huawei equipment for espionage. Seen in the broader context of the Joint Russian/Chinese statement on ‘International Relations Entering a New Era and the Global Sustainable Development’ of 4 February 2022, the case brings to the forefront an ideological conflict between the West and the East about international security and the rule of law. It will be interesting to see how international investment law will be shaped through disputes of this kind.
“Government reforms across the world, particularly in the energy and finance sector, have put pressure on many parties, escalating arbitration.”
FW: What do you consider to be the most pressing issues facing parties and practitioners in today’s evolving international arbitration landscape? How is the arbitration community dealing with these issues?
Petit: Government reforms across the world, particularly in the energy and finance sector, have put pressure on many parties, escalating arbitration. For these parties, some contracts which may have functioned in one way at completion, operate differently in a new regulatory landscape. For practitioners, it is important to stay up to date on regulatory changes across the world and their commercial impacts on clients. Regulatory reform can lead to change and claims arising from the public and private hybrid of investment treaties. This is apparent in Latin America and the Middle East.
Ramirez: Time and costs have consistently been some of the most pressing issues facing parties and practitioners in international arbitration. The increase in virtual meetings and hearings has helped to reduce some of these costs as parties and practitioners no longer need to engage in international travel or incur hotel and other related expenses. Exclusively filing electronically, which we are seeing more of, has further helped to reduce the costs of printing hard copies and sending large boxes with filings via courier, all of which can become very expensive. These recent trends helped increase savings in arbitration matters. To reduce the time required to conduct a proceeding, some arbitral institutions have also been revising their arbitration rules, which resulted in conducting arbitrations in a more efficient manner, such as the ICC’s Expedited Procedure Rules, which came into force in January 2021.
Rhie: Despite entering the third year of the pandemic, dispute lawyers are still adapting to the ‘new normal’. Added challenges have been brought about by the fact that countries have started to adopt divergent approaches on how best to deal with the pandemic. The trend in Europe, North America, and many other countries is to adopt a ‘living with COVID-19’ strategy. However, this has yet to be embraced in most of Asia. As a result, cross-border deals and proceedings have been affected, especially if one side is particularly reliant on parties or counsel that are based in Asia, which remains generally difficult to access. For those based in Asia, virtual or hybrid hearings remain the only feasible options. As a result, they are likely to progressively become a permanent feature, and even the default option in some instances, for how we conduct hearings and conferences, as well as case management.
Odigie: The most pressing issue facing parties and practitioners is preserving the highly prized flexibility of the arbitral process. The underpinning thoughts are technology in the arbitral process and the application of arbitral concepts and rules amid significant technological concepts in commercial transactions, for example in financial products transactions and payment processes. The recent pandemic has given the arbitral community the opportunity to use technology and allow for technological tools to preserve flexibility and access. While wider considerations and implications continue and will, I expect, result in further refinements in this area, work continues to be required in building and keeping up with technological advancements in commercial transactions, financial products and processes.
Paschalidis: The consequences of the Russian invasion in Ukraine is undoubtedly the most pressing issue facing parties and arbitration practitioners today. The restrictive measures adopted by the US, the EU, the UK and other countries, as well as the decision of several industry actors to stop their business in Russia or with Russian partners, are likely to result in the multiplication of disputes. At the same time, many arbitration practitioners have decided not to act for the Russian state, Russia state-owned entities and Russian clients. Such decisions are unprecedented. The landscape for legal services with respect to business in or with Russia will undergo an evolution.
MacKinnon: The related issues of time and cost are a key challenge for international arbitration. While arbitration has often been viewed as an attractive alternative to litigation in part because it is faster and more cost-efficient, that comparative advantage is increasingly being called into question because of extensive document disclosure, protracted procedural battles between the parties, and multiple rounds of written and oral submissions both before and after the merits hearing. Further potential challenges to efficiency have arisen in the US in particular, where the US Supreme Court is poised to rule shortly on whether US courts can permit discovery of third parties for use in international commercial arbitrations under 28 USC section 1782(a). Arbitration practitioners and arbitrators alike are focused on addressing the issues of time and cost, which are frequently discussed at arbitration conferences across the globe, but these issues undoubtedly will require deliberate and consistent attention, and a willingness on the part of arbitrators to make tough decisions.
