Survey: flexibility, enforceability, privacy and choice of arbitrators are main attractions

The vast majority of general counsel prefer international arbitration to litigation, according to a report from accountancy firm PricewaterhouseCoopers (PwC).


Of the nearly 150 in-house lawyers surveyed, some 73% favoured arbitration to obtaining redress through national courts. They cited the flexibility of procedure, the enforceability of awards, privacy and the opportunity to choose the arbitrators to suit the dispute as its main attractions.


Some 95% of those polled expect to continue using international arbitration, and believe the number of cases in which it is employed will increase. But though nine out of ten respondents feel 'well-informed' about it, they said they wanted to receive more training.


However, the PwC report revealed that international arbitration and alternative dispute resolution are not the cheaper options they have been claimed to be in the past. Companies are nevertheless getting enough out of arbitration to justify the often similar or even greater cost.


The report - conducted for PwC by the school of international arbitration at Queen Mary, University of London - found that England, Switzerland, France and the US are the most popular venues for international arbitration, with legal considerations the most important reason for choosing a particular venue.


But the report claimed that the importance attached by many respondents to the convenience of the location suggests that the 'tactical significance of the seat of arbitration' is not always fully appreciated. Well-crafted arbitration clauses can therefore give a party an advantage if a dispute arises, it suggested.


Nick Fletcher, a partner in Clifford Chance's international arbitration group, said the results backed what he was seeing day to day. 'It's interesting that [clients] perceive the advantages and what arbitration can give them in very much the same way that we as practitioners see it,' he said.


Mr Fletcher agreed that the jurisdiction under which the arbitration is carried out is more important than is often recognised, and that cost is not a primary reason to go into arbitration. But 'it is incumbent on practitioners and arbitrators to get together to ensure that individual disputes [work out] in as cost-effective and expeditious a manner as possible', he said.


Allan Connarty, director of operations at the Chartered Institute of Arbitrators, said one 'really significant outcome' of the report related to the companies' choice of legal adviser. Three-quarters of respondents said they retain specialist arbitration firms or firms with a substantial international arbitration practice. Just 25% use their regular external counsel.


'[It is interesting] to see the value corporations put on firms who do specialist advisory functions,' he said, 'as opposed to using in-house staff or a less experienced firm.'


Elizabeth Birch, a barrister who has been arbitrating since 1992 on commercial and international disputes, also backed the report's findings. 'The feeling is that there is an increased interest in international arbitration and other dispute resolution processes for all the reasons shown,' she said.