This page is split into two sections the first being frequently asked questions by members of the CIArb and the second contains articles written by branch members.  Click on the relevant link below:

               Frequently Asked Questions                                                                    Members' Articles

How many years has the CIArb been in existence?

The Institute was founded as the Institute of Arbitrators on 1^st March 1915.

The Institute was granted a Royal Charter in 1979, which set the seal on recognition of the Institute as a learned body, and in 1990 the Institute became a charitable body whose main object is to promote and facilitate the determination of disputes by arbitration and alternative forms of dispute resolution.

In how many countries does the CIArb operate?

There are members in 86 countries and active branches in Australia, Bahrain, Bermuda, Channel Islands, Cyprus, East Asia, Egypt, Europe, India, Ireland, Kenya, Lebanon, Malaysia, Nigeria, North America, Scotland and Zimbabwe.

How many members does the CIArb have?

Just under 10,000.

Who are the key officers of the CIArb?

The CIArb has a small secretariat based in London, the management team being:

Dair Farrar-Hockley Secretary General, David Griffiths, Director of Operations, Malcom McMullan Director of Finance and Tamara Øyre Legal Counsel.

The Institute’s President is Karen Gough, a leading construction and arbitration lawyer and the Honorary President is Sir Anthony Evans, a former Judge from the  Court of Appeal  and well known commercial arbitrator.

What is the turnover of the CIArb?

Just over £3 million. About half the income is from subscriptions; the remainder comes from training courses and the fees from our commercial and consumer arbitration schemes.

Arbitration Schemes?

The Institute operates dispute resolution services for the settling of disputes between subscribers to each service and their customers. These schemes are designed to offer access to justice to members of the community who might not otherwise be willing and or able to enter into court-based litigation. Since 1994 there have been over 12,000 appointments to resolve consumer disputes where our members have been used as arbitrators. The Institute administers over 80 business-to-consumer and business-to-business dispute resolution schemes including:

• Arbitration service for the Travel industry (ABTA) members and clients

• British Telecom

• BT Cellnet

• Commercial Arbitration Scheme

• Consignia

• Ford Journey Dispute Resolution Procedure

• Legal Services Commission Arbitration Scheme

• Mortgage Code Arbitration Scheme (incorporating 38 mortgage lenders and over 44,000 mortgage intermediaries)

• National House Building Council

• NTL

• One2One

• Orange

• Surveyors & Valuers Arbitration scheme

• Vodafone

 Who are the main competitors of the CIArb?

Most western countries will have their own membership body promoting dispute resolution but none are global in their outlook. For example the (English) Law Society has a Dispute Resolution section, as does the American Bar Association. Similar organisations in the UK include Mediation UK, the UK College of Family Mediators CEDR and the Academy of Experts. Although they undertake some training activities, the CIArb is unique in the range of training offered.

In what way is the CIArb different from them?

CEDR exists to promote awareness of dispute resolution with British companies and it’s members are nearly all Corporate and professional practices, so in that respect our activities are very compatible. Mediation UK and the College of Family mediators focus on mediation at community level and the Academy of Experts as its name suggests on expert witnesses.

CIArb is a charity and is the only membership body that covers the entire range of dispute resolution  processes on a global basis and the only body providing world-wide education & training.

In the UK the professional construction institutions (RICS and ICE) compete at some levels on arbitrator / adjudicator training and also in making appointments, but they are very specific to their own industry.

What are the major achievements of the CIArb?

• Setting a global standard (Chartered Arbitrator) as the benchmark of professional standards and training. (Ironically, arbitration is not a controlled profession and while anyone can in theory call them selves an arbitrator, parties come to the CIArb knowing they will be working with professionals at the highest standards of practise in dispute resolution)
  

• The Ford Journey dispute resolution scheme marks Europe’s first on-line resolution scheme, providing appropriate methods of dispute resolution for e-commerce.
  

• Being able to offer education and training pretty much anywhere in the world. Recent courses have been in Bhutan, the Lebanon and China.

 How does arbitration differ from other forms of dispute resolution?

How long have you got? Arbitration is faster, cheaper and simpler than litigation and has two major advantages. The results are completely confidential – which means in commercial disputes the trading relationship can continue and arbitration awards are enforceable in any of the 123 countries that have ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. In contrast a victory in the court of one jurisdiction doesn’t necessarily mean the “winner” will be enforce the court’s judgment and to get payment in his or her own jurisdiction and the negative publicity associated with a well publicized legal dispute or an unfavourable judgment can be very damaging. 

Arbitration is similar to litigation in that a third party makes a binding decision and increasingly other forms of dispute resolution such as mediation and conciliation are becoming popular as they allow the parties in dispute to have more control over the dispute resolution process. These Alternative forms of Dispute Resolution are sometimes known colloquially as “Appropriate forms of dispute resolution”. They are essentially non-binding in character. The CIArb has embraced ADR as part of its charter since 1999.

Incidentally the Lord Chief Justice Lord Woolfe has been one of the chief proponents of mediation and ADR in the UK, as part of attempts to reduce pressure on the UK court system, by resolving disputes without recourse to formal litigation.

The Changing Face of Adjudication
Adjudication's Achilles' Heel by Jonathan Leech     
Mediation v Adjudication v Arbitration   
The Role of the Expert in Arbitration by D Roger Dyer
The Arbitration Act 1996 by D Roger Dyer
When All Else Fails: A Review of Dispute Resolution by D Roger Dyer

THE CHANGING FACE OF ADJUDICATION

A talk given on 11 February 2003 by D Roger Dyer as part of a seminar presented by

St Philip’s Chambers, Birmingham entitled:

“Adjudication towards 2005”

I mention, first, the aims of Parliament in creating the provisions for statutory adjudication as part of the 1996 Act.  Primary legislation was said to be required to give all parties to construction contracts a statutory right to have disputes decided by adjudication, which was to be a rapid and (hopefully) a relatively inexpensive process.  Lord MacKay, the Lord Chancellor at the time, put a good deal of store by the provisions.  “We must adapt our remedies to changing circumstances.  We must not allow the burden of going to seek justice to become so great that instead of guaranteeing freedom it crushes it.”  There are those who said that before the Act became law the construction industry’s record for dispute resolution was so poor that almost any change could reasonably expect a welcome.  The working party that was set up identified a number of contributory factors of the delay or prevention of dispute resolution, including:

• Current court procedures

• Absence of emphasis on ADR in legal education

• Lack of awareness of ADR techniques by lawyers

• Lack of experience by litigators

• Similar inexperience of the parties

• The absence of a stage in litigation at which the court may suggest settlement.

There was also a general recognition that there was unfairness in the mechanics of payment within the building industry.  This arose partly through inequality in bargaining power – mainly between main contractors and their sub-contractors.  But beside that was the operation of “pay when paid” arguments.  One could also look to the rigid scheme of certification in JCT and ICE contracts.

What was needed, it may be said, was a “quick fix” or “rough justice” approach to dispute resolution in the industry with a speedy, cheap and binding decision on any dispute as it arose.  As everyone knows, what ensued was a so called fast track process that required an adjudicator to reach a decision within 28 days of referral – extendable by the agreement of the referring party by up to 14 days.  Recognizing the potential for the defending party to delay matters there were no provisions in the primary legislation for challenges to the appointment of an adjudicator; the jurisdiction point.  This aspect was strengthened by the “Scheme” that was set up by the 1998 Regulations.   Nevertheless both the statutory provisions and the Scheme imposed a duty on the adjudicator to act impartially.

There were, though, no primary provisions for the appointment of adjudicators – anyone could establish themselves as appointing bodies and, besides the established institutes, many apparently suspect organisations took on that role. 

