Most of the time, we are told that solving a problem is simple.
Buy this amazing product and you'll lose weight quickly and
easily – and keep it off! Vote for me and your taxes
will go down (and government services will improve).
Of course if there were easy solutions to difficult problems,
the problems would disappear. Everyone would solve them, The Easy
Way. We'd all be slim and trim (and eat and drink as much as we
like) with little or no effort.
Arbitration (or any other form of ADR) is not the solution to
all – or even most – of the woes of using courts and
their associated civil procedure rules to resolve commercial
disputes. But arbitration can work well if it's used in a
thoughtful and thorough manner.
Choosing commercial arbitration is a good start, particularly in
international transactions and long-term commercial relationships.
Making that choice is not my topic today (nor do I think it's
always the right choice). Today is about how you implement
There are lots of specific things that can be done to make
arbitration work better and specifically, to improve upon the
experience in court proceedings. Here are three ways to make
commercial arbitration work better by taking more control of the
First: Tailor the language of the arbitration clause.
Avoid boilerplate. It's worth spending some
time up front to make sure the choice suits the specific agreement
and the commercial relationship. Vagueness and uncertainty invite
arguments over interpretation that can be used to delay a hearing
on the merits and run up the costs.
So take the pen. Doing so does not mean that you will have to
spend a lot of time negotiating the arbitration clause. When deals
are being papered, most dispute resolution clauses are accepted
with little revision. Drafting it in the first place makes
Second: Make deliberate choices when incorporating
formal arbitration rules (or drafting your own). Some
rules are better than others. Some use a sole arbitrator, while
others default to a 3-person tribunal which is usually more
expensive and invites scheduling delays. Not all arbitration rules
enable parties to seek urgent remedies from a tribunal, which may
mean going to court before arbitration. That can be costly and
riskier, particularly if you have to apply to local courts overseas
for an urgent remedy. Choosing some institutional rules may cost
more because you pay the institution as well as the tribunal.
Sometimes there are good reasons to select 3-member tribunals,
national courts for interim remedies and institutional arbitration
(just a there are good reasons to select court for some disputes).
The point is to be deliberate about what arbitration rules you
select (and amend them yourself to suit the commercial relationship
– it's almost always allowed).
Third: Select an arbitrator who actually
understands commercial arbitration. An arbitrator, or
chair of a 3-person tribunal, can help you manage litigation costs
by keeping the dispute focused and generally dissuading behaviour
that may drive costs up and delay a hearing on the merits.
Unlike court proceedings, there is no right to pre-hearing
depositions and comprehensive document production in commercial
arbitration. International arbitrations typically involve document
production on a request basis, and little or no pre-hearing
"discovery" testimony. If parties cannot agree, an
arbitrator can order document production focused on what is really
needed and can authorize only those depositions that are necessary
– if any. That arbitrator will not compromise the
parties' right to have a reasonable opportunity to present
their cases but can keep everyone focused on what actually matters
to the particular dispute.
To this list of three things to do, I will add: avoid
temptation. For example, some people try to slant the arbitration
process by drafting one-sided or overly clever rules. That is
usually short-sighted. It usually creates animosity and ultimately
makes cases harder to settle.
There is no magic bullet or a sure-fire Easy Way to make
commercial dispute resolution less expensive, decided promptly on
the merits and still inherently fair. If there were, we'd all
do it. Taking more control can yield a less expensive and quicker
process, if you're thorough and persistent... and maybe if you
eat right and get some exercise.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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