A Response to Judicial Comments on the Arbitration-Litigation Debate

Blog post by Derek Auchie

Recently, the Lord Chief Justice of England and Wales, The Right Hon. The Lord Thomas of Cwmgiedd, argued that the balance between litigation and arbitration as processes for resolving commercial disputes under the English and Welsh system had been taken too far in favour of arbitration. I was interested to read Lord Thomas’s points from the Bailii Lecture 2016 (PDF) as, on the face of it, they go against almost everything I have read and that I hear about the litigation-arbitration debate. I have to say I disagree with the tenor of what he said in his speech.

Before setting out why I disagree, let me be clear about two things. Firstly, I do agree that the choice of method of resolution of a commercial dispute is a complex one, dependent on many factors. Secondly, arbitration is not perfect as a process, even if it is deemed to be a suitable method in any particular case.

However, the speech delivered appears to be based on the notion that what is important is the development of the common law by judicial decision making. In my view, that is rarely, if ever, a matter of any priority for those in commerce who become involved in disputes. What they care about are issues such as: cost, speed, confidentiality, quality of decision making and enforceability. Now, I am not suggesting that arbitration always lives up to its billing in these areas, but I believe that it delivers a better process and outcome more often against these factors than litigation does.

Lord Thomas suggests that the criteria for appealing an arbitral award could be relaxed. However, that would give rise to an increase in unpredictability. The suggestion that arbitration stifles contribution to the development of the common law, even if a valid consideration for the parties (which I doubt), is not really borne out by the significant volume of arbitral appeal cases which end up in the English Commercial Court.

Litigation has its place, of course, but not as a means to allow the development of the law. In my view, it is not there for that purpose. The courts and the law are there to serve the public, not the other way around.

What is striking in today’s era of the search for better systems to resolve commercial disputes (an era which exists globally) is the suggestion that more appeals from arbitral awards (which could come from relaxing the grounds of appeal) would be a good thing. Those in the commercial sector who would pick up the costs of such additional appeals would not, I suspect, be thankful that their payment had contributed to the development of the common law.

It strikes me that the right approach to concentrate upon is having an understanding of all the methods available (whether mediation, litigation, arbitration, expert determination), ensuring that those who negotiate have the skills to do so effectively, and judging when any post-negotiation method might best be used. In my view, this is the future, not one where we consider the development of the law via litigation as an important aim in itself.

Derek has a keen interest in dispute resolution processes (court, tribunal, arbitration and mediation). He is the Programme Leader of our online LLM Dispute Resolution.

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