Thus, despite the usual regulatory framework, the Act set up a system that could be regarded as fairly loose in its modus operandi and that attracted a good deal of doubt and criticism from a broad swathe of academics and lawyers experienced in construction litigation and arbitration.  No-one knew at the beginning how the Act was to be policed.  There was a good deal of speculation on the appropriate route.  But sure enough the first few cases attracted applications to the courts to set aside the adjudicator’s decision for a variety of reasons.  If the system was to work, it needed robust support from the judiciary – but it got it.

It soon became clear that the courts were going to ensure that the system would be upheld with all its apparent faults.  Shortly before the Act came into force it became known that the Technology and Construction Court (TCC) had instructed its judges to clear the decks to consider any challenges.  Starting with Macob v Morrison Construction [1999] BLR 93 the approach was clear: summary judgement was to be appropriate in enforcing the adjudicator’s decision and Macob was endorsed by Outwing Construction Ltd v Randell & Son Ltd  [1999] BLR 156.  The decisions of the TCC soon established a pattern of upholding the form of rough justice that was coming from adjudicators even to the extent of support for adjudicator’s decisions that were obviously wrong in some respect or that were shown to be wrong.  There was also some inconsistency; for example, in John Cothliff Ltd v Allen Build (NW) Ltd (1999) CILL 1530 it was held that paragraphs 13(h) and 16 of the Scheme gave an adjudicator very wide powers of control – wide enough to give him power to award costs.

The precept adopted is exemplified in C&B Scene Concept Design Ltd v Isobars Ltd [2002] BLR 93 where it was held that even if an adjudicator made errors of law his decision is binding and enforceable until the matter is corrected in the final determination.  Furthermore, as in Shimitzu Europe Ltd v Automajor Ltd [2002] BLR 113, it was considered that an adjudicator had jurisdiction to make a mistake as long as he asked himself a question or questions which had actually been referred to him for decision. 

There are of course the authorities of which most will be aware such as Bouygues v Dahl-Jensen where a defendant was unable to persuade either the TCC [2000] BLR 49 or the Court of Appeal [2000] BLR 522 to correct an adjudicator’s arithmetical error of significant proportions.  Such an outcome was said by Buxton LJ to be “inherent in the exceptional and summary procedure provided by the 1996 Act.”  There are, though, a long series of cases that may have made the more legalistic among us blush.

For example, in The Construction Group Centre Ltd v The Highland Council [2002] BLR 476 Lord Macfadyen held that “enforcement is a matter of contractual obligation.”  In that case he argued that “the parties have accepted a contractual obligation to give effect to the adjudicator’s decision.”  One is entitled to enquire how that can be when the defending party is brought to adjudication by statutory force.  Lord Macfadyen’s justification was that a party to an adjudication who does not advance an argument before the adjudicator may be prevented from raising the point before the court in attempting to deprive the adjudicator’s decision of enforceability.

However, the approach of the courts is, in my opinion, demonstrably changing.  Forbes J, the presiding High Court Judge of the TCC said recently, in addressing the first annual conference of the Adjudication Society, there are essentially only two grounds upon which an adjudicator’s decision can be challenged.  These are want of jurisdiction and procedural unfairness.  But do the more recent cases go beyond that?

The starting point may be Discain v Opecprime [2001] BLR 285 in which the TCC found “a very serious risk of , if not bias, at least a failure to consult with one party upon important submissions which were made by the other party….  The adjudicator had over-stretched the rules [of natural justice].”  Accordingly the court declined to enforce the adjudicator’s decision.   

Next in line was Glencot Development v Ben Barrett [2001] BLR 207 in which the court’s decision is usefully summarised in a series of steps:

1. Section 108(2) of the Act and paragraph 12 of the Scheme obliged the adjudicator to act impartially in carrying out his duties.

2. The adjudicator had to conduct proceedings in accordance with the rules of natural justice.

3. The words “impartial” and “impartiality” in the Act and the Scheme were to be given their usual meaning as they had in common law or (interestingly) in Article 6 of the Human Rights Convention.

4. The test was an objective one, namely whether the circumstances would lead a fair minded and informed observer to conclude that there was a real possibility or a real danger, the two being the same, that the tribunal was biased.

There is an interesting commentary in BLR on these matters. Like the theme of this talk it is suggested that adjudicators are indeed bound by the principles of natural justice and are to be compared with judges and arbitrators.  All this is in contrast to Elanay Contracts Ltd v The Vestry [2001] BLR 33, where HHJ Havery appears to accept that the time restraints of statutory adjudication may be inherently unfair and result in a fairly rough and ready approach – perhaps in line with the Bouygeues case, where Dyson J thought there was a “reasonably close analogy between the expert evaluation and adjudication cases.”   

Then there is the case of Balfour Beatty Construction Ltd v London Borough of Lambeth [2002] BLR 288.  HHJ Humphrey Lloyd held that the adjudicator who took the initiative in ascertaining the facts and applied his own knowledge and experience to do a party’s work for them (pace the arbitration case of Fox v Welfair [1981] 2Lloyd’s Rep 514) but does not inform the parties of his proposed methodology or seek their observations on its suitability commits such a potentially serious breach of the requirement of impartiality or fairness as to render his decision invalid. 

Next there arises the old thorny problem – well known to arbitrators – as to whether there was a dispute.  In Edmund Nuttall Ltd v R G Carter Ltd [2002] BLR 312 it was held that, objectively construed, what had been referred to adjudication by the Notice to Refer comprised a package of facts relied on by each side in support of the parties’ respective positions and the arguments that had been rehearsed.  What the adjudicator decided was not something which had been referred to him for his decision and accordingly it was made without jurisdiction and was unenforceable.  The point arose again in Watkin Jones & Son v Lidl UK GmbH (2002) CILL 1837.

A further interesting case is RJT Consulting Engineers Ltd v DM Engineering (NI) Ltd [2002] BLR 217.  Section 107 of the Act provides that a construction contract must be in writing and defines that agreement.  In RJT the TCC in Liverpool dismissed an application that the agreement between the parties was not an agreement in writing for the purposes of the Act but that decision was reversed by the Court of Appeal.  In their judgment what had to be evidenced in writing was the whole of the agreement, not just part of it.  The decision seems to me to be surprising, particularly in view of the courts’ earlier attitude to adjudication, because there are numerous construction contracts where not all of the terms are evidenced in writing.  In many cases there are what are said to be collateral agreements while in others material terms such as completion periods and dates are agreed orally.  Then there are variation orders, not all of which are confirmed in writing.  The decision seems to open the possibility of further challenges to the jurisdiction of adjudicators on these grounds.

A similar point arose recently in Carillion Construction v Devonport Royal Dockyard, decided in November 2002 but unreported.  A variation as to the basis of reimbursement was the subject of an oral agreement.  It was held that adjudicators had no jurisdiction to reach a decision on the oral agreement. 

Finally I shall refer to the case of Woods Hardwick v Chiltern Air-Conditioning [2001] BLR 23.  It was held, among other matters, that an adjudicator had to allow a party a fair opportunity to make its case and seek to present its view in relation to such adverse views as the adjudicator had provisionally formed in the early stages of the adjudication.  The statutory requirement to act impartially required him to act in a way that did not lead to a perception of partiality by one party, judged objectively.       

