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Running a business can be very rewarding, particularly when you see your business thrive and succeed. However, it can be stressful sometimes, and you can face problems as a business owner. You may encounter a dispute relating to a disagreement with another business. When encountering a dispute, you must choose a method to resolve it. Court litigation should usually be a last resort, and instead, you may want to consider an alternative dispute resolution (ADR) procedure to court proceedings such as arbitration. This article looks at the legal processes, such as arbitration law, and the implications of the arbitral process in the arbitration award.
What is Arbitration?
Arbitration is an alternative dispute resolution (ADR) procedure that you, as a business, can use for a dispute. Although it is an alternative to court litigation, it is still a formal procedure that follows rules and procedures. Like court litigation, arbitration can also result in binding decisions known as an arbitral award.
If you choose arbitration to resolve your dispute, you and the other party will likely have an arbitration agreement or clause in your existing contract. When you start the arbitration process, you must select an arbitral panel to decide on the dispute. This will consist of one or more expert arbitrators who listen to both parties’ evidence before deciding on the arbitral award to resolve the dispute.
Legal Implications of Arbitration
The arbitral panel’s decision is final and binding. They may make a:
- final award, which is a decision on all the issues the dispute is concerned with; or
- a partial award is a decision on a particular dispute within the arbitration proceedings. It can include several partial awards; the last issue is the ‘final award’.
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Legal Processes in Arbitration Concerning Arbitration Awards
Part of the legal process of issuing an arbitral award requires the arbitrators to ensure that the award:
- is in a written format;
- every arbitrator on the panel signs it;
- contains the arbitral panel’s reasoning for the award;
- has the details of where the arbitration took place; and
- states the date of the prize.
A party to arbitration can only oppose the award on specific statutory grounds, which is part of the legal processes in arbitration. The Arbitration Act 1996 details these legal grounds and includes:
- if the award is incomplete and fails to cover one of the areas in dispute;
- where there is a clerical or typographical error on the arbitral award;
- when a tribunal that did not have substantive jurisdiction made the award; and
- a serious irregularity can cause substantial unfairness, which could affect the tribunal, proceedings, or award.
Enforcement of arbitral awards is another part of the legal processes in arbitration in terms of arbitral awards. Although arbitral awards are binding, it is sometimes necessary to enforce them where the losing party does not abide by them.
The Arbitration Act 1996 details the enforcement of arbitral awards, whether the arbitration was in the UK or a different country. The Act allows an enforcing party to request authorisation in written format to enforce the award. It also details when and why a court may refuse to issue this. An award is enforced if the request is allowed, like a court judgment.
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Key Takeaways
If you are involved in a dispute, you and the other party may choose arbitration to resolve the conflict. Arbitration serves as an ADR method to resolve a dispute. An arbitral panel resolves the dispute through an arbitral award. The award binds legally and could be a final, partial, or agreed award. Parties can only challenge arbitral awards on specific grounds, for example, if the arbitral tribunal lacked substantive jurisdiction. Although arbitral awards bind legally, you might need to take steps to enforce them. The Arbitration Act 1996 provides rules for this legal process in arbitration.
If you need help understanding legal processes and implications in arbitration for commercial disputes, our experienced disputes solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Arbitration is an ADR procedure where an arbitral panel resolves disputes outside of court by issuing a binding decision called an arbitral award.
An arbitral award can be challenged on grounds like clerical errors or jurisdiction issues. You may need court authorisation to enforce it, especially if the losing party does not comply.
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