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IACCM Contract Management Forum

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Rio Tinto
2015-07-28 21:46:49

Arbitration less popular than litgiation

I am wondering if anyone else has noticed a trend of arbitration becoming less popular than litigation in developed countries where the judicial system is trusted, such as US, Canada, Australia, UK etc, with arbitration being reserved now for developing countries where the judicial system does not enjoy such levels of trust. Thanks for your help.
 
 •  IACCM  •   2015-07-29 00:19:44
Cameron
I haven't observed such a trend, though I'll see what data we can get. A factor in this could be that the courts - certainly in UK and Australia - now expect that the parties will have attempted some form of dispute resolution prior to coming to court. So perhaps this is a 'behind the scenes' issue.
 
 
 •  Rio Tinto  •   2015-07-29 02:08:46
Thanks Tim, good point.
 
 
 •   2015-07-29 10:06:52
I don't know about trust being an issue, but at least in the U.S., arbitration is usually just as expensive, if not more expensive, than litigation. This is especially true if the arbitration involves a panel of arbitrators. Most of my clients did not want a mandatory arbitration clause in the agreement for that reason (aside from the fact that there is no appeal in arbitration). After practicing law for over 16 years, I only handled maybe 20 or 30 arbitrations but countless lawsuits. Lawsuits are cheaper and appealable.
 
 
 •  Rio Tinto  •   2015-08-04 04:41:02
Thanks for that last reply. That is the feeling we have here too and I was wondering if it is shared more widely. Do you find your counterparties agree generally and prefer litigation to arbitration?
 
 
 •   2015-08-04 11:10:03
Yes, my counterparts definitely agree. Arbitration sounds great in theory, but the only real advantage that any of my clients appreciated is the fact that arbitration documents do not become public record. For very small companies (sole proprietorships) involved in fairly minor disputes, arbitration with a single arbitrator is feasible, but about half of my clients in those situations preferred mediation instead, and then non-binding arbitration. I would say for medium to large companies, litigation is preferable.
 
 
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