Safety net

International arbitration, with the twin props of the New York Convention and the Panama Convention, is the safety net above which the daredevils of cross-border business perform. Its integrity and proper functioning are fundamental. But as international arbitration has grown and evolved, so too have a few of its imperfections.

To some, arbitration is outshone by its history. David Goldberg, SJ Berwin’s head of international arbitration, does not share that view, but notes that: ‘Arbitration is far from its origins. In effect, it used to be a means of avoiding court-based litigation to ensure efficient resolution of disputes, quickly and cheaply, by men and women who understood something about the particular trade.’

But a recent study of Investment Centre for Settlement of Investment Disputes (ICSID) arbitrations highlights the shift. On average, the time period between filing a request for arbitration and the rendering of the final award is now just over three and a half years, and costs usually run into millions of dollars. For clients this is problematic, and reform has become a central preoccupation for the international arbitration community.

‘Costs and delays are causing a real problem for clients,’ says David W Rivkin, a litigation partner in Debevoise & Plimpton’s New York and London offices. Michael Davison, co-head of international arbitration at the newly merged Hogan Lovells, agrees: ‘If arbitration is going to deliver on its original promise, everyone involved has got to take advantage of how flexible arbitration is to make it as cost effective and efficient as possible. If they fail, ultimately, it will be taken into an area of disrepute.’

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