On 19 November 2019 Paula Hodges QC, Herbert Smith Freehills’ Head of Global Arbitration and President of the London Court of International Arbitration (LCIA) delivered the Chartered Institute of Arbitrators (CIArb) Annual Lecture. The lecture is the keynote event of Australian Arbitration Week and attracted an audience of practitioners, experts and interested clients. Sponsored and hosted by Herbert Smith Freehills, the lecture considered the continuing evolution of international commercial arbitration and sought to answer the question of whether it remains fit for purpose. Paula Hodges considered the opportunities and challenges presented by the future of international commercial arbitration, and suggested that embracing diversity, adapting to new technologies and ongoing flexibility are crucial to the evolution of international commercial arbitration.


The story of international commercial arbitration so far

Briefly recounting the history of commercial arbitration generally and pointing to the growth in user demand following the entry into force of the New York Convention in 1959, Paula noted that the story of international commercial arbitration was one of success. The proliferation of arbitral institutions around the world bears out the enduring relevance of international commercial arbitration for parties and practitioners around the world. However, Paula cautioned against complacency and suggested that the international commercial arbitration community should always be mindful of user interests.

What do users want and how can international commercial arbitration provide it?

Paula argued that user-interests will play a significant role in shaping the evolution of international commercial arbitration. To that end, by reference to the Queen Mary University of London (QMUL) International Arbitration Survey, she considered what parties like, and dislike, about international commercial arbitration and identified two key tensions that will play a role in shaping the future of international commercial arbitration:

(a) Efficiency and flexibility: Considering the most common complaints about the arbitration proceedings – cost and speed – Paula suggested that practitioners should strive to be increasingly flexible and to adapt their approach to suit the commercial needs of parties. That is, the arbitral proceedings should be appropriate for the relevant dispute. In adopting a more pragmatic approach, unconstrained by proscriptive regulation, international commercial arbitration can better meet the needs of users.

(b) Confidentiality and the need for greater transparency: Confidentiality and privacy are commonly cited by parties as valuable features of international commercial arbitration. At the same time, however, there has been a recent push towards more transparency, partially motivated by the desire to provide parties with more certainty and confidence in the arbitral process. Paula referred to the ICC’s revised approach to the publication of awards – requiring parties to positively opt out of publication – as an example of the push for enhanced transparency in international commercial arbitration. For more detail about the ICC’s new approach to publication see our blog post from earlier this year. Ultimately, she suggested that this tension emerges from a desire on the part of users of arbitration to control the process as much as possible.

What’s next for international commercial arbitration?

Paula noted that a key part of the challenge of ensuring international commercial arbitration remains ‘fit for purpose’ is an increased focus on gender, ethnic, and regional diversity. Whilst acknowledging the work that has already been done by arbitral institutions, Paula urged practitioners and parties to do more to make diverse tribunals a reality.

Technological advancements have already changed the practice of arbitration. However, Paula suggested that the introduction of augmented reality, blockchain and smart contracts requires practitioners and tribunals to up-skill if they are to leverage these innovations. She argued that increasing diversity and the continuing introduction and adoption of new technologies will play an important role in ensuring the future of international commercial arbitration and maintaining its fitness for purpose.

Ultimately, the story of international commercial arbitration has been one of development, adaptation and change. Paula encouraged practitioners and parties to retain the flexibility and pragmatism that has shaped the history of international arbitration, so as to take advantage of the benefits that diversity and new technologies can provide.

For more information, please contact Paula Hodges QC, Brenda Horrigan, Oliver Cook or your usual Herbert Smith Freehills contact

Paula Hodges QC
Paula Hodges QC
Head of Global Arbitration Practice
+44 20 7466 2027

Brenda Horrigan
Brenda Horrigan
Head of International Arbitration (Australia)
+61 2 9225 5536

Oliver Cook
Oliver Cook
Associate
+61 7 3258 6321