On Norton Rose Fulbright Litigation Survey: In Litigation v. Arbitration Debate, Best Answer is “It Depends”

In mid-May, law firm Norton Rose Fulbright released its 11th annual Litigation Trends Survey—the broadest the firm had ever undertaken, compiling results from more than 800 corporate counsel (primarily general counsel) representing companies across 26 countries on dispute-related issues and challenges. According to the firm survey summary, “While each country or region surveyed is unique, one common theme comes through loud and clear—corporate counsel around the world see the growing litigiousness of the  business environment as an important trend that bears watching.”

Survey results reflected significant corporate spend on litigation, with 34% of US respondents reporting litigation budgets of 1 million to 5 million, as compared to only 26% two years ago. There was also a slight increase in the companies reporting litigation budgets of $10 million or more.

One point of particular interest was the broad utilization of international arbitration, particularly for larger companies (more than $1 billion in revenue). Across all regions and industries, more than two-thirds of companies with $5 to $10 billion in revenue preferred arbitration, and were also much more likely to have been involved in an arbitration in the past 12 months (38%). Specifically, given the choice, for disputes that were international in nature, nearly half of total respondents said they preferred arbitration over litigation, with about a quarter choosing litigation and the remaining quarter answering, “It depends.”

CPR President & CEO Noah Hanft—who at the time of this post was heading to Munich to sit on a panel at the Association of Corporate Counsel-Europe Conference, on the topic of how to choose between litigation and arbitration—noted that, as compared to the 25% of total respondents, only 10% of German companies reported preferring litigation over arbitration. “The majority of German companies surveyed selected ‘It Depends,’ which—as part of a thoughtful dispute resolution process—is actually the best answer,” Hanft observed.

Hanft concluded, “These survey results support the growing realization that in the international arena companies are in many cases seeing no real alternative to arbitration—but for a minority of disputes where litigation is preferred or defaulted to.”

Other relevant survey results revealed the reasons that companies choose arbitration for international disputes. They cited, in order:

  • Confidential process
  • Speed
  • Enforceability of awards
  • Cost-effective
  • Right to appoint an arbitrator
  • Limited disclosure
  • Avoidance of a jury
  • Claim under an investment treaty

Almost all of these factors are optimally addressed by key features of CPR’s recently released Administered Arbitration Rules for International Disputes, e.g.:

  • Arbitrators, parties and CPR all subject to an express confidentiality requirement
  • A 12-month time-frame to final award, after constitution of a Tribunal
  • Transparent fees, consisting of: (1) a nonrefundable filing fee of $1,750 and (2) a sliding scale administrative fee (not a percentage) based on the amount in dispute, capped at USD $34,000, absent special circumstances
  • CPR provides various arbitrator selection options for party-appointments, including a screened selection process where the arbitrator doesn’t know who appointed him or her

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