Counsel Rina See and Partner Steven Finizio discuss the use of international arbitration by financial services institutions in the latest edition of Young Arbitration Review, and ask whether, given recent developments in arbitral practice, it is time for the financial industry to take another look at arbitration.
Excerpt: Although the use of international arbitration to resolve disputes involving financial institutions has grown over the last decade, international arbitration still remains the exception rather than the rule for many financial institutions. As discussed below, financial transactions vary greatly. That means that familiarity with and the use of arbitration differs greatly across the financial services sector, with wide familiarity and use for certain types of transactions and very little familiarity and use for others. This note outlines current trends in the use of arbitration involving financial institutions, before exploring possible reasons for the apparent reluctance to use arbitration in at least some parts of the financial services industry and considering the suitability of arbitration for such disputes. PART II discusses existing initiatives directed at the use of arbitration in financial services disputes, as well as indications of increased use of arbitration in certain types of financial services disputes. PART III examines the key features of arbitration in the context of financial disputes, along with recent developments in arbitral law and practice and their implications for the financial sector. It also considers when arbitration could be suitable in respect of different types of financial transactions. PART IV concludes with some observations for the future. In light of recent developments in arbitral practice that would address the specific needs of the financial sector, we ask: is it time for the financial industry to have another look at the use of international arbitration in financial disputes?