Arbitration: New toys for the new year

There is a sandwich board man marching up and down outside the RICS; another outside the Chartered Institute of Arbitrators. Their boards read: “Arbitrate don’t adjudicate.” And the people inside the RICS and CIArb are marching up and down, music and all, they too proselytise: “Arbitrate don’t adjudicate.”

It is not quite a new faith, more of a new dawn. Go further; the two institutions have re-branded arbitration. Like those old washing powder adverts, “New Arbitration” washes whiter than white. I like it.

For 2016 the RICS has launched Arbitration Select and Arbitration Fast-Track. The Chartered Institute of Arbitrators (CIArb) has launched brand new Arbitration Rules and brand new Emergency Arbitration.

I will delve into those brands in a moment. First though, listen in: adjudication came as a brand new baby in 1998. It took us by storm. It took us by the throat. It made us move ever so fast. That pace taught us how to arbitrate. We can arbitrate at a pace never dreamed of before 1998. The shock to many a lawyer brought up on the grinding detail of the traditional approach to dispute resolution left some behind. We now take for granted “doing it damn quick”. And there is more. Those RICS adjudicators in particular have now, in upwards of 18 years, done thousands of awards, and have dealt with a whole range of technical complexity in all these construction disputes. There is now an adjudicator horse to fit your arbitration course. Even more, in these 18 years we have dragged adjudication away from a quick fumble to a lock, stock and barrel thumping wrestle to get to the bottom of the matter. Take a look now at an adjudicator’s award, then look at an arbitration award - the depth and difference is not far apart.

There is a band of adjudicators well-versed in deciding disputes fast. Nobody anywhere in the world has our experience in deciding disputes on construction projects

So, there is a band of adjudicators well-versed in deciding disputes fast. Nobody anywhere in the world has our experience in deciding disputes on construction projects: believe me.

Now then, what’s this RICS Fast Track Arbitration about? It is for disputes under £100,000. The timetable is, at most, 25 weeks. The RICS will “interview” the parties as to what sort of arbitrator, or who, is best. More likely the parties will put up names for the RICS to select from. Then the RICS will dedicate a case officer, to each arbitration appointment, for “enhanced pre- and post-appointment customer support”. The arbitrator is tasked with proportionate cost management of the arbitration. To that extent, the arbitrator’s rate is £175 per hour. The cap is 60 hours, so £10,500 maximum. If a counterclaim pops up the time clock jumps by six hours for each £10,000 value of counterclaim. As to the party and party costs, recoverable costs will be capped at £5,000 or 20% of the value of the claim, plus any counterclaim. My message to the RICS is to be very careful about whom you choose as arbitrator; these disputes under £100,000 are not a training ground. The going rate for our highly experienced dispute deciders is well up on that £175.

The RICS Select option is for high value, complex disputes. The time limit is 12 months. The RICS will discuss fee-earning rates with the arbitrator and the parties to ask for a view. The rate per hour is all very interesting. More important is how fast, how quickly, and how properly can the arbitrator get to the issues and to the bottom of the matter. Whether “fast track” or not, a “wannabee” arbitrator is a tad risky unless he has a senior arbitrator mentor.

The CIArb new idea is a refresh of Arbitration Rules. I confess that the best “rules” in the land are these of the Arbitration Act 1996. It is world-beating and worth following. The CIArb Rules, in fairness, are for worldwide use. So top marks for that idea.

But what’s with Emergency Arbitration? The rules allow a party to apply out of the blue for emergency relief and interim measures. Apply today and the appointment will be made in two days. The emergency arbitrator’s decision is made within 15 days. It is intended, for example, to provide an order to restore the status quo pending the eventual determination of the dispute, prevent a party taking action likely to cause harm or prejudice the arbitration, preserve assets out of which a subsequent award may be satisfied, preserve evidence that may be relevant, and more. This arbitrator also can decide jurisdictional challenges, the meaning, and the scope of the arbitration clause. This idea is welcome. It is the emergency default clause. It can only be excluded if expressly deleted in the arbitration clause. Don’t do that.

Well now, all that is exciting and shows a renewed commitment to the established idea of arbitration. There is just a snag. The JCT and other standard form providers have to be asked to go back to putting an arbitration clause in the documents, just as it