Frequently Asked Questions These FAQs are provided to help anyone unfamiliar with the arbitration process who may: have discovered that they are going to be involved in an LCIA arbitration; be considering including an arbitration clause in a contract; or have been advised to consider arbitration in order to resolve a dispute. If you already have an arbitration with the LCIA, or you already have some experience of arbitration, you might find it helpful to read the LCIA’s Notes for Parties. If you are an arbitrator, more detailed guidance can be found in the LCIA’s Notes for Arbitrators. Legal practitioners might find it useful to read both sets of notes and the current version of the LCIA Arbitration Rules. Our FAQs are constantly evolving, and we welcome new questions. So if you have a question that is not covered below or in our guidance notes, please email us at [email protected], or call us on +44 (0)20 7936 6200, and ask to speak to a member of our Casework team. Arbitration basics What is arbitration? What is a tribunal? What are the different stages in an arbitration? What makes arbitration different from going to court? Can the tribunal’s decision (an “award”) be appealed? What makes arbitration different from mediation and other forms of alternative dispute resolution? Using the LCIA to administer an arbitration What is the LCIA, and what does it do? Why should I choose arbitration under the LCIA Rules? Do I need to be a member of the LCIA to use the LCIA’s services? Is the LCIA actually a court? What are the LCIA Arbitration Rules? How are the arbitrators chosen? Does the LCIA have a pool of arbitrators it chooses from? Can I, or the other party, choose an arbitrator not known to the LCIA? How does a dispute get referred to the LCIA? What do parties need to record in an arbitration agreement or arbitration clause? What is a “seat” and what is the “governing law”? Does an arbitration need to be physically held at the “seat”? How does the law of the seat relate to the LCIA Arbitration Rules? Can the LCIA still be involved if we decide not to use the LCIA Arbitration Rules? How is the LCIA funded? How do I pay for an arbitration? What is the typical cost of an arbitration? What is the typical duration of an arbitration? Can an arbitration be fast-tracked? Is the final outcome of an arbitration made public? Does the LCIA review awards? Does the LCIA only handle English-law cases? Arbitration basics 1. What is arbitration? Arbitration is a way that people or companies can resolve disputes, instead of going through a traditional court system. Disputes can happen over many different things – a basic example of a dispute would be where person A thinks person B owes them money, but person B disagrees. In a court, a judge decides a dispute between people or companies (who are called the “parties”) by giving a written judgment. Arbitration works similarly, but instead of a judge, one or more persons (usually lawyers or professionals in a relevant industry, such as engineers) are appointed as “arbitrators” to decide the dispute. In arbitration, a judgment is called an “award”. Both judgments and awards are binding. This means that if a judgment or award says that party A owes money to party B, party A will be required by law to pay party B. One key aspect of arbitration is that all parties must agree to use arbitration. Usually, the parties will agree to use arbitration at the same time as they enter into a contract for whatever business they are going to do, and include an “arbitration clause” in the contract to reflect that agreement. Parties can, however, agree to arbitration when a dispute arises by making an “arbitration agreement”, even if their original contract did not contain an arbitration clause. 2. What is a tribunal? “Tribunal” is another way of referring to the arbitrator (or arbitrators) appointed to decide a dispute. Where three or more arbitrators are appointed, the arbitrator in charge of the panel of arbitrators, and often the day-to-day running of the arbitration, is called the “chair” or “presiding arbitrator”. 3. What are the different stages in an arbitration? Unlike a court proceeding, the arbitration process is very flexible. As a result, the process will depend largely on what the parties and the arbitrators agree, taking into account what makes sense for the particular dispute. In broad terms, an arbitration will consist of the following steps: the party that wants to start the arbitration will make a written “request for arbitration”, setting out the details of their claim. This party is called the “claimant” because they are making a claim against the other party. The other party is called the “respondent” because they are responding to the claim and will usually provide a written “response” setting out their own position; arbitrators are appointed to decide the dispute. How arbitrators are appointed is explained below; the parties are given an opportunity to argue their positions and provide evidence in support. Usually, this is done by the parties’ legal representatives, who may be internal representatives or external legal advisors. Legal representatives present their arguments through “submissions”, which can be written or oral (or both). When submissions are made orally, this is called a “hearing”, and is usually done in person, although it can also be by telephone or by videoconference; and having heard the parties’ arguments, the arbitrator(s) will decide the dispute, and make an award. 