Clyde & Co host International Arbitration Day as part of London International Disputes Week 2024

  • Market Insight 13 June 2024 13 June 2024
  • Global

  • International Arbitration

Clyde & Co were proud to host this year’s International Arbitration Day on Monday, 3 June, as part of London International Disputes Week (LIDW) 2024. Continuing in the format of LIDW23, three renowned international law firms acted as ‘hubs’, hosting twelve panel discussions throughout the day. This flagship arbitration event showcased the importance of London as a global arbitration centre and provided insights into recent developments in arbitration across key regions and jurisdictions.

The day started with an insightful keynote on the history and future of international commercial and investor-state arbitration by arbitrator, scholar, and most distinguished arbitration practitioner, Professor Jan Paulsson.

Paulsson explained how arbitration started as a niche specialty that quickly evolved into an integral part of every major disputes practice. He reflected on how arbitration was formerly run by a small group of lawyers and often presided over by one arbitrator. Nowadays, arbitration teams accommodate lawyers of varying specialties, with several junior practitioners involved at every stage of the arbitration process. Arbitrators now have access to a depth of junior resources, with tribunal secretaries playing a more active role in the administration of an arbitration. Paulsson was critical of the increasing complexity of proceedings and the length of written submissions, which can run into the hundreds of pages. He warned of the risks of over professionalised arbitration teams and reminded lawyers of their ethical duties to ensure decision-making is not profit-driven.

Paulsson then gave a forward-looking message, reflecting on the role of technology, particularly AI, in the preparation of pleadings, which he anticipates will continue to get lengthier and may “write themselves” in the future. Paulsson also looked to the emergence of international commercial courts as key players in cross-border disputes and likely competitors of international arbitration at a fraction of the cost. He gave examples from the Singapore International Commercial Court, courts in New York and England, and emerging courts in financial hubs and independent free zones. Attendees were left to reflect on how international arbitration can co-exist with international commercial courts and whether arbitration can evolve to survive and continue to be competitive.

The first panel convened to discuss arbitration and legal developments in The Kingdom of Saudi Arabia. The panel was chaired by Loukas Mistelis, Partner at Clyde & Co and professor at Queen Mary University of London and comprised Dr Hamed Merah, CEO of the Saudi Center for Commercial Arbitration (SCCA), Amani Khalifa, Partner at Freshfields Bruckhaus Deringer, Joza Al Rasheed, Partner at Herbert Smith Freehills, Dr Anna Rogowska, Leader & Counsel at SABIC, and Haroon Niazi, Partner at HKA.

Saudi Arabia continues to house some of the most ambitious infrastructure projects globally, often referred to as ‘giga-projects’, with major developments including Neom, The Line, and other projects by the Red Sea. These projects continue to be the biggest drivers of growth in Saudi Arabia.

In response to growing foreign investment, the Saudi government has taken significant steps to evolve its legal landscape, including the introduction of a new Saudi Civil Transaction Law (CTL), bringing Saudi in line with international standards. The new CTL adopts a model similar to civil codes in Egypt and the UAE, which are, in turn, derived from the Napoleonic Code. The new CTL however is a more modern version of legislation which also considered the law in Quebec and other jurisdictions. 

Panellists discussed the strategic motivations behind legal reforms, particularly addressing legal uncertainty that is often emblematic of the region. The CTL serves to codify legal and Sharia principles in force in Saudi Arabia, as well as to bring clarity to their application. The Saudi government has gone to lengths to train judges on the application of the CTL and has emphasized the importance of a consistent and predictable application. The most significant features of the CTL were also considered and in particular, the recognition of liquidated damages clauses, albeit with restrictions for liquidated damages on late payments. The duty to negotiate contracts in good faith is a significant feature of the CTL, and panellists explored how the doctrine is applied in practice, with a focus on its application in a construction context.

The Saudi Center for Commercial Arbitration (“SCCA”) has grown in popularity as a dispute resolution forum in Saudi Arabia, since its inception in 2014. The SCCA is backed by the Saudi government but operates independently. The SCCA is increasingly a popular choice for foreign investors entering into public contracts, which are exclusively governed by Saudi law and more typically adopt arbitration as a means of dispute resolution. The Saudi courts have embraced various digital solutions to ease and expedite the enforcement of judgments and awards, as well as interim measures across Saudi Arabia. The SCCA offers a seamless route to the recognition and enforcement of awards in Saudi Arabia.

