International Arbitration 2024

Global Overview – International Arbitration 2024

The international arbitration landscape continues to be dominated by macroeconomic and geopolitical factors. Global inflationary pressures have proven to be more persistent than originally anticipated, borrowing costs have remained high and many major global economies are close to, or have already fallen into, recession. Macroeconomic instability has combined with geopolitical events including the use of sanctions against Russia, intensifying concerns about conflicts in the Middle East and a global supply chain crisis to present serious challenges for businesses across the globe.

This has led to a proliferation of disputes across a wide range of sectors. The areas that are seeing the most disputes are construction, mining, transport and energy; ones in which arbitration has historically been the preferred dispute resolution mechanism. Against this backdrop, it is unsurprising that most leading arbitral institutions reported a record – or close-to-record – caseload over the past year.

Russian Invasion of Ukraine

As the world began to emerge from the pandemic, the Russian invasion of Ukraine on 24 February 2022 triggered another large-scale humanitarian crisis. The war in Ukraine, which has continued into 2024, has caused a massive upheaval in people’s lives and businesses across the globe.

The effect of Russia’s invasion of Ukraine on the arbitration landscape has changed over time. Initially, in 2022, there was a sharp decline in the number of Russia-related arbitrations as reported by the London Court of International Arbitration (LCIA) and other major institutions. The ensuing disruptions, however, have triggered a large number of Russia-related disputes. This is because, since the invasion, many businesses have been forced to cease operations in Russia or have seen their operations taken over by the Russian government.

In 2024, several large companies including Carlsberg, Fortum and Uniper either commenced, or confirmed that they intend to commence, treaty claims against Russia for expropriation. The Russia-Ukraine conflict has also triggered a large number of commercial arbitrations, especially in the mining, commodities and energy sectors as Russia’s invasion of Ukraine and the ensuing sanctions has made the performance of numerous existing commercial contracts more difficult and, in some cases, impossible. This has resulted in a wave of commercial arbitrations as parties seek to suspend or terminate Russia-related contracts.

Technology and Generative AI

Investment in technology and AI continues to boom as companies have invested heavily, especially in the use of generative AI. This is having obvious and profound effects on the arbitration landscape.

Many major arbitral institutions are either already using AI, or considering it, for services including vetting and conflict checks, transcription and award scrutiny. There have not yet been any reports of tribunals using generative AI to assist with drafting awards, or preparing case summaries and the extent to which tribunals may rely on AI remains controversial.

A number of initiatives have emerged to address the use of AI in international arbitration. The most notable are the Guidelines on the Use of AI in Arbitration published by the Silicon Valley Arbitration and Mediation Center in late 2023, and the JAMS AI Rules published in April 2024. Another key, related development is the EU’s AI Act, which is the world’s first comprehensive AI law and provides for EU-wide rules on data quality, transparency, human oversight and accountability. 

Together with an increased use of AI in the arbitral process, there has been a rise in technology and AI-related arbitrations. The International Centre for Settlement of Disputes (ICSID) has reported a significant increase in information and communication-related technology disputes. One such dispute that has been widely reported is Chinese telecoms giant Huawei’s treaty claim against the government of Sweden over its exclusion from the 5G network. Investor-state technology disputes of this nature are likely to raise a host of new and topical issues including whether digital assets, blockchain, AI or decentralised assets qualify as investments.

Caseload of Arbitral Institutions

Arbitration continues to remain a preferred method of dispute resolution for many international businesses. A number of arbitral institutions recorded high numbers of new case filings. The International Chamber of Commerce (ICC) registered 890 new arbitrations in 2023, the third highest number in its history. Singapore International Arbitration Centre (SIAC) recorded 663 new case filings. Other institutions also recorded sizeable numbers with 377 new cases for the LCIA and 500 for the Hong Kong International Arbitration Centre (HKIAC).

The five most preferred arbitral institutions are the ICC, SIAC, HKIAC, LCIA and China International Economic and Trade Arbitration Commission (CIETAC). Each of these institutions continues to dominate the Queen Mary University of London and White & Case International Arbitration Survey, a recurring feature of the arbitration landscape that the industry has now grown used to seeing as a periodic barometer of its progress. In the most recent survey, the most preferred arbitral seat is London, with users citing the stability of its commercial law and highly regarded judiciary. Singapore was the second most popular seat, with users noting that it is receiving a larger share of Asian disputes as many US and Western companies have relocated out of Hong Kong.

