Arbitration

What is arbitration?

Arbitration is the dispute resolution method of choice for international disputes. It also works well for smaller disputes and, in the UK domestic arena, extends down to schemes for resolving disputes between travel operators and their clients.

Arbitration is a non court-based dispute resolution process. As such, the parties will have a high degree of control over the selection of their tribunal, which will generally consist of one or three arbitrators.

Arbitration will also usually be private and substantially confidential. The parties can choose the legal place, (also known as the ‘seat of the arbitration’), and the law of the arbitration, as well as the language in which the process in conducted. Parties to cross-border contracts may choose a third, neutral country as the seat of their arbitration; they may consider London, Geneva or Paris in this context.

When are arbitration services needed?

Arbitration lends itself to the resolution of international disputes due to the relative ease of enforcement across borders thanks to the New York Convention, which provides for easy enforcement of arbitral awards across different jurisdictions. National courts around the world are also generally supportive of arbitration. But, how do you get to arbitration? There may be a clause in a main agreement requiring resolution by arbitration of all disputes, claims and the like. Alternatively, the parties can agree a specific arbitration agreement. Either may contain so-called ‘step dispute resolution clauses’, involving negotiation, followed by mediation, followed by arbitration.

The output of an arbitration will be an adjudication, known as the Arbitral Award. This may be difficult, if not impossible to appeal. If the arbitration is properly and effectively run by the tribunal and with the co-operation of the parties, it can move rapidly and cost-effectively.

How does arbitration work?

There are a number of options on how the arbitration is run. In certain specialist sectors, there are well-established arbitration rules, such as those of the London Maritime Arbitrators Association in the world of shipping. Other institutional rules include those of the London Court of International Arbitration (LCIA) and the International Chamber of Commerce. (ICC). Certain of these institutions can be more hands-on in the running of the arbitration and will have panels of suitable specialist arbitrators.