Tribunals and Arbitration

• The industrial tribunals are the most formal and their procedure is very similar to that of a court;

• The social security appeals tribunals are less formal.
• In all tribunals individuals are encouraged to bring their own case and not to use lawyers.    
• Indeed, apart from the Mental Health Review Tribunal, the Lands Tribunal and the Employment Appeal Tribunal, legal aid is not available, so that anyone wishing to be represented by a lawyer will have to pay his or her own legal costs.

• The decision of most tribunals is final, that means there is no appeal available.    Again there are some exceptions, the most important being the industrial tribunals which have a complicated appeal route, going first to the Employment Appeal Tribunal and then to the Court of Appeal (Civil Division).

Advantages of tribunals

There are many advantages to using this system of tribunals instead of the courts.

1. It is cheaper since there are no expensive court or lawyers’ fees to pay as most applicants represent themselves.   In industrial tribunals people are more likely to be represented by a lawyer than at social security tribunals.
2. The proceedings are less formal than a court, making it easier for ordinary people to start proceedings and conduct their own case.
3. Each tribunal specialises in one type of case so that they become experts in that area.       In addition the two lay members will have their own specialist knowledge of the subject.
4. Cases are dealt with more quickly than in the courts.

Disadvantages of tribunals

However the system does have its drawbacks.

1. Applicants who are unrepresented are less likely to win their case.    Statistics in the early 1990s showed that in industrial tribunals the success rate for those with lawyers was 49 per cent, while for those without lawyers the rate was only 28 per cent.    One of the main problems in tribunals is that although the individual will not be represented, the employer or government department on the other side is likely to have its own lawyer.    Legal aid is not available.

2. Although the procedure is comparatively informal, many people still find it confusing and intimidating.    The fact that each tribunal is likely to have its own methods adds to this confusion.

3. The specialist knowledge of tribunals may make an applicant feel at a disadvantage since he or she will not share that knowledge.

4. Tribunals do not always operate quickly.   Reports by the Council on Tribunals have highlighted delays.   It is normal for employment cases to take a year or more to be heard and if the case goes to appeal there will probably be another two years to wait.    One case actually took nine years from start to finish (Darnell v United Kingdom 1993).

Control of tribunals

Since tribunals operate outside the court system a special council was set up in 1958 (following the Franks Committee Report in 1957) to supervise and keep under review the constitution and the working of tribunals.      It hears complaints about tribunals and publishes an annual report.    

• It has fifteen members who visit tribunals and observe their work at first hand.
• The main problem is that it can only make suggestions for reform as it has no power to alter any decisions made by any tribunal.

• The other problem is that it is very small, with a limited number of staff, and it cannot deal with the growing number of tribunals and cases.
• The Council also has very little power; it can all only report on problems and make recommendations for the future; it does not have the right to overrule any decision by a tribunal.

Are appeals an effective way of controlling tribunals?

It is, however, as already noted, possible to appeal from the decisions of some tribunals.    

• Most employment cases can appeal first to the Employment Appeals Tribunal and from there to the Court of Appeal.    In these cases the courts can control the workings of the tribunals and correct any errors they may have made.

• There is also a Social Security Appeals Tribunal to hear appeals in this area.

Apart from an actual appeal the courts have some control over tribunals with the process of judicial review.  

• The Queen's Bench Divisional Court hears applications for judicial review against tribunal decisions and can use its prerogative powers, for example, where there has been a breach of natural justice.

These proceedings are brought in the Queen's Bench Divisional Court but the Divisional Court will only overturn the tribunal’s decision for one of the following reasons:

1. The tribunal has acted ultra vires, that is, it has done something it has no power to do.
2. The decision was clearly wrong in law.
3. The decision was against the rules of natural justice.    The rules of natural justice include the point that no person is allowed to act as a judge in a case in which he has an interest and that both sides must be given the chance to put their case.

Finally there is an Ombudsman to whom dissatisfied parties can complain.

