Scottish government contractual disputes to be resolved through Scottish Arbitration Centre, ministers announce

Out-Law News | 16 Apr 2014 | 12:54 pm | 1 min. read

New Scottish government contracts will refer disputes to arbitration through the Scottish Arbitration Centre as a "default position", it has announced.

Legal Affairs Minister Roseanna Cunningham said that a new clause providing for disputes to go to arbitration would be included in contracts going forward, with the Edinburgh-based Scottish Arbitration Centre named as appointing body when required.

"Arbitration can play an important role in meeting the needs of businesses, their customers and their employees in finding cost-effective resolution to complex issues," she said. "There is a fantastic level of expertise within Scotland's legal community in arbitration, and we want to capitalise on this to make Scotland a world leader in the lucrative arbitration market."

"We have been determined in our commitment to provide businesses and lawyers with the infrastructure they need to make Scotland an international centre for arbitration and enhance this country's global competitiveness. As part of our efforts, this government is actively inserting Scottish arbitration clauses in all Scottish government contracts," she said.

Arbitration is a system of formal dispute resolution for a final and binding decision from a neutral arbitral tribunal. It is often used as the primary means of dispute resolution by global businesses, particularly in disputes with sovereign states, as it is seen as more likely to be free from political interference and it allows for greater confidentiality than open courts.

The Scottish Arbitration Centre was established in 2011 and is governed by the provisions of the Arbitration (Scotland) Act. The regime set out in the Act is broadly similar to that applicable in England and Wales, according to the centre's website, but includes a number of provisions designed to increase confidentiality and reduce unnecessary court challenges. In particular, the duty to treat arbitral proceedings as confidential is backed up by a statutory guarantee.

Contracting parties can specify Scotland as the seat of arbitration in any domestic or international arbitration clause. Depending on the nature of the clause, arbitrations can either be run in accordance with the Scottish Arbitration Rules or using various institutional rules, subject to the Arbitration (Scotland) Act and the jurisdiction of the Scottish courts.