“Climate change cases have led to a clash between the rights of investors and the actions taken by a state to implement climate change policies and protect the environment.”
FW: How important is it to utilise expert witnesses to illuminate complex issues and provide an informed perspective in certain cases? To what extent can expert testimony define success or failure in an arbitration?
Rhie: Early input from external advisers is critical. They can give an independent take on the company’s situation, allowing the company to understand all aspects of the dispute, including those it may not even have been aware of. An experts’ early evaluations and opinions can be a critical component of the overall dispute resolution strategy. Recently, a high-net-worth individual successfully defended against a $2bn claim brought by a consortium of private equity funds in a dispute concerning the value of their shares in the individual’s company. Part of the success of this defence was attributable to the fact that valuation experts were engaged from day one and able to provide high-calibre and reliable opinions, which was reflected in their testimony during the evidentiary hearing. The claim was dismissed in its entirety.
MacKinnon: The benefits of utilising expert witnesses may depend on, among other things, the issues in play, the governing law, and the legal background of the members of the tribunal. It is fairly common, though not uniformly necessary, to use expert testimony to address valuation or quantum issues, as well as to handle highly technical engineering or specialised scientific topics. The usefulness of other types of experts, such as legal experts or industry custom and practice experts, may depend on the governing law and the composition of the arbitral tribunal. For instance, in certain jurisdictions, it is typical that legal experts will be called upon to provide their opinions on complex issues of law and even the application of that law to the facts at hand, whereas in other jurisdictions, this may be perceived as a usurpation of the arbitral tribunal’s role, at least if not done with great care.
Paschalidis: Success or failure in an arbitration will rarely be due to the expert alone. However, experts are essential actors in international arbitration. They add weight and authority to a party’s argument, especially with respect to matters that do not fall strictly within the expertise of counsel, such as local or foreign law, technical matters or quantum. Their success depends not only on their reputation and their experience in their field but also on their ability to explain complex matters in a simple and understandable manner and to perform well in cross-examination. It is a sign of good counsel to be able to direct clients to make the right choice of expert.
Odigie: The arbitral process’ central reliance is on subject matter dispute resolution experts. Thus, I believe that the use of expert witnesses is crucial to respecting the origin and preserving the value of the arbitral process. The arbitral process arose from and is valued in commercial transactions. However, commercial transactions almost never exist in insolation but are featured in myriad sectors. Today’s commercial landscape is influenced and supported by complex scientific and operational concepts. Thus, I consider that if arbitration is to remain a valuable and successful dispute resolution tool, a revered place must be preserved for expert witnesses.
Ramirez: Expert witnesses play a crucial role in international arbitration proceedings. They constitute an aid for both counsel and the tribunal to understand complex technical, quantum and legal issues, among others, that may arise in an arbitral dispute. In this respect, an expert’s testimony can define the success or failure of an arbitration. A qualified expert, who can clearly present and explain a complex issue, will contribute to the tribunal’s decision-making process by providing independent, competent and relevant evidence in the case. In contrast, an expert witness who is unqualified, lacks independence, shows evident partiality or is unable to clearly explain complex issues to the tribunal, may severely prejudice a client’s case, or worse, harm the credibility of a party and its counsel involved in the dispute.
Petit: Expert witnesses are used to assist and direct the tribunal in making decisions by providing independent factual or legal evidence on issues that cannot be determined by counsel alone. Expert evidence can be used to assist the tribunal in deciding technical issues, delay and quantum. It can definitely help a case to succeed. If an expert clearly understands that their primary duty is to the tribunal and sets out the position within their independent expertise, it makes a complex issues like quantum much easier for a tribunal to grapple with. In arbitration, expert witnesses can be more at risk to partiality and bias by the appointing party, especially where they are remunerated. This may lead an expert to unconsciously, or consciously, take the side of their appointer. Another risk of party appointed experts is that two experts, who may indirectly take the side of their respective party, may come to different conclusions.
