Arbitration in context — overviewKey features of arbitration

Arbitration differs from other dispute resolution methods in a number of respects. Some of the important key features are:

• doctrine of separability; the arbitration agreement and substantive contract are regarded as separate agreements

• difficulties when there are multiple parties due to privity of contract and joinder issues

• the extent to which the arbitration process is confidential. This differs depending on the country; England and Australia for example taking very different approaches

Can a dispute be arbitrated?

It is important to understand whether the parties are entitled to arbitrate their dispute. This will depend on whether there is in fact an arbitration agreement between the parties and, if there is, whether the parties are entitled to arbitrate that type of dispute.

Whether there is an agreement to arbitrate is not always clear cut. The wording can be persuasive as to whether they have agreed to arbitrate but essentially the courts will look at the nature and remit of the agreement rather than the specific wording.

The general rule is that parties can agree to arbitrate almost any dispute between them but there are clear exceptions. For example:

• disputes or differences relating to criminal activities and issues of public interest cannot be arbitrated

• where the agreement in dispute is contrary to English law; although this is dependant on where the agreement is to be enforced

• certain consumer contracts; particularly where the remedy sought is less than £5,000

It is also important to remember that whether a dispute or difference can be arbitrated is relevant when determining whether an award will be recognised and enforced under the New York Convention.

Differences between arbitration and other types of DR

There are a number of differences between arbitration and other types of dispute resolution methods such as litigation and adjudication. Examples include how issues such as confidentiality and interim measures including injunctions are dealt with or how much control parties have over the arbitration process. It is important to understand these differences when drafting dispute resolution clauses in contracts given that they may influence the type of dispute resolution clause a party wishes to use.

Evidence — contrasting arbitration and litigation

One of the main differences between arbitration and litigation is that arbitrators are not bound by any rule of evidence and therefore have complete discretion to decide the relevance and weight to be given to any evidence unless the parties have prescribed their powers.

The Arbitration Act 1996 contains evidence provisions such as the powers that a tribunal will have over witnesses; they have no power to compel witnesses to attend the arbitration hearing and give evidence.

Institutional and Adhoc arbitration

There are a number of institutions which have produced their own arbitration rules such as the ICC. There are both advantages and disadvantages to the use of such rules.