UK - Arbitrate or Litigate???????

Hi John

There is usually no choice in the matter because the Contract sets out the dispute resolution process.

If you have a choice then the main advantage of arbitration is that your dispute remains confidential.

Litigation has the advantage that the courtroom and the judge are provided free to the litigants from the public purse.

Best regards

Mike Testro

Hi Mike,

You are generally right except in this case we have been discussing the dispute resolution clauses with the client at tender stage and both parties are very open to what goes in them - hence the question as I don’t know alot about either process.

Apparently the courts are no longer free, the client (who’s been there) said the TCC costs about £5,000 a day now, used to be free but that has all changed and the costs are going up.

It’s because the client has ended up in litigation before and it cost them alot that they are thinking of different methods of resolving disputes. I only know abit about adjudication but I’m told that most people these days accept the adjudicators decision and go no further - well obviously on occassions they do. Therefore is whether you have arbitration of litigation as the next step so important as it might have been in the past?

Any thoughts on the matter would be helpful. (We’re trying not to run to the lawyers on this one!!!!!!)

Hi John

You cannot escape adjudication as the first step even if there is no such clause in the contract - the housing and grants act will enforce it anyway.

Once the adjudication process is over then the courts are the next step if the adjudicators decision is challenged.

Adjudication is quick rough justice but it generally works well.

The best route in any dispute is to negotiate a settlement.

My definition of a succesful negotiated settlement is when both parties are still unhappy.

Best regards

Mike Testro.

Mike,

Thanks, I agree negotiation is the best way but you have to put something in the contract.

Possibly not the right forum to ask for details in, I’m thinking someone in both organisations might have to go and talk to a lawyer for advice, ouch!

John.

Hi John

Try this free of charge

33.1 In the event of any dispute arising between the Parties in connection with this Agreement, senior representatives of the parties will, within 10 business days of a written notice from either Party to the other, meet in good faith and attempt to resolve the dispute without recourse to legal proceedings.
33.2 If the dispute is not resolved as a result of such meeting, either Party may, at such meeting (or within 10 business days of its conclusion) propose to the other in writing that structured negotiations be entered into with the assistance of a neutral adviser or mediator (’Neutral Adviser’).
33.6 If the Parties accept the Neutral Adviser’s recommendations or otherwise reach agreement on the resolution of the dispute, such agreement will be recorded in writing and, once it is signed by their duly authorised representatives, will be binding on the Parties.
33.8 If the Parties fail to reach agreement in the structured negotiations within 45 business days of the Neutral Adviser being appointed then any dispute between them may be referred to the Court unless within a further period of 25 business days the parties agree to arbitration in accordance with the procedure set out below."

This will not supersede any statutory adjudication rights

Best regards

Mike T.

Mike,

Thanks, I’ve put it on the contract managers desk, see what he thinks.

John

John,

No simple answer of which process to use but it’s a question that is often asked. At least for once you are

having the chance to think about what process to use, normally the dispute resolution clauses aren’t even

looked at or thought about until a dispute arises.

As Mike said, you can’t opt out of adjudication but this process doesn’t suit every dispute and has to be used

cautiously in today’s credit crunch era – insolvency is becoming a new defence to adjudication for private

developers leaving a contractor in a very poor position.

The trouble is that it’s a chicken and egg situation - until the dispute has actually occurred you don’t know

precisely what the most suitable process will be to suit the circumstances that you find yourself in - which is

no help in deciding what to put in the contract at tender stage!!!!

Sorry, but here’s a bit of self advertising (never before have I posted a link on this site then twice in one day!) but it saves me a lot of typing and cutting & pasting, hope it helps or at least gives you an brief outline of all the processes to think about:

Construction Dispute Resolution Service

Have a look under “Formal Disputes” to see an overview of the processes available – the final process when a

dispute arises doesn’t actually have to be arbitration or litigation, but as far as the original contract is

concerned, I would say that one or the other should be used. However, the question is how likely will it be

that the parties can agree to something different after the dispute has arisen?

Andrew,

Thanks, I found your site useful - had heard of most of the processes available but didn’t know what all of them really were.

No decision on what to use yet, think it might take a bit of time to sort out!

Regards,

John

John,

Seems a bit ironic but if you were talking about an international contract then I’d say arbitration without any hesitation whatsoever.

Surprisingly domestic contracts are actually more complicated, there’s a surprising amount of things to think about and weigh up.

Mike / Andrew,

Thanks for your help, we’ve actually agreed on a staged resolution approach:

1. Negotiation
2. Mediation
3. Arbitration

But with a proviso that the parties are free to agree a different approach after the dispute has arisen such as Expert Determination.

Thanks,

John

John,

Just make sure that the option WHEN to arbitrate is properly defined otherwise you could find yourself arbitrating and mediating at the same time. (Same would have been the case if you’d chosen litigation)

Andrew,

Have you got any sample clauses that would cover the negotiation to arbitration procedure?

Thanks,

John

John,

I have several - but posting them all on here might fill several pages up!!!!

Send me your email address in a private message and I’ll forward them onto you.

Andy,

Thanks for your help, we have it sorted.

Thanks,

John

John,

Another satisfied customer!!!!!!!!!!!

Cheers,

Andy