Report offers businesses help with arbitration strategies, says expert

Pamela McDonald and Sylvia Tonova, international arbitration specialists at Pinsent Masons, commented after the publication of the first edition of the GAR 100 “data report”.
This report produced by Global Arbitration Review provides analysis of more than 11,000 international arbitration cases that went to hearings between 2014 and 2023 inclusive. The data on the cases was shared with GAR by more than 200 law firms over the course of eight editions of the GAR 100 – including international arbitration specialists Pinsent Masons.

The report focuses on three main aspects: value, seat, and institution; and attempts to determine what the “average” international arbitration is.

GAR concluded that, on the balance of probabilities, an international arbitration typically involves a $262 million dispute, seated in London, and conducted under arbitration rules set by either the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), or the Singapore International Arbitration Centre (SIAC). The median case, representing the midpoint of the dataset when sorted by value, is a $20 million SIAC arbitration and involves a sole arbitrator, a dispute between a US and Asian company, concerns pharmaceuticals, and is seated in Singapore.

“The GAR 100 data report is a commendable effort that provides an extensive dataset for benchmarking against industry standards, helping parties and counsel anticipate changes in the arbitration landscape and adapt their strategies accordingly,” said McDonald. “The detailed data enhances transparency in the arbitration process, offering a clearer picture of how cases are handled, the typical costs involved, and the outcomes achieved. This transparency is crucial for building trust in the arbitration process, ultimately aiding parties and counsel in navigating it more effectively.”

Tonova added: “While the report is a strong start, it does have limitations, such as the incomplete representation of smaller or less prominent cases. However, GAR has promised future reports that will delve deeper into important issues. These upcoming reports are expected to explore various aspects of international arbitration, such as the characteristics of the average arbitration case by industry, differences in ad hoc work, trends in high-value cases, and the role of arbitrators and experts. Additionally, they will address diversity in arbitration, including the appointment of female arbitrators and the use of experts in cases.”

According to GAR, commercial arbitration cases are 11 times more common than investor-state dispute settlement (ISDS) proceedings, though the data indicates there is an increasing proportion of smaller ISDS matters: the percentage of overall work involving disputes below $50 million has been gradually rising, exceeding 20% for the first time in 2021.

GAR said: “Studies suggest that the cost of investment arbitration is falling – through a combination of competition between law firms on fees, better management by institutions and funding. That could explain why more small claims are being brought.”

Of the 11,289 cases in the GAR 100 dataset, 1,195 were ad hoc cases, where arbitration takes place outside the sphere of an administering arbitral institution. GAR said the ratio of institutional to ad hoc cases is about seven to one. GAR acknowledged that the dataset does not represent the entire “universe” of ad hoc cases as it only encourages firms to submit data on their larger cases, nor does it take account of most ad hoc shipping and commodities arbitrations.

McDonald said: “London’s dominance – consistently identified as the most popular seat of arbitration, ahead of Singapore and Paris – aligns with the results of other studies, such as surveys by Queen Mary University (QMUL)”.

Singapore's rise to second place, surpassing Paris, is attributed more to fluctuations in Paris' popularity rather than anything else. GAR explains various factors contributing to Paris' temporary decline, including instances where French courts intervened in arbitration cases, particularly those involving evidence of corruption, and warns that other seats might face similar challenges. Historically, Paris' popularity has been bolstered by its courts' strong support for arbitration.

Despite these fluctuations, Paris still holds a strong position in terms of the total value of arbitration cases ($266 billion), second only to London ($352bn). “This indicates that while Paris may face challenges in popularity, it remains a significant player in the arbitration landscape,” said Tonova. The total value of cases seated in Geneva, Singapore, Stockholm and New York all also exceeded $100bn in the 10-year period covered by the data, highlighting their importance in the arbitration landscape.

The ICC is the most prominent institution for GAR 100 firms, accounting for over a quarter (26.45%) of the total GAR 100 case work. This is nearly equivalent to the combined total of 316 other institutions grouped as "other” and is more than double the combined caseload of the LCIA and SIAC, which each account for a little more than 6% of the total.

When considering the value of cases heard, the ICC and LCIA remain prominent, with ISDS providers like the International Centre for Settlement of Investment Disputes (ICSID) and the Permanent Court of Arbitration (PCA) also ranking highly. The report also found that, when analysing the average and median case sizes per institution, the average ICC case is larger than those of the LCIA or SIAC and that ISDS providers have significantly higher average and median case values compared to other institutions.

The data also highlighted that the ICC handles about twice as many high-value cases – cases valued at at least $250m – as its closest competitors, including ICSID, LCIA, and PCA.

The GAR 100 report also showed that cases heard by a sole arbitrator have consistently made up 26% of the total cases over the past three years. The current report does not analyse the gender breakdown of sole arbitrator appointments.

McDonald said: “The data speaks for itself, showcasing the shifting dynamics and competitive landscape in international arbitration, with London maintaining its lead, Singapore's rising prominence, and Paris's resilience despite recent challenges. The ICC's dominance in case volume and value further underscores its central role in global arbitrations.”