For industries and organisations where disputes commonly arise - such as in the construction and energy sectors - alternative dispute resolution (ADR) methods are paramount. They help you minimise disruption to your business, avoid soured relationships with partners or suppliers, and avoid costly legal proceedings.

One example of an ADR is arbitration, a method where an arbitrator is instructed by the parties involved to provide a binding decision and resolve a dispute.

Unlike traditional litigation, arbitration allows you to resolve disagreements outside of the court system, often providing a faster, more private way to navigate disputes.

Here in the UK, arbitration is governed by the Arbitration Act 1996. While in Ireland, primary legislation regarding arbitration is the Arbitration Act 2010.

Fun fact: Until adjudication came into force in Ireland in 2016 under the Construction Contracts Act 2013, arbitration was the primary formal dispute resolution process used.

Today, we’re taking you on a whistle-stop tour of what arbitration is, what the process involves, and providing some guidance on whether it’s the right path forward for you.

While mediation involves finding resolution through constructive conversation and collaboration, and with support from a neutral third-party, and litigation involves taking a dispute to court for a judge to decide the outcome, arbitration sits somewhere in the middle.

The parties involved will work together to choose a neutral arbitrator (or multiple!) who is an expert in the industry or specifics of the case. This arbitrator will weigh up both sides of the argument and come to a decision. Arbitration decisions (or awards, as they’re known) are enforceable in court and hold the same legal status as a court judgement.

Arbitration can be simpler, less formal, and offer more privacy and flexibility than litigation. It provides a binding, final decision and helps you avoid a lot of the back and forth associated with mediation.

You’ll often find arbitration used with international parties - such as investor-states, and shipping or technology companies - in disputes where privacy is a key priority, or in areas with less reliable jurisdictions such as the Middle East.

To learn more about arbitration, or to train towards becoming an arbitrator yourself, have a look at the Chartered Institute of Arbitrators (CIArb), a global professional body responsible for pushing the world of dispute resolution forward.

Step 1: Agreement to arbitrate

The arbitration process typically begins before a dispute has occurred, but in very rare cases it can begin post-dispute.

At the beginning of a contract, both parties – for example, a construction business and their contractor – should work together to set an arbitration clause. This is a contractual provision that will require disputes to be resolved through arbitration, as opposed to litigation. It will dictate how the arbitration process will proceed, should there be a dispute or disagreement in connection with the contract.

Arbitration clauses are important for minimising the negative impacts of disputes and making sure all parties are satisfied with the arbitration process. If you’re in need of support to review and strengthen an arbitration clause, feel free to get in touch with the Novus Resolve team.

In an arbitration clause, you should clearly set out:

• The venue for the arbitration

• The seat of arbitration – the legal location where proceedings will take place, which can be different to the governing law

• The governing law of the arbitration

• Number of tribunal members - whether you want one or more arbitrators

• The location

• Procedural rules

For example, you might have an arbitration that’s seated in France, under English law, with three tribunal members, under Singapore International Arbitration Centre rules.

Step 2: Choosing an arbitrator or panel

Next up is selecting the arbitrator(s) who will resolve the dispute. They’ll act as a neutral third-party, listening to all sides, examining evidence, assessing the case and reaching a fair, legally binding decision.

Typically, in smaller, simpler cases, you’ll choose a single arbitrator. But, in larger cases, you’ll often see tribunals made up of three. When looking for an arbitrator, you’ll want someone with specialist skills, such as:

• Legal knowledge

• Communication skills

• Decision-making abilities

• Conflict resolution skills

• Industry or subject matter expertise

Unlike in litigation, where a judge will be assigned to your case, arbitrators are selected by the parties themselves. This can be done via mutual agreement, where both parties assess the arbitrators available to them and reach a joint decision, or through institution-led appointment.

