Regulatory Competition and the Location of International Arbitration Proceedings

This article examines the effect of regulatory competition in international arbitration law on the parties' choice of the place of arbitration – in other words, the extent to which countries that revise their arbitration statutes succeed in attracting parties to hold more arbitration proceedings in the country. Using a panel of countries that enacted new or revised arbitration statutes from 1994 through 1999, the article finds that a country which enacts a new or revised arbitration statute experiences a statistically significant increase in the number of ICC arbitration proceedings held by party agreement in the country. Because the published data are only for ICC arbitrations and not arbitrations administered by other institutions (or ad hoc arbitration proceedings), the estimates here likely reflect the minimum increase that results. In absolute numbers, the estimated increase is small, with roughly two additional arbitrations in the full sample and from eight to ten more arbitrations in major arbitration countries. That is not surprising, given the relatively small number of ICC arbitration proceedings held worldwide in any given year. In percentage terms, by comparison, the estimated effect is greater, ranging from 18.39 percent for the full sample to 26.95 percent for the major arbitration countries. Because of the small number of arbitrations involved, the estimated economic benefit to arbitral sites from new or revised arbitration statutes is substantially smaller than some have suggested, although data limitations make translating the increase in the number of arbitrations into monetary terms inexact