Using Arbitration to resolve complex Commercial Disputes

With 30+ years+ of international experience, our team handles high value complex international arbitrations, working with States, governments and Fortune 500 companies. Contact us today.

We use a range of alternative dispute resolution methods (ADR) to get the best results for our clients. One way is through arbitration. Other ADR methods include mediation, negotiation, adjudication and early neutral evaluation.

ADR helps us get the right outcome for commercial clients involved in risky legal disputes – without going to court. Commercial arbitration is the ADR process that most closely resembles court proceedings. Here are some situations when we might advise clients to engage in arbitration instead of litigation or some other kind of ADR:

• When a contentious matter is particularly complicated
• There’s an international element to the dispute
• When the issues at stake are highly technical
• The parties want to keep matters private, for example to avoid public reporting of commercially sensitive material

GET IN TOUCH WITH NATH SOLICITORS

Contact Nath Solicitors in London on 0203 983 8278 or contact the firm online.

We advise small and medium-sized businesses on all aspects of commercial arbitration. We act for clients in London and across the UK as well as those based overseas who may wish to take advantage of arbitration carried out under the auspices of the London Court of International Arbitration (LCIA) or similar arbitral institution.

WHAT ARE THE BENEFITS OF ARBITRATION COMPARED TO LITIGATION AND OTHER TYPES OF ADR?

Arbitrations take place before an independent third party or parties, (an arbitrator or a panel of arbitrators). They act like a judge, hearing arguments from both sides before reaching a decision. Part of the arbitrator’s role is to encourage collaboration between the parties and to discourage adversarial tactics.

Using arbitration as a way of resolving your commercial dispute won’t be appropriate in every case. For example, many internal shareholder disputes are best resolved through informal negotiation. Similarly disputes that concern issues of a less technical legal nature or where a high level of monetary compensation is not sought might be more efficiently resolved through mediation or another type of ADR.

In practice the expense and more formal setting of commercial arbitration compared to mediation or direct negotiations mean it’s really only appropriate when there is a considerable amount at stake – whether in terms of financial loss or in terms of damage to your commercial reputation. When it is used, commercial arbitration has a number of distinct benefits of arbitration. These include:

• Flexibility – Parties have a high degree of control over the running of the arbitration
• Choice of procedural rules – It’s up to both sides to agree the arbitration rules. This means parties can develop their own procedures from scratch (‘ad hoc arbitration’) or choose to follow the established rules of a recognised arbitral institution such as the LCIA, the International Chamber of Commerce (the ICC) or the International Bar Association (the IBA)
• A binding decision– ADR methods like mediation don’t produce a binding decision but a commercial arbitration ‘award’ (decision) is not only binding but is also internationally recognised and enforceable across the globe
• Privacy– Arbitration is a private process between the parties. This means avoiding damaging publicity and preventing the exposure of sensitive commercial data – always possible during a court case that’s held in public
• An expert arbitrator– The arbitrator making the decision will possess a degree of expertise in the subject matter of your dispute that a judge won’t always have. This can drastically cut down the need for background explanations and the use of technical witnesses to clarify matters. (These are sometimes required for a judge sitting in court.) Parties to the arbitration get to choose the arbitrator so they can ensure the person making the decision is equipped with appropriate expertise
• Limits on appeal– Arbitration awards are generally less open to appeal than court decisions. For many of our clients this is attractive because it ensures there is relatively swift closure of the dispute and certainty that the decision won’t be challenged
• Neutrality – It’s up to the parties to agree where the arbitration itself will be heard, and to choose the arbitrator(s). If there is an international angle to the dispute – for example the parties are located in different countries – this means one party won’t be subject to the laws and procedures of a legal jurisdiction with which they may be unfamiliar

You can read more about the nature of arbitration on the Nath Solicitors Blog.

WHAT DOES THE ARBITRATION PROCESS LOOK LIKE?

The way arbitrations proceed will vary from case to case. This contrasts with litigation where specific rules of court procedure will often apply uniformly. Arbitration allows parties to follow to a greater or lesser degree the rules of an institution like the LCIA, and to use the institution’s resources. Parties may also choose to arbitrate on an ad hoc basis where they make the rules themselves (usually with some reference to already established arbitral institutional frameworks).

