Arbitration is a method of alternative dispute resolution where both sides agree to have their dispute decided upon by a private, independent third party rather than by a court. Arbitration has a long history in Ireland, having roots in Brehon Law. It also has the backing and support of the legislature and the Courts by way of the Arbitration Act. Arbitration may be used to resolve any dispute that would otherwise be resolved by the Courts.
Submitting to arbitration may be agreed before the dispute arises by way of an arbitration clause in a contract or by way of an arbitration agreement after a dispute has arisen. The rules and procedure for the arbitration can be agreed by the parties. In default of bespoke rules, the Act or the Model Law sets out the rules to be followed.
The process is highly legalistic and is similar to the judicial process in that pleadings and discovery are exchanged, both sides will make submissions in writing and evidence can be presented at hearing and the parties will be represented by lawyers. The neutral arbitrator will decide the outcome and the decision is binding on both parties.
Arbitration has a number of advantages over court procedings. The selected arbitrator can be a subject-matter expert, meaning that less time is needed on explaining technical matters and there is a reduced need for expert reports. This leads to reductions in the time and cost of resolving the dispute.
The process is confidential. This is a particular benefit where the fact or the subject matter of Court proceedings could lead to reputational damage to an organisation or an individual. The arbitrator has a duty of confidentiality, the media is excluded from hearings and the parties are bound to privacy by way of the arbitration rules.
Arbitration is appropriate in international disputes where parties may wish to rely on foreign laws or where there are multi-jurisdictional parties. Arbitration awards are also capable of international enforcement.
The arbitration process is far more adaptable than the Court system, and matters can be resolved more swiftly. An arbitrator does not have a list of matters on which priority must be attributed; rather will only accept seisin of a matter where she has the time to hear the evidence and make her findings within a timely period, and as per the needs of the clients. Preliminary matters can be resolved speedily rather than lingering in a Court’s call-over list. This is particularly pertinent at the moment, where Court lists are overburdened due to Covid restrictions. It is estimated that a complex arbitration may be resolved within a year.
The arbitrator is appointed by the method set out in the arbitration clause or agreement, and can be selected by the head of a particular body (e.g. the President of the Law Society) or by one party providing a list of three names and the other party choosing one of the three.
The arbitrator charges a fee for her time and the venue must be paid for, in contrast to traditional litigation where the Judge or Court is not paid by the parties, but when balancing other cost-saving measures in arbitration such as less need for expert reports and less time spent of preliminary issues, arbitration can be a more or equally cost-effective means of dispute resolution., when handled appropriately. The arbitrator can award costs in the same way as Judge.
Many clients are wary of arbitration as they believe that if the process fails, they will end up incurring the cost of the arbitration plus the cost of going to court in any event. However, the Act provides that arbitration replaces Court proceedings. If a party is unhappy with the outcome, they are stuck with it anyway except in rare circumstances where an application to the High Court may be made to set aside the decision of the arbitrator. The grounds for doing so are limited and the Courts are slow to entertain such applications. It is fair to say that the award of the arbitrator is as final, binding and enforceable as that of a Judge.
This article is for information purposes only, and is not intended to be relied upon as legal advice. If you require representation in an arbitration or would like to insert arbitration clauses in your contracts, Fitzsimons Redmond can assist you. Please contact us on 01-6763257
By Lisa Quinn O’Flaherty
Solicitor at Fitzsimons Redmond