I do not intend to give an exhaustive review of the many cases that come before the courts by way of applications to enforce or to challenge an adjudicator’s decision.  However I submit that there is emerging a clear strand that demonstrates that whereas the courts have spent three or more years doggedly upholding adjudicator’s findings no matter what defects they may have had, it will no longer do so.  More recent cases have given significant legal consideration to arguments on a number of aspects of an adjudicator’s role and, where necessary, the adjudicator’s decision has been rejected.  There is now a growing body of case law that attaches critical importance to the need for adjudicators to act impartially and in accordance with basic rules of natural justice and fairness.  It may be said that adjudicators have little time under the provisions of the statute to reach a decision, and that it may be difficult to give the parties full opportunity to be heard on every strand of their respective cases.  Nonetheless the duty to act impartially is now generally considered by the courts to be a predominant factor in carrying out an adjudicator’s duty. 

19. What lessons are to be learnt from this?  It seems to me that in future adjudicators should be more carefully selected and, perhaps, ought to have deeper experience of the dispute resolution process than hitherto.  We seem to be moving away from the rough justice envisaged when the Act was enacted towards a more sophisticated analysis of the disputes referred to adjudication.

ROGER DYER - 11 February 2003

Adjudication's Achilles' Heel by Jonathan Leech                             

Adjudication was designed to protect the weaker party and alter the commercial balance between the parties in the supply chain. However, the state of the law on enforcement of adjudicators' decisions may encourage employers and main contractors to push those to whom they owe money towards insolvency. Its cheaper to finish the other side off altogether!

Adjudication should enable those who need their money fast to get hold of it. To a great extent this objective has been achieved and the courts have been supportive. The problem comes when either party encounters serious financial difficulties.

If a contractor is pushed into liquidation, the right to adjudicate may remain but any award may be unenforceable. It is reasonably clear following the Court of Appeal judgment in Bouygues v Dahl Jensen that 'insolvency set-off' under the Insolvency Rules operates independently from the Construction Act. Under rule 4.90, if either party goes into liquidation an account must be taken of all mutual dealings between the parties 'and the sums due from one party shall be set off against the sums from the other'. This allows contra charges in the absence of a withholding notice. It also renders the adjudicator's decision in practice unenforceable.

For example, an employer refuses to pay and defends adjudication proceedings on the ground that he is entitled to set off liquidated damages for delay. The adjudicator decides that the contractor was not in delay and the employer must pay. The employer refuses and the contractor is forced into liquidation. Can the liquidator dismiss the claim for liquidated damages on the basis of the adjudicator's decision that the contractor was not in delay? After all, the Construction Act states that an adjudicator's decision is binding until the dispute is re-decided by a court or arbitrator. The difficulty is that the employer still has a claim for liquidated damages, a claim that could be proved in court or arbitration if necessary. The current state of the law as set out in Bouygues strongly suggests that the delay claim must go into the equation along with all others to determine the balance due either way between the parties. As Judge Seymour stated in Rainford v Cadogan, in this process 'the correctness of the decision of the adjudicator must be evaluated.' Once this happens, the value of the adjudicator's decision is destroyed.

The situation is no different if there has been no previous adjudication. The liquidator can himself launch adjudication proceedings to determine the balance due between the parties under the contract. Following Macob v Morrison and a host of other authorities, one could be excused for assuming that an adjudicator's decision obtained in this way would be enforceable. If Judge Seymour is right, the liquidator would be wasting his time. No matter what the adjudicator decides the employer still has his claim and can go behind the adjudicator's decision. The liquidator is unlikely to be in any position to pursue either court proceedings or arbitration, so may be left without a remedy.

If the contractor is in serious financial difficulty but has not reached the point of liquidation, a favourable adjudication award may still offer little comfort. The contractor may obtain judgment, but the employer is likely to seek a stay of enforcement, arguing that the contractor would be unable to repay the money should the dispute later be re-decided in the employer's favour by a court or arbitrator. Rainford v Cadogan suggests that the employer need do no more than provide credible evidence that the contractor is insolvent. The employer need not attempt to predict when any challenge to the adjudicator's decision will be heard. If this is correct the contractor may be unable to get his money simply because he has no money. The employer stands by and waits for the inevitable to happen.

There should be an obligation on the employer to proceed with court proceedings or an arbitration if he is to have the benefit of a stay of enforcement of the adjudicator's decision. The employer may argue that it would be too expensive to pursue the claim as the contractor could never meet his own and the employer's costs. This argument would allow a defendant to maintain a stay almost indefinitely. This is contrary to the established principle that until the dispute is re-decided, the adjudicator's decision is binding. In Rainford v Cadogan the employer had already lodged a counterclaim. Enforcement was stayed pending the trial of the counterclaim.  Rainford should be taken as endorsing a stay of enforcement only if the employer demonstrates a clear intention to go ahead with proceedings to overturn the adjudicator's decision.  Of course, if the contractor goes into liquidation in the mean time, the employer is off the hook! The costs of the proceedings may themselves cause this.

All this suggests that adjudication's greatest challenge will come in the next recession.

Mediation v Adjudication v Arbitration

An eerie silence descended on the Chamber of Commerce on 5 July 2001 when prominent dispute resolution experts representing different fields met in the first event of its kind hosted by the WM branch of the CIArb.  The scene was set for a highly charged evening.

Those expecting an all-out offensive on each other were disappointed. Instead, each speaker put forward subtle and compelling reasons for his own field. Andrew Patton argued that Mediation offers scope for control, innovation, problem solving and the ability to identify matters which are not formally raised which are not available in arbitration.  Few can be more fervent about adjudication that Tony Bingham. He spoke about the extraordinary impact that the Construction Act has had with his customary zeal. His observations on the quality and training of adjudicators no doubt alarmed many.  Finally, Brian Eggleston for Arbitration considered whether the dispute resolution industry was fragmenting to its disadvantage.  He invited the audience to treat each form of resolution as a tool in the resolution "kit". His question as to whether it is possible to develop some unity to serve all manner of commercial and professional disputes is an important one with so many types of dispute resolution available.

Bloodbath it was not, but a display of excellent public speaking in which the many virtues of the competing and complimentary methods of dispute resolution were pointed out.

The Role of the Expert in Arbitration by D Roger Dyer

The Arbitrator's View

Expert evidence

There are those that say that there is no such thing as an expert witness; there is only evidence of fact or of opinion.  Nevertheless, while the Arbitration Act 1996 makes no specific reference to expert evidence [cf s 37], the phrase is widely used in adversarial dispute resolution procedures including direct reference in the Civil Evidence Acts and, for what it is worth, CPR.  It is, of course, a well-known phrase that is universally understood.  Besides, others may give opinion evidence in the right circumstances.

From quite early days the courts answered the point.  Take for instance Crosfield & Sons v Techno-Chemical Laboratories [1913] 29 TLR 379 in which the judge, Neville J said “It is technical information which the expert witness should be asked to give; not his opinion of the meaning of a document”.

The arbitrator’s expertise

Of course, in arbitration, the arbitrator himself is often appointed because of his own expertise in relation to the subject matter of the dispute.  He may well have the same qualifications as the expert witnesses who are to give evidence before him.  That in itself may give rise to difficulties in the role of the arbitrator and his impartiality.  If he has at any time expressed opinions, whether in written or oral form, that have had some degree of public airing, the prudent arbitrator will make these matters known to the parties and their advisers.  It is, of course, essential to maintain the confidence of the parties that matters of expert assessment will be handled with the utmost probity.

A further area in which the arbitrator’s expertise may be drawn into the ring is where one party declines to appoint an expert witness in that particular field, relying on the arbitrator’s knowledge but the other side go ahead and appoint their own expert.  How, then does the arbitrator make a public examination of relevant areas of that expert’s evidence without losing his impartiality and the trust of the participants?  The arbitrator must somehow air any disparity between his own beliefs and those put forward by the expert witness before him.

