Introduction to Arbitration — Royal Society for Public Health Vocationally-Related Qualification Construction & Building Services Revision
This element introduces the fundamentals of arbitration as a key alternative dispute resolution (ADR) method within the construction and building services
Topic Synopsis
This element introduces the fundamentals of arbitration as a key alternative dispute resolution (ADR) method within the construction and building services sector. It explores the circumstances that lead parties to choose arbitration over litigation, such as confidentiality needs, technical expertise required, or contractual obligations, and examines the legal framework that governs arbitration in the UK, primarily the Arbitration Act 1996. Learners will gain insight into how arbitration is practically applied to resolve construction disputes efficiently and fairly.
Key Concepts & Core Principles
- Arbitration Agreement: A written agreement between parties to submit existing or future disputes to arbitration. Under the Arbitration Act 1996, this agreement must be in writing and can be a standalone contract or a clause within a main contract.
- Arbitrator's Powers and Duties: Arbitrators have the power to determine procedural and evidential matters, including the admissibility of evidence and the conduct of hearings. Their duties include acting fairly and impartially, avoiding unnecessary delay or expense, and ensuring the award is enforceable.
- The Arbitration Process: This includes the initiation of arbitration (notice of arbitration), appointment of arbitrators (party-appointed or by an appointing body), preliminary meetings, exchange of statements of case, disclosure of documents, hearings, and the issuance of the final award.
- Enforcement of Awards: A valid arbitration award is binding on the parties and can be enforced through the courts under the New York Convention 1958 (for international awards) or the Arbitration Act 1996 (for domestic awards). Grounds for challenging an award are limited and include serious irregularity or lack of substantive jurisdiction.
- Confidentiality: Unlike court proceedings, arbitration is private and confidential. This means that the existence of the dispute, the evidence, and the award are not disclosed to third parties unless required by law.
Exam Tips & Revision Strategies
- Use concrete examples from construction contracts (e.g., JCT or NEC) to illustrate when arbitration clauses are invoked.
- Reference specific clauses from the Arbitration Act 1996 to strengthen legal arguments.
- Clearly distinguish between arbitration and other ADR methods by outlining pros and cons in a construction context.
- Focus on the practical implications of arbitration, such as privacy, speed, and technical decision-making, rather than just theoretical definitions.
Common Misconceptions & Mistakes to Avoid
- Confusing arbitration with adjudication, failing to recognise arbitration's final and binding nature versus adjudication's interim-binding effect.
- Assuming arbitration is always less costly than litigation without considering arbitrator fees and administrative expenses.
- Overlooking the legal necessity of an arbitration clause or submission agreement being in writing.
- Misunderstanding the limited scope for judicial intervention once an arbitral award is issued.
Examiner Marking Points
- Award credit for accurately listing at least three construction-specific situations that may lead to arbitration (e.g., contractual disputes, delays, defective work).
- Credit for demonstrating a clear understanding of the binding nature of arbitral awards and the limited grounds for appeal.
- Expect reference to sections of the Arbitration Act 1996, such as the requirement for a written arbitration agreement.
- Acknowledge comparison between arbitration and litigation, highlighting confidentiality and technical expertise benefits.
- Reward identification of the arbitrator's role in managing proceedings and rendering a fair decision.