Adjudication is increasingly becoming a preferred form of early dispute resolution in many countries. In the UK, it was no surprise to anybody that arbitration’s popularity plummeted when statutory adjudication came along in 1998. Trett Consulting’s Eugene Lenehan’s research shows that the cause of arbitration’s demise arose from a number of factors; for example that the average length of an arbitration was over 14 months, though many drag on for years, and, generally speaking the larger the claim the longer they last. Nor are arbitrations a sure-fire way of getting your money. In the cases he studied, only 54% of main contractor claimants received the arbitrator’s full award, and the amount awarded was always less than claimed.

For example, what research has shown is that when arbitration as a dispute resolution process is considered the preferred route, its success is dependant upon the selection of the arbitration tribunal. Indeed the UK’s Arbitration Act emphasises speed, economy and fairness, and the selection of an arbitrator who can comply with both the spirit and the letter of the Act is vital to success.

There are various procedures the arbitrator can follow which can reduce costs and duration, but not all arbitrators will take advantage of them.

AVOIDING EXPENSE

Section 1(a) of the Act provides:

“The object of arbitration is to obtain the resolution to disputes by an impartial tribunal without unnecessary delay or expense”.

The aim of section 1(a) is taken up at section 33(1)(b) of the Act which imposes on the arbitrator the duty to

“adopt procedures suitable to the circumstances to the particular case, avoiding unnecessary delay or expense”.

This obliges the arbitrator to be flexible in selecting procedures to suit the individual circumstances of the case before them and it is clear that there is no need for the arbitrator to follow ‘court’ procedures. Hence, an arbitration has the flexibility to establish relatively inexpensive procedures.

There are a number of choices available to an arbitrator which might have a streamlining effect. These include:

(i) dispensing with pleadings / statements of case
(ii) the scope of disclosure,
(iii) a fast track timetable for the arbitration
(iv) using written submissions instead of having interlocutory hearings.
(v) using inquisitorial powers, where the arbitrator searches for facts, examines documents, and makes further investigations.

PROCEDURAL MATTERS

These procedural matters are not mandatory provision and, therefore, the arbitrator’s power to decide on procedural matters is subject to the right of the parties to agree such matters. If the parties can’t agree, the arbitrator can decide to use them.

Research has found that confining the scope of disclosure and the use of a fast-track timetable / setting time limits, both reduce the cost and the duration of arbitration. When dispensing with pleadings reduces time but not necessarily cost; the use of the inquisitorial powers reduced costs but not duration of arbitration; instructing written submissions reduced duration but not costs.

ARBITRARY CHOICES

Section 16(1) of the Act provides that the “parties are free to agree the procedure for appointing the arbitrator”.

This can be done by the parties cooperating in choosing their own arbitrator once they decide on the relevant experience and other criteria of the potential arbitrator. This would include considering the curriculum vitae of prospective arbitrators before agreeing. However, this sensible procedure appears only to be adopted infrequently.

Research has confirmed that in two thirds of cases, the tribunal is appointed by reference to an institution. This is because the means of appointing the arbitrator is generally set out to be by this method in the pre-existing contract between the parties.

The nomination procedure of some institutions, such as the UK’s RIBA and the Institution of Mechanical Engineers, involves matching the respective geographical locations of the potential arbitrator against those of the parties. If there is more than one arbitrator in that area, the institutions then try to select someone with qualifications that are relevant to the dispute. Geographical proximity is a practical advantage rather than a necessity and it is suggested that the main concern should be to appoint the person with the appropriate skills and knowledge.

CONCLUSIONS

In the author’s view, the parties should only refer to an institution if they fail to agree on who the arbitrator should be. In addition, both the arbitrator and the parties should give careful thought to the type of procedural directions they may wish to use.

Eugene Lenehan is based at Trett Consulting’s Coventry office