What is the point of arbitration?

Barrister Charles Joseph of Tanfield Chambers looks at the many advantages of arbitration


What indeed is the point of arbitration? After all, there is a justice system, paid for by the state (out of your taxes, of course). There are courts and court-rooms, district judges, circuit judges and high court judges. If you want to appeal and are lucky enough to get permission to do so there is the Court of Appeal and even the Supreme Court, so long as you have plenty of money and there is a serious point of law to be decided (which is in fact not at all common). And if you succeed in your claim there is a well-recognized system of enforcement, so that you can do something to recover the money ordered to be paid by the judgment in your favour.

The answer is that there are more advantages to arbitration than you might think.

Civil litigation
The vast bulk of civil litigation takes place in the county court. The system is creaking at the seams. A large number of local courts have been or are in the process of being closed. There are not enough judges, and in particular there are not enough staff running the courts. This results in substantial delays. In some courts paper documents which have been filed, and even complete files, go missing. By contrast, if you agree to resolve your dispute by arbitration the arbitrator is someone you choose (or, depending on the arbitration agreement, someone who is chosen by an independent professional body), and he personally receives whatever documents are relevant, and he personally deals with them (I call the arbitrator ‘he' for convenience – there are lots of competent female arbitrators as well). There is no file which is supposed to be maintained by civil servants.

Moreover the arbitrator will set the timetable and arrange the process of the arbitration with guidance from the parties and with reference to what is suitable for the particular dispute. There is no one size fits all procedure in arbitration – it is tailored to the needs of the dispute. You are not dependent on the court's own list.

And for similar reasons the arbitrator may decide that a hearing is unnecessary if the dispute can be decided simply be looking at the documents which he has received. Even if a hearing is required, it can be anywhere which is convenient for the parties and the arbitrator. There is no need to spend ages getting to a court hearing centre (which might be miles from where the parties are, or which is inconvenient for public transport and which has minimal and expensive car parking facilities, if indeed you are lucky enough to have been assigned to a court which has any car parking at all), only to be told that there are not enough judges or insufficient time for your case to be heard.

Another point in favour of arbitration is speed. The arbitrator does not have to work to a court timetable. He is not burdened like the court system with hundreds or thousands of other cases waiting to be heard. In some county courts if you want a couple of days for a final hearing you might have to wait for six months or more – and that might be from the date when the preliminary skirmishes have already taken place in court. Overall, litigation in a county court can take a year or eighteen months to get to trial. Depending on the dispute, arbitration might take only a matter of weeks, or for something difficult and substantial, perhaps as much as a few months. And the sooner the dispute is resolved the less time is spent paying professional advisors, which helps to save money.

Next, an arbitration is confidential. The arbitration is private as between the disputing parties. This means, for example, that there is no risk of reputational damage because no-one else will know of the claim. By contrast litigation is a matter of public record. The courts are open to the public and anyone can go along to listen to what is being said. Local and even national newspapers and press can report and comment on what is taking place. This may not be at all desirable where, for example, there are local competing businesses, or a customer base to be kept happy.

A further advantage, particularly if a dispute involves some form of specialized information or knowledge, is that an arbitrator who is familiar with the specialized area can be chosen. This avoids having to explain technical details to a judge who does not have such specialized knowledge, and who may have difficulty understanding the details. The dispute will take less time to resolve, and, as before, less time spent means a saving in legal costs.

Lastly it is the policy of the courts not to interfere with the arbitration process unless it has gone badly wrong. The Arbitration Act 1996 contains strict limits on any appeal from the arbitrator to the court. The reason for this is to promote arbitration as a way of resolving differences, and to ensure that there is finality for the parties so far as possible. It is important that the agreed dispute resolution process is not undermined by proceedings in court, and this is mostly welcomed by disputing parties. Again, the prevention of appeals to the court can save money.

Where an arbitrator makes an award in favour of a party to an arbitration, the court has the power to enforce that award as if it was a judgment, or to enter judgment in the same terms as the award. So there is no problem with the enforcement of a proper award.

So, if you have a dispute you might seriously consider resolving it by arbitration. There are quite a lot of good points in favour.

Charles Joseph is a barrister at Tanfield Chambers