For large companies and ultra-high-net-worth individuals, disputes are an inevitable feature of doing business. According to the Litigation Trends Annual Survey, published by Norton Rose Fulbright, US companies now spend $1.2m on disputes per $1bn of annual revenue. Add in the growth of non-US companies involved in disputes and tens of billions of dollars are being spent worldwide in resolving them. Where those disputes are resolved, and in what form, is evolving in line with the global economy – as economic power shifts eastwards, so does the volume of disputes.
Despite this trend, which is underpinned by intense competition from rival dispute resolution centres in Asia, London continues to be the world’s most favoured international disputes destination – at least for now. As rival jurisdictions seize the opportunity to increase their share, the battle for business shows no sign of abating.
So which dispute resolution centres are in the thick of it?
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London calling
The international success of London’s Commercial Court is self-evident: around 80% of cases involve at least one foreign party and in nearly half, both parties are foreign. ‘London is still a major centre for dispute resolution both in the courts and in arbitration: it sucks in work from around the globe,’ says Stephen Moriarty QC of Fountain Court Chambers.
A chorus of voices support London’s case. ‘London is the global leader and I don’t see any change – this may be the one area of our national predicament that is not negatively impacted by Brexit,’ says Constantine Partasides QC, founding partner of Three Crowns.
‘The tolerant culture in London that attracts people to live here is reflected in the legal system. It is reflective of the society and vice versa: they shape each other.’
Tim Lord QC, Brick Court Chambers
Brick Court Chambers’ Tim Lord QC notes: ‘The tolerant, fair-minded, liberal culture in London that attracts people to live here is reflected in the legal system. The common law with its sense of fair play and centuries-old incremental development of fairness – those are two sides of the same coin. It is reflective of the society and vice versa: they shape each other.’
John Reynolds, head of White & Case’s London litigation department, agrees that London was a pre-eminent forum for the resolution of international disputes long before Brexit or the EU came along. ‘When we leave, it ought not to have a significant impact because London’s pre-eminence is based on hundreds of years of resolving international disputes and familiarity with international commerce. It’s a system that’s worked well for generations and that people like. We have an exceptional judiciary: there is nothing quite like the Commercial Court in London. The biggest threat to maintaining its position is being able to maintain the quality of the judiciary.’ (See ‘Back to the Lords’ below.)
However, London has other problems too. ‘The Rolls Building in London was opened as being the premier dispute resolution centre in the world,’ says Moriarty. ‘In terms of the quality of the judiciary, it certainly is that. But if you compare the building itself to the sheer quality of the Supreme Court building in Singapore, it falls a bit short.’ Veronique Buehrlen QC of Keating Chambers concurs: ‘The Rolls Building is not the jewel in the crown it should be.’
‘The biggest problem is cost, which has just gone through the roof,’ says Charles Hollander QC of Brick Court. ‘It’s largely because City firms now dominate commercial litigation: they do everything on a no-stone-unturned basis and the costs of litigating are wild.’ Reform is underway with the introduction of a two-year disclosure pilot scheme in January – designed, according to Lady Justice Gloster, ‘to produce wholesale cultural change’ by streamlining the disclosure process.
The overall impact on cost, however, may be limited. Reynolds mounts a robust defence: ‘It is a costly process – that’s in second place as a potential threat to London’s position. Clients have got used to a Rolls-Royce approach and that demands large teams and long hours: that’s what you need to do to compete at the highest level. However, this can lead to some eye-watering numbers and, as a profession, we have not found it easy to develop a standard cost model as an alternative to the hourly rate.’
‘London is still a major centre for dispute resolution both in the courts and in arbitration: it sucks in work from around the globe.’
Stephen Moriarty QC, Fountain Court Chambers
According to the 2018 International Arbitration Survey published by the School of International Arbitration at Queen Mary University of London and White & Case, the five most preferred seats for arbitration – in order – continue to be London, Paris, Singapore, Hong Kong and Geneva. Meanwhile, the most favoured arbitral institutions are: the International Court of Arbitration (ICC), the London Court of International Arbitration (LCIA), the Singapore International Arbitration Centre (SIAC), the Hong Kong International Arbitration Centre (HKIAC) and the Arbitration Institute of the Stockholm Chamber of Commerce (SCC).
