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Three Tips for a Successful Arbitration

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As a business owner, running a business can be a challenging task. To ensure your business succeeds, you may have to work with other companies. It is, therefore, essential to keep business-to-business relationships running smoothly. However, you may encounter a commercial dispute along your business journey. If you cannot resolve this between you and the other business, it is possible to undergo traditional litigation. Alternatively, you and the other business may choose arbitration with experienced arbitrators to resolve the dispute. This article will explain three tips for a successful arbitration in the UK.

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What is Arbitration?

Arbitration is a type of Alternative Dispute Resolution (ADR) a business may use to resolve a commercial dispute. Your company may use arbitration instead of taking another business to court. Arbitration involves a third party and neutral arbitrator who listens to the views of each party on the commercial dispute. They will usually have expertise in the area of the business dispute and make a final decision on the issue.

Arbitration is not the only type of ADR – another type of ADR you may use instead of arbitration is mediation.

Although arbitration is an alternative to court action, it is still a formal dispute resolution process. There are strict rules to follow, and the decision is usually legally binding on the parties. Ultimately, the arbitrator has the legal right to make the decision. 

Arbitration is often the primary method for resolving an issue when a business works with a company from a different region. This is because neither business will usually trust the court system of the other party’s region.

Tips for a Successful Arbitration

If your business elects for arbitration to resolve a commercial dispute, you will want it to be successful. Here, we look at three tips for successful arbitration in the UK.

1. Choose a Good Arbitrator

One tip for successful arbitration is choosing a suitable arbitrator. Arbitrators should have expertise in the subject in dispute, so it is critical to select an arbitrator with this in mind. If your arbitrator has expertise in the area, they are more likely to know how to resolve your commercial dispute successfully. They will understand any legal jargon and know complicated technical issues. It is essential to note that an arbitrator should have legal expertise in the matter rather than simply knowledge of the area. Therefore, you should look into the background of arbitrators to understand their experience in the area in dispute.

2. Write a Clear Arbitration Clause

If your business uses or intends to use arbitration as a form of ADR, include an arbitration clause within the commercial contract. An explicit arbitration clause is critical for successful arbitration. It should point out rules about how the arbitration process will work. 

Additionally, make your arbitration clause as straightforward as possible to avoid disputes about the arbitration process itself. Points you may include are:

  • clarifying which party will choose the arbitrator;
  • the number of arbitrators for the type of commercial dispute;
  • the qualifications the arbitration needs; 
  • whether the arbitration process will be ad hoc or institutional;
  • the language of the arbitration, procedures; and 
  • the arbitrator’s expertise. 

3. Start the Arbitration Process Early

If you find yourself needing to enter into arbitration proceedings, ensure you begin the process immediately to help it succeed. This is advantageous as it:

  • can prevent delays in other business projects while you wait for the result of the arbitration proceedings;
  • help the dispute to conclude more effectively;
  • helps ensure your relationship with the other party to the arbitration proceedings is less damaged; and 
  • avoids a contract with a specific timeframe coming to an end before the commercial dispute concludes. 
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Key Takeaways

When you encounter a commercial dispute, one way to resolve this is through arbitration. Arbitration is a formal ADR method to resolve your dispute with a legally binding decision. To ensure the success of your arbitration, select a good arbitrator with expertise in the matter of dispute. It is also essential that your arbitration clause in the commercial contract is clear. In addition, if you do get into a business dispute, you should start the process as soon as possible. 

If you need help understanding tips for successful arbitration, our experienced disputes and litigation solicitors 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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Clare Farmer

Clare Farmer

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