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Time for a change? Financial services and international arbitration

Parties involved in certain industries, such as construction and engineering, oil and gas, and mining, often elect international arbitration as their go to forum for dispute resolution in their contracts, as they are able to appoint adjudicators with specialized knowledge. As such, these parties make up a large number of disputes heard by international arbitral institutions, such as the International Chamber of Commerce (“ICC”). By contrast, parties operating in the world of financial services have turned to arbitration with far less frequency. 

The “ICC Dispute Resolution 2020 Statistics” report is telling in this regard. The ICC reports that disputes arising from construction/engineering and energy accounted for approximately 38% of all new cases in 2020.[1] The ICC’s report states that “other sectors”, including financing, accounted for 5% to 7% of newly registered cases.[2]

Pinpointing why the difference is so stark is challenging, not least because financial services is a complex and heavily regulated industry not unlike the industries whose participants do turn to international arbitral institutions to resolve their disputes. Of course, many jurisdictions offer a specialized commercial court which regularly hears financial services disputes. But this does not mean there is no place in international arbitration for disputes in the financial services sector to be heard with greater regularity, particularly where arbitration may offer parties certain benefits (described below) that are not easily obtained in the domestic courts or at all.

By way of example, in 2013, the International Swaps and Derivatives Association (“ISDA”) published its first arbitration guide. The guide provided guidance to parties on the use of an arbitration clause in the 1992 and 2002 ISDA Master Agreement.[3] In publishing that guide, nearly a decade ago, ISDA stated the guide was prepared:

“in response to a growing trend in derivatives trading over recent years to make use of arbitration as an alternative way of dispute resolution compared to the traditional choice of court litigation. This development is also owing to the growing diversity of counterparties and jurisdictions that are involved in derivatives trading globally.”[4]

The 2013 guide was subsequently superseded by a new guide in 2018, which includes further model arbitration clauses for more arbitral institutions and seats worldwide.[5]

As recognized by ISDA, going forward, parties to other types of financial services contracts would be well served to consider the benefits of resolving disputes through arbitration. In arriving at this decision, certain factors should be borne in mind, including whether:

(a) Confidentiality is a concern such that the parties would not want their dispute to be public. The courts in Canada, for example, operate under the “open court principle” such that the proceedings and evidence used in the proceeding is open and available to the public by default. 

(b) Enforcement of a court order could be challenging. Parties to arbitral proceedings have the benefit of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), to which many countries worldwide are signatories.[6] These countries have signed up to the New York Convention with a view to agreeing to enforce arbitral awards issued in other countries.

(c) The parties would benefit from having more than one adjudicator hearing their dispute. International arbitral institutions offer the possibility of a panel of three adjudicators presiding over proceedings.

(d) The parties would benefit from having a specialized adjudicator or adjudicators with knowledge of the practice or contract in dispute.

(e) The right of appeal is important to the parties. Unless otherwise agreed by the parties, the right of appeal is often very limited in arbitral proceedings. Arbitral awards offer parties greater finality sooner than what is often offered by the courts where there can be multiple levels of appeal.

Based on recent trends, the courts are likely to continue to be the forum of choice for financial services disputes for now. However, parties and practitioners should consider the benefits of arbitration and whether to include arbitration provisions in their agreements going forward.

[1]ICC Dispute Resolution 2020 Statistics, at p. 17.

[2]ICC Dispute Resolution 2020 Statistics, at p. 17.




[6] A complete list of contracting states is available at:


arbitration international arbitration dispute resolution financial services



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