Originally from American Review of International Arbitration - ARIA

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THE SETTLEMENT-ENFORCEMENT DYNAMIC IN
INTERNATIONAL ARBITRATION
Loukas Mistelis∗

I. INTRODUCTORY REMARKS

Settlement in international arbitration has been a topic at the forefront of
discussion amongst scholars and practitioners for the last twenty years1 and the
2008 School of International Arbitration survey sponsored by Pricewaterhouse-
Coopers (the "2008 SIA/PwC Survey")2 confirms the importance of the topic.3
Forms of dispute resolution combining arbitration with settlement techniques
(such as med-arb and combined mediation and arbitration)4 exist in many legal
cultures and can be found in so-called Chinese, German, and Swiss-style
international arbitrations; Australia, Canada, Hong Kong and Japan have actually
enacted arbitration laws that contain med-arb provisions.5 This dynamic led the
International Council of Commercial Arbitration ("ICCA") to look more closely at
the use of settlement techniques in arbitration in its Beijing Congress in 20046 and
the Centre for Effective Dispute Resolution in the UK ("CEDR") to explore the
issue of Settlement in International Arbitration.7

The 2008 SIA/PwC Survey explores more specifically settlement as a means
of enforcement of claims in arbitration and arbitration awards and looks at
settlement before an arbitration award has been rendered and even settlement in
lieu of enforcement, i.e., settlement after an award has been rendered. Here are
some of the more intriguing results, in addition to the very specific ones on
settlement, which have a bearing on this paper:

• the overwhelming majority (92%) of arbitration cases are "successfully
resolved at some stage through the arbitration proceedings;" that is 27%
by settlement without an award; 7% by settlement with an award by
consent; 47% by awards voluntarily complied with; 11% by awards and
subsequent enforcement proceedings; and then the outlying 8% -- 6% by
awards followed by litigation; and 2% by settlement followed by
litigation.8

• in the 11% of the cases where enforcement was needed, only 19% of
corporations reported difficulties in enforcing awards, and 70% of these
difficulties related to the party not prevailing in the arbitration being a
"loser" and not having assets or the fact that the losing party was elusive
so that identification of assets was problematic;9

• for the majority of companies who have to enforce, the enforcement and
execution process takes less than a year, with 44% recovering the full
amount of the award and 60% recovering 76% or more of the award. 10