West London Local Chambers can help companies with commercial disputes
In the world of commerce not every sale satisfies both parties. Mediation and Arbitration are two avenues to resolve disagreements before going to court.
Although they have the same goal in mind which is a fair resolution of the dispute, there are significant differences, which both parties must understand before the process starts.
In arbitration the arbitrator hears evidence and makes a decision binding on the parties. Arbitration is similar to the court process as parties provide testimony and give evidence as they would in a trial. However, it is usually less formal and not held in a court but in private. In mediation, the process is a negotiation with the assistance of a neutral third party, trying to broker a deal between the parties. In mediation there is no resolution unless all sides agree.
Mediators do not issue orders, find fault, or make determinations. Instead they help parties to reach a settlement by assisting with communications, obtaining relevant information, and developing options. Although mediation procedures may vary, the parties usually all together first meet the mediator informally to explain their views of the dispute. Usually, the mediator will then meet with each party separately and will not divulge the discussions to the other party unless authorised to do so. It is common for the mediator to go back and forth between the sides a number of times. The main focus remains on the parties as they work towards a mutually beneficial solution. Many disputes are successfully resolved and often the parties will then enter into a written settlement agreement. Many people report a higher degree of satisfaction with mediation than with arbitration or other court processes because they can control the settlement, be part of the resolution and save the costs of litigation.
Arbitration, on the other hand, is a way of legally settling a commercial contract without having to go to court. You are called the Claimant and the party against which you are taking action is the Respondent. You both put your case to an independent person called an arbitrator. The arbitrator listens to both sides, looks at the evidence you’ve sent in and decides what the outcome should be. In some cases, the arbitrator may choose to have several meetings with you both. All you need to do is state in your contract, at the time of order award, that you both agree to Arbitration via your local Chamber of Commerce in London.
As such it is generally a more formal process than mediation. An arbitrator could be a retired judge, a senior lawyer or a professional such as an accountant, engineer or international trade professional. During arbitration, both parties are given an opportunity to present their cases to the arbitrator. Much like a regular court proceeding, lawyers can also question witnesses from both sides.
When the arbitrator makes a decision, this is called an award and it is legally binding. If you do not agree with the decision, in general you cannot take your case to court to have the decision changed. Thus, the arbitrator has the power to render a legally binding decision, which both parties must honour and the award is enforceable in our courts and the courts of 142 countries.
Many trade associations offer arbitration under a code of practice to help you settle the problem. For smaller contracts our Chamber of Commerce can arbitrate at a cost in keeping with the size of the contract. For larger contracts we can refer you to a higher level in the Chamber of Commerce network.
In conclusion, it is important to actively consider a form of Alternative Dispute Resolution (ADR) for many reasons and as early in the dispute as you can. In fact, the court process requires some type of ADR to have been explored in any event. Some of these reasons are:
- Time – the time taken to come to a resolution through the court is time a business owner can ill afford – time is the most precious commodity.
- Cost – the cost of litigating can spiral and can easily damage the business cash flow. Cash that can be better directed in growing the business.
- Reputation – having a costly dispute played out in public can have a negative effect on all aspects of the business.