Hypothesis: The total sum in dispute spiked and settled in line with arbitration caseloads1
In our first report exploring arbitration topics as part of our ‘data driven disputes’ campaign, we saw arbitration caseloads spike in 2020 and 2021 due to the COVID pandemic and other international geopolitical issues. The numbers have since settled back down. In this third report, we look at whether the Total Sum in Dispute2 followed the same trajectory as the Arbitration Caseloads, with a spike in 2020 and 2021 before stabilising.
We also considered whether the average value of an arbitration dispute (the Mean and Median Sum in Dispute) changed in response to those same global dynamics and, if so – how? Our starting point was to consider whether fire-fighting the effects of COVID-19 and the financial crisis may have forced many small and medium sized-enterprises (with correspondingly small and medium-sized disputes) not to pursue arbitrations when they otherwise might have done. This could have artificially inflated the Mean Sum in Dispute for arbitrations registered in 2020-2021, given that only large and more financially stable organisations would be in a position to bring their typically (albeit not always) larger disputes.
In the process of testing our hypotheses, we discovered that there was a noticeable lack of data on disputes values published by arbitral institutions, and where data is available, there is a significant lack of uniformity in terms of what is reported and how it is reported. In our view, this is a cause of concern, as institutions should be striving for transparency and accountability, not only as an end in itself, but also to helps arbitration users when selecting an institution to administer their disputes. Greater transparency would also allow institutions to consider global trends and identify how best to position themselves and their services.
Research and methodology
In order to conduct our analysis, we carried out desk research and qualitative interviews:
Institution: 29 arbitral institutions representing around 7,000 arbitrations per year.
Region: Middle East, Asia Pacific, Europe and Arica.
Qualifying criteria: included only those institutions that have published detailed caseload figures for each of the last five years.
17 interviews including from CIETAC, DIAC, HKIAC, JCAA, KCAB, LMAA, LME, MCIA, OAC, SCC and VIAC.
Trajectory of total sum in dispute vs arbitration caseloads – regional disparities
As noted above, there was a significant discrepancy in the amount of data that was publicly available in relation to the Total Sum in Dispute as compared with the institutions’ caseloads. However, we did observe that despite the overall increase in arbitration caseloads globally, the Total Sum in Dispute did not follow the same trend globally, only in Europe.
As shown in the graph below, most of the major European institutions saw the Total Sum in Dispute increase (for instance, the ICC’s Total Sum in Dispute increased from USD 37bn in 2017 to USD 101bn in 2022).
However, in the APAC region, the statistics show an overall decline in the Total Sum in Dispute over the past five years (with the exception of CIETAC, which consistently saw growth over the last five years from USD 10 bn to USD 17 bn, save for a slight dip in 2020). Given that APAC was the best performing market in terms of the number of arbitrations filed in 2022, one might have expected a correlating increase in the Total Sum in Dispute. However, as shown on the graph below, both SIAC and HKIAC, the two major institutions in APAC, did not see any significant growth in the Total Sum in Dispute overall. The SIAC did see a spike in 2019-2020, and this may be due to increased cases as a result of the COVID-19 pandemic, which has since stabilised.
Unfortunately, there is not enough data available from institutions from other regions to discern a trend in terms of dispute values outside of Europe and Asia. The ICDR-AAA publishes data on Total Sum in Dispute and this has been fluctuating, at USD 8.2bn in 2018, dipping to USD 4.8bn in 2019, increasing to USD 6.1bn in 2020, and dipping to USD 4.2 bn in 2022.
Largest players
In terms of arbitral institutions with the highest dispute values, ICC is at the top of the table with a Total Sum in Dispute of US$ 37 bn – US$ 112 bn over the period 2017 to 2022, followed by CIETAC with US$10.11 bn – 17.85 bn over the period 2017 to 2022. ICDR, DIS, HKIAC, and SIAC make up the next category of institutions, with Total Dispute Values falling in the US$ 4bn – US$ 8bn range over the period 2017 to 2022. Most other institutions have a Total Sum in Dispute Value of US$ 2bn or less, such as SCC, VIAC and SAC.
Impact on SMEs and average dispute values
Only five of the institutions that we analysed report the Mean Sum in Dispute, while only two report the Median Sum in Dispute. Due to the scarcity of data on the Mean or Median Sum in Dispute, we were not able effectively to test our second hypothesis on whether average dispute values did indeed spike alongside caseload numbers in 2020/2021 and then settle back down. However, in APAC, the fact that (a) there was an increase in case numbers and (b) the Total Sum in Dispute declined suggests that the Mean Sum in Dispute in APAC fell, contrary to what we hypothesised.