Domestic tribunals   

These are effectively “in-house” tribunals set up by private bodies usually for their own internal disciplinary control.   They must keep to the rules of natural justice and their decisions are subject to judicial review.    In addition for many professional disciplinary tribunals there is an appeal route to the Judicial Committee of the Privy Council in cases where the tribunal has decided to strike off a member from the professional register.

ADR AND MEDIATION

We will now look at methods of resolving disputes which are quite independent of the legal system i.e. you do not need to resort to using the courts.   Remember that in civil cases it is one of the parties involved who decides whether or not to start a court case.     People do not want to start a case unnecessarily and will usually try to settle the problem in another way if possible.

ADR means Alternative Dispute Resolution and is becoming popular among big companies as a cheap and quick way of sorting out a dispute.    

• ADR takes a number of different forms but the common factor is that the parties are encouraged to come to a satisfactory settlement themselves (i.e. private arbitration), instead of allowing another person (a judge or arbitrator) to make a decision.    
• Negotiation is one form of ADR.    In this the parties try to reach an agreement themselves, often by each party being prepared to give up part of his or her claim.    
• Another method is mediation in which a neutral party or mediator will intervene to try to encourage the parties to reach a compromise solution in order to settle the dispute.

• Another is the formalised settlement conference (commonly called a “mini-trial”).     This is where each side presents its case to a panel composed of an executive from each party often assisted by a neutral party.    This panel of three will then come to a decision.

Centre for Dispute Resolution

In 1991 the Centre for Dispute Resolution was set up in London and many important companies have become members, including ICI and Sony and almost all the big London law firms.    

• The Centre does not make a judgement.    Instead the aim is to act as a mediator and help the parties reach a settlement.     The Centre offers a variety of ways of resolving a dispute.  
• One method is to have a “mini-trial” with a panel of three reaching a decision.    The unusual part of this procedure is that only one of the panel will be independent and neutral, the others will be one executive from each of the companies involved.

• The panel will hear a short presentation of each side’s case and the two executives will then, with the neutral advisor’s help, try to find a solution that satisfies them both.    
• The solution is likely to be based more on commercial realism than on pure law and it may contain certain agreements about future businesses, a matter on which the court could not make any decision.

• Apart from saving time and money this sort of procedure avoids the “head-on” conflict that can occur in court and makes it easier for the companies to continue doing business with each other.

• Examples of disputes which have been settled through the Centre include a £5 million claim involving insurance negligence, a £1 million construction claim over electrical and mechanical installations and a £20 million dispute over a breach of contract between manufacturing firms.    All these disputes were resolved in one or two days of mediation, saving estimated court costs of several thousands of pounds.

ARBITRATION

Arbitration arises from:

• An agreement to arbitrate (private arbitration);
• Statutory intervention (e.g. ACAS must be informed in industrial tribunal cases);  
• Through the courts in small claims cases and the Commercial Court of the Queen's Bench Division.

Going to arbitration means that the parties voluntarily agree to have their dispute judged by another person privately, not in court, and agree to accept his or her decision.  

• The agreement to go to arbitration is generally made in writing at the time the parties made their original contract.    At this time, of course, there would have been no dispute, but the agreement would be aimed at any possible future disputes.    
• This type of arbitration agreement is known as a Scott v. Avery clause, being named after a case in 1855.    This is a clause where the parties in their original contract agree that in the event of a dispute arising between them, they will have that dispute settled by arbitration.  
• Many organisations automatically include arbitration clauses in any contracts made.   In particular arbitration clauses are commonly found in car insurance contracts and contracts for package holidays.

Activity: Try to find an arbitration clause in a contract.

What if there is no arbitration clause?

Apart from making an arbitration agreement at this early stage, it is also possible to agree to go to arbitration after a dispute arises. When people agree to use arbitration the courts will normally refuse to allow them to take proceedings in court instead of going to arbitration.  

