Survey reveals businesses increasingly seek out specialist legal advisors to tackle a rise in international disputes

The joint survey entitled, ‘Corporate Choices in International Arbitration’ (IA), showed that over a third (35 percent) of polled counsels had reported a rise in the number of international disputes. When asked what method they would choose to resolve their disputes, twice as many opted for international arbitration rather than other forms such as litigation.

Researchers at Queen Mary and PwC together analysed IA trends in more than 100 multinational businesses, focusing on the financial services, energy and construction sectors. Currently companies tend to seek specialist expertise from external law firms but under the current constraints of the economic climate and the rising cost of proceedings, many more are now more likely to start recruiting in-house, the report says. Whilst 90 percent of respondents had a dedicated legal department, the survey revealed only half 49 percent had a dedicated in-house disputes team.

Professor Loukas Mistelis, Director of International Arbitration at Queen Mary’s Centre for Commercial Law Studies (CCLS), said: “This survey confirms that arbitration is an option considered by all major sectors of the economy, including banking and finance and has a much wider acceptance in construction and energy industries.

Professor Mistelis, an acknowledged authority on international dispute resolution who has been listed as one of the “leading lights in international arbitration”, added: “It also reflects the impact the recent financial crisis has had on arbitration and how businesses have become most cost-aware and savvy, including in respect of procurement of legal services (outside counsel) and increased participation of in-house teams in arbitration. The pervasive dialogue between internal and external counsel is becoming more pertinent and sophisticated.”

Overall 73 percent of respondents said IA was well suited to resolving transnational disputes, with preferences strongest in the construction and energy sectors. When asked to rank various dispute methods in order of preference, 68 percent of construction respondents said arbitration was their preferred method compared to 56 percent for energy, whilst in financial services, 82percent ranked court litigation as their number one method.

Despite this, over two thirds, 69 percent, of in-house counsel in financial services companies felt IA has become more suited to resolving their disputes. Of those that said arbitration was not their preferred method for settling disputes, 22 percent said this was down to it being less cost effective than other methods – such as litigation, according to the report.

Gerry Lagerberg, PwC partner and head of International Arbitration, added: “This serves as a real vote of confidence in IA as these firms recognise the value in having arbitration specialists embedded more within their multinational businesses.”

Many businesses opt for arbitration for international disputes due to its speedier process and private nature. There is usually no appeal process and the final decision is binding, unlike litigation.

Click here to view the Arbitration Study in full.