Over the last several years a concern which has gained traction, particularly in common law jurisdictions, is the impact of commercial arbitration on the development of the commercial common law, especially contract law. The fear is that the popularity of arbitration is diverting commercial disputes away from the courts with the consequence of frustrating the development of the commercial common law. There appears an obvious logic to this concern given the historical heavy reliance on the courts for the development of the commercial common law. However, when considered at a deeper level, the concerns expressed raise several important questions: Are court decisions as important to the development of the law as they once were? Is there a significant difference between the importance of court decisions in common law as opposed to civil law jurisdictions? Is commercial litigation really declining? If so, is the decline a consequence of the popularity of arbitration or are there other reasons at play? Finally, but importantly, assuming there is a real problem, what is the best way of dealing with it?

Introduction

It is now well-established that international commercial arbitration is the preferred method of dispute resolution for parties engaged in international commercial transactions.¹ Consequently, it has been suggested that there has been a steady decline around the world (but particularly in common law jurisdictions) of the number of commercial cases coming before domestic courts. In some sense, this decline could be perceived as desirable. In fact, many jurisdictions have actively encouraged the use of private dispute settlement – be it through arbitration or other forms of alternative dispute resolution (‘ADR’) – in order to reduce the burden on the public justice system. In the arbitration context, this encouragement has taken the form of legislative reforms, joining international conventions and the establishment or hosting of international arbitration centres. The competition to make jurisdictions more ‘arbitration-friendly’ has been widely noted.²

Despite the active encouragement of such developments, concerns are being expressed about the perceived negative impact of the privatisation of dispute resolution for jurisdictions around the world. The criticisms take many forms. One concern is the impact of commercial arbitration on the development of the commercial common law, especially contract law. On the face of it, there is obvious logic to this concern. Historically, common law systems were completely dependent on court judgments for developing important areas of law and for identifying and informing the legislature, through the rendering of decisions, of the need for reforms and revisions to the law. Without a steady stream of cases considering developments in commerce, it is conceivable that the law would be in danger of falling behind the commercial world.

However, when considered at a deeper level, the concerns expressed raise several important questions: Are court decisions as important to the development of the law as they once were? Is there a significant difference between the importance of court decisions in common law as opposed to civil law jurisdictions? Is commercial litigation really declining? If so, is the decline a consequence of the popularity of arbitration or are there other reasons at play? Finally, but importantly, assuming there is a real problem, what is the best way of dealing with it? This paper considers these questions.

Part I of this paper begins by mapping out the present concern as it has been expressed by senior members of the judiciary and academics in order to understand the issue and survey the solutions proposed. Part II compares and contrasts how courts in common and civil law jurisdictions contribute to the development of the law, both historically and in modern times. Part III considers some of the proposed reforms to commercial arbitration for dealing with this issue and then reflects on some developments in the area of international commercial litigation that could serve to foster its development, in turn fostering the development of commercial law.

I. The current concern: The erosion of commercial law

The decline in the number of trials because of private forms of civil dispute resolution has been a point of concern in England and other common law jurisdictions for some time.³ In recent years, however, the focus has been the impact arbitration has on the development of commercial law, in particular by commercial court judges across common law jurisdictions. In a 2016 speech, Lord Thomas, former Lord Chief Justice of England and Wales, noted:

The effect of the diminishing number of appeals compounds the problem that arises from the diversion of more claims from the courts to arbitration. It reduces the potential for the courts to develop and explain the law. This consequence provides fertile ground for transforming the common law from a living instrument into, as Lord Toulson put it in a different context, "an ossuary".⁴

Lord Thomas went on to note that:

[A]cross many sectors of law traditionally developed in London, particularly relating to the construction industry, engineering, shipping, insurance and commodities, there is a real concern which has been expressed ... at the lack of case law on standard form contracts and on changes in commercial practice. ⁵

Similarly (albeit with a particular focus on the lack of transparency in commercial arbitration), Sir Bernard Rix, retired Lord Justice of Appeals, said:

[T]he lack of publication, the lack of transparency, the difficulty or impossibility of getting such awards into the public domain, a fortiori in the light of institutional rules which bar any challenge or appeal to the courts whatsoever, mean that our commercial law is going underground.⁶ (emphasis in original)

As concerns a specific industry – the construction industry – Beverly McLachlin, the former Chief Justice of Canada, has said:

The construction law tree looks different than it used to. It may not be dead, but new branches are not appearing as often as they once did. And old branches that need pruning are often neglected. The trend is clear. Fewer and fewer construction cases are reaching the courts where the law is developed. Increasingly, instead of being resolved by judges, construction disputes are being sent to mediation, arbitration, or other forms of [ADR].⁷

There have been two key proposals suggested to alleviate this problem:

