Enduring appeal of London arbitration for multinational parties unaffected by turbulent recent years for the UK.
Legal research group Legal UK have recently published a report which explores the economic value of English law as a choice of substantive law across sectors as well as its enduring appeal as a seat of arbitration. The report cited that:
- English law governed at least EUR 661.5 trillion of OTC derivatives trading in 2018, USD 11.6 trillion of global metals trading in 2020, and GBP 250 billion of global M&A in 2019;
- English law is the “preferred legal framework for global commercial maritime contracts”;
- English law comprises 40% of all governing law in corporate arbitrations generally; and
- A 2019 survey of 600 legal practitioners and in-house counsel involved in cross-border transactions in Asia found that English law was selected as the most frequently used governing law by 43% of respondents.
This reinforces the view of London as the world’s leading choice of arbitral seat in international arbitrations.
Accurate figures on the use of London arbitration as a seat are difficult to obtain as arbitrations remain private and confidential, and (in contrast to several other jurisdictions) London arbitrations do not require parties to use an appointing authority – even where there is a default by one party in appointing their arbitrator (unless the parties had previously agreed on a sole arbitrator). However, it bears highlighting that:
- In London, two of the best known arbitration bodies, the LCIA and the LMAA received 444 and 1,775 new arbitrations registered in 2020 respectively. (LCIA Annual Casework Report 2020)
- This contrasts with 483 total referrals to the HKIAC (the default appointing body under Hong Kong law) and 1,080 total filings to the SIAC (the default appointing body under Singapore law) in 2020. (SIAC Annual Report 2020)
The trend suggests that whilst the popularity of specialist and regional arbitration centres remains cyclical and often linked to short-term boosts in local investment, London’s appeal as a reliable seat of arbitration abides.
There are a number of attractions to London arbitration which have led to this state of affairs, including:
- The user-friendly and sensible approach of the Arbitration Act, which avoids unnecessarily complex rules governing service of process in favour of service by “any effective means” (s76 of the Act) and which allows for the default appointment of a Tribunal without the need of the further delay and expense of applying to an appointing authority (s17 of the Act).
- The right to appeal on a point of law under s69 of the Arbitration Act 1996, rather than only the limited grounds of serious irregularity under s68 of the Arbitration Act – in marked contrast to the UNCITRAL Model Law on International Commercial Arbitration, which is incorporated almost verbatim into the national legislations of several jurisdictions, most notably the Hong Kong (via the Arbitration Ordinance (Cap 609)) and Singapore (via the International Arbitration Act).
This acts as a useful safeguard from obviously wrong decisions, but is not simply an automatic rehearing of the issues – in 2020 only 7 permissions to appeal under s69 were granted (Commercial Court Users Group Minutes November 2020). This gives parties added certainty.
- The strength of the legal market in London, and the stable of professional arbitrators, the value of which is often respected and recognised by the judiciary (for instance in the recent Supreme Court ruling in Halliburton v Chubb  UKSC 48) in contrast to jurisdictions where arbitrators are often seem as interlopers impinging on the authority of the Courts.
- The stability of the legal system in London in a jurisdiction where ‘boom and bust’, political upheaval, Brexit and pandemic woes have had little to no effect on London as a choice of arbitral seat.
Our international arbitration team combines extensive experience of institutional and ad hoc arbitrations, an in-depth experience of jurisdictions around the world and specialist sector-based industry knowledge to provide our clients with a team that can successfully run large and complex multi-jurisdictional arbitral proceedings. The legal directories recognise our international arbitration practice and for 7 years running, we have been included in the Global Arbitration Review’s annual guide to ‘approved’ international arbitration firms around the world.
Recent public successes include a win for Naftogaz against Gazprom totalling over US$2.6 billion in a widely reported SCC arbitration concerning gas supplies and acting in what Latin Lawyer called “the dispute of the year for 2021 across all of Latin America”. The latter dispute represents the first time an arbitral tribunal enforced a forfeiture provision in a joint operating agreement under Brazilian law.
Our international arbitration team has full spectrum arbitration capabilities in several key sectors, and regularly acts for institutional and multinational clients in international arbitrations at the pre-action, arbitration and enforcement stages. Our team has specific experience conducting arbitration proceedings under, amongst others, the ICC, LCIA, HKIAC, UNCITRAL, SCC, LMAA and SIAC rules, and our team members are regular speakers and writers in relation to international arbitration developments and issues.