2017 Year in Review - International Arbitration

By Jesse Van Genugten

Picture: Globe License: Public Domain

Constructed as efficient and impartial adjudicative bodies for the resolution of international disputes, arbitral tribunals issue globally enforceable awards as a positive alternative to litigation in domestic courts. At least in theory. Faced with public criticism that as a practical matter the tribunals are neither impartial nor efficient, the system has come to a crossroads. This past year, in response, various international bodies have endeavored to address concerns with the current structure of international arbitration.

Investor-State Dispute Settlement (ISDS)

In July 2017, at the annual United Nations Commission on International Trade Law (UNCITRAL) in Vienna, the 60 member states resolved to open up a new forum to first determine if the current ISDS system needs overhaul and if so, what that improvement process entail. UNCITRAL’s newly inaugurated Working Group III will discuss, compile, and reflect on interested parties’ experiences with the current system—particularly focusing on a publically perceived lack of legitimacy associated with the proceedings. (See UNCITRAL WGIII). UNCITRAL Rules on Arbitration have been used in more than 30% of all ISDS cases, (see UNCTAD), and therefore the new framework for state-led reform will likely shape the landscape of the field for years to come.

Furthermore, the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) has sought out, in the last year, member-state and expert opinion to reform its arbitration rules. (See ICSID Amendment Process). In the next few months, the Centre promises to publish background papers on several topics to improve its arbitral proceedings, including expanding the arbitrators’ code of conduct and providing a means for efficient consolidation of similar arbitral proceedings. These academically oriented pieces will serve as a springboard for a modernizing debate, and specifies a lens through which one can forecast future amendments to the ICSID rules.

International Commercial Arbitration

Diverse in both the industries involved and nature of the underlying disputes, international conflicts driving the use of commercial arbitration around the world show no sign of decreasing in number. (See Global Arbitration News). Given the latest statistics published, the Chinese International Economic and Trade Arbitration Commission administered the most commercial arbitrations in 2016, but that number incorporates both domestic and foreign disputes. On the other hand, the International Centre for Dispute Resolution (ICDR), based in New York, served as the organization responsible for administering the most foreign commercial arbitrations. Support by ICDR, as a division of the American Arbitration Association, for reform therefore proves significant in gauging developments in the field. Spearheading an initiative to bolster the cyber-security measures necessary to protect commercial arbitration disputes, as well as seeking to streamline the creation of arbitral panels, ICDR has set its sights for reform high. (See 2018 Agenda) If these changes prove effective, it could serve as a model for other international arbitration institutions—particularly the largest few that share the bulk of the proceedings—but that remains to be seen in 2018.