Ezines at the end of last year looked at mediation and adjudication as methods of resolving business disputes. This final article exploring the range of dispute management methods looks at arbitration, expert determination and neutral evaluation.
Arbitration grew up due to the need to have a forum for resolving international trade disputes, for example shipping and carriage of goods. It is only usually relevant in high value cases, as it can be just as expensive as a court action.
Arbitration is similar to court proceedings. The final decision, known as an award, is final and binding, and enforceable through the courts. Arbitration has the advantage that it is consensual, so can only be used with the agreement of all parties and it’s private and confidential, so ideal for the kind of commercial dispute that you don’t want in the public domain.
Arbitration agreements can be found in all sorts of business arenas. For example, the rules of the Football Association require arbitration in disputes between clubs.
Read more: Solving disputes using arbitration.
Expert Determination is a confidential and binding process which is agreed by the parties to the dispute, either in the original contract documentation, or in a subsequent agreement. An expert appointed will reach a decision which will be binding on the parties.
It has the advantage that it is confidential, carried out in private, and so can protect commercial confidences and sensitive subjects. It is also fast and far less formal compared to other dispute resolution processes, and is ideal for multi party disputes.
Expert determination is most suitable for technical disputes where the help of an expert is required. For example the expert may be an engineer, IT consultant, or valuer of certain types of property or goods.
As far as costs are concerned, it is usual for the parties to agree that they will meet their own costs and share of the fees of the expert. Unless the parties have agreed in their terms of reference, the expert cannot award costs against another party.
Read more: Expert determination for resolving business disputes.
Also known as Early Neutral Evaluation (ENE), this alternative dispute resolution process emerged in the late 1990s. The main difference to the other forms of dispute resolution is that any evaluation is non-binding.
So why would a non-binding evaluation be of any help? The key is that the evaluator is usually either a judge or a QC, someone who is used to court trials as well as having legal expertise and experience. The idea is that their decision would be very persuasive and be a strong indicator of the likely outcome if the matter went to trial.
It can be a cost effective solution for some disputes.
Read more: Resolving disputes through early neutral evaluation
For advice on any business dispute contact Nigel Musgrove or Gary Cousins in our Dispute Management Team.