‘Arbitration has gone global,’ says Partasides. ‘It has gone from being the exotic bird of international commercial dispute resolution to rather more banal mainstream. It hasn’t altered the relative strength of the traditionally-leading centres, but it means there is more work also taking place outside of those.’
In 2017, the LCIA received 285 arbitration referrals, 233 of which were under LCIA Rules. But that is only part of the story, scale also matters: 16% of all LCIA disputes exceeded £100m in value with around a dozen over the £1bn mark. As with litigation, over 80% of the parties came from overseas. English law was applicable in 85% of arbitrations under LCIA Rules, while 94% were seated in London. ‘There had been a trend of some clients in London preferring arbitration to litigation, but it’s case specific: clients choose very carefully which they prefer for certain types of disputes,’ says Tom Snelling, head of the commercial disputes group at Freshfields Bruckhaus Deringer.
The US has almost as many litigators as the rest of the world put together. But London’s rivals for international disputes work are no longer big US names, even though the main disputes centres – primarily New York and Washington DC – are still very highly rated. ‘If your arbitration practice has a significant state dispute focus, Washington is a more natural international centre than any other US city because The International Centre for Settlement of Investment Disputes (ICSID) is based there,’ says Partasides.
‘Singapore has a huge locational advantage for work coming out of South-East Asia and a huge linguistic advantage for trying to get work out of China.’
Alex Gunning QC, One Essex Court
While US disputes volume and values remain very substantial, its international appeal has diminished to some extent, save for Latin American parties that have increased with Miami making notable inroads as a chosen seat. One prominent lawyer notes: ‘New York and London were once on a par: in most disputes, you would find parallel proceedings. It happens much less frequently now. America did itself no favours with the Gulf War. That sort of rhetoric, amplified by Donald Trump more recently, doesn’t help America’s place in the world.’
Emerging Asia
In contrast, Justin D’Agostino, global head of Herbert Smith Freehills’ disputes practice, suggests that Asian governments are making their place in the world more appealing. ‘We’ve seen a shift both in competition between various hubs, but also in governments making policy to bolster their jurisdiction and make them a world-class dispute resolution venue,’ he says. ‘By providing significant support to ensure that they present themselves to be best in class, governments recognise that positioning their jurisdictions as dispute resolution centres or hubs is good for business.’
According to the Litigation Trends survey, arbitration is preferred over litigation for international disputes, not least because of confidentiality and the international enforcement of arbitral awards under the New York Convention. From Congo to Colombia, scores of arbitration centres have opened for business in the past two decades. Disputes in Asia are often resolved through arbitration. In this context, Singapore leads the pack.
‘Arbitration has gone global. It has gone from being the exotic bird of international dispute resolution to rather more banal mainstream.’
Constantine Partasides QC, Three Crowns
‘The SIAC in Maxwell Chambers is pretty fabulous, particularly for these enormous multi-party, high-value arbitrations: they’ve got huge rooms and the technology is superb,’ says Anneliese Day QC of Fountain Court. ‘Singapore has made great inroads into getting a stellar group of people sitting in its courts – in particular in its ultimate appellate court – who have great specialised knowledge of commercial arbitration disputes,’ adds Paul Key QC of Essex Court Chambers.
Last year, Singapore was ranked 13th globally for the rule of law by the World Justice Project (WJP) – the top Asian nation out of 126 countries, ahead of Japan (15th); Hong Kong (16th); and South Korea (18th). If high-quality judges underpin a legal system, then Singapore punches well above its weight relative to size. In particular, Sundaresh Menon, the Chief Justice, receives praise for his brilliance. Comments Day: ‘He’s an amazing advocate for Singapore. A bit like Barack Obama – he makes people sit up and listen to what he has to say.’
But there is also bench strength. ‘In the Singapore International Commercial Court (SICC), you get absolute Rolls-Royce treatment, bespoke procedures – you’re dealt with very quickly,’ adds Moriarty.
Partasides adds: ‘Singapore has become a hub by having state-of-the-art arbitration legislative, judicial and institutional infrastructure. This has been reinforced by extraordinary governmental support for the promotion of Singapore as a reliable centre. What’s interesting about this experiment is that as a consequence of putting legal infrastructure in place, it has attracted, increasingly, senior international arbitration practitioners to make it one of their bases.’
