Arbitration is one of the oldest forms of Alternative Dispute Resolution (ADR) it is governed by the 1996 Arbitration Act (AA) and is part of the Advisory, Conciliation and Arbitration Service (ACAS). The Act states in Section One that the object of Arbitration is “to obtain the fair resolution of disputes by an impartial tribunal without necessary delay or expense” (Slapper and Kelly, 2003)
Arbitration can only transpire if both parties involved agree to it, it is the only form of ADR that is legally binding however Arbitrators are not bound by precedent. An Arbitrator can either be a legal practioner or an expert in the field where the dispute rest and they are usually a panel of three known as an Arbitration Tribunal generally comprising of a legal and industry expert within the dispute field and an experienced Arbitrator. Section 33 of the AA states that an Arbitration Tribunal has a duty to “act fairly and impartially between the parties, giving each a reasonable opportunity to state their case; and to adopt procedures suitable for the circumstances of the case, avoiding unnecessary delay or expense” (Slapper and Kelly, 2003) An Arbitrator can make a decision based on one of two ways, the first being made using any supporting documents given by the parties involved to assist their case and secondly by holding a hearing where both sides can present their case themselves .
Arbitrators can also decide whether the parties involved can be legally represented, they also have the power to call in expert witnesses and can visit sites outside of the hearing room. A court can retract an Arbitrators decision if it feels that the Arbitrator has not acted fairly or impartially towards one or both parties, they do not hold the relevant or required qualifications or is not of a suitable mental or physical capacity to deal with the proceedings accordingly. The majority of contracts between businesses now include what is known as an Arbitration Clause, this is when parties agree that any future disputes that may occur will be submitted to Arbitration instead of pursuing litigation.
There are of course advantages and disadvantages to Arbitration as there are with all other forms of ADR, some of the advantages are that; it is a private process and within business means that any particularly sensitive information about the parties involved and their company remains completely confidential, it is also an informal process unlike litigation, it reduces the risk of parties pursuing litigation, it can help arrive at a decision much quicker than litigation and a significant advantage is that it is considerable less expensive than litigation. The disadvantages are; there is no automatic right to appeal once an Arbitration Award has been prepared, Arbitrators are not obliged to follow the law and it can be extremely difficult to resolve the entire dispute. As in some cases a provision may have already been made within a contract for a particular Arbitrator it may cause problems if the other party feels that the appointed Arbitrator may show bias towards them.
Another form of ADR is Mediation; Mediation started within Family Law and has been strengthened by the 1996 Family Law Act, it is used to deal with custody and divorce issues nevertheless it is now becoming widely used within the business community as a way of solving company disputes and it is now being offered as an alternative to litigation by the courts. Mediation is a process whereby a third party acts as a ‘go between’ amongst the parties involved. A Mediator can insure that an agreement is made without the parties involved even having to communicate with each other directly, a Mediator is not involved in anyway with any party implicated in the dispute and can only advise and not give any professional advice to either party. Lord Mackay examined three alternative forms of Mediation the first “involving lawyers advising parties as to the legal strengths of their relative positions…” the second was “based on judges adopting the role of Mediator…” and finally the one that Lord Mackay favored most “broadened the issues beyond the legal, to explore solutions that were not available to the court.” (Slapper and Kelly, 2003). Although Mediation is not in actual fact binding it can become binding once an agreement has been reached and all parties are happy with the outcome, the agreement then has been signed by all involved unless the parties have specifically requested otherwise it then becomes a legally binding document and will be treated as any other legal contract. Some advantages of Mediation are as follows; it is voluntary, confidential, it gives both parties more control over the final decision made, it can be a more effective way of maintaining continued business relations and it can be arranged quickly in comparison to litigation.
Some of the disadvantages may be that the more powerful of the parties may dominate the Mediation process in favor of themselves and although Mediation is voluntary and this is seen as an advantage it can also be a disadvantage as one party can refuse to use Mediation and instead decide o pursue litigation especially if they feel it would be more beneficial to them and Mediation may not lead to a suitable resolution of the dispute which both parties agree.
Negotiation is a process where the parties involved try to agree a course of action by sitting down and putting forward all relevant points across until finally reaching an agreement which satisfies both parties. Negotiations will usually be held in a neutral environment and will be more informal than standard litigation this may help the parties to relax and come to a suitable and rational decision without the situation getting out of hand. Each party will in turn be able to state what they feel is the nature of the dispute before negotiating a suitable outcome. Negotiation is slightly different to Conciliation and Mediation as the person negotiating acts on ‘your’ behalf and represents and looks after ‘your’ interests, a successful negotiator will be able to reach a conclusion where they are able to achieve most of their parties wishes but without causing the other party to feel they have lost and therefore detach themselves from the rest of the negotiation process and then choose to pursue a litigation option.
Conciliation can be seen as a form of Mediation in fact some people say that the only difference between them is that Conciliators have more power than Mediators as they can “suggest grounds for compromise and the possible basis for a conclusive agreement” (Slapper and Kelly, 2001). Conciliation like Arbitration is part of ACAS and like Mediation tries to allow parties to decide an outcome between them that suits them both, however it does not always guarantee that a dispute will be settled and will not proceed to litigation anyway.