The quality of expert witnesses

Looking at the field of expert evidence in a wider context, my experience as an arbitrator is that a good expert witness often makes his client’s case without resorting to advocacy.  It is essential for the arbitrator to be satisfied that the expert witness before him is truly independent.  Any doubts as to that status may be damaging to the case submitted and may be fatal.  Sometimes the expert witness may try to be too clever and whether by being dismissive, arrogant or by a refusal to answer questions may lose their client’s case.  It is amazing how often it becomes clear to the arbitrator that there is an imbalance between the evidence of one expert and that of his opposite number.  On the other hand an arbitrator may be able to write that part of his award that deals with the technical issues around the good expert witness’ evidence.

Expert’s reports

It is not for me as the arbitrator to tell the parties how their expert reports should be written.  However, as an arbitrator I often find myself frustrated by the divergence between the way one expert presents his report and that of his opponent.  It is beneficial to the arbitrator if the experts can be persuaded to adopt the same or a similar format.  It is usually difficult for the arbitrator to give guidance on the point because he will normally be unaware of the range of issues to be examined.  However an indication at the start of the case (the preliminary meeting, say) to those instructing the expert witnesses to persuade them to reach a degree of unanimity on the presentation of their reports can be beneficial not only to the arbitrator but to the advocates as well.          

Deleting parts of the expert’s report

It will be no surprise to find that the expert as advocate demonstrates his lack of independence in his disclosed report.  The areas covered by the poor expert often include those matters that it is for the arbitrator to decide.  For example, “the effect of a reference to a British Standard or its interpretation in a contract document is not a matter for expert opinion”.  (Clarksteel Ltd v Birse Construction (1996) CILL 1136).  And see also, “When not properly used, expert evidence is at best waste of effort, time and money.  At worst it carries the risk that the decision making body, whether it be judge, jury or other tribunal, is confused and misled into making unsound findings of fact” (Alliance & Leicester Building Society & Ors v Edgestop and Lancaster (1992) unreported).  And again, “It is not competent in any action for witnesses to express their opinion upon any of the issues, whether of law or fact, which the court or a jury has to determine”. (Crosfield v Techno-Chemical, etc).

To what extent should the arbitrator interfere when the reports are delivered to him?  Often the arbitrator is requested by one of the parties to strike out parts of its opponent’s expert’s report.  That can lead to a detailed examination of all the experts’ reports in that case so the exercise may be undertaken without any hint of the arbitrator being anything other than even handed.  That is not always the case, however and it may be that the canny, wary or wise arbitrator should invite the parties to carry out the exercise themselves before seeking to rule on the point.  Nevertheless in my experience matters can be so bad that the arbitrator has to take the initiative to avoid expensive and tedious disruptions to the arbitral procedure.

The evidence

I have found over the years the benefit of back-to-back evidence by the experts.  Of course I appreciate that any tribunal should do what it can to meet the convenience of the expert witnesses.  However the receipt of expert evidence after all the evidence of fact helps to clarify the issues.  Where opposing witnesses of a particular discipline can be heard immediately after one another there is a patent assistance to the arbitrator’s understanding of the main considerations.

Tribunal appointed expert witnesses

While there is sometimes an apparent saving in cost in having an expert witness appointed by the arbitrator, the process has to be approached with some caution.  The first hurdle to overcome is a suitable brief for the expert.  The arbitrator will rarely appreciate the points that the parties require to be assessed and presented by the expert witness.  The arbitrator can, sometimes, take the lead and produce a draft brief for adaptation by the parties but there is inevitably a duplication of effort with the concomitant expenditure in the process.  Then there is the advice that the parties have to seek from their own experts or advisers in order to ensure that the tribunal appointed expert is questioned on the pertinent matters.  For these reasons it is, in my experience, only in the simplest cases that there are obvious advantages in having a tribunal appointed expert.   I have also experience of the expert who goes off on a frolic of his own because he is not restrained by the reality of having to present the evidence that his client’s case demands.

Notes of a presentation to a joint seminar of the West Midlands Branch, the Academy of Experts and the Worshipful Company of Arbitrators; 17 April 2002.

The Arbitration Act 1996 by D Roger Dyer

Mustill & Boyd say that the piecemeal evolution of English arbitration law has avoided the ossification of some other states where a codified arbitration law has been overtaken by events.  But the English arbitration law’s most serious weakness has been its almost complete absence of any systematic analysis of the underlying concepts.

The 1996 Act aims to transform that picture by creating an accessible and almost complete code of conduct.  What, then is arbitration?  For the answer to that question it may be necessary to look at the aims of the Act.

The Aims and Philosophy of the Act 

The fulfilment of its declared aim (its long title):

“An Act to restate and improve the law relating to arbitration pursuant to an arbitration agreement; to make other provision relating to arbitration and arbitration awards; and for connected purposes” leaves the substance of the previous law largely unimpaired.

Historically there has been a relationship between the courts and participants in voluntary arbitration that involved a mutual exchange of powers.  However over time there has been an acknowledgement that as far as possible parties should have their disputes decided by procedures they have agreed.

Nevertheless Parliament recognized that it would not be possible to codify the huge amount of case law that has built up over centuries.  Rather it sought to include what it felt were the more important common law principles.  

Whereas other countries have either enacted the UNCITRAL Model Law on International Commercial Arbitration directly, or have passed legislation based upon it, the English Act is more ambitious.  It aims to restate and improve the law relating to arbitration where the parties have agreed to arbitrate.

Further Aims

A small number of key areas have not been included, precisely because they are unsettled, and because they are better left to the common law to evolve.

Privacy 

One such aspect concerns privacy and confidentiality in arbitrations.  Privacy and confidentiality have long been assumed as general principles in English commercial arbitration.  However there are exceptions and it is only relatively recently that the English courts have examined the legal basis for such principles.  There is no doubt that an arbitration agreement carries with it an implied term to the effect that the proceedings are confidential to the parties.  However those drafting the new Act came to the conclusion that the exceptions have yet to be analysed in depth or detail by the courts. For now it is said that there are three main exceptions that have been brought to light by recent cases (pp112/113 M&B):

First, disclosure is permissible with the express or implied consent of the party originating the material;

Secondly, disclosure is permissible by leave of (or by order of) the court;

Thirdly, is where material is deployed before the court in proceedings concerning the arbitration.

However, the inclusion of these exceptions and qualifications was felt likely to create new impediments to the practice of English arbitration and, in particular, to add to English litigation on the issue.  Far from solving a difficulty, it was felt that new ones would be created.

Specific Aims

The essence of the Act offers a set of principles to replace those incorporated in decided cases.  The main principles are:

1. “the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense"

2. "the parties should be free to agree how their disputes are to be resolved, subject only to such safeguards as are necessary to the public interest”

3. “in matters governed by this Part the court should not intervene except as provided by this part”.

 All these are established in section 1 of the Act.

Principle 1 is also incorporated into section 33 that sets out the duties of the arbitrator qualified only by his selection of procedures “suitable to the circumstances of the particular case”.  The reference to fair resolution will be recognizable as natural justice or due process.  However, while economy is important it is not the whole criterion; the aim is to avoid unnecessary delay and expense.  It is submitted that the avoidance of waste is supreme and the arbitrator should always have that in mind.

Principle 2 is expressed as party autonomy.  The purpose of the Act is to give the parties and their representatives the opportunity to control all aspects of the proceedings.  This axiom, though, is subject to public policy.

As to the third principle, the limitation on court interference is founded on Article 5 of the Model Law.  The aim is not that there should be no intervention at all because the court is intended to have a free hand to cut across the carefully balanced regimes of international and national instruments.  Of course, an arbitrator who under-performs should be subject to the sanction of the court, but there is an emphasis detectable in the Act to remit the case to him in preference to other remedies.  Furthermore, it is clear that actions for the determination of preliminary points of law can only be entertained when all parties agree and when the question will produce substantial savings in costs and when the application is made without delay.

