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.

Resolving a dispute – Do you have the skills?

How should a dispute be resolved? This is a complex question, which used to have a simple answer – by negotiation and, if this fails, straight to court. Nowadays, it is not so simple.

Firstly, how may an effective negotiation be conducted? Strangely, lawyers and business graduates are not routinely taught negotiation skills. Yet, there are good and bad negotiation techniques. It is well understood that the use of certain techniques can lead to a fruitful negotiation where in the absence of those techniques, the outcome is likely to be less favourable. There is a vast volume of literature in this area, especially in the US, where the Harvard Programme on Negotiation is based. It is not only in commerce that good negotiation skills are needed; they are useful in the workplace too, whether dealing with colleagues, suppliers or even management. Workplace disputes that can be resolved early can solve a lot of time, effort and distress. Indeed, the same can be said (to a greater or lesser extent) of all disputes.

Where negotiation does not work, the ‘straight to court’ model is no longer viable. Lawyers have a duty to inform clients of all alternatives, as provided for in recent Law Society of Scotland guidance and these include mediation and (especially in commercial contracts) arbitration. These methods have their place, and, when chosen well, can bring critical benefits to any dispute process, such as: speed, less cost, privacy and can (especially with mediation) even allow parties to repair an ongoing relationship (family, employment, or even commercial). This latter dynamic is simply absent from most court processes. Further, recent research on resolving family law disputes suggests that a hybrid model (whereby lawyers can act both as lawyer and mediator) can work. Indeed, the perception of mediation as only for disputes involving relationships is now in the past, with regular increases in the use of mediation of commercial disputes: The Centre for Effective Dispute Resolution (CEDR) estimates that it was involved in 9,500 commercial mediations in 2014, 9% growth on the previous year.

Disputes can happen in any environment, and they are a fact of life. They are, in one sense, a waste of time. They are not productive or enjoyable. No-one has disputes recreationally. It is not a hobby. Making the process as streamlined, quick, painless and cheap as possible should therefore be a key priority of any dispute adviser, transactions adviser or line manager.

Learning about the different forms of resolution and the techniques involved, whether with a view to advising on disputes or to resolve them more effectively, is important. The Law School here is very active in this area; it already offers courses and programmes on dispute resolution, at undergraduate and Masters levels, including a Masters programme which is professionally accredited by the Chartered Institute of Arbitrators.

The plan is to specialise further in this area by launching a new Masters online part-time programme: LLM Dispute Resolution. If you are interested in being kept informed of developments on this new, exciting addition, please register your interest here. At the moment, we are collecting evidence of demand, so the higher the level of interest, the more likely this programme will launch.

The more education offered in this area, the more harmonious our relations with others will be. How can you argue with that?

Blog by Derek Auchie