Alternatives to the courts

"Arbitration" - introduction
Arbitration	The first and oldest of alternative dispute procedures. Issues of speed and cost play a part. Here the parties in question refer the problem to a 3^rd party for a decision (resolution) rather than going to court. Where commerce is concerned parties tend to try to avoid going to court despite well-developed contract law. NB – most businesses want to establish long-term relationships with other business people, so they do not want to jeopardise their relationships by going to law. The benefits of arbitration include its confidentiality, flexibility, speed and the expertise of many arbitrators. It is usually, but not always, cheaper than court.
Definition of arbitration	Arbitration is a process used by the agreement of the parties to resolve disputes. In arbitrations, disputes are resolved, with binding effect, by a person or persons acting in a judicial manner in private, rather than by a court of law that would have jurisdiction but for the agreement of the parties to exclude it.
Is Arbitration ADR?	It is not unusual for arbitration to be classed as a form of ADR, but this is potentially misleading. In many important respects arbitration has more in common with court-based litigation than other forms of ADR. Arbitration has a statutory basis, which is not a common feature of all ADR. (Others include Family mediation and tribunals). Nevertheless, ADR is promoted by the Civil Procedure Rules.
Arbitration "awards" are binding	The arbitrator does this by making an "award" and giving the reasons for doing so. Neither party may then start a court action in relation to the same dispute. The courts will not interfere with the decision unless the arbitrator acted improperly or unless fresh evidence is introduced.
Costs can be awarded following Arbitration	An arbitrator has discretion not to award costs, but usually awards reasonable costs to the winning party.
Appeal against award	The only right to appeal against an arbitrator’s decision, is through the High Court on a count of “serious irregularity”, such as a violation of natural justice, the excess of jurisdiction, or a visible error of law.
Private	Arbitration can be conducted in private and confidentially. Going to court is a sure way to wash dirty linen in public.
Parties select the judge, the venue; the rules are less rigid than court	Arbitration lets parties choose their own judges – each party usually nominating one arbitrator who between them choose a third. Because the majority rules, decisions can’t be skewed by a rogue appointee. Parties can choose a neutral venue for the hearing and a neutral language if necessary. Although arbitration takes place under strict rules the process and basis for decision are not as rigidly defined as in court. For example, rules of evidence are not as strict, and parties can usually have a say in how they want the hearing to be conducted.
Time saving	Arbitration can save time – and to businesses time means money – because the arbitrators can tailor the procedure to the dispute and rights of appeal are more limited. And if both sides agree, they can forego appeals completely.
Legislative control distinguishes Arbitration from other ADR
Arbitration Act 1996	The 1996 Act provides that the arbitration procedure is carried out in a judicial manner in line with Natural Justice, arbitrators are required to give reasons for decisions and awards. Arbitration is voluntary but the courts do maintain a supervisory role. All arbitration proceedings are open to challenge by Judicial Review. The courts will move against any attempt to reduce their jurisdiction over the ‘law’ generally. The Arbitration Act allows question of law to be authoritatively determined by the High Court.
Small Claims Procedure uses arbitration.	Arbitration is also available in the county court under the small claims procedure. The provisions of the Arbitration Act 1996 extend to small claims arbitration in the county court and consumer arbitration agreements.
"Scott-Avery" clauses - arbitration clauses - ouster clauses
Arbitration clauses normally required Picture courtesy of RH Pardy Removals who resolve disputes by arbitration	In order for arbitration to take place, section 5 Arbitration Act 1996 requires that there must be an agreement to arbitrate in writing. The clause may provide for an arbitrator to be appointed by agreement between the parties or it may need to provide one (usually where the parties cannot agree on an arbitrator). Arbitration clauses are now common in contracts, particularly in consumer contracts. The Chartered Institute of Arbitrators is an example of a body that could be used, should a dispute arise. Others include trade organisations; for example in a home removal contract it will be common for disputes to be contractually resolved by the British Association of Removers
Can be part of initial contract	The power and possibility of arbitration can be secured by slipping one innocent-looking clause into a contract – completely standard - utterly unobjectionable and almost invisibly levelling the playing field; the "Scott v Avery" clause.
*The Scott-Avery clause; named after the case Scott v Avery* (1865)**	All contracts made with The Grain And Feed Trade Association (GAFTA) - the only worldwide trade association - include a "Scott-Avery clause which reads: "neither party [...] shall bring any action or other legal proceedings against the other of them in respect of any such dispute until such dispute shall first have been heard and determined by the arbitrator(s) [ ... ], in accordance with the Arbitration Rules and [ ... ] an award from the arbitrator(s) [ ... ] shall be a condition precedent to [ ... ] any action or other legal proceedings [ ... ]"
Arbitration in Employment cases
ADR in employment cases	The purpose of s 32 of, and Sch 2 to, the Employment Act 2002 was plainly to encourage conciliation, agreement, compromise and settlement rather than to precipitate the issue of proceedings, similar to the intended effect of the pre-action protocols introduced under the CPR. Shergold v Fieldway Medical Centre (2005) EAT.
Advisory Conciliation and Arbitration Service (ACAS)	The Advisory Conciliation and Arbitration Service (ACAS) was created by the Employment Protection Act 1975 to help in trade disputes and to improve industrial relations.
Unfair dismissal - ACAS will arbitrate (or arrange mediation)	It is simpler and quicker to use the ACAS arbitration service than to apply to an Employment Tribunal, in unfair dismissal cases. Such cases could arise out of breaches of the Employment Rights Act 1996.
Parties agree to be bound	The feature of arbitration is that the parties in dispute agree to accept the decision of an independent third party, the arbitrator, as binding (under section 58 Arbitration Act 1996) and agree to waive other rights of action.
Freedom to arbitrate or not	Section 1 of the Act states that "the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense". This lays out the principle that people should be free to agree how their disputes are resolved, and that the court should not intervene. In fact, the courts will usually not only refuse to interfere but actually enforce the arbitration agreement.
ACAS is free	The Advisory, Conciliation and Arbitration Service (ACAS) provides free independent and impartial arbitration to employers and employees.
Arbitration in international disputes
Agreed rules, suits different legal systems	In International Arbitration there are reassuring internationally agreed rules. There are many versions, each approved by a different but unimpeachably neutral body, such as the ICC, LCIA or American Arbitration Association. This is particularly helpful when one party is used to an adversarial court system, as in the UK, Australia or USA, and the other is used to an inquisitorial system, as in many European countries.
UNCITRAL	Arbitrators may use their own Rules or in international disputes the UNCITRAL (United Nations Commission on International Trade Law) Rules. Awards using UNCITRAL are enforced by international agreements such as the Geneva Convention (1927) and the New York Convention (1958). Use of specialist arbitrators ensures knowledge of actual practice in the area under consideration.
Enforcing arbitration in other countries	Court judgments may be easily obtained in one country but not so easily enforced in another. Often, the claim has to be proved again where the debtor or his assets are. The 1958 New York Convention provides that arbitral awards made in one signatory state can be enforced in 144 (up from 137 in 2004) other signatory states more easily than court judgments.
Binding arbitration is inflexible	The use of arbitration has proved successful in many cases. However, the binding nature of arbitration is inflexible, and for this reason, other types of ADR may be more suitable.