The Coronavirus Lockdown has undoubtedly had a massive impact on the court system – making Alternative Dispute Resolution (ADR) and arbitration an attractive option for parties seeking to resolve a dispute in a timely manner.
With a substantial backlog of pre-lockdown cases and an increase in new claims being issued, there is currently a considerable delay on Court proceedings. On 8 June 2020, the Courts announced a planned expansion of face-to-face hearings, as sixteen more court and tribunal buildings open across England and Wales.
For people wishing to progress cases quickly, ADR could be a good way forward. We’ve published an introduction to ADR already and this article focuses on arbitration.
What is arbitration?
Arbitration is the private, judicial determination of a dispute by an independent third party.
Arbitration tends to be a much more flexible method of dispute resolution compared to traditional court proceedings. Nonetheless, arbitration is just as final and binding as a Court judgement, unlike mediation and negotiation.
When can you use arbitration?
Parties will only tend to use arbitration in circumstances where they have entered into an arbitration agreement or there is an arbitration clause within their contract.
The arbitration agreement / clause will set out that any disputes relating to the wider contract will be dealt with by arbitration rather than by Court proceedings. In England and Wales, an arbitration agreement / clause must be in writing or evidenced in writing.
However there is nothing preventing parties agreeing to refer a dispute to arbitration by separate agreement.
How does the arbitration process start?
Arbitration is commenced by a written notice to the other party or parties or the appointing authority – this is unless there is an agreement between the parties which requires additional or other requirements to be satisfied.
Can it be done virtually?
Arbitration agreements will often contain a provision confirming the law which will govern the arbitration (i.e. the country in which the arbitration will be “rooted”) – this is known as the seat or arbitration. Nonetheless, there is no requirement for procedural and evidential hearings to physically take place at the seat of arbitration.
One of the main arbitral institutions, the International Chamber of Commerce (ICC) has comprehensive provisions within its rules on remote hearings; allowing hearings to be held virtually by video conference or phone “or similar means of communication”. The flexibility of arbitration and its ability to be shaped by the parties is likely its most attractive quality.
Virtual arbitration is possible in the current climate but it isn’t without its challenges. One of the most problematic aspects of conducting a virtual arbitration is the challenge for the arbitrator in assessing a witness’ demeanour – which is crucial in determining their credibility and the reliability of their evidence. This of course will be more difficult if the technology causes issues.
Advantages to arbitration
Choice of Decision Maker
Parties can choose the arbitrator, unless the agreement specifies otherwise.
In comparison to court proceedings (especially in the current climate), arbitrations can typically be heard sooner. The timeline for an arbitration to be concluded from start to finish depends on the parties involved, but generally matters can be concluded much quicker than court proceedings – sometimes in a matter of months.
The parties can mould the procedure according to the circumstances.
Arbitration hearings are confidential, private meetings in which the media and members of the public are not able to attend. The final decision is not published.
Hearings are arranged to suit the parties, arbitrators and witnesses. This contrasts with court proceedings; the Court will work to take the unavailability of parties and counsel into consideration when listing the hearings – but this is not guaranteed.
In general, there is no right of appeal in arbitration. However, the Courts do have limited powers to set aside an award.
Whilst you pay for an arbitrator as opposed to a court judge, you avoid court fees by short cutting the full judicial process and therefore, you usually save on costs overall.
Although noted as an advantage above; depending on what side of the coin you’re on this could be a disadvantage if the losing party disagrees with the reasoning of the arbitrator.
As discussed already, if conducting the arbitration virtually, the unreliability of technology may impact the arbitrator’s ability to assess witnesses.
For more information on arbitration and alternative dispute resolution, please get in touch with our team and they will be able to advise which option may be best for you.