The new Litigation 2023 guide provides the latest legal information on litigation funding, initiating a lawsuit, pre-trial proceedings, discovery, injunctive relief, trials and hearings, settlement, damages and judgment, appeals, costs, alternative dispute resolution (ADR), arbitration, and the impact of COVID-19.
Last Updated: December 02, 2022
Litigation in 2022
International commerce continues to undergo a period of rapid and tumultuous change. In 2022, the global litigation landscape has been dominated by two global crises: the COVID-19 pandemic and the war in Ukraine. These two large-scale humanitarian crises have had a profound impact on the global economy. Prices for commodities, particularly fuels, food, and fertilisers have risen dramatically: energy prices were up 78% year-on-year, led by natural gas, which is up 250% year-on-year. This massive price volatility, combined with the stop-start nature of the global recovery from the COVID-19 pandemic, has led to serious global supply chain disruptions and a proliferation of international disputes.
Despite Brexit, London remains a popular choice for dispute resolution. It is the world’s leading centre for international dispute resolution by litigation and, equally with Singapore, by arbitration, according to the Queen Mary University of London International Arbitration Survey. In Europe, however, a number of EU member states are seeking to divert business from London, recognising the economic benefits that come from being a hub for international dispute resolution. Paris, Amsterdam, Brussels and Frankfurt have all opened English-language courts or are in the process of doing so, while Dublin also seeks to position itself as an alternative to the English courts.
The establishment of international-facing courts in Europe follows an earlier trend in the Middle East and Asia. The Dubai International Financial Centre Courts, the Qatar International Court, the Abu Dhabi Global Market Courts and, more recently, the Singapore International Commercial Court and the China International Commercial Court all seek to attract international disputes. Cases in these courts are decided by senior judges and lawyers drawn from multiple jurisdictions (except in the China International Commercial Court, where the judges are exclusively Chinese). The establishment of international courts in the Middle East and East Asia certainly reflects the eastward shift in economic growth and opportunity. It remains to be seen, however, whether the new courts in Singapore and China can compete with more established courts in Europe and the USA or – perhaps more importantly – the already successful arbitral institutions in Singapore, Hong Kong and China.
In the USA, many of the unilateralist and protectionist trade policies of the Trump administration have largely remained in place under the Biden administration. The USA has become increasingly hostile towards international trade treaties, which commit the USA to resolving disputes by arbitration or other means of international dispute resolution. The USA has withdrawn from the Trans-Pacific Partnership (TPP) and has ruled out joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It has also renegotiated trade agreements with Mexico and Canada (NAFTA) and South Korea (KORUS). Former president Donald Trump’s import tariffs and quotas also remain in place.
State courts in jurisdictions such as New York and California nevertheless remain attractive choices when international litigants enter into jurisdiction agreements. Where no jurisdiction agreement exists, the US Supreme Court has scaled back US courts’ power to assume jurisdiction over foreign companies in disputes that have arisen outside the USA (Goodyear Dunlop Tires Operations SA v Brown, Daimler AG v Bauman, BNSF Railway Co v Tyrrell and Bristol-Myers Squibb v Superior Court of California). The change is likely to be welcomed by foreign litigants who are anxious about the US courts exercising jurisdiction over disputes that have no connection to the USA.
Notably, while the US Supreme Court has traditionally been supportive of international arbitration, several recent decisions have disfavoured federal arbitration in various ways. These decisions include foreclosing the availability of US court assistance in evidence gathering in aid of foreign arbitration (ZF Automotive US v Luxshare), relaxing the requirements for the waiver of a right to arbitrate (Morgan v Sundance) and confirming that federal courts lack subject-matter jurisdiction to confirm or vacate awards (Badgerow v Walters).
Despite attempts by newly formed courts to attract international business, arbitration remains the preferred form of dispute resolution for businesses operating across borders. In the recent Queen Mary University of London International Arbitration Survey, 90% of respondents chose international arbitration – on its own or with other forms of ADR – as their preferred means of dispute resolution in international contracts.
The cornerstone of international arbitration’s success is the New York Convention, ratified by 170 states, which celebrates its 65th anniversary in 2023. The Convention protects the enforcement of arbitration agreements and awards, ensuring, with rare exceptions, that arbitral awards can be enforced against award debtors. In its global reach and in its success, the New York Convention remains unparalleled in other forms of international dispute resolution.
It is now clear that the COVID-19 pandemic will have a lasting and profound effect on the manner in which global litigation is conducted. According to a global survey of 23 jurisdictions conducted by the International Bar Association and published in Dispute Resolution International in 2021, the primary trend that emerged is the development and accelerated use of online platforms for the commencement and conduct of litigation. Since then, online or remote hearings have become increasingly common, and many jurisdictions have adopted detailed protocols for the conduct of online hearings that focus on ensuring procedural fairness, efficiency, confidentiality and security.
Increased interconnectedness and globalisation also bring new challenges. Data protection regulations such as the General Data Protection Regulation (GDPR) can cause serious difficulties for lawyers and their clients engaged in cross-border litigation. It may be difficult or impossible to reconcile disclosure obligations to a court or tribunal in one jurisdiction with data protection obligations owed in another jurisdiction. If the wrong balance is struck, serious financial penalties could result – in the most serious cases, GDPR permits fines of EUR20 million or 4% of global annual turnover, whichever is higher.
Cybersecurity issues also pose an increasing threat to law firms, which hold sensitive commercial information. The shift to digital working due to the COVID-19 pandemic has increased this threat. The UK’s National Cyber Security Centre reported a 400% increase in cyber-attacks across all businesses after lockdown, and the Law Society issued a warning to law firms advising them of the increased risk of cybercrime targeted at law firms. Litigators must now adapt to new ways of processing and protecting the vast amount of information generated by modern disputes.
The global outlook for 2023 remains uncertain. The International Monetary Fund has downgraded its outlook for the world economy for 2023, citing an extensive list of global threats. These include Russia’s war against Ukraine, chronic inflation, a sharp rise in the cost of borrowing, high levels of government debt and the knock-on effect of the COVID-19 pandemic. It now seems increasingly likely that the world is edging towards a global recession in 2023. Against such a backdrop, the demand among businesses for international dispute resolution is unlikely to diminish. On the contrary, international litigators should reflect that the changing landscape of international commerce – even if tumultuous – will always lead to disputes.