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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Arbitration
A record 966 new cases were filed with the ICC International Court of Arbitration in 2016. This unprecedented 20% growth is explained by continuing expansion in all continents, especially North and Central America and Africa, and in all sectors of industry. These figures also factor an influx of small claims in a Californian collective action. The widening use of ICC arbitration demonstrates the versatility of the ICC Arbitration Rules, which leave the parties free to adapt aspects of the procedure to their particular needs while ensuring that cases are conducted efficiently and in accordance with best practices.
Parties
A consequence of the increased filings, the number of parties reached a record level, too. Of the 3,099 parties involved in the cases filed in 2016, 39% were claimants and 61% respondents. The year saw an increase in the number of multiparty cases, with nearly half of all new cases (43%) involving three or more parties. Of these, 23% involved more than five parties, with one case marshalling as many as forty-six parties. The most common configuration in multiparty cases was one claimant versus several respondents (68%). Less common were cases brought by several claimants against one respondent (18%), and cases involving both multiple claimants and respondents (14%).
Geographical origins
The 3,099 parties in the 2016 filings came from 137 countries and independent territories worldwide. Compared to 2015, the number of parties from the Americas more than doubled, while African parties grew by 50% and South and East Asian parties by 22%, both exceeding previous records.
Most frequent nationalities among parties in 2016 filings:
The number of Sub-Saharan nationalities represented in 2016 filings rose to 29, from 20 in 2015. Nigeria fielded the largest number of parties, doubling previous levels due to multiparty cases. The involvement of North African parties, especially from Morocco and Tunisia, was also stronger than in recent years.
2016 was an exceptional year, with more than twice as many parties as in 2015. This was due to the unusual influx of small multiparty cases involving parties from the United States, Belize and the US Virgin Islands. No less remarkable was the growing involvement of parties from Brazil, where arbitration now attracts as many parties as in the traditional European strongholds of France and Germany. Mexican parties, too, reached a record level. Between them Brazilian and Mexican parties accounted for 67% of all Latin American parties.
Parties from Central and West Asia returned to former levels after a peak in 2015 owing to a case involving multiple Israeli parties. By contrast, there was a surge in parties from South East Asia, due largely to the increased presence of South Korean parties and, to a lesser degree, Thai parties, despite a small drop in the number of parties from mainland China.
The European breakdown remained similar to previous years, with French and German parties maintaining their traditional lead. The overall number of parties from Central and East Europe remained stable despite some country fluctuations, including a small decrease in Greek and Romanian parties.
International vs domestic cases
Four out of every five cases filed in 2016 were between parties from different countries, international dispute resolution being ICC's stock in trade. However, ICC each year also receives many domestic cases. The Latin American region accounted for approximately a quarter of all single-nationality cases filed during 2016, and those cases represented a third of all cases involving one or more Latin American parties. Central and West Asia also fielded a large proportion of domestic cases, with one in every five cases involving parties from that region being a single-nationality case. Two-thirds of 2016 filings involved parties not only from different countries, but from different regions, testifying to ICC's capacity to handle cases involving contrasting cultures and legal traditions.
State and state-owned parties
Some 11% of cases filed in 2016 involved states or parties under state ownership (parastatals). The majority of the 123 state and parastatal parties in these filings came from countries with state-led economies, as reflected in the regional distribution shown below.
Investor-state disputes
Seven cases were filed during the year on the basis of bilateral investment treaties. Six of the disputes concerned investments made by Turkish parties in countries in Africa and Central Asia. The seventh case was brought by a Spanish investor against a host state in Central America. ICC was also requested to provide administrative services in an ad hoc arbitration under the UNCITRAL Arbitration Rules brought by Spanish investors against a Latin American state. Those services included acting as appointing authority, administering financial aspects of the proceedings, maintaining case records, and organising hearings. ICC will soon adopt revised rules setting out a clear framework for the provision of services in cases it does not itself administer (Rules of ICC as Appointing Authority in UNCITRAL or Other Ad Hoc Arbitration Proceedings).
ICC was also requested to act as appointing authority in a dispute involving an inter-governmental organisation in the Middle East.
Arbitral tribunals
1The number of arbitrators in ICC proceedings reached a record level in 2016, with a total of 1,411 appointments and confirmations. This rise of 7.5% compared to 2015 reflects the increased number of filings. The full effect of that increase has yet to be seen, however, given the interval between the filing of a case and the constitution of the tribunal.
The table below shows a breakdown of the 2016 appointments and confirmations by type of arbitrator and method of selection.
