The Year Ahead - Developments in Global Litigation and Arbitration in 2020
What trends are emerging? What's around the corner? How can I position my organization for what comes next?
The Year Ahead
Developments in Global Litigation
and Arbitration in 2020
It is not common to produce a forward-looking guide to the law as there are very few sources that consider what lies ahead. The legal community tends to look to the past and present, writing and presenting on recent cases and the current state of the law. And yet the questions we hear from clients are often future-oriented. What trends are emerging? What's around the corner? How can I position my organization for what comes next ?
With more than 1100 disputes lawyers in 77 offices and 46 countries around the world, Baker McKenzie is well positioned to consider future developments on a truly global basis. In compiling this guide to the coming year, we draw upon the collective knowledge of our disputes lawyers around the world, embedded in their local markets, experts in their industries.
We hope you find our guide useful, and look forward to working with you in the year ahead.
Global Chair, Dispute Resolution
Trade disputes and geopolitical frictions
have become key drivers of the economy
Blackrock Q4 2019
Global Investment Outlook
The global economy is growing at about 3% a year. This is roughly equal to the average growth rate for the last 50 years.
However, growth predictions are ticking slightly downwards, mainly due to concerns around trade. And there are still high levels of government and corporate debt arising from the financial crisis and subsequent period of low interest rates.
Nowhere is this better illustrated than China, which is forecast to overtake the US as the world's largest economy as early as this year, on some measures. But China's national debt is over 300% of GDP, and US tariffs threaten growth.
Increasing rivalry between the US and China is currently focused on trade, and specifically on technology. There is also tension between the US and Russia, based largely on sanctions. US presidential elections will take place in November this year, setting the path for future US policy.
In Europe, the UK has a new government committed to Brexit. Italy has a new government at odds with the EU on its budget. There were gains for anti-EU parties in last year's EU elections.
Governments in the Middle East and Africa continue to struggle with low global commodity prices, which limit government spending and create the potential for civil unrest.
While the risk of recession is real,
our baseline assumption is that the
economy will experience a relatively
modest cyclical slowdown
Baker McKenzie Global Transactions Forecast 2020
In Latin America, populist policies in Brazil and Mexico continue to erode investor confidence. There is economic weakness in Argentina, and Venezuela's crisis continues.
In Asia, potential flashpoints exist in Kashmir, Iran, North Korea and Hong Kong. But India continues its rise, and is forecast to be the world's fastest growing major economy this year and beyond.
Data are to this century what oil was to the last one: a driver of growth and change
Meanwhile, the digital revolution continues. Some technologies are now mainstream, such as cloud computing and e-commerce. Others are still getting established, such as artificial intelligence, the internet of things, and robotics.
In the coming year, 5G networks will continue to be rolled out all over the world. 5G networks are up to 100 times faster than 4G, driving innovation in augmented and virtual reality, connected cars and smart homes.
Meanwhile, the sustainability movement has gathered pace. There is increasing pressure on companies to show sound environmental practices, and rising consumer demand for sustainable products and services.
A new era of sustainability is rising and it’s touching every corner of the world
Nielsen Report, 2018
1. The globalization of dispute resolution
In the last three years, six jurisdictions have launched "international" commercial courts. Others are under consideration. Many still have low (or no) caseload. But these projects are slow burners: the average time between the announcement of a new court and its first case is 3.7 years.
Competition is driving courts to make procedural efficiency reforms to reduce costs, such as in the UK, Germany, Hungary, Russia, Colombia and Vietnam. Arbitral institutions are competing through opening new offices, revising rules for efficiency, and introducing new case management technology.
There is also a focus on new international courts. Existing international courts focus mainly on criminal matters, trade disputes and treaty interpretation. New courts of this type have been proposed, such as the EU's campaign to create a multilateral investment court.
Beyond this, there have been suggestions for the creation of an international civil court for cross-border mass tort claims, and an international tribunal for business and human rights cases. Whilst these are longer term projects, we may see further progress in the coming year.
2. Efforts to improve cross-border enforcement
Last year, this guide reported on the increasing efforts between states and between courts to co-operate over enforcement of judgments. This trend has continued, driven in part by the wish to make a country's litigation venues more attractive.
The Hague Convention on Choice of Court Agreements allows judgments of one jurisdiction to be enforced in another, where a choice of court clause exists. It has been gaining momentum, with the first enforcement case last year (in Singapore), and China reported to be interested in joining.
The more ambitious Hague Judgments Convention was concluded in July 2019, after 27 years in development. This allows for cross-border recognition of judgments in specified situations even without a choice of court clause. However, no state has yet ratified the Convention.
The Singapore Mediation Convention was signed in July 2019. This UNCITRAL project aims to ensure cross-border enforceability of settlement agreements arising from mediation. Signatories include the US, India and China. No state has yet ratified, but Singapore is expected to do so soon.
The Singapore Convention on Mediation is a key part of the international dispute settlement framework, fundamental to international trade, and I look to it coming into force.