1. A proposal, by Lord Thomas, to reform the English Arbitration Act 1996 and, in particular, section 69 which deals with appeals from arbitral awards to the courts.⁸ He suggests liberalising the standard for appeal under section 69 so that it provides ‘a more flexible test for the grant of permission to appeal’.⁹

2. Amendments to the laws and rules concerning confidentiality in international commercial arbitration. In England, Sir Rix has been the champion of this approach; however, many others in England and elsewhere have made the same or similar suggestions.¹⁰

II. Some underlying assumptions

All of these critics are operating under two important assumptions when articulating this problem. The first is that courts play a critical role in the development of the law. The second is that there is, indeed, a decline in the number of cases coming before the courts. These two assumptions give rise to three important questions: how do courts contribute to the development of the law? Is judge-developed law always positive, or are there disadvantages inherent in this law-making process? Finally, does empirical evidence demonstrate a decline in the number of cases coming before the courts as a consequence of arbitration?

A. How do courts contribute to the development of the law?

In considering the question of how courts contribute to the development of the law, it is important to assess the different role courts play under different legal traditions as it is often assumed that the differences, both historically and today, are significant.¹¹ While there are a number of different legal systems around the world,¹² this article focuses exclusively on the common and civil law legal systems¹³ and considers the role the courts play in those two legal systems, both historically and in modern times.

(i) Traditional approaches under the common and civil law traditions¹⁴

Traditionally, in civil law jurisdictions, the legislature is charged with making law and the judiciary is charged with applying that law. One basic principle underpinning civil law is that the primary role of the court is to apply and interpret the law, as it is found in codes, to the particular dispute before it. The assumption is that the codes should be capable of being applied to any potential case that may come before the courts. In this way, the codes provide general principles of law, which dictate rights and duties in specific legal relationships in the abstract.¹⁵ The courts then apply these rules to concrete factual situations and, given their generality, adapt the principles to the circumstances of the particular case. In doing so, the courts identify the particular conditions under which the general rule laid down in the code applies.¹⁶ Where a case comes before the courts for which the code does not cater, the courts will apply general legal principles provided in the codes in order to fill those gaps.¹⁷ There is, in theory, no system of precedent and therefore decisions of higher courts are not required to be given any greater weight than that of lower court decisions.¹⁸ Consequently, it is believed that it is not uncommon for factually similar cases to be decided differently.¹⁹ Another distinguishing feature of the civil law tradition is the weight given to academic jurisprudence, which is often referred to, considered and relied upon by civil law courts when deciding a case.

By contrast, the common law system is traditionally seen as one that develops through case law. Common law precedents develop via the courts providing a solution to a concrete factual situation and then adopting the same solution in factually similar cases, until a string of cases develop a legal principle which is then applied in all subsequent similar factual situations.²⁰ The system operates under the principle of stare decisis,²¹ which means that earlier judicial decisions, principally rendered by higher courts and made in factually similar cases, are to be followed by lower courts. Another distinguishing feature is that common law courts traditionally gave very little (if any) weight to secondary sources of law such as academic commentary. In fact, the convention was that authors were not relied upon unless the author was a former judge or practitioner, deceased and the relevant academic work had achieved a certain degree of respectability.²²

Thus, historically, the common and civil law legal systems reflect two fundamentally different approaches to the development of the law and in particular to the manner in which courts contribute to that development. In civil law systems the judge is tasked with deciding the dispute before it (not dissimilar to the role of the arbitrator) while in common law systems, in addition to deciding the dispute, the role of the judiciary is to develop the law by providing guidance on how similar disputes should be decided. While this is broadly true for all common law courts, it is particularly so for senior courts which under the common law system are tasked with correcting decisions and shaping, explaining and developing the law as well as identifying gaps which require the attention of the legislature.²³ This is not to say that the courts of common law jurisdictions contribute to the development of the law while the courts of civil law jurisdictions do not; rather, under traditional conceptions of the common and civil law traditions, the courts contribute to the development of the law albeit in slightly different ways.²⁴

(ii) Convergence of the common and civil law traditions

Modern times have seen a convergence of the common and civil law traditions. Once a system with a scarcity of legislation, since the 19th century the common law is increasingly codified in statutes, which sit alongside or take priority over case law.²⁵ As noted by Lord Denning²⁶ in the late 1970s, ‘in almost every case on which you have to advise you will have to interpret a statute’.²⁷ These statutes in some instances codify the common law and in others state the law anew. Unlike under civil law systems, statutes in common law systems are specific as opposed to general and abstract. As a general rule, the intention of the legislature is to refrain from making general statements of law, rather it tries to provide specific instances in which the legislation is intended to apply.²⁸ The proliferation of the codification of the common law – and particularly the more precisely worded forms of statutes – naturally curtail the courts’ role in the development of the law.

