A new report, released on 9 November 2016 by the International Chamber of Commerce, offers an unprecedented insight into the advantages of arbitrating banking disputes and gives an overview of perceptions and experiences financial institutions have with international arbitration.
Traditionally banking and finance sectors have used court litigation to solve disputes, but in the wake of a changing regulatory environment and the global financial crisis of 2008, financial institutions have increasingly turned to international arbitration.
The new report demonstrates that arbitration is an effective and suitable mechanism to resolve finance disputes, but it nevertheless, appears that international arbitration is not yet used to its full potential due to, among other things, misperceptions about the process and insufficient awareness of how the flexibility that international arbitration offers can serve the resolution of disputes in the banking and finance sector.
The Report unveils findings based on information collected on a wide range of banking and financial sectors and products – spanning all corporate and investment banking financing, capital markets, asset management and advisory mandate fields – and in-depth interviews conducted with over 50 leading financial institutions.
A series of recommendations are made for financial institutions to tailor their needs to the arbitration process.
One of the key benefits of international arbitration is the flexibility it gives parties to tailor the arbitral procedure to their needs – both when drafting their dispute resolution clause and during the arbitration process.
“One of the key benefits of international arbitration is the flexibility it gives parties to tailor the arbitral procedure to their needs – both when drafting their dispute resolution clause and during the arbitration process,” the report states.
The recommendations outline how clauses can be amended to deal with confidentiality, and address situations such as complex and multiparty arbitrations, the possibility of providing for early dismissal and the availability of interim relief. It also reports that the existing techniques for controlling time and costs are also applicable to the financial sector and in what manner.
The Report and its recommendations have been designed as a toolkit for financial institutions when deciding when, where and how to arbitrate their disputes. It offers credit committees and risk departments the necessary information to decide when to arbitrate and how to assess the risk implications.
This report is the linchpin of a new approach to dispute risk management in international banking and finance.
“This report is the linchpin of a new approach to dispute risk management in international banking and finance.” said Co-chair of the ICC Task Force Claudia Salomon.
Ms Salomon and Georges Affaki, co-chaired the Task Force of the ICC Commission on Arbitration and ADR responsible for producing the report, which received strong support from the ICC Banking Commission. The Banking Commission was well represented in the task force membership, composed of over 100 bank officers and arbitration practitioners from a wide range of geographic, cultural and legal backgrounds.
Task force work was divided into workstreams led by Jean-François Adelle,Arnaud de la Cotardière.
Whitney Debevoise, Carine Dupeyron, Christian Duve, Julien Fouret, Beata Gessel-Kalinowska, Sara Hall, Grant Hanessian, Samaa Haridi, Duarte Henriques, Henri-Paul Lemaître, Timothy Lindsay, Charles Nairac, Patricia Peterson, Heinz Rindler, Daniel Schimmel, Kenji Tagaya, Daniel Valls Figueras, Fred Vroom and Mohamed S.E. Abdel Wahab.
The Commission’s leadership was represented by Annet van Hooft and Christopher Newmark.
The report was officially unveiled at a launch event in Rome on Tuesday 8 November 2016, on the eve of the ICC Banking Commission’s technical meeting.
The full report is available in hard copy upon request and can be downloaded from the ICC website here.