Arbitration – the general
principles
What arbitration is.
Why arbitration is considered desirable by commercial parties.
Key principles of arbitration, including those set out within the English Arbitration Act 1996.
The significance of the New York Convention in relation to the enforcement of arbitral awards.
How to answer problem and essay questions on arbitration.
What is arbitration?
O’Callaghan v Coral Racing Ltd (CA, 19 November 1998) (Hirst LJ):
‘To my mind the hallmark of the arbitration process is that it is a procedure to determine the legal
rights and obligations of the parties judicially, with binding effect, which is enforceable in law, thus
reflecting in private proceedings the role of a civil court of law.’
- Alternative to litigation in court
- Form of ADR
• Consensual in origin (unlike litigation).
• Arbitration agreement.
• Arbitration is triggered by this
• Contained in the contract – parties include an arbitration agreement in initial
contract on transaction
• Requires a dispute.
• Triggered by a dispute
Can be domestic (parties in the same jurisdiction) or international (parties across different
jurisdiction - NY convention)
Why arbitration?
Resolving dispute: court (litigation) vs arbitration
- Cheaper than court (often/in principle)
- Flexibility of rules (of evidence?) can make it more informal than litigation
- Less public than a court hearing (private)
- Often quicker than court
, Arbitrator = expert in the field
- Commercial specialism
- Help them get to a commercially sensible outcome (rather than a strictly legal one)
- Pragmatic outcome which is sensitive to their sector or particular dispute
- Both parties agree on the arbitrator
o Parties choose who decides their case
o More confident in outcome
o More satisfaction in the end, even if they lost
Consensual
- Litigation is not
- Both parties agree to go to arbitration
- With litigation = don’t have a choice
Privacy + confidentiality:
- Main reason parties choose arbitration
- Court hearing = public
o media attention
o parties names out there
o names and facts in the court’s judgement, what they are being sued for, how much
money they are suing for etc.
o judge will set out the different factual accusations and which side the judge agrees
with depending on the evidence
o not only does the public know there is a judgement, they also know that the judge
did not believe one party/business = not good for reputation
- arbitration = avoids all these problems
o very beneficial for the reputation of the business parties
Why not arbitration?
Grounds to appeal = limited (can exclude this beforehand too)
o Less flexibility if not happy with the outcome and want to appeal award
Might be best to first try something which will not result in binding decision (mediation or
negotiation) – much more control over the outcome
Might not be able to agree on various procedural aspects, such as the arbitrator
It can be expensive
Appeal – in Court of Appeal =confidentiality is lost = defeats the purpose
If legal issues involve multiple parties = can be much more difficult in arbitration than in
litigation
principles
What arbitration is.
Why arbitration is considered desirable by commercial parties.
Key principles of arbitration, including those set out within the English Arbitration Act 1996.
The significance of the New York Convention in relation to the enforcement of arbitral awards.
How to answer problem and essay questions on arbitration.
What is arbitration?
O’Callaghan v Coral Racing Ltd (CA, 19 November 1998) (Hirst LJ):
‘To my mind the hallmark of the arbitration process is that it is a procedure to determine the legal
rights and obligations of the parties judicially, with binding effect, which is enforceable in law, thus
reflecting in private proceedings the role of a civil court of law.’
- Alternative to litigation in court
- Form of ADR
• Consensual in origin (unlike litigation).
• Arbitration agreement.
• Arbitration is triggered by this
• Contained in the contract – parties include an arbitration agreement in initial
contract on transaction
• Requires a dispute.
• Triggered by a dispute
Can be domestic (parties in the same jurisdiction) or international (parties across different
jurisdiction - NY convention)
Why arbitration?
Resolving dispute: court (litigation) vs arbitration
- Cheaper than court (often/in principle)
- Flexibility of rules (of evidence?) can make it more informal than litigation
- Less public than a court hearing (private)
- Often quicker than court
, Arbitrator = expert in the field
- Commercial specialism
- Help them get to a commercially sensible outcome (rather than a strictly legal one)
- Pragmatic outcome which is sensitive to their sector or particular dispute
- Both parties agree on the arbitrator
o Parties choose who decides their case
o More confident in outcome
o More satisfaction in the end, even if they lost
Consensual
- Litigation is not
- Both parties agree to go to arbitration
- With litigation = don’t have a choice
Privacy + confidentiality:
- Main reason parties choose arbitration
- Court hearing = public
o media attention
o parties names out there
o names and facts in the court’s judgement, what they are being sued for, how much
money they are suing for etc.
o judge will set out the different factual accusations and which side the judge agrees
with depending on the evidence
o not only does the public know there is a judgement, they also know that the judge
did not believe one party/business = not good for reputation
- arbitration = avoids all these problems
o very beneficial for the reputation of the business parties
Why not arbitration?
Grounds to appeal = limited (can exclude this beforehand too)
o Less flexibility if not happy with the outcome and want to appeal award
Might be best to first try something which will not result in binding decision (mediation or
negotiation) – much more control over the outcome
Might not be able to agree on various procedural aspects, such as the arbitrator
It can be expensive
Appeal – in Court of Appeal =confidentiality is lost = defeats the purpose
If legal issues involve multiple parties = can be much more difficult in arbitration than in
litigation
