International Arbitration: key trends from 2024 and predictions for 2025
Insight
Preparing for upheaval
2024 has been a year of geopolitical instability, driven primarily by conflicts in Ukraine and the Middle East. Coupled with market uncertainties surrounding major elections worldwide, ensuring that contracts are fit for purpose has become more important than ever, particularly as the risk of enforcement continues to rise.
Arbitration clauses already streamline international enforcement, but it is now also essential to ensure that force majeure provisions are up to date. Consider worst-case scenarios: what if assets are stranded in foreign jurisdictions due to sanctions? What if trade tariffs mean that previously agreed prices are no longer commercially viable? What if you need hedge your bets on the outcome of a national policy decision that is currently on a knife edge?
It is important to get ahead of the game, learning the lessons of the post Covid-era and planning for the unpredictable.
Options worth considering will be bonds, contracting with a different arm of an organisation, or including a parent company guarantee.
Impartiality in arbitration – the elephant in the room
While the Arbitration Bill making its way through the House of Lords will largely streamline and codify current processes, for example in relation to summary awards and emergency arbitrator powers, it also contains interesting provisions regarding arbitrator impartiality. Currently, impartiality in arbitration is something of an elephant in the room. Unlike in the courts, the tribunal is selected and paid for by the parties involved.
The introduction of a continuing duty of disclosure for arbitrators is intended to pave the way towards improved transparency and trust in arbitration. However, we anticipate parties being more willing to pull the trigger more quickly on challenges, adding an extra layer of disputes to proceedings.
We await with interest any changes that will be made consequent on the GAR-LCIA roundtable report, which frankly recognises the runaway costs issues and lack of strict case management that can arise as a result of the party-appointed tribunal system.
Chronic underinvestment in the courts risks damaging London’s status
Despite challenges from Dubai, Paris and Singapore, London’s pre-eminent position as the leading seat of international arbitration appears secure. However, the long-running and chronic underinvestment in our court system could have a damaging effect.
While the Government has pledged to “begin to repair the justice system”, the extensive case backlog needs more than incipient action. Delays present real risks - they are not mere administrative inconveniences.
London’s reputation as the gold standard for international dispute resolution should not be taken for granted. Repeated roadblocks, and a sense that the UK is not investing enough into its core infrastructure, may over time become so intolerable that states and businesses decide to look elsewhere.
While arbitration does not take place within the courts, the overall perception of the UK court system does affect how arbitration is viewed. Moreover, if any parties do require court assistance during arbitral proceedings, they may be frustrated to find themselves at the bottom of an unacceptably lengthy waiting list.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, February 2025
Dispute resolution trends and predictions
This insight is part of our wider report – "Dispute resolution trends & predictions" – which includes comprehensive analysis from our specialists together with valuable viewpoints from our clients.