Edwin Tong, Singapore Senior Minister of State for Law and Health
Along with the New York Convention on enforcement of arbitral awards, we now have agreements covering the three key modes of dispute resolution: litigation, arbitration and mediation.
And there is more good news. Last year UNCITRAL published new model rules on the enforcement of insolvency-related judgments. In addition, the Standing International Forum of Commercial Courts published a Memorandum promoting co-operation on cross-border enforcement at judicial level.
The work of the Standing Forum is significant. A meeting is scheduled in Singapore for March 2020 and an enhanced Memorandum is expected. In time we may see international judges create a body of soft law which allows them to move more quickly than inter-governmental negotiations allow.
3. Growing use of mediation
Mediation is gaining traction around the world, with increasing amounts of legislation to support and promote it.
There is a growing trend for mandatory mediation. This has been used for some time in places such as Australia, Italy and the Philippines, but other jurisdictions are now following suit. Initiatives are at various stages in Turkey, Greece, Romania and India.
British Columbia has expanded its quasi-mandatory "notice to mediate" system, having pioneered it over twenty years ago. And in the state courts of New York, mediation is now presumptive.
There is also ground-up promotion, such as the INSOL working group on mediation. Mediation is working its way into more dispute clauses, and hybrid clauses such as med-arb continue to be popular, especially in Asia. Unsurprisingly, data from mediation institutions shows rising caseloads.
4. Litigation funding entering the mainstream
Use of funding is still increasing, but is not yet fully established in the industry. There has been a bubble in the funding market in the last five years. USD 100 invested in the world's largest funder five years ago would have been worth almost USD 2000 at the peak in 2018.
Since then, the wheels have not quite come off the wagon, but they are starting to wobble. There have been failed IPOs and accounting controversies. But funding is here to stay, and funding is slowly starting to enter the mainstream.
Jurisdictions are legislating to allow - and regulate - funding, such as Singapore, Hong Kong, and the UAE. New legislation in this area may be introduced in the US this year. The arbitration community is starting to develop accepted practices around funding.
5. Growth of criminal and regulatory enforcement
Data from courts and arbitration institutions continues to show growing caseloads in most major centers. Where caseloads are falling, the amount in dispute is often still rising. However, this data does not capture the significant growth in criminal and regulatory enforcement activity around the world.
There is a rise in both the volume of regulation and the number of laws imposing corporate criminal liability. We are also seeing an increase in the number of investigations being conducted by regulators and law enforcement agencies.
The US has historically been dominant in this area through the Foreign Corrupt Practices Act and agencies such as the Department of Justice. That dominance is gradually being eroded by the introduction of new anti-bribery and corruption laws in many parts of the world, and a rise in the activity of local law enforcement agencies.
Agencies are also becoming more effective, for example through increasing the incentives for self-reporting, and using deferred prosecution agreements to reach settlement. In particular, there is greater cross-border cooperation between agencies, leading to a rise in global multi-agency investigations, prosecutions and settlements.
The risk of being subject to an investigation, and a prosecution or DPA, is increasing, and is no longer limited to the US. This is leading to greater efforts by many companies to develop their compliance systems.
6. Political risk to investments
Investors in certain developing countries have long faced the risk of nationalization. Methods of expropriation are becoming more sophisticated and include spurious legal claims and special retrospective tax measures. This risk increases where long-standing foreign investments in host countries are coming to the end of their agreed terms.
However, it is not just investments in developing countries that face political risk. Recent polling in the UK suggests strong support for the nationalization of key industries such as utilities and railways. Populist political parties are campaigning for nationalization in places such as Spain and Hungary.
It is possible for investors to seek increased protection by amending contractual provisions, obtaining independent valuations, or re-structuring their investments to take advantage of investment treaty protections.
This pre-emptive protection requires a careful blend of political and legal analysis. In the EU for example, the Achmea decision found that arbitration provisions in an intra-EU bilateral investment treaty were invalid. Many tribunals have ignored the decision, with consequences still unfolding.
We anticipate that political expropriation will drive increasing amounts of investment arbitration, together with court litigation involving public law and human rights arguments.
7. New analytics tools for disputes lawyers
Machine learning is nothing new to many disputes lawyers - technology-assisted document review has been around for over a decade. But new tools, applying machine learning and artificial intelligence to past litigation data, can give valuable insights into cases, opponents and judges.
This is nascent technology, about to tip into the mainstream. It enables lawyers to construct more effective cases, and give better settlement advice. It enables litigation funders to make better investments. And it allows more sophisticated research on judges and arbitrators.
This has significant potential use for arbitrator selection, and it is here that we are likely to see the first widespread use of these tools. Want to appoint an arbitrator with the highest percentage chance of accepting jurisdiction on a particular investment treaty case? AI has the answer.
But these tools are not universally popular. As we warned in last year's report, these systems can highlight aberrant decision-making by judges and arbitrators. This may not be welcomed by the decision-makers. This analysis may also generate appeals, or constrain judicial freedoms.
