LCIA publishes its casework report for 2023 – an increase in cases with consolidation and early determination becoming more popular

The LCIA has recently published its Casework Report for 2023, providing valuable insights into the organisation's caseload and emerging trends. The report highlights several noteworthy developments, including an increase in referrals to the LCIA, particularly "younger" contracts dated within the two years prior to referral (from 41% in 2022 to 48% in 2023). The majority of these contracts involves sale of goods, which the LCIA attributes to various factors such as the war in Ukraine, rising energy prices, and sector volatility.

Additionally, the report emphasises the growing popularity of consolidation and of the early determination tools offered by the LCIA following the updating of the LCIA Rules in 2020.

Caseload in 2023

• In terms of caseload, the LCIA received a total of 377 referrals in 2023, including 327 arbitrations pursuant to the LCIA Rules, marking a 13% increase from the previous year. Other referrals were for fundholding, other ADR services (including mediation and adjudication), and a small number of non-LCIA arbitrations or appointment-only services. The number of arbitration referrals reverses the slight dip in 2022 (293 cases) and continues the upward trajectory of case numbers over the last five years.
• The top industry sectors across the caseload remain transport and commodities (36%), banking and finance (16%) and energy and resources (14%). This industry split is very similar to the LCIA's 2022 caseload, reportedly impacted by fluctuations in energy prices and supply chain uncertainty following the war in Ukraine.
• The majority of arbitrations arose from agreements related to the sale of goods (31%), services (17%), shareholder/share purchase/joint ventures (15%), and loan and other loan facility agreements (10%). This is again consistent with the 2022 caseload.
• As in previous years, a significant proportion of LCIA arbitrations begin within five years of the agreement being signed. Furthermore, there has been a noticeable increase in the number of disputes arising from contracts made within the last two years (48%). This surpasses the previous high in 2020 (47%), which had been connected to disruptions caused by the COVID-19 pandemic. It remains to be seen whether this reflects an emerging trend of referring disputes to LCIA arbitration earlier in the contract life cycle.
• The percentage of cases involving state parties and state-owned parties remains significant – at 11%. Since the LCIA started recording this figure in 2021 (where it stood at 5.7%), this figure has risen steadily.
• The report highlights that the LCIA's reach is truly international. Approximately 98% of LCIA cases involve one or more international parties, with 79% having no UK parties. Western Europe remains the largest geographic grouping of parties (19.4% in 2021, 22% in 2022 and 21% in 2023), followed by Asia (8%). The percentage of Asian parties marks a return to a similar percentage to that in 2020 (9.2%) and 2021 (8.1%) and reverses the marked increase in Asian parties seen in 2022 (24%).
• In addition, referrals from African parties have doubled (from 4% in 2022 to 8% in 2023), and the percentage of parties from Saudi Arabia have also significantly increased (from 0.8% in 2022 to 4.2% in 2023).
• London continues to be the preferred location for LCIA arbitrations, with 86% of cases seated there, a slight decrease from 88% in 2022. Regarding governing law, the law of England and Wales is still the preferred choice – with 83% of parties selecting it in 2023.

Arbitrator appointments and diversity

• The split between three member tribunals (56%) and sole arbitrators (44%) for LCIA arbitrations remained fairly even in 2023. The LCIA Court selected arbitrators in 36% of all appointments in arbitrations pursuant to the LCIA Rules, which is similar to last year (33%). The number of first-time appointees in LCIA Court appointments was 13% in 2023 (similar to 14% in 2022), whilst the percentage of first-time appointees nominated by the parties was 17% (down from 20% recorded in 2022).
• One important aspect of the report is the LCIA's commitment to promoting diversity in its appointments, particularly in terms of gender representation. The overall proportion of female arbitrators appointed under the LCIA Rules has increased to 34% in 2023, up from 28% in the previous year. The proportion of female co-arbitrators has increased significantly, from 25% in 2022 to 39% in 2023. Furthermore, almost half of the LCIA Court's appointments were for female arbitrators. The proportion of female arbitrators appointed by parties has also increased slightly, to 21% in 2023 (up from 19% in 2022).
• The report also highlights an increase in the diversity of national identity among arbitrators, with appointees from 41 countries, including prominently the United Kingdom (258), the USA (30), Ireland (19), Canada (18) Germany (11), Greece (10) and Singapore (10). Non-British arbitrators were appointed in 42% of appointments, which is up 2% from the previous year. Of the 187 appointments of non-British arbitrators, 48% were made by the LCIA Court, 40% by the parties and 12% by the co-arbitrators.

Challenges to arbitrators

• There were five challenges to arbitrators in 2023: two of which were rejected, in one case the arbitrator resigned, and the remaining two applications are pending. Although this is an increase from 2022 (where the LCIA received no challenges to arbitrators), it is broadly consistent with the number of challenges received in the last five years. 

Multi-party arbitrations, early determination and interim relief

• The LCIA reports that parties have continued to make use of the features introduced by the 2020 Rules. For example, the ability to file a composite request for arbitration has contributed to a significant decrease in the proportion of LCIA arbitrations involving disputes arising out of more than one agreement, from 7% in 2022 down to 2% in 2023. The LCIA noted that the majority of composite requests filed in 2023 resulted in consolidation (26 out of 29), demonstrating that composite requests are a useful tool for parties seeking to consolidate multiple arbitrations at an early stage in the arbitration.
• More parties are seeking consolidation of their arbitrations and more are succeeding. A total of 48 applications for consolidation were made by parties in LCIA arbitrations (15% of LCIA cases commenced in 2023). 84% of these were granted, which is a significant increase from previous years (69% in 2022 and 79% in 2021). This reflects that parties continue to utilise consolidation provisions introduced by the 2020 Rules and their preference for consolidation to take place before the tribunal is appointed.
• A total of 24% of LCIA arbitrations involved more than two parties, and 2% of arbitrations involved ten or more. This is a larger number of multi-party arbitrations than in 2022 and is more consistent with the figures in 2021.
• Only four applications were made for the joinder of a third party in 2023, three of which were rejected, and one of which was granted. The LCIA notes this is one of the lowest numbers of joinder applications in recent years.
• In 2023, there were 24 applications for early determination, which is a 60% increase from the 15 applications received in 2022. Of the 2023 applications, two were granted, 15 were rejected, three were partially granted/ partially rejected, one was withdrawn, and the three remaining applications are pending.
• Finally, in 2023, parties made 58 applications for interim and conservatory measures, across 43 arbitrations. As in 2021 and 2022, security for costs was the most common interim relief sought. Tribunals granted the requested relief in 14 instances and rejected the application in 21 instances, with five applications being partially granted, and 18 were superseded or are pending.

Expedited formation of tribunals and emergency arbitrator appointments

• The LCIA reports an increase in applications for expedited formation of the tribunal (15) and the appointment of an emergency arbitrator (6) in 2023, as compared to 10 and 3 respectively, in 2022. Twelve of the 15 applications for expedited formation were rejected and three were granted.
• Five of the requests for an emergency arbitrator were rejected and one was granted.

For more information, please contact Andrew Cannon, Partner, Global Co-Head of International Arbitration, Gerald Leong, Senior Associate, Vanessa Naish, Professional Support Consultant, or your usual Herbert Smith Freehills contact.

The authors would like to thank Emily Skinner for her assistance with this post.