4. What makes arbitration different from going to court? As set out above, arbitration and going to court (which is sometimes called “litigation”) are quite similar. They allow parties to resolve their disputes, and result in a binding decision that the parties are required by law to obey. There are, however, important differences between arbitration and litigation, which often make arbitration a better choice for resolving a dispute: Arbitration is more flexible: A court will generally have very rigid processes which need to be followed in every case. By contrast, the process in an arbitration can be adapted to suit the case, as explained above. Arbitration makes it easier to obtain money kept overseas: An award (the written decision in an arbitration) or a judgment (the written decision in litigation) will often require one party to pay the other party a sum of money. However, the losing party will sometimes still refuse to pay, so the winning party will need to go to court to “enforce” the award or judgment and force them to pay. If a winning party needs to enforce in a foreign country to obtain assets that the losing party is keeping in that country, it is usually easier to do so with an award than with a judgment. Enforcing a judgment in a foreign country depends on the particular arrangements agreed between the countries involved, such as the comprehensive arrangements within the European Union. By contrast, almost every country in the world has agreed to recognise awards made by arbitrators and help to enforce them. Because it is so easy to enforce an award all over the world, arbitration is overwhelmingly popular with anyone doing business with someone based in a different country. Awards are almost always final: A judgment can usually be appealed to a higher court (and sometimes again and again to even higher courts) for a variety of reasons. As set out below, an award can only be challenged in limited circumstances. This leads to much more certainty for parties, and a more straightforward and faster process. 5. Can the tribunal’s decision (an “award”) be appealed? Generally, it is quite hard to appeal (or “challenge”) a tribunal’s award. Usually, a challenge can only be made where the proper legal processes for the arbitration were not followed – for example, if one party was not given an opportunity to present their arguments. As a result, in arbitration an award is almost always the final word in a matter. 6. What makes arbitration different from mediation and other forms of alternative dispute resolution? Alternative dispute resolution, or “ADR”, is what lawyers call a variety of different methods for resolving disputes that are non-binding – meaning that the parties are not required to comply with the outcomes (unlike arbitration or litigation). Mediation is perhaps the most common form of ADR. It involves a “mediator” sitting with the parties to help them to work together and resolve the dispute themselves. A mediator does not impose an outcome like an arbitrator or a judge does. Instead, the mediator helps the parties to agree an outcome. Often, parties will try to use ADR to avoid needing to go to arbitration or litigation. If ADR doesn’t work because the parties can’t agree on a solution to the dispute, they will then go to arbitration or to court, and have an arbitrator or judge resolve the dispute for them. Using the LCIA to administer an arbitration 7. What is the LCIA, and what does it do? The London Court of International Arbitration (the “LCIA”) was established in 1892 to help people who wanted to use arbitration to resolve their commercial disputes. The LCIA’s role in an arbitration is to provide administrative support. When the LCIA “administers” a case, it will: appoint arbitrators to decide the dispute. How arbitrators are chosen is explained below; monitor the progress of an arbitration. This involves things like reminding arbitrators if the parties have missed a deadline for submitting documents; manage payments to arbitrators. Parties pay arbitrators for their help in resolving a dispute – the LCIA obtains the money from the parties and then organises these payments; and help with any practical matters, like arranging for a venue for a hearing. The LCIA can also help parties to use mediation similarly to how it helps parties with arbitration. 