Commercial Dispute Resolution/Arbitration Flashcards
What is the result of less litigation and why is this an issue?
Mulcahy - fewer commercial contract disputes are going to court.
Lord Thomas - suggests that this is having a negative impact on the English judicial system.
Parties come to arbitrate in England due to its advanced legal system and precedent but ironically this phenomenon is eroding it!
How might parties renegotiate their contracts?
Beale and Dugdale - Contracts Between Businessmen - reaching compromise is crucial in business.
Macaulay found that businessmen are happy to reach a compromise in order to enable performance.
Fresh consideration is required for contractual renegotiation - Stilk v Myrick.
Williams v Roffey Bros - practical benefit consideration can give effect to renegotiated contracts, as long as there is no duress.
Why is it good that the law allows renegotiation?
Commercial contracts are often specifically drafted to suit the needs of the parties and so it makes sense that they are able to amend them.
What is mediation?
A neutral third party mediator aids the parties in reaching an agreement (this is non-binding).
Cable and Wireless v IBM - courts should not decline to enforce ADR on the grounds of intrinsic uncertainty (as long as the clause is well defined).
Mulcahy - the number of mediations has been growing steadily since 2000.
Mediation can be voluntary, ordered by court or under the UK Civil Procedure Rules (to save court workload and resources).
What is expert determination?
Where the parties elect a neutral third party expert to adjudicate a dispute or make a decision at a future date.
The benefit is that the expert knows the industry better than a judge might.
Third party adjudications may be stipulated in legislation - S108 Housing Grants, Construction and Regeneration Act 1996.
What was the decision in Sudbrook Trading v Eggleton?
It was stipulated that an option to purchase would be exercised by expert surveyors.
The clause was enforceable because there was a mechanism in place to determine the price.
What is Arbitration?
A form of dispute resolution in which the parties agree to submit their differences to a third party or tribunal for a binding decision.
The arbitrator determines the rights of the parties in a judicial manner in light of the evidence and representations submitted to them.
Arbitration can be voluntary, statutory or court-ordered.
Which statute governs arbitration in England and Wales and what principles underpin it?
Arbitration Act 1996.
This replaced the 1950 Arbitration Act which was seen to give too much power to the courts, making the LCIA uncompetitive.
- Fairness, party autonomy and limited judicial intervention;
1. The objective of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.
2. The parties should be free to agree how their disputes are resolved subject only to such safeguards as are necessary in the public interest.
3. The court should only intervene on matters provided by the Act.
What are the differences between Arbitration and Expert Determination?
(Can be used together to good effect).
Expert determination does not necessarily involve a dispute.
Experts may not need to act in a judicial function.
The arbitrator uses evidence, not his own knowledge, to reach a decision.
What are the main advantages of Arbitration over Litigation?
- Arbitrators can be appointed knowingly by the parties (S30) and are respected by them.
- Arbitrators can have specific industry knowledge, a judge may not.
- Parties have greater control over the proceedings.
- Rules of evidence, procedure and conflict of laws do not have to be adhered to.
- Proceedings are private and so there is no press coverage or reputational damage - Berezovsky - and class lawsuits can be avoided.
- Arbitration can be quicker and cheaper than litigation (although not always).
- The atmosphere of arbitration can be less hostile than litigation.
Why not Litigation?
Walford v Miles - parties’ positions are adversarial.
However, this is not the whole picture, businesses are concerned about their relationships and reputations - Macaulay.
‘Relational model’ of business contracts - Leggatt J.
Litigation is lengthy, expensive and ruins reputations/reputations - Abramovich v Berezovsky.
What are the differences between ad hoc and institutional arbitration?
Ad hoc arbitration gives the parties more leeway and can be cheaper.
Ad hoc arbitration can be delayed by disagreement over the appointment of arbitrators.
Institutional arbitration follows clear frameworks of procedure - LCIA/ICC are important arbitration organisations.
What are the sources of Arbitration Law?
The written agreement of the parties gives rise to the procedural rights and duties in the arbitration. The arbitration agreement is autonomous from the underlying contract.
The Arbitration Act gives almost total supremacy to the wishes of the parties.
In institutional arbitration, the parties agree to abide by the rules of the institution.
What questions need to be considered when drafting the arbitration agreement?
- Is arbitration the best method of DR? Could it be better to use expert determination or mediation?
- Should the arbitration agreement cover all disputes or only specific ones?
- Will the arbitration be ad hoc or institutional?
- How many arbitrators will there be? 1 or 3?
- Where is the arbitration to have its seat and what will be the applicable law? A New York Convention state should be chosen so that the arbitral award is enforceable.
What does ‘Fairness’ refer to under the Arbitration Act?
Parties should be given equality of treatment.
The arbitrators should be impartial.
Arbitrators have a general duty to act in good faith.
