Arbitration is an excellent procedure for the resolution of business disputes between parties, especially international parties where the jurisdiction in which you would prefer to settle these disputes is not the jurisdiction in which your business relationship was carried out.
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Arbitration can avoid lengthy and expensive disputes
Arbitration can be an excellent process for avoiding cost and wasted management time. For example, Arbitration can help with
- Resolving disputes over jurisdiction. Otherwise, jurisdiction disputes can continue for years, focusing on the “correct” legal territory, with arguments for example over the Rome Convention (in Europe) or the New York Convention (in the US). This can lead to substantial legal costs before the points in dispute are even addressed.
- Removing arguments and issues about the legal jurisdiction where the work took place, especially in international agreements. The jurisdiction for the contract may be unstable, politically or economically, or the trust in the domestic justice system may not be there.
- Enforcement. When it comes to enforcing an award often the parties to the agreement subject to the dispute are located elsewhere (or their assets are) and thus recognition of an award in that jurisdiction may be uncertain (particularly in circumstances where the judgement you seek to enforce is handed down in a poorly recognised or corrupt legal system). Enforcement of arbitral awards can be much easier.
What other benefits does Arbitration bring?
Choice of Location
Different countries have different arbitration rules – many have adopted the New York Convention on Arbitration and in the UK we have the Arbitration Act 1996, which embodies legal rules addressing such matters.
- for business arrangements that are entered into in respect of international agreements, both parties may be partisan or biased as to where the dispute is settled.
- accordingly, it is fair to both parties to have a neutral venue free of corruption and with a strong arbitration system.
In the UK we have a strong legal system which, although it does not interfere with the legal jurisdiction referred to in the arbitration agreement, protects the arbitration process from abuse and enables arbitration awards to be more enforceable in jurisdictions where such Arbitration decisions are recognised.
It is consensual
Litigation proceedings are almost always contested – the Civil Procedure Rules 1998 (as amended) in the UK require that parties attempt to correspond and mediate before issuing a litigation claim, but ultimately if the parties do not agree then litigation commences and continues on the basis that there is a right or wrong for the Court decide (although Court judgments often do not fall as cleanly as this).
However, with Arbitration both parties have consented to the dispute resolution procedure. Whilst there may be some attempt to resolve such disputes without recourse to arbitration, ultimately the Arbitration procedure commences based on where in this grey area does the Arbitrator’s decision fall.
If your issue is commercially sensitive, Arbitration offers both a neutral venue and private hearings.
In conventional litigation proceedings, the Court is accessible by the public (a necessary right of the UK litigation procedure and a feature which is present in many countries) and judgements and orders are freely accessible to the public.
This is not the case with an Arbitration decision. The arbitration process and decision is all confidential.
It is quicker
In the UK, the Arbitration Act 19896 (which governs most of the rules and procedure for arbitration) pales in volume when compared to the Civil Procedure Rules 1998 (as amended) which govern normal Court procedure.
- whilst the Arbitration process does require the use of experts on laws and other expertise, and may be more expensive to administer, it is a finite hearing of submitted facts with an expert controlling the Tribunal hearing.
- it is considerably quicker to resolve and there are fewer procedural opportunities to delay or use other tactical mechanisms (as are available for civil litigation procedures).
If, for commercial or other reasons, you require a swift resolution to a dispute then Arbitration may be a wise course to adopt.
If your dispute is international, it is almost certainly going to be easier to enforce any award you obtain by arbitration.
This is mainly due to the New York Convention which is often described as the cornerstone of international commercial arbitration. As of September 2019, 161 states have contracted to it. The effect of the Convention is that contracting states would recognise written arbitration agreements and foreign arbitral awards. Foreign judgments do not have any such similar convention.
Ultimately the enforcement of an Arbitration award may face other difficulties but at Francis Wilks & Jones we can assist you with considering the best course of action for enforcing an award overseas.
Choice of tribunal and flexibility
Another two advantages which arbitration has is the choice of tribunal and flexibility.
The parties can agree a tailored arbitration which would save you time and money.
- the tribunal is not tied to formal rules of litigation.
- an expedited timetable can be drawn and agreed.
- furthermore, as you can choose your Arbitrator, you are much more likely to obtain the level of expertise required to deal with the discrete issues in your dispute.
Should you have a matter that requires arbitration, at FWJ we will be able to assist you with the commencement of the arbitration process through to conclusion. If required, FWJ may also consider alternate litigation funding methods to assist you with the funding of the arbitration process.