The Scottish Branch has published short form rules ("the Rules") which provide a fast track route to obtaining a binding decision from an arbitrator with limited recourse to the courts.
Arbitration was popular in Scotland until the 1980s by which time it was seen as slow, expensive and hindered by the lack of modern legislation.
This changed with the coming into force of the Arbitration (Scotland) Act 2010 ("the Act") on 7 June 2010. The new Act reformed and modernised the Law of Arbitration in Scotland.
The Act offers parties who wish to use arbitration in Scotland a modern and clear framework.
Parties in dispute can resort to the courts. However arbitration offers the parties greater control over who settles the dispute for them, and how long it takes which affects cost. Importantly, the process is confidential.
What is covered?
These rules are designed to cover disputes up to £25,000 (plus VAT). They can be used for larger amounts by agreement of the parties.
If the parties have a contract between them that provides for arbitration to determine disputes, the method of choosing the arbitrator would normally be set out.
The Scottish Branch can nominate an arbitrator if the contract provides for this or by agreement of the parties. If the Rules are either mentioned in the contract or are agreed they provide for the process for appointing an arbitrator.
What does it cost?
The sole arbitrator sets out his or her terms of business within 3 days of nomination and the parties have 4 days to accept with a default mechanism for dealing with the situation where this does not happen.
The arbitrator will usually award his expenses against the unsuccessful party. Legal expenses etc incurred by parties have to be declared in advance. Savings on expenses can often be achieved by conducting the arbitration on a "documents only" basis.
How long does it take?
Under the Rules an arbitration should be finished within 77 days. The timetable is;
- Arbitrator to set out directions for conduct of arbitration - 14 days
- Statement of Claim by Claimant - 14 days
- Respondent's Statement of defence - 21 days
- Claimant's response to defence - 7 days
- Respondent's response - 7 days
- Arbitrator publishes award within 14 days, can declare a 7 days extension, or longer with permission of parties
What to do next
You should discuss dispute resolution options with your advisers who may suggest that you include referral of any dispute to arbitration in your contract.
The Rules which contain Guidance Notes should be reviewed.