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If your business has a commercial dispute with another company, it is important to know what dispute resolution methods are available to you. You should aim to avoid court litigation if you can and instead resolve your dispute amicably and cost-effectively. One way to do this is through alternative dispute resolution (ADR), such as arbitration or mediation. This article will explain what the arbitration process is for a commercial dispute.
Definition of Arbitration
Arbitration is an alternative dispute resolution (ADR) method to resolve a commercial disagreement. This means it is an alternative to court litigation and is, therefore, confidential. You and the other party to the commercial dispute will choose an arbitrator. Alternatively, you may choose a panel of arbitrators for your arbitration if you feel it would be more appropriate. One example is where the dispute is complicated and involves a significant amount of technical knowledge. Arbitrators are often people with real expertise in the dispute and are always an independent third party.
The arbitrator or panel of arbitrators will make a decision at the end of the arbitration proceedings. This is known as an arbitral award. Arbitral awards are legally binding and can be enforced in a court of law.
This guide outlines how to resolve commercial disputes.
The Arbitration Process
When going through arbitration, it is important to understand the relevant steps and procedures clearly. This will help to ensure you maximise the benefits of arbitration and effectively resolve your dispute. We outline the key aspects of the arbitration process below.
General Procedures
The arbitration process for your commercial dispute is a formal process. However, there is no one set process for what happens during the arbitration procedure. This is because you and the party to the conflict can decide if you will have institutional or ad hoc proceedings. If you choose institutional proceedings, your proceedings will be held by a chosen arbitral institution. As such, you will use their rules. Examples of these institutions include the:
- International Chamber of Commerce (ICC);
- London Court of International Arbitration (LCIA); or
- Chartered Institute of Arbitrators (CIArb).
If, however, you choose ad hoc proceedings, you can either allow the tribunal to decide the procedure or select the set of arbitral rules you wish to follow. An example of a set of rules is the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules.
Regardless of whether you choose institutional or ad hoc proceedings for your arbitration process, the process consists of the arbitrator or panel of arbitrators. Arbitrators review the evidence you both provide about the dispute. This means that you will have to file:
- written submissions, such as witness statements;
- written expert reports; and
- any other documents that support your point of view about the commercial dispute.
The arbitrator will then need to hear this evidence, meaning that you will attend at least one hearing before a tribunal, and your legal representative will present this to the tribunal. During the hearing, they may question the other party and vice versa. Finally, the arbitrator makes a legally binding decision, which is the arbitral award for the dispute.
Arbitration Timeframes
The arbitration process for a commercial dispute is a faster process than resolving your business disagreement through commercial litigation in a court. However, the arbitration process could be lengthy if, for example, you have many arbitrators on the panel. This is because finding times when all of them can attend a hearing date can be difficult. Therefore, it is difficult to say precisely how long the arbitration process will take; it could be as little as half a day up to a few months.
Arbitration Location
The arbitration process for your commercial dispute will take place in the seat, or place, of arbitration. This will be detailed in the arbitration clause in the contract subject to the commercial dispute. Alternatively, it will be in any arbitration agreement. The seat of arbitration will usually be a city rather than a country. The reason for this is that the country concerned may have arbitration laws that vary between states.
When you draw up any arbitration agreement or clause in a contract, you should note that the city must be in a country that is party to the New York Convention. This international convention allows arbitral awards to be enforceable overseas.
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Key Takeaways
Arbitration is a form of alternative dispute resolution (ADR) method to help resolve commercial disputes. It involves one or more arbitrators who are experts and independent.
The exact arbitration process will depend on whether you choose institutional or ad hoc proceedings. However, generally speaking, the process consists of you and other parties providing written evidence to the tribunal. Then, the arbitrator considers this through at least one hearing where your lawyer presents this. The arbitration process finishes with a legally binding decision, the arbitral award. The arbitration process is usually quicker than court litigation but can vary. Your arbitration process will take place in the seat of arbitration, which is the city of the arbitration.
If you need help understanding the arbitration process for a commercial dispute in the UK, LegalVision’s 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. So call us today on 0808 196 8584 or visit our membership page.
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