Our international arbitration group has launched the eighth edition of our annual top trends analysis: International Arbitration in 2023.
The last 12 months have proved challenging for many businesses around the world. From the disruption and fallout caused by the war in Ukraine to soaring energy prices and inflation, businesses globally are facing significant new hurdles and complex legal challenges, many of which are driving new trends in international arbitration.
Our report explores the following key themes that we predict will shape the international arbitration landscape for our clients and the arbitration community in the year ahead.
- Arbitration Arising out of Russia’s Invasion of Ukraine. The legal and economic fallout from Russia’s invasion of Ukraine has significantly impacted businesses across a wide range of sectors worldwide and the number of Russia-related arbitrations – both investment treaty and commercial – is expected to rise. To maximise the prospects of successful enforcement, strategic and creative planning will be key.
- The global supply chain crisis and construction arbitration. Significant supply chain disruption will continue to cause difficulties for major global projects. We expect an increase in disputes over the operation of key contractual provisions, such as price escalation, currency fluctuation and nominated supplier clauses, as well as parties invoking legal concepts of frustration, force majeure and/or change in circumstances.
- LNG disputes gather on the horizon amid market volatility. In the LNG market, the wider energy market volatility is expected to give rise to increasing gas pricing disputes and other contractual disputes, as buyers and sellers try to navigate the severe market fluctuations and supply issues facing the industry, as well as the effects of sanctions and other political issues.
- Energy transition: the current landscape in Latin America and what to expect in 2023. The energy crisis is also impacting the pace and progress of energy transition plans. We consider the challenges and opportunities presented by energy transition in Latin America, which are expected to give rise to an increased number of energy-related disputes in the region during the coming year.
- Withdrawal from the ECT: one step forward, two steps back? The future of the Energy Charter Treaty looks uncertain in light of the increasing number of states that have announced their intention to withdraw from the treaty. Prudent energy investors will want to consider alternative options to protect their investments against unlawful government intervention.
- Drive towards greater transparency. The drive towards transparency in international arbitration is expected to continue in the year ahead with more arbitral institutions amending their rules to provide for greater public access to information about arbitral proceedings, including the existence of any third-party funding.
- Progress towards diversity continues to gather pace. Diversity remains a key theme in 2023 as efforts are increasingly being made within the arbitration community to address broader diversity goals beyond gender. Two notable developments pave the way for further progress: the requirement to take diversity into account when appointing arbitrators being enshrined, for the first time, into the arbitration rules of two institutions; and the launch of the Equal Representation for Experts Pledge to address diversity in the appointment of expert witnesses.
- Reform of the Arbitration Act 1996. The eagerly awaited reform of the Arbitration Act 1996 is another key development to watch out for in 2023. The outcome of the Law Commission’s public consultation, expected to be published in the first half of the year, will reveal which of the initial proposals are likely to be enacted. The provisions relating to summary judgment and jurisdictional challenges will be of most interest to commercial parties.
- Section 1782 discovery: some answers, but more questions. Following the US Supreme Court’s clarification that Section 1782 discovery is not available in commercial arbitration, there remains uncertainty with respect to investment arbitrations. We expect many more decisions on this issue in the coming year as the lower courts grapple with the question of whether an investment arbitration tribunal is sufficiently governmental to qualify for 1782 discovery.
- International arbitration in the life sciences sector. The number of life sciences disputes being referred to arbitration is on the rise – partly due to the growth in the life sciences industry generally, but also the realisation within the industry that many of the features of international arbitration are well-suited to resolving sectoral disputes.
- Data protection and cybersecurity in international arbitration remain in the spotlight. Considerations of cybersecurity and data protection are continuing to gain importance in international arbitration. We expect parties to increasingly adopt cybersecurity and data protection measures in their individual proceedings, and institutions to continue to encourage their adoption through their rules or policies.
- Increasing ‘internationalisation’ of tax disputes. Our final trend relates to the increasing number of international tax disputes being resolved by arbitration. With the global economy facing challenges, we expect there to be more examples of aggressive taxation by financially distressed governments in the coming year and therefore more foreign investors reconsidering their tax risks and options for dispute resolution.
Looking ahead helps our clients to plan for the future and think strategically about where the biggest risks and opportunities lie. We hope you find our analysis useful. Please reach out to one of us, or any of the authors of the trends, to discuss how any of these issues might affect you and your business.
Our top trends analysis is also available in Spanish and Portuguese. Please let us know if you would like a copy.