8. Why should I choose arbitration under the LCIA Rules? The LCIA is one of the world’s leading international institutions for commercial dispute resolution, and has helped countless parties to resolve disputes in the 125 years since it was founded. At present, our casework team oversees some 300 new arbitrations each year. The LCIA Arbitration Rules provide a robust yet flexible framework for resolving disputes through arbitration. The LCIA provides access to the most eminent and experienced arbitrators, mediators, and experts, with diverse backgrounds, from a variety of jurisdictions, and with the widest range of expertise. In order to ensure cost-effective services, the LCIA’s administrative charges and the fees charged by the arbitrators it appoints are not based on the value of the dispute. Instead, a fixed registration fee is payable with the Request for Arbitration, and the arbitrators and LCIA apply hourly rates for services. 9. Do I need to be a member of the LCIA to use the LCIA’s services? No – parties can agree to provide for LCIA arbitration even if none of them are members of one of the LCIA’s Regional Users’ Councils. Parties are in fact free to provide for LCIA arbitration without obtaining prior agreement from the LCIA or even informing the LCIA. There are benefits to being a member, however, such as priority access and discounted registration fees for some of the LCIA’s events. The LCIA Users’ Councils form a vibrant and active global community, with over 2,200 members from over 80 countries. Details on how to become a member can be found here. 10. Is the LCIA actually a court? The LCIA has the word “court” in its name because historically the LCIA wanted to let people know that it could help them to resolve disputes, just like a traditional court. The LCIA is not really a court in the way most people think of a court – it is not tied to any country’s legal system or government, and the arbitrators the LCIA appoints to decide disputes are not associated with the LCIA like a judge is associated with a court. Arbitrators are independent of the LCIA, appointed on a case-by-case basis, and paid by the parties rather than the LCIA. The LCIA does, however, have a body it calls the “LCIA Court”, made up of a distinguished group of arbitration lawyers. The LCIA Court is the part of the LCIA that officially carries out various functions under the LCIA Arbitration Rules (including appointing arbitrators) and also ensures that those rules are kept up to date. 11. What are the LCIA Arbitration Rules? The LCIA Arbitration Rules are the rules which govern most arbitrations administered by the LCIA. They cover many different practical aspects of an arbitration, like how arbitrators are appointed, and the extent to which an arbitration must be kept confidential. 12. How are the arbitrators chosen? How arbitrators are chosen in a given arbitration depends on what the parties have agreed. There are three common ways in which arbitrators in LCIA arbitrations are chosen: By the LCIA: If the parties haven’t agreed anything different, the LCIA will choose an appropriate arbitrator to decide the dispute. Parties can also ask the LCIA to choose three arbitrators, who will work together to decide a dispute. By the parties: The parties can agree to work together to choose a sole arbitrator or they can agree to each choose one arbitrator, with a third arbitrator to be chosen either by the LCIA or by the two arbitrators that the parties chose. By the arbitrators: Where the parties have agreed to choose one arbitrator each, the parties may agree that these two arbitrators should decide on a third arbitrator to act as chair. 13. Does the LCIA have a pool of arbitrators it chooses from? The LCIA keeps a database of arbitrators, which includes information to help the LCIA to choose arbitrators, such as language skills and legal/industry experience. However, the LCIA will choose an arbitrator from outside the database if they would be the best person in the circumstances. While parties cannot access the database of arbitrators, if the parties to a case agree, the LCIA is happy to provide a list of potential arbitrators suited to the circumstances of the case. 14. Can I, or the other party, choose an arbitrator not known to the LCIA? If parties have agreed to choose arbitrators themselves, they can generally choose any person they would like (usually on the advice of their legal representatives), and that person will be officially appointed by the LCIA Court as an arbitrator for the case. However, the LCIA Court will not appoint someone chosen by a party where that person: is not impartial and independent of the parties; does not have the necessary experience, either in international arbitration or in the subject matter of the dispute; or does not have enough time available to devote to the arbitration. 15. How does a dispute get referred to the LCIA? As set out above, arbitration only occurs where parties have agreed to it. The LCIA becomes involved when, as well as agreeing to arbitration, the parties also agree that the arbitration should be governed by the LCIA Arbitration Rules. The parties’ agreement to arbitration governed by the LCIA Arbitration Rules can be recorded: in the contract between the parties, by including an “arbitration clause”; or if the parties only agree to arbitration after they’ve already entered into a contract, in a separate “arbitration agreement”. 