The Reform of the Arbitration Act (England and Wales)

In the UK, the process of reform of the Arbitration Act 1996 is nearing its conclusion as the new UK government has confirmed its intention to proceed with the reform. In September 2023, the Law Commission published its final consultation paper proposing reforms to the Arbitration Act 1996 focusing on confidentiality, independence of arbitration, discrimination, powers of arbitrators to adopt summary dismissal procedures and arbitrator immunity.

By far and above the most significant proposed reform, however, is to introduce a new statutory rule that, in the absence of an express choice from the parties of the governing law of the arbitration agreement, the applicable law will be the law of the seat. This reform, if implemented, would overturn the effects of Enka v Chubb, a Supreme Court decision of October 2020 that decided the vexed question of how to determine the law applicable to an arbitration agreement. In Enka v Chubb, the Supreme Court held that the default choice is the law of the contract. The Law Commission’s report highlights complications arising from Enka and advocates a new statutory rule be included in the Arbitration Act 1996 to the effect that the law of the arbitration agreement is the law of the seat.

New Arbitral Rules

In 2024, the HKIAC approved a new set of rules. These rules are noteworthy for the additional powers and duties they confer on the HKIAC. Under the 2024 Rules, the HKIAC may “take any measure necessary to preserve the efficiency or integrity of the arbitration”. This includes powers to suspend or cease administration of the arbitration and, in exceptional circumstances, to revoke an arbitrator’s appointment if the HKIAC concludes that an arbitrator has failed to fulfil their function. The new HKIAC Rules also contain new provisions addressing information security, the environmental impact of legal proceedings, multi-contract scenarios and additional powers for emergency arbitrators. These new provisions all improve the time and cost-efficiency of HKIAC arbitration.

The Saudi Center for Commercial Arbitration (SCCA) issued a new set of updated rules in 2023. Importantly, the 2023 Rules provide for the establishment of an SCCA court to perform an administrative role to support arbitrations that are administrated under the SCCA rules. The SCCA also provides for an online dispute resolution system for the resolution of low-value disputes as well as an electronic filing system. The 2023 Rules are some of the most advanced rules in terms of embracing the use of modern technology to improve the efficiency of the dispute resolution process. The Kingdom of Saudi Arabia followed up by issuing an updated Investment Law in 2024 that facilitates the establishment of foreign investments in Saudi Arabia. Together these measures are intended to provide an attractive investment climate for foreign investors.

The Shanghai International Economic and Trade Arbitration Commission (SHIAC), a leading arbitral institutions in the PRC, introduced new arbitration rules with effect from 1 January 2024. The 2024 Rules provide for emergency arbitration and interim relief, expanded provisions on joinder and consolidation, online arbitration using SHIAC’s e-platform, and for the publication of awards with party consent.

The Development of Arbitral Jurisprudence

National apex courts have recently delivered several judgments that have had a meaningful impact on the development of arbitral jurisprudence. Perhaps the most prominent of these that captivated the attention of the arbitration community were rendered by the UK and US Supreme Courts.

ZF UniCredit Bank GmbH v RusChemAlliance

The UK Supreme Court confirmed that English courts have the discretion to issue anti-suit injunctions to support foreign seated arbitrations where English law governs the arbitration agreement. Prior to this decision, the circumstances in which English courts would grant injunctive relief to support foreign-seated arbitrations were uncertain. This decision is important as it confirms that parties can request an anti-suit injunction from the English courts to enforce an arbitration agreement, even where the arbitration is not seated in England and Wales.

Smith v Spizziri

The US Supreme Court held that federal courts must stay, rather than dismiss, claims that are governed by an arbitration agreement. The decision is important as while a party can immediately appeal an order dismissing an action, there is no immediate right of appeal from an order staying the proceedings. The decision resolves a circuit split over whether Federal Arbitration Act, 9 U.S.C. § 3 requires a court to stay proceedings after compelling arbitration. The Supreme Court’s pro-arbitration decision reasoned that staying, instead of dismissing, lawsuits subject to an arbitration agreement is consistent with the supervisory role that the Federal Arbitration Act envisions for the courts and allows parties to seek relief related to the arbitration without filing a new case.

Morgan v Sundance

Morgan v Sundance addressed the important question of the standard for determining whether a party has waived its right to arbitrate a dispute by first engaging in litigation. Overruling decisions in nine circuits, the Supreme Court unanimously held that there is no requirement for an adverse party to show that it suffered prejudice as a result of the litigation proceedings for a waiver of a right to arbitrate to arise. The decision is important, and may have wider ramifications because the Supreme Court reasoned that arbitration-specific procedural rules – such as a prejudice requirement – are incompatible with the FAA, even when those rules purport to support the pro-arbitration policies underlying the FAA.