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You may have a commercial dispute with another party when you run a business. When this arises, it may slow down day-to-day business activities and take up time and money. Therefore, it is essential you can find an efficient solution. Arbitration proceedings are one way to do so and are an alternative dispute resolution (ADR) method. Despite being an alternative to court litigation, you may still end up using a court in the process. This article will explain when you may involve a court during the arbitration process for a commercial dispute.
What is Arbitration?
Arbitration is a dispute resolution method alternative to formal court litigation. Therefore, it does not happen in a courtroom. Instead, parties to the dispute choose a tribunal of an expert arbitrator or panel of arbitrators. The arbitrator or panel will listen to the evidence the parties present and make a legally binding decision. This is known as an arbitral award. International arbitration is often a choice of dispute resolution method for cross-border commercial disputes. This is because it is a neutral mechanism that also allows parties to choose the location and applicable laws of the arbitration.
Arbitration is one of the more formal methods of alternative dispute resolution to solve a commercial dispute. This is because it has rules governing it, such as set procedural rules.
When Do You Need to Use a Court During the Arbitration Process?
Whilst commercial arbitration does not take place in court, there may be times when you need to use a court during the arbitral process. In particular, there may be issues related to the arbitration that can only be determined in the court or that you wish to be legally enforced by litigating. For international arbitration, for instance, you may be seeking interim relief or national rather than overseas arbitration. It is essential to understand that a court has more powers than an arbitral tribunal powers. We explain some key considerations below.
1. Preserving Evidence or Assets
You may need to use a court during the international arbitration process for a commercial dispute if assets or evidence need to be preserved. This can be done through an urgent freezing injunction, which prevents a party from disposing of their assets. A national court can grant this urgently.
2. Integrating Third Parties
When you are part of international arbitration proceedings, you may need to ask a third party to assist in the arbitration process. This third party is someone who is not part of the original arbitration agreement and, thus, the proceedings. For example, you may need a witness to:
- produce evidence;
- give you documents; or
- attend the arbitration hearing.
Unfortunately, the arbitral tribunal cannot make third parties participate in the arbitration proceedings, but a court can compel them to.
3. Enforcing Orders and Arbitral Awards
Although an arbitral tribunal may make an interim order, they have no power to enforce it. As a result, you may need to turn to the courts, as they can implement this order legally. If the party fails to comply after a court enforces an arbitral interim order, this is contempt of court, a prisonable offence. Courts can also play a role in enforcing the arbitral award in commercial arbitration. This is an essential part of the court’s role in the arbitration process, where they can make an order to help enforcement.
4. Interpreting an Arbitration Agreement
You may be taking part in arbitration based on processes and terms outlined in an arbitration agreement with the other party. If so, you may need to use a court where there is a question over the interpretation of the arbitration agreement. Although the arbitral tribunal may first look at the issue, it can then go to a court for interpretation clarification. Furthermore, if the other party breaches the arbitration agreement, you may seek relief from a court.
5. Appealing an Arbitral Award
You may need to use a court during the arbitration process if you are the losing party and wish to try to appeal the arbitral award. To do so, you must meet the grounds of appeal and follow all relevant filing requirements.
This fact sheet outlines how your business can manage a dispute.
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Key Takeaways
Arbitration is an alternative dispute resolution (ADR) method for commercial disputes. It involves the appointment of an expert arbitrator or panel to hear each party’s evidence and make a decision called an arbitral award. Although arbitration is intended to be an alternative to litigation, there may be instances during the arbitration process where you need to use a court. These include when you are looking to:
- preserve evidence or assets;
- integrate third parties into proceedings;
- enforce interim orders or arbitral awards;
- interpret an arbitration agreement; and
- appeal an arbitral award.
If you have any further questions about court involvement in arbitration proceedings, 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. Call us today on 0808 196 8584 or visit our membership page.
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