Last year France became the first country to ban publication of judicial analytics. The Brazilian judiciary is rumored to be working on a similar bill. We may see other examples in the coming year.
Tools like this can also, in theory, analyze the performance of individual lawyers, and quantify their likely influence over the outcome of a case.
Academic studies already show that this influence can be very significant. We can expect sophisticated litigants to begin to explore this area.
Analytics Tools for Disputes Lawyers
- Arbitrator Intelligence
- Dispute Resolution Data
- GAR ART
- Kluwer Arbitrator Tool
8. New efficiency tools for lawyers
Many efficiency tools are already established in the disputes industry. These include electronic court or tribunal bundles, witness evidence by video-link, and technology-assisted document review.
Other technologies are still emerging, including automated transcription, semi-automated research and drafting, and guided workflow systems. These tools will begin to see wider adoption.
For example, LitiGate offers automated drafting of key people lists and chronologies, and in the coming year will pilot a service to review arguments, suggest counter-arguments, and recommend preferred procedural tactics. Baker McKenzie's Disputes Clause Finder will draft a bespoke disputes clause in just a few steps.
9. Emerging use of AI in national court systems
Some national courts are also interested in AI. It can improve efficiency and consistency. For example, the Chinese courts have an AI system which provides judges with a first draft suggested judgment.
It can also help to ease pressure on the court system. The French courts launched a system last year where claimants are provided with a predicted outcome to their case, and then sent for mediation.
Whilst the Beijing Internet Court introduced a "robot judge" last year, it was restricted to "repetitive basic work". This will allow the Estonian courts to claim a world first, as they aim to roll out a robot judge this year which can determine small money claims (albeit with right of appeal).
It is not yet clear whether AI in courts will first become established in sophisticated legal markets (to supplement existing legal infrastructure) or in less sophisticated markets (where that infrastructure does not exist and AI takes its place).
The latter would allow jurisdictions to leapfrog the established order in efficiency, and could have a significant impact.
10. Automated dispute resolution
One approach to automated dispute resolution is by AI algorithm, such as the Estonian example above. But there are issues around transparency, explanation of reasons, and extrapolation of existing human biases.
Another approach is by "crowdsourcing" decisions. For example, Kleros is a platform that envisages a global community of jurors to adjudicate disputes, utilizing concepts of game theory in an attempt to ensure correct decisions.
Other platforms aim to improve the settlement process. For example, Smartsettle uses a blind bidding system to facilitate negotiated solutions.
Both Kleros and Smartsettle are blockchain platforms. Several other projects aim to use blockchain to automate dispute resolution to some degree. Blockchain offers potential advantages for dispute resolution - around verification (of service, of evidence) and automatic execution (smart contracts). Many of these ideas are still under development, but over the coming year we may see them start to bubble up to the mainstream. As they do so, disputes lawyers will need to become familiar with new concepts and terminology, such as oracles, prediction markets, and incentive tokens.
Automated Dispute Resolution Tools
Consumer Goods & Retail
There is an increasing trend toward a class action culture outside of the traditional US market, particularly in consumer fraud, product liability, and antitrust matters. A key example is Australia, where it is estimated that USD 6.9 billion in class actions have been filed in the past fiscal year.
New legislation is making class actions easier, such as in the Netherlands and the UK. There is also a growing political climate where corporate wrongdoing must be seen to be tackled: class actions form part of the response. Litigation funders continue to target these cases, chasing high returns.
Manufacturers and retailers continue to face pressure on supply chain transparency and compliance. Consumers increasingly demand ethical and sustainable products, and companies face big legal and reputational risks if they get it wrong.
Modern slavery laws are being enacted in an increasing number of jurisdictions, with accompanying penalties and sanctions. The most recent law enacted is Australia’s Modern Slavery Act which came into force in January 2019, joining the ranks of the UK, France and California.
Risks related to product quality are also rising. In the age of digital media and global product sales, failure to handle a manufacturing defect correctly can lead to swift and significant reputational damage. Regulators are also imposing larger fines for these issues.
Care must also be taken over advertising, especially as global brands expand into new markets. In China, professional complainants routinely lodge complaints against manufacturers and traders for violating advertising laws, so as to obtain compensation, or a reward from the authorities.
Energy, Mining & Infrastructure
The transition from oil and coal to renewables is leading to changes in business structures, operating models and assets, making disputes more common. We are seeing particular issues around construction projects, joint ventures and M&A warranties.
The pace of regulatory change around renewables is also causing compliance risks and triggering disputes. Investors whose projects are losing value due to regulatory changes will continue to make claims against host states, relying on investment treaty protections.
The extractive industries will remain a key focus for regulators and law enforcement agencies, particularly the US Department of Justice. Their business is inevitably highly politicized due to the need to engage with communities, local partners and governments in developing countries.
There are currently 33 oil and gas companies with open FCPA investigations, and at least 16 ongoing UK SFO investigations in the energy and infrastructure industry.
