LCIA publishes its casework report for 2021 – showing among other things an increased number of cases from North America and the Middle East and continued improvement in arbitrator diversity in appointments by the LCIA Court

The LCIA has published its Casework Report for 2021, its annual summary of its caseload and trends. It reported fewer new cases than in the record high year of 2020, in a return to caseload figures around pre-pandemic levels. The top three industry sectors of the LCIA's caseload remain banking and finance, energy and resources and transport and commodities (together representing 65% of cases).

While the number of cases referred from Russian parties declined (from 6.8% of parties in 2020 to 2.1% in 2021), the percentage of parties from North America and the UAE doubled (from 4.9% and 4.3% of parties in 2020 to 9.8% and 9.5% in 2021 respectively).

The report also demonstrates continued progress by the LCIA Court in the gender and nationality diversity of its arbitrator appointments, in contrast to party appointments.

Caseload in 2021

• The LCIA received a total of 387 referrals for its services in 2021, including 322 arbitrations pursuant to the LCIA Rules. Other referrals were for fundholding, other ADR services (including mediation and adjudication), and a small number of non-LCIA arbitrations or appointment-only services. This was a 21% decrease in referrals compared with the record high in 2020, but was broadly consistent with the number of referrals in 2019 (395).
• The top industry sectors across the caseload remain banking and finance (26%), energy and resources (25%), and transport and commodities (14%). This is consistent with the 2020 caseload, albeit that the balance between the three sectors has changed, with the banking and finance caseload increasing considerably (in part due to the commencement of a group of 27 related arbitrations in this sector).
• The major types of agreements under which arbitrations were commenced remains similar to 2020, with 82% of arbitrations arising under sale of goods agreements (25%), services agreements (21%), loan or loan facility agreements (21%) and shareholder/share purchase/joint venture agreements (14%). As in previous years, most of the arbitrations (74%) were commenced within five years of the agreement in question being entered into – with 34% being commenced within two years.
• The LCIA now records the numbers of parties which are state bodies or state-owned entities (5.7% of parties in 2021).
• The report also addresses the agreement in March 2022 between the LCIA and the Dubai International Arbitration Centre by which the LCIA would administer all existing DIFC-LCIA cases from London, following the Decree No. (34) of 2021 of the Government of Dubai. Around 130 DIFC-LCIA cases are now being administered from London.
• Consistent with 2020, 85.2% of parties to arbitrations administered by the LCIA were from countries other than the UK, across 90 countries in total, although 23% of arbitrations involved at least one party from the UK. The largest geographic grouping of parties remained from Western Europe (19.4%), followed by the MENA region (18.3%). The largest growth came from the UAE (up to 9.5% of parties in 2021 from 4.3% in 2020) and North America (up to 9.8% of parties in 2021 from 4.9% in 2020), with the most significant decreases coming from Africa (6.6% in 2021 down from 11.7% in 2020) and Russia and other CIS regions (2.4% in 2021 down from 7.2% in 2020).
• The majority of LCIA arbitrations (85%) remained seated in England, with 76% being governed by English law.

Arbitrator appointments and diversity

• The split between three member tribunals (52%) and sole arbitrators (48%) for LCIA arbitrations remained fairly even. Unusually, the LCIA also reported two tribunals of two members being appointed by the LCIA Court in accordance with the parties' arbitration agreement.
• The LCIA Court selected arbitrators in 42% of all the appointments in arbitrations pursuant to the LCIA Rules, continuing the key role which the LCIA plays in arbitrator appointments and reinforcing the important contribution which the institution can make to diversity. An impressive 47% of the 449 appointments made by the LCIA Court in 2021 were women, up from 45% in 2020.
• The overall proportion of appointments of female arbitrators made in arbitrations under the LCIA Rules was 32% (compared to 33% in 2020). As in previous years, party appointments represented a disproportionately small contribution to this – a figure which in fact decreased from 22% to 16%, a development which the LCIA described as "especially disconcerting" and which it attributed in part to a greater proportion of repeat appointments being made by parties and co-arbitrators. As in previous years, the LCIA's own appointments of presiding or sole arbitrators reflected a much higher proportion of gender diverse arbitrators.
• 42% of all sole arbitrator appointments were of women, compared to 27% of co-arbitrator appointments and 29% of chair appointments in three member tribunals. Two of the three emergency arbitrator appointments were of women.
• In terms of diversity of nationality, non-British arbitrators were appointed in 41% of appointments in LCIA arbitrations, an increase from 37% in 2020. These arbitrators were from 46 different countries, including the USA (5%), Canada (4%), Ireland (3%), and France (2%). The non-British arbitrators were chosen by the LCIA Court 47% of the time, compared with by the parties 28% of the time and by the co-arbitrators 33% of the time.
• The proportion of first-time appointees by both the LCIA Court and by the parties also increased. The percentage of first-time appointees in LCIA Court appointments increased from 10% of all Court appointments in 2020 to 17% of appointments in 2021, while the percentage of first-time appointees nominated by the parties increased slightly from 17% in 2020 to 19%in 2021.

Challenges to arbitrators

• There were seven challenges to arbitrators in 2021 (four of which were in related cases), a number which has remained consistently low (2.17% of new arbitrations). Six of those challenges were dismissed, and in one case the arbitrator resigned before a decision was required.

Multi-party arbitrations, early determination and interim relief

• The LCIA reports that parties have made use of the new features introduced by the 2020 Rules, such as the ability to file a composite request for arbitration (for which the LCIA received 29 requests to commence 96 arbitrations, constituting 30% of the total arbitrations received in 2021). One such composite request commenced 27 arbitrations.
• Parties have also made use of the broader consolidation provisions, with more such applications being successful and being made at an earlier stage in the arbitration. A total of 43 applications for consolidation were made (13% of the LCIA cases commenced in 2021), with 88% being fully or partially granted.
• A total of 24% of the arbitrations commenced pursuant to the LCIA Rules in 2021 involved more than two parties, and 1.24% of arbitrations involved ten or more parties. This was fewer multi-party arbitrations than in 2020, where 31% of arbitrations involved more than two parties.
• Fourteen applications were made for the joinder of a third party in 2021, eight of which were granted, four were rejected, one was withdrawn, and one was superseded by the withdrawal of claims.
• In 2021, 15 applications were made for early determination pursuant to Article 22.1(viii) of the Rules. Of these, seven were granted, two were rejected, one was superseded by the parties’ settlement of the case, and five were yet to be determined by the end of 2021.
• Finally, 57 parties made applications for interim and conservatory measures across 38 arbitrations, with security for costs being the most common relief sought. Tribunals granted the relief in 21 instances and rejected it in 24 cases, with the remaining 12 applications being superseded, withdrawn, or pending at the end of the year.

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 (8) in 2021 as compared with 2020. Eleven of the fifteen applications for expedited formation were rejected, three were granted and one was superseded by party agreement. Five of the eight applications for the appointment of an emergency arbitrator were rejected and three were granted.

For more information, please contact Andrew Cannon, Partner, Louise Barber, Senior Associate, or your usual Herbert Smith Freehills contact.