Arbitration has seen its market-leading reputation for international dispute resolution called into question in recent months by a number of issues, relating to inefficiencies, delays and costs. Emerging industries such as esports, however, offer immense opportunities, provided arbitration can adapt sufficiently to seize them.
The industry of competitive video gaming (or "esports") has grown exponentially in the last few years alone, from small competitions to internationally recognised tournaments. The first Esports World Cup took place earlier this year in Riyadh, Saudi Arabia; in parallel, the International Olympic Committee ("IOC") announced a 12-year partnership with the National Olympic Committee of Saudi Arabia to host the inaugural Olympic Esports Games 2025.
In contrast to more traditional sports, esports do not have clear sets of rules provided by national or international governing bodies (think the ICC for cricket, or FIFA for football). There is also no unified dispute resolution forum akin to the Court of Arbitration for Sport (the "CAS"). The world of esports therefore remains, while extremely lucrative (the prize pool for this year's World Cup was equivalent to £47 million), still relatively unregulated – a combination which signals huge opportunities for arbitration practitioners.
The recent partnership between video game developer Riot Games and German law firm Martens Rechtsanwälte establishing a court of arbitration for certain high-profile esports competitions is likely a sign of things to come in this space. The so-called Dispute Resolution for Riot Games' Esports (EMEA) ("DR") will oversee disputes arising in or related to contracts of players, coaches and/or teams in the EMEA region of specific Riot Games leagues (both professional and semi-professional). According to the DR Arbitration Rules, the arbitral seat will be Zurich, Switzerland and arbitrations will be governed by Chapter 12 of the Swiss Federal Act on Private International Law. Arbitrators may dispense with application of Swiss law if they decide it is fair and equitable to do so, instead using their own notions of equity and justice (known as the "ex Aequo et Bono" principle). The default rule will be no oral hearings, sole arbitrators and only one round of submissions.
The DR signals a vote of confidence in arbitration, however the debate on whether the mechanism remains fit for purpose rages on, exemplified in this year's GAR-LCIA Roundtable topic: "Has international arbitration lost its way". The causes for dissatisfaction are wide-ranging but broadly relate to procedural inefficiencies, lengthy processes and ballooning costs. Some jurisdictions are responding by strengthening their local laws (for example the English Arbitration Bill is expected to pass through the House of Commons shortly). The answer to many of these issues, however, must lie in how well arbitration can incorporate artificial intelligence ("AI") into its practice. Esports has done so to great effect and is already making use of more sophisticated game design, enhanced user experience and real time player performance evaluation (to name only a few benefits). To keep its position as the obvious dispute resolution mechanism for esports disputes, arbitration cannot afford to fall behind. Regulations such as the EU's "AI Act" and public initiatives such as Silicon Valley Arbitration and Mediation Center's "Guidelines on the use of AI in Arbitration" are promising developments that will help provide transparency and temper the risks of widespread AI use in this field.
The DR is narrow in scope and in jurisdiction, but nevertheless signals an appetite for stability, consistency and access to justice within the esports industry. Arbitration is uniquely placed to meet this demand for the same reasons that make it desirable in traditional sports dispute resolution. Privacy is advantageous in cases which may attract media scrutiny and threaten sponsorship deals. Sports disputes are often time-pressured (for example when they relate to upcoming competition and eligibility concerns) therefore speed and procedural flexibility are attractive to athletes and gamers alike. Parties in both sports and esports arbitrations benefit from tribunals with particular expertise relevant to their industry, which in turn improves efficacy and consistency. Future IOC involvement in esports will likely accelerate development of regulation within the industry, paving the way for additional localised arbitration institutions and eventually a CAS equivalent.
This relatively nascent industry remains a huge opportunity for arbitration as an institution as well as its practitioners, provided arbitration as a dispute resolution mechanism can overcome its current challenges and adapt to the new AI dominated landscape.
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