Arbitration & Adjudication (Decisional Processes)
Nature of Arbitration
Arbitration (also called "Adjudication"), is a private, trial-like process that can be established by any two or more parties who agree to arbitrate - either under a contract, by legislation, or by simple written agreement.
A properly designed, well managed arbitration process can provide the quickest and most cost-effective way possible of getting a legally binding decision on just about any sort of issue or dispute.
The Arbitrator is usually an expert in the area of the dispute, eg: an accountant for a financial/ commercial dispute; a doctor for a medical dispute etc. All of our Arbitrators have an excellent working knowledge of the law (although they may not be practising lawyers) and have knowledge of and extensive experience in arbitration law and procedure.
When the issues are basically legal, the Arbitrator may be a lawyer, eg: a retired judge, barrister or solicitor. When the issues are commercial or essentially practical, the arbitrator is more likely to be drawn from a non-legal background.
The most important issue with all arbitrations is that the Arbitrator must be an expert in the area of the dispute. Otherwise, the dispute may as well be taken to litigation. (Author's Note: Actually, I expressly disagree with that last point. Unless there's a really important issue of law or public policy at the heart of a dispute I can't imagine many situations that will be better dealt with by the legal system than by a responsible arbitration process).
There are three main reasons for appointing an expert to make the decision:
- There is no time wasted educating the Arbitrator about technicalities.
- An expert arbitrator can make properly informed decisions about deeply technical issues, based on extensive training and experience. Judges are almost totally at the mercy of experts, which is why they often make decisions that have more to do with legal technicalities (which they do understand), rather than on the merits of the technical issues (which they rarely understand).
- The Arbitrator (ie: the person empowered to make a binding determination) understands the context of the dispute and doesn't simply apply an abstract legal interpretation to a situation that cries out for a commercially appropriate, or otherwise practical, determination.
In large cases a panel of Arbitrators may be appointed to cover all likely technical and legal aspects of the dispute (eg: engineer + lawyer + accountant), each with a specific brief to take the lead addressing the technical construction, legal and damages issues.
Arbitrations are conducted under the Commercial Arbitration Acts. The Acts give Arbitrators most of the power and authority of a Supreme Court judge. The Acts encourage Arbitrators to use this power to make the process quick, fair, tightly and pragmatically managed and, above all, cost-effective.
The Arbitration Process
In effect, an Arbitrator is appointed to be a private judge, and is required to manage a confidential, private trial.
Depending on the nature and scale of the issues and the wishes of the parties, the whole process can be based solely on documents. However, most arbitrations involve hearings where, under the watchful eye and control of the Arbitrator, the parties have an opportunity to present and promote their arguments and to have them tested by the other side.
By agreement, the process can be as formal or as informal as the parties choose, whether or not lawyers and other experts are used. Inevitably, the more formal the process, the lengthier and more expensive it becomes.
After all information and arguments have been presented and tested, the Arbitrator evaluates what they have heard and produces a written decision, called the Award. The award is legally binding on the parties and is enforceable through the courts, like a court judgement. It provides finality because it can only be appealed, to the Court, on very restricted grounds. Even these can be excluded by agreement.
Benefits of Arbitration
Well-managed arbitrations can deal efficiently with a vast range of disputes, from small and straightforward to large and difficult. Even complex disputes involving many parties and many millions of dollars should take just a few months to resolve - an attractive proposition compared to the years such a dispute would taken in the courts. Smaller and less complex disputes can usually be resolved within weeks.
Well-managed arbitrations are much cheaper and quicker than conventional litigation - and parties are generally more satisfied with the outcome as the process is far more understandable and user-friendly than the court process.
Also, both the problem and its solution remain confidential - often a critical factor in sensitive commercial and family business disputes.
