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The battle of the seats, Miami and other contenders

Miami

In an article published last week in The New York Times, entitled ‘Cities compete to be the arena for global legal disputes’Elizabeth Olson discusses a phenomenon we have been referring to recurrently in this blog: the ‘Battle of the seats’. This concept refers to the competition between different cities to be considered as ‘arbitration hubs’. In the arbitration parlance a hub is a place known for its reputation in hosting arbitration proceedings. International arbitration is very mobile, as by its own nature it can take place anywhere. Countries and cities all over the world compete to be chosen by the parties as suitable venues for international arbitration. The boom in the market of international arbitration has created a sort of undeclared competition where each competitor is struggling for a larger share of the market. In this legal industry competition is ferocious: competition between arbitration venues, between the arbitral institutions, between arbitrators, and even between the periodicals on international arbitration. Arbitral institutions compete for their market share of disputes, legislatures enact arbitration-friendly rules to attract business, several conferences and workshops are held year round, and a class of essentially full-time arbitrators has surfaced. An authentic ‘arbitration industry’ has developed.

The article focuses on the case of Miami, but several other cities all over the world aspire to be recognized as contenders. The battle of the seats is no longer limited to the traditional heavy-weights. As international arbitration becomes a global business, the market of international commercial arbitration expands and many cities and jurisdictions are positioning themselves to collect a share of that market. Arbitral institutions play a decisive role in the success of arbitration. They prosper only if the number of proceedings they administer flourishes. They actively market and promote arbitration in the hope of attracting more cases and increasing their revenues. The multiplication of arbitral institutions further stimulates the global battle of the seats.

Cities such as Milan, Madrid, Vienna, Shanghai, Seoul, Kuala Lumpur, and Cairo have stepped into the arena. As more venues refresh and harmonise their legal systems to achieve an international benchmark, parties may feel persuaded to select them as the seat of their arbitration proceedings, looking beyond the ‘traditional’ options. Commercial entrepreneurs increasingly benefit from greater flexibility in their choice of a place of arbitration. The emergence of new arbitral centres enlarges the pool of available institutions, giving parties the possibility to choose institutions with closer cultural affinity and greater geographic or linguistic convenience. With the surfacing of regional economic centres around the world, there has been a trend towards referring disputes to arbitral institutions closer to home. The popularity of not yet fully established and new institutions is growing. Some of them are now joining the ranks of the traditional arbitration institutions as appropriate choices. I discuss the battle of the seats in more detail in my book Commercial Arbitration between China and the Portuguese-speaking World (Kluwer Law International, 2014).

Image: Wikimedia Commons


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