“The most pressing issue facing parties and practitioners is preserving the highly prized flexibility of the arbitral process.”
FW: Although known as binding and enforceable, how robust is arbitral award enforcement in practice, especially when pertaining to enforcement in a jurisdiction different from the venue of the arbitration?
Paschalidis: Enforcement of awards is not always an easy exercise. Some difficulties may be practical. For example, it may not be easy to trace assets belonging to the party against which enforcement is sought. Other difficulties may be legal in nature. Certainly, the 1958 New York Convention has limited the grounds on which courts can refuse to enforce foreign awards to those exhaustively enumerated in Article V, such as lack of jurisdiction of the arbitral tribunal, violation of procedural fairness or breach of public policy. However, these grounds can give rise to complex litigation that can last for years and arrive at different results from one jurisdiction to another. Finally, one should not fail to mention that enforcement against states is more complicated than enforcement against private parties in light of the fact that states are protected to a considerable extent by the rules on sovereign immunity. Enforcement is therefore an art to itself. It requires lawyers who master both arbitration and litigation.
Odigie: The New York Convention has been valuable in addressing this issue. The convention allows for awards to be enforced in executing jurisdictions. The dual effect of this is that the award is recognised in a jurisdiction and the domestic laws and jurisdictional system can be used to facilitate enforcement of the respective award. This of course means that the award enforcement is exposed to or may be adversely affected by any flaws in the legal system where such award is to be enforced. Thus, the robustness of the enforcement of an award is always subject to the robustness of the legal system of the jurisdiction in which it is to be enforced.
Ramirez: In practice, the enforcement of arbitral awards has become robust. Although the seat of the arbitration is the only place where appeals or attempts to vacate the arbitral award may be conducted, a party is free to enforce an arbitral award in any jurisdiction where the losing party has assets. To avoid pitfalls, a party enforcing an award should select to enforce the award in a country that is a signatory to the New York Convention or any other similar convention, as that will make it easier to enforce the award. In this respect, such conventions have greatly contributed to the removal of obstacles when obtaining recognition and enforcement of international arbitral awards in foreign jurisdictions, as the grounds they contain to refuse recognition and enforcement are limited and narrowly construed.
MacKinnon: The successful enforcement of awards very much depends on the jurisdiction where enforcement is sought. A great number of jurisdictions have a proven track record of award enforcement under the New York Convention or the Panama Convention; others less so. The considerations that accompany decisions regarding where to enforce an arbitral award are very jurisdiction-dependent and may also be influenced by where certain parties and assets are located, and what the state or country regime surrounding asset attachment and seizure may be. In New York, for example, where many parties may have offices, operations, physical property or bank accounts, there are local arbitration law and recent court decisions that may permit a party to attach an asset even before an award is issued by a tribunal in order to secure and preserve the asset.
Petit: The New York Convention 1958 governs enforcement of arbitral awards. One hundred and sixty-eight states are signatory to the convention, the most recent of which is Iraq. There is a general obligation for the contracting states to recognise arbitral awards as enforceable and binding. This means that for the countries that are signatory to the convention, awards are as enforceable as local judgments. Therefore an award under the convention is enforceable provided that the country that provides nationality to the award and the country in which the assets are located are all signatories to the convention. However, the convention does not guarantee enforcement. Firstly, even though the signatories are extensive, not all nations are party to the convention. Secondly, there are some limited grounds on which an award can be challenged and overturned in national courts and thereby unenforceable. For example, in a London-seated arbitration, under section 68 of the Arbitration Act 1998, proceedings can be challenged on the grounds of serious irregularity in the proceedings or award.