Government initiatives to promote Singapore’s position as an international dispute resolution hub have been reinforced by slick marketing and extensive roadshows. Its growing share of international work derives principally from South-East Asia, India, and, increasingly, mainland China. In SIAC’s latest annual report, the number of new case filings was down slightly, at 402, although this is still significantly up from 259 in 2013 and 64 in 2003, while the total sums in dispute last year rose from $7.06bn compared with $4.07bn in 2017. By country of origin, the top five foreign users of SIAC arbitration were: the US, India, Malaysia, China and Indonesia.
‘Singapore has a huge locational advantage for work coming out of South-East Asia and a huge linguistic advantage for trying to get work out of China,’ argues Alex Gunning QC of One Essex Court. ‘It is well accustomed to putting on heavy arbitrations and dealing with the ancillary applications that arrive outside the arbitration. Singapore also has an extremely high-quality judicial system sitting outside the arbitral system, which is very supportive of the arbitral process. If you’re a company based in South-East Asia, you’d probably rather be in Singapore than in Europe.’
This view is not uniformly shared. ‘I’m not seeing clients starting to choose, for example, Singapore as a venue to resolve their disputes when they would previously have chosen London,’ says Sarah Parkes, head of the London disputes group at Freshfields. ‘When the UK introduced sanctions against Russia, there was a lot of talk of cases involving Russian clients moving to Singapore, both arbitration and litigation,’ says Reynolds. ‘But despite these fears, we haven’t yet seen disputes moving there in any significant number.’
The Hong Kong/Singapore rivalry has a long history. The WEF’s judicial independence rankings in 2019 placed Hong Kong 13th in the world and Singapore 19th. ‘These are among the very best,’ says D’Agostino. ‘We see that on the ground: very strong independent judiciaries, well-trained judges, the ability to do hearings in multiple languages, very strong modern legislation. On the advocates’ side and on the quality of the legal profession, it’s also strong because we’ve seen law firms invest heavily in these markets and the Bar is also prominent in the region.’
‘When the UK introduced sanctions against Russia, there was a lot of talk of Russian clients moving to Singapore. But we haven’t seen disputes moving in any significant number.’
John Reynolds, White & Case
Like Singapore, Hong Kong’s legal system enjoys a strong legacy of English law jurisprudence. ‘The judiciary at the top end is first rate,’ says Hollander. ‘The Court of Final Appeal is terrific. They’re quite tactical – they see their role to publicise what a good litigation centre Hong Kong is.’
International arbitration work, centred on the HKIAC, has traditionally made Hong Kong the leader in Asia-based disputes. But there is some evidence of slippage in its standing. In the 2018 International Arbitration Survey, Hong Kong fell from third to fourth place as a most preferred seat, while HKIAC also fell to fourth place as a most preferred institution – displaced in third place by Singapore and SIAC, respectively.
Nevertheless, HKIAC’s future success seems to be guaranteed, in part, by the Belt and Road initiative: China’s $900bn of infrastructure investment that will inevitably produce a flood of international litigation and arbitration work over the next two decades. Hong Kong should benefit significantly, although Singapore also hopes to be a beneficiary while the Shanghai International Arbitration Centre (SHIAC) continues to be favoured by the Chinese government.
Beyond that, maintaining an impartial and independent judiciary is perhaps Hong Kong’s biggest international challenge. ‘Singapore has been in the right position at the right time, as well as all the hard work they’ve done, to benefit from some of the challenges which Hong Kong faces,’ says Chantal-Aimée Doerries QC, head of Atkin Chambers.
Its relationship with mainland China remains pivotal. ‘The proximity to China is often painted as a negative; I think it’s the opposite,’ says D’Agostino. ‘Hong Kong and Singapore are increasing in importance, primarily because of the increase in outward bound and inbound Chinese investment,’ adds Sarah Lee of Slaughter and May. ‘Hong Kong will be fine and still do very well in the medium to long term,’ adds Hollander. ‘But there are mixed feelings about Hong Kong as a seat with some concern about future political influence and impartiality.’
