Smarter use of international arbitration could help boost the bottom line
Budapest, 25 July 2006
The use of international arbitration to resolve cross-border disputes has received massive backing from international businesses, wary of the alternative of seeking redress in the national courts. A major survey of nearly 150 in-house counsel worldwide reveals that 73% of corporations prefer international arbitration over transnational litigation.
By seeking input from corporate in-house lawyers, this ground-breaking study explores some of the misconceptions that surround international arbitration. The research, sponsored by PricewaterhouseCoopers and conducted by the School of International Arbitration, Queen Mary, University of London, provides invaluable insights for businesses that trade or invest abroad.
The top reasons given by in-house lawyers for choosing international arbitration are: flexibility of procedure, enforceability of awards, privacy, and the opportunity to choose arbitrators to suit the case/dispute. These far outweigh the most commonly cited disadvantages of this method of dispute resolution – inevitable expense and the occasional difficulties of binding parties into an arbitration process at the outset.
Getting the upper-hand
Having a clear dispute resolution policy clearly provides an important strategic advantage. International arbitration can help clients resolve disputes, manage risk and gain competitive advantage, which can have a major impact on their bottom line. 86% of respondents stated that a dispute resolution policy produces cost savings either through effective management of the dispute process or by helping to minimise the risk of dispute escalation.
The future of international arbitration
The study reveals that 95% of corporations expect to continue using international arbitration to help resolve their cross-border disputes. Corporations that equip themselves with the knowledge, tools and tactics to conduct international arbitration proceedings are well-placed to resolve their cross-border disputes effectively, and thereby manage a key investment risk.
“We hope this study will assist company directors and their legal advisors to focus on international dispute resolution as a risk management priority which will preserve – and even enhance – shareholder value,” says Mike Tallent, Director, PricewaterhouseCoopers Hungary.
Notes to the Editors:
1. International arbitration – a consensual, binding method of dispute resolution – offers the means to resolve cross-border disputes away from recourse to litigation in national courts.
2. This survey of in-house counsel at leading corporations around the world tested 12 perceptions around international arbitration. The study was conducted during a six month period and comprised two phases: an online questionnaire completed by 103 respondents and 40 in-depth face-to-face and telephone interviews. The report is presented in sections, each using the empirical evidence from the research to either confirm or challenge these perceptions.
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