Dispute Resolution in England and Wales: Arbitration and Mediation

Although court proceedings are often commenced in order to resolve disputes between parties, disputes are in fact more often than not resolved by the parties in one form or another without a court judge having to give judgment.

This can be through settlement negotiations by the parties, or by the use of formal alternative dispute resolution (“ADR”) methods.

ADR methods are continuously encouraged prior to the commencement of court proceedings and if ADR is appropriate once court proceedings have commenced, the court can stay proceedings in order for parties to carry out ADR.  Furthermore, the parties are free to choose which particular ADR method suits their circumstances best

ADR can broadly be categorised into two types: determinative ADR where a binding decision is reached and non-determinative ADR whereby the parties after evaluating their respective positions reach a voluntary settlement.

The focus of this article is on arbitration (which is a determinative form of ADR) and mediation (a non-determinative form of ADR) which are the most prominent ADR methods in England and Wales.

Arbitration

Arbitration is a determinative form of dispute resolution meaning that the parties are bound by the decision of the arbitrator(s) and that decision can be enforced without commencing court proceedings.  It is a method of dispute resolution that can be used and is used in many areas of law.

In commercial contracts, many parties choose to include an arbitration clause in the contract for business in order to enable the parties to arbitrate rather than litigate the matter. 

Arbitration does not, however, solely rely on the presence of an arbitration clause.  It is possible to arbitrate a matter even if an agreement did not originally make requirements for arbitration.  Parties are free to arbitrate a matter at any point, even after court proceedings have commenced.  

For many, arbitration is advantageous as it gives the parties control over the dispute resolution process.

Arbitrations can be held in private and the parties are free to choose an arbitrator who specialises in the subject of the arbitration.  Accordingly, the parties can be confident that their dispute will be resolved by persons with the relevant expertise.

Furthermore, the parties are free to decide the procedure that the arbitration should take, including the number of arbitrators, the country to arbitrate in, the language of the arbitration and the law which will govern the arbitration procedure. 

Arbitration in England and Wales is governed by the Arbitration Act 1996 (the “Act”).

England and Wales have international recognition for dealing with arbitration matters through their arbitration bodies, such as the Chartered Institute of Arbitrators, and the London Court of International Arbitration. 

By agreeing that any arbitration will be determined in England and Wales, parties are given the security that a fair decision will be reached due to the arbitration being governed by the Act. 

The Act applies to any arbitration agreements which are in writing, and requires that certain terms of the arbitration will be mandatory, and certain terms will be non-mandatory and may be decided by the parties.  It also acts as a fall back position to deal with the terms of the arbitration when such terms are not expressly stated in the written agreement.

The Act also supports arbitrations carried out in England and Wales in that it allows the courts to issue injunctions and provides that an arbitral award will be recognised and enforced with the same effect as if it were an order of the court.  Furthermore, the Act will only allow a challenge to an arbitral award in specific circumstances in relation to jurisdiction, irregularity and on point(s) of law.

Therefore, not only does the Act provide structure for commercial agreements which do not expressly state specific terms on which the arbitration is to take place; it also provides, for example, a way by which parties may request that an arbitrator is removed by the courts and provides that an arbitrator’s decision may be enforced as if it were a court judgment.  The rules of the Act therefore exist to assist the arbitration without interfering in the arbitrator’s decision unless this is needed.

Accordingly, due to the attractiveness of England and Wales as an arbitration venue, it is common for parties who have no specific link to these countries to include an arbitration clause within their commercial contracts stating that any disputes which may arise are to be determined by arbitration within England and Wales and that they will be governed by the Act. 

Mediation

Mediation is a form of non-determinative ADR meaning that no enforceable judgment is given at the conclusion of the mediation.  The parties are therefore obliged; if they wish the mediation to succeed, to reach a consensual agreement usually in writing in order to resolve their dispute.  Once an agreement between the parties is reached in writing this agreement can then be enforced through the courts if necessary.

Mediation is a method of dispute resolution that all parties should consider before they commence court proceedings; and in fact, all parties are obliged, under the Civil Procedure Rules of England and Wales, to consider whether mediation as a form of ADR could be suitably used to resolve the dispute outside of court in order to save the parties relationship and to save costs.  

At a mediation, the parties will jointly decide upon a neutral third party to act as a mediator.  His or her role will often be to direct the parties to an appropriate outcome, and to give their view as to what is an appropriate settlement in the given situation.  They are not, however, in a position to determine the outcome of the mediation. As with arbitration, the mediation is private and confidential.

Many parties view mediation as an attractive method of dispute resolution to use alongside court proceedings due to the fact that it may take place at any time while the court proceedings are ongoing.  Accordingly this can therefore assist in curbing the costs that could be incurred if a disagreement was to be decided by a judge in court as the parties are free to reach a consensual agreement at any point, and are free to request that the court proceedings be stayed. 

It is also possible to carry out mediation before commencing proceedings in court. This can assist the parties financially and commercially.  Not only is mediation generally far cheaper than court proceedings, but it may also be possible to protect the commercial relationship of the parties if the dispute can be resolved amicably.

Conclusion

Arbitration and mediation within England and Wales are often viewed as appropriate alternatives to commencing court proceedings not only due to their ability to save commercial relationships and allow for privacy, but also because they grant the parties more control over how the dispute is resolved.

The broad numbers of arbitration and mediation bodies, along with the Arbitration Act 1996 have assisted in creating a high calibre stage within England and Wales for international parties to resolve their legal disputes amicably without the need to litigate. 

Both these methods of ADR should therefore always be considered before litigating any kind of dispute. 

Nigel Rowley is Head of Litigation and Dispute Resolution in the London Office of Mackrell Turner Garrett.

A brief look at his experience of acting in the last years includes:-

• Acting for a US hedge fund against a UK bank in  a claim for in excess of $10M claiming misrepresentation
• Acting for a UK based software company in a claim for £15M against a UK infringer claiming commercial infringement
•  Acting for a US film producer in a claim against a UK media company claiming commercial infringement of rights
• Acting for a US high net worth individual in a claim against a UK architect designer claiming substantial over invoicing.
• Acting for a SA company in a £12M claim against a Canadian conglomerate – share dispute.
• Acting for a UK motor trader in a £1M+ claim against a UK individual – breach of guarantee.
• Acting for a UK company Director in defending a claim against an Iranian state owned business – alleged misallocation of payments
• Acting for a Middle Eastern Royal in defending a £20M+ claim made by a UK bank – alleged bank guarantee default.
• Acting for non –UK national in major extradition case

Acting for non-UK nationals in international freezing injunction cases.

Nigel has considerable experience in defending FSA prosecutions, and HMRC Appeals.

Is an International Committee member for EMEA on Mackrell International, the independent network of 80+ law firms around the World.  As well as the Chairman of the Membership Committee for Mackrell International.

As a result of the firms membership of Mackrell International, very experienced in cross-border disputes, and multi-jurisdictional litigation.  Nigel can be contacted on +44 (0)207 240 0521 or by email at Nigel.Rowley@Mackrell.Com