Arbitration was supposed to be the solution for international companies seeking to resolve disputes without expensive and drawn-out court battles. But it is starting to look more like the problem.

Once a swift, cost-efficient method of resolving international commercial disputes, the process is now often bogged down in long and costly legal proceedings.

“It now takes longer, costs more and has many more steps in the procedures,” says Joseph R. Profaizer, of counsel to Paul, Hastings, Janofsky & Walker in Washington, D.C. “There is now broader discovery, larger damages requests, longer briefing schedules, much bigger briefs, far greater reliance on experts and their testimony, and more procedural challenges to the arbitration.”

If that sounds suspiciously like U.S.-style litigation, well, that is exactly the problem. Arbitration of international commercial disputes has taken on many of the characteristics of litigation in U.S. courts. And this has upset many companies that rely on arbitration to resolve cross-border business disputes.

“There’s been an increasing chorus of voices that international arbitration is getting too expensive, mostly because it is taking too long,” says Richard W. Naimark, senior vice president of the American Arbitration Association’s International Center for Dispute Resolution.

A growing number of businesses appear to be turning away from arbitration and resolving their international commercial disputes the old-fashioned way—in the courts.

In a targeted survey of corporate counsel published in 2006 by the School of International Arbitration at Queen Mary, University of London, only 11 percent of in-house counsel said they preferred litigation to settle international disputes. In a follow-up survey conducted two years later, that figure rose to 41 percent—only slightly less than the number who prefer international arbitration.

Many businesses, attorneys and international arbitral organizations lament an Americanization of international arbitration. But they are often themselves to blame.

“It’s the parties who are causing the problem,” says one expert who spoke on the condition that he not be identified. “They’re the ones picking counsel and deciding how the arbitration is to be run. They’re asking the arbitral associations to stop the parties from bringing the problems on themselves.”

Profaizer agrees. “If arbitration is to commit suicide, it will do so of its own choosing, because the parties have chosen to make it more expensive, time-consuming and more like litigation.”

via International Arbitration Loses Its Grip – Magazine – ABA Journal.