Commercial Arbitration: What to expect in 2022

Iuliana Iacob
Iuliana Iacob

After two challenging years that saw rapid and dramatic changes to the arbitration landscape, the far-reaching effects of the COVID-19 pandemic will also be felt in 2022. In addition to a wave of fresh disputes, paperless arbitrations and virtual hearings are expected to continue. A few bright spots are also on the horizon: increased focus on sustainability and greater financing opportunities for disputing parties.

Rising number of construction disputes

Global issues such as supply chain shortages, increasing price of materials, loss of financing, travel restrictions, health and safety requirements, the need to maintain social distancing in the workplace and quarantine of workers, have all impacted construction projects during recent years.

Against this backdrop, arbitral institutions saw a growth in the number of cases related to the COVID-19 pandemic. As the construction field continues to face multiple challenges, 2022 is expected to usher in new disputes focusing on a wide range of matters such as the impact of the COVID-19 pandemic on the progress of the construction projects or force-majeure and hardship.

The Interplay between Insolvency and Arbitration

As experts predict a sharp rise in the number of insolvencies citing the devastating effect of the pandemic and the gradual elimination of governmental economic support measures, the interplay between insolvency and arbitration is expected to come into sharper focus, giving rise to complex legal issues related to standing, conflict of laws, or provisional measures. To determine the potential impact of insolvency on arbitration and navigate these thorny issues, the parties should look at the contract, the law of the seat of arbitration, or the law of the state of opening of insolvency proceedings.

Virtual Hearings aren’t going anywhere

Aiming to mitigate the adverse effects of the COVID-19 pandemic, arbitral institutions went to great length to adapt their methods and even revisited their rules implementing a host of measures and preparing extensive guidance notes and checklists addressing online filing of submissions, paperless arbitrations, or virtual hearings. Displaying the flexibility and adaptability of arbitration, such measures allowed arbitral institutions to continue to function even in the early days of the pandemic and contributed to the fast and smooth settlement of disputes. With no clear end in sight for the pandemic, a return to in-person hearings does not appear imminent. On the contrary, based on considerations of time and cost efficiency, virtual hearings are likely to become a fixture in arbitration.

Challenges and opportunities to keep an eye on

– Renewed focus on controlling time and costs: As the use of technology in arbitration has become widespread and virtual hearings have become the norm, parties and arbitral tribunals have at their disposal a wide range of tools to ensure the efficiency of the arbitration proceedings and control costs.

– Third party funding opportunities: In light of the volatile global market and economic difficulties, the discussion surrounding third party funding has gained momentum. While not without practical difficulties and requiring extensive verifications, more and more parties are expected to consider identifying financing opportunities to pursue their claims.

– Impact of the arbitration on the environment: Recent years brought greater recognition of the need to conduct arbitration sustainably and responsibly. Parties and tribunals can resort to paperless arbitration, reduce travel and thus minimise their costs and the overall impact on the environment.

Iuliana Iacob, Partner Musat & Asociatii

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