Implementation of international commercial arbitration mechanisms could significantly strengthen and increase trade in the Commonwealth.
Issues around dispute resolution are a barrier to international trade for many small and medium-sized businesses, and the cost of not having a robust framework could be millions of dollars in lost cross-border investment and missed opportunities for economic growth and development.
These are the key messages of a major new study on international commercial arbitration produced by the Commonwealth.
Commissioned in 2018 by senior officials of law ministers, the study set out to survey the contemporary landscape around the 53 Commonwealth countries and explore the socio-economic benefits that measures to enhance commercial arbitration could bring.
The study has been led by the Commonwealth’s Office of Civil and Criminal Justice Reform and developed by an expert group of law and trade specialists.
It has been informed by worldwide research and surveys of stakeholders including arbitrators, lawyers, judges, governments and chambers of commerce in every Commonwealth country.
The study recognises numerous challenges in the widespread use of international commercial arbitration, such as the need to build capacity, keeping costs down and increasing businesses’ understanding.
But it also makes several recommendations that could help overcome these and achieve the goal of driving intra-Commonwealth trade upwards towards projected targets of US$700 billion by next year and $2 trillion by 2030.
Chief among these is countries becoming party to the New York Convention on foreign arbitral awards and adopting a modern arbitration law based on the UNCITRAL (United Nations Commission on International Trade Law) model law.
The New York Convention provides the framework for the enforcement of arbitration agreements and is regarded as the most important international instrument for the practice and development of international commercial arbitration. At present, 161 countries have acceded to it, but 16 Commonwealth jurisdictions have not.
The Commonwealth study found 58 per cent of member countries do not have an international arbitration framework that reflects modern best practice, while a small number of countries do not have a legislative framework for arbitration at all.
Having been endorsed by Commonwealth law ministers at their biennial meeting in Sri Lanka last month, the study will be launched as a major Commonwealth product in 2020.
Matthew Moorhead, acting head of the OCCJR, told an event held at the British Institute of International and Comparative Law to introduce the study that the 600-plus-page report will be developed into a digital product for people to use.
“It is an immensely useful resource for finding out how arbitration works in every Commonwealth country, full of interesting and valuable information,” he told the audience of law and arbitration professionals.
Experts in these fields applauded the study, and discussed its findings.
The study was welcomed as a “wonderful resource” to drive discussion and development in cross-border dispute resolution methods.
Robin Hayden, from the Chartered Institute of Arbitrators, said: “We’ve been delighted to support this study and it really adds greatly to the literature that’s out there currently.
“In particular we welcome the focus of this study on jurisdictions that do not currently have very well developed sectors in international commercial arbitration.”
She added: “We’d love to keep speaking with the Commonwealth and see what we can do together.”