Arbitration Model Answer

• Arbitration is a formal method of alternate dispute resolution where the parties voluntarily agree to let their dispute be left to the judgment of an Arbitrator or a panel of Arbitrators, who are neutral. An Arbitrator is independent and usually has legal and expert knowledge of the type of dispute eg. in a commercial dispute, a surveyor may arbitrate in a dispute between a builder and a developer. Package holiday contracts usually include a clause providing for arbitration through Association of British Travel Agents (ABTA) e.g. holiday maker and tour operator.
• Arbitration is controlled by the Arbitration Act 1996 which sets out rules for Arbitration, agreements are usually in writing. Agreement to go to Arbitration can be made before a dispute arises by the inclusion of a Scott v Avery clause in a contract. Large commercial contracts will contain a Scott v Avery clause eg the building dispute that arose over the creation of the new Wembley stadium.
• Under s15 of the Arbitration Act 1996, the parties can choose their Arbitrator so will name a specific arbitrator or name a professional body to appoint an expert eg. the Chartered Institute of Arbitrators (CIA) or ACAS. Both parties must agree to the chosen arbitrator and agree to be bound by their decision.
• Arbitration can be regarded as semi-formal. ‘Paper’ arbitration is informal and simply involves both parties putting their points in writing and submitting with relevant documentation. Or, it can take a more formal approach whereby the parties send their documentation but must attend a hearing.
• The parties and the Arbitrator can agree the procedure including; deciding whether it is ‘paper’ Arbitration or form, the time and place of the hearing. During the hearing the each party will put forward their case and evidence. They can be represented by lawyers but this is discouraged. Witnesses can be called and cross-examined although are rarely needed as witness reports can be sufficient.
• Once all the information has been presented, the Arbitrator makes a final decision called an ‘Award’, which is binding on the parties and can be enforced by the courts if necessary.
• There is no automatic right of appeal. However, under s68 of the Arbitration Act 1996, an appeal can be made by a party if there is a serious irregularity with the way the arbitration was conducted or under s69 if there is an issue with a point of law.