The School of International Arbitration at Queen Mary College has published the results of its seventh annual survey in international arbitration. Our summary of the sixth annual survey, can be found here.
This year’s survey focused on only one substantive area– Technology, Media and Telecoms (TMT) disputes. The report is based on 343 questionnaires and 62 personal interviews with stakeholders involved with TMT disputes from across the globe. Although smaller than last year’s general survey, this year’s survey is the first to focus on TMT and is the largest sector specific study conducted by the School.
Highlights of the survey are summarised below.
Types of TMT dispute
The results indicate that there are a wide variety of potential disputes in TMT, with respondents having experienced at least 17 different types of TMT related dispute. The most commonly encountered form of TMT dispute is intellectual property, with some 50% of those respondents to the survey indicating that they had encountered such a dispute in the last five years.
Only 9% of the respondents indicated that they had experienced a TMT dispute relating to data and security system breaches in the last five years. Nevertheless, these represented the greatest anticipated increase in TMT disputes, with 79% of respondents considering these breaches to be ‘very likely’ or ‘somewhat likely’ to occur in the next five years.
The respondents indicated that a high number of TMT disputes are valued at over US$100 million. Such high-value disputes arise particularly in Europe and North America with 41% and 38% of TMT disputes respectively in each jurisdiction involving sums in excess of US$100 million. This may be due to a number of factors: many of the larger technology companies are headquartered in Europe or North America; those regions have mature legal markets; and Europe and North America tend to have a more litigious business culture than is the case in many jurisdictions in the Far East.
Dispute resolution policies and practices
75% of the organisations surveyed had a dispute resolution policy which encouraged an escalating approach, typically providing for mediation followed by arbitration. The preferred method of dispute resolution for TMT disputes among all respondents (including private practitioners) is arbitration. The least desirable option is court litigation. Surprisingly, litigation was the most commonly used method of dispute resolution for the disputes in which the respondents had been involved. In light of the views expressed by respondents, we may expect to see a decrease in the use of litigation in the future, and a corresponding increase in arbitration.
A minority of disputes did not lead to a binding decision through any formal dispute resolution mechanism, with 41% of all disputes being concluded via an amicable settlement for all parties.
Suitability of international arbitration for TMT disputes
Some 92% of respondents agreed with the proposition that international arbitration is well suited for TMT disputes. 82% of respondents believe that there will be an increase in the use of international arbitration for TMT disputes in the future.
The advantages of international arbitration from the perspective of the respondents are enforceability; the expertise of the arbitrators; and confidentiality and privacy. Some respondents expressed a desire to use technology to improve the arbitration process. 58% of respondents would like to see lower costs in international arbitration, potentially achieved through the implementation of The most frequently used institutions for TMT disputes are ICC, WIPO, LCIA, ICDR and SIAC. The seat of the arbitration was commonly determined by ascertaining the geographically logical seat depending on the location of the parties.
A high percentage of respondents (some 56%) thought that injunctive relief was difficult to obtain or implement in arbitration which some respondents considered to be a reason why arbitration may not be as well suited to TMT disputes. These views may reflect opinions based on experiences that predate the new emergency arbitrator provisions that have recently been adopted by many international arbitration institutions.
As technology increasingly affects all aspects of business life and business spending on technology continues to rise, the risk of disputes relating to TMT rises in parallel. The digital world moves fast, and methods of dispute resolution needs to respond to those altered requirements.
The results of this important survey indicate the critical factors that every business needs to take into account in considering an effective dispute resolution strategy for any company that is reliant on its technology, and where disputes relating to TMT are likely to arise. International arbitration continues to dominate the field as the most popular method of dispute resolution.