Arbitration is a private, contractual form of dispute resolution which is commonly found in international construction contracts
What is arbitration?
- Arbitration is a private, contractual form of dispute resolution which is commonly found in international construction contracts. It is, due to the introduction of construction adjudication, less common today in domestic construction contracts
- The dispute is decided by a single arbitrator or a panel, typically three either appointed by the parties or by a third party such as the Chartered Institute of Arbitrators or, for international arbitrations, the London Court of International Arbitration, or ICC International Court of Arbitration
- Arbitrator(s) decisions (called ‘awards’) are readily enforceable through the courts
- Arbitrator(s) are not generally liable to the parties, i.e. they cannot be sued simply because one party dislikes the decision
- The JCT suite of building contracts allow the parties to select arbitration as their agreed form of dispute resolution procedure, but the default position is that arbitration does not apply
- Many standard form construction contracts include, where the arbitration option is selected, a set of arbitration rules, e.g. the Construction Industry Model Arbitration Rules or CIMAR
How does domestic arbitration work?
- The Arbitration Act 1996 provides a well-established statutory framework for the proceedings, however, where possible, the parties can agree on the procedure to be followed
- Arbitration starts with a ‘notice to concur’, by which the Claimant invites the Respondent to concur (agree) on the appointment of an arbitrator
- Following the arbitrator’s appointment, it is common for written submissions to be exchanged, evidence (documents and witness statements) to be disclosed and exchanged, and for a hearing to take place. But disputes can be dealt with on a ‘documents only’ basis without a hearing
- The arbitrator(s) can impose a wide variety of sanctions where a party fails to follow the agreed procedure, and, where necessary, the courts can ensure the parties comply
- Subject to limited rights of challenge, an arbitrator’s award is to be complied with and, if not, the courts have powers to enforce it
- The parties are responsible for the arbitrator(s) fees and expenses, although it is common for the losing party to pay these
- Awards are not published because arbitration is private to those involved
Benefits of arbitration
- Arbitration proceedings are private to the parties involved
- The parties can agree on the identity of the arbitrator(s) and on the procedure to be followed, which allows the parties to resolve their dispute quicker and cheaper when compared to court proceedings
- The arbitration award is readily enforced by the courts
How can Maples Teesdale help you?
- We can, for a fixed fee:
- tell you if arbitration applies to your contract, agreement etc, what the procedure is and if your contract requires you to do anything before arbitration can start; and
- recommend alternative ways by which you can try to resolve a dispute, thereby avoiding the time and cost etc of arbitration
- If arbitration cannot be avoided, we can for agreed fixed or capped fees:
- advise how your claim/response should be presented, i.e. what evidence, documents etc you need to prove your case;
- where necessary recommend independent experts who can provide you with evidence to prove your case; and
- recommend, if appropriate, barristers to advise on the merits of your case and to draft the formal claim/respond documents.
- When arbitration starts, we can for agreed fixed or capped fees:
- assist in the appointment, through agreement with the other side or not, of the arbitrator(s) because the identity and background of the arbitrator(s) is key to the efficient resolution of any dispute; and
- take the lead in pursuing your claim or defending the claim against you. Alternatively, you can take the lead and we can assist in the background as/when you require our input and advice.
- Following the arbitrator’s award, we can act for you in any subsequent court proceedings to enforce it, or to contest the validity of the award
- We can, where appropriate, assist you in challenging the arbitrator’s conduct of the arbitration and/or the fees charged
The cost of adjudication
- Generally, arbitration is more expensive than construction adjudication but can be cheaper than comparable court proceedings
- Some ‘low’ cost arbitration schemes do exist which the parties can agree to use
- You can recover the majority (say 75%) of your legal costs if you ‘win’ but, if you lose, you will have to pay you own legal costs and the majority of the other party’s costs
- The losing party usually pays all of the arbitrator(s) fees and expenses, but these can be split between the parties
- The legal cost of enforcing an arbitration award through the courts is recoverable in the normal way