Rhie: Generally, arbitral award enforcement is still robust, though it is dependent on several factors, including which jurisdiction or jurisdictions you are ultimately seeking to enforce in. Whether or not the state is a signatory to the New York Convention is the most important consideration. The ease of enforcement will also depend on the nature of the relief awarded by the arbitral tribunal and whether the local courts are pro-arbitration or not. For instance, Hong Kong, which is a signatory through extension of territorial application by the People’s Republic of China (PRC), is considered a pro-arbitration jurisdiction. Enforcement will be refused exceptionally as there are limited grounds in the arbitration ordinance to do so.
“The benefits of utilising expert witnesses may depend on, among other things, the issues in play, the governing law, and the legal background of the members of the tribunal.”
FW: Would you say companies are now more inclined to include international arbitration provisions in their commercial agreements? What factors should they consider when doing so?
Odigie: The pursuit of wide consumer markets, among other reasons, has resulted in a significant increase in cross-border commercial relationships and international interdependence. Tangential to these complex international relationships is the increasing appetite for speedier transactions. Arbitration is a valuable alternative dispute resolution tool for international commercial agreements governing and underpinning these resultant transactions. It is potentially more flexible since it potentially overcomes conflict of laws issues and potentially takes less time to convene and conclude in comparison with the traditional court system. Notwithstanding this, there are factors to carefully consider. First, the subject matter and commercial intention of the agreement between parties. Parties will need to consider if the subject matter of the agreement or any ancillary matter thereto is capable of being subject to arbitration. There are some matters that may not be subject to arbitration, such as any public policy matter or any matter that would result in a change to a party’s legal status. Second, the governing law of the agreement. It would be prudent for parties to consider anything in the laws and regulations of the governing law of the agreement that would impose specific rules or arrangements that could affect or hinder the arbitral process. Third, the governing law and jurisdiction of the arbitration agreement. In addition, it would be prudent for parties to consider the laws that may be applicable to the arbitration agreement and in some cases their relationship with the governing laws of the agreement. Fourth, the jurisdictional location of assets of either party. It would also be valuable to consider the location of material assets of the other party. It is, of course, not imperative, but it is valuable if the jurisdiction of the assets of a party is the same jurisdiction as the jurisdiction of the arbitration. This could serve to ease the enforcement of the arbitral award. Finally, the arbitral institution. Parties will need to consider the appropriate arbitral institution suitable for their agreement. Certain arbitral institutions have certain specialities or have established reputation on resolving certain types of matters.
Ramirez: Although it is difficult to quantify the inclinations of corporate entities, international arbitration remains one of the preferred mechanisms for resolving cross-border disputes. For companies that operate in industries that traditionally use arbitration as a means of dispute resolution, such as energy, construction, infrastructure and technology, entities are more likely to continue to include arbitration clauses in their commercial agreements. Additionally, it appears, based on what we have recently seen, that arbitration clauses will be increasingly used in commercial agreements in certain industries that historically have been less likely to use arbitration, such as the banking sector. Key factors that should be considered when evaluating whether to add an international arbitration provision in a commercial agreement include confidentiality, costs, efficiency, flexibility and the need to enforce an order or award in multiple jurisdictions.
MacKinnon: Arbitration agreements remain very common in those industries that have long favoured arbitration as a form of dispute resolution, including the oil & gas, mining and construction industries, especially in emerging markets. For certain other industries, such as the financial industry in the US, many disputes continue to be litigated in local courts, especially in New York or Delaware. To maintain its strong position in the industries where it is already quite prevalent, as well as to widen its appeal in other industries, arbitration must continue to show itself to be a timely, cost-effective, expert mechanism for confidential dispute resolution.
Petit: There is likely to be an increasing demand for arbitration clauses across industry sectors. Arbitration is relied upon for the resolution of corporate disputes, including those arising from M&A deals. According to the London Court of International Arbitration (LCIA), there has been a tendency toward arbitration clauses for shareholder, share purchase and joint venture agreements referred to LCIA arbitration, evidenced by the fact that such agreements comprised one fifth of total disputes in 2020. Parties should consider, if choosing arbitration, that there is limited scope to challenge the decision of the arbitrator. Arbitrators are more likely to take commercial considerations of the parties into account when issuing an award, and so parties will want to make sure that their commercial obligations are enshrined in the contract, and that mechanisms are put in place to retain data of relevant individuals in case a dispute were to arise.