A further development over the decades has been the ever-so-slight watering down of the principle of stare decisis.²⁹ An example is seen in the release in 1966 by the House of Lords (now the Supreme Court of the UK) of a Practice Statement declaring that:

Their Lordships nevertheless recognise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose, therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so.³⁰

It is now frequently seen that common law courts will rely on secondary law sources, such as academic textbooks and commentary as well as the law or decisions rendered by the courts of foreign jurisdictions,³¹ to support a conclusion in a particular case.³² While such secondary sources are not binding, they are nevertheless persuasive – particularly in the absence of any other primary sources on point. This is similar to the approach adopted in civil law systems where courts can and frequently do rely upon academic textbooks and commentary, even though they are not legally obliged to do so.

In civil law jurisdictions, generally speaking and contrary to popular belief, lower courts routinely take into consideration and follow the decisions of higher courts, to avoid being overturned on appeal.³³ In fact, in some civil law jurisdictions the principle of stare decisis does apply.³⁴ It operates such that a deviation by a lower court from a decision of the Supreme Court constitutes a ground for appeal.³⁵ Moreover, in many civil law jurisdictions it is not uncommon for laws to be drafted in a general manner, thereby requiring development through the lower courts and subsequent confirmation by the Supreme Court.³⁶ An example is the establishment and development of tort law in several civil law jurisdictions, which was developed through courts drawing on the doctrine of abuse of rights. It was later codified by the legislature but in a number of jurisdictions the codified laws still only provide a broad outline consisting of certain general law maxims, thereby requiring development by the courts.³⁷

Furthermore, civil law courts are often instructed by statute to have recourse to customary law as well as established doctrine and case law where there is a gap in the code. An example of such a provision can be found in section 1 of the Swiss Civil Code.³⁸ This is largely akin to the approach adopted under common law where courts will first have regard to statute (where available) and then supplement it with case law and other secondary sources.

Taking a less jurisdiction-specific perspective, the convergence of these two systems is further exemplified when looking at international efforts to unify and harmonise private law, a number of which have set to harmonise commercial contract law in particular. An obvious example³⁹ is the 1980 Convention on the International Sales of Goods (‘CISG’).⁴⁰ The CISG is frequently prescribed as the law applicable to international commercial contracts and thus routinely applied by courts and tribunals globally.⁴¹

Informally, there have also been calls for the further development of transnational commercial law through jurisprudence and for increased harmonisation of commercial law.⁴² This has been the focus of some senior members of the judiciary, in particular Chief Justice Menon of the Supreme Court of Singapore who recently remarked that due to the substantial increase in cross-border trade and investment, the days of lawyers and the judiciary ‘operating in jurisdictional silos’ are gone. He called on the courts to ‘continue to establish links with their counterparts with a view to collectively developing international commercial law in a consistent manner that is supportive of transnational business.’⁴³ By way of example, Menon CJ refers to the convergence of contractual interpretation under the common and civil law systems, noting that common law courts have shifted from a textual approach to a contextual approach, which is more in line with the civil law approach to contractual interpretation.⁴⁴

Thus, it appears that in contemporary times the differences in the development of the law by courts of common and civil law systems is diminishing and is, at present, far less significant than it once was. When considering the perception that all common law is judge-developed law whereas civil law courts are restricted to the application of codes, some even argue that nowadays ‘the law in the [civil law] codes has become what the courts have made of it ... [and] the law made by the [common law] court has become what the statutes have left of it’.⁴⁵ This is not to say that there are no longer disparities between common and civil law systems. However there has been, and continues to be, a clear convergence.

B. Some of the limitations of judge-developed law

Another factor relevant to the consideration of the courts’ contribution to the development of the law under the two different systems is the limitations present in this method of developing the law. There is an inherent assumption that judge-developed law (particularly the traditional common law notion of judge-developed law) is a good thing. There are, of course, many advantages of judge-developed law and the courts do play a critical role in the development of the law under both common and civil law legal traditions as highlighted above. However, there are also many issues associated with the traditional common law concept of the development of the law. This topic is much broader than what can be comprehensively discussed in this article, but a few examples serve to elucidate this point.

One obvious limitation of judge-developed law – which also illustrates an additional difference between the common and civil law traditions – is the length and quality of the judicial reasoning given to substantiate the court’s decision in a particular case.⁴⁶ This is seen most starkly in decisions of the higher courts. Under the common law system, traditionally judges of the most senior courts write their own decisions and, in doing so, they provide very fulsome reasons for those decisions. Perhaps the most significant issue with this approach is that it can lead to subtle (or not-so-subtle), and often unintended, distinctions between what appear to be substantially the same conclusions. The result is that it can be quite difficult to decipher the ratio decidendi of a case or, even worse, it can leave the law in a state of incongruence. This is less common now with higher courts making a concerted effort to render fewer separate opinions,⁴⁷ but it still occurs.⁴⁸

Lack of clarity on the true reasoning of a case is not unique to the common law tradition. Under the civil law system, higher court decisions rarely contain multiple judgments, except where there are dissenting opinions. While this can result in a much clearer articulation and application of the law than under the common law system, in some instances, the lack of reasoning on a particular point can equally lead to confusion and incongruence in the law.⁴⁹