Construction projects are host to the most complex and valuable disputes in Saudi Arabia, where ambitious and often ground-breaking initiatives, delays and variations are commonplace. As a result, quantum experts play a significant role in the outcome of disputes, where parties often look for early expert determinations, and expert findings guide the decisions of tribunals and courts.

Despite being a civil law jurisdiction, common law lawyers remain in high demand in Saudi Arabia, playing a crucial role in servicing foreign investors. Common law practitioners work to bridge the gap between investors in common law jurisdictions and Saudi entities. They also facilitate contracts between Saudi-based entities and foreign contractors and suppliers, particularly when Saudi-based entities engage in projects outside Saudi Arabia or where contracts are being performed outside of the Kingdom. English seats and common law remain quite popular in certain international contracts. Practitioners with sector expertise are especially effective whereby standard form contracts still benefit from a practitioner’s experience on similar contracts outside of Saudi. 

The second panel at Clyde & Co discussed developments in international arbitration in Europe. The panel was chaired by Dr Monique Sasson, Partner at DeliSasson and Arbitrator, and included Duarte Henriques, Partner at Victoria Associates and Arbitrator, Gerard Meijer, Partner at Linklaters, Veronika Korom, Professor of international business law at ESSEC Business School and Partner at PARAGON Advocacy, and Stefan Kröll, Professor for international dispute resolution at Bucerius Law School and Chairman of the German Arbitration Institute (DIS).

The recourse to investor-state arbitration continues to be severely limited intra-EU, following the CJEU’s decision in Achmea that an investor-state arbitration provision in a BIT between two EU Member States, which permitted arbitration between EU investors and the EU Member States, had an adverse effect on the autonomy of EU law and was therefore incompatible with EU law. For example, in 2022, the German Supreme Court declared that two ICSID arbitrations which had been brought against the Netherlands were inadmissible, pursuant to section 1032(2) of the German Code of Civil Procedure, as intra-EU arbitration clauses were incompatible with EU law. Although many EU Member States have fully embraced the limitation of intra-EU arbitration, questions remain regarding the effect of this limitation on (i) the Energy Charter Treaty (ECT); (ii) commercial arbitration where EU states or state-owned entities are parties to a dispute; and (iii) intra-EU investment arbitration which is seated outside the EU.

The investor-state dispute settlement mechanism in Article 26 of the ECT was found to be incompatible with EU law by the CJEU in Moldova v Komstroy, insofar as it allows arbitration between EU investors and EU Member States. This decision has not been applied entirely consistently, in particular by non-EU Courts, and it remains to be seen whether the CJEU has effectively eradicated intra-EU arbitration under the ECT. The panel discussed the (announced) withdrawals from the ECT by Member States and the EU, and queried whether States who have withdrawn from the ECT will be able to take part in the modernisation process of the ECT. 

The panel expressed a concern regarding a perceived shift that all intra-EU arbitration was incompatible with EU law, including contract-based arbitrations. In commercial arbitrations which include a state-owned entity as a party, a key issue is whether the state-owned entity could validly enter into arbitration agreements. This trend of equating commercial arbitration with investment arbitration is likely to be contrary to public policy. The panel noted that the call for recognition of the legitimacy of commercial arbitration is spreading. 

The role of London as a seat was also discussed, suggesting that it could be a place for arbitration to develop outside the more conservative approach of the EU. Although the Dutch courts recently refused to grant Poland’s request for an interim measure to enjoin the Dutch company LC Corp from further pursuing an ongoing UNCITRAL arbitration against Poland in London on the basis of Kompetenz-kompetenz, the approach taken by courts in other EU Member States may differ. It remains to be seen whether intra-EU arbitration which is seated in London (or elsewhere outside of the EU) can consistently be successfully enforced in the EU.

The third panel discussion which took place at Clyde & Co was focused on arbitration in Africa. The panel was moderated by Poupak Anjomshoaa, Barrister and Partner at Trinity International and included Funke Adekoya, Senior Advocate of Nigeria and Arbitrator, Salim Moolan KC, Barrister at Brick Court Chambers, Rob Wilkins, Partner at Pinsent Masons, and Nadya Berova, Senior Legal Counsel and Head of Litigation for Africa and Middle East at Barrick Gold Corporation. 

The proliferation of African arbitral institutions as well as the steady rise of quality African law firms have gone a long way to enhance the ubiquity and acceptance of arbitration in Africa. However, the relative novelty of many of these institutions, as well as the ever-present enforcement concerns in Africa means that most of African disputes remain ripe for “export” to the traditional centres in London, Paris and Singapore. 