ICC tribunals are generally composed of either one or three arbitrators. The choice between a single or three-member tribunal was made by the parties in 86% of cases and in the remaining 14% of cases by the Court failing party agreement. The Court decided to constitute a three-member tribunal in 28% of cases and a single-member tribunal in 72% of cases. Parties, on the other hand, opted for a three member-tribunal in 59% of cases and a single-member tribunal in 41% of cases. Unusually, a case was filed in 2016 pursuant to an arbitration agreement that required the constitution of a five-member tribunal, four of whose members were to be nominated by each of the four parties and the fifth by the four co-arbitrators, once confirmed.
Before taking up office, arbitrators are required to confirm their independence in a statement of acceptance, availability, independence and impartiality. The ICC Court's recent efforts to encourage maximum transparency in proceedings and make arbitrators better aware of their disclosure obligations is reflected in a 30% increase in the number of arbitrators who made disclosures prior to being confirmed or appointed. During the year, the Court declined to confirm or appoint 50 arbitrators, 39 of whom had filed qualified statements of independence.
Once an arbitrator has been confirmed or appointed, an objection to his or her independence must be made by way of a challenge. The number of challenges filed in 2016, whether for impartiality, independence or other reasons, totalled 50, of which 5 were accepted by the Court. In the course of the year, 34 arbitrators resigned. A total of 33 replacements were made, following the resignation or death of an arbitrator, the filing of a successful challenge, at the request of the parties or, in one case, on the Court's own initiative.
The arbitrators appointed and confirmed in 2016 represented 76 different nationalities. The six most frequent nationalities were the same as in 2015, with British and US arbitrators accounting for over a quarter of all appointments and confirmations made during the year. The breakdown of arbitrators by region shows that 57% of all arbitrators originated from Europe (with a slightly larger proportion from Central and East Europe than in the previous year), 16% from North America, 12% from Latin America and the Caribbean, 13% from Asia and the Pacific and some 2% from Africa.
Most frequent nationalities:
Breakdown by country of origin and status:
In 2016, the number of appointments and confirmations of female arbitrators rose to 209, representing some 15% of all appointments and confirmations, from 136 in 2015 and less than 100 five years earlier2 . Although 2016 saw a significant increase in the number of female arbitrators nominated by parties (up 62% on 2015), they still represented less than half (41%) of all female arbitrators. A larger proportion (46%) of female arbitrators were appointed by the Court (either directly or upon the proposal of an ICC National Committee or Group). The remaining female arbitrators were chosen by co-arbitrators as presidents of three-member tribunals (12%) or by another appointing authority (1%).
Women arbitrators were appointed or confirmed as sole arbitrators (33%), co-arbitrators (43%) and tribunal presidents (24%). Of all sole arbitrators appointed or confirmed during the year, 24% were women, whereas 14% of presidents and 12% of co-arbitrators were women.
The table below gives a breakdown of male/female arbitrators appointed or confirmed in 2016 by region:
It is also noteworthy that amongst the 41 new Court members appointed by the ICC World Council at its June 2017 session in Nairobi, 22% are women, bringing the proportion of women in the Court to 21%.
Places of arbitration
In 2016, ICC arbitrations were seated in 106 different cities spread over 60 countries in all parts of the world. The number of European countries chosen as places of arbitration dropped slightly from 23 to 21, while the number of African countries rose from 2 to 6, and the number of Latin and Central American countries from 11 to 13. Apart from the exceptional number of cases in which Belize was chosen as the place of arbitration and some minor fluctuations elsewhere, the frequency with which seats were selected followed a similar pattern to previous years. A notable newcomer in the top ten cities was Doha in Qatar.
Most frequently selected cities in 2016:
Countries selected in 2016:
Of the 80 cases with seats in the USA, 41 were in the state of New York, 10 in California, 10 in Texas, seven in Florida, two in each of the states of Illinois, Washington and Washington D.C., and one in each of the states of Arizona, Hawaii, Oregon, Pennsylvania, Virginia and Wyoming. The Canadian seats were in the provinces of Ontario (five cases), Alberta and Quebec (three cases each). Hong Kong was the place of arbitration in all eight cases seated in China.
Although in the great majority of cases the place of arbitration is chosen by the parties, the ICC Court is sometimes required to fix the place of arbitration failing agreement between the parties. It did so in 15% of cases in 2016, which was slightly higher than in 2015. It should be noted that when selecting a particular city, the Court sometimes relies on a preference one or more parties has expressed for the country in which that city is situated.
Choice of law
In 90% of the disputes referred to ICC arbitration in 2016 the parties had included a choice-of-law clause in their contracts. In 97% of cases they chose national laws, and their choices covered the laws of 97 different nations. The laws of England and the USA remained the most frequent choices. They were closely followed by the laws of Belize, reflecting the upsurge in the number of parties from Belize. Likewise, the greater number of parties from Brazil and Mexico was reflected in a rise in the number of contracts providing for Brazilian or Mexican law.
