Commercial arbitration - Alternative dispute resolution

What is commercial arbitration?

Commercial arbitration in is a well-established method for resolving many types of disputes arising out of commercial transactions. This method allows parties to avoid court proceedings, providing a potentially faster, more flexible, and confidential process. The rules for commercial arbitration are determined by the Arbitration Act 1996. This law applies to arbitration cases in England and Wales, whether they are domestic or international.

Commercial arbitration is focused on resolving disputes arising from commercial agreements. These may include contracts for the sale of goods or services. Commercial arbitration is prevalent in international trade. It provides a neutral ground for resolving disputes outside of national courts.

Certain sectors may have their own specific arbitration rules or institutions. These include the London Court of International Arbitration (LCIA), which is one of the world’s leading international institutions for commercial dispute resolution. The LCIA provides a set of rules and a panel of arbitrators for parties opting for arbitration under its auspices.

Benefits of using commercial arbitration

Party autonomy:

One of the fundamental principles of the Arbitration Act 1996 is the respect for party autonomy. This means parties have significant freedom to structure their arbitration proceedings. This includes choosing their arbitrators, the seat of arbitration, the rules governing the proceedings, and the law applicable to the dispute.

Confidentiality:

Arbitration proceedings in England and Wales are private, and there is an inherent duty of confidentiality. This duty covers the arbitration hearing itself, documents generated and exchanged during the arbitration, and the award. The exact scope of confidentiality can be subject to the arbitration agreement and any relevant arbitration rules chosen by the parties.

Limited Court Intervention:

The Arbitration Act 1996 restricts court intervention in arbitration proceedings. Courts can support arbitration by, for example, assisting in the appointment of arbitrators or enforcing interim measures. However, their role is generally limited to ensuring the arbitration process is fair and in accordance with the parties’ agreement.

Types of commercial arbitration

Ad Hoc Arbitration:

In ad hoc arbitration, the parties retain significant control over the arbitration process. They are responsible for setting their own rules and procedures, including selecting arbitrators and determining the arbitration’s conduct. This type of arbitration offers flexibility but requires more effort from the parties to manage the process.

Institutional Arbitration:

Institutional arbitration is administered by an established arbitration institution. Institutions such as the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), and the American Arbitration Association (AAA) have their own set of specialist arbitral rules and procedures.

They provide administrative support, and can assist in appointing arbitrators. This type offers a more structured approach. It is often chosen for its convenience and the reputation of the institution.

Domestic Arbitration:

This refers to arbitration proceedings that involve disputes between parties located within the same country. It is governed by the country’s specific national laws and practice. Domestic arbitration adheres to the legal and procedural framework applicable within English law

International Commercial Arbitration:

International arbitration addresses disputes between parties from different countries or disputes with a significant foreign element. International law will be implemented in international arbitration. It is characterised by its cross-border nature.

Parties often choose arbitration due to its neutrality, the enforceability of awards (under the New York Convention), and the ability to avoid the home courts of either party.

Enforcement of arbitral awards

The United Kingdom is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. This means that arbitral awards made in England and Wales are generally recognised and enforceable in other signatory countries, and vice versa. This provides a significant advantage in international commerce.

Challenging a decision

The Arbitration Act (UK):

In England and Wales, under the Arbitration Act 1996, there are very limited grounds on which an arbitration award can be challenged or appealed in court. Challenges can be made on the basis of jurisdiction, serious procedural irregularity, or on a point of law. The latter being subject to tight restrictions and the need for leave to appeal.

The Federal Arbitration Act (USA):

In the USA, the Federal Arbitration Act allows for the vacatur (setting aside) of an arbitration award in specific circumstances. This can include fraud, arbitrator bias, or where the arbitrators exceeded their powers. It does not generally allow for an appeal on the merits of the decision.

UNCITRAL Model Law:

Many countries have adopted arbitration laws based on the UNCITRAL Model Law on International Commercial Arbitration. This similarly restricts the grounds for challenging an arbitration award to issues like incapacity, invalidity of the arbitration agreement, lack of proper notice, and the arbitration tribunal exceeding its scope, among others.

How can Expert Commercial Law assist?

Expert Commercial Law have a panel of law firms who can assist with commercial arbitration. They can also assist by providing other types of commercial dispute resolution.

Each solicitor and expert witness is vetted before being allowed onto our panel, and we only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA).

Our solicitors also help with commercial claims, such as breach of contract, winding up proceedings and statutory demands.

Please note we are not a firm of solicitors. We maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.