5 Things to Know About Arbitration in England and Wales

As a business entering into a dispute, it is important to consider the options available to you before you begin formal proceedings. Aside from litigation (formal court proceedings where you argue your case before a judge), you can use alternative dispute resolution methods. One option is arbitration. Arbitral proceedings are similar to litigation in a number of ways but take place before an arbitrator within an independent tribunal. This article will outline what arbitration involves, highlighting 5 key points about it that you should know prior to making a decision about your preferred dispute resolution method.

What is Arbitration?

Arbitration is a way of resolving a dispute without going to court. Usually, both parties agree to appoint a panel of arbitrators. These arbitrators will make a binding decision on the matter. Some contracts may require you to use arbitration to resolve your dispute – this is when your contract has an arbitration clause. 

Arbitration can be ad hoc, where you and your opponent will agree as to the rules of the process. Alternatively, proceedings can be administered, where your arbitral proceedings are overseen and governed by the rules of a formal arbitral organisation (such as the Singapore International Arbitration Centre, the International Chamber, or the London Court of International Arbitration). The key points you should know before entering an arbitration are outlined below.

1. Costs and Time

First, the costs of arbitration are calculated in a different way than litigation. In arbitral proceedings, you and the other party will appoint an independent arbitrator together. You will then pay the arbitrator, typically by the hour. The hourly rate can vary depending on a number of factors, including the arbitrator’s expertise, the complexity of the case, and the number of expert witnesses you might need for the case. 

You will then also pay for registration fees, administrative fees, and tribunal costs. In the end, the arbitrator will make an arbitration award, which the losing party will pay to the successful one. Once the arbitrator makes the award, it is usually binding, which means parties cannot appeal against it. 

In comparison, litigation leads to a court judgment that either party can appeal. Additionally, the process of beginning your case through litigation can take longer due to court procedures. As arbitration is a private dispute resolution method, you can often structure it around your own schedule. As a result, arbitration is usually more cost and time effective than litigation. 

2. Confidentiality

Arbitral proceedings typically have a greater degree of confidentiality than litigation. Unlike a court judgment, the arbitrator will not publicise their reasoning for conferring an arbitration award on one party.  There are some exceptions to the general duties of confidentiality in arbitration, such as:

• where disputing parties agree to the disclosure of documents;
• where disclosure of documents is reasonably necessary to protect or establish a party’s legal rights; or
• where a court orders the disclosure of documents.

3. Appealing Decisions

As mentioned, arbitration awards are binding. This means that you often will not get a chance to appeal against them. Often, the finality of a decision is an advantage for many parties, as it ends the dispute and closes the question of additional legal fees and worries. 

To challenge the decision of an arbitrator, the aggrieved party would have to show:

• the tribunal did not have jurisdiction to make the decision;
• the arbitrator erred on a specific point of law; or
• there was a serious irregularity in the way that the arbitral proceedings occurred.

4. Choosing an Arbitrator

In arbitration, you are able to appoint an arbitrator. Generally, both parties would agree on a certain arbitrator.  

Ideally, the arbitrator that you choose would be an expert in the industry or area that you are operating in, and have familiarity with the contentious legal points of your case. Where your arbitrator is indeed an expert, arbitration proceedings can be as effective as litigation. An upside to litigation, on the other hand, is that a judge decides your case. This judge will necessarily have very good experience with English law.

5. Control of the Process

As arbitration is a private method of dispute resolution, you and the other party have far greater control over the process. Alongside being able to appoint the arbitrator, you will also have greater control over the timetable and schedule, as well as the terms of the arbitration (especially if it is ad hoc).

Key Takeaways

As a business entering into a dispute, it is important to understand alternative dispute resolution methods, such as arbitration. Often, a court will require you to try alternative dispute resolution methods (including mediation) before your case is tried before a judge in the English courts. 

Arbitration differs from litigation in a number of ways. In arbitration, you are able to appoint the arbitrator, whose services you will pay for. You have greater confidentiality and control over the process, but it is more difficult to appeal a decision. 

If you require guidance regarding your dispute resolution choices, our experienced disputes lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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