In those contracts in which the parties chose US laws, their choices covered the laws of 17 states. The most frequent choice was New York state law, followed by the laws of California, Delaware and Texas. Other less frequent choices included the laws of Arizona, Connecticut, Florida, Illinois, Indiana, Iowa, Massachusetts, Missouri, Pennsylvania, Virginia, Washington, Wisconsin and Wyoming. In Canada, parties' choices covered the laws of Alberta, British Columbia, Ontario and Quebec, and in Australia the laws of Queensland and Western Australia. In China, the laws of the mainland were chosen almost as often as those of Hong Kong.
Some 3% of contracts provided for the application of rules or instruments other than national laws. These included the UN Convention on Contracts for the International Sale of Goods (six contracts), the UNIDROIT Principles of International Commercial Contracts (6 contracts), lex mercatoria (three contracts), general principles of law (three contracts) and Incoterms (2 contracts), as well as trade rules in specific sectors such as agriculture and the petroleum industry.
It should be noted that the positive choices of law made by the parties in their contracts do not necessarily correspond to the law actually applied to the merits of the dispute, as this may also depend on decisions made by the arbitrators after the proceedings have begun. When making such decisions, arbitrators may also need to take account of negative choices, whereby parties exclude the application of certain rules of law.
Nature of the disputes
The cases filed in 2016 covered a wide gamut of business sectors, ranging from agriculture to heavy industry and manufacturing, as well as public sector activities and service industries. As in the past, the construction and engineering sector fielded the largest number of cases, almost equalled in 2016 by disputes related to the finance and insurance sector (approximately 20% of cases in each sector). Disputes relating to the energy sector were particularly numerous, too, accounting for 13% of cases.
Amounts in dispute
Although a large proportion of our caseload involved amounts in dispute below US$ 5 million (39% of pending cases at the end of 2016), the average value of ICC cases is much higher than that of any other arbitral institution, with the amount in dispute in cases pending at the end of 2016 averaging US$ 112,259,575. The introduction in 2017 of an expedited procedure now enables lower-value cases to be handled with greater time- and cost-efficiency than previously.
Breakdown of cases filed in 2016 according to amount in dispute:
Awards
A total of 479 awards were approved by the ICC Court during 2016. They included 305 final awards, 140 partial awards and 34 awards by consent. The proportion of partial awards (29%) was higher than in previous years, which may reflect an increasing trend to bifurcate proceedings. As a measure of the extraordinary increase in the activity of the Court over recent years, the annual number of awards approved has doubled in twenty years.
The awards approved in 2016 were drafted in a total of 12 languages. Although English remained the predominant language, the proportion of awards in English was slightly less than in 2015 at 76%. Other languages used were French (38 awards), Spanish (36 awards), Portuguese (15 awards), German (15 awards), Greek (three awards), Czech (two awards), Italian (two awards), Polish, Romanian, Russian and Thai (one award in each language). In addition, a bilingual award was rendered in French and English.
Of the 259 partial and final awards rendered by three-member tribunals, 86% were decided unanimously, leaving a total of 37 awards rendered by a majority of the tribunal members. Of these, 31 were accompanied by a dissenting opinion, which appeared in the award itself in seven cases and in a separate document in 23 cases. In the remaining case both co-arbitrators expressed dissenting opinions, one of which was in the award and the other in a separate document. In the six majority awards rendered without a dissenting opinion, the minority arbitrator remained unidentified in all but one case (where that arbitrator was the tribunal president). The majority of dissenting arbitrators whose identities were revealed had been nominated by a party (as opposed to being appointed by the ICC Court or other authority).
All awards are submitted to the ICC Court for scrutiny before being rendered. The ICC Arbitration Rules empower the Court to lay down modifications as to form and draw the tribunal's attention to points of substance when approving an award. It is extremely rare for the Court not to exercise this power, which is intended to enhance the quality and enforceability of the award. In 2016, only three out of 479 awards were approved by the Court without comment. A further 62 awards were returned to the arbitral tribunal for resubmission. Notwithstanding scrutiny, requests are sometimes received for awards to be corrected or interpreted by the arbitral tribunal after being issued. In 2016, 79 such requests were received, of which 42 led to the subsequent correction or interpretation of the award. When rejecting the other 37 requests, the tribunals sometimes added to their original awards an order relating to the costs of the correction/interpretation proceedings.
Emergency Arbitrator
The cases filed with the ICC Court in 2016 included 25 applications under the ICC Emergency Arbitrator Rules. Since their introduction in 2012, use of ICC's emergency arbitrator procedure, which allows parties to seek an urgent order prior to the constitution of the arbitral tribunal, has steadily increased. It attracts parties in all parts of the world. The cases filed in 2016 involved parties from 25 countries. Central and South America was the region most heavily represented, accounting for 30% of all parties.
