Domestic Arbitration – time to reassert the benefits?
Doug Jones, the President of the Chartered Institute of Arbitrators (“CIArb”), has recently commented on the extent to which in the UK it seems that domestic arbitration is falling out of favour while, at the same time, international arbitrations with their seats in the UK continue to flourish. He has commented on the extent to which mediation is encroaching into the arbitration space. Some commentators have reflected adversely on the extent to which arbitrators fail in their duty to “adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined [in the arbitration]” as required by section 33(1) of the Arbitration Act 1996. It is said that the traditional virtues of arbitration of speed, confidentiality, panel expertise, and costs lower than apply in the courts, are all being eroded. Also, there are improved procedures in some (but by no means all!) courts and a general reluctance of arbitrators to get to grips with the issues at an early stage of the arbitration process. Perhaps, however, the tide is now about to turn. T
he government, by its cuts to the funding of county courts, and the closing of various courts, is producing a county court system that is less and less fit for purpose. Delays in the courts will undoubtedly increase because of the rise in the numbers of litigants in person following cutbacks in legal aid and the pending Legal Aid, Sentencing and Punishment of Offenders Bill. Court fees are going up and fees are now being charged in the employment tribunals.
All of these negative changes in the courts and tribunals present an opportunity for domestic arbitration to reassert itself as a better way to decide disputes at reasonable cost and in a reasonable period of time. Why not the “100 day arbitration” as was first mooted some years ago?
It is true that the 100 day arbitration procedure does not guarantee an award will be published within 100 days after the arbitrator is appointed. Nevertheless, even if the 100 days begins with the service of the Defence, a 6 month period from appointment to award is highly acceptable. The award is readily enforceable and difficult to challenge in the Court. The 100 day arbitration is a genuine alternative to an adjudication and likely to be perceived as more fair.
Arbitrators do not have to ape the Civil Procedure Rules in the conduct of arbitrations. A key requirement of a sole arbitrator or an arbitration panel should be to get a better understanding of the issues at an early stage in any particular dispute. It is sometimes said that the issues only “emerge” by going through the various stages that apply in court proceedings. Thus, exchange of statements of case, disclosure of documents, witness statements, expert evidence, and an all too long court hearing. At the first meeting with the arbitrator(s), the claimants surely must be able to explain to the tribunal what they are claiming and why they are claiming it. Respondents sometimes feign bafflement at the fact that a claim is being asserted against them. Nevertheless, having agreed to arbitrate, they cannot object if a reasonably tight timetable is imposed to move the process forward with appropriate speed.
The recent survey by the CIArb on the costs of international arbitrations followed a widely held concern at the high costs and long delays in international arbitrations. The findings of the survey included that the average length of the 254 arbitrations surveyed was between 17 and 20 months.
The average cost per party (!) was well over £1 million although it is important to record that at least 50% of the arbitrations surveyed were for claims exceeding £1 million and about 25% were for claims in excess of £10 million. Nevertheless, the impression remains that international arbitrations can be very expensive and take a very long time to come to a final award. However most domestic arbitrations should be a great deal quicker and cheaper.
There is now an opportunity in the light of developments in the English court system for domestic arbitration to reassert itself as the preferred method of dispute resolution.
This briefing is for guidance purposes only. RadcliffesLeBrasseur LLP accepts no responsibility or liability whatsoever for any action taken or not taken in relation to this note and recommends that appropriate legal advice be taken having regard to a client's own particular circumstances.