One QC suggests: ‘Momentum is moving away from Hong Kong in favour of Singapore because of, not least, the China problem. Nevertheless, it will still remain a premier place for arbitration, in particular if you’ve got a counterparty that’s Chinese.’
Europe and the Middle East
As a civil law jurisdiction, Paris has never historically competed for litigation work with London. ‘Paris is different – its reputation as a centre for the resolution of international disputes is founded on arbitration rather than litigation,’ says Reynolds. A bilingual French speaker, Buehrlen has been involved in cases conducted in both London and Paris. ‘In the context of international arbitration, there is a real tension between the common law and civil law approach,’ she says. ‘Having a mix of the two can be very difficult to manage.’
In February 2018, divisions of the Paris Commercial Court and Court of Appeal were established to deal with international business disputes governed by common law in English – part of an emerging trend in several EU jurisdictions: Brussels, Amsterdam and Frankfurt have taken similar steps. Although it is too early to gauge the impact, London lawyers remain sceptical about what one of them terms ‘understandable opportunism, it won’t make any difference – if parties want to litigate their dispute under English law, they will choose London, not Paris’.
Gunning adds: ‘If people were going to move from London to Paris, it’s unlikely to be simply because there’s an English language court in Paris. It’s more likely to be because they want the judgment coming out of an EU-based court that they can then enforce uniformly across the EU. What’s going to happen about their mutual recognition and enforcement of judgments post-Brexit is unclear.’
In arbitration, however, Paris is a major force. Established in 1923, the ICC Court of Arbitration is headquartered in Paris with offices all over the world. But it is not a court, nor does it decide disputes or act as an arbitrator. Instead it acts as an administrative body supervising and appointing under ICC Rules. Arbitrators are appointed on the recommendations of the ICC’s Secretariat and National Committees.
‘Paris is undoubtedly a global centre and I don’t see that changing,’ says Partasides. ‘Like London, it is often selected despite the absence of a particular subject-matter connection with the city, but because it is a reliable centre of international arbitration with a concentration of expertise and a supportive judiciary. Disputes between companies or states that have a civil law factor may see particular attraction to choosing Paris. Add to that a francophone dimension – although not as significant as it once was – and we are seeing Paris more than hold its own.’
According to its website, The Dubai International Financial Centre (DIFC) casts its net across nearly half the world’s population: ‘The leading financial hub for the Middle East, Africa and South Asia (MEASA), which comprises 72 countries with an approximate population of three billion and a nominal GDP of $7.7trn… DIFC is home to an internationally recognised, independent regulator and a proven judicial system with an English common law framework.’
Reynolds says: ‘DIFC started operating in 2004. It’s getting some big cases, but not yet as many as it should.’ One QC comments: ‘DIFC is seen as slightly less independent, although many of the judges on the SICC also sit on the DIFC.’
According to D’Agostino, the DIFC courts are a conduit so that the parties can have an arbitral award recognised and enforced against assets located in the DIFC and possibly elsewhere offshore without having to go to the Dubai court. The DIFC still has a very important role for people doing business in the region, or where they want access to assets in the region. However, he adds: ‘There are tensions in views expressed by certain local courts and various decrees have been unhelpful. We’re seeing more UAE-seated arbitrations and the new arbitration law is pretty aligned with international standards and best practice, which will help build the UAE’s reputation. It’s certainly on a journey – the right journey, but with some road to follow.’
Meanwhile, Day notes: ‘They make some interesting law in the DIFC, particularly in relation to jurisdiction (which is expansive) with a number of important financial claims currently being heard. There have been concerns about the enforcement of awards and the interplay between DIFC and the local courts and a joint committee has now been set up. It will be interesting to see how the DIFC responds to increasing competition from Abu Dhabi, which those in the market report is attracting cases.’
Having invested heavily in international arbitration – state-of-the-art infrastructure and a clutch of arbitration centres in addition to the DIFC – the UAE shot itself in the foot in 2016 by issuing an amendment to its Federal Penal Code: ‘Anyone who issues a decision, expresses an opinion, submits a report, presents a case or proves an incident in favour of or against a person, in contravention of the requirements of the duty of neutrality and integrity, while acting in his capacity as an arbitrator, expert, translator or fact finder appointed by an administrative or judicial authority or selected by the parties, shall be punished by temporary imprisonment [ie, three to 15 years].’
