Chapter six

ARBITRATION
Main Points
1. Alternative Dispute Resolution
2. Three main types of ADR
3. Mandatory &Voluntary Processes
4. Why a course on Arbitration Law?:
Alternative Dispute Resolution
Alternative dispute resolution is often
referred to as ADR.

It describes the ways that parties can

settle/resolve civil disputes with the help of
an independent third party and without the
need for a formal court hearing.
ADR & the
Under the Civil
Civil Procedure Rules
Procedure Rules-UK, parties
involved in litigation/lawsuit are encouraged to
use ADR.

The court can also impose cost

sanctions/penalty if it decides that one or more
of the parties have been unreasonable in
refusing to attempt to settle their dispute out
of court using ADR.
ADR & the Civil Procedure Rules
In the 1980s, demand for ADR in the
commercial sector began to grow as part of
an effort to find more efficient and effective
alternatives to litigation/lawsuit.
Since this time, the use of private
arbitration, mediation and other forms of
ADR in the business setting has risen
affectively, accompanied by an explosion in
the number of private firms offering ADR
services.
Three main types of ADR

1. Arbitration

2. Mediation

3. Conciliation
Arbitration
Arbitration is the adjudication of a
dispute by one or more specially-
appointed experts or lawyers.
Arbitration
Arbitration is procedurally less formal than
court adjudication; procedural rules and
substantive law may be set by the parties.

People who work as arbitrators often belong

to the Chartered Institute of Arbitrators.
Arbitration is governed by the Arbitration
Act 1996.
Arbitration
Arbitration Act 1996,
(a) the object of arbitration is to obtain the fair
resolution of disputes by an impartial
tribunal/court without unnecessary delay or
expense;
(b) the parties should be free to agree how their
disputes are resolved,
Arbitration
Choosing an arbitrator
Parties are free to decide between themselves
whom they will appoint as an arbitrator.

Where there is no agreement a party can

apply to a court under the Arbitration Act 1996
to have one appointed by the court.
Arbitration
Arbitration by Contract
Arbitration by contract is when the
parties have signed a contract and there
is a clause/phrase in the contract where
they agree to refer any dispute over the
terms of the contract to an arbitrator.
Arbitration
Where a party tries to ignore an
arbitration clause agreed in a contract,
the court in which he or she is trying to
make his claim will order a ‘stay’ (i.e. a
stop) of proceedings so that the matter
may be referred to arbitration as agreed
in the contract.
Types of arbitration
Institutional arbitration
An institutional arbitration is one
where a specialized institution is
appointed and takes on the role of
administering the arbitration process /
case management.
Types of arbitration
Each institution has its own set of
rules which provides a framework
(such as timelines for the filing of
documents or procedures for making
applications etc) for the arbitration and
its own form of administration to assist
in the process.
Types of arbitration
ad hoc arbitration: is one that is not
administered by an institution. Parties
will determine between themselves all
aspects of the arbitration, such as the
appointment of arbitrator, applicable
rules and timetable for filing various
documents.
Types of arbitration
An ad hoc arbitration can also be turned
into an institutional arbitration. If parties
feel they require the assistance of a
specialized institution to run the case at
some point, they may by agreement make
such an appointment.
Types of arbitration
The obvious advantage of institutional arbitration
is:
1. the administrative assistance given by the
institution.
2. The availability of established rules also helps
move the arbitration forward in a timely manner.
3. The institution will usually charge a percentage
of the disputed sum as their fee – which can
sometimes be substantial in large disputes
Negotiation
negotiation, as its name implies,
involves two parties and a facilitator.
The facilitator allows both sides talk
and negotiate their disputes. The
facilitator records the whole process
including the parties’ positions, their
agreements and discussions.
Conciliation
Conciliation is a process in which a
third party meets with the disputants
separately in an effort to establish
mutual understanding of the
underlying causes of the dispute and
thereby promote settlement in a
friendly manner.
Mediation
Mediation is a voluntary and informal
process in which the disputing parties select
a neutral third party (one or more
individuals) to assist them in reaching a
mutually-acceptable settlement.
Unlike a judge or arbitrator, the mediator
has no power to impose a solution on the
disputants; instead, the mediator assists
them in shaping solutions to meet their
interests.
Mediation
Mediators can employ a wide-range of
techniques, e.g.: assist parties to communicate
effectively and to develop a cooperative
problem-solving attitude; identify parties'
underlying interests; identify and narrow
issues; transmit messages between parties;
explore possible options for agreement and
the consequences of non-settlement.
Differences
Negotiation systems create a structure to
encourage and facilitate direct negotiation
between parties to a dispute, without the
intervention of a third party.
Mediation and conciliation systems are
very similar in that they interject a third
party between the disputants, either to
mediate a specific dispute or to reconcile
their relationship.
Differences
Mediators and conciliators may simply
facilitate communication, or may help direct
and structure a settlement/resolution, but
they do not have the authority to decide or
rule on a settlement.
Arbitration systems authorize a third party
to decide how a dispute should be resolved.
Binding and Non-Binding ADR
Negotiation, mediation, and conciliation programs
are non-binding, and depend on the willingness of
the parties to reach a voluntary agreement.
ADR may be either binding or non-binding. Binding
ADR such as arbitration produces a third party
decision that the disputants must follow even if they
disagree with the result, much like a judicial
decision.
Non-binding ADR produces a third party decision
that the parties may reject.
Mandatory &Voluntary Processes
Mandatory Process: Some judicial
systems require litigants to negotiate,
conciliate, mediate, or arbitrate prior to
court action.
ADR processes may also be required as
part of a prior contractual agreement
between parties.
Voluntary process: Submission of a
dispute to an ADR process depends entirely
Why a course on Arbitration Law?:
Arbitration has now replaced Litigation as
the primary means by which Business and
Employment disputes are adjudicated.
1. Informality
2. Application of equity
3. Direct Participation and Communication
between Disputants
4. Party Autonomy
Why a course on Arbitration Law?:
Informality
Arbitration processes are less formal than judicial
processes.
In most cases, the rules of procedure are flexible,
without extensive written documentation, or rules of
evidence.
This informality is important for increasing access to
dispute resolution for parts of the population who may
be unable to participate in more formal systems.
Reducing the delay and cost of dispute resolution.
Why a course on Arbitration Law?:
Application of Equity
Instruments for the application of
equity rather than the rule of law. Each
case is decided by a third party, or
negotiated between disputants
themselves, based on principles and
terms that seem equitable in the
particular case.
Why a course on Arbitration Law?:
Direct Participation and Communication
between Disputants:
More direct participation by the disputants in the
process and in designing settlements.
More direct dialogue and opportunity for
reconciliation between disputants
Potentially higher levels of confidentiality since
public records are not typically kept
More flexibility in designing creative settlements
Why a course on Arbitration Law?:
Party Autonomy:
choice of tribunal, choice of procedure,
choice of place of arbitration
Why a course on Arbitration Law?:
Privacy and Confidentiality: No
person is allowed to attend arbitration
proceedings unless he is connected
with it.
In contrast, court proceedings would
be attended by press and news
(publicity).
Thanks
For your attention