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How to take a dispute to arbitration

Introduction

Many contracts require the parties to submit any dispute that arises to arbitration. This practice is governed by the ARBITRATION ACT 1996.

If you are the one initiating arbitration, you should ascertain all the facts that are relevant to the dispute and then establish the real issue in dispute.

You will also need to decide who could be witnesses for your side.

How do we determine who should be the arbitrator?

You will need to negotiate with the other side to determine who should be the arbitrator. There are many ways to find a suitable arbitrator, and this will usually depend on the subject-matter of your particular dispute. For example, if the issue concerns building standards or conduct, you should contact the Master Builders Association, and they will provide you with a list of reputable people.

You will also need to reach agreement as to the venue for the arbitration hearing.

What happens at the arbitration hearing?

At the hearing the arbitrator will open by outlining his or her function to the parties.

Next, the side that initiated the proceedings will open by summarising their argument and presenting their witnesses. The witnesses will read their briefs of evidence and then be cross-examined.

The other side then has an opportunity to present their case.

Throughout this process the arbitrator is free to ask the witnesses any questions.

The arbitrator will usually reserve his or her decision for a period to consider the dispute.

What powers does the arbitrator have?

Unless the parties agree otherwise, the arbitrator may:

  • award any remedy or relief that the High Court could have ordered had the dispute gone to court, and
  • award interest, for some or all of the period up to the date of the award, on any sum that the arbitrator awards or on any sum that was in issue in the proceedings but that had already been paid

Who pays for the arbitrator?

Usually the arbitrator's fee is paid by the unsuccessful party. But in some circumstances the parties may have agreed beforehand on a formula for sharing the cost.

Can I appeal against an arbitrator's decision?

You may appeal an arbitrator's decision, but generally this is limited to appeals on points of law or procedure.

Cautionary notes
  • Because the ability to appeal an arbitrator's decision is so limited, it is vital to obtain legal advice when you begin arbitration proceedings. A lawyer will help you prepare the necessary documents correctly without any harmful omissions – for example, the deed of arbitration (a document setting out the parties to the arbitration, their dispute, and the rules that they agree to) and the briefs of evidence.

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