Scarce and inconsistent data on dispute values
As is evident from our analysis above, our ability to identify trends around dispute values has been limited by the fact that many arbitral institutions do not publish data on dispute values, and where such data is publicly available, there is a lack of consistency across institutions in how this data is reported. Most institutions that publish data on dispute values provide the Total Sum in Dispute3, a handful provide a breakdown of those administered by the institution4 and some include counterclaim amounts5. Some institutions only report on the Median Sum in Dispute6, while others indicate the percentage of cases within different ranges7. Only five of the institutions we analysed report the Mean Sum in Dispute8, whereas only two report the Median Sum in Dispute9.
Bodies such as the International Federation for Commercial Arbitration Institutions10 are exploring the possibility of institutions harmonising the way they arrive at and report their statistics. Such standardisation would certainly help users, though it does not yet seem to have gained much traction with the arbitral institutions.
A call to action for arbitral institutions
The broader conclusion from our analysis is that institutions should strive towards greater transparency and consistency in reporting the Total, Mean, and Median Sum in Dispute, as well as the general spread of cases.
Statistics from the arbitral institutions shed light on the nature of disputes, the institutes, and their performance. This clarity enables parties to make well-informed, prudent decisions, ensuring that they find the dispute resolution method best suited for their contract
Caroline Falconer, SCC
Where institutions selectively report only certain metrics, only limited conclusions may be drawn. For instance, the Total Sum in Dispute statistics, when viewed in isolation, must be viewed with caution, as a single multi-billion dollar case can hugely inflate the reported number for the year it was registered. The Mean Sum in Dispute figure would similarly be inflated by a datapoint on either extreme. To illustrate, in 2020, the Mean Sum in Dispute at the AIAC even exceeded the Mean Sum in Dispute of the ICC and hit a record value of US$ 79.7 million. In other years between 2017 - 2022, the Mean Sum in Dispute ranged between 8 - 13 million only.
By comparison, the Median Sum in Dispute would be a very informative and more accurate measure of the size of the “average case” than the Total Sum in Dispute. Unfortunately, only a limited number of institutions make this information public, including the ICC, SAC, and DIS. Similarly, the core spread of cases, excluding outlying “one off” cases, would provide valuable insight when analysing the value of the average dispute in arbitration. Typically, the bulk of institutions’ cases would fall within a mid-range of dispute values, with some cases in the lower end and some in the higher end. Understanding what this range is for each institution would be a useful indicator of the types of cases it deals with, as well as their growth over time.
This data must of course be viewed in conjunction with the caseload data to understand the volume of cases managed by the institution.
Not unlike the position at many other arbitral institutions, most of our cases fall into the <USD1 million and >USD1 million to USD 5 million category, with very few in the >USD100 million category. Nevertheless, many of our cases involve large corporates and state and semi-state entities, and it is important to note that financial relief is not always the main driver for parties, with most parties seeking a combination of declaratory relief, specific performance and monetary relief.
Robert Stephen, DIAC
We are conscious that such data may offer only a 2-dimensional view and not necessarily reflect the complexity and revenue generated for the institutions. That said, ultimately, rigour, transparency and consistency across institutions in reporting data on Total, Mean and Median Sum in Dispute, as well as the general spread of cases (in addition to caseload data) would be helpful to both users and institutions. It would provide holistic insight and context into the institutions’ work and help users to better determine which institution would be best suited for their dispute. This would also be beneficial to institutions as they would gain valuable insight as to the global trends and the best way to position their services.
The authors would like to thank Niluka Perera (Trainee, CMS London) and Kerith Cheriyan (Trainee, Singapore) for their assistance with the research used to write this article.
1 For ease of comparison in this report, all figures have been converted to USD where institutions reported in their local currency only.
2 For the purpose of this report, the ‘Total Sum in Dispute’ refers to the total value of newly registered cases with an institution, and the ‘Mean Sum in Dispute’ refers to the total dispute value divided by the total number of new cases registered. The ‘Median Sum in Dispute’ refers to the value of the case that falls at the midpoint of the data set, i.e. half the cases are a higher sum and half the cases are a lower sum.
3 For example, ICC, CIETAC, SIAC, HKIAC, KCAB, AIAC, DIS, SCC, VIAC, SAC, ICDR-AAA
4 For example, HKIAC
5 For example AIAC
6 For example, SAC and DIS
7 For example, JCAA
8 The HKIAC, SIAC, KCAB, AIAC and the ICC.
9 The ICC, DIS
10 IFCAI Arbitration (ifcai-arbitration.org)