A further limitation of judge-developed law is that, particularly under the common law tradition, the focus and role of the judge is split. As discussed above, the role of the judge in the common law tradition, particularly in higher courts, is two-fold: to render justice in the particular case before it and to foster the development of the law. While these two objectives can (and often do) operate seamlessly side-by-side, there is an inherent tension that can sometimes result in undesirable consequences. The first such consequence is that it can lead to issues of inconsistency and uncertainty in the development of the law when a court, for example, broadens a legal principle by focusing on ensuring justice in a particular case instead of on the ramifications for the application of the legal principle in future cases. Where this occurs, there can be a frustration in the administration of justice for future cases until the law is corrected by the courts or the legislature. This can take a long time. Conversely, it can result in ineffective access to justice for the parties to the particular proceedings if a court focuses too heavily on the future development of the law and not enough on administering justice in the case before it. For example, judges in common law jurisdictions sometimes cite policy reasons such as the opening of ‘floodgates’ as one reason for concluding that a particular claim should not succeed. Ensuring that the judge’s primary role is the administration of justice in the case before it removes this tension.⁵⁰

The development of law in legal systems that are dependent on judge-developed law can also be somewhat stilted, as the traditional common law approach requires the relevant cases to come before higher courts in order for a legal principle to be pronounced on or further developed. There are many reasons why private law test cases might not reach higher courts. A few particularly notable reasons include the steady increase in legal costs over the last few decades,⁵¹ the general decline in legal aid for private law claims,⁵² and the move away from the right of appeal towards a system where the courts grant special leave to appeal. Together, these factors have meant that only a small minority of cases go on appeal, with all but a very few never reaching the highest courts.⁵³ Consequently, out of necessity the legislature has stepped in and created or clarified certain legal principles.

Finally, but importantly, the accessibility of judge-developed law to the common person is a significant limitation.⁵⁴ Access to the law is a rule of law issue,⁵⁵ and has been increasingly recognised as of fundamental importance to the development of ‘good law’.⁵⁶ The ability of the everyday person to source and understand the laws which govern them, which inform them of both the consequences of their actions and what they are entitled to do, is critical to the effective administration of justice. The inaccessibility of the law is an issue shared among legal systems. However, a frequent complaint as concerns traditional notions of the common law system is that the relevant law is often very difficult to find. Indeed, it can and often does require lawyers to spend hours trawling through cases. In fact, one of the key reasons for the codification of the common law was to make it more accessible to the general public by making it easier to find. As recorded in a statement of policy prepared by the Law Commission for England and Wales in 1965:

It is true that the law on certain subjects has from time to time been largely restated in codifying statutes, but these are few and far between and date mostly from the end of the nineteenth century. The result is that it is today extremely difficult for anyone without special training to discover what the law is on any given topic and when the law is finally ascertained, it is found in many places to be obsolete and in some cases to be unjust. This is plainly wrong. English law should be capable of being recast in a form which is accessible, intelligible and in accordance with modern needs.⁵⁷

This is not to say that statutory law is necessarily accessible or easy to understand and apply. Often it is not. However, the codification of the law does go some way to addressing issues associated with accessibility.

C. Commercial litigation and arbitration: Empirical evidence

As noted above, while there is a substantial amount of academic and judicial commentary concerning the perceived decline in the number of cases commenced before the courts, there is a notable lack of empirical evidence relied upon in support of such a conclusion.⁵⁸ This section considers the court statistics available in England and Wales and in Switzerland. These jurisdictions were chosen because they are longstanding international arbitration hubs in common and civil law jurisdictions. The available data ranges from 2009 to 2019,⁵⁹ and is limited to cases commenced before the courts.

In England and Wales, most commercial cases are heard and determined by the London Commercial Court (‘LCC’) which forms part of the High Court of England and Wales. The civil justice section of the UK government website provides data from 2009 to 2019 for the Commercial Court.⁶⁰ The data recording the overall caseload before that period is difficult to obtain.⁶¹ The LCC statistics from 2009 to 2019 illustrate fluctuation in the number of claims commenced, but ultimately demonstrate an overall decline from 1,256 claims in 2009 to 479 claims in 2019 (i.e. a decrease of around 62%). No explanation is provided for the decline, with the exception of a suggestion that it may be the result of raised court fees.⁶²

In Switzerland, cantons are able to establish courts for certain specialised areas of law. In this regard, four commercial courts have been established in Switzerland: in Zurich, Bern, St Gallen and Aargau. The statistics of the Swiss Commercial Courts (‘SCC’) demonstrate an overall decline between 2010 and 2019 from 1,185 cases to 864, reflecting an overall decrease of around 27%. ⁶³ As with the LCC statistics, little information is provided to explain these statistics.⁶⁴

