Financial Transactions and Arbitration

October 23, 2013

The growth and economic development of BRIC and other emerging and frontier economies in recent decades is well documented and a key driver in today's global economy. Accompanying these advances has been the expansion of international financial markets and the increasing use of complex international financial instruments in emerging economies, including by sovereign states. The same drivers behind the growth in the use of complex international financial instruments in emerging economies – globalization, rampant growth in emerging and frontier markets, and the rise in bargaining power of counterparties from those regions – have driven the rise of international arbitration as a now predominant means of resolving disputes arising out of international commerce.

This update explores a particular area of international commerce that has historically veered away from the use of arbitration – international finance – and explores the increasing intersection of the two fields. That intersection is best seen in the International Swaps and Derivatives Association’s (“ISDA’s”) recent publication of optional arbitration agreements for use with ISDA’s 2002 Master Agreement and 1992 Master Agreement (Multicurrency-Cross Border) (each a “Master Agreement”).