Some arbitrators resigned from tribunals, others declined to accept future appointments. Although the Decree was overturned last October after considerable lobbying, ‘the international perception of Dubai’s arbitration process was damaged,’ adds Day.
Geneva has some big arbitrations and there’s no doubt it is an important seat. But it doesn’t, in a marketing sense, go around telling everybody: ‘Come to Geneva’. Sadly, it is losing ground because of that.
No such threats have been made against arbitrators in Geneva. Although the level of international litigation in Switzerland is comparatively low, arbitration volumes are relatively high. ‘Whether common or civil law, we see lawyers choosing Switzerland for arbitration because of positive experiences, or past negative experiences with other jurisdictions or fora,’ says Alexander Troller, co-chair of Lalive’s litigation practice group in Geneva. ‘Negative experiences can relate to cost: London is expensive. We consider ourselves not only as an alternative to the mainstream, but as one of the strongholds of international dispute resolution.’
Notwithstanding his optimism, Geneva may have something to learn from Singapore, according to one lawyer. ‘Geneva has some big arbitrations and there’s no doubt it is an important seat,’ he says. ‘But it doesn’t, in a marketing sense, go around telling everybody: “Come to Geneva”. Sadly, in the way of the world, it is losing ground because of that.’
However, Switzerland was the second most-frequently chosen seat for ICC Rules arbitration in 2017 with 51 cases seated in Geneva (8%) and 36 in Zurich (5%). Switzerland is therefore second only to Paris, where 121 ICC Rules cases were seated (18%). Swiss arbitrators are also popular. With 116 appointments, Swiss nationals accounted for 8% of all appointments, behind UK arbitrators (219 appointments, 15%) and French (141 appointments, 10%).
Large commercial disputes in Sweden are mostly resolved through arbitration. Resolving them through court litigation is rare. ‘Stockholm is extremely well thought of as an arbitration centre,’ says Gunning. ‘But it is much smaller. Stockholm has a very good mix of treaty arbitration work and also commercial arbitration. It was the natural venue for disputes with a Russian angle. London has since managed to muscle into that work.’
Key comments: ‘Stockholm was historically favoured by Russians – a hangover from the Soviet era. It still carries some legacy cases from that world, but there are now fewer of them and it would be completely unthinkable for an Indian or Chinese law firm to think about sending cases to Stockholm.’
Vernon Flynn QC of Essex Court Chambers adds: ‘Traditionally, Stockholm is the interface between Russia and Europe. I did the first case between Russian interests and Ukrainian interests about switching off the gas in front of two former Swedish chief justices. I was there over many months, two weeks at a time. In the summer, it’s absolutely wonderful; in the winter, absolutely terrible. Since then, there have been a series of similar arbitrations taking place in Stockholm in English. It’s a good seat, lots of very good arbitration practitioners.’
In 2018, after four years of arbitration proceedings between Naftogaz and Gazprom – the largest-ever commercial arbitration claim amounting to around $125bn – the Stockholm Arbitration awarded Naftogaz $2.6bn. That award is subject to appeal in Stockholm.
Top trumps
Based on dozens of interviews and feedback from leading disputes practitioners it is clear that there is a premier league comprising London, the US and Singapore, while a second division includes Geneva, Hong Kong, Paris and Stockholm.
Although these judgements are purely subjective and it is more difficult to compare jurisdictions for litigation than arbitration, it is apparent that the gap between the first and second tiers is slight. While each has distinct characteristics that may appeal, no-one centre is running away with it. A number of jurisdictions have perceived shortcomings around disclosure and Dubai appears to have shot itself in the foot over recent legislation that has called the impartiality of arbitrators into question (see above).
A key factor in all this could be cost. Based on our research, the best bet for high-quality, impartial judges delivering value for money – in arbitration at least – is Geneva. As an all-round choice across the disputes field, London remains the one to beat.
Back to the Lords: Dyson and Neuberger on London’s challenges as a disputes centre
‘We have judges at least as good as anywhere in the world. The commercial Bar is probably the strongest anywhere.’
