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Focus: How do global arbitration bodies compare?

A look at the various organizations competing for Canadian business
|Written By Julius Melnitzer

The three major international arbitration institutions that are fiercely competitive with the courts are also, as it turns out, in just as much competition among themselves.

“There is a significant amount of competition among the International Court of Arbitration of the International Chamber of Commerce, the International Dispute Resolution Centre of the American Arbitration Association,  and the London Court of International Arbitration,” says Barry Leon of Ottawa’s Perley-Robertson Hill & McDougall LLP, a lawyer who’s about to move to the Caribbean to serve as a judge.

“And one of the things they compete on are their rules of procedure, which are related to the process and the speed and the cost.”

Like law firms, arbitration institutions want to be innovative in order to satisfy corporate counsel who seek efficiency and cost-effectiveness.

“Each of the institutions is looking for ways to get out of the gate first,” says Leon.

The International Dispute Resolution Centre, for example, followed Israel’s lead by creating an arbitration appeal panel and has led the way in customizing products for different industries.

“But if those who aren’t first out of the gate see anything innovative out there, they tend to copy it,” says Leon.

In 2012, the International Chamber of Commerce released updated arbitration rules that represented the most significant changes ever to its procedures. More than two years later, the International Dispute Resolution Centre produced its own major revisions with the London Court of International Arbitration following in October 2014.

While all three sets of international arbitration rules contain many similar provisions, there are  differences both in their innovations and some of their traditional rules, including the deemed start date for an arbitration; the default deadline for a response; the default number of arbitrators; the default appointment of arbitrators; the default restrictions on arbitrators where the parties are of different nationalities; the time limits for challenging arbitration; joinder; consolidation; the tribunal’s discretion to order interim measures; confidentiality; the time limit for issuing awards; expedited and summary procedures; availability of an emergency arbitrator; and cost allocation among the parties.

“Overall, the ICC is known for its heavy dose of quality control and its efficient processing of issues at the front end,” says Leon.

“On the other hand, there is some variation in the quality of the arbitrators on the ICC list.”

As far as fees go, the International Dispute Resolution Centre posts hourly rates for its arbitrators while the International Chamber of Commerce provides a fee range with the final determination based on the efficiency of the arbitration as determined by the International Court of Arbitration.

“Generally speaking, the IDRC is relatively inexpensive while the ICC is relatively expensive,” says Joel Richler of Blake Cassels & Graydon LLP’s Toronto office.

In 2013, the International Chamber of Commerce, facing a shrinking percentage of cases from North America, opened a New York office to serve the Canadian and U.S. international arbitration markets.

For its part, the International Dispute Resolution Centre, which with the London Court of International Arbitration is the institute of choice for the Canadian business community’s international arbitrations, has taken aim at the Canadian domestic arbitration market. Opportunity abounds because Canadian business is unusual in its tendency to resort to ad hoc arbitrations.

“The reason we have so much ad hoc domestic arbitration is because of the relative immaturity of the Canadian system as opposed to the U.S. and European system,” says Richler.

On the whole, the rules of the international institutions aren’t a good fit with domestic arbitrations. On Jan. 1, however, rules developed by the International Dispute Resolution Centre for domestic arbitrations in Canada went into effect. “IDRC wants to be the institute of choice for domestic arbitration in Canada,” says Richler. “They are trying to compete with the ADR Institute of Canada, which is the only other similar organization to which Canadians can resort.”

While many lawyers and clients prefer ad hoc arbitration because they believe the institutions aren’t doing enough to drive down cost and delay, Richler says there are distinct disadvantages to proceeding on that basis.

“I find that there are significant inefficiencies built into the process if you have to start it by agreeing on a set of rules rather than having a set of rules in place,” he says.

“Otherwise, there’s no governing body to approach if the arbitrator is not doing his or her job efficiently or quickly enough.”

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