Climate change litigation is an emerging trend, where individuals and NGOs bring actions against governments and large energy companies. Claimants aim to change government policies, corporate behavior, and generate publicity. Arguments tend to be based on public law and human rights.
Climate change cases have been brought in at least 28 countries around the world, but three quarters of cases so far have been filed in the United States. Other examples include the Netherlands, Australia, New Zealand, and the Philippines.
Project finance risk presents an ongoing issue, particularly under China's Belt and Road Initiative. China has poured billions of dollars into infrastructure projects across Asia and Africa, leading to high levels of debt in developing nations that may not be sustainable.
Equally, access to financing may be constrained by a slowdown in the Chinese economy, which may trigger default situations and disputes throughout the project chain.
The BRI presents risks common to large infrastructure projects. These risks could be exacerbated by the … weak economic fundamentals and governance of several participating countries
World Bank, June 2019
And nationalization risk is increasingly prevalent in this sector, not just in the developing world but in countries such as the UK, Hungary and South Africa. Protecting investments from this risk involves careful consideration of corporate structures, investment treaties and public law.
The global investment surge is driving a rising debt burden that, combined with ongoing economic disruption, is creating the conditions for rising debt defaults. This has potential knock-on effects for disputes.
The next default cycle is likely to be exacerbated by the popularity of cov-lite loans. These make up 80% of new issuance in the leveraged loan market, as investors abandon conventional protections in the hunt for yield. When firms deteriorate, lenders will have fewer warnings and fewer options.
From 2022, panel bank support for LIBOR will be discontinued, with other inter-bank offered rates under threat. IBORs are the dominant benchmarks for financial products, referenced by an estimated USD 370 trillion of agreements.
Discontinuation of LIBOR raises many issues including uncertainty as to contractual positions, financial and accounting implications (in which there may be winners and losers) and regulatory risks. The natural consequence of this is likely to be litigation and, in some cases, regulatory enforcement.
Financial regulators and law enforcement agencies are becoming increasingly active, and co-operating more closely with other national and global agencies. There is a greater focus on individual accountability regimes for senior managers, for example in Australia, Hong Kong, Singapore and the UK.
Sanctions compliance is an increasing issue, especially as organizations try to navigate US secondary sanctions against Iran imposed by the Trump administration, and EU Blocking Regulations introduced in response.
The hiring practices of financial institutions, especially in Asia, have also faced scrutiny. There are at least five companies which have been fined for hiring relatives of public officials to win banking deals or to receive favorable treatment.
Governments are under pressure to take action against perceived "bad actors" such as banks. Also, the financial rewards for governments can be compelling. Globally, regulators and law enforcement agencies impose fines of over USD 20 billion per year - a significant revenue stream for governments.
This increasing scrutiny has knock on effects, as banks continue to de-risk customer bases and reduce higher risk products, services and jurisdiction exposures.
The rapid growth of the fintech market lays the ground for disputes between new entrants and the established order, and also poses regulatory challenges. Recent concerns include the potential for machine learning and AI to erroneously promote mis-selling or other regulatory breaches.
The cryptocurrency market has been volatile over the past three years. Many new currencies have launched through "Initial Coin Offerings", and many investors have been misled or defrauded, leading to claims. The approach of national regulators to ICOs is inconsistent.
Cryptocurrencies are held in virtual wallets and traded on exchanges. Several exchanges have fallen victim to cyberattacks, resulting in claims. Exchanges are also facing increasing scrutiny from regulators and law enforcement agencies over conflicts of interest, market manipulation, and money laundering.
Healthcare has always been a highly-regulated industry, but it is now difficult for regulations to keep up with the pace of innovation in the industry. New frontiers such as precision medicine, biomarkers, omics, gene and cell therapies require forward-thinking and innovative advice.
Healthcare tech is a clear example, with minimal regulation to date. Concepts such as telemedicine and wearable devices are gaining ground. Major tech companies such as Google and Amazon are already active in the sector, partnering with healthcare organizations to deliver new services.
New regulations must also reflect social change, such as the ongoing liberalization of regulations around the world regarding medicinal cannabis.
Many of these trends involve big data. Handling individuals' most sensitive personal data requires care around privacy, consent and clarity of ownership, and involves growing regulatory scrutiny.
Baker McKenzie research published in November 2019 shows that a lack of consumer confidence in digital healthcare threatens to undermine industry efforts to expand.
Healthcare continues to be more widely scrutinized by regulators. Many healthcare professionals are public officials working in the public health sector, which can create challenges when professionals help companies to promote their products, or when making decisions around treatment options.
Large companies in the sector will continue to pursue strategic partnerships with smaller players. M&A, licensing and collaboration agreements are common, bolstering research and development efforts and driving growth, but increasing the risk of disputes.
