Recent innovations at a number of arbitral institutions have brought into sharp focus arbitration options for post Brexit financial disputes.
The English Arbitration Act is in its 20th year. It provides a tried-and-tested framework for international arbitration. Brexit will not affect that framework. Brexit should have no impact on London’s standing as a leading arbitral seat. For international arbitration, it is the New York Convention that is our most important legal infrastructure. That global treaty, which allows for the recognition and enforcement of arbitral awards in over 150 countries (including EU Member States), does not depend on membership of the EU.
Nor should Brexit affect the popularity of English law as the governing law of choice for international financial contracts. The pedigree of the English common law reaches back more than a thousand years. Its certainty and predictability are greatly valued by those concluding complex financial arrangements. Membership of the EU did not materially impact upon the certainty or predictability of our commercial common law and Brexit may well allow judges and Parliament to accentuate those valuable features.
This together with certain new arbitral rules on summary determination and decision expedition may cause financial institutions to look more closely at arbitration for post-Brexit financial disputes.
Two new sets of rules emanating from Asia are worthy of note and likely to appeal to non-traditional users of arbitration including financial institutions. Firstly, the new SIAC 2016 rules containing a pioneering provision (Rule 29) allowing for a fast tracked summary determination of cases with no credible defence, akin to a summary judgement or strike out process. Properly used, it could see awards rendered in such cases in less than 3 months. In China, CIETAC’s Financial Disputes Arbitration Rules, effective from last year and drawn up in consultation with the financial services industry, provide for a 45 day arbitration process for disputes arising from transactions concerning currency, capital, foreign exchange, gold and insurance markets that relate to financing in both domestic and foreign currencies, and the assignment and sale of financial instruments and documents denominated in both domestic and foreign currencies including loans, guarantees, bonds, fund transactions, securities and futures.
Doubtless more such innovations will follow as arbitral institutions around the world seek to meet the concerns of users to provide effective and efficient outcomes without undue delay.
The arbitral process is inherently flexible. Thoughtful drafting and selection of appropriate arbitral rules can produce an expeditious, expert, independent forum in which to resolve financial disputes on a summary or fast track basis. Parties can design their own arbitral framework, including a summary determination or other expedited framework, quite aside from any provision or lack of explicit provision in institutional rules. Arbitral institutions have almost universally adapted their rules to facilitate the resolution of multi-party disputes. Tribunals have also begun to try certain large group actions through arbitration including in relation to financial instruments, and financial institutions may find it attractive for cases involving a large number of claimants to be resolved through an arbitration test case scheme by which the parties agree to be bound by the outcome of a selection of appropriate lead cases.