UK: A Short Introduction To Arbitration

Last Updated: 2 December 2014
Article by Jonathan Haydn-Williams

Definitions :

A simple definition : A private court

A detailed definition: A consensual, private, dispute resolution technique, governed by statute, by which a neutral tribunal, acting fairly and judicially, makes a decision which binds the parties (but only the parties).

Pros and Cons:

See table on page 3 below.

Arbitrability:

Disputes may not be arbitrable if they involve a decision which may need to be enforceable against persons other than the parties e.g. a dispute over registration in a public register.

Arbitration in England and Wales

Governed by the Arbitration Act 1996 ("AA").

AA section 1:

"(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;

(b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest;

(c) ...the court should not intervene except as provided by this [statute]".

Some AA provisions are mandatory e.g. power of court to remove an arbitrator (section 24).

Others are non-mandatory in that parties may agree how to deal with the matter in question e.g. procedural and evidential matters (section 34).

Arbitration internationally

Well accepted as a means of resolving business disputes that cross national borders.

Every arbitration has to have a "seat" in a chosen country. Usually subject to the arbitration laws of that country.

Arbitration awards are enforceable in the majority of countries with which UK has trading links, usually under the 1958 New York Convention. (Compare with court judgments, which are easily enforced within EU and some other European states, but may be more difficult to enforce elsewhere).

Arbitration agreements

Usually included in a contract, but may be entered into after a dispute has arisen.

An arbitration clause is severable or even a contract in its own right. As such, it survives the termination of the contract.

Can either adopt the rules of an institution or draft an "ad hoc" clause. Well known institutional rules include:

  • London Court of International Arbitration (LCIA)
  • ICC Court of Arbitration
  • ICDR (International Centre for Dispute Resolution)1
  • UNCITRAL (UN Commission on International Trade)

An "ad hoc" clause should specify the seat of arbitration and method of appointing the arbitrator(s). The advantage of institutional rules is that such matters, and other procedures, are already provided for in the rules.

If the contract incorporates by reference any terms contained in another document and those terms include an arbitration clause, ensure you make specific reference to the arbitration clause – otherwise, under English law, it may not be effectively incorporated.

Pros and cons of litigation and arbitration

(This table is not specific to England and Wales or any other jurisdiction, but gives a broad overview of the common advantages and disadvantages of litigating or arbitrating disputes. The exact position will vary from jurisdiction to jurisdiction and specific advice should be sought from a lawyer qualified in the relevant jurisdiction).

Court Litigation Arbitration
Usually public Usually private – confidentiality is often a reason for choosing arbitration2
No say in choosing the judge(s). Judge(s) will usually be from the state where the court is located. Have a say in the choice of arbitrator(s). An arbitrator does not have to be a lawyer (but often is). Can be from any country.
The judge(s)' and court's services are usually free or low cost The arbitrator(s)' services (and any related administration services) have to be paid for
All or most disputes can be resolved through the courts Some disputes may be incapable of resolution by arbitration e.g. as to entries in public registers
Choice of procedures is limited and they are likely to be more formal Procedures can be tailored to the particular dispute and can be flexible and informal. Even institutional rules can be varied. A compromise can be struck between different legal systems
Other parties can be joined into the proceedings Other parties cannot usually be joined without their consent
Often, only local lawyers have right of audience Usually, any lawyers have right of audience
No choice of language The language(s) of the proceedings can be chosen by the parties and/or arbitrator(s)
Interim relief e.g. asset freezing orders usually available Arbitrators generally have less power to grant interim relief, but courts may be able to grant it pending the outcome of arbitration
A one or two stage appeal process usually exists Rights of appeal are more limited and can often be excluded by agreement
Speed of outcome depends on the particular case and the skill of those handling it
Cost depends on the particular case. Arbitrators' fees and administration costs may increase the cost of arbitration, but the flexibility of arbitration may result in reduced party costs
Both are intended to result in binding and enforceable decisions. As regards cross-border enforcement, judgments of courts within the EU are readily enforced in other EU located courts. Elsewhere in the world, arbitration awards are often more easily enforced across borders than court judgments (e.g. as between UK and USA)

Footnotes

[1] The international wing of the American Arbitration Association ("AAA").

[2] There are exceptions, such as decisions of the Court of Arbitration for Sport (CAS) ad hoc panel at the Olympics.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.