Even in sectors known for very high value contracts such as aviation and defence, in-house counsel are frequently asked to advise on relatively simple, comparatively low-value, claims that, as a result of their subject matter, must be dealt with confidentially and sensitively. As arbitration will often be the stipulated mechanism for ultimately resolving such disputes (particularly in defence contracts), this has presented a dispute resolution 'problem'. Arbitration was not always seen as a viable method of resolving these types of disputes; whilst it is more able to maintain the confidentiality which these disputes demand, it was hard to resolve them at a cost proportionate to the amounts at stake. However it looks like change is on its way.
At the beginning of December 2015 the Chartered Institute of Arbitrators (CIArb) launched its Business Arbitration Scheme (BAS) to provide a "simple, cost-effective, and timely resolution of disputes of low to medium monetary value (£5,000-100,000) before a sole arbitrator". A fixed fee of £1,250 plus VAT is payable by each party, together with further fees if a hearing and/or a site visit is required. The aim is to provide a party with a final, legally-binding decision in less than 90 days from the appointment of the arbitrator, which is quicker and cheaper than traditional arbitration or court proceedings and, most importantly, private.
Although, the LCIA at present is not offering a similar scheme, its website does state that it is happy to provide specific rules to fast-track any arbitration so that the parties can have an expedited process to resolve their disputes. It is a welcome development that these arbitral institutions are grasping the fact that as court fees and costs are rising, parties require a quicker and cheaper method to resolve their disputes.
It may well be that the launch of the BAS is in response to the judiciary in England & Wales launching two new pilot schemes promoting Shorter and Flexible Trial procedures in October 2015. Both pilot schemes operate in the High Court, Chancery Division, the Patents Court, the Companies Court, London Mercantile Court and Technology and Construction Courts and the aim of both is to facilitate greater procedural efficiency, economy and proportionality in commercial and business disputes. The Flexible Trial procedure enables parties to adapt the trial procedure to their individual needs. This will enable parties to agree to limit disclosure, expert evidence and submissions. The Shorter Trial procedure is intended to ensure that claims reach trial (which will be listed for a maximum four-day hearing) within ten months of issue. However, importantly for parties who require a more abridged process, which provides confidentiality, these procedures will be of limited use.
In summary, for sectors that experience lower-value disputes in which a lack of public awareness of a dispute is key, (such as in the defence industry) 'fast-track' arbitration will be very appealing. It will be interesting to see the statistics showing the take-up of this new scheme and the data around which sectors in particular are making most use of it.
Michael Stocks joined Bird & Bird in November 2015 from BAE Systems. Michael is a Legal Director in our Dispute Resolution team with a particular focus on the Aerospace, Defence and Security sector.
At BAE Systems Michael headed up the in-house Dispute Resolution team managing disputes affecting all of the UK businesses, often of a high value, and involving technical or politically-sensitive issues. Aside from advising on litigation (at all court levels) and arbitration, Michael regularly advises on jurisdiction, governing law and arbitration clauses in contracts.