The average time taken to complete the proceedings was 18 days. Of the 25 applications, six were granted in full or in part, and the remainder were dismissed or withdrawn. Over half of the applications came from the construction, engineering and energy sectors, mirroring the prominence of these sectors in ICC arbitration as a whole.
ICC as Appointing Authority
ICC was called upon as an appointing authority on 12 occasions in 2016. One request was for the appointment of an arbitrator in ad hoc proceedings under the UNCITRAL Arbitration Rules and six requests were for appointments in other ad hoc proceedings. In the remaining five cases, ICC was requested to decide on challenges of arbitrators both in proceedings under the UNCITRAL Rules (three cases) and in non-UNCITRAL proceedings (two cases). These cases were conducted under the Rules of ICC as Appointing Authority in UNCITRAL or Other Ad Hoc Arbitration Proceedings of 2004, which allow the ICC Court to offer services other than those relating strictly to appointments and challenges when agreed by the parties. The 2016 cases included a request for the administration of funds, for example. The 2004 Rules will soon be revised to provide a more comprehensive framework for the provision of services in ad hoc proceedings.
Mediation
In 2016, the ICC International Centre for ADR registered 32 new filings under the ICC Mediation Rules. The term 'mediation' as used in the Rules includes not only mediation but any other amicable settlement technique or combination of techniques the parties may prefer. In the 2016 filings, apart from one request for conciliation and another for a mini-trial, parties opted overwhelmingly for mediation.
The 81 parties in the 2016 filings came from 32 countries and independent territories across the world, as listed below.
Three of the parties were states or parastatals (two from Sub-Saharan Africa and one from Latin America).
A total of 23 neutrals of 10 different nationalities (Belgium, Brazil, Canada, Egypt, France, Germany, Spain, Switzerland, United Kingdom, USA) were nominated or appointed in those cases in which settlement proceedings took place. Six of the neutrals were women and 17 were men. In those cases settled with the assistance of neutrals during the year, the settlement was achieved within an average of sixty days of the file being transmitted to the neutral. In several cases, no neutral was required as the parties settled their dispute themselves.
The disputes concerned a wide range of business sectors. Energy disputes were the most frequent, accounting for almost a fifth of all cases, followed by disputes relating to industrial equipment and facilities, construction, finance, telecommunications and transport. The amounts in dispute ranged from just over US$ 200,000 to just under US$ 90 million. The costs of the proceedings (ICC administrative expenses and the fees and expenses of the neutral) averaged approximately US$ 16,000.
Experts
A total of 27 requests for services related to experts were filed with the ICC International Centre for ADR in 2016. Of these, 15 (56%) were for the proposal of experts, seven (26%) for the appointment of experts, and five (18%) for the administration of expert proceedings. Six of the requests for the proposal of experts were made by ICC arbitral tribunals (for which the service is provided free of charge); one proposal was requested by a non-ICC arbitral tribunal; while all other requests were filed by parties.
The 60 parties involved in the 2016 filings came from 27 countries. They included eight state or state-owned parties in Africa, Asia and Europe. As in previous years, the largest demand for the Centre's expert services came from European parties.
Geographical origins of parties:
The 2016 filings led to the proposal or appointment of 30 experts of 17 nationalities (in some cases more than one expert was proposed or appointed). The average time taken to propose or appoint the experts was eighty days.
Geographical origins of experts:
Over half of the requests filed in 2016 related to technical expertise, with the remainder equally split between financial expertise and legal expertise. The business sectors in which the expertise was needed were wide-ranging. As in other areas of ICC dispute resolution, demand from the construction sector was highest, but the manufacturing, transport and energy sectors were also strongly represented.
DOCDEX
ICC DODEX is a rapid, document-based dispute resolution service for trade finance. It was initially designed for letters of credit, but has since been extended to include other instruments, undertakings and agreements related to trade finance. Use of the service has traditionally been strongest in Asia. This was again the case in 2016, with two of the three filings involving parties from South East Asia and the Pacific (Australia, Hong Kong, Indonesia and the Philippines). The parties in the third case were from Turkey.
Disputes are decided by a panel of three experts, normally of different nationalities. The experts appointed in the cases filed in 2016 were from Australia, the Czech Republic, Germany, India, Italy, South Africa, Sweden and the United Kingdom (two experts), illustrating the breadth of ICC's network of experts.
1 For a commentary on ICC arbitral tribunals, see H. J. Samra & C. Azar, 'ICC Ushers in New Era of Transparency', ICC Dispute Resolution Bulletin 2017, issue 1, p.93.
2 For a detailed presentation of ICC gender statistics over several years, see M. Philippe, 'Diversity & Transparency - ICC Gender Statistics', TDM (2017).