Arbitration statistics. In 2018, QMUL reported that ‘97% of respondents indicate that international arbitration is their preferred dispute resolution mechanism, either as a stand-alone method (48%) or in conjunction with ADR (49%)’.⁶⁵ This reflects a notable increase compared to a 2006 study conducted by QMUL which found that ‘73% of respondents prefer to use international arbitration, either alone (29%) or in combination with [ADR] mechanisms in a multi-tiered dispute resolution process (44%)’.⁶⁶ The statistics of the leading arbitral institutions⁶⁷ also show an increase in caseload of 64% (from 4,080 in 2012 to 6,691 in 2019).⁶⁸

Limitations of the available data. Unsurprisingly, it is impossible to conclude from these figures that the decline in the number of claims issued before these courts is a consequence of the popularity of arbitration. Apart from the lack of court data and associated accuracy issues, it is not possible to draw a causal link between the overall decline in the number of cases coming before the courts and the increase in the number of cases going to arbitration. There are several variables that could significantly impact upon the ability to draw any inferences in this respect.

First, the available court data only reflects cases commenced before the commercial courts and does not account for procedures such as disposal by way of settlement or transfer to another court.⁶⁹

Second, there are several limits to the data concerning arbitration. Most obviously, these statistics do not account for the number of ad hoc arbitrations, or for industry-specific arbitrations which are likely to be significant, particularly as concerns industries such as insurance, shipping, construction etc... for which arbitration has been noted to be the preferred method of dispute resolution for a long time.

Third, the court data is generally unreliable for the purposes of drawing a causal link because of ongoing civil justice reforms and court restructuring. For example, the civil justice reforms through the Woolf reforms in England and Wales, and the subsequent Jackson reforms,⁷⁰ saw (i) positive encouragement for the early resolution of disputes through ADR;⁷¹ (ii) the establishment of pre-action protocols;⁷² (iii) heavy cost sanctions; (iv) the introduction of rules regulating offers to settle;⁷³ (v) the establishment of small claims tribunals; and (vi) the introduction of different court tracks. Consistent with these reforms, the English courts have also played a significant role in deterring litigants from bringing cases before the courts without having first pursued alternative means.⁷⁴ Another significant contributing factor is likely to be the withdrawal of legal aid for a broad range of private law disputes, frustrating the ability of litigants to obtain access to justice for private claims. A driving force of these reforms has been – as is so often the case – austerity measures. In Switzerland, as noted above, reforms to the Swiss Code of Civil Procedure in 2011, which resulted in the creation of a federal code of civil procedure rather than canton-specific codes, would have invariably influenced the data. Some of the key features of the Swiss Code of Civil Procedure include the encouragement of the early settlement of disputes through mediation and conciliation, and the introduction of three different types of proceedings: ordinary, simplified and summary, depending on the value of the claim.⁷⁵

Finally, there are many other forms of private dispute resolution other than arbitration that could be impacting the development of commercial law. Obvious examples are mediation and conciliation. However, there are many others, such as electronic and online dispute resolution services, internal dispute resolution services such as for the resolution of consumer and employment matters, ombudsman services, as well as public and private services provided by regulators.

III. Fostering the development of commercial litigation and commercial law

When considering the impact arbitration is having on the development of commercial law, many academics and senior judges have suggested reforms to arbitration as a remedy. As it cannot be conclusively stated that the popularity of arbitration is causing a decline in the number of cases before the courts, this section considers and evaluates the proposed reforms to commercial arbitration and variations to these options are also proposed. It then looks at reforms to commercial litigation that could foster its development, thereby fostering the development of commercial law.

A. Possible international commercial arbitration reforms

(i) Broadening the grounds for appeal

One suggestion, proposed by Lord Thomas, is a more liberal standard to appeal arbitration awards, in particular where there is a question of law of ‘general public importance’.⁷⁶ Specifically, it has been suggested that section 69 of the English Arbitration Act 1996 should be reformed to provide ‘a more flexible test for permission to appeal’.⁷⁷ Section 69 affords parties to an arbitration seated in England a limited right to appeal against an arbitral award where either the parties agree or (more commonly) the court is satisfied that certain specific criteria are met.⁷⁸ However, the parties can agree to opt-out of section 69, either expressly or by the choice of certain institutional rules. The LCC statistics demonstrate that applications for appeals on points of law are limited and rarely successful: in 2017, 56 applications were made, of which 10 were granted permission to appeal and only one was successful.⁷⁹