Lord Dyson
Lord Dyson was Master of the Rolls for four years until October 2016, and a Supreme Court judge from 2010 to 2012.
Lord Neuberger was President of the Supreme Court from 2012 to 2017. He has been a non-permanent judge of Hong Kong’s Court of Final Appeal since 2009 and was appointed as an international judge to Singapore’s International Commercial Court in January 2018.
As former holders of the two highest judicial offices in the UK, it is unsurprising that Lord Dyson and Lord Neuberger champion London as a dispute resolution centre. ‘We have judges at least as good as anywhere in the world if not better; that reputation is maintained and justifiably maintained,’ says Dyson. ‘The legal profession is also a very strong card in favour of London: the commercial Bar is probably the strongest anywhere – its professionalism, its integrity – all of that is hugely important. The same applies to solicitors here. Cost, which worries me, is the only qualification I would make.’
Neuberger adds that the challengers keep London on its toes. ‘You get it in the neck if you’re the leader in any area. You either get accused of being neurotic or of being complacent and it’s difficult to stay on a middle course. It’s almost inevitable that there will be a degree of complacency and it could be argued that being a bit overconfident may be better than being under confident. Having said that, we should be promoting ourselves. If there’s a conference taking place, which promotes the UK as a place to litigate or arbitrate, not only do I see nothing wrong with a judge taking part, there is a duty on the judges to provide somebody.’
However, they are critical of London too. ‘The facilities in London are not good enough. The Rolls Building is not fantastic by any means,’ says Dyson, while Neuberger focuses on the wider impact of continued cuts to the Ministry of Justice budget: ‘You can’t just say: let’s keep the Commercial Court, the Chancery Division, the Business and Property Court and the Technology and Construction Court fully funded with good judges so that people will bring their disputes to this country, and let’s keep the arbitrators morally supported – and let the court system otherwise go hang so far as the average member of the public is concerned. First of all, that’s immoral and improper. Secondly, it will lead to real problems in the country. Thirdly it will lead, in the long run, to serious reputational damage to our justice system.’
He argues that a lack of investment in infrastructure and administrative support for judges is ‘a serious problem because it has two obvious adverse consequences. First, the role of the courts in providing efficient, effective dispute resolution facilities in accordance with the law is undermined. Secondly, lots of good people are going to be put off becoming judges.’
The Judicial Appointments Commission is faced with the unedifying choice of not filling vacancies as they arise or lowering the standards.
Lord Neuberger
This could lead to insufficient numbers of judges being appointed. ‘The Judicial Appointments Commission is faced with the unedifying choice of not filling vacancies as they arise or lowering the standards,’ he says. ‘I take my hat off to them for making the right decision which is not to fill the vacancy. There is not a perception of a problem yet, but there’s a perception that a problem may be on its way.’
Both recognise the achievements of Singapore. ‘So far as the courts are concerned, Singapore’s facilities are amazing,’ says Dyson. ‘Chief Justice Sundaresh Menon is brilliant. He’s been able to get huge resources from the government that we haven’t got here, and we’re not going to get.’
Neuberger is more nuanced: ‘Singapore is very impressive – if you like a monolithic system with everyone minded to work together to promote the Singaporean economy and Singaporean influence, including the rule of law and the Singapore role in supporting and providing rule of law. The advantage is that everybody is pulling in the same direction. The disadvantage is it’s a less diverse system, more unilateral, more of a command structure. The idea that we should adopt the Singapore model is wholly unrealistic, but the idea that we can learn from Singapore is undoubtedly true as they have learned from us.’
On the relative merits of arbitration and litigation, their opinions diverge. Neuberger argues: ‘While arbitration is a very important and valuable means of resolving commercial and other disputes, it would be worse than unfortunate if all disputes were dealt with by arbitration. With people going to arbitration more and more, the risk is that the law gets ossified because cases don’t come before the courts so that judges can develop the law and people do not see justice being done openly. Although the general view is that litigation is a bad thing and people should settle, it’s healthy that the public sees disputes being resolved in court.’
Dyson counters: ‘This idea of the ossification of the law is overstated because there are cases that come to the Commercial Court. There are appeals. The idea that commercial law is no longer developing is not correct.’