FY2020 Tax Return

How Can International Arbitration Be Made Cost Effective?

Making International Arbitration More Cost Effective International arbitration remains a preferred method for resolving cross-border disputes, especially in the Asia-Pacific. However, the process can be costly and protracted, often attracting criticism from commercial parties who seek timely and efficient outcomes. As arbitration continues to evolve in the region, cost effectiveness requires coordinated efforts from parties, arbitrators, institutions and legislators alike. Enhancing Efficiency Through Strategic PlanningMuch of the responsibility for controlling arbitration costs lies with the parties and their legal representatives. Early case assessment and a clear procedural strategy can significantly reduce inefficiencies. By developing a well-defined case theory from the outset, parties can better assess settlement options and avoid unnecessary procedural steps. Importantly, parties should give more thought to dispute resolution clauses before a dispute arises. Too often, these clauses are treated as boilerplate without due consideration of their strategic impact. This is the moment to agree to mechanisms that can streamline future proceedings, such as adopting the IBA Rules on the Taking of Evidence in International Arbitration, which typically provide for more limited disclosure than common law approaches. Likewise, agreeing on the preparation of core document bundles and the use of admissions, even where these may be unfamiliar in civil law jurisdictions, can help narrow the factual issues in dispute and avoid unnecessary fact-finding. Choosing the right arbitrator is equally critical. Opting for a sole arbitrator, particularly one with availability and relevant industry experience, can eliminate the risk of scheduling conflicts and streamline decision-making. This is especially important in the Asia-Pacific region, where access to experienced arbitrators is competitive. Technology also plays a key role in reducing costs. Remote hearings now offer a practical alternative to in-person appearances, eliminating travel expenses and enabling greater flexibility in scheduling. Additionally, focusing on essential evidence and narrowing the scope of issues helps prevent the arbitration process from becoming unnecessarily prolonged. Arbitrators as Drivers of Procedural Efficiency Arbitrators play a pivotal role in setting the tone for an efficient process. Active case management, through clear timelines, procedural orders and firm expectations, helps ensure alignment throughout the arbitration. A key efficiency measure is for arbitrators to clarify the live issues early on, either by preparing their own list for party comment or asking the parties to jointly define them. This can dramatically reduce the time spent arguing peripheral matters. While arbitration is, to some degree, the parties' process, arbitrators should not be overly deferential. Effective case management may require firm intervention. Arbitrators should feel confident using procedural tools such as bifurcation, summary dismissal, or early partial awards, and they should not be deterred by concerns that being prescriptive might affect future appointments or trigger challenges to the award. The tribunal has a responsibility not only to the parties but also to the integrity of the arbitral process. Limiting the volume of submissions and requiring parties to justify the relevance of their evidence are further levers that tribunals can use to ensure the arbitration stays focused and proportionate. Arbitrators should also remain alert to opportunities for early settlement. In jurisdictions such as Singapore and Hong Kong, where mediation is well integrated, they can encourage or facilitate early resort to alternative dispute resolution (ADR) mechanisms. Institutional Support and Legislative Reform Arbitral institutions in the region, including the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC), have taken steps to improve procedural efficiency. Many now offer expedited procedures that compress timeframes and reduce unnecessary steps, making them ideal for less complex or lower-value disputes. Institutions can go further by actively managing arbitrator availability, enforcing award delivery timelines, and promoting the use of ADR within the arbitration process. In countries such as Australia and New Zealand, where mediation is common, institutions could empower tribunals to stay proceedings to allow for meaningful settlement discussions. Legislation also plays a role. Clear statutory endorsement of summary procedures and expedited mechanisms can remove uncertainties about their enforceability and encourage broader adoption. Recent reforms in arbitration laws across the Asia-Pacific reflect a growing appetite for speed and economy in international arbitration. Practical Steps to Consider To maximise cost efficiency, parties and legal representatives should: • Carefully negotiate dispute resolution clauses during contract formation, considering procedural rules (e.g. IBA Rules) that limit scope and disclosure. • Include pre-arbitration settlement or ADR clauses in contracts. • Agree early on procedural matters such as timelines, core bundles and potential admissions. • Engage experienced arbitration counsel familiar with regional practices. • Limit evidence and witnesses to those strictly necessary. • Consider remote hearings wherever appropriate. Conclusion Cost effective arbitration is not achieved through isolated efforts. Instead, it requires a coordinated approach involving proactive parties, decisive arbitrators, supportive institutions and forward-looking legislation. By embracing efficient case management, agreeing procedural rules and issues upfront, leveraging technology and adopting expedited procedures, international arbitration can continue to serve as a reliable and commercially viable dispute resolution mechanism, particularly for businesses operating across the Asia-Pacific.