Faster deals and internationally accepted judgments. These are some of the reasons why arbitration is the most common way to resolve business disputes. But since international arbitration is based on "best practice", rather than written laws and rules, lawyers working in the field must be experienced and constantly update their knowledge. "The parties, rather than the rules, determine how the dispute should be handled," says Kristoffer Löf from Mannheimer Swartling's Dispute Resolution practice group.
The increasingly complex and international business community, combined with increased global trade, have resulted in more numerous and more extensive disputes. One important reason that arbitral institutions are preferable to the courts for dispute resolution is that cases are usually handled significantly faster. In addition, arbitral judgments are enforceable in many countries.
"A matter that could take ten years to resolve in court could be resolved in one or two years by arbitration," adds Löf. "And while a Swedish court order is worthless in, for instance, the US, Swedish arbitration is accepted and enforceable in more than 150 countries."
Praxis evolves over time
In many cases the parties choose a location that they consider to be a neutral arbitration venue. When a third country venue (where none of the parties is domiciled) is chosen to resolve the dispute, it is rarely due to any deeper understanding of – or love for – the country's legal framework, but rather because in addition to being neutral it is also perceived as convenient and has the reputation of being "arbitration friendly".
"International arbitration has become increasingly borderless," adds Löf. "There are few written rules for how to conduct arbitration procedures. Unwritten procedures and practices have instead evolved over time, which experienced dispute resolution lawyers apply regardless of where the negotiations take place. The rules of procedure are almost Darwinian, good solutions are reused and bad ones disappear. Dispute resolution becomes effective through evolution. 'Best practices' develop. The result is more efficient and customised procedures than in heavily regulated court proceedings, where ineffective solutions are statutory and it takes time to change or break away from them."
Mix of common law and civil law
"Best practices" can be defined as solutions advocated by experienced arbitration lawyers – what they are generally expected to be guided by if mandatory regulations in the country where the dispute is decided had not dictated otherwise, or if the parties agree on a different solution. These principles are often consistent with a mix of civil law and common law. The common law tradition developed in England during the Middle Ages and was also applied in the British colonies, while civil law emerged on continental Europe during the same period. Civil law also spread to colonies. Countries like Russia and Japan also adapted their legal systems to civil law in the nineteenth and twentieth centuries. When parties with backgrounds in different legal systems meet in disputes, it is important that they trust the dispute resolution model and feel it provides fair treatment. Since best practices in international arbitration have borrowed features from a variety of legal systems, parties from all over the world trust the process.
One challenge for lawyers is to keep up with the development of what constitutes best practice in international arbitration. Consequently an extensive international exchange of experience is underway in various fora that deal with arbitration law. A number of Mannheimer Swartling partners and members of the Dispute Resolution practice group, including Löf, recently published a guide to dispute resolution in Sweden.
"An incredibly intensive effort is underway to codify and document best practices," explains Löf. "Reading to keep up with all of these arguments and trends is absolutely crucial. Because of constant developments, studying the rules is not enough – you have to be part of the international environment. Because of our size, our practice group is exposed to a variety of international arbitration procedures each year and through the constant internal exchange of knowledge, we ensure that we are part of ongoing developments."
An incredibly intensive effort is underway to codify and document best practices. Reading to keep up with all of these arguments and trends is absolutely crucial.
He also believes that Swedish dispute resolution lawyers do a good job of holding their own in international competition. Sweden and Stockholm are often chosen – and have traditionally been chosen – as a venue for international arbitration for this very reason. During the Cold War, it was common for disputes between businesses in East and West to be resolved in non-aligned Sweden. A well-established arbitral institution at the Stockholm Chamber of Commerce and – not least – many respected arbitrators also helped make Sweden a major power in arbitration.
"Many people also choose to come here because of the extremely low level of corruption in Sweden," says Löf. "At the same time, competition has intensified from, for example, London, which has received many Russian disputes in recent years. The English have excelled at marketing themselves, so visibility and highlighting the advantages of Sweden as an arbitration country have become increasingly important."
Mannheimer Swartling has extensive experience of commercial disputes in a large number of industrial sectors and areas of law, as well as government and regulatory disputes. Energy is an important area, along with telecom, IT, the automotive industry, real estate, media and entertainment, as well as shipping and transport. Employees in the Dispute Resolution practice group serve as counsel on arbitration panels all over the world, and they also assist clients in mediation proceedings and other forms of dispute resolution.