Partnering has become a key priority for sourcing innovation
IQVIA Report, 2019
More familiar healthcare disputes are still prevalent. Class actions and mass tort litigation continue to challenge drug and medical device manufacturers. We are seeing claims around faulty products, false marketing and failure to warn patients about potential side effects.
In this guide two years ago, we predicted a growing number of cases filed against manufacturers, distributors and retailers of addictive painkillers (the so-called "opioid epidemic"). There are now thousands of such cases in the US, with discussions around a global settlement of USD 48 billion.
Industrials, Manufacturing & Transportation
Escalating trade wars are forcing companies to rethink their manufacturing operations and supply chains. Some companies are moving investments into low-risk jurisdictions, or establishing component-manufacturing facilities in multiple locations, triggering disputes with existing partners.
Companies worldwide also face rising pressure to comply with international labor and human rights standards, and modern slavery legislation, both within their operations and in their supply chains.
There have been high profile court actions against multinationals using the US Alien Tort Statutes, and similar legislation in other parts of the world means this trend is likely to continue.
While volume deployment of autonomous vehicles is still roughly ten years away, there are increasingly sophisticated levels of automation and connectivity in new cars (such as automated parking). Regulation continues to develop around technology standards, safety and liability.
The FAA predicts that by 2023, the number of commercial drones in the US will triple. Similar growth is seen in other parts of the world, with governments bringing in new regulations to cope with the trend.
Beyond basic safety issues, the proliferation of drones in our society presents challenges around privacy which are likely to receive growing attention this year and beyond.
This industry continues to be a target of enforcement agencies across the globe, and features heavily in the list of top FCPA settlements. There are at least 10 companies in this industry with open UK SFO investigations. The "Operation Car Wash" investigations roll on, and have spilled out of Latin America, a key example of cooperation between agencies from many nations.
Technology, Media & Telecoms
The roll-out of 5G is already triggering disputes, with networks accused of misleading customers into believing they have 5G before the infrastructure is in place. Ongoing government auctions of 5G spectrum are a further source of disagreements.
Surveys show that global IP litigation is rising in value and complexity. These cases are also found increasingly outside the US. Key technologies affected include AI, internet streaming, autonomous tech, and the internet of things.
Technology and IP also lie at the heart of the US/China trade war, with the US accusing China of adopting policies and laws that encourage theft of US technologies and talent, or the forced transfer of know-how and IP. The US is now seeking to regulate inflows of technological investment into China.
We are seeing an increase in trade secrets disputes. Trade secret laws are an increasingly common method of IP protection, due to harmonization of trade secrets standards across jurisdictions, the difficulties of patent litigation, and confidentiality advantages from avoiding the patenting process.
Since it is difficult to protect AI through copyright or patents, there is a shift to trying to protect this IP through trade secrets. Businesses are also relying on trade secrets to safeguard their data from third-party access or use - though this has challenges.
The movement of talent between tech companies is also creating trade secrets disputes as employees share information with new employers. This is a fertile area for litigation in the US, and is on the rise in Asia.
Data disputes are an increasing feature of this sector. There is now a perfect storm of multiple factors coming together.
The volume of data is growing at an exponential rate, driven by the technological revolution. This data is increasingly commercialized: 47% of companies now share or sell their customer data for revenue . Cyberattacks are increasing in frequency and scale.
In response, there are strengthening data protection laws, such as the GDPR in the EU, the CCPA in California, and several equivalents in Latin America. There are also stronger trade secret laws. Regulators are being more active, such as in France, Italy, and Hong Kong. Fines are also increasing.
All these factors lead to disputes. These include issues around sharing of data (such as outsourcing arrangements and cloud storage), contractual disputes around who owns or controls data, injunctions arising from data protection breaches, class actions, and public law challenges to regulatory fines.
These disputes involve a high degree of reputational risk for companies, and show the need for effective information governance systems, response planning, and crisis management.
Data Disputes: a perfect storm
Government considering class action reform
Last year the Australian Law Reform Commission published a report into class actions and third party funders. This made several recommendations including that solicitors acting for plaintiffs in representative proceedings be permitted to enter into percentage-based (or “contingency fee”) arrangements. Australian solicitors are currently prohibited from entering into such arrangements, subject only to limited exceptions. The Government is currently considering the recommendations. If they are adopted this year, it will likely further increase the number of class actions in Australia.
China (including Hong Kong)
Increased options for China-related arbitrations
Last year, China and Hong Kong entered into an agreement to allow parties to Hong Kong arbitrations to seek interim measures from Chinese courts. Chinese courts have already begun granting orders to support Hong Kong arbitrations. We expect this trend to continue this year, enhancing Hong Kong's position as a preferred seat for China-related arbitration. We also foresee an uptick of China-seated arbitrations, boosted by foreign arbitral institutions setting up in the Shanghai Free Trade Zone, and pro-arbitration rulings from the China International Commercial Court.
