The profile and popularity of international arbitration continues to grow, with leading arbitration institutions reporting steady increases in referrals in recent years.
Here, we identify a few sectors which are likely to see increasing use of international arbitration as a means of dispute resolution.
Energy and natural resources
The Covid-19 pandemic and the increasing effects of climate change means that many businesses involved in large scale projects have had cause to examine how best to protect themselves against adverse consequences arising from unforeseeable events.
Even with increased awareness of the types of disputes that may arise in the event of unexpected occurrences, like extreme weather, an analysis of what constitutes 'unforeseeable' is likely to prove increasingly complex. Experts predict that occurrences of extreme weather will increase and as such, disputes about whether the range of what is 'reasonably foreseeable' should also increase. There may also be greater variance between what is reasonably foreseeable across different jurisdictions. The greater degree of unpredictability is likely to lead to disputes.
The impacts of climate change will, we expect, start to hasten the speed of transition to greater focus on renewable energy. That inevitably means development of new (or at least fast-evolving) technology, larger projects, new entrants to the market and new joint-ventures, all in an emerging market where industry standards, contracts and practical outcomes are, in relative terms, less tried and tested.
Such an emerging market with complex contractual arrangements, international supply chains and practical operations potentially spanning across a number of jurisdictions, is likely to be a rich source of disputes best suited to international arbitration.
Banking and finance
Financial institutions have historically favoured resolving disputes in courts, swayed to that view by a large body of relevant judicial decisions which are perceived to provide a greater degree of outcome predictability. However, arbitral institutions have reported a growing trend in the banking and finance sector since 2016. In fact, the LCIA's Annual Casework Report for 2021 reported that the Financial Services sector was the source of more LCIA international arbitrations than any other sector.
In recent years, arbitral institutions, such as the LCIA and the ICC, have made efforts to attract disputes arising out of complex, multi-jurisdictional financial transactions. In particular, express provisions have been introduced to strengthen (or at least clearly state) tribunal powers to summarily dismiss claims or defences which are wholly lacking in merit.
Furthermore, we may see the banking and finance sector's apparent attraction to arbitration continue to increase as a consequence of revised P.R.I.M.E Finance Arbitration rules which came into force on 1 January 2022 and, with the benefit of feedback from financial institutions, are now more finely tailored towards complex financial disputes.
P.R.I.M.E. (which is the Panel of Recognised International Market Experts in Finance) also retains a large panel of specialist arbitrators in the sector.
For disputes relating to new or developing technologies, expert decision makers are often best placed to determine novel issues of fact and law. Through international arbitration, parties can benefit from the appointment of suitably qualified decision makers who hold an understanding of key industry context and/or the technical aspects of the technology in question.
International arbitration is also particularly suitable to disputes involving incorporeal and borderless technologies such as blockchain, with the New York Convention simplifying the process for obtaining an award for enforcement in foreign jurisdictions.
Disputes are likely to increase in many sectors in the coming years, not least in the above sectors, as businesses seek to adapt to the removal of temporary statutory protections in a post-pandemic world and strive for economic recovery in the midst of geopolitical instability and a global economic downturn. International arbitration is perfectly poised to act as a forum to resolve such disputes.