Arbitration is the form of ADR on everyone’s lips – even more so now with the new NCDR provisions that have come into force. Slow to get going, after its launch in 2012, and after Haley v Haley ironed out people’s concerns about routes to appeal, arbitration is sometimes hailed as being the silver bullet solution – a client-pleasing way to avoid the challenges that come with the court service. Providing a confidential and streamlined process for those wanting to avoid the delays and potential publicity of a court process, its attraction for clients, other than the additional fees of the arbitrator, are obvious.

However, there are traps that one can fall into, and stumbling blocks we have identified which prevent people from arbitrating, cause difficulties in the process and can add to the cost for clients, which can tarnish the lustre of our proverbial silver bullet.

Here are our lessons learned over the past few years.

Why are people not arbitrating more

Choice of arbitrator

• A key attraction of arbitration for clients and lawyers alike which sways people towards arbitration is the ability to choose the arbitrator, but availability is an issue and can be a moving target. Even drawing up a shortlist can be difficult once you start filtering by seniority, fees and dates. The identity of the arbitrator might be agreed, only to find that their availability has changed, sending the parties back to the drawing board. Some might say that a potential solution is to ask IFLA to choose the arbitrator, but that detracts from one of the main advantages of arbitration – selecting and knowing your tribunal.
• When recommending arbitration, the clients look to their legal team to guide them about the selection of arbitrator and will often ask if a certain arbitrator will be a ‘good judge’. With barristers (more often than solicitors) who have an established track record as a PFDR evaluator, it can be relatively easy to work out how they might approach the issues for determination in arbitration. But without that first-hand knowledge, they are an unknown ‘judge’ quantity as any judge will be in court. Over time, each firm is building up a bank of institutional knowledge, but potentially missing out on exposure to really good arbitrators with less experience or lower profiles, including the trained solicitor arbitrators, whose daily practice will equip them well for understanding and getting to the heart of the parties’ concerns.
• So, what is the solution to the first two points? More people should train to be arbitrators (so that there is increased choice and availability), and perhaps firms and chambers should have ‘open evenings’ to provide a showcase for their practice. In reality though, if there is limited take up, particularly for solicitor arbitrators, it can be difficult to justify the time and costs of training.

Delay

• Another reason that we often see thwarting arbitration is that delay suits one party, or they want a less stringent form of NCDR where the outcome is in their hands to agree rather than imposed on them. The new NCDR provisions go some way to addressing the delay issue, but in practice it will have little effect in circumstances where the delaying party can feign compliance by proposing engagement with other forms of NCDR such as mediation, whilst having no intention of actually resolving the dispute.

Administrative hurdles

• There are administrative hurdles along the way that need to be overcome which can, at any stage, cause the brakes to be put on by one party and in our experience add to the cost. If the parties are in particularly contentious proceedings, getting over the administrative hurdles can be daunting and difficult. The parties need to (a) agree an arbitrator, (b) find and agree a date, (c) agree on who is paying the fees, and (d) fill in the ARB1FS and agree and sign off on its content including, crucially, the nature of the dispute and the parameters of all the issues to be determined. Once this has been done, the appointment must be approved by IFLA and it is only then that you have got the process secured, including the hearing dates. It is not always the quick fix that it might be expected or useful for it to be.

Cost

• Finally, the cost. Whilst it is possible for legal teams to see the overall cost benefit to a client of bringing the process to an end swiftly rather than costs continuing to run in protracted proceedings, the cost of arbitration can be prohibitive and off-putting, even when shared by the parties. It can be difficult for clients to acknowledge that the overall costs could be lower in arbitration, particularly when they are at the latter stages of their proceedings.

Once the arbitration has been lined up, effort and focus needs to be put into the practicalities to ensure that the process runs smoothly.

Practicalities in the lead up

• Remember to think about whether the arbitration should be recorded, in case a transcript is needed. This could be an additional cost but being able to turn to a neutral record of the evidence and submissions might be invaluable when drafting the order later.
• Make sure the ARB1FS form is filled in comprehensively with all the steps that you will require the arbitrator to take. Make sure you always add to the form that you want the arbitrator to adjudicate on any disagreement about the wording of the order as well as whether it might become necessary for them to consider costs issues. Spell all of these out even if you feel that you should not have to do so. If it does not form part of the arbitration form, most arbitrators (in our experience) will say that they need the consent of both parties to deal with that issue – consent that can be hard to obtain if one party is unhappy with the arbitrator’s approach. Think about how judgments in court proceedings are in style – they often do not descend into the kind of detail that the order arising from that judgment goes into, and the same is true for arbitral determinations. If detail is going to be important, it should be made clear in the ARB1FS that the arbitrator is being asked to descend into such detail. The possibility of a dispute arising when it comes to the drafting of the order is significant, so this is an important issue to bear in mind.
• Think about whether you want the arbitrator to make a direction that the draft order needs to be provided within a certain number of days of the award being handed down, so that they are case managing the drawing up of the order as well.
• Whilst flexibility of start and end times of an arbitration ‘hearing’ can be helpful, being clear on an agreed time estimate and the witness template is important. The parties will have invested in the process, not least financially, and they need to feel as if they have been given enough time.

Practicalities on the day

• If possible, it is best to have the room laid out like a court. This assists during cross examination (no awkward examining someone next to you or directly opposite you in reaching distance), and also helps the client to remember that they need to treat the process with the same level of formality that they would if they were in court. It also has the added benefit of ensuring that everyone can clearly see what is happening.
• Make sure there are at least three rooms available, in relatively close proximity to each other. One of the rooms will be used for the hearing and for the arbitrator if the hearing is not at their office or chambers, and the others for each party. It helps to have the rooms near each other so that discussions can take place between counsel, although the people hosting the arbitration will need to use common sense as to whether the rooms are suitably soundproof! If there are any witnesses, it is helpful to ensure there is a room set aside for them as well.
• Our view is that it works better when the arbitrator's style is such that they adopt the persona of an actual judge, rather than making it more informal. Some clients (and legal representatives) forget the importance of the arbitration if the arbitrator is too informal, and it can make the other party feel like the whole process isn't being taken seriously as well.

Arbitration: silver bullet or not?

With the current state of the court system, it is clear that we all have to make arbitration work and that it is a useful form of NCDR. In our experience, we all need to be realistic about what is involved. Good preparation on the part of the parties / solicitors can make all the difference as to whether it is effective in properly resolving the dispute. It is hoped that this post will help parties and their legal teams make the most of arbitration and avoid some of the unexpected pitfalls that take the shine off, what is often seen as, a silver bullet.