Scope of the Provisions

One problem area that had to be addressed is the context of international arbitrations.  Where conflict of laws arises, it may have been possible to provide that all arbitrations conducted in England and Wales or in Northern Ireland should be subject to the Act.  However Parliament decided that would be contrary to the principle of party autonomy.  It decided that there were no reasons of public policy to prevent the parties conducting an arbitration here under an agreement governed by foreign law or in accordance with a foreign procedural law.  Section 4(5) follows that principle.  Of course, those drafting the Act recognized that cases could arise where considerations of our own concepts of public policy could lead to the refusal of the English court to enforce an award.  But that is covered by section 66(3).

Potential Benefits of Arbitration Under the 1996 Act

The following part of this talk focuses on some aspects of the Act that may be seen as benefits that arise from the new statement of arbitration law.  These are by no means intended to be exhaustive but aim to show the way in which the new environment of English arbitration law offers more appropriate procedures and remedies for those seeking dispute resolution.

Among the more obvious assets are that the parties may select their arbitrator or tribunal, which may be a choice of a panel of three arbitrators.  Convenience is equally apparent in the choice of language and, of course the choice of venue, whether in geographical terms or in terms of suitable surroundings.  Arbitration offers a wider choice of procedure than litigation.  Thus the parties may demand an early resolution as part of their selection of arbitrator: for example I have often been asked whether, if appointed, I would undertake to produce an award by a given date.  The 1996 Act allows the parties to dictate the specific procedure to be adopted, whether by an “ad hoc” selection of procedures for the whole arbitration or for any preliminary issues.  Privacy may be an important aspect for the parties, particularly where commercial interests are at stake.

An arbitration award may be regarded as binding because of the restricted rights of appeal.  Thus unless the arbitrator misconducts the hearing or fails to take account of matters addressed to him, there can be no recourse to the courts save where, as indicated above, the court’s determination of a point of law is sought by the parties and it would save costs.

I have already looked at issues of privacy, which in my experience often have a real impact as far as the parties are concerned.  And, of course, there is a closer consideration of finality.

Fundamental Attributes

There are in my submission, particular financial aspects that make arbitration preferable to litigation in appropriate circumstances.  First there is the availability of awards of compound interest on debts and certain damages.  In commercial disputes the inability of the court to award compound interest save as damages in itself can severely restrict the remedy available to a winning party.  That is an innovation of the 1996 Act.  Even more attractive to the winning party is the award of compound interest on sums awarded and not paid after the delivery of the award.  As a spur to settlement of the sums awarded, whether in respect of the substantive award or of costs, there must be an incentive to the parties to settle those matters once and for all.

Furthermore, the Act introduces the concept of limiting recoverable costs, sometimes known as “cost capping”.  Sensibly used, and subject to any tactics deployed by financially stronger adversaries, there can be a real incentive to adopt suitably economical procedures.  In the right circumstances it can be a powerful aid to reducing unnecessary expenditure.

Other Aspects

The use of “documents only” procedures arise not entirely as a result of the 1996 Act although the arbitrator is given a wider range of procedural and evidential matters under section 34.  These are for the arbitrator may decide, subject to the right of the parties to agree any such form.  These options include, for example, the way in which documents are to be used.  The section also looks at the application of the strict rules of evidence and allows the arbitrator to consider whether and to what extent he or she may take the initiative in ascertaining the facts and the law.

As can be seen, using these powers may indicate whether the arbitrator should focus on a definition of the issues at an early stage.  The Act has spawned the introduction of sets of rules that may be adopted by the parties in relevant cases taking advantage of a series of options given to them by the Act.  In the construction field, for example, the Joint Contracts Tribunal has adopted the CIMAR.  If adopted these rules grant wide powers to the arbitrator.

The introduction of partial awards allows issues to be separated with consequent savings of costs and time.

It goes without saying, perhaps, that rights of representation are not limited and, indeed, it is common for parties to be represented by lay specialists.  Not always successfully, I should add.

A major attraction of arbitration is, as I have mentioned above, the enforceability of an award internationally.

Innovatory Provisions

There are a series of changes in arbitration law that warrant mention in this brief review.  Among those that I have highlighted is provision for the arbitrator who resigns to go to the court for relief from any liability incurred through his resignation.

I have already mentioned the provision for an arbitrator to take the initiative in ascertaining the facts and the law.  Some see this as an inquisitorial procedure and there is some support for that view from the courts, but a prudent arbitrator will take care to ensure that he takes his lead from the parties.  The effect of the section is intended to free the arbitrator and the parties from the need to mimic court procedure where the circumstances of the case demand a different approach.

While an arbitrator could always examine his own jurisdiction, the approach is now given statutory support.  He has express power to rule on the question by way of award.  Moreover the Act grants a series of methods by which the parties may challenge that jurisdiction.  The main change is that the new scheme allows the arbitrator to proceed rather than waiting for the challenge to come to fruition.  A challenging party that fails to act quickly may also lose its right to found the challenge but equally, or alternatively, a party that is sure of its ground may take no part in the proceedings and mount its challenge after publication of the award.

While it is a fundamental pillar of the Act that the court’s interference in the arbitration process should be limited, section 44 sets out powers exercisable by the court in support of the proceedings.  For example it may order what used to be known as Mareva or Anton Pillar relief (freezing orders or search orders).  But the court can only act with the agreement of the parties or with the permission of the tribunal.  They cannot, of course, confer different powers on the court as they can in relation to the tribunal under section 38 (in terms of procedural matters). 

Section 48(5) permits an arbitrator to order a party to do or refrain from doing anything or to order rectification.  The setting aside or cancellation of contracts may be appropriate where certain forms of mistake are alleged.  Specific performance has long been a tool of arbitrators although the usual caveats apply.  These provisions were described by those drafting the Act as clarifying the power of arbitrators to award injunctive relief and the like.  Mustill & Boyd suggest that the forms of relief given by the section are self-executory.  Only if the award is first converted into a judgment can 1these remedies bite but the relief is available in arbitral proceedings.

Other Innovations 

The powers to make provisional awards compares with the court’s powers to give summary judgments or orders for interim payment.  Such powers can only be exercised when the parties have so agreed and such agreements would have to be carefully drafted.  As indicated the power is limited but is nonetheless valuable in certain circumstances.

Finally, the provisions for correcting slips has now been widened to allow an arbitrator to make an additional award where he is aware of a mistake, or where it has been brought to his attention.  These provisions are not intended to allow the arbitrator to change his mind but they allow a party to make further representations if there has been an omission in the award.

How to find an Arbitrator

The Chartered Institute of Arbitrators exists to promote arbitration among other forms of dispute resolution.  It has a large membership at home and overseas, principally Fellows, Members and Associates nearly all qualified by examination.  The governing body of the Institute is the Council made up of elected members augmented by representatives of the branches of which there are a dozen or so.  The local branch is the West Midlands.  It organizes a series of events, partly educational and partly concerned, among other things with public relations as well as social gatherings.

The headquarters of the Institute is at Russell Square, London.  One of its functions is the maintenance of a series of panels of arbitrators.  Only chartered arbitrators that are Fellows specially qualified to act as arbitrators are included on the panels.  Selection of panel members is by interview.  Some panels are devoted to commercial schemes run for organizations such as BT, ABTA, NHBC and the like.  Others are devoted to special aspects of the law like shipping or other maritime areas, insurance, or partnerships.  Anyone seeking an arbitrator may be assisted by headquarters or by the branches.

