#4795 - Arbitration Adr - Civil Litigation

When advising clients on the pros/cons of different courses of action:

• P4 requires a solicitor to act in the best interests of each client.

• P5 provides that solicitors must provide a proper service to their clients.

• O(1.12) requires the clients are in a position to make informed decisions about the services they need, how the matter will be handled, and the options available to them.

Furthermore, endeavour to ensure you client understands the different COSTS involved (O(1.13) – best possible information about likely overall cost and IB(1.13) solicitors should discuss whether the potential outcomes are likely to justify the risk involved).

Escalation Clauses

Some contracts contains these, which set out a range of steps that should be taken in the event of a dispute. The usual order is:

1. Parties must negotiate in good faith

2. If that fails to resolve a dispute, the will mediate

3. If no settlement is reached at mediation, they will arbitrate

This can be helpful in providing the parties will a guide as to what the expected procedure will be in a dispute.

NB: there can be certain difficulties will a mediation clause:

• It Is hard to gauge whether someone has complied with their obligations – someone may just arrive at the mediation and sit there, with no intention of actually mediating. It is hard to prove whether someone is negotiating in good faith.

• There is no guaranteed solution in any event.

Types of ADR

1) Expert Determination

2) Mediation

1. Mediator meets each party

2. First joint session – parties come together and discuss their case (can be helpful to get things off their chests)

3. Parties break away

4. Final joint session

• Explaining mediation to the client and considering whether it is appropriate in the circumstances

• Preparing the client for mediation

• Selecting and agreeing a mediator alongside the other party

• Agreeing on how costs will be borne

• Arranging the mediation venue

• Deal with arranging a stay of proceedings (if necessary)

• Preparing written submissions to the mediator

• Settling the mediation agreement

• Assisting in the negotiation stage

• Drafting the settlement agreement (if necessary)

• If the case is already underway (i.e. pending) and a mediation settlement is reached, the agreement can be incorporated into a consent order and therefore enforced as a court order.

• The court may stay proceedings pending payment/in order to carry out the terms of the agreement.

• This type of order is known as a Tomlin Order.

3) Arbitration

Components:

• s.5 AA – must be in writing (or evidenced in writing).

• Scope – what types of dispute are to be referred to in arbitration?

• Tribunal – it’s composition; will it be an institution? Will there be a set of rules?

• Arbitrator – who will it be? Institution? How many?

• Seat and governing law of the arbitration and physical location of the arbitration

• Non-mandatory provisions the parties’ decide to include (i.e. powers of court)

• s.52 – should you allow the Arbitrators not to have to provide reasons when making an award?

• s.33 AA – mandatory – dictates how arbitrators should carry out their role:

  • Fairly and impartially between the parties

  • Adopt suitable procedures for the circumstances of the case, and avoid unnecessary delay/expense

• s.33 – if arbitrator has a past relationship with any of the parties, he must disclose the relationship.

• s29 – the arbitrator is immune from liability unless he acted in “bad faith”

Can arbitrator’s withhold making the award until they have been paid?

• YES – s.56 enables arbitrators to withhold the award unless their fees and expenses are paid.

• In order to contest this, the parties will have to pay the sum and then apply to court under s.28 to have the fees adjusted.

• Commencing arbitration – depends if parties’ are following the Arbitration Act or a set of institutional rules.

  • In order to commence a claim, there may be a specific procedure to be followed set out in the Arbitration Agreement.

  • If it is silent – then s.14 AA applies and arbitration is commenced by service of written notice of arbitration on the other party.

  • ***s.9 – mandatory – ask for a stay in proceedings (court would only reject if incapable/void)

    • s.9(3) – prepare and file an application notice asking the court to stay.

• Preliminary meeting: this is the equivalent of a CMC. s.34 AA sets out the matters to consider at that stage (e.g. location, rules of evidence). Note, this is a non-mandatory provision.

• **Legally correct solution – important for the parties to agree whether the court has power to get involved in the arbitration, whether the aware should be legally correct and final and BINDING.

1) The FIRST thing the party trying to obtain payment should do is use commercial pressure (e.g. if there is a continuing commercial relationship).

If assets in ENGLAND:

• 2) s.41(5) – if any party fails to comply with the arbitrator’s directions, the arbitrator can make an order giving the defaulting party a period of time to comply with the order (equivalent of an unless order).

  • If the defaulting party is the claimant, the arbitrator can dismiss the claim.

  • s.41(7) – if the defaulting party doesn't comply with the order by the end of the period, the arbitrator can take further steps.

  • s.42 – the arbitrator can also apply to court for the court to enforce the order.

• 3) s.66 – mandatory – provides the court may grant permission to enforce an arbitral award as if it were a judgment of court.

• Appeals – s.69 – non-mandatory – section provides the court with the power to hear an appeal on a point of law.

• Challenges:

  • s.67 – challenge on jurisdiction – mandatory

  • s.68 – challenge for serious irregularity – mandatory