The suggestion of Lord Thomas has been the subject of some criticism by Lord Saville, former Supreme Court Justice and Chair of the UK’s Departmental Advisory Committee on Arbitration Law, among others. Lord Saville queried why it should be the parties that are ‘obliged to finance the development of English commercial law?’⁸⁰ He also noted that the suggestions voiced by Lord Thomas would ‘drive international commercial arbitration away from London, to the great loss of [England]’,⁸¹ which would conceivably have an even greater impact on the development of the commercial law.⁸² As is evidenced by the fact that a number of other popular jurisdictions for international commercial arbitration have taken steps in the opposite direction, in favour of finality, by reforming domestic arbitration legislation to enable parties to expressly agree to waive their right to annulment.⁸³ It is also worth recalling that the English Arbitration Act 1950 did provide for much broader mechanism for court intervention on points of law under what was termed the ‘Special Case’ procedure.⁸⁴ The procedure enabled a party to an arbitration to request at any time (i.e. even before an award was rendered) that the arbitrator ask the court for a ruling on a point of law arising in the arbitration. The provision was abolished during reform to the Arbitration Act in 1979 for two main reasons. First, the process resulted in significant delays and costs and was susceptible to abuse. Second (but closely linked to the first), it acted as a deterrent to commercial actors entering into one-off contracts from choosing England as the seat of arbitration.⁸⁵

However, there is a further issue with this proposal: appeals from arbitral awards under the English Arbitration Act 1996 are heard by first instance courts, not appellate courts. As noted above, under the common law system, the law is primarily developed through appellate court decisions. If appeals on points of law are restricted to first instance courts, then the ability of the higher courts to review and develop the law is necessarily limited as it is only in the very rare case where there are two appeals (or three in the case of the Supreme Court) that an appellate court will hear and determine a point of law arising from an arbitral award.

If the idea is to reform section 69 to allow for a greater number of appeals on points of law in order to develop the law, perhaps a better solution would be to amend the appeal process such that an appeal from an award would leapfrog the first instance court and be heard directly by the Court of Appeal.

(ii) Reform of the laws and rules concerning confidentiality

An alternative solution proposed by Sir Rix is to amend express or implied rules concerning confidentiality in arbitration.⁸⁶ He suggests that consideration should be given to whether the principle of implied confidentiality under English law ‘extends too widely’, and whether it should cover arbitral awards. A further proposal he proffers is for a default rule that ‘after a certain period of time, such as 6 months or a year ... an award might be publishable in anonymised form (or even unanonymised form) without the possibility of objection.’ ⁸⁷

A less conservative approach that merits consideration would be to adopt a default position whereby there is no obligation of confidentiality, unless both parties expressly agree otherwise. That a default approach in favour of the publication of arbitral awards would ensure greater publication of awards is supported by an abundance of evidence in the behavioural economics space which suggests that the manner in which options are presented to individuals has a determinative effect on their decision-making and that providing a default option can ‘nudge’ individuals towards a particular choice.⁸⁸ This position has been adopted vis-à-vis arbitration in a number of jurisdictions.⁸⁹ The obvious counterargument to this approach is that it may make arbitration less desirable. However, in Sweden⁹⁰ and the US⁹¹ there is no implied duty of confidentiality and they remain popular arbitration jurisdictions.⁹²

Similarly, arbitral institutions could be encouraged to relax their confidentiality rules so that awards are made public unless the parties expressly agree otherwise, as the ICC has done. Unlike other potential reforms, such an approach would still respect and promote party autonomy by allowing the parties to agree to confidentiality if they deem that necessary or important.

But this proposal gives rise to further important questions: would adopting opt-in confidentiality rules and laws actually foster the development of the law? Once publicly available, will courts refer to and rely upon arbitral awards? What is the potential precedential value of arbitral awards?

(iii) The precedential value of arbitral awards

As discussed above, the long-standing tradition in civil law jurisdictions of referring to and relying on academic commentary when hearing and determining cases is becoming an increasing occurrence in common law jurisdictions. This is particularly so as concerns established and highly-regarded treaties,⁹³ but also for less well-known publications on important points of law.⁹⁴ There is no reason why arbitral awards, if publicly available, should (or would) not be treated similarly. This is especially so considering the increasing trend for senior members of the judiciary in common law jurisdictions to take arbitral appointments on retirement. For example, in recent years an arbitral tribunal chaired by Lord Collins, former Justice of the Supreme Court of the UK, is said to have rendered a very lengthy award addressing questions of English tort and contract law, including a detailed discussion of the question of res judicata in the context of international arbitration.⁹⁵ The award is confidential, but if it were to be made public, it could be referred to or relied on to inform the development of the law. Indeed, it would seem a rather curious result if a court were willing to place reliance on certain opinions when expressed in a publication, but not if they took the form of an arbitral award. But the law is not without curious results. And the current treatment of awards by commercial arbitral tribunals vis-à-vis scholarly works tends to suggest that reliance upon published awards may not necessarily be forthcoming.⁹⁶ It could be argued that this is because the approach adopted in international commercial arbitration is more akin to the traditional civil law model,⁹⁷ and that courts may adopt a different approach. Or it could simply be that reliance on arbitral awards when rendering a decision is one step too far for the courts, particularly common law courts that traditionally refrained from relying on scholarly works.