Most arbitrations stem from an arbitration clause in a standard form contract although there are many referrals based on ad hoc agreements after disputes arise.  Where there is an arbitration clause the usual course is for an aggrieved party to write to the other inviting them to agree on the appointment of an arbitrator.  Although it is not unknown for the parties to distrust the other’s nominee, most sensible parties will co-operate on the selection of a suitable arbitrator.  Once appointed the arbitrator will normally call a preliminary meeting so that he can be made familiar with the outline of the dispute and make directions for the conduct of the arbitration.  Since the 1996 Act with the duty placed on the arbitrator by section 33 to adopt procedures suitable to the circumstances of the case, avoiding unnecessary delay or expense, the preliminary meeting takes on an important role.  The arbitrator must attempt to find the particular nature of the dispute so that he can tailor procedures to the parameters of the dispute.  

An Overview

By way of conclusion I recommend arbitration under the 1996 Act as a suitable option to recommend to your clients seeking dispute resolution.  Furthermore, an arbitration clause inserted into contracts where such disputes have to be safely covered is a prudent course.  Although the right arbitrator has to be selected, the arbitral process can be more user-friendly than litigation with less rigid procedures without sacrificing the means of reaching a fair judgment.  Used properly it can be more economical than a route through the courts.  Finally it is more effective in terms of enforcement with the benefit of compound interest to ensure speedy payment.

A presentation to Pinsent Curtis: 31 October 2001

When All Else Fails: A Review of Dispute Resolution by D Roger Dyer

A talk given to final year students of the School of Architecture, Oxford Brookes University at a seminar entitled “Managing the Risks”: 19 march 2002

I note that the current issue of the RIBA Journal sets “Disputes and resolution methods” at number 8 in the list of most frequently asked questions of the RIBA Information Service.  It follows that it is a serious topic that raises its head often in the course of architectural practice.

There are four basic alternatives when disputes have to be resolved:

            Adjudication;

            Mediation;

            Arbitration; and

            Litigation.

I should also mention expert determination, although I do not intend to dwell on that today because it has some similarities to the other main topics that I shall address. 

Adjudication

The genesis of this recent form is a history within the building industry of non-payment of certified sums.  There are, though, other similar disputes that arise in the course of the construction process (many of them involving sub-contractors).

The Act (Housing Grants, Construction and Regeneration Act) introduces one of the few statutory interventions into the principle of freedom of contract in English law.  It is probable that you will not be interested in the intellectual principles of contract law but you will appreciate that a contract is a promise or set of promises that the law will enforce.  The main justification for that enforcement is economic; trade and industry would be seriously impeded if a promisor may break that promise.  The adjudication provisions apply only to building contracts – a point that I shall touch upon later.  Why then does Parliament need to impose a layer of obligations into a contract that has been entered into freely?  It is, of course, an attempt to eliminate a perceived problem that, in itself, threatens to disrupt performance of promises made by a formal contract.

What Parliament envisaged was a form of rough justice.  It foresaw a quick and effective determination of problems that have immediate urgency and threaten to disrupt the smooth performance of the construction process.  Unfortunately standard forms of building contract have, traditionally, postponed the resolution of disputes until after practical completion.  However, as you know, there are some matters that, if left, will fester to the disadvantage of all parties.  Why then are not the certificates of the architect regarded as an appropriate adjudication?  After all, that is what was envisaged in the early part of the 20^th century when the architect was demonstrated to be a “quasi arbitrator”.  It seems that the architect’s role has come to be regarded with suspicion, and by some as the agent of one party – the employer.  It may be that architects have only themselves to blame by not demonstrating their independence.  At any rate the “quasi arbitrator” notion was finally quashed by the courts in the mid 20^th century (Sutcliffe v Thackrah).

In order to achieve the desired solution the legislation provides first, appointment of the adjudicator at any time by the aggrieved party, secondly, the avoidance of jurisdictional problems (the adjudicator must proceed once appointed, if necessary against the protests of the opposing party) and, thirdly, a rigid and short timetable.  In theory a quick decision allows the parties to get on a do what they first promised to do - that is to complete the building works and to pay for them.  The courts have been supportive of the adjudicator in nearly all the various applications to the court for enforcement of his decision.

The first point gives a right to any one party to start the adjudication process.  Of course, the provisions of the Act allow the parties freely to incorporate adjudication into their contract and thus to set up adjudication on their own terms.  It is only where the contract fails to incorporate these provisions that the statute steps in.  The vital point, though, is that the adjudication may start as soon as one party wants that.  It often happens that while disagreeing over one aspect of their contract, the parties may want to maintain amicable relations.  Thus a short, sharp outcome to the disagreement may restore long- term respect.

The second aspect hinges on the first.  It would defeat the object of the legislation if the adjudication were to be delayed by arguments over the suitability of the adjudicator.  That is not to say that an adjudicator may lack jurisdiction if he is not truly independent or if he patently lacks suitable qualifications (for instance one would not, I hope, invite a dentist, say, to rule on the intricacies of a building contract – although it is not always quite so obvious that a person lacks the essential qualities; what about a quantity surveyor who is asked to adjudicate on the issues that touch on methods of altering a listed building).  Such problems can be dealt with later.  The Scheme requires the adjudicator to get on with his task if possible.  Nevertheless the courts have held that challenges to jurisdiction must be made promptly and forcefully.

Finally, the Act requires the adjudicator to reach his decision within 28 days.  Although, as I have said, the process is rough justice, a dispute may involve intricate and detailed consideration of a range of issues.  Because a party may give notice of the reference to adjudication at any time, he may store up his grievances so that when he lights the blue touch paper he may present the adjudicator with a myriad of disputes.  This is sometimes known as the “ambush” approach.  It may not only take his opponent by surprise, it may make the adjudicator’s life difficult too.  It may take over the adjudicator’s next 28 days without respite and without the opportunity to deal with his own regular practice.

The Act allows extensions of time, but only 14 days and then with the consent of the referring party.  The authors of the Act were realistic enough to foresee that the agreement of parties in dispute could not be relied upon.

What then of the nature of the disputes that would be referred to adjudication?  It is right that the majority of adjudications are challenges to valuations or challenges by sub-contractors to payments by main contractors (before or after any set off that the main contractor may wish to apply).  As an architect and a lawyer I have never been called upon to decide valuation matters.  There is a range of subjects that fall within the definition of construction contracts.  I should intercede here to say that the definition is closely identified in the Act, but notable exceptions are schemes where there a contracting party is to be a residential occupier.  Equally construction contracts include the provision of services (let us say for example an architects terms of engagement).  There are also various definitions of some, but not all, engineering operations (drilling, extraction of minerals and so forth).

Let me give you a flavour of some disputes with which I have been involved. 

First there was a supermarket operator who engaged a small firm to do a series of small jobs (often not worth more than £100 each, some less) at a series of locations but had cut down on the payments made because there was no estimate/quotation or prior agreement as to the amount to be charged.  The defence was not only alleged over-charging but also unsatisfactory workmanship.  The effect was one adjudication for all the work, the total of which ran into many thousands of pounds.

Then there was adjudication about a dispute that had settled.  The issue became whether the settlement was effective and what it included.  Most at issue was whether the agreed sum included VAT and the legal costs of the successful party.

Another adjudication was whether a contractor’s tender included attendance on services tradesmen, even though the tender was on a detailed priced schedule of works.

Again a similar adjudication hinged upon what had been included in a design team’s agreed brief fee.  There was some uncertainty about one element that was paid before the formal agreement but that included components that had been referred to in an ambiguous statement.