Improved enforcement between Mainland China and Hong Kong
Meanwhile, the reciprocal recognition and enforcement arrangement between Mainland China and Hong Kong is expected to come into force this year. Once effective, parties seeking to enforce Mainland China or Hong Kong judgments will not need to re-litigate their cases when seeking to recover assets in Mainland China or Hong Kong. This will benefit investors in China's Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area.
Tighter asset disclosure rules to aid execution
The amendments in the Civil Execution Act to tighten the asset disclosure system will come into force this year. The original system was criticized for its light penalties, incapable of forcing debtors to comply with the disclosure obligation to identify their properties. The amendment has added harsher penalties, including imprisonment of up to 6 months. Under the new system, a creditor may also seek a court order compelling the disclosure of information about the debtor's properties from third parties including financial institutions.
Amendments to arbitration law
Following a public consultation, the Singapore Government is expected to introduce amendments to the International Arbitration Act this year. Key proposals include: a default procedure for the appointment of arbitrators in multi-party proceedings; a right for parties to require jurisdictional issues to be dealt with at a preliminary stage; an "opt-in" mechanism for parties to appeal arbitral awards to the High Court on questions of law; and an option for parties to waive their right to request annulment under Article V(1) of the New York Convention, but only after the award is rendered.
Increase in enforcement proceedings
Singapore recently passed the Reciprocal Enforcement of Foreign Judgments (Amendment) Act. This has enabled a broader range of foreign judgments to be recognized and enforced in Singapore, including non-money judgments, lower court judgments, interlocutory judgments, judicial settlements, consent judgments and consent orders. We can expect an increase in enforcement proceedings with a greater number of judgment creditors seeking to benefit from the Act.
Proposed establishment of Commercial Court
Taiwan's Legislative Yuan is considering the establishment of a Commercial Court to expedite proceedings for select commercial disputes. The Commercial Court would begin at the high court level and adopt a two-tier system (contrasted with the three-tier system for general cases). Cases subject to the Commercial Court would include derivative actions by shareholders of listed companies, disputes over the validity of board/shareholder resolutions of listed companies, and certain other high-value financial disputes.
New consumer councils
Following the passage of the Act on the Establishment of a Consumer Council, the Office of the Prime Minister has already started accepting applications from consumer organizations to form consumer councils. Consumer councils are designed to be independent of state agencies, business operators, and political parties, and will work in parallel with the existing Office of the Consumer Protection Board to defend consumer rights. These councils have been introduced partly to tackle the rising number of complaints about products purchased online.
Growing trend for mediation
Vietnam will likely see the rise of commercial mediation in 2020. In recent years, Vietnam has improved its legal framework for commercial mediation, providing for the effective enforcement of mediated settlement agreements. The Vietnam Mediation Center was launched in 2018, followed by the Vietnam International Commercial Mediation Center last year. We expect to see growing caseloads this year.
Europe, Middle East and Africa
Restrictions on conclusion of arbitration agreements to be eased
One of the last remaining restrictions on arbitration in Austria is due to be removed in the coming year. At present, most arbitration agreements can be concluded easily, including by e-mail. By contrast, the power to do so on behalf of a party that is to be bound by the arbitration agreement is still subject to strict formal requirements, including that the relevant power of attorney is in writing. These requirements are set to be relaxed by upcoming legislation, ensuring that agreements concluded on behalf of someone else are not treated differently.
England & Wales
UK to leave European Union
The UK is now scheduled to leave the EU on 31 January 2020, following an extension of time for ratification of the Withdrawal Agreement agreed between the UK and the remaining EU states. The UK's internal legislation on the Withdrawal Agreement was paused pending the result of a general election and will now recommence. In light of the recent extension, the UK has suspended its accession to the Hague Convention on Choice of Court Agreements until 1 February 2020.
Reform to witness statements
A Witness Evidence Working Group established by the Business and Property Courts of England & Wales is shortly to release its initial proposals for reform of witness statements. The Working Group was established following concerns that witness statements have become over-worked by lawyers, unnecessarily long and costly to produce. Any proposed reforms will be scrutinized by the senior judiciary before being taken forward.
Civil courts to undergo reform
From 1 January 2020, the "tribunal d'instance" (TI) and the "tribunal de grande instance" (TGI) will merge and become the "tribunal judiciaire" (TJ), which will then have general jurisdiction in civil matters. Proceedings pending in either of these courts on the date of the merger will automatically be transferred to the TJ. The change is part of the Reform of Justice program that was approved last year.
Specialization and efficiency in civil litigation to increase
Increased use of case management measures is expected in Germany this year, following the passage of legislation that aims to encourage efficiency in civil litigation by structuring proceedings more efficiently. Although such measures have been possible for some time, they have been used sparingly. The legislation also creates specialized chambers at the district courts for information technology and communication disputes, inheritance disputes and insolvency matters. The new provisions on procedural efficiency commenced on 1 January 2020 and the provisions concerning specialized chambers will enter into force on 1 January 2021.
