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An analysis of 2018 statistics from six major international arbitral bodies shows that only those based in London saw increases in both new case numbers and appointments of arbitrators, says James Clanchy of the Lexis®PSL Arbitration team. Pessimism about London’s decline as an arbitral hub following the 2016 Brexit vote may be premature. 

Our post of 26 July 2018, Arbitration statistics: a reality check, presented statistics from the same set of arbitral organisations for 2017 and noted a downward trend. This year, the overall picture is of plateauing caseloads. The growth in Singapore and Hong Kong took a pause in 2018. 

This analysis looks behind the headlines again and considers messages for traditional institutions, notably in Europe and in the Asia-Pacific region, and the challenges they face both from new arbitration centres and from ad hoc arbitration.

What are the practical implications of the 2018 statistics?

As noted in our analysis in 2018, caseload statistics have to be put in the wider economic contexts which give rise to commercial disputes. The relative decline of growth in China, for example, has disrupted commercial relations and markets. The prospect of fully-fledged trade wars could spawn more arbitrations. 

In the meantime, institutions and other arbitral organisations need to look to their rules, practices and costs in an increasingly crowded market for their services. Competition from new regional centres is also slowly heating up. 

The stand-out message from the 2018 statistics is London’s resilience and attractiveness, both as a seat and as a hub of international arbitration. The London Court of International Arbitration (LCIA) and the London Maritime Arbitrators Association (LMAA) saw increases in caseloads and in appointments of arbitrators.  Ad hoc arbitration under the LMAA Terms and ‘light touch’ administration under the LCIA Arbitration Rules remain, it would appear, winning formulas. 

The International Chamber of Commerce (ICC) saw an increase in its caseload in 2018, but there was a small drop in the number of arbitrators appointed in ICC cases.

The ICC’s number of new cases had been substantially larger in 2016 (966) than in 2018 (842) but it nevertheless claimed that the size of its 2018 caseload was a record. The institution’s explanation was that its 2016 total included 135 related small-claim cases from a collective dispute. As noted in our analysis of the 2017 statistics, the institutions do not take a uniform approach to statistics and should consider doing so.  For example, the spike in the caseload of the Singapore International Arbitration Centre (SIAC) in 2017 might be attributable to similar sets of related cases, as suggested by the 55 consolidation applications which it received in that year. 

Finally, the statistics on appointments of arbitrators suggest that sole arbitrators are more popular than is usually recognised. They constituted slightly more than half of tribunals in LCIA arbitrations and around two thirds of SIAC tribunals. Discussions around the selection of arbitrators tend to assume that each party has the right to appoint an arbitrator, but this is less often so. 

What do the numbers show?

As in 2018, we have collated statistics from five institutions, the ICC, LCIA, SIAC, Stockholm Chamber of Commerce (SCC) and Hong Kong International Arbitration Centre (HKIAC), and from one ad hoc arbitrators’ association, the LMAA.

This year we have compiled two graphs, illustrating the changes in caseloads and in appointments of arbitrators respectively.

Caseloads

The global caseload figure for 2018 (3539) is just one short of 2017’s total (3540) but remains considerably lower than 2016’s. The LMAA, ICC and LCIA all saw modest increases in their caseloads, in each case recovering some ground lost in 2017, but SIAC, HKIAC and SCC all saw falls after each experiencing increases in 2017. 

Appointments of arbitrators

There was a small overall rise in the numbers of appointments of arbitrators as between 2017 and 2018 but the total remained below 2016’s. 

It is notable that, while SIAC and HKIAC had 19% of the new arbitrations filed in 2018, they had only 10% of the appointments, illustrating the preponderance of sole arbitrators in those institutions and also the phenomenon, peculiar to institutions, of arbitrations without arbitrators, whether as the result of consolidation, settlement, or withdrawal. 

The LCIA and LMAA together had more than half (57%) of the appointments across the six organisations.

Arbitration hubs

As international arbitration spreads to new regions and sectors, new centres and organisations are established.  At the same time, traditional arbitration hubs, represented by the six organisations in the above graphs, have undergone changes and have diversified. 

For example, in 2018, the LCIA saw a sharp drop in the proportion of arbitrations with English law as the governing law (down to 76% from 85%) and a doubling of the proportion of arbitrations with a seat outside England and Wales (to 12%).   

In 2018, the DIFC-LCIA arbitration centre in Dubai published its own statistics for the first time in the ten years since it was founded.  These showed a more than respectable caseload with 51 cases filed in 2017.   The DIFC-LCIA has its own secretariat and has approaches to the handling and administration of arbitrations which are more in tune with local and regional practices. 

For comparison purposes, and indicating that the market in that region may not be expanding, the Dubai International Arbitration Centre (DIAC) saw a drop in its number of new cases in 2018, down to 161 from 201 in 2017. Its 2018 caseload was around half the size it was in 2013 (310).   

Meanwhile, in London, arbitration under institutional rules, for all the advances which it has made, remains a minority taste. The LCIA itself continues to provide various administrative services, such as fundholding, in substantial numbers of ad hoc arbitrations. In 2018, it provided such services in 46 of its reported 317 arbitrations. In most ad hoc arbitrations, the parties will not have recourse to institutions.  The numbers are unknown but TheCityUK has estimated that there are some 300 ad hoc arbitrations in London annually in addition to those with the LMAA. The Grain and Feed Trade Association (GAFTA), one of a number of international trade associations based in the UK, has reported that it saw 526 new claims for arbitration filed in the year to 30 September 2018.  

Singapore has been seen as a rival to London as a hub for international commercial arbitrations. Not only has SIAC’s caseload overtaken the LCIA’s, Singapore also has its own maritime arbitration body, the Singapore Chamber of Maritime Arbitration (SCMA), which broke away from SIAC in 2009 and celebrates its 10^th anniversary this year. The SCMA’s stated goal is ‘to be the seat of choice for global maritime arbitration’. However, its caseload remains very small in comparison to the LMAA’s. In 2018, it received 56 new maritime arbitrations, a record number but only 4% of the LMAA’s estimated 1561.   The SCMA’s relative lack of success, and SIAC’s high proportions of arbitrations with sole arbitrators and with no arbitrators at all, may partly explain the Singapore government’s proposal to introduce an opt-in for appeals on points of law.

In Hong Kong, the HKIAC has carved out two niches for itself, being the first foreign institution to obtain a licence in Russia and benefitting from a new reciprocal arrangement on interim measures with Chinese courts. Whether such advantages will attract new cases, and how perceptions of Hong Kong’s justice system will be influenced by current events there, are questions which remain to be answered.     

Conclusion

Reports of London’s decline as the leading arbitral hub have been exaggerated. Its continued dominance, and the diversity of its offering in terms of both administered and unadministered arbitration, are playing an influential role in shaping arbitration at other seats. 

The 2019 statistics may paint a different picture again. The rise of new centres may require that a new set of arbitral bodies be analysed. Meanwhile the numbers for 2018, as analysed here, are sobering. They confirm that the traditional institutions and other bodies have work to do to attract new cases from around the world.

To follow developments in caseloads, see LexisPSL Arbitration Practice Note , which is updated regularly. This link requires a subscription to LexisPSL Arbitration.  For a free trial, click here.