SURVEY: awards honoured in vast majority of cases

Fears that commercial arbitration would be unenforceable across national boundaries have proved groundless, according to a survey by academic experts.

Only 19% of corporations who took part in the study had encountered difficulties when seeking to enforce foreign arbitral awards, the study by the school of international arbitration at Queen Mary, University of London, found.

China, India and Russia are the countries perceived as most hostile to enforcement.

International arbitration is the most commonly used dispute resolution mechanism in the shipping, oil and gas, and insurance industries; 88% of corporate counsel said they had used it at least once.

The study marks the 50th anniversary of the 1958 New York convention on foreign arbitration awards, which gives international arbitration some teeth. More than 140 states have adopted the convention.

Voluntary compliance with a settlement is the most likely outcome.

Once an award has been rendered, the vast majority of parties appear to comply. Some 84% of respondents said that the opposing party had honoured the award in more than 76% of cases. Only 3% reported that an award debtor had failed to comply.

The study, carried out by a team led by Professor Loukas Mistelis and PricewaterhouseCoopers, collected data on enforcement practice from 130 arbitration users from Fortune 500 companies.

Mistelis said the findings confirm 'widely held perceptions, such as the high rate of voluntary compliance with awards.'