The arbitration community and the courts should work together to reduce the fragmentation of commercial disputes, Mr Justice Foxton, the former head of the London Commercial Court, told the 26th International Bar Association (IBA) Arbitration Day last week.
The synergies and challenges between arbitration and litigation – and their resolution – defined the opening sessions of the conference, which was held in London from 3-4 April.
Foxton delivered a detailed keynote address on the fragmentation of commercial disputes and the challenges for arbitration and the courts, which mixed legal analysis with practical suggestions for reform.
Foxton suggested how the arbitration community and the courts should seek to “accommodate increasingly complex commercial disputes in an essentially bilateral model”, with disputes “mapped on a complex nodal diagram” replete with complex contractual issues, multi-party provisions, tiered dispute resolution clauses and associated legal advisers.
However, the courts had “the most limited manoeuvring room in trying to avoid the fragmentation of a complex and interconnected dispute” when clients had requested arbitration to resolve part of a dispute, although solutions – such as an enforced stay – were controversial.
To avoid such fragmentation – and to enhance experience in managing the implications of complex commercial disputes – he called for arbitration to develop institutional powers in consolidating disputes, following the lead set by Singapore.
However, he acknowledged that “cross-institutional consolidation” had a “major stumbling block” in the right for parties to choose their arbitrators, which he called “one of the sacred cows of international arbitration”, although he noted that distinguished figures like the Chief Justice of Singapore, Sundaresh Menon, and Jan Paulsson, president of the Bahrain International Commercial Court, had advocated reform of that precept.
Foxton also advocated greater sophistication in drafting arbitration agreements to allow, in certain circumstances, for the “forced joinder” of third parties to an agreement, albeit as “a derogation from the principles of party autonomy and consent”. He noted such provisions “are not attractive to those who valued party choice of arbitrators”.
Thirdly, he reminded his audience that “arbitral tribunals, like courts, can stay the proceedings before them pending a determination elsewhere”.
Although English law requires arbitral tribunals to resolve disputes directly in front of them, with fewer tools than the courts to manage disputes simultaneously, there have been attempts in case law to establish case management powers to address appropriate issues, particularly in investor-state matters. Foxton said this offered one potential evolution, if a mildly controversial one, but with increasing currency.
He added: “Both the courts and the international arbitration community have a responsibility to try and ensure complex multi-party disputes are resolved as efficiently as possible.”
The major arbitral institutions “must lead the way, giving arbitral tribunals the power and confidence to make decisions that reflect the demands of both party autonomy and efficient dispute resolution”.
IBA Arbitration Day kicked off with welcomes from the chairs of the Arbitration Committee, Chiann Bao and Kate de Vejar Brown, the organising committee and IBA leadership, including IBA president-elect Claudio Vasco.
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