"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Monday, January 16, 2017

Empirical Findings in International Arbitration: Part I

Christopher R Drahozal has come up with a paper titled "Empirical Findings on International Arbitration: An Overview". For those uninitiated, Drahozal has been writing a lot about empirical analysis in International Arbitration, including especially the book he co-edited with Richard W. Naimark titled "Towards a Science of International Arbitration: Collected Empirical Research" (2005). The book surveys the empirical literature on the subject and was published a decade ago to an international arbitration audience who found it very interesting especially because of the lack of empirical findings on the subject, primarily owing to arbitration being a private and a confidential affair.

In the paper referred above, Drahozal gives an overview of some important inferences in international arbitration. In the process of doing so, he also critiques certain empirical surveys. We've been stressing on empirical research in arbitration for quite some time (see here, for instance). This two-series post quotes/ paraphrases some important findings cited in the paper and is hoped that this would be a fillip to those interested in embarking on empirical international arbitration research.

Prominence of Use of Arbitration in International Contracts

The data on the use of arbitration in international contracts is not comprehensive to provide a definitive conclusion on the prominence of arbitration clauses in such contracts. A work by Eisenberg & Miller tends to focus on specific agreements and inference derived therefrom cannot be generalised for reasons stated in the paper.

Reasons why Parties Agree to Arbitrate

Parties' preference of arbitration over litigation may depend on the types of contract. Certain agreements such as international merger agreements, international credit commitments agreements may not contain arbitration clauses as much as other agreements for specific reasons. 

Frequency of International Arbitration Proceedings

The data on the number of references to arbitrations is incomplete since they do not include ad hoc arbitrations, or comprehensively cover all arbitral institutions. At times, they take into account even domestic arbitrations. Further,there is no baseline comparison to qualitatively evaluate the references to arbitration. On the other hand, there has been a growth in the number of investor-State arbitrations. 

Costs in International Arbitration

An ICC survey has reported the following costs breakup based on a sample of 221 arbitral awards:
  • Party costs- lawyers' fees and expenses, expert and other witnesses' expenses and other party incurred costs- 83%
  • arbitrators' fee- 15%
  • Case administration- 2%
The figures on attorney fees in investor-State arbitration is startling 😈.  average claimants' costs is approximately USD 44,37,000/- and average respondents' cost is USED 45,59,000/- and the average tribunal costs is USD 7,46,000 (that is, 7.7% of the total costs).

Length of Arbitral Proceedings

The length connotes the time between filing and award. In ICSID arbitration the average time taken for the publication of arbitral award after the final hearing is 379 days. 

Time taken for Investor-State arbitration under UNCITRAL Arbitration Rules- 1446 days
Time taken for Investor-State arbitration under ICSID arbitration- 1381 days

(Does this debunk the theory that ad hoc arbitration is considerably slower?- food for thought!)

Drahozal seems to compare time taken in investor state arbitration with commercial arbitration administered by arbitral institutions (p. 13). Such a comparison may not be correct. 

Duration of LCIA arbitration
  • Sole arbitrator tribunal- 18.5 months
  • Three member tribunal-21 months.
Duration of SIAC Arbitration
  • Sole arbitrator- 13 months
  • Three member tribunal- 15.3 months
Duration of Stockholm Chamber of Commerce Arbitration



  • Sole arbitrator- 10.9 months
  • Three member tribunal- 19 months

  • Size of Arbitral Tribunal: Approximately half of the ICA involve sole arbitrator. 

    Multi-Party Proceedings: ICC has reported that about 34% of the ICC Arbitration in 2015 involved multiple parties.

    Use of Emergency Arbitrators

    ICDR- 67 requests
    SIAC- 50 requests
    ICC- 34 requests

    However, it appears that many parties prefer national courts for interim/ emergency relief.

    Part II will address the rest of the paper. Happy reading! 

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