Nevertheless, even if the courts do not adopt a practice of relying upon arbitral awards, the publication of awards may still facilitate the development of the law indirectly through the discussion of awards in academic commentary. In support of this approach, some of the leading authors on English reinsurance law have commented that:

Some of the finest judges and lawyers in the reinsurance field have produced detailed arbitration awards in difficult areas of reinsurance litigation, but the learning must remain hidden ... [Consequently most] contested decisions are not available to the researcher and the reinsurance wheel has to be reinvented time and again.⁹⁸

The publication and subsequent reliance on awards (either directly or through scholarly works) could go a long way towards fostering the development of the law.

B. Development of, and reforms to, international commercial courts

Over the past decade, several States have invested considerable resources in the development of international commercial courts and dispute centres in an attempt to attract parties engaged in cross-border disputes.⁹⁹ In the Middle East, for instance, both Qatar and the United Arab Emirates have developed state-of-the-art international courts in order ‘to reverse a trend under which companies operating in the Gulf region – many of them using contracts written in English – agree to go to courts or arbitration overseas to settle their legal disputes’.¹⁰⁰ In Asia, the Singapore International Commercial Court (‘SICC’) was established in 2015 in order to further Singapore’s position in the Asia-Pacific region as a financial and dispute resolution hub. A principal goal of the SICC is exporting Singaporean law.¹⁰¹

Since then there has been a proliferation of international commercial courts.¹⁰² Such courts have attempted to attract business by adopting features which are said to have contributed to the popularity of arbitration. Examples include:

• forming tribunals composed of experienced and well-regarded judges from jurisdictions around the world (greater neutrality);¹⁰³
• removing the common law requirement that parties must plead and prove foreign law (increased flexibility);¹⁰⁴
• relaxing barriers to appearances by foreign lawyers (greater party autonomy);¹⁰⁵
• affording parties the ability to exclude the application of a jurisdiction’s rules of evidence (increased simplicity and flexibility);¹⁰⁶
• providing for proceedings to be conducted, and judgments rendered, in English – the most commonly used language in international commerce; and
• allowing parties to agree that certain proceedings can be determined confidentially,¹⁰⁷ and that rights of appeal can be limited or excluded altogether (greater party autonomy and finality).¹⁰⁸

Such measures are an obvious reflection of the features which parties indicate time and again in arbitration surveys are characteristics which contribute to the choice of arbitration over litigation, and will likely serve to encourage increased commercial litigation.

C. Judicial cooperation and global instruments regulating international jurisdiction, and the recognition and enforcement of foreign judgments

A repeated suggestion for fostering international litigation is enhanced judicial cooperation, particularly among commercial courts. Judicial cooperation has been occurring for some time in specific regions around the world, and among common law jurisdictions in particular. However, with more and more commercial courts developing globally, there is new-found focus on judicial cooperation. For instance, the English courts established the Standing International Forum of Commercial Courts, which met for the first time in 2017 and brought together 60 judges from 28 jurisdictions. This initiative appears promising, particularly in terms of demonstrating ‘the readiness of courts to improve their understanding of cultural differences’,¹⁰⁹ as well as the streamlining of court practices and procedures which remains a significant hurdle for foreign litigants. It will also serve to foster the development of transnational commercial law as championed by Menon CJ and discussed above in Part II(A)(i) ‘Traditional approaches under the common and civil law traditions’.

Another obvious development which has the potential to significantly contribute to the uptake of litigation is the harmonisation of rules concerning the enforceability of foreign judgments. In contrast to the ease with which arbitral awards can be enforced as a consequence of the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards (the ‘New York Convention’), in cross-border litigation the enforcement of judgments is largely left to national or regional, arrangements,¹¹⁰ and in some jurisdictions, proceedings need to be re-litigated in order for enforcement to take effect.¹¹¹

The enforceability of judgments as a significant hindrance to cross-border litigation is supported by empirical research. Burford Capital’s 2016 Judgment Enforcement Survey reported that 58% of corporations have not been paid the full value of judgments in the last five years and 74% of in-house executives say ease and likelihood of recoverability is the most important factor influencing whether to pursue litigation/arbitration.¹¹²

For decades the Hague Conference on Private International Law (‘HCCH’) has sought to create a global convention regulating international jurisdiction and the recognition and enforcement of foreign judgments in civil or commercial matters (‘the Judgments Project’). This task has not been without challenges,¹¹³ but, in recent years, the Judgments Project gained momentum.

