NEW YORK, May 17, 2006 (PRIMEZONE) -- A recent PricewaterhouseCoopers study concludes that the use of international arbitration to resolve cross-border disputes has received backing from international businesses wary of the alternative of seeking redress in the national courts of a foreign nation. The survey of nearly 150 in-house counsel worldwide reveals that 73 percent of corporations prefer international arbitration over transnational litigation.
By seeking input from corporate in-house lawyers, this study explores some of the misconceptions that surround international arbitration. The research, sponsored by PricewaterhouseCoopers and conducted by the School of International Arbitration, Queen Mary, University of London, provides invaluable insights for businesses that trade or invest abroad.
The resulting report is published at a time when billions are being invested in international projects and trade, increasingly leading to disputes of great complexity. The study finds it takes significant skill to cut through the web of financial, cultural and political issues to arrive at a true value of losses incurred, which is where international arbitration scores over transnational courtroom battles.
The top reasons given by in-house lawyers for choosing international arbitration are: flexibility of procedure, enforceability of awards, privacy and the opportunity to choose arbitrators to suit the dispute. These far outweigh the most commonly cited disadvantages of this method of dispute resolution -- inevitable expense and the occasional difficulties of binding parties into an arbitration process at the outset.
Having a well thought-out dispute-resolution policy provides an important strategic advantage. Eighty-six percent of respondents stated that a dispute resolution policy produces cost savings either through effective management of the dispute process or by helping to minimize the risk of dispute escalation.
Corporations that equip themselves with the knowledge, tools and tactics to conduct international arbitration proceedings are well-placed to resolve their cross-border disputes effectively. Patricia Tilton, partner, PricewaterhouseCoopers adds: "International arbitration can not only help our clients resolve their disputes, but also helps them manage a key investment risk and gain competitive advantage. This can have a major impact on their bottom line."
"We hope this study will assist company management and their legal advisors to focus on international dispute resolution as a risk management priority which can preserve -- and even enhance -- shareholder value," says Ms. Tilton.
In the survey, many of the in-house lawyers called for the development of stronger regional arbitration institutions in order to move the process closer to home -- but they accepted that many of these had some way to go before demonstrating the track record necessary to instill confidence in potential users.
Legal considerations attached to the "seat" of arbitration are the most important reasons for a corporation's choice of venue for international arbitration proceedings, with the four most popular venues being England, Switzerland, France and the United States. However, the tactical significance of the seat of arbitration did not appear to be fully appreciated by some corporations. The study concludes that companies need to increase their knowledge in this area to take full advantage of international arbitration to resolve their cross-border disputes.
The study reveals that 95 percent of corporations expect to continue using international arbitration to help resolve their cross-border disputes. Concludes Ms. Tilton: "We expect to see a continued rise in international arbitration cases, with corporations appearing confident that arbitration law and practices will generate the solutions required to meet future challenges. PricewaterhouseCoopers is increasingly being instructed to provide expert evidence to corporations and their legal advisors to quantify loss and damage or to give opinions on valuation, economic or accounting issues arising in international arbitration cases around the world."
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Notes to Editor:
1. International arbitration -- a consensual, binding method of
dispute resolution -- offers the means to resolve cross-border
disputes away from recourse to litigation in national courts.
2. This survey of in-house counsel at leading corporations around
the world tested 12 perceptions around international arbitration.
The study was conducted during a six month period and comprised
two phases: an online questionnaire completed by 103 respondents
and 40 in-depth face-to-face and telephone interviews. The report
is presented in sections, each using the empirical evidence from
the research to either confirm or challenge these perceptions.
To download a full copy of the report, entitled International Arbitration: Corporate attitudes and practices 2006, visit www.pwc.com/arbitrationstudy.