New Study Reports Multinational Corporations Prefer International Arbitration to Litigation

Dispute Resolution Journal, May-July 2006 | Go to article overview

New Study Reports Multinational Corporations Prefer International Arbitration to Litigation


A new report sponsored by PricewaterhouseCoopers based on research by the School of International Arbitration at Queen Mary, University of London, confirms a number of beliefs about international arbitration and challenges others. For example, it confirms the perception that in-house counsel believe that arbitration has significant advantages that outweigh its disadvantages. On the other hand, it challenges the belief that corporations do not appreciate the finality of arbitration and would like to be able to appeal an arbitration award or otherwise obtain review on the merits.

There are findings in the report that should interest companies involved in the global marketplace, as well as international arbitration providers and international practitioners and arbitrators.

The subjects of this study were inhouse counsel at 143 multinational corporations with revenues topping $500 million. The research was conducted during a six-month period and involved two parts: an online survey questionnaire (completed by 103 respondents) and 40 in-depth interviews. The researchers asked the respondents a variety of questions about corporate attitudes toward international arbitration and cross-border litigation, the perceived advantages and disadvantages of arbitration, their use of dispute resolution clauses in contracts, the types of arbitrators preferred, and the outlook for the continued use of international arbitration in the future, among other issues.

There are several findings that auger well for the international arbitration community. One is that a significant majority of respondents (73% of those who have experience with international arbitration and transnational litigation) said they prefer to use international arbitration rather than litigate in national courts. Of these 29% preferred arbitration alone while 44% preferred it in combination with a multi-step ADR clause. By contrast, only a minority (11%) preferred international litigation.

According to the report, the companies that prefer litigation tend to do business mainly in developed countries and have confidence in the national court, or they are based in developing countries and lack experience with international arbitration.

Another finding is that over 75% of the companies that use international arbitration use administered arbitration under the auspices of an established arbitration institution. The most often cited reasons for this are reputation of the institution, convenience, familiarity with proceedings, an understanding of the costs and fees.

The report also indicates that international arbitration will continue to be an important process in the future. …

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