16. What do parties need to record in an arbitration agreement or arbitration clause? As well as stating that the LCIA Arbitration Rules will apply, parties should agree to and record the following matters in their arbitration clause or arbitration agreement: the number of arbitrators who will decide the dispute (usually one or three); the way in which the arbitrators will be chosen. As set out above, if the parties don’t include anything about this, the LCIA will choose an arbitrator for them; the seat (also known as the legal place of the arbitration). This is explained further below; the law that the arbitrators will apply to decide the dispute. This is explained further below; and the language that will be used in the arbitration. 17. What is a “seat” and what is the “governing law”? For non-lawyers, one of the most confusing parts of arbitration is how different systems of law can apply in the one arbitration. In arbitration, there are two types of law to keep in mind: the law which deals with procedural issues (the law of the “seat” or “legal place”). Procedural issues are things like how hearings must be conducted, and whether an arbitration must be kept confidential. The seat also determines in which courts any challenge to an award must be made. For example, if the seat is New York, a challenge would need to be made in the New York courts; and the law which is applied to decide the actual dispute (the “governing law” or “substantive law”). The actual dispute is what the parties are arguing over. If party A says that party B has breached their contract, an arbitrator will apply the governing law to the facts to determine whether the contract has, as a matter of law, been breached. Confusingly, the law of the seat and the governing law are not always from the same place. For example, an arbitration seated in London would have English law as the law of the seat (so the procedure of the arbitration would be governed by English law), but could have French law as the governing law (so the actual dispute would be decided by applying French law). As set out above, parties should choose both the law of the seat and the governing law in their arbitration clause or arbitration agreement, and should make sure that their choice is informed by appropriate legal advice. The LCIA can administer any arbitration, regardless of what seat and governing law are chosen. 18. Does an arbitration need to be physically held at the “seat”? No – while in practice hearings are often held at the seat of the arbitration, parties and the arbitrators may agree to hold the hearings somewhere else that is convenient for the parties, any witnesses, and the arbitrators. In addition, the majority of an arbitration occurs via email or other correspondence, so for the most part no-one needs to physically travel. 19. How does the law of the seat relate to the LCIA Arbitration Rules? While the law of the seat is important in determining the procedure of an arbitration, it is generally not very detailed. As a result, it is up to the parties to decide how most of the day-to-day issues in an arbitration are dealt with. These day-to-day issues include things like how documents must be delivered and how payments to arbitrators will work. By deciding to use the LCIA Arbitration Rules, the parties are deciding that these issues should be dealt with in the way set out in the Rules. This is actually one of the main reasons parties choose to use the LCIA Arbitration Rules – relying on the carefully thought out and time-tested LCIA Arbitration Rules is much quicker and easier than the parties wasting time trying to agree on every procedural issue. 20. Can the LCIA still be involved if we decide not to use the LCIA Arbitration Rules? Usually, the LCIA will become involved because an arbitration clause or arbitration agreement refers to the LCIA Arbitration Rules. However, even if the arbitration clause or arbitration agreement refers to a different set of arbitration rules (notably the UNCITRAL Rules), it can still state that the arbitration should be administered by the LCIA. In these cases, the LCIA will provide administration services much the same as if the arbitration was being conducted under the LCIA Arbitration Rules. The LCIA cannot, however, administer an arbitration under the rules of another arbitration institution (such as the SCC or the ICC). 