The LCIA 2020 Annual Casework Report
On 17 May 2021 the LCIA published its annual casework report for 2020 (the Report) which can be found here. It is evident from the Report that during the COVID-19 pandemic the LCIA has continued to thrive, with more disputes being referred to the LCIA in 2020 than in any previous year. The LCIA’s caseload has also continued to be highly international in nature, and varied in terms of subject-matter and sector. The Report also highlights how the pandemic was a catalyst for change in the conduct of arbitration, with electronic communication becoming the default method of communication between parties, the arbitral tribunal and the LCIA, and hearings being held virtually.
We have summarised below some of the key trends which emerge from the Report.
Continued growth in caseload: The number of referrals to the LCIA reached a record-breaking high in 2020 with a total of 444 referrals, including 407 arbitrations under the LCIA Rules. This compares to the 395 total referrals (of which 346 were under the LCIA Rules) in 2019, representing an 18% increase on the year before and a doubling of referrals over the past decade. In 2020, the use of virtual hearings allowed more cases to proceed, and many parties cited COVID-19 as a cause of the dispute.
Rules changes: The LCIA updated its arbitration and mediation rules in 2020, with effect from 1 October 2020 (see our alert here for a summary of the main changes). The changes to the rules reflect developments in good practice amongst arbitration and mediation practitioners and mark a shift towards the primacy of electronic communication and the use of virtual hearings, including electronic communication with the parties by the LCIA and the tribunal, and the use of electronic signatures and awards. The pandemic also resulted in more parties proceeding on a documents-only basis, avoiding the need for a lengthy hearing and enhancing the overall efficiency of proceedings.
Of particular note is the introduction of express powers under Article 22.1(viii), pursuant to which a tribunal may issue an order or award providing for early determination of unmeritorious claims, defences and counter-claims. Though there are no statistics in the Report on the use of Article 22.1(viii) so far, we await the 2021 casework report, to understand how willing parties and arbitral tribunals are to engage with this new provision.
A shake up of the leading industry sectors: During 2020 there was a shift in the order of the three industry sectors to which the majority of disputes related (disputes associated with these three sectors represented 68% of all LCIA cases). The banking and finance sector dropped from first place to third, with the percentage of cases falling to 20%, down from 32% in 2019. The energy and resources sector represented the highest number of cases at 26% (up from 22% in 2019) and the transport and commodities sector recorded a jump from 15% in 2019 to 22% of cases in 2020. A common theme in transport and commodity cases has inevitably been the scope and impact of any relevant force majeure provisions.
The hospitality and leisure sector saw a 5% increase from 2019 to 6% in 2020, which may be indicative of the impact that the COVID-19 pandemic has had on that sector in particular.
Agreement dates and time lag: The general pattern of arbitrations commencing within five years of the agreement being made has remained steady. However, in 2020 there was a sharp rise in the percentage of arbitrations commencing within two years of the parties entering into an agreement. This is a likely knock-on effect of the pandemic, however it will be interesting to see if this trend continues.
Parties: The international nature of the LCIA’s caseload continued to develop, with 86% of parties being from countries outside of the UK, up from 81.4% in 2019. Whilst parties from the UK remain the largest single group, that percentage dropped from 18.6% in 2019 to 13.4% in 2020. Parties opting for LCIA arbitration came from 88 different countries.
Seat and applicable law: Although England remained the most popular seat and English law remained the most frequently chosen, both saw a decrease in 2020 compared to 2019. A trend towards more non-UK seats and choices of law continued in 2020, with parties increasingly choosing a seat and applicable law from the same country.
Gender diversity: The LCIA continues to promote gender diversity. In 2020, 33% of all arbitrator appointments in LCIA cases were female, an increase from 29% in 2019. Parties nominated female arbitrators in 22% of all appointments, a significant increase from 12% in the previous year. In 2020, 32% of arbitrators selected by co-arbitrators were female, a slight increase from 30% in 2019. However, it remains the case that the LCIA itself selects female arbitrators far more frequently than the parties or co-arbitrators, with 45% of LCIA arbitrator appointments being female arbitrators. This reflects a continued commitment from the LCIA to improving gender diversity in the field of arbitration. At the same time as publishing the Report the LCIA also announced a number of new appointments, including the appointment of Kate Brown de Vejar, one of DLA Piper’s Co-Chairs of International Arbitration based in Mexico City, to the LCIA Court, and the appointment of Kate Cervantes-Knox, a DLA Piper arbitration specialist based in London, as President of the LCIA European Users’ Council.
Overall, the data in the Report shows that the LCIA continues to be a popular choice for contracting parties in the UK but also across the globe, in all sectors. The LCIA continues to develop and adapt its rules to ensure they are fit for purpose and ensure effective and swift dispute resolution.
If you would like to discuss the Report or have any questions on arbitration under the LCIA Rules more generally, please do not hesitate to contact a member of our leading international arbitration team.
