Keeping business disputes confidential – arbitration clausesPosted on
It is a key tenet of the justice system in England and Wales that proceedings are to be held in full view of the public. Justice must not only be done but be seen to be done.
Commercial litigation is therefore not a forum for a business or individual with secrets.
All businesses, whilst entering agreements, should prepare for the worst case scenario. Documenting transactions, clauses and even conversations, is a key to resolving any disputes that may arise. One further consideration is entering arbitration clauses in contracts.
The key advantage of an arbitration clause is that it allows businesses to deal with disputes in private, in front of an experienced arbitration panel and with the desired effect that neither party has their reputation or ego bruised. Always a consideration for a high profile company or individual.
On balance, arbitration is also designed to be less expensive and speedier. Though arbitrator’s costs are often higher than court fees, the theory is that the less formal process saves on legal fees and other delays in the court process.
The court system in England and Wales, like all public offices, is under intense pressure during the economic downturn. The result is that getting listed for a court hearing, let alone a full trial, is not easy. Trials can be pushed back by many many months, if not years and, though the courts deal regularly with urgent business and applications (and admirably so) if you wish to sue to assert your rights then you may be waiting a long time.
Arbitration may not be for everyone. Awards in arbitration are not usually appealable and there may be tactical advantages of having proceedings in public, however, before entering into any contract arbitration (and what form that arbitration may take) should always be considered.