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Thursday, July 18, 2024

Look to arbitration to reduce costs of legal disputes

An expert has pointed to arbitration as an alternative to turning to courts to resolve potentially costly commercial disputes.

Andrew Holden, senior associate solicitor in the Litigation team at regional law firm Napthens, reports that courts are struggling with budget cuts; and court users are struggling with fee hikes and falling service levels.

However, this has not decreased the use of litigation – which can be an expensive process as well as involving the time to take a case to trial – to resolve disputes.

Now Andrew is advising that businesses could look to arbitration, a private form of dispute resolution which can be used to resolve commercial disputes, instead.

He explained: “Many people are familiar with mediation, but with arbitration there is no need to offer a concession to those with whom the business is in dispute. A party may wish to negotiate, but they can’t be compelled and a binding decision can be reached without the consent of the opponent.

“Arbitration is also private, far more flexible, with a certain outcome reached by utilising an expert in the sector the parties operate in.

“There is also no public judgement, and no trial where conduct is open to public scrutiny. Courts only become involved if the losing party fails to comply with the arbitrator’s decision. 

“Unfortunately, arbitration simply isn’t used as often as it should be. In some cases, solicitors are unfamiliar with the process, so it may not be considered; or perhaps a compromise would be impossible to reach.

“To make sure it can be an option, businesses should include a clause in standard terms of business or in a contractual document negotiated with trading partners. Such clauses are easy to draft because industry sectors have their own schemes which can be adopted. 

“Arbitration is increasingly popular among larger businesses and trading relationships, particularly those with an international dimension. This is likely to continue for smaller businesses and domestic disputes.”

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