Process management is vital for companies who want to benefit from choosing arbitration over litigation, say experts

Out-Law Analysis | 20 Jun 2014 | 10:25 am | 2 min. read

FOCUS: Forward thinking organisations are increasingly choosing arbitration over litigation, but too many of them are throwing away the benefits of arbitration because they are not managing the process well enough.

Arbitration's main benefits are that it is quicker and cheaper than going to court. For in-house lawyers who sensibly adopt a more conciliatory tone in disputes and don't seek to use the courts to punish rivals or business partners it is the ideal way to settle a dispute at a reasonable and predictable cost and move on with the important work – making the organisation a success.

But too many companies think that once they choose arbitration the hard work is done. In fact it is only just beginning, and in-house lawyers must focus as much on process as substance in an arbitration's early days.

One of the reasons arbitration is easier to understand and flexible enough to be useful is that it is not bound by the strict processes of a court. But this can be a pitfall, too, because companies need to take an active role in shaping the process.

If they don't they will get snarled up in constant procedural arguments, will find themselves arguing over clauses that they inserted into documents without even reading, and will soon watch bills and clocks tick over at a rate that competes with litigation.

Companies need to take advantage of the fact that arbitration allows them to create a tailor-made process to suit exactly the dispute they have on their hands. But that requires engagement from the start in the process itself, and making lots of decisions early on about how it will run.

Those that do this will find it running smoothly and cheaply. Those that don't will soon wish they did.

But this is not an easy process, especially for in-house lawyers who have not done it often. The International Chamber of Commerce (ICC) Commission on Arbitration and Alternative Dispute Resolution (ADR) has just published a guide to the practical steps that need to be taken to ensure a smooth arbitration process.

The guide advocates early assessment of the strengths and weaknesses of cases so that parties can properly consider the merits of settlement options and early case management.  The 11 topic sheets deal with specific procedural steps in the arbitration process, from the request for arbitration, through document production and factual and expert witnesses, to post-hearing briefs.

Their innovative structure helps in-house lawyers to identify the important issues and points to be considered at each step, along with questions a party should ask itself, and lists the various options available to parties providing pros and cons and a cost/benefit analysis of each.

Although the guide was created with the ICC Arbitration Rules in mind, it is useful in any arbitration. It will not only provide assistance to in-house counsel but also to external advisors as they work together to assess the pros and cons of alternative procedural steps and make strategic decisions on the presentation of their case.

The guide is very useful and thought-provoking, and fleshes out the ICC’s helpful guide to controlling time and costs in arbitration. It helps to identify the right questions to ask at each stage of a case to help tailor arbitration proceedings to be efficient and cost effective. In particular, it will help those who are less familiar with arbitration challenge their legal teams to consider all options in formulating the best approach to each case.

This is something that all parties should be doing anyway – since the ICC Rules were revised in 2012 the process of tailor-making the procedure in ICC arbitrations has been a formal requirement in an effort to encourage effective time and cost management. But having this guide makes that job much easier, and makes it more likely that companies will reap the full benefits of using arbitration rather than litigation to settle disputes.

John Gilbert and Alistair Calvert are arbitration specialists at Pinsent Masons, the law firm behind Out-Law.com