Rhie: Companies are increasingly inclined to include international arbitration in their commercial agreements, especially as in recent years, many countries and jurisdictions around the world have gone through bouts of political or economic instability. Commercial parties are increasingly looking toward independent arbitral tribunals to adjudicate their disputes. In addition to the seat of the arbitration, and the governing law of the arbitration agreement itself, not just the underlying contract, parties should invest some time in considering which arbitration rules they want to agree on using. For instance, some rules incorporate fast-track procedures, which may be attractive and helpful for smaller companies or those that envision smaller-sized disputes. For deals that entail multiple agreements, there is a need to focus on consistency and compatibility across different dispute resolution clauses. If in doubt, ask a disputes counsel to give a view. Proper tailoring can result in significant cost savings down the road.
Paschalidis: Recourse to international arbitration is a natural choice for companies involved in international transactions. It is often said that parties choose arbitration for reasons of cost, speed and other advantages, such as confidentiality. However, the most significant factor in favour of resolving international commercial disputes through arbitration is the neutrality of the arbitral process. Unlike courts, arbitrators do not have a forum. They are therefore free, in the eyes of the parties, from bias on the basis of nationality. Each arbitral tribunal is bespoke, in the sense that it is constituted to hear and resolve a specific dispute. By contrast, courts perform a public service and therefore operate under different constraints.
“The most significant factor in favour of resolving international commercial disputes through arbitration is the neutrality of the arbitral process.”
FW: Looking ahead, how do you envisage the international arbitration landscape developing over the coming months and years? What trends are on the horizon?
Ramirez: The COVID-19 pandemic has shown that remote hearings are, in many instances, a viable alternative to in-person hearings. Remote hearings are more cost-effective and offer much greater flexibility to the parties in terms of scheduling, but, of course, there are certain drawbacks to a fully remote arbitral proceeding, such as the difficulties in conferring with a legal team that is dispersed across several locations and the ‘screen fatigue’ associated with an extensive remote hearing. Whether remote proceedings will become a permanent fixture in a post-pandemic world remains to be seen, but, in any event, they have already had a major impact in the international arbitration landscape and will likely continue to play a role. Some companies have adopted policies making remote arbitration hearings the default and a number of practitioners have committed to limiting the environmental impact of international arbitrations by, among other things, reducing travel.
Paschalidis: International arbitration will continue to be the preferred dispute settlement method for commercial disputes with an international element. One identifiable trend which appears to be on the rise is the frequency with which allegations of corruption and illegality appear in arbitrations. Interestingly, the courts – at least in certain jurisdictions – have proved more open than arbitrators to infer corruption from circumstantial evidence. This is likely to encourage arbitrators to do the same and therefore strengthen their ability to uphold propriety in international commerce and transactions.
Petit: It is likely that 2022 will see a welcome return to in-person hearings, restoring effective cross-examination and confidence that the tribunal has sufficiently engaged with proceedings. Virtual hearings are likely to remain apparent in some circumstances, as the COVID-19 landscape has called into question whether in-person hearings are in fact necessary, as virtual hearings have allowed international parties to engage with each other at a far lower cost. This transition has also sparked conversations around arbitral procedural reform, with institutions now considering whether differentiated procedural models ought to be established for dealing with different types of disputes. Choice is a core principle of international arbitration. Providing parties with options for how they can conduct a hearing aligns with this purpose and might allow different kinds of parties to choose arbitration, which can now be facilitated in a cost-effective manner.
Rhie: The push toward virtual conferences and hearings will continue to grow. This is particularly the case in Asia where borders still remain largely closed with stringent quarantine requirements for international travellers. The lack of in-person meetings may continue to be a challenge for those that have business in Asia or disputes that have an Asia nexus. While we remain optimistic that such challenges are temporary, more resources are being invested by all, including law firms and arbitral institutions, to adapt to the virtual environment. Even as borders reopen, and we are optimistic that they will, it is likely that virtual conferences and hearings will become a permanent feature in international arbitration.
