The LCIA has published its Casework Report for 2022, which is the LCIA’s annual summary of its caseload and trends. It reported fewer new cases than in 2021, but the figures for the last quarter of 2022 show an upward trajectory of referrals received compared with earlier in the year, with the number of LCIA arbitrations in the last quarter surpassing those of 2021, 2019, and 2018. The top three industry sectors of the LCIA’s caseload remain transport and commodities, banking and finance, and energy and resources (together representing 63% of cases).
While the number of cases referred from North American parties has declined (from 10% of parties in 2021 to 5% in 2022), the percentage of parties from Asia has tripled (from 8% of parties in 2021 to 24% in 2022).
Caseload in 2022
- The LCIA received a total of 333 referrals for its services in 2022, including 293 arbitrations pursuant to the LCIA Rules. Other referrals were for fundholding, ADR services (including mediation and adjudication), and a small number of UNCITRAL arbitrations or appointment-only services. This represents a decrease in referrals compared with 2021 (387) but is broadly consistent with the LCIA’s historic caseload. In its report, the LCIA attributes this ebb and flow of cases to the impact of global developments including the Covid-19 pandemic and the war in Ukraine.
- The top industry sectors across the caseload remain transport and commodities (37%), banking and finance (15%), and energy and resources (11%). This is consistent with the 2021 caseload, albeit that the balance between the three sectors has changed, with the transport and commodities caseload increasing considerably to more than double the percentage in 2021 (14%). The LCIA notes that this is likely to be in part due to the fluctuation in energy prices impacted by the war in Ukraine, which has had a ripple effect on the supply chain of commodities, resulting in more disputes.
- The major types of agreement under which arbitrations were commenced remain broadly similar to 2021, with 75% of arbitrations arising under sale of goods agreements (34%), services agreements (24%), shareholder/share purchase/joint venture agreements (10%), and loan or other loan facility agreements (7%), although the balance between these three categories has changed. As in previous years, most of the arbitrations (74%) arose within five years of the agreement.
- The percentage of state parties and state-owned parties more than doubled in 2022 to 13% (compared to 6% in 2021), and the percentage of cases involving state parties and state-owned parties in 2022 was 15%. The LCIA only started comprehensively recording this particular statistic in 2021.
- The report also touches upon the aftermath of the closure of the DIFC-LCIA, in the form of an update on the 135 cases which were transferred pursuant to the DIFC-LCIA Rules from the DIAC to the LCIA for administration in London. Since the transfer, the LCIA has closed over 70 cases, with an additional 21 in the final stages of closing. Only 41 cases remain active or stayed.
- As to the nationality of parties, 88% of parties to arbitrations administered by the LCIA were from countries other than the UK, across 91 countries in total (compared with 85.2% in 2021), demonstrating the LCIA’s continued international reach. Asia replaced Western Europe as the location of the largest geographic grouping of parties. Asia also experienced the largest growth in this area, representing 24% of parties by region in 2022, which is a significant increase from the 8% recorded in 2021. The LCIA observes that this striking increase is largely connected to the increase of commodities involving parties from Asia, and in particular, Singapore. Western Europe was the second largest geographic grouping of parties and experienced growth from 19% in 2021 up to 22% in 2022. The most significant decreases came from North America (5% in 2022 down from 10% in 2021), the Caribbean (4% in 2022 down from 8% in 2021), and Central and Eastern Europe (3% in 2022 down from 6% in 2021).
- London remains the most popular seat for LCIA arbitrations, with 88% of cases seated in London in 2022. As for governing law, 85% of LCIA arbitrations were governed by the law of England and Wales in 2022, an increase of 9% from the previous year’s figure of 76%.
Arbitrator appointments and diversity
- The split between three member tribunals (59%) and sole arbitrators (41%) for LCIA arbitrations remained fairly even in 2022.
- The LCIA Court selected arbitrators in 33% of all the appointments in arbitrations pursuant to the LCIA Rules, compared with 42% in 2021. In terms of gender diversity, it is noteworthy that 45% of the 423 appointments made by the LCIA Court in 2022 were women, which remains a substantial proportion albeit that it represents a slight decrease from 2021 (47%).
- Disappointingly however, the overall proportion of appointments of female arbitrators made in arbitrations under the LCIA Rules decreased from 32% in 2021 to 28% in 2022. The LCIA attributes this to the decrease in the percentage of women selected by the parties and co-arbitrators, compounded by an increase in the percentage of arbitrators selected by both parties and co-arbitrators, who make a greater proportion of repeat appointments. Whilst the percentage of women selected by co-arbitrators was 23% (down from 33% in 2021), for parties the figure was 19% (albeit up from 16% in 2021).
- As to the arbitrator role for women appointees, 44% of all sole arbitrator appointments were of women, compared to 24% of co-arbitrator appointments, and 26% of presiding arbitrator appointments.
- In terms of diversity of nationality, non-British arbitrators were appointed in 40% of appointments in LCIA arbitrations, a similar number to the 41% of appointments recorded in 2021. These arbitrators were from 48 different countries, including prominently the USA (6.4%), Canada (3.3%), Germany (2.8%), and Ireland (2%). Non-British arbitrators were chosen by the LCIA Court 63% of the time (up from 47% in 2021), compared with by the co-arbitrators 31% of the time and by the parties 27% of the time.
- The percentage of first-time appointees in LCIA Court appointments remained at 17% in 2022, while the percentage of first-time appointees nominated by the parties was 20% (similar to the 19% recorded in 2021).
Challenges to arbitrators
- For the first time in over 25 years, the LCIA received no challenges to arbitrators at all pursuant to Article 10 of the LCIA Rules. The LCIA described this notable ‘nil return’ as “remarkable and a testament to both an effective and robust disclosure and appointment system as well as robust and transparent challenge procedures“.
Multi-party arbitrations, early determination and interim relief
- The LCIA reports that parties have continued to make use of the features introduced by the 2020 Rules, such as the ability to file a composite request for arbitration, which has contributed to a decrease in the proportion of LCIA arbitrations involving disputes arising out of more than one agreement (7% in 2022 down from 8% in 2021).
- Parties have also continued to make use of the broader consolidation provisions, allowing more arbitrations to be consolidated at an earlier stage in the arbitration. A total of 35 applications for consolidation were made (12% of the LCIA cases commenced in 2022), with 89% being fully or partially granted.
- A total of 20% of the arbitrations commenced pursuant to the LCIA Rules in 2022 involved more than two parties, and less than 1% of arbitrations involved ten or more parties. This is a smaller number of multi-party arbitrations than in 2021, where 24% of arbitrations involved more than two parties.
- Only six applications were made for the joinder of a third party in 2022, four of which were granted and two were rejected. The LCIA notes that this is one of the lowest numbers of joinder applications in recent years.
- In 2022, 15 applications were made for early determination. Of these, one was granted, five were rejected, three were superseded, and six were yet to be determined by the end of 2022.
- Finally, 40 parties made applications for interim and conservatory measures across 31 arbitrations. As in 2021, security for costs was the most common interim relief sought. Tribunals granted the relief in 14 instances and rejected it in 16 cases, with the remaining ten applications being superseded, withdrawn, or pending at the end of the year.
Expedited formation of tribunals and emergency arbitrator appointments
- The LCIA reports a decrease in applications for expedited formation of the tribunal (10) and the appointment of an emergency arbitrator (3) in 2022, as compared to 15 and eight applications respectively in 2021. Five of the ten applications for expedited formation were rejected, four were granted, and one was superseded. All three of the applications for the appointment of an emergency arbitrator were rejected.