Africa is far from a homogenous region, and it is therefore challenging to discuss general trends across the continent. The panel however agreed that the steady population rise throughout the region has necessitated development of infrastructure and attracted foreign investment. Africa remains a popular investment destination and the 54 African states are party to thousands of investment treaties. Investment into extractive industries in particular has led to an increase in international arbitrations. 40% of ICSID mining claims have been brought against African States. North Africa has also recently seen an uptick in post-conflict mining disputes.

With investment-related disputes on the rise and the ever-increasing plethora of arbitral institutions throughout Africa, one would expect to see a significant rise in parties selecting African arbitral institutions. Unfortunately, notwithstanding the number and sophistication of these institutions, there has not been a meaningful shift away from the traditional centres. This could be because it will simply take time for parties to become sufficiently au fait with African arbitral institutions and comfortable enough to incorporate them into their contracts. However, the novelty of these institutions is likely to work against them. The increase of high-quality African law firms in recent years are working to assuage these concerns. Many African counsel view it as part of their duty to ensure that parties are presented with all African institutional alternatives rather than opting for the default export of disputes to traditional centres abroad. 

Failure to wholeheartedly accept African arbitral institutions is most often attributed to scepticism surrounding speed and efficacy of enforcement. Whist over 75% of African states have adopted the New York Convention, there is a lack of uniformity as to how arbitral awards have been enforced. Even when awards are eventually recognised, an overburdened judiciary and various appeal mechanisms means enforcement may take several years. Sadly, until this perception is ameliorated, the increase in the number of homegrown African arbitrations is likely to remain unhurried.

The fourth and final panel discussion which took place at Clyde & Co explored arbitration in Latin America - the next decade. The panel was moderated by Luiz Aboim, Partner at Mayer Brown, and comprised of Christian Leathley, Partner at Herbert Smith Freehills, Melissa Ordoñez, Partner at Hogan & Lovell, Enrique Abiega, Managing Director of J.S. Held, and Valeria Galindez, Partner at Galíndez Arb.

With a panel consisting of experts, arbitrators, and experienced counsel, the session sought to address the possible trends that will dominate arbitration in Latin America over the coming decade. A number of topics were addressed in the session, starting with the possible (and expected) return of traditional seats of arbitration of local and regional disputes. The majority of the panellists agreed upon the swinging back of the pendulum to the traditional seats (London, Paris, and New York) to resolve regional disputes due to the lengthy proceedings and the uncertainty of uniformity of local case law, however, it was noted that Latin American focused cases are still growing in terms of volume and monetary figures. By way of example, we have recently seen the ICC opening a branch in Brazil; therefore, the cases would be expected to be run regionally at least for the time being.

The expected type of disputes for the next decade was also discussed, starting with highlighting the trend of many Latin American countries revisiting the investment policies and opening their borders by entering into BITs. This has led to numerous ICSID cases and continues to attract investment to the region, especially in relation to the natural resources industry due to the transition focus in these sectors. It was also noted that the tension between local and aboriginal communities continues to generate major disputes in relation to large-scale projects. 

The panel then turned to the subject of diaspora and the empowerment and leadership of local law firms during international arbitral proceedings. This refers to  Latin American lawyers, after gaining experience and obtaining postgraduate degrees abroad, deciding to return to the region to offer specialised services at a more affordable price than international law firms. Because of this, we are seeing a lot of local law firms acting as lead counsel with international law firms taking the backseat. It was noted that although this structure is becoming more common, on major multi-jurisdictional cases, we still see international law firms dominating.

The panel concluded by discussing the tropicalization of arbitral procedure and agreed that there is a certain disparity in conducting an arbitration in Latin America in comparison to seats located in common law jurisdictions. We see this especially in relation to disclosure, expert evidence, and submissions. However, the panel did note that it is not a matter of overlaying or juxtaposing one system over the other, but of understanding the differences and choosing to adopt mechanisms which makes sense to the parties in terms of the process, context and the particularities of each individual case.

We would like to thank all of the panellists and attendees who participated in the day and we very much look forward to seeing you all London International Disputes Week which takes place the week of 2 June 2025.

Clyde & Co has nearly 70 offices and associated offices worldwide and conducts large scale complex commercial and investor-state arbitrations all over the world, irrespective of the governing law, the arbitral rules or the language of the arbitration. The firm specialises in cross-border, multi-jurisdictional and complex international arbitration across a range of sectors which build, power, move and protect the global economy. If you wish to discuss the above sessions or your international arbitration needs, please contact any of the authors below.

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Additional authors:

Saskia Wolters, Khaled Abdelhaq and Ana María Sánchez-Silva

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