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The main challenges that arbitration is currently faced with: what are the possible solutions?

20 January 2013
The purpose of arbitration is to provide quick, efficient, and inexpensive resolution of disputes. Research shows the purpose is often achieved, but nothing is perfect. Litigation surrounding arbitration has continued. In order for arbitration to maintain its vitality, the problems with arbitration must be addressed. It is possible to make arbitration better by looking at its strengths and weaknesses. The key idea behind this article is to strengthen arbitration by discussing, not solving, its challenges.

These characteristics of the arbitration have given rise to many challenges. The strength of arbitration comes from the will of the parties who can decide which procedure will apply, where the arbitration will take place, how the arbitrators will be appointed, whether the arbitrators can rule in equity, what the timetable will be and many other points which they could not otherwise influence in a judicial forum.

Yet, the weaknesses of arbitration equally flow from the will of the parties. Challenges and recourses inevitably arise when the arbitration agreement is ambiguous, vague, incomplete, liable to annulment or bears on non-arbitrable matters. Similarly, the need to add to the arbitration proceedings a third-party foreign to the arbitration agreement can give rise to difficulties. Moreover, the arbitrator cannot always remedy such difficulties since his/her powers are limited. It goes without saying that an arbitration award can only be as strong as the underlying arbitration agreement. Negligence or carelessness in the drafting of arbitration clauses also gives rise to many challenges.

The preceding overview of challenges possibly arising from the organization, the conduct or the enforcement of arbitration proceedings prompts certain remarks concerning the role of the parties and of the arbitrator. Indeed, many challenges arise from a lack of precision which can be blamed on the parties, for instance when the arbitration is launched with an unclear request leading to multiple supplementary actions, or when parties act carelessly with respect to the procedure and the various deadlines, or when they misuse procedural resources.

In addition, many challenges will be avoided if the arbitrator acts diligently and impartially and respects fundamental procedural rights (equality between the parties, adversarial nature of the proceedings, rights of defense). A good arbitrator will seek to be trusted by the parties, for instance by hearing them carefully and patiently, and will take good care to ground its award on sound reasoning. Short and incomplete awards may lead to litigation simply because a party wants additional explanation or justification.

The combined efforts of parties and arbitrators remain without any doubt one of the best ways to curtail challenges arising from arbitration proceedings.
Marilena Constantinou
Tags:

arbitration, challenges, solutions