In 2005, the HCCH concluded the Convention on Choice of Court Agreements, which is intended to be the litigation equivalent of the New York Convention as it facilitates the recognition and enforcement of judgments rendered by courts chosen in exclusive choice of court agreements.¹¹⁴ It effectively provides uniform rules, reducing the risks inherent in international litigation, such as the risk of not having choice of court agreements respected which often results in duplicative proceedings in several different jurisdictions. This Convention, which entered into force on 1 October 2015 with the approval of the Convention by the EU, is now in force between Mexico, Singapore,¹¹⁵ all EU Member States, the UK and Montenegro. It has also been signed by China, the US, North Macedonia and Ukraine.¹¹⁶

In July of 2019, the HCCH concluded a Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, which is a much broader instrument.¹¹⁷ Among a wide-range of judgments ruling on civil or commercial matters pursuant to a long list of indirect grounds of jurisdiction,¹¹⁸ it provides for the recognition and enforcement of judgments rendered pursuant to non-exclusive jurisdiction clauses, such as asymmetric jurisdiction clauses,¹¹⁹ which are very common in international banking documents. Thus, relevantly for the purposes of increasing the popularity of commercial litigation vis-à-vis arbitration, both Conventions provide a complete package on the recognition and enforcement of foreign judgments rendered in accordance with choice of court agreements, albeit both instruments provide for a number of subject matter carve outs from scope.

Of note is the fact that these Conventions are the first global conventions that will effectively provide for the enforcement of non-money judgments. Where a party is seeking specific performance, or injunctive relief of some kind, arbitration has a significant advantage over litigation because arbitral awards providing for nonmonetary relief are enforceable, whereas in a significant number of jurisdictions a non-money judgment can be difficult to enforce.¹²⁰ As more and more wealth takes the form of intellectual property, confidential information, data and so on, these forms of non-monetary relief are of increasing importance and enforceability is an increasing advantage.¹²¹

If the contribution of the New York Convention to the success of international commercial arbitration is anything to go by, these instruments have the potential to greatly increase the amount of crossborder litigation. Indeed, as noted by Menon CJ, the Convention on Choice of Court Agreements alone ‘holds the promise to be a game-changer in the international enforceability of court judgments’.¹²² However, like the New York Convention, the ability to effect change is entirely dependent on widespread ratification. If senior members of the judiciary and academics are serious about the concerns being expressed regarding the development of commercial law, they should be encouraging governments to consider joining these conventions.

Conclusion

The concern expressed by many judges and scholars that a decline in the number of cases coming before the courts is frustrating the development of the law has generated some debate and anxiety. This is both because the fear may be warranted and because it could lead to reforms that would ultimately make arbitration a less desirable form of dispute resolution. This article has attempted to examine some of the underlying assumptions inherent in this debate, i.e. whether court decisions are as important to the development of the law as they once were, and whether there really is a decline in the number of cases coming before the courts that can reliably be linked to the popularity of arbitration. It is apparent from the available data that no such conclusion can be drawn.

Despite this finding, and because the perception remains that the popularity of arbitration is frustrating the development of commercial law, this article examined proposals for reforming commercial arbitration in order to foster the development of commercial litigation. Variations to those proposals were suggested in the form of allowing direct appeals to higher courts, and an opt-in confidentiality regime which would provide for the increased publication of awards. It was suggested that while it cannot be guaranteed that arbitral awards will be directly relied upon by the courts in a way that would guarantee the development of the law, the publication of awards would indirectly assist by informing academic works that are increasingly relied upon by the courts. Finally, bearing in mind the factors said to contribute to the development of commercial arbitration, this article surveyed some of the developments and reforms that could enhance litigation’s attractiveness, namely (i) the development of international commercial courts, features of which resemble the characteristics of commercial arbitration; (ii) enhanced judicial cooperation with a view to streamlining procedures; and (iii) the conclusion of conventions to ensure the effective recognition and enforcement of foreign judgments. Championing these developments would go a long way towards attracting international commercial parties to resolve their disputes in the courts

In the context of the present debate it is apposite to make one final observation. Historically there has been a trend towards pitting arbitration against litigation. However, the reality is that both forms of dispute resolution are reliant upon one another, and there is room and need for both. It is clear that absent support from the court, arbitration would be far less likely to offer parties an attractive alternative to litigation. Similarly, without arbitration and other forms of ADR, the courts would be overburdened with cases. Indeed, one of the main reasons behind the development of ADR was to provide parties with alternative means to resolve their disputes in a way that would foster access to justice,¹²³ and enable the civil justice system to operate more efficiently.

The difficulty is thus encouraging both forms of dispute resolution, but at the same time ensuring an appropriate balance. In the context of this paper that would mean making certain that party autonomy is respected where appropriate, and that there is a steady flow of court-rendered judgments for the benefit of the development of the commercial law, if that is deemed necessary as methods to develop the law currently stand.

This is best achieved by obtaining and analysing empirical data identifying trends in litigation and arbitration, considering the relative merits of each form of dispute resolution, and keeping abreast of relevant global developments in international dispute resolution generally. On that basis, reforms can be studied and adopted. Such an approach will serve to reinforce the essential purpose of the civil justice system by protecting the rights of citizens and businesses, fostering social order and economic growth and ensuring effective access to justice.¹²⁴