Alternative dispute resolution (ADR) has grown hugely in significance over the last decade as a means for parties to settle disputes without resorting to litigation. Popular forms of ADR include mediation, conciliation, expert determination and arbitration. Arbitration is perhaps the most important of these, reflected by the fact that it is the only one enshrined in statute.
The broad aims of any sort of alternative dispute resolution are to reduce costs, to provide a quicker method of resolving disputes and to diffuse some of the more confrontational elements of traditional litigation. To see how this can be achieved is helpful to understand what Arbitration actually entails and some of its advantages and disadvantages.
What is Arbitration?
As the phrase alternative dispute resolution suggests, Arbitration is a means for parties to resolve disputes outside of the court system. Disputes are not resolved by a judge sitting in a public court but rather by a person sitting in private proceedings making decisions in a judicial manner that result in an award that is binding.
How Does it Work?
Generally, resolution of disputes between contracting parties may require recourse to a form or forms of ADR as specified in the contract. Typically the lesser forms must be exhausted in sequence with Arbitration the final resort before full litigation can be commenced.
The main governing legislation is the Arbitration Act 1996. The provisions are particularly focused on commercial transactions and their use is encouraged as a matter of public policy. An award made under the Arbitration procedures is usually binding on the parties.
Advantages
Arbitration can have significant advantages over a normal court hearing. It has been noted that Arbitration aims to reduce costs, increase the speed at which disputes are resolved and avoid the confrontational aspects of litigation.
There are other benefits which are attributed to the flexibility that it enables. Arbitration is often held in private which means that information can remain confidential. The arbitration agreement can also give the parties scope to appoint experts in the event of a dispute; particularly beneficial where there are highly technical issues at stake. In terms of outcome, Arbitration is less likely to be appealed than litigation.
Disadvantages
Although one of the primary benefits of ADR should be a reduction in costs, this is not always the case. Deliberately obstructive parties can slow the process down and arbitrators do not have the same powers as judges to prevent them from doing so. Delays have also been caused by the popularity of the process itself. Finally, arbitration awards are not directly enforceable so may require a court order to confirm the award.
Rollingsons has lawyers experienced in advising parties to disputes; if you would like more information please contact James Crighton (jcrighton@rollingsons.co.uk) via e-mail or by telephone on 0207 611 4848.
