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Arbitration rules and the battle of the seats

Over the last months several arbitral institutions across the globe have introduced amendments to their arbitral rules. Examples include the Arbitration Rules of the Singapore International Arbitration Centre (effective 1 April 2013); the International Institute for Conflict Prevention and Resolution (CPR) Administered Arbitration Rules (effective 1 July 2013); the Hong Kong International Arbitration Centre Administered Arbitration Rules (effective 1 November 2013); the American Arbitration Association Optional Appellate Arbitration Rules (Effective 1 November 2013) and Commercial Arbitration Rules and Mediation Procedures(effective 1 October 2013). The Kuala Lumpur Regional Centre for Arbitration Arbitration Rules were also revised in 2013. Already this year, the Japan Commercial Arbitration Association has released a new set of Commercial Arbitration Rules which came into effect on 1 February 2014. The London Court of international Arbitration has recently circulated its final draft of the new LCIA Arbitration rules, which should be promulgated new month.

Arbitral institutions generally make available to parties their own arbitration rules. These rules are a set of provisions intended to govern the arbitral procedure. They constitute a private source of international arbitration law because their binding nature does not result from the acts of one or more public authorities. These rules are devised for arbitrations that are to be administered by the institution concerned; they are usually incorporated into the main contract between the parties by means of an arbitration clause and modified as they see fit. Parties who specify in an arbitration clause a specific arbitral institution thereby adopt its rules as a standard form subject to any variations agreed to by the parties. The rules of arbitral institutions tend to follow a broadly similar pattern. Most of them are based on the UNCITRAL Arbitration Rules. The arbitration rules of each institution are frequently set out in a small booklet or made available online. Rules laid down by arbitral institutions have as a rule proved to operate well in practice; and go through periodic revision in consultation with experienced practitioners, to incorporate new developments in the law and practice of international arbitration.

Arbitral institutions compete with each other by reviewing their arbitration rules to make them more attuned to their clients’ needs. Many arbitral institutions have been insistently promoting their services by keeping their institutional rules on the cutting edge of market changes and needs. Institutions consult extensively with arbitrators and parties so that their rules best meet the needs of their clients. Many arbitral institutions revise their arbitration rules accordingly. As arbitral institutions are devoted specifically to the arbitration business, they compete ferociously to attract more and more arbitration proceedings. To improve their market share, they seek governmental support, namely by lobbying officials in their jurisdiction to improve the legal framework. In the global ‘battle of the seats’, success is measured by how effective arbitral institutions are in transforming their jurisdiction into a hub for arbitration, where parties are willing to go in case any dispute arises.

 


2 Comments

  1. Gracious Timothy says:

    Just to put it on the table… does not this bring out this battle between seats of arbitration or this rat race between arbitration institutions to be more like a battle between MNCs or Corporate Giants, becoming too commercial in their approach in the business sense….

  2. Fernando Dias Simões says:

    Dear Timothy: I would say that arbitral institutions are becoming more entrepreneurial, just like arbitrators, in the sense that their ‘business’ depends on attracting cases and building prestige. Naturally, arbitration has become an ‘industry’, and some of the marketing techniques which are used in other industries may also be found on this very peculiar ‘industry’. My forthcoming book on international commercial arbitration includes a chapter on the ‘battle of the seats’ and the ‘arbitration industry’.

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