The there was the contractor that successfully tendered (under EC rules) for the construction of a new hospital (all £11 million) on the strength that it was setting up a joint venture by entering into a partnership with the main mechanical and engineering services contractor.  The contractor had issued an elaborate document setting out the basis of its joint venture with the engineers.  In fact it transpired some three months or so after work started that the contractor and the engineers had not been able to come to terms and they had thus set about the work on the basis of a straightforward sub-contract agreement.  

How does the process work in practice?

An appointing body usually selects the adjudicator.  While some appointing bodies are institutes such as RIBA, there are a series of organisations, some apparently ad hoc, who are recognized by the Government as suitable for the task.  That is not to say that the parties may appoint the adjudicator in advance by naming him in the building contract.  I myself have experience of that form of nomination.  Otherwise the parties may agree at the time of the dispute who is to undertake the task.

Once selected the adjudicator will write to the parties with his directions.  Such directions will, inevitably, be confined within limits because of the need to reach a decision within 28 days.  Normally he will direct that the referring party’s statement and supporting documents must be received within 7 days and the responding party’s documents within 14 days or so thereafter.  That leaves the adjudicator 7 days to sort it all out and to write his decision.  However, sometimes the adjudicator will give the referring party a right of reply if necessary.           

Where necessary the adjudicator will inspect the site if appropriate.  He may, if he wishes, discuss the case orally with the parties either together or separately.  Although the Act does not demand that the adjudicator should give reasons, the law tends towards requiring the reasons for any decision that will affect the rights and obligations of the parties.  Most adjudicators give brief reasons but much will depend on the nature of the case.  That then is adjudication in a nutshell.

What lessons are there for the architect to learn from all this?  Not a great deal in abstract from the sort of cases that I deal with, although it would be right to say that the architect has a role in advising his client before recommending entry into a particular contract.  Then he should ensure that he fully understands the implications of the contract that is to be entered.  Finally he should endeavour to make certain that all the provisions of the contract are capable of implementation.

As to his certificates, he should be careful to get the right figure and to see that it will stand scrutiny.  While the quantity surveyor has responsibility for calculating the financial content, the contract will usually place liability for the content of the certificate on the architect.  Only he knows whether all the work valued complies with the contractual provisions as to quality and whether there is work performed that should be excluded from the payment ordered.  Traditionally in a contract that has a period of final measurement, there was no incentive to fine tune interim valuations.  That is no longer so where such interim certificates can be challenged under the adjudication provisions. 

Next I shall have a brief look at mediation.

The process has its roots in America where the plethora of consumer litigation has led parties to seek another way.  Mediation has not, until recently, been a common aspect of building disputes although I have been involved in such mediation on the periphery of construction.

Today lawyers are looking closely at mediation and are encouraging their clients to consider the advantages that flow from the process.  Like adjudication, although more often in other industries, parties may want to retain good relationships with those to whom they are bound by contract.  An amicable resolution of the dispute may allow a series of contracts to flow between the parties whereas a full-blown dispute about legal rights would be damaging.  It follows that mediation best serve the participants where each side wants to settle the dispute and that those who represent the parties have full instructions to settle the matter on the best terms that they can without having to refer back to those instructing them.

It will be immediately obvious that the process is not always amenable to the interim dispute that may arise in the course of a building contract because the decision or settlement affects the ongoing rights and obligations of the parties.  However any such outcome may help the contract to proceed on a firm footing.  Accordingly the process should not be ignored.                 

While each of the other areas of dispute resolution to which I am referring today are, by their very nature adversarial, in mediation pragmatic trade-offs can be quietly negotiated in private.  It is a strictly confidential procedure.  While arbitration is also a confidential process, there remains the possibility of a High Court challenge with consequent publicity.  No such possibility hangs over mediation.  If the process is successful an agreement is drawn up and no one other the parties and their advisors are any the wiser.

Even if complete agreement is not reached, some benefit often accrues because it may have been possible to clarify some of the issues and that, in itself, helps the parties to understand from where the other is coming.

One other advantage of mediation is that, once embarked upon, it is a relatively speedy and inexpensive method of solving differences.  The disadvantage is that in reality it may take longer to get the parties to the negotiating table.

Mediation has no statutory force.  It relies entirely on mutual consent.  By definition it is a method of encouraging disputants to reach their own solution in an atmosphere where the role of the mediator is to facilitate the parties to reach agreement.  It relies almost entirely on the mediator’s persuasive powers.  The mediator, himself, may make suggestions for the parties to consider, although he has no power to impose a solution.

The mediator often has a legal background or he may be someone who has expertise in the field of the dispute.  Having selected the mediator, whether by agreement, or by nomination from a suitable body, he will set aside a day or so on which to carry out the mediation process.  He may, and often does, invite a statement from each of the parties setting out their initial position so that he may understand the ramifications of the dispute.

The mediation itself takes place with all the parties - it is a process that often suits multi-party disputes – together with their advisors (that may include their lawyers and/or other experts).  The process usually starts with a joint session of everyone involved.  (I say usually because there is no set pattern and the mediator may make his own rules to suit his experience and to take account of the nature of the case).  At this joint session each party is invited to make a brief presentation of its case.  It is important for each party to understand, at this stage, where the others’ view of the case lies.  It is also important that this stage is carried out in a face-to-face session where the depth of the perceived grievance can be fully understood.

The parties then retire to their own ground.  A room will be set aside for each party where they can review the situation in the light of the matters revealed at the joint session.  The mediator will then visit each party in what is known as a “caucus”.  These meeting explore the strength and weaknesses of each party’s case in a frank and open discussion.  Of course, what is said in these meeting is entirely confidential and will not be revealed to the other side unless a party gives the mediator to do so.  It is important that the mediator should also be robust in dwelling on the weaknesses of that party’s position.  He should make clear how likely it is that if the mediation process fails, any ensuing litigation may have adverse, and costly, results.  Each party must be fully cognisant of the risks of litigation or other forms of enforceable decision.

These caucus meetings allow a broad view to be developed.  The opinions that the parties reach in these meetings will, hopefully, be free from prejudged or even biased stances.  The mediation is a gradual process with the mediator moving from one caucus to the others gradually developing the confidence of the parties and moving them towards a common view of the problem.  As will be seen this is a matter of discussion and what might be called shuttle diplomacy with the mediator acting as an honest broker.  He needs to understand when to intervene and when to stand back.  He will also need to judge when it is appropriate to bring the parties back to a joint meeting.  This will often happen either if there is a good prospect of success or the contrary or when the mediator sees it as the only way to make further progress.  Of course the process does not prevent the parties (or some of them) having their own joint sessions in the absence of the mediator.

By these means the parties come to a common objective that suits their respective purposes.  Often there is some sort of trade-off, maybe totally unconnected with the matters in dispute whereby each party gains access to other markets or contracts and this helps to reach a meeting of minds.

When the mediation is successful, it is important that the agreement reached is committed to paper so that the deal is certain and, if absolutely necessary, it can be enforced.

The lessons to be drawn are simply to keep the parties talking and to make sure that in a potential dispute situation the parties are not driven so far apart that a compromise cannot be achieved.  The architect is, or should be, the controlling influence on the administration of construction contracts.  The goodwill that will exist between the employer and the contractor at the start of a project should be maintained throughout and the architect can do much to bring this about.  It is essential that the architect has the control of the contract at his finger tips and that he should not be drawn into leaning one way or the other.  Good relations are vital to setting the scene for a negotiated settlement of any potential disputes that arise during the course of the works.  If all else fails the option of mediation will then remain viable.

Arbitration

By now many of you will have become aware of arbitration and its benefits in the resolution of construction disputes.  Arbitration is important to your understanding of dispute resolution largely because of the existence of an arbitration clause in virtually all construction contracts.

