In this Part 4 of our series on international construction and energy arbitration, Kevin Joyce and Alex Slade consider the cultural aspects of international arbitration and why that is so often critical to the resolution of international construction and energy disputes.

An international arbitration involves parties, legal representatives and arbitrators who come from diverse legal and national cultures and backgrounds, and one of the challenges for any party is to navigate these cultural differences successfully.

In this article, we look not only at differences between parties in their communication styles, legal traditions and the perception of authority and process, but how over time these differences have fused into a new “international arbitration culture” – a set of norms, practices and shared understandings that have developed among practitioners, arbitrators, institutions and the parties involved.

The importance of culture in international arbitration

Culture plays a significant role in international arbitration, influencing various aspects of the process. These cultural factors include:

(a) Selection of arbitrators

Parties often consider the cultural background of potential arbitrators when making their selections, as their backgrounds may influence their interpretation of evidence and arguments. While arbitrators obviously strive to be neutral, their cultural perspectives can still, consciously or unconsciously, affect their views on a case or their approach to specific issues that may arise in that case.

Equally, an arbitrator aware of the cultural norms of both parties can help facilitate smoother communication, cooperation and understanding.

(b) Perception of authority and process

Cultural attitudes towards authority can affect how parties view the arbitrators. In some cultures, arbitrators can be seen as figures of significant authority, warranting high deference, while in others, parties may expect a more collaborative or egalitarian interaction.

Similarly with deadlines and time management. Some cultures place great emphasis on punctuality and adherence to strict deadlines, while others may adopt a more flexible approach to time management. This can impact the schedule, procedural timetable and expectations around responsiveness.

Ultimately, different expectations and perceptions can affect how arbitral processes are perceived by parties and arbitrators, as well as which processes may be adopted in the first place.

(c) Legal traditions

One of the most pronounced cultural differences in international arbitration relates to the parties’ legal traditions. Arbitration often brings together parties from different legal systems and these traditions can have a significant influence on the conduct of the proceedings. Civil law cultures, for example, often prioritise written submissions in their national legal systems, while common law cultures may place a greater emphasis on oral advocacy and cross-examination in theirs.

Similarly, as regards the role of precedent. In civil law jurisdictions, parties and arbitrators may focus more on statutory law or equitable considerations, as opposed to common law, where legal precedent can play a much more prominent role.

(d) Style of communication

Different cultures have different norms about how directly they express their views or disagreements. For example, some cultures value direct, straightforward communication, while others may prefer more indirect, nuanced ways of presenting information. These differences can affect the clarity and interpretation by others of submissions, witness evidence and oral arguments.

In the same way, cultural differences in the use of language and non-verbal communication can sometimes lead to misunderstandings. For example, gestures, tone and expressions may have different meanings across cultures.

A particular challenge for arbitrators is to assess and place appropriate weight on evidence from witnesses who may have very different cultural backgrounds and very different ways of communicating their evidence.

(e) Enforcement of awards

Cultural norms influence what parties perceive as fair or just. Some cultures may emphasise procedural fairness, while others may focus on substantive outcomes. This can affect how arbitration awards are perceived and accepted.

The willingness of a party to enforce or comply with an award can also be influenced by cultural views on international law and institutions. Some cultures may view arbitration as an extension of foreign influence, again affecting a party’s willingness to comply with directions and decisions. Some cultures (particularly, but not exclusively, in state-owned entities or organisations with significant links to states) may mean that a negotiated settlement is very difficult to achieve during a case, but once an award is issued by the tribunal it will be accepted and complied with without the need for enforcement.

International arbitration culture

While international arbitration involves parties from diverse legal, cultural and national backgrounds, a common framework has evolved over time, creating a unique professional culture. This culture helps bridge some of the differences that can be experienced, and provides a degree of consistency and predictability in the arbitration process, even when participants come from vastly different cultural or legal systems.

These are the key components of the international arbitration culture:

(a) Key features of international arbitration

In Part 1 of our series, we outlined the key features of international arbitration that make it a preferred method for resolving complex, high-value, cross-border disputes. These features include the parties’ autonomy and international arbitration’s neutrality, flexibility, privacy and enforceability.

(b) International institutions and institutional rules

Major international arbitration institutions like the ICC, LCIA, and Permanent Court of Arbitration (PCA) have contributed to the creation of a global arbitration culture by providing standardised rules, frameworks, best practice, and administrative support which is widely accepted by the international arbitration community, helping create a consistent, predictable process for arbitration, regardless of where the parties are based.

(c) Deference to transnational norms and practices

A notable aspect of international arbitration culture is the application of lex mercatoria, or the “law of merchants,” which refers to a body of transnational commercial norms. This reflects a desire to apply globally recognised principles rather than favouring one party’s domestic law over another’s. Depending on the legal framework for the arbitration, arbitrators may apply substantive principles that have broad international acceptance.

Further, organisations like the International Bar Association (IBA) have developed ethical guidelines and best practices for arbitrators and counsel in relation to procedural issues. These guidelines, including the IBA Rules on the Taking of Evidence in International Arbitration and the IBA Guidelines on Conflicts of Interest in International Arbitration, help harmonize procedural expectations across different legal cultures.

(d) Global community of practitioners

International arbitration has developed its own professional network, where arbitrators, lawyers, and experts regularly meet at global conferences like arbitration weeks or days in different jurisdictions, ICC Arbitration Days or LCIA Symposiums. This networking helps reinforce the shared culture by allowing practitioners from different countries to exchange knowledge, establish norms, and contribute to the development of international arbitration law and practices.

And although international arbitration has roots in Western legal traditions, there has been increasing representation from practitioners, arbitrators, and institutions from regions such as Asia, Africa, and Latin America, helping further to globalise the field and diversify the culture. More development and more effort on the part of the community is needed to increase this diversity, but there are a number of important initiatives already in place that are striving to improve the position. And although not necessarily directly linked to culture in the national/legal sense, other types of diversity are vitally important too – e.g. gender and disability inclusion – where, despite significant efforts to increase participation, further and quicker progress needs to be made.

(e) Emphasis on fairness and due process

International arbitration culture strongly upholds principles of fairness, due process, and the right to be heard. While procedures may be more flexible than in the national courts, there are strict expectations that parties are given equal opportunities to present their cases and that arbitrators must act impartially.

Further, although arbitration awards are generally final and binding, they may be set aside or challenged under specific circumstances, such as lack of due process or arbitrator misconduct. Consequently, the balance between finality and fairness is a core feature.

Conclusion

While international arbitration brings together parties from diverse cultural and legal backgrounds, it has developed its own distinct culture characterised by neutrality, procedural flexibility, global standards, confidentiality, and professional expertise.

This culture helps create a common ground for resolving cross-border disputes and plays a crucial role in making international arbitration an attractive alternative to litigation for many global businesses and governments. It is pivotal to international arbitration’s success as a means of resolving complex, international construction and energy disputes, but achieving the best results for parties requires experienced counsel who focus on navigating these cultural differences every day.

Posted by: Kevin Joyce and Alexander Slade

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