Insight Local Government Lawyer Insight July 2017 17 Arbitration has some key advantages over litigation and is often embodied into the dispute resolution provisions in commercial agreements, including construction contracts and partnership agreements. However, arbitration is not always appropriate in every situation and may in fact generate its own difficulties. Speed Arbitration is established on the premise that it is a quick and economical means of dispute resolution. Arbitrations should be fair and they should be carried out without unnecessary delay or expense.¹ The arbitrator is required to act fairly and impartially and must adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay and expense². Similarly, the parties have a mutual duty to do all things necessary for the proper and expeditious conduct of the arbitration³. Arbitrators are accustomed to issuing directions via email, following the exchange of correspondence. This availability of arbitrators on email is a distinct advantage over court proceedings which require formal applications to be meted out. Additionally, it may take time for a new judge unfamiliar with the case to become proficient on the history. As a result, court applications are usually furnished with a comprehensive background to the dispute. In contrast, arbitrators quickly become familiar with the case once the arbitration has commenced. Costs Arbitration does not come within the scope of the Jackson reforms. This is particularly attractive as it means the parties are spared the joy of preparing costs budgets! Nonetheless, the costs of arbitration are generally quite high. The procedure often mirrors court litigation with its emphasis on statements of case, disclosure of documents, expert meetings and exchange of witness statements. There is also the matter of the arbitrator’s fees and expenses. This is usually charged in one of two ways – an hourly rate or a percentage of the amount in dispute. The parties are usually required to pay the fees for the time the arbitral tribunal is engaged. This differs from litigation where the judge’s costs are largely funded by the tax payer. Parties to an arbitration will customarily start on the basis that the arbitrator’s fees should be divided equally between them, while retaining responsibility for their own legal costs. The arbitrator will determine at the conclusion of the proceedings who ultimately should pay his fees and legal costs. Difficulties may arise if a defendant refuses to pay - arbitrators often refuse to release awards until their fees have been paid. If it is apparent a party is going to lose, they may have little motivation to pay their portion of the arbitrator’s fees. The winning party may find itself in the unhappy position of paying the arbitrator’s fees so as to gain access to his award. ¹ Section 1 Arbitration Act 1996 ² Section 33 Arbitration Act 1996 ³ Section 40 Arbitration Act 1996 Arbitration - pain or panacea? Ron Cheriyan of Waltham Forest Council reviews the main benefits and drawbacks of arbitration for local authority disputes in the light of recent developments.