MacKinnon: With much of the world seemingly adapting to a new normal after two years with the COVID-19 pandemic, the international arbitration community is similarly trying to determine how its recent challenges will shape future experiences and the possibility of returning to in-person hearings and other events. Although we have all gotten quite adept at videoconferencing over the years, as travel restrictions continue to ease across the world, international arbitration practitioners will be grappling with whether to continue with remote hearings, in-person hearings, or perhaps some combination in which the relevant parties appear in some hybrid form. There are advantages and disadvantages to each method, but we believe that the technologies we have embraced over the last few years will continue to be integrated into our practice and arbitration proceedings.
Odigie: The primary trend will continue to be centred on technology. I believe there will be further advancements in reliance on technology in the arbitral process, as well as expertise in the influence of technology on commercial arrangements. I am particularly keen to see how the arbitral process will keep up with technological advancements, such as smart contract blockchain arrangements. In addition, I believe that in its drive to preserve its place in alternative dispute resolution in the commercial landscape, the arbitral community will have to continue to consider and embed sustainability and climate change measures in its processes.
Paschalis Paschalidis specialises in the practice of international commercial and investment treaty arbitration. He has acted as counsel for companies and states under a variety of arbitral rules, as well as arbitrator. He also advises in matters of EU law and appears before the Court of Justice of the European Union (CJEU). He can be contacted on +352 40 78 78 3235 or by email: paschalis.paschalidis@arendt.com.
Ari MacKinnon’s practice focuses on disputes matters in Latin America with a particular emphasis on international arbitration and corruption issues. He has successfully represented a number of major Latin American oil & gas, energy, infrastructure, and pulp and paper companies, as well as other clients in disputes in the region. He speaks regularly in Latin America on topics related to arbitration and crisis management. Mr MacKinnon has experience conducting arbitration and corruption-related disputes matters in both English and Spanish. He/She can be contacted on +1 (212) 225 2243 or by email: amackinnon@cgsh.com.
Catherine Odigie has over a decade’s experience as a legal services leader and C-suite executive in the financial services sector, with expertise in commodities, payment services and foreign exchange. She is an arbitrator and member of the Chartered Institute of Arbitrators and London Court of International Arbitration and obtained an LLM in International Corporate Governance and Economic Law. She can be contacted by email: codigie@edfmancapital.com.
Maria Eugenia Ramirez is an international arbitration partner at Hogan Lovells in the Miami office. Ms Ramirez focuses her practice on international arbitration, both commercial and investment, with an emphasis on Latin America and the Caribbean. She represents clients in various industries, including construction, energy and telecommunications. She handles international arbitration matters in both English and Spanish before all of the major arbitral organisations, including ICDR, ICC and ICSID. She can be contacted on +1 (305) 459 6542 or by email: maria.ramirez@hoganlovells.com.
Sherina Petit is an international arbitration partner at Norton Rose Fulbright in London, leading the practice across Asia, Europe and the Middle East. She also heads the firm’s India practice globally. Besides international arbitration, she has significant experience in investor-state dispute resolution, alternative dispute resolution (ADR) and litigation. In addition to acting as counsel, she regularly sits as an arbitrator. She can be contacted on +44 (0)20 7444 5573 or by email: sherina.petit@nortonrosefulbright.com.
John Rhie is managing partner of Quinn Emanuel’s Hong Kong office and head of the international arbitration practice in Asia. He specialises in international arbitration, both commercial and investment treaty, as well as cross-border/international litigation and white-collar crime. In relation to international arbitration, he has acted as counsel and arbitrator in arbitrations under most arbitral institutions, such as the HKIAC, ICC, ICSID, KCAB, LCIA, SIAC as well as ad hoc arbitrations around the world. He can be contacted on +852 3464 5602 or by email: johnrhie@quinnemanuel.com.
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