The Power of Arbitration: A Faster, Flexible Alternative to Court

If we clarify arbitration in the simplest way, it involves submitting a disagreement to one or more arbitrators who render a legally enforceable ruling at the parties' agreement. Under the Arbitration Act 1996, the parties forego going to court and instead choose a private dispute settlement process. In arbitration, a claimant and respondent argue their case before an impartial arbiter who listens, weighs the evidence, and renders a legally enforceable decision. If the case is won, the initial fee will be reimbursed, together with VAT. The arbitrator's ruling is typically heard in 45 days, and if the claimant prevails, the opposing party may be required to make the necessary financial payments.

This article is going to discuss arbitration as another legal pathway, explain its value and how it works, and outline examples of when it is useful. 

What is its value?

Arbitration is a rapidly expanding legal avenue with many benefits for both people and companies. Flexibility, speed, secrecy, knowledge, control, and lower expenses are some of its benefits. By selecting the arbitrator, the rules, and the venue, the parties have more control over the proceedings. As professionals with extensive legal experience, arbitrators act as impartial arbiters in cases involving disagreements. In addition to providing support services like administrators, case managers, and specialists, arbitration counsel also advocates for clients. Obstacles include restricted appeal, selecting an appropriate arbitrator, expenses, and restricted precedent. Notwithstanding these difficulties, arbitration is nevertheless a useful legal option for companies and individuals looking for a more rapid, flexible, and economical means of resolving conflicts.

When a dispute resolution clause calls for arbitration proceedings, lawyers are very concerned about the associated costs of arbitration. According to the International Chamber of Commerce (ICC) party costs (including fees and expenses for attorneys), experts, and witnesses, account for 83% of arbitration costs. Think about the “three Ps”: perspective, proportionality, and purpose, to keep arbitration expenses under control. Employment agreements increasingly include arbitration clauses to settle disagreements or accusations of wrongdoing outside of court.

Employers must, however, weigh the ramifications and reduce the dangers of arbitration. In arbitration processes, prompt and reliable documentation methods are too important. The number of cases that proceed to arbitration can be decreased by implementing a well-practiced internal dispute resolution procedure before actual arbitration. Protracted disputes can also postpone settlement and raise legal costs. A well-thought-out strategy lowers legal expenses and strengthens the party's position before the tribunal. Expert fees can range from high to low (hourly wages from £250 to £650), and the venue selection affects the hearing costs.

How does it work?

Arbitration is a legal procedure that requires a written contract clause or a separate agreement known as a submission to arbitration, as well as an agreement to arbitrate. A demand for arbitration is served to the other party to start the process. The arbiter is selected according to how well-versed they are in the subject matter. Discovery, hearings, and a formal, and binding written ruling are all parts of the process. Consent is the foundation of arbitration, and each arbitration organization has its own set of regulations. In most cases, awards are upholdable in court. For instance, two businesses with a contract for the provision of goods may demand arbitration; the demand is then heard, and an award is made. 

The arbitration agreement, which establishes crucial components including the number of arbitrators and venue, is one of the milestones in the arbitration process. Arguments and interrogations take place during hearings, and the tribunal renders an award. The arbitration agreement, the arbitral seat, and institutional regulations are some of the variables that affect challenges and appeals.

Arbitration has been a popular dispute resolution technique since 1989, and it offers faster resolution and reduces costs, often obtained within six months compared to two years in courtroom litigation. It also offers private proceedings, avoiding public courtroom airing, and making class-action litigation difficult. Despite potential risks, companies continue to use arbitration due to fee-savings and the ability to obtain key evidence. However, the quality of results is often poor due to cost-savings and the lack of appeal rights. Most arbitrators are former judges, and their shortcomings may be hidden by not subjecting their outcomes to appellate review.

Clear examples where arbitration was extremely useful

Significant rulings in the arbitration field were rendered by English courts in 2017, with an emphasis on problems about enforcement, confidentiality, and award disclosure. The UK Supreme Court's recent ruling in Halliburton Company v. Chubb Bermuda Insurance Ltd. case clarified two key points concerning English arbitration law: whether an arbitrator is obligated to disclose facts and how apparent bias should be examined. The ruling resulted from the 2010 explosion of the Deepwater Horizon oil drilling rig. The court upheld the legal requirement to disclose under English law unless the parties agree otherwise. The court also established that non-party witnesses can be compelled to testify in arbitral proceedings by English courts.

International conflicts are frequently resolved by arbitration, which benefits all sides by saving money and time. The preferred governing law for commercial disputes is English law, and London is a global center for this process. Although arbitration can be drawn out and difficult, it does allow parties to choose arbitrators who are experts in the subject matter of the dispute. With the proposed amendment to the Arbitration Act of 1996, the UK hopes to maintain its position as a top venue for arbitration. 

Is it worth it or not?

Pros of arbitration include its expanding demand, flexibility, range of positions, international reach, and intellectual challenge. Cons include competition, the need for specialized training, the possibility of reduced income, a lack of precedent, and restricted appeal.

Think about your goals, interests, and abilities when determining if arbitration is something you should pursue. Arbitration may be a wise legal option if you seek a flexible job, like resolving disputes, and are prepared to spend time in specialized training. Do extensive research on the subject matter, consult with experts on networking events, and consider a variety of employment options in the sector. When selecting an arbitration route, it's extremely important to take your goals, interests, and abilities into account.