Harper James advises UK businesses, including start-ups, scale-ups and established companies, on commercial disputes under the laws of England and Wales. Commercial arbitration is a private dispute resolution process in which one or more independent arbitrators decide a dispute and issue a binding award.
Arbitration usually begins with an arbitration clause in a contract. The clause should identify the disputes covered, the legal seat of the arbitration, the governing law, the number of arbitrators and the applicable rules. The seat determines the procedural law and the courts supervising the arbitration. Businesses also select institutional rules, such as those of the London Court of International Arbitration, or agree an ad hoc process. A poorly drafted clause creates avoidable disputes about jurisdiction and procedure.
The process normally involves a notice of arbitration, appointment of the tribunal, a procedural timetable, written submissions, disclosure of relevant documents, witness evidence and a hearing. The tribunal manages the case and sets directions, with the aim of keeping the procedure proportionate to the value and complexity of the dispute. Businesses should preserve contracts, correspondence, invoices, project records and relevant electronic communications as soon as a dispute is identified. They should also assess limitation periods, contractual notice requirements and any obligations to negotiate or mediate before arbitration begins.
Arbitration is private, although confidentiality depends on the agreement, the applicable rules and the circumstances of the case. Costs include legal fees, tribunal fees, institutional charges, expert evidence and hearing expenses. The tribunal usually allocates costs in the award, subject to the applicable rules and its assessment of the parties’ conduct. An award is generally final, with limited grounds for challenge under the Arbitration Act 1996. It can be enforced through the courts of England and Wales, and international enforcement is supported by treaties including the New York Convention.
Before accepting or drafting an arbitration clause, a business should compare arbitration with court proceedings, mediation and expert determination. Relevant factors include confidentiality, the location of assets, the technical nature of the dispute, the likely value of the claim, the need for urgent court relief and the enforceability of an award against the counterparty. Legal advice should address the contract wording at the outset, because changing from litigation to arbitration after a dispute arises requires agreement or a valid existing arbitration clause.