At a Glance
- The knock-on effect of Russia’s invasion of Ukraine on energy prices and supply chains is now finding its way before arbitration tribunals.
- Banking & Finance international arbitrations are set to rise this year with inflationary pressure and high interest rates impacting corporates across the world.
On 26 May 2023, the London Court of International Arbitration (LCIA) released its Annual Casework Report for the year 2022 (Report). The Report provides some insight into the LCIA’s work over the past year and reveals a solid year — though overall, the numbers are down from 2021 (as discussed in our update from last year). Some key points from the Report are:
- In 2022, the LCIA received 333 referrals, including 293 referrals for LCIA arbitration. This is down from 377 referrals in 2021. The Report states that the beginning of 2022 started slowly for new cases but picked up steam in the latter half of the year. They also said that this upward trajectory has “continued” in the first half of 2023.
- Transport & Commodities and Banking & Finance continue to be the leading industry sectors for LCIA arbitrations (which is the same as in 2021).
- Users of the LCIA came from 90 different countries, with 88% of parties coming from outside the United Kingdom. Asia remains the region that represents the highest percentage of parties (making up almost a quarter of all parties), followed by Western Europe.
- State parties or state-owned parties more than doubled in 2022 and made up 13% of all parties in LCIA arbitrations.
- Transport & Commodity disputes “dominated” the LCIA workload with 37% of its new referrals on this subject matter. The Report states that this is related to the energy price increases seen in 2022. The trend is expected to continue.
- Interestingly, the Office of Financial Sanctions Implementation granted the LCIA a general licence, which permits receipt of, and payments for, arbitration costs from Russian (or other sanctioned) entities, enabling them to continue to use the LCIA as a forum to resolve disputes.
- Diversity of arbitrators remains a key theme discussed by the LCIA. They said that non-British arbitrators were selected by the LCIA in 63% of its court appointments despite 85% of LCIA arbitrations being governed by English law and 88% of arbitrations being seated in London. Women arbitrators were appointed in 45% of all of the LCIA’s appointments. However, the parties only selected 19% women arbitrators, so overall only 28% of appointments were women.
- The LCIA received no challenges to arbitrators pursuant to Article 10 of the LCIA Rules in 2022.
Whilst the number of new referrals decreased in 2022, the LCIA and international arbitration in general remain a popular route for the resolution of international disputes. The Report shows how parties (and their disputes) are adapting to the global political and economic trends of the day. Russia’s invasion of Ukraine is, and will continue to be, a challenge for international commercial entities. Particularly, the knock-on effect on energy prices and supply chains is now finding its way before arbitration tribunals. Further, the Report highlights again the misconception that international arbitration is not a popular method for resolving Banking & Finance disputes. Disputes in that sector are only set to rise this year with inflationary pressure and high interest rates impacting corporates across the world.