Arbitration
Most people have heard of arbitration and know that it is used to settle quite a wide variety of disputes, but do not really understand how it works. This brief summary sets out some of the main features of the process but it is not intended to be an exhaustive guide.
What is arbitration?
Arbitration is a formal process, governed by the Arbitration Act 1996. This Act gives the parties the freedom to agree the procedures to be used, but enables the arbitrator to decide if the parties cannot agree. An arbitrator will act in a similar manner to a judge and will give a legally binding decision known as an award. His award will be based on the evidence put before him by the parties or their representatives.
Who can use arbitration?
If there is not an arbitration agreement in existence when a dispute arises, there is nothing to prevent parties jointly agreeing to resolve their dispute by arbitration. The problem is that when a dispute does arise, it is often difficult to agree the best way to resolve it. Court is then the only option.
Many contracts and leases will contain an arbitration clause. This means that if a dispute arises (which is covered by this clause) then the parties have agreed to use arbitration, rather than going to court, to resolve their dispute.
Who can act as an arbitrator?
It is not essential to have an arbitration qualification to act as an arbitrator. But, it is important to remember that if an arbitrator fails to follow correct procedures or acts inappropriately, the court does have the power to remove an arbitrator or set aside the award. It may be sensible to make sure that your chosen arbitrator has an appropriate qualification or has undertaken some training.
Most parties prefer that the arbitrator who decides their dispute has knowledge and experience of the type of dispute to help him/her understand and weigh the evidence appropriately. For instance, if the dispute is a construction dispute involving quantum, then it may be preferable to have an arbitrator with a quantity surveying background, whereas a construction dispute over a complicated legal issue may be best suited to a construction arbitrator with a legal background. A dispute over a commercial rent review in a shopping centre may require the expertise of a surveyor who is a retail specialist, whereas a dispute over a farm rent would benefit from an arbitrator who is a rural practice surveyor.
It may be possible for both parties to agree who should act as arbitrator and this website will help you choose an arbitrator with appropriate expertise and able to act in a specific geographical area. Choose an arbitrator
Sometimes a contract may name an arbitrator or it may name an appointing body, such as RICS (Royal Institute of Chartered Surveyors), RIBA (Royal Institution of British Architects) or CIArb (Chartered Institute of Arbitrators). There are other bodies as well. These organizations have panels of trained arbitrators and will appoint from one of their panels. Most appointing bodies will charge an administrative fee for the appointment of an arbitrator. See links
Can I represent myself in arbitration proceedings?
There is nothing to prevent anyone from putting their own case in arbitration proceedings. But it is important to note that a properly prepared and presented case will stand a much greater chance of a successful outcome.
Before embarking on arbitration proceedings, it would be sensible to discuss your case with a professional representative, experienced in this type of dispute. A good representative may be able to negotiate a settlement without having to proceed with arbitration. Find a Arbitrator
Who pays for arbitration proceedings?
The Arbitration Act 1996 gives the arbitrator the power to decide who should pay, not only his fees and expenses but also the costs of the parties. The rule is that ‘costs follow the event’. This means that if one party wins outright, the other party is responsible for paying the costs. Parties to an arbitration will often seek to protect their position as to costs by serving a ‘Calderbank’ offer. This can be quite a complicated area and you should seek advice on this point.
What if I do not agree with the arbitrator’s award?
There are limited right of appeal. Appeals must be on specific grounds which are listed in the Arbitration Act
What are the advantages of arbitration over litigation?
1)The parties can have a greater control of the proceedings, if they are able to agree procedural points
2)Arbitration is more flexible and should be quicker and cheaper
3)An arbitrator is usually knowledgeable about the subject matter of the dispute and understands technical points
4)The process is confidential to the parties and the award is not made public