Commercial & Chancery: Staying Power

London has a deserved reputation as an axis for arbitral excellence, but reputation alone will not ensure its continued supremacy. By Khawar Qureshi

Commercial & Chancery Special Report: Staying Power For many years London has ­occupied a pivotal position as the chosen seat for dispute ­resolution by the process of arbitration. The international reputation of ­English law, English courts and English legal professionals, taken together, have widely been seen as providing a predictable, consistent, highly respected, relatively expeditious and expert dispute resolution process.

In recent years, despite the strong support shown by the English courts to the arbitral process, international business users have displayed increasing frustration at the cost and time involved in resorting to arbitration in London.

Disproportionate legal fees are seen by some users as being a major ­disincentive to arbitrate. Such fees are even more likely to be the subject of concern in these uncertain times.

The recent decision of the European Court of Justice in the West Tankers case (2009) has been viewed by some as a blow to ­London as the pre-eminent international arbitration centre of choice.

What the decision in West Tankers means, in the short term at least, is that English courts will not be able to grant anti-suit injunctions vis-à-vis EU court proceedings, but our courts are still able to grant anti-suit injunctions in respect of non-EU court ­proceedings concerning arbitrations. Many hope that EU courts are much less likely to be the subject of an abuse of process than courts in some non-EU states. Given that anti-suit injunctions are still available in respect of non-EU court proceedings, it is argued on this basis that the core purpose and benefit of anti-suit injunctions will not be undermined significantly by the West Tankers decision.

Rivals to London

Nevertheless, a bigger question still needs to be considered: is London in danger of losing its place as one of the most preferred seats for international arbitration?

A ;research ;paper ;published ;by ­International Financial Services London in September 2008 indicates that around 5,000 arbitrations take place each year in the UK, almost 3,000 of which are based upon the London Maritime Arbitrators Association rules. Around 100 arbitration matters end up before the English courts every year under the Arbitration Act 1996. The overwhelming majority of attempts to challenge the arbitral process are dealt with expeditiously and fail before our courts.

On the strength of these statistics alone, some argue that there is little cause for ­concern. Most arbitral institutions in ­London have seen an increase in the ­number of arbitrations dealt with by them over the past 10 years and, until very ­recently, this has been seen as a continuous upward trend. So what has changed?

One of the reasons why international ­parties choose to arbitrate in London is, frankly, because they perceive a lack of ­credible and alternative regional ­facilities. This is no longer the case. Relatively new centres, such Hong Kong, China, ­Singapore and the Dubai International Financial ­Centre (DIFC), have been leading the way in recent years to develop and establish ­respected international dispute ­resolution centres.

In addition, traditional centres such as Paris, Geneva and New York are ­
beginning to stage a fightback to regain some of the ground lost to London over recent years.

Furthermore, the English Commercial Court has begun to display strong and encouraging signs of recognising the immense and valuable role it has performed for international business users.

On 16 February 2009, Dubai hosted a major International Bar Association ­conference on the subject of international arbitration attended by around 500 lawyers from all over the world.

While the new Dubai International ­Arbitration Centre (established by the
DIFC together with the London Court of ­International Arbitration) is as yet untested, the London arbitration community may wish to consider whether a strong and ­concerted response is needed to address concerns of international users, so as to ensure that London does not lose its ­position of pre-eminence.

Khawar Qureshi is a QC at Serle Court