Study discloses economic impact of confidential process
TORONTO, Sept. 12, 2012 /CNW/ - Toronto will play host to an estimated 425 arbitrations this year bringing $256-million into the city's economy, according to a study commissioned by Arbitration Place, a state-of-the-art Canadian arbitration centre, and conducted by consultants at global consulting firm Charles River Associates (CRA).
Arbitration involves the private resolution of business disputes and public data is not collected. Arbitration in Toronto: An Economic Study is believed to be the first report to gather this type of information and quantify the sector's financial impact on Canada's largest city.
"These results confirm what many of us have suspected for some time: Arbitration has a significant footprint on the Toronto economy and it should be on the radar screen of anyone promoting Toronto as a business and financial centre," says Kimberley Stewart, CEO and founder of Arbitration Place. "Arbitrations employ a significant range of legal and financial experts but Toronto's hotel and restaurant workers, taxi drivers, retail outlets, airport and airline employees will also benefit from the $256-million being spent here this year."
To put the value of arbitration in context, the Toronto International Film Festival issued a report in 2010 concluding it generated an economic impact of $170-million on the city's economy from its year-round activities.
Consultants at CRA surveyed Toronto-based arbitration lawyers in the spring of 2012, asking them to provide estimates of all-in costs that they've incurred on arbitrations in the past three years including for legal fees, arbitral expenses and other associated items such as travel, accommodation and meals. The completed responses provided a pool of almost 3,000 arbitrations from which to draw data.
The result sheds some light on the historically confidential proceedings. It shows the vast majority of arbitrations, 68.9%, are resolved within two years from the time they begin - much faster than court trials.
The study also compares the economics of an arbitration between Canadian parties and an international arbitration, with the results making it clear that bringing an increasing number of international disputes to Canada - a neutral jurisdiction comfortable with both common and civil law - could be very big business for Toronto.
A 2010 World Bank study cited by CRA researchers suggests Canada is well placed to win an increasing amount of lucrative international arbitration work. It ranks Canada fifth out of 87 countries for conditions favourable for arbitrating commercial disputes, behind the UK, Singapore and France - among the world's top international arbitration centres - and well ahead of the United States.
Arbitration Place, which has forged formal affiliations with the London Court of International Arbitration ("LCIA") and ICC Canada, the Canadian National Committee of the International Chamber of Commerce, has been working to raise Canada's profile as a global hub for arbitration, says Yves Fortier, one of the centre's Resident Arbitrators.
"Toronto has everything it takes to be an international seat of arbitration," says Fortier. "It is a cosmopolitan city, relatively close for US companies, it shares a similar legal system and uses English as its predominant legal language. Toronto provides a neutral non-US jurisdiction and our courts have a great reputation for supporting arbitration and enforcing arbitral awards."
"So I expect the amount of arbitration in Toronto to grow with the advent of new facilities like ours, which can compete with the best in the world. This will make the economic impact of arbitration increasingly important in the coming years."
The majority of the survey's respondents were equally optimistic about arbitration's prospects. Just over half said arbitration activity has grown significantly over the past three years, and roughly 40% expect that growth to continue into 2013. Asked why, they pointed to the long delays in traditional court litigation, the business community's growing acceptance of arbitration as a way of resolving commercial disputes, and the ability to choose arbitrators who have industry experience.
Based on the responses, the report is forecasting overall spending on arbitration to grow to $273-million next year from $256-million in 2012. The report notes that if anything, its consultants were conservative in their assumptions and may have underestimated activity level in the sector.
"What we can conclude from this study is that arbitration activity definitely has a significant and measurable impact on Toronto's economy," says Greg Bell of Charles River Associates, one of the authors of the report. "Arbitrations generate a variety of accompanying economic activity. They use local lawyers, experts and arbitrators, bringing benefits to the local professional services community, and they also use local services and venues associated with more traditional forms of tourism. The potential impact on the local economy can be significant. The more that can be done to draw arbitration to Toronto, the faster spending will grow."
Recognition that Canada is a "natural venue" for international arbitration is long overdue, says J. William Rowley, chairman emeritus of McMillan LLP and a member of London's 20 Essex Street Chambers, one of England's preeminent sets of chambers practising international arbitration.
"The state-of-the-art hearing facilities at Toronto's Arbitration Place, a growing understanding of the many positives of Canadian-seated arbitrations and the findings of the new report suggest that Toronto has the potential to become one of the go-to arbitration hubs of the 21st century."
About Arbitration Place
Arbitration Place is a fully integrated international arbitration centre located in the heart of Canada's financial district in downtown Toronto. It features a roster of recognized Resident and Member Arbitrators, an on-site court reporting service, experienced interpreters and translators, and in-house counsel available to serve as clerk or secretary to the Tribunal. Arbitration Place welcomes guest arbitrators and provides all arbitrators with executive assistants and full support including the services of a concierge team and technical staff for the course of the hearing. Housed in one of Canada's newest LEED certified office towers, it has state-of-the-art hearing rooms that can be configured to suit any size hearing as well as a full suite of breakout rooms and an on-site commercial kitchen, with meals and snacks prepared by a resident chef. Arbitration Place, with a library of arbitration resources, is also committed to being an educational resource centre and frequently runs programs on key international developments of interest to the litigation and arbitration communities. For more information please visit http://arbitrationplace.com.
SOURCE: Arbitration Place
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For more information or to arrange an interview, please contact Deborah Bowden-Jones at Dewar Legal Communications Group, 416.921.1827 or [email protected].