21. How is the LCIA funded? The LCIA is funded by three sources: Administrative fees: The LCIA charges parties fees for administering an arbitration. Full details of the LCIA’s fees can be found in the LCIA’s Schedules of Costs. Membership fees: The LCIA has over 2,200 members from around the world, who pay an annual fee. For details about the LCIA’s membership benefits, see here, and for information on how to join, see here. Tickets to events and conferences: The LCIA sells tickets to the various events and conferences it hosts around the world. Details of the LCIA’s current events schedule can be found here. 22. How do I pay for an arbitration? When a party starts an arbitration, they must pay the LCIA a fixed filing fee. Once an arbitration is in progress, the LCIA will periodically ask the parties to make deposits to the LCIA, which the LCIA then uses to cover the arbitrator’s fees and the LCIA’s administrative fees. Arbitrator fees and LCIA administrative fees are charged based on hourly rates, as set out in the LCIA’s Schedules of Costs. It is important to keep in mind that parties will usually need to engage legal representatives to help them in an arbitration. The costs of these legal representatives are completely separate from the amounts paid to the LCIA and to the arbitrators – each party manages the amounts paid to their legal representatives themselves. 23. What is the typical cost of an arbitration? How much an arbitration costs will depend on a number of factors, most importantly how complicated the legal and factual questions are that need to be answered by the arbitrator(s). From 2013 to 2016, the median arbitration costs at the LCIA were USD 97,000 (note that this does not include amounts paid by the parties to their legal representatives). While this gives some idea of the typical costs, legal representatives are best placed to give an estimate in a specific case, as they can take into account the relevant circumstances. More details regarding the costs of LCIA arbitrations can be found in the LCIA’s latest costs and duration analysis. 24. What is the typical duration of an arbitration? As with cost, how long an arbitration will last depends on a number of factors, most importantly how complicated the legal and factual questions are that need to be answered by the arbitrator(s). From 2013 to 2016, the median duration of an LCIA arbitration was 16 months. While this gives some idea of the typical duration, legal representatives are best placed to give an estimate in a specific case, as they can take into account the relevant circumstances. More details regarding the duration of LCIA arbitrations can be found in the LCIA’s latest costs and duration analysis. 25. Can an arbitration be fast-tracked? An arbitration can be “fast-tracked” and resolved more quickly in a few different ways: Agreeing in the arbitration clause or arbitration agreement: Parties can agree that a faster process should be followed for either all disputes or a specified set of disputes (for example, where there is only a small amount of money in dispute). This should be recorded in their arbitration clause or arbitration agreement, along with the actual process to make it faster, such as shorter time limits for making submissions and providing evidence. Emergency arbitrator: Before an actual tribunal is appointed, the LCIA Arbitration Rules allow parties to apply for the appointment of a temporary sole arbitrator to decide a claim for “emergency relief”. Note however that a temporary arbitrator will only decide the claim for emergency relief, not the overall dispute. Expedited appointment: The LCIA Arbitration Rules allow for parties to apply to have the arbitrators appointed more quickly than normal where there is “exceptional urgency”. Arbitrators set a faster timetable: Once appointed, arbitrators can (usually after discussing with the parties) decide on a faster timetable for resolving the dispute than might normally be used. 26. Is the final outcome of an arbitration made public? No. LCIA arbitration is a private process, and the LCIA Arbitration Rules have strict confidentiality obligations, which apply to the parties, the arbitrators, and the LCIA itself. Unless all parties agree, any documents relating to the arbitration, the award, and the outcome will not be made public. Sometimes, the outcome of an arbitration is made public where a party is required to make certain information public (for example, because it is a publicly listed company) or where a winning party needs to go to a court to force the losing party to comply with the award. However, if a party goes to court they can often ask to keep things confidential, and the court will usually cooperate. 27. Does the LCIA review awards? The LCIA does not formally review or scrutinise the awards produced by tribunals, but may read through for typos if requested to do so by the arbitrators. The proper decision maker(s) in an arbitration should always be the arbitrator(s); it is not for an institution to form its own views on a case. The LCIA instead addresses the quality and enforceability of awards through its role in the appointment process and its robust administration procedures. 28. Does the LCIA only handle English-law cases? No. The LCIA can handle cases from anywhere in the world, from any system of law. As explained above in arbitration terms, the LCIA can administer arbitrations with any seat, and with any governing law. Last updated: October 2018