Arbitration has a long history, dating from Roman times.  The resolution of disputes by an independent person with expertise in the subject matter of the dispute is the principal advantage of this system.  Litigation benefits from the existence of arbitration as a means of keeping the courts clear of contractual disputes that require a degree of expertise in their resolution.  Accordingly the courts have always been supportive of arbitration which, can provide an element of adaptability that can be absent fro more rigid procedures present in litigation.  Nevertheless the courts control arbitration to the extent that if an arbitral tribunal has stepped outside its proper functions, or has exercised them unfairly, or has arrived at an unfair or unjust result the mistake can be remedied.  The courts also retain the ultimate power to enforce an arbitrator’s award.

One hallmark of arbitration is the element of privacy and confidentiality although those aspects are not controlled by legislation.  Nevertheless they have long been assumed as general principles in English commercial arbitration and it is only recently that the courts have examined the legal basis of them and any exceptions to it (one of which is the publication of challenges to an award where that is considered by the court).  Users of arbitration place much reliance and importance on that aspect.  However the authors of the current Arbitration Act (1996) decided that, given the ramifications of the subject, to introduce statutory control might only create new problems.      

The general principles of the 1996 Act are, and are set out in the Act as fairness, impartiality and the avoidance of unnecessary delay or expense.  Secondly the Act emphasises the importance of what is known as party autonomy.  An arbitration is a consensual process by which the parties have agreed to resolve disputes or differences by arbitration.  In building contracts that is apparent from the arbitration clause.  Parliament has therefore decided that it should be for the parties to decide how their arbitration should be conducted.

As a corollary to this the Act provides that the courts will not intervene in the arbitration process except at the invitation of the parties.  There are safeguards in the Act to ensure that any such intervention is to support rather than to replace the arbitral process.

The Act places a responsibility upon the arbitrator offer a dispute resolution service that can be tailored to the particular dispute.  There are thus numerous ways in which the arbitration can be conducted and it goes without saying that the formulation of procedures offers methods that litigation finds difficulty in matching.  The duty placed on the arbitrator ensures that he is conscious of the need to adopt procedures that are expeditious and economical.

At the same time there is a similar duty placed upon the parties to do everything necessary for the proper and expeditious conduct of the arbitral proceedings.  They must comply without delay with any rulings of the arbitrator and assist in other ways.

To summarise, parties choose arbitration because of the flexibility and privacy of the proceedings, their ability to choose (directly or indirectly) the arbitrator or tribunal and the enforceability of the award.  There are mixed views as to the expense of the system.  While a court and judge is provided notionally at the nation’s expense, the venue for arbitration has to be paid for, as does the arbitrator (who will often charge a not insubstantial fee).  However that has to be balanced against the adoption of faster and thus more economical procedures and the tailoring of the sitting days to suit the parties.  Arbitrators will often adopt special rules that introduce a guillotine or chess clock for parts of the evidence or submissions and arbitrators are more willing than judges to accept written documents rather than take exclusively oral submissions.

The 1996 Act also allows the arbitrator to adopt a more commercial approach to the award of interest.  It is well recognized that in the building industry, projects are financed by others commercially and that the process requires the payment of interest on a compound basis on both sides, employers and contractors.  That is why it is necessary to issue interim certificates as a project progresses.  Accordingly an arbitrator may attach compound interest to the amounts awarded, something that the courts may not do.

The arbitrator also has the power to limit recoverable costs.  As you may know the general principle in litigation as well as in arbitration, is that the loser should pay the legal costs of the winner.  You will appreciate that if a Respondent (defendant) is drawn into the process by having to defend a claim and has to pay significant fees to his lawyers to do so then if it is found that the claim had no basis, he should recover the legal costs that he would otherwise not have paid.  Equally if a Claimant has to go to arbitration (or to law) and has to expend similar legal fees, then he should recover them against a defendant who took that far unreasonably.  However these fees and the like can be highly expensive.

Accordingly the Act gives the arbitrator power, if the parties so wish, to limit the recoverable costs to a predetermined amount.  The aim is to encourage the parties to keep their spending to the limit imposed and thus not to embark on procedures that are disproportional to the amounts in dispute.

All this paints a fairly rosy picture of arbitration.  However that is only by comparison with litigation.  It must be remembered that arbitration is a lengthy process that is time consuming and emotionally wearing for the parties.  It must also be borne in mind that the architect will almost inevitably be drawn into the arbitral process in support of one party or the other if not both.  In my experience arbitrations into construction disputes nearly always arise because the architect has failed in some way or another.  If he is not deemed to be outright negligent, there are other aspects of his performance that has led the parties into dispute.  It is not unusual to find an architect on the receiving end of a negligence claim after the arbitration between his employer and the contractor has concluded.

While the arbitrator has some flexibility in his approach and may adopt ways of hearing the dispute that the courts cannot match, he has to adopt means of hearing all that the parties wish to say and to take their evidence.  This means that whatever procedures are adopted, there will be some similarity to the methods found to be practical by the courts over centuries of experience.  According many of the pressures found by the courts will exist in arbitration.

I should say something about the procedures that are followed in arbitration.  The arbitrator does not have the advantage of court staff and offices.  Therefore he has to set all the procedures himself as distinct from a judge who usually does not meet the parties or their advocates until the trial starts.

Accordingly, once appointed he will normally call a preliminary meeting to discover the background to the dispute and to adopt the best procedure for the exigencies of that particular case.  At the end of the meeting he will give directions for the matters that he requires the parties to do.  These include the service of pleadings (statements of case), disclosure and examination of the documents that each party possesses, exchange of witness statements and arrangements for taking and recording the views of expert witnesses.  There are, as you may guess, a host of other matters that may come out of the meeting.  There then follows what is known as an interlocutory period between the start of the arbitration and the final hearing.  However there are inevitably a series of applications for further directions made by the parties during that period so the arbitrator is kept fairly busy.  These applications often arise out of the pleadings and the documents that have by then been disclosed.

The hearing itself is often as formal as is necessary, but the arbitrator can put the parties at their ease by his demeanour and the like.  I like to punctuate my arbitrations with coffee and tea breaks that enable the parties to relax and be sociable.  I say no more at this stage. 

Finally litigation.

You will be aware by now of the background to litigation.  It is inevitably a formal and, sometimes, overwhelming process.  It is usually held in “ceremonious surroundings. The judge and advocates wear wigs and gowns (although for civil proceedings I think it is quite unnecessary) and the sitting hours vary little.  The advocates stand to address the judge while witnesses stand in the witness box rather than (as in arbitration by sitting at the same table as everyone else).

Opening submissions are made with an adversarial flavour while evidence is taken fully and formally with no concessions to convenience or other situations.  It can be for those unused to it an intimidating experience.

As to the procedure itself, the interlocutory period follows the Civil Procedure Rules so there is no need for a preliminary period.  No concessions are made to the particular circumstances of any case.  That is not to say that the parties may not make the interim applications to which I referred in my review of arbitration.  Nevertheless it is unlikely that the applications will be heard by the trial judge – more often they are heard and decided by a “master” if in London, or by a “district judge” if elsewhere.  There are exceptions where a case is heard by a judge of the TCC (Technical and Construction Court) although even then it may not be the trial judge that hears these applications.

I need, I hope, say little more.  For architects, avoid litigation like the plague.  It is a debilitating and expensive process.  For those charged with administering construction contracts it is essential that you keep on top of the job and do not let matters slip.  One other word of advice: always keep full records of everything you say and do in administering the contract.  It is amazing to me in dealing with litigation and arbitration how there is no written record of instructions, meetings, telephone conversations and the like.  A witness is more likely to be believed if he can support his evidence with documents or other records.

19 March 2002         

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