London’s Place as a Global Arbitration Hub

Global Arbitration Hub

By Deborah Ruff and Charles Golsong

Despite the recent increase in the popularity of Singapore and Hong Kong as arbitration centres, London remains at the top due to some unique factors. Let´s examine them.

Recent press reports have suggested that London’s status as the world’s leading arbitration hub is now subject to challenge by Singapore, with Hong Kong not too far behind. A closer look reveals that London remains uniquely popular for high-value arbitration.

The reach of Singapore and Hong Kong as arbitration seats

Given that one of the major advantages of arbitration over litigation is that arbitration is generally confidential, we must necessarily take into account statistics in order to ascertain where London ranks. However, as Mark Twain once said, “Facts are stubborn things, but statistics are pliable.”

A further complication arises in that, to our knowledge, there exist no overall figures of total arbitrations heard in a particular seat. Indeed, compiling such statistics accurately would be nigh on impossible given, for example, that many ad hoc arbitrations are never reported. As such, one must rely on data collated by arbitral institutions and surveys of users of arbitration.

The data suggest that Singapore and Hong Kong are predominantly regional arbitration hubs, favoured by users operating in Asia-Pacific.

In the most recent Queen Mary University International Arbitration Survey published in 2021, the five most preferred arbitral seats were London, with 54% of respondents including the city in their answer, which tied with Singapore, followed by Hong Kong (50%), Paris (35%) and Geneva (13%). However, respondents to the survey seem to have been heavily concentrated in Asia.

When one looks at the most recent figures from the Singapore International Arbitration Centre (SIAC), these reveal that almost a third of cases administered by SIAC in 2022 involved one or more Singaporean party, and only about a quarter of parties originated from outside the Asia Pacific region.

In Hong Kong, meanwhile, less than a third of all arbitrations submitted to the Hong Kong International Arbitration Centre (HKIAC) involved no Hong Kong parties and a mere 6% involved no Asian parties.

The data suggest that Singapore and Hong Kong are predominantly regional arbitration hubs, favoured by users operating in Asia-Pacific. We note in particular that, in our experience, Chinese parties prefer to arbitrate close to home.

Whether these two seats can build on their regional popularity will depend on a number of factors. It is worth noting that the effects of recent political difficulties in Hong Kong are likely not yet fully reflected in the statistics, not least because contracts are typically drafted years before disputes are in contemplation.

How does London compare?

Statistics published by the London Court of International Arbitration (LCIA) for 2022 show that 88% of parties in LCIA arbitrations came from countries other than the UK, with the percentage of parties from the UK decreasing in 2022 (12%) compared with 2021 (15%). Moreover, 95% of LCIA arbitrations involved at least one international party, and 75% involved no UK parties whatsoever. There are, of course, many arbitrations held under the rules of other institutions, such as the International Chamber of Commerce (ICC), which are seated in London, in addition to those administered by the LCIA.

Strikingly, London was considered the preferred arbitration seat by respondents to the Queen Mary University survey from Africa, Europe, the Middle East and North America, with over 75% of respondents from Europe and the Middle East making it their preferred choice, and 66% of North American respondents doing the same (ahead of New York).

A Brexit effect?

Brexit effect

It is still too early to say whether London’s popularity as an arbitration seat will in any way be adversely affected by the UK’s withdrawal from the European Union. However, the enforcement advantages of arbitration afforded by the New York Convention, of which the UK is a signatory, will be entirely unaffected by Brexit.

Location, location, location?

While each user of arbitration will have its reasons for selecting London as a seat, the continued attractiveness of London is likely down to several advantages which the city possesses.

Firstly, and most obviously, London offers a convenient location between East and West, in a country whose language is the most widely spoken in the world, and is particularly accommodating for virtual hearings operating across different time zones. The rise in virtual hearings can also negate concerns over the cost of holding arbitrations seated in London.

Secondly, English law is an undeniably extremely popular choice when it comes to selecting a law to govern agreements between international parties. English arbitrators are frequently appointed in arbitrations held under the rules of all major institutions, regardless of where they are seated. English-style arbitration also offers a compelling compromise between civil law and US styles of dispute resolution.

Thirdly, because many of the world’s pre-eminent lawyers, experts, and accountants are based in or have offices in London, there is little difficulty involved in locating and instructing the most talented professionals.

Fourthly, the English Arbitration Act provides a strong framework with limited, defined, court intervention. The ongoing review of the Arbitration Act is undoubtedly being carried out with a view to cementing London as the go-to arbitration seat by streamlining the arbitration process and proposing a procedure whereby unmeritorious claims can be dismissed at an early stage of the proceedings.

What to look for in an arbitration seat

arbitration seat

The seat of the arbitration will be relevant to a number of factors, including:

  1. the ability of arbitrators to award interest;
  2. rights of challenge to the arbitration award;
  3. arbitrators’ powers of joinder and consolidation;
  4. the level of confidentiality provided;
  5. the availability of court assistance when seeking interim relief; and
  6. the ability to recover lawyers’ fees and expenses.

The Chartered Institute of Arbitrators in 2018, developed a framework outlining the key elements of a “safe seat” for international arbitrations.

The English Arbitration Act provides a strong framework with limited, defined, court intervention.

These elements include a modern and effective arbitration law providing a good framework for the process, limiting court intervention, striking the right balance between confidentiality and transparency, and an independent, competent, and efficient judiciary.

In addition, an independent, competent legal profession with expertise in international arbitration is a critical element of the framework. Furthermore, adherence to international treaties for the recognition and enforcement of foreign awards and arbitration agreements, immunity for arbitrators from civil and criminal liability for anything done/omitted to be in good faith as an arbitrator, and ready access to the country for witnesses, counsel, and a safe environment for participants.

London ticks all of these boxes, such that its arbitration crown is not (yet) under threat. However, continued innovation and promotion will be required for London to remain at the forefront.

About the Authors

Deborah RuffDeborah Ruff, is Pillsbury’s International Arbitration Practice Group Leader. She has extensive experience in multi-jurisdiction disputes, with a focus on high-value and complex international arbitration in the energy, infrastructure and construction, telecommunications and financial sectors.

Charles GolsongCharles Golsong is a dispute resolution counsel based in Pillsbury’s London office, focusing on international arbitration.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.