An institutional arbitration is where a specialised institution takes control of the arbitration process. They’ll bring their own rules and framework to the arbitration, resulting in a more regimented arbitration experience. For example, here at Novus Resolve, we have a panel of experienced arbitrators available to help you find simple and straightforward resolution for disputes.

Step 3: Preliminary hearing or case management conference

Early in the arbitration process, there will be a preliminary hearing or case management conference.

This is an opportunity for the tribunal and parties to discuss the case, identify any issues, and discuss submissions, evidence and confidentiality and conduct expectations. You might also agree on a schedule and timetable for the arbitration at this point.

Meeting to discuss expectations and next steps at this stage can be invaluable for ensuring the arbitration is completed efficiently.

Practice Direction 62 sets out some rules that will influence this stage of the arbitration process. For example, they offer guidelines surrounding the filing and serving of evidence.

Step 4: Exchange of statements and evidence

Next, all parties will submit their claims and defences, along with any evidence.

This is the time for the disclosure of any key documents that are relevant to the case and the arbitrator will collect any written witness statements and expert reports.

Step 5: The arbitration hearing

We’ve now reached the arbitration hearing – which can be more formal or informal, depending on the rules set out in your arbitration clause.

Some hearings will take place remotely (a post-COVID addition to the arbitration process), while others will be conducted in person.

Either way, this is the point where both parties present their case to the arbitrator and undergo any cross-examination. In simple cases, arbitration may take a few hours, whereas more complex disputes could take weeks or months to find resolution.

While there's no strict structure for an arbitration hearing, they typically go as follows:

• Opening statements – starting with the claimant, all parties will present their case, evidence and perspective.

• Witness examinations – each party will be able to examine their witnesses and cross-examine the other party’s.

• Expert examinations – if applicable, both parties will get the opportunity to examine their own experts and cross-examine the other side’s.

• Closing statements – the parties involved can summarise their case, referring to the hearing and emphasising their points and perspective for a final time.

Step 6: Deliberation and award

Following the hearing, the arbitrator(s) will consider the case, review all evidence and issue a binding decision (the award).

This award is enforceable under the Arbitration Act 1996, and internationally via conventions. While arbitrators may decide an outcome in as little as a day, it could take longer depending on the complexity of the case.

The length of arbitration will vary significantly based on the specifics and complexities of the case, party co-operation, and the number of arbitrators on the tribunal. Typically, the process will be faster than court litigation, which can take weeks to months, but not always.

Availability of the tribunal – especially in the case of multiple arbitrators – can also be a factor in how long arbitrations take. For example, if dates were to shift, it could be a substantial period before all arbitrators are available again.

Looking forward, the Arbitration Bill includes legislative updates that look to streamline arbitration timelines and make the process more efficient for everyone involved.

When choosing a dispute resolution method, we often see arbitration weighed up alongside litigation in court. Both methods will provide a concrete, undisputable resolution and will be determined by an impartial third-party.

Where arbitration is different is that it provides more privacy and control to the parties involved. Whereas court proceedings will be made public, arbitrations are closed, and any sensitive information remains confidential. As both parties work together to choose the arbitrator, location, and structure of the process, you can also expect to benefit from more control and input over how the process plays out.

Arbitration awards will also be enforceable internationally, due to an increasing number of global jurisdictions adhering to The New York Convention. This outline for the recognition and enforcement or arbitral awards was adopted by the UK back in 1975, and the US in 1970, but we're still seeing new jurisdictions adopt it now. This more recently includes Timor-Leste (2023), Suriname (2022), Malawi (2021) and Iraq (2021).

As with any dispute process, it can be beneficial to consult a professional when undergoing arbitration – especially in its early stages. Whether you need support deciding on the seat or governing law of an arbitration, reviewing arbitration clauses, or simply deciding if arbitration is the right course of action, seeking expert advice will be invaluable.

For expert consultation, advice or arbitrator appointment, schedule a consultation with the Novus Resolve team today: https://novusresolve.com/contact