In/Formalisation and Glocalisation of International Commercial Arbitration and Investment Treaty Arbitration in Asia

Formalisation and Flexibilisation in Dispute Resolution, J. Zekoll, M. Baelz, I. Amelung, eds, Brill, The Netherlands, 2014

Sydney Law School Research Paper No. 17/47

21 Pages Posted: 16 Jun 2017

See all articles by Luke R. Nottage

Luke R. Nottage

The University of Sydney Law School; The University of Sydney - Australian Network for Japanese Law

Date Written: 2014

Abstract

International arbitration, especially International Commercial Arbitration (ICA) of disputes among businesses, has experienced a dramatic diffusion from West to East over the last decade. Yet Section 2 of this paper begins by outlining a seemingly perennial tension between informality and formality (the ‘in/formalization’ tension), arguably linked respectively to more global or ‘internationalist’ versus more local or national approaches to dispute resolution by means of ICA (the ‘glocalization’ tension). Drawing on recent empirical studies, Sub-section 2.1 confirms the view expressed in 2012 by (now Chief Justice) Menon of Singapore that delays and especially costs are escalating in ICA. This both reflects and promotes formalization. For example, parties and legal experts are forced to become much careful and elaborate when drafting arbitration agreements, rules and legislation. Arbitral proceedings generate ever-growing volumes of submissions and documentary evidence. Hearings become more formalized. Challenges to arbitrators are more common. Awards become more detailed. Yet court proceedings are quite frequent. Sub-section 2.2 suggests that this phenomenon may not be due simply to the growing complexity of cross-border business deals, and consequent disputes, but also to a major development that even Menon did not directly broach. There has been a dramatic worldwide expansion of (US- and UK-based) international law firms, and the emergence of large home-grown law firms in Asia, both typically operating on a ‘billable hours’ model at least for cross-border dispute resolution work. This meshes with a tradition of confidentiality in ICA that exacerbates information asymmetries and other issues, making it unlikely that the usual market forces of supply and demand will significantly dampen delays and legal fees (the major component of ICA costs). Section 3 argues that these developments in ICA are particularly problematic as large law firms increasingly move into the somewhat overlapping yet distinct field of treaty-based Investor-State Arbitration (ISA). The latter has only recently found general acceptance in the Asian region, and concerns have recently (re-)emerged especially in India, Indonesia and even Australia, as foreign investors have launched high-profile claims of expropriation or other substantive investment treaty violations. In. Section 4 concludes, however, that moves underway towards greater transparency in ISA can help reduce some of these problems. Somewhat ironically, they are likely to persist in the world of ICA despite the growing concerns of users themselves, including a new wave of Asian companies that have started to resolve commercial disputes through international arbitration.

Keywords: Dispute Resolution, Legal Profession, International Commercial Arbitration, Investment Treaty Arbitration, Asian Law

JEL Classification: K10, K30, K33

Suggested Citation

Nottage, Luke R., In/Formalisation and Glocalisation of International Commercial Arbitration and Investment Treaty Arbitration in Asia (2014). Formalisation and Flexibilisation in Dispute Resolution, J. Zekoll, M. Baelz, I. Amelung, eds, Brill, The Netherlands, 2014; Sydney Law School Research Paper No. 17/47. Available at SSRN: https://ssrn.com/abstract=2987674

Luke R. Nottage (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
Australia

The University of Sydney - Australian Network for Japanese Law

Room 640, Building F10, Eastern Avenue
Sydney, NSW 2006
Australia

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