Financial Institutions and International Arbitration – ICC Arbitration & ADR Commission Report

The Task Force on Financial Institutions and International Arbitration examined a wide range of banking and financial activities, whether undertaken by licensed banks or by funds (equity, investment or sovereign wealth). The Task Force examined arbitration in derivatives, sovereign lending, regulatory matters, international financing, trade finance, Islamic finance disputes, advisory matters, asset management and interbank disputes.

The study covered many types of financial institutions, including multilateral and bilateral development financial institutions and export credit agencies providing credit-enhancement or risk-mitigation tools, insofar as those institutions use arbitration from time to time and often have a persuasive role in proposing arbitration as an option to lending syndicates in which they participate or those that they guarantee.

The Task Force analysed both international commercial and investment arbitration. The latter is a relatively novel feature in the banking and financial landscape with a number of investment awards holding that financial instruments ranging from straightforward loans to negotiable instruments, securities and oil hedges are qualifying investments under the relevant treaties. These awards open up broad horizons with respect to treaty claims that could have a catalysing effect on the receptiveness of the banking and financial sector to arbitration in general.

The Report is structured as follows:

Section II sets out the Task Force’s detailed recommendations for tailoring the arbitration procedure to suit the needs of the banking and finance sector.

Section III discusses the changing landscape of financial disputes.

Section IV describes financial institutions’ experience of arbitration, including their preferences in conducting arbitration proceedings, and the advantages and perceived limitations of arbitration in banking and financial disputes.

Sections V to XII address issues relating to the use of arbitration in specialist sectors of finance and banking practice:

Section V discusses arbitration of derivatives disputes.

Section VI discusses arbitration of sovereign finance disputes.

Section VII discusses investment arbitration applied to banking and finance disputes.

Section VIII discusses arbitration of disputes relating to regulatory matters.

Section IX discusses arbitration of international financing disputes.

Section X discusses arbitration of Islamic finance disputes.

Section XI discusses use of arbitration by international financial institutions, development finance institutions and export credit agencies.

Section XII discusses arbitration of disputes relating to advisory matters.

Section XIII discusses arbitration of disputes relating to asset management.