Most arbitrations begun pursuant to an arbitration agreement (or arbitration clause in the relevant contract) will include some or all of the following steps:

• A party, believing a dispute has arisen and wishing to arbitrate, sends a ‘notice to arbitrate‘ to the other party
• Where an institution like the LCIA is involved the party sending the notice should comply with the institution’s requirements in terms of what details the notice should contain. It’s common practice at this point to nominate an arbitrator
• The party in receipt of the notice should respond within the time specified in the notice and indicate whether it accepts the nominated arbitrator or whether it wants to nominate a different arbitrator
• The arbitration panel is appointed. This may consist of a single arbitrator or a panel
• Together the parties and the arbitrator(s) will isolate the key issues in dispute
• The arbitrator, with input from both parties produces an arbitration timetable
• The case proceeds in line with the agreed rules or the rules of the relevant arbitral institution
• Key stages are similar to court proceedings, including preparation and exchange of written arguments, exchange of witness statements and disclosure of documents
• A hearing is held. Usually solicitors and/or barristers will present each side’s case to the arbitration panel
• The arbitrator(s) produce an award (a final decision)

• A party, believing a dispute has arisen and wishing to arbitrate, sends a ‘notice to arbitrate ‘to the other party
• Where an institution like the LCIA is involved the party sending the notice should comply with the institution’s requirements in terms of what details the notice should contain. It’s common practice at this point to nominate an arbitrator
• The party in receipt of the notice should respond within the time specified in the notice and indicate whether it accepts the nominated arbitrator or whether it wants to nominate a different arbitrator
• The arbitration panel is appointed. This may consist of a single arbitrator or a panel
• Together the parties and the arbitrator(s) will isolate the key issues in dispute
• The arbitrator, with input from both parties produces an arbitration timetable
• The case proceeds in line with the agreed rules or the rules of the relevant arbitral institution
• Key stages are similar to court proceedings, including preparation and exchange of written arguments, exchange of witness statements and disclosure of documents
• A hearing is held. Usually solicitors and/or barristers will present each side’s case to the arbitration panel
• The arbitrator(s) produce an award (a final decision)

COMMERCIAL ARBITRATION: FAQS

Some of the main issues our clients regularly raise with us about arbitration are explained below. If your question isn’t answered or you’d like to arrange a consultation with our director Shubha Nath, please call 0203 983 8278 or contact us online.

• Is arbitration cheaper than going to court?

In many cases arbitration is cheaper than litigation, but it is important to be clear that costs can still be considerable. For example, if you are carrying out the process in conjunction with an arbitral institution such as the LCIA you will have to meet its administrative costs. You will also be expected to pay the arbitrator’s fee. However, the cooperative nature of arbitration means that less time is often taken up arguing over procedural and ancillary issues than may be the case in full blown court proceedings. This can reduce costs significantly.

• Will I be liable for costs if I win/lose?

Given the consensual and flexible nature of the arbitration process rules about paying the costs of the other party once an award or decision has been made tend not to be applied in a hard and fast way and are always subject to agreement between the parties. This is clear from The Arbitration Act, 1996 which applies to arbitrations held in England and Wales. It states

• • • • The tribunal may make an award allocating the costs of the arbitration as between the parties, subject to any agreement of the parties.
      • Unless the parties otherwise agree, the tribunal shall award costs on the general principle that costs should follow the event (meaning that the successful party is entitled to an order to recover costs from the unsuccessful side) except where it appears to the tribunal that in the circumstances this is not appropriate in relation to the whole or part of the costs.

• Can I insist on arbitration to settle a dispute?

Arbitration is a consensual process so it’s not possible to force another party to engage in arbitration. It’s common however for commercial contracts to contain a binding arbitration clause but you must agree this clause at the time you draft and sign the original contract. Usually, the clause should cover matters such as what disputes must be referred to arbitration, where the arbitration is to be held and which arbitral institution’s rules (if any) are to be followed.

In the absence of an arbitration clause, it is still open to the parties – when a dispute arises – to agree to arbitrate a dispute instead of going to court.

• When can I decide to arbitrate?

It’s crucial to remember that commercial arbitration – at the LCIA or anywhere else – is a voluntary procedure. That’s to say you and the party you are in dispute with must both agree to the arbitration. Usually, a commercial contract will specify whether or not disputes should be referred to arbitration instead of following the more traditional court route. It’s important therefore when entering contracts to get specialist legal advice on terms and to consider whether or not arbitration might be the best way to resolve any future disputes under the contract.

WHY CHOOSE NATH SOLICITORS

Nath Solicitors is a commercial law firm situated in the heart of London. We handle arbitration cases for a range of small and medium-sized business in the UK and overseas. Our cases include ad hoc arbitrations as well as institutional arbitrations. Our offices are close to the central London LCIA offices and clients benefit from the relationships we have built up over the years, including a trusted network of barristers who specialise in LCIA and other institutional proceedings. We have also established good working relationships with key LCIA staff, including many of the specialist arbitrators. This enables us to provide an efficient and cost-effective commercial arbitration service no matter where you are in the world and irrespective of which legal system governs the commercial contract you are in dispute over.

CONTACT OUR ARBITRATION AND COMMERCIAL DISPUTE LAWYERS LONDON

We advise businesses on all aspects of commercial arbitration under LCIA and other arbitral organisation rules. We can also assist companies in developing their own ad hoc arbitration procedures where appropriate.  Please contact Nath Solicitors on 0203 983 8278 or contact the firm online.