ICC Report on Financial Institutions and Arbitration will be of interest to banks and financial institutions throughout Asia-Pacific
- TIM LINDSAY
Late last year the ICC Commission on Arbitration released its multidisciplinary report Financial Institutions and Arbitration (the Report). The Report addresses how banks, financial institutions and their clients, who have historically resorted to traditional litigation to resolve disputes arising out of their dealings, can use arbitration for efficient and effective resolution of what can be complex disputes. Lowndes Jordan litigation partner Timothy Lindsay was one of the leaders of the Task Force, and comments on why the Report will be of interest to banks and financial institutions in New Zealand and throughout the Asia-Pacific region.
Background Internationally, commercial arbitration is the predominant means by which commercial parties resolve their disputes. Banks and financial institutions have appeared to resist this trend, however, historically reverting to national courts to resolve disputes with their clients and each other. Whether there is aversion to change, “stickiness” of boilerplate dispute resolution clauses in financing documents, or misconceptions around the arbitration process, in recent years there has been increasing use of arbitration by financial institutions. Against this background, the ICC recognised the need to study financial institutions’ perceptions and experience of arbitration and how arbitration procedures can be used and adapted to meet their needs. The Report The Report’s findings and recommendations are based on input from approximately 50 financial institutions globally, banking counsel, data from 13 arbitral institutions, arbitral awards, relevant literature, and lawyers experienced in banking and finance disputes. The Task Force examined a wide range of banking and financial activities, whether by licensed banks or by funds, including lending activities, derivatives, sovereign lending, regulatory matters, international financing, trade finance, Islamic finance, advisory matters, asset management and interbank disputes. Based on this research, the Report addresses usage of arbitration by financial institutions, the potential benefits of commercial arbitration for banks and financial institutions (e.g., efficiency, expert decision-makers, global enforceability of arbitral awards, confidentiality, and finality) and some common misconceptions about the process.
"...the Report addresses usage of arbitration by financial institutions, the potential benefits of commercial arbitration for banks and financial institutions, and some common misconceptions about the process"