Arbitration in Technology Dispute Resolution

International arbitration is an ideal method for resolving technology-related disputes (including artificial intelligence, advanced robotics, data analytics, and IoT), which fundamentally transform how individuals, businesses, and governments interact with one another. Rapid changes are increasing the complexity and uncertainties within the sector. Therefore, it is not surprising that technology disputes are becoming more common across all levels of stakeholders.

In recent years, both globally and particularly in Europe, commercial technology disputes have become one of the main topics of discussion—ranging from telecommunications and IT to the medical technology sector—and many such arbitrations remain inaccessible to the public. Moreover, the number of technology-related disputes at ICSID appears to have doubled in 2022 compared to figures from three years earlier. In recent years, international arbitration has emerged as an effective mechanism for resolving complex cross-border disputes across various sectors, especially in the technology field. Technology companies are increasingly adopting international arbitration to resolve disputes in different contexts.

Notable examples include LG Corporation’s successful arbitral award against its competitor, Japan’s Sharp Corporation, in a patent infringement dispute; Plintron Holdings’ defense in a breach of contract case brought by Brazil’s Surf Telecom; and Monsoon Blockchain Storage’s victory in arbitration against Korean LED manufacturer Magic Micro for breach of a share purchase agreement in 2018. While technology companies have traditionally relied on commercial arbitration at both domestic and international levels, there is a growing trend of companies turning to investment arbitration to address grievances related to alleged harmful conduct by states affecting their investments. For example, in January last year, Huawei initiated arbitration proceedings against Sweden following the latter’s refusal to lift the ban on Huawei products from its 5G rollout. Huawei invoked provisions of the China–Sweden bilateral investment treaty (BIT), arguing that Sweden’s ban violated its rights as a Chinese investor under the BIT. In another regional example, a multinational technology company and its local subsidiary recently relied on an investment treaty to resolve a dispute with a Latin American state. After notifying the state of the dispute, the company was able to reach an amicable settlement. In another example from a different geographical region, a multinational technology enterprise and its local subsidiary resolved a dispute with a Latin American state through an investment treaty.

After notifying the state of the dispute, the company achieved a peaceful resolution.

Why is arbitration ideal for high-tech disputes?

1. Arbitration is more flexible in resolving complex technical or scientific disputes due to the possibility of obtaining expert opinions.
2. In arbitration, parties can choose an experienced arbitrator who possesses sector-specific knowledge, expertise in the relevant scientific and/or technological field, as well as legal expertise.
3. Arbitration minimizes the risk of damaging long-term relationships between business partners and clients.
4. Arbitration does not provide for appellate review, which leads to cost savings for companies by avoiding lengthy court appeal procedures.
5. Non-disclosure or confidentiality agreements are commonly applied in various commercial environments to protect trade secrets and confidential business information.