• This rule is in the Arbitration Act 1950.    The one exception to this is if the dispute involves consumer rights and the claim is for less than £1,000.    In this case the consumer can decide to use the small claims arbitration scheme in the County Court instead of a private arbitration scheme.  
• Arbitration is popular with businesses and is used by both big and small companies.     International companies often use what is called the London Court of Arbitration to resolve their disputes.    
• There is also the Institute of Arbitrators which provides arbitrators for major disputes.    About 10,000 arbitrations take place in London each year.  
• Apart from these major disputes, arbitration is also used as a way of resolving disputes between businesses and customers in a variety of services and industries.      This is sometimes referred to as domestic arbitration since it is the industries themselves that have set up the arbitration schemes.    
• The difference between arbitration and mediation is that in arbitration a decision is made by the arbitrator and both parties are then bound by that decision, whereas in mediation the parties are helped to come to an agreement by a neutral third party.      The parties can accept or reject the mediator's suggestions for resolving the dispute.

The arbitrator

An arbitrator can be anyone whom the parties agree should decide their case.     He or she may be a lawyer who specialises in the type of law involved in the dispute or may be a non-lawyer who is a technical expert in the area involved.    This second type of arbitrator is often used where the dispute is over the quality of goods or work done.    

• An example would be an engineer being asked to make a decision in a case about faulty machinery.    
• The agreement to go to arbitration will generally name the arbitrator or provide a method for choosing him.    
• Commercial contracts often say that the president of the appropriate trade organisation shall appoint the arbitrator.    If the parties want to use arbitration but cannot agree on how to choose an arbitrator, they can ask the High Court to appoint one for them.

There is also the Institute of Arbitrators, which provides trained arbitrators for major disputes.   In many cases the arbitrator will be someone who has expertise in the particular field involved in the dispute.

The award

The decision of the arbitrator is called an award.   This award is usually final, which means neither party can appeal from it.  The award can be enforced in the same way as a judgement of the court.

Advantages of arbitration

There are many advantages to using arbitration instead of going to court:

1. The parties can make their own rules as to how the arbitration should be concluded.    This means they can choose a formal hearing with witnesses giving evidence on oath in a similar way to a court hearing or they can agree to a more informal hearing.     They may even agree that all the evidence will be put in as documents and provide a “paper” arbitration with no witnesses.
2. The time and place of the hearing can be arranged to suit the parties.    Where suitable the hearing may be in the evening or at a weekend so as not to interfere with business.
3. The whole case will take place in private, so that business disputes are not made public.    If a case goes to court, the hearing is almost always open in the public.
4. The case will be finished more quickly than in the courts.     Questions of quality are decided by an expert rather than by a judge.     This can also save time since the parties will not have to waste time explaining technical points.
5. It is much cheaper than going to court.   Some estimates suggest that a court case costs 10 times more than an arbitration hearing.    This is particularly true if the parties agree that they will not use lawyers at the hearing.

Disadvantages

As with all schemes, however, there are some disadvantages:

1. Arbitration is not always cheap.   If the parties use a professional arbitrator from an organisation such as the London Institute of Arbitrators, the charge for such an arbitrator could be £1,000 per day.   In addition, if the parties use top barristers to present their cases at the hearing, the costs may well be the same as going to court.
2. An individual with a dispute against a big business may feel at a disadvantage.    Legal aid is not available for arbitration hearings, although it may be if the same dispute were heard in court, so the individual will either have to do without a lawyer or pay his own costs.    In some instances he may find that he has to go to arbitration since there was an arbitration clause in the original contract.    Many organisations, such as package holiday firms and insurance companies, include such a clause in their standard contracts and consumers may have to accept that arbitration clause if they wish to go ahead with the contract.
3. The fact that there is no general right of appeal can be a disadvantage.   If a point of law is involved then it may be more suitable for a judge to make the decision than an arbitrator.     Arbitration is being increasingly criticised as being almost as costly and time-consuming as going to court and many companies now prefer to use ADR.