Author: Loukas Mistelis*
Published: December 2009
I. INTRODUCTORY REMARKS
Settlement in international arbitration has been a topic at the forefront of discussion amongst scholars and practitioners for the last twenty years and the 2008 School of International Arbitration survey sponsored by Pricewaterhouse- Coopers (the “2008 SIA/PwC Survey”) confirms the importance of the topic. Forms of dispute resolution combining arbitration with settlement techniques (such as med-arb and combined mediation and arbitration) exist in many legal cultures and can be found in so-called Chinese, German, and Swiss-style international arbitrations; Australia, Canada, Hong Kong and Japan have actually enacted arbitration laws that contain med-arb provisions. This dynamic led the International Council of Commercial Arbitration (“ICCA”) to look more closely at the use of settlement techniques in arbitration in its Beijing Congress in 2004 and the Centre for Effective Dispute Resolution in the UK (“CEDR”) to explore the issue of Settlement in International Arbitration.
The 2008 SIA/PwC Survey explores more specifically settlement as a means of enforcement of claims in arbitration and arbitration awards and looks at settlement before an arbitration award has been rendered and even settlement in lieu of enforcement, i.e., settlement after an award has been rendered. Here are some of the more intriguing results, in addition to the very specific ones on settlement, which have a bearing on this paper:
• the overwhelming majority (92%) of arbitration cases are “successfully resolved at some stage through the arbitration proceedings;” that is 27% by settlement without an award; 7% by settlement with an award by consent; 47% by awards voluntarily complied with; 11% by awards and subsequent enforcement proceedings; and then the outlying 8% — 6% by awards followed by litigation; and 2% by settlement followed by litigation.
• in the 11% of the cases where enforcement was needed, only 19% of corporations reported difficulties in enforcing awards, and 70% of these difficulties related to the party not prevailing in the arbitration being a “loser” and not having assets or the fact that the losing party was elusive so that identification of assets was problematic;
• for the majority of companies who have to enforce, the enforcement and execution process takes less than a year, with 44% recovering the full amount of the award and 60% recovering 76% or more of the award.
*Special Section on the 2008 Survey on Corporate Attitudes Towards Recognition and Enforcement of International Arbitral Awards
**Loukas Mistelis, LLB (Hons, Athens), MLE (magna cum laude), Dr. Iuris (summa cum laude) (Hanover), MCIArb, Advocate, is the Clive M. Schmitthoff Professor of Transnational Commercial Law and Arbitration, and Director of the School of International Arbitration, Centre for Commercial Law Studies, Queen Mary University of London.