The Social and Psychological Underpinnings of Commercial Arbitration in Europe

The Social and Psychological Underpinnings of Commercial Arbitration in Europe

An ESRC and the University of Leicester funded project investigating commercial arbitration in Europe.

In the beginning of this summer I had the pleasure to be interviewed by Tony Cole (FCIArb, Leicester Law School) in connection with his fact finding for the ESRC and the University of Leicester funded project investigating commercial arbitration in Europe 

The objectives of this project will contribute significantly to methodological development in qualitative social science research. Commercial arbitration is an ongoing area of concern for both governments and civil society across Europe, but remains poorly understood because of the confidentiality that dominates the field. This project will take advantage of the Principal Investigator’s recognition amongst arbitration practitioners, and of the range of expertise of an interdisciplinary research team, to gain a clear understanding of this important, but controversial, area of civil justice. 

If you wish to follow the outcome of this project please visithttps://commercialarbitrationineurope.wordpress.com/project-blog/. 

A summary of the objectives of this project is given below. 

Businesses face a dilemma when disputes arise. They would like the certainty of a judicial decision, but often find courts to be slow, inefficient and/or inflexible. Commercial arbitration has developed as the leading solution to this dilemma, providing a private, flexible and user-controlled process, while also delivering a binding decision that will be enforced by courts. But commercial arbitration creates a dilemma for States. Support of arbitration assists the business community and allows courts to redirect their limited resources to other areas, but the private and confidential nature of arbitration effectively allows businesses to operate an autonomous legal process, supported by the State but ultimately outside State control. 
Commercial arbitration has a central place in contemporary dispute resolution, being used to resolve large numbers of disputes of both large and small value. In 2013, the ICC International Court of Arbitration received 767 requests for commencement of an arbitration, the London Court of International Arbitration received 301, the Stockholm Chamber of Commerce received 203 and the German Institution of Arbitration received 121. These were often disputes of considerable importance: 540 of the cases the ICC received in 2013 involved a dispute worth more than US$1m, 277 more than US$10m, and 63 more than US$100m. Yet these numbers represent only a fraction of the arbitrations occurring each year, with many more arbitral institutions operating in Europe, and a large number of arbitrations occurring without the involvement of an institution. 
Yet despite commercial arbitration’s prominent role in the delivery of civil justice, the actual practices of arbitrators, the mechanisms for career development in the field, and the character of the justice arbitration provides remain sealed inside what has been called a “black box”. This is because research on arbitration suffers from the confidentiality of most arbitration proceedings and awards, and from the difficulty of collecting robust empirical data on a professional community that is heterogeneous, porous, multinational, and notoriously difficult to penetrate. Through an innovative triangulation of methodologies, this project will open that “box”. 
Commercial arbitration relies on an institutional structure that rests on three pillars: regulative (rules and norms), normative (training, compliance, internal rules), and cultural-cognitive (social capital, informal networks, symbolic orders). Now that arbitration has reached a level of maturity as a dispute resolution system these pillars are sufficiently marked out to be the focus of empirical research. This project will clarify how social norms and social connections impact on standards of practice and career development in arbitration, and thereby on the functioning of arbitration as a mechanism for the delivery of civil justice. In so doing it will achieve three things. Firstly, by developing an enhanced understanding of the processes through which commercial arbitration functions as a field of professional practice, it will make possible more effective approaches to the integration of commercial arbitration into civil justice systems. Secondly, it will contribute to a greater understanding of the impact of informal social norms and social connections on career development and standards of practice in professional fields.