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Cutting through the legalese: “Arbitration”

Whilst many people now delete the arbitration provisions from JCT contracts for work carried out in the UK, the BPE Construction Team has noticed that many of our clients and contacts use the word “arbitration” fairly loosely when referring to dispute resolution generally. Whilst this is, of course, harmless enough in general conversation (and it’s our job to be pedantic so that our clients can continue to speak like normal human beings!), we thought it worth running through the basics of arbitration so that you can see why it really isn’t interchangeable with “court proceedings” or “adjudication”. Here’s a quick comparison to help you understand the differences:

 

Court proceedings

Arbitration

Does it require prior agreement to use this method of dispute resolution?

No

Yes

Can the parties set the rules?

No – the Civil Procedure Rules apply although the parties can agree certain directions.

Yes – although the parties will usually choose an existing set of rules

How long does it take?

The timetable will depend on the Court’s availability, the flexibility of the other side and the complexity of the matter.  Standard Court timetables tend to represent the “quickest” a case can proceed.  Complex matters can take up to 5 years.

The arbitration tribunal has to tailor the timetable and procedural requirements to suit the parties and the facts of the dispute – meaning that the timetable can be better governed by the parties themselves.

How do the Court/Arbitrator’s fees compare?

Based on value of the claim.

Based on the complexity of the issues and time spent by arbitrators.

Are the proceedings confidential?

No

Yes

Can you appeal?

Yes (although you may need to request leave to Appeal)

No – although in exceptional circumstances the Court may set aside the arbitrator’s award

How can you enforce the award abroad?

You will need to make applications both at home and abroad to enforce the award in a different country.

The New York Convention means that arbitrator’s awards are usually recognised without difficulty in over 149 countries.

 

As a further thought, whilst arbitration is most commonly used for international disputes, it can be used for domestic cases too.

Finally, if your contract has an arbitration clause, do remember that you MUST go to arbitration rather than taking your dispute to the Courts (save in very narrow circumstances). This also means that if you are on the receiving end of a court claim form but you believe you signed a contract with an arbitration clause, you should challenge the jurisdiction of the court straight away (or at least take legal advice).

 

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These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice. 

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