ARBITRATION has been developed in England and Wales specifically for use in settling commercial disputes. The process of the arbitration is governed by the Arbitration Act 1996, which lays claim to being legislation drafted for a commercial application and which tries to avoid unnecessary legal terminology.
Its first clause clearly sets out its intention: “The object of arbitration is to obtain the fair resolution of disputes without unnecessary delay or expense.” It can be used in connection with any dispute where there exists a written agreement to take any matters not resolved to arbitration.
I first became acquainted with the practical application of arbitration as part of my practice as a chartered accountant and I was impressed by its success for a client of mine. Since becoming a practising arbitrator myself I have been able to observe the many benefits of arbitration first hand. Here are some of the more obvious reasons to consider arbitration as a means for resolving a commercial dispute:
1: It is certain. The award of the arbitrator is binding and is very difficult to overturn by appeal. Essentially it brings a dispute to a certain end.
2: It is skilled. The arbitrator is selected by the parties on the basis of his relevant expertise. Most arbitrators are practising professionals, so parties do not have the frustration of arguing very technical points before a layman.
3: It is flexible. Under the Arbitration Act 1996 it is for the arbitrator to devise the most appropriate procedures for determining the dispute. That can be by such a combination of hearings, correspondence and site visits as the arbitrator deems the most appropriate. The arbitrator also has the option to take an inquisitorial role in unearthing the facts if he so chooses.
4: It is convenient. It takes place at a time and venue arranged between the arbitrator and the parties to suit their requirements. Some arbitration hearings will be very similar to courts, while others may be very informal.
5: It is private. Both the process and what is concluded at the arbitration is an entirely private matter between the parties involved.
6: It is efficient. The location, procedures and timing are customised in order to have the ability to deal with complex issues without undue waste of time or money. There is no undue time spent waiting for the case to be called.
7: It provides each party with an opportunity to express their point of view. The overriding duty of the arbitrator is to provide each party with an opportunity to present their case and to deal with that of their opponent. That removes from each party the frustration that they never felt properly listened to.
8: It can be innovative. The arbitrator is not obliged to find wholly for one side or the other. In complex and technical disputes the decision is often complex as well.
9: It is fair. The arbitrator, if properly selected, will be technically competent, experienced and objective. That is precisely what the parties to any dispute are looking for.
10: It enables the parties to get on with their lives.
Without arbitration a commercial dispute can become all consuming, of uncertain timing and cost and with little prospect of a clear outcome. Commercial clients want a fair opportunity to put their case and then a clear outcome so that they can get on with their commercial business. That is what arbitration provides.
Life can be complicated; commercial relationships more so. Recourse to litigation can seem like an uncertain course of action which will consume time and money. Arbitration offers a sensible and satisfactory alternative method of dispute resolution.