Welcome to our annual review of the top trends in international arbitration for 2022
Freshfields Bruckhaus Deringer | February 2022
Welcome to our annual review of the top trends in international arbitration for 2022
This time last year, we hoped that 2021 would see the beginning of the end of the COVID-19 pandemic and the start of a global economic recovery. At the beginning of 2022, despite widespread vaccination programmes, the pandemic and resulting economic disruption continue to interfere with many fundamental aspects of life and business across the globe.
In this edition of our top trends publication, we explore some of the key themes that we predict will influence the arbitration landscape during the year ahead. The 10 trends covered in this year’s report have been identified by international arbitration specialists from across our global network.
In addition to the pandemic, there are a myriad of other political, economic and social factors impacting the world that our clients operate in, which are having knock-on effects on the substance and practice of arbitration. We have identified some of these general themes below, which are considered further in the individual trends:
- Growing environmental, social and governance (ESG) expectations of business and the implementation of broader climate change goals are expected to lead to an increase in ESG-related disputes being referred to arbitration (ESG and arbitration), not least in the energy and construction sectors as companies strive to implement net zero and global energy transition programmes over the coming years (Construction arbitration in the face of energy transition and climate change).
- The continuation of the global economic downturn is expected to lead to a further increase in the number of disputes across many sectors. Arbitral institutions reported a record number of cases for 2020 and this trend is likely to continue as businesses try to recoup some of their pandemic losses, exacerbated by the expiration of government protection schemes and agreements to defer or reschedule performance of debt (COVID-19 and the arbitration landscape). The effects of the pandemic are likely to catalyse interest in and use of third-party funding as companies adopt new strategies for liquidity and risk management (Developments in third-party funding).
- In the EU, the European Court of Justice (ECJ) has sought to further curtail investment protection. The ECJ has extended the historic decision in Achmea, which had declared arbitration clauses in intra-EU BITs incompatible with EU law, to intra-EU ECT arbitration and ad hoc arbitration clauses. We consider what steps investors can take to protect themselves going forward (Investment arbitration in the European Union).
- Mirroring increasing societal expectations on business mentioned above, the arbitration community has seen a marked increase in initiatives designed to improve professional, ethical and environmental standards in arbitration conduct and procedure, including those aimed at increasing the diversity and civility of arbitration (Emerging standards in international arbitration).
- Continued scepticism of ISDS has led to renewed efforts at pushing reform. The long-awaited revised ICSID Rules are due to be launched in 2022 with novel features such as a new fast-track arbitration procedure designed for investor-State disputes. Reform in the ISDS sphere follows extensive procedural reforms of rules aimed at making commercial arbitration more efficient and cost-effective over recent years (Drives towards greater efficiency).
- Accelerated digital transformation and innovation will continue to impact the disputes landscape over the year ahead with the rapid growth and globalisation of the tech sector. New product areas, such as cryptocurrency, blockchain and AI, for example, will inevitably give rise to new types of commercial disputes, while increased government action to regulate the big tech companies may also lead to an increasing number of tech-related investor-State disputes (Arbitration and the tech sector).
- Government involvement in the economy and interference with business is on the increase in other sectors too, including finance. Financial institutions are increasingly alive to the protections available under investment treaties in the event of government action that adversely affects their investments. We also explore recent developments in commercial arbitral procedure designed to make arbitration more attractive to the banking community (Financial institutions and arbitration).
- A rare example of government interference in arbitration procedure towards the end of last year concerned Dubai Decree 34 of 2021, which had the effect of making the Dubai International Arbitration Centre the only Dubai arbitral institution with authority to administer cases. We look at the resulting impact on arbitration in the region (Consolidating arbitration centres in the Middle East).
Read on to explore these trends in more detail. If you would like to discuss any of the topics covered in the report, please reach out to us, the authors of the trends or your usual Freshfields contact.
We look forward to navigating the challenges and opportunities presented by these developments with our clients during the year ahead.
