International arbitration in 2021

International arbitration in 2021

Welcome to our annual international arbitration top trends publication for 2021.

2020 turned out to be a year no one expected. With the fallout from the pandemic expected to continue well into 2021, we can expect further turbulent times ahead. However, with the widespread roll-out of vaccine programmes, we hope that 2021 will see the beginning of a global economic recovery and a return to a ‘new normal’ as we start to look beyond the pandemic.

In this edition of our top trends report, we explore the key themes that we predict will be important for our clients and arbitration practitioners during the year ahead. The following trends have been identified by international arbitration specialists from across our global network.

• The extensive use of remote hearings during the pandemic has shown that in many cases they work as an efficient and cost-effective alternative to in-person hearings. Once in-person hearings become an option once again, we expect parties and tribunals to consider how and when virtual hearings should continue to be a feature of the arbitral process going forward.
• COVID-19-related disputes leading to arbitration have come in waves. Government assistance packages and temporary renegotiation of contracts have prevented an anticipated major spike in cases. However, contractual disputes have arisen on the scope of force majeure clauses, and some governments have used the pandemic as a pretext for political changes. Yet others have buried their heads in the sand and taken no relief action for certain sectors. This may give rise to claims for those investors who benefit from an investment treaty.
• Corporate insolvencies are expected to rise sharply in most major economies around the world. Where an arbitral counterparty is insolvent, or at risk of becoming insolvent, the case strategy needs to be carefully managed to minimise the risks associated with insolvency and the arbitral process.
• Investment protection in the EU and UK will be an area to watch in 2021 as the effects of the agreement terminating intra-EU bilateral investment treaties (BITs) and the UK’s formal departure from the EU take hold. It is not yet clear what approach the UK will take in its future trade agreements, but the lack of investor-State dispute settlement provisions in the new EU–UK and Japan–UK trade agreements indicates that UK investors will increasingly need to rely on the UK’s BIT network to protect their investments.
• Recent government policy reforms in the energy, technology and finance sectors, particularly in Latin America, may lead to new investment treaty claims being filed by affected investors in coming months, in addition to claims relating to government measures taken in response to the pandemic.
• Recent reforms of some of the major arbitral institutional rules have paved the way for the more efficient conduct of arbitrations, with increased tools, procedures and technology at the tribunal’s and parties’ disposal.
• The pandemic has hit the international construction and infrastructure industry hard. The combination of the market uncertainty, reduced finance available and a hardening of both national and commercial protectionism is likely to lead to more disputes as ongoing projects reach completion and the parties seek to address the economic realities of the pandemic.
• Given the recent focus on arbitrators’ duties of disclosure following the UK Supreme Court Judgment in Halliburton v Chubb, we analyse the current state of play on the topic from an international perspective.
• With an increasing focus on sustainability globally, our final trend evaluates the role that arbitration plays in the context of resolving climate change disputes and looks at how the arbitration process itself can be more sustainable.

We look forward to navigating the challenges and opportunities presented by these developments with our clients during the year ahead. Through looking ahead, we can help to more effectively and strategically plan and prepare for what comes next.

Read on to explore these trends in more detail. If you would like to discuss any of the topics covered in the report, please reach out to us, the authors of the trends or your usual Freshfields contact.