Push for greater efficiency in court proceedings
Hungary is taking steps to increase the efficiency of its courts. It has already passed a new civil procedure act, which introduced a new, quicker litigation structure. The second step is a bill, currently before the Hungarian Parliament, on the enforcement of financial compensation related to the length of court proceedings. The bill would allow parties to seek financial compensation for breaches of its fundamental right to conclude court proceedings within a reasonable period of time. It is hoped that such penalties will incentivize the courts to conduct proceedings in a more efficient manner.
Class action reform in Italy
A significant reform of Italy's class action regime is set to take effect from April 2020. The new law, which was passed last year, provides that all holders of “individual homogeneous rights” will be allowed to file class actions, regardless of their status as consumers. Other changes include provision for class actions to protect rights stemming from both contractual and tort liability, as well as the establishment of a new opt-in system, enabling interested parties to join a class action even after the relevant acceptance in court.
Collective actions for damages to begin
The use of collective actions is expected to take off this year, following the passage of collective action legislation in November 2019. The new regime allows Dutch foundations or associations to bring actions for damages in the interest of a certain class of victims, provided the interests of the class are similar, the claim has sufficient nexus to the Netherlands, and the foundation or association meets certain stringent requirements. The system generally operates on an opt-out basis for Dutch residents and opt-in for all other class members. The changes took effect on 1 January 2020 and apply to incidents that occurred on or after 15 November 2016.
Reform of civil procedure
Major reform of Polish civil procedure law is due to occur in 2020. The changes introduce several novelties, such as organizational hearings dedicated to the scheduling of the proceedings, as well as a special court procedure for commercial disputes that imposes significant limitations on the parties. For instance, parties will be obliged to present all evidence in their first pleadings, and witness testimony will be admissible only if the circumstances of the case have not been proven by other types of evidence.
Legal services market to be reformed
Further changes to requirements for court representation may be introduced in Russia as part of the reform of the legal services market. Since October 2019 only individuals with a law degree can represent parties in courts, except for lower instances of general jurisdiction courts. Further plans potentially include a requirement of an advocate's status for court representation, however, the concept statement regarding the reform is yet to be finalized and approved by the Government.
Unified arbitration court to commence operations
Spain's three foremost courts of arbitration will begin hearing international arbitration cases as a single, unified center at the start of 2020, as the Madrid International Arbitration Centre. The Spanish Court of Arbitration, the Madrid Court of Arbitration and the Civil and Commercial Arbitration Court, who have traditionally competed for such work, announced the link-up in October 2019. The move will see the three institutions jointly administering international arbitrations, whilst continuing to separately administer domestic arbitrations. The move aims to strength Spain's international reputation as an arbitration hub, and, in particular, attract work from Latin America.
Extension of limitation periods
New provisions on limitation periods will enter into force on 1 January 2020. The “relative” limitation period for claims based on tort or unlawful enrichment will increase from one to three years from the date the victim becomes aware of the damage and the identity of the liable person. Additionally, the “absolute” limitation period for bringing a claim for damages or moral harm in the event of a relative’s death or personal injury will be extended from ten to twenty years from the day on which the harmful event occurred or ceased to have any effect.
United Arab Emirates
IP litigation likely to rise in DIFC
A rise in IP litigation in the Dubai International Financial Center is expected this year, following the enactment of a new intellectual property law in November 2019. The new law, which intends to create an environment in which it is safe to innovate with the knowledge that IP rights can be protected and enforced, recognizes IP rights in relation to patents, utility certificates, industrial designs, drawings, copyrights, trademarks, trade names and trade secrets and provides for sanctions and remedies for IP infringement. In light of these new protections, we expect to see a corresponding rise in IP infringement actions in the DIFC courts.
Class action regime to be written into statute
Argentina is expected to enact a new bill regulating class actions this year. Class actions have been possible since the 2009 National Supreme Court case of Halabi, which outlined the requirements for the admission of a class action, and this has been further clarified by subsequent case law. However, at present, there are no specific regulations governing class actions. It is anticipated that the new Class Action Act will formally set out the requirements and procedural steps to initiate a class action in Argentina.
New Commercial Code to reform company structures and business contracts
Brazil is expected to enact a new Commercial Code by the middle of this year. It is anticipated that it will establish new regulations relating to several types of business, including limited companies, as well as certain types of business contracts. The reforms are set to amend some of the more controversial changes brought in by the 2003 Civil Code, such as the requirements for supermajority quorums for decisions in limited partnerships, which have been regarded by some as unduly burdensome.
Supreme Court to decide on validity of arbitration clauses in gig economy apps
The Supreme Court's decision in Uber Technologies v. David Heller is expected this year. The court heard oral arguments in November 2019 regarding the validity of an arbitration clause between Uber and an Uber driver in Ontario. The Court will decide whether to uphold the Ontario Court of Appeal's decision that the clause, which required the Uber driver to arbitrate under ICC Rules in The Hague, was unconscionable.
Notary and registry system set for reform
The government has introduced a bill that seeks to update the current notary and registry system, using more technology, allowing it to carry out procedures and consult information remotely, keeping digital records, and having greater facility to send information to other systems and platforms. By incorporating more flexibility and efficiency into the registry system, it is hoped to increase agility in the delivery of goods and services.
Arbitration reforms under consideration
Colombia's Congress is considering significant reform to its Arbitration Act of 2012. The bill, which was proposed by the Colombian government last year, develops a number of key issues, including the circumstances under which an arbitration seated in Colombia will be deemed to be international and the procedure that national courts should follow when practicing interim measures in support of international arbitration. The bill also designates the Permanent Court of Arbitration as Appointing Authority in cases of the nomination, challenge or disqualification of arbitrators, and discontinuance of charge, instead of national judges.
Supreme Court to rule on SEC's power to obtain disgorgement
The Supreme Court is due to hear arguments on whether the Securities and Exchange Commission has the authority to obtain disgorgement in federal court for “ill-gotten gains” from securities law violations. The SEC has historically been successful in obtaining monetary relief from defendants through disgorgement, which the SEC has asserted is within the courts’ equitable powers, in addition to its statutory authority to seek civil penalties. If the Court rules that the SEC lacks the authority to obtain disgorgement in federal district court actions, it could significantly disrupt the SEC’s enforcement program.
Forced arbitration ban to be considered
The US Senate is set to consider legislation that would prohibit pre-dispute arbitration agreements if they require arbitration of, or otherwise interfere with the rights of individuals, workers, and small businesses to participate in, a class action related to employment, consumer, antitrust, or civil rights disputes. The Forced Arbitration Injustice Repeal Act was passed by the House of Representatives last year but is likely to face resistance in the Senate, where the Republican Party holds a majority of seats.
Use of disputes boards to be promoted
The Conciliation and Arbitration Business Center, one of Venezuela's most significant arbitration institutions, has plans to develop the use of dispute boards as an alternative dispute resolution mechanism for the construction sector, which is one of the most important economic sectors in the country. Dispute boards are a project-specific dispute resolution process, which aim to maintain good relations between the parties by appointing a panel of independent experts to assist in resolving issues before they escalate to formal dispute resolution channels such as litigation or arbitration. To date, they have enjoyed relatively little use in Venezuela.
Hague Judgments Convention awaits entry into force
The Convention on Enforcement of Foreign Judgments may enter into force during the coming year. The Convention establishes an international agreement on the recognition and enforcement of court judgments across borders. It should greatly increase the ease of enforceability whilst lessening the time and cost, making this a highly significant event for international dispute resolution. The Convention was formally adopted by the Hague Conference on Private International Law in July 2019 but will not enter into force it has been ratified by at least two states.
Singapore Mediation Convention expected to take effect
UNCITRAL's new Convention on the Enforcement of Mediation Settlements, known as the "Singapore Convention," is forecast to come into force this year. The Convention seeks to encourage confidence in mediation by creating an international mechanism for the enforcement of settlement agreements that result from mediation. The Convention has been signed by 46 countries, including China, India, Singapore and the United States. It will come into force six months after ratification by at least three United Nations states.
ICSID likely to update rules
The International Centre for Settlement of Investment Disputes is expected to update its rules governing disputes between states and foreign investors in the year ahead. To date, ICSID has published three working papers on the proposed changes, with a fourth expected early this year. The reforms, which would represent the first update to the rules in 13 years, currently include provisions on disclosure requirements for third-party funding, new provisions on security for costs and the requirement to publish awards, decisions and orders. Any changes would require the approval of two-thirds of ICSID’s 154 member states.
UNCITRAL to continue work on expedited arbitration
UNCITRAL's Working Group II, which oversees arbitration and conciliation, is scheduled to meet in February 2020 to consider further the introduction of expedited arbitration into the UNCITRAL rules. At the previous meeting in September 2019, the working group agreed to prepare a set of draft rules on expedited arbitration for consideration. Current UNCITRAL rules contain no provision for expedited arbitration. The working group also agreed that, once reforms of expedited arbitration have been completed, other procedures, such as emergency arbitrators and adjudication, would be considered.
UNCITRAL to consider ISDS reform
UNCITRAL's Working Group III, which is considering reform of investor-state dispute settlement (ISDS), is due to meet in Vienna in January 2020 for its 39th session. The working group is expected to continue discussions on potential reforms of ISDS, including the possible establishment of a permanent multilateral investment court. Two further meetings, in March and October 2020, are already scheduled. The working group has indicated that it may adopt a report for submission to the fifty-third session of the UNCITRAL Commission, which is scheduled to be held in New York, from 6 to 17 July 2020.
Global Dispute Resolution
Claudia Benavides Galvis
Compliance and Investigations
Partner, New York
Europe, the Middle East and Africa
Rodrigo Diaz de Valdez
Consumer Goods & Retail
Partner, Washington, DC
Energy, Mining and Infrastructure
Partner, Washington, DC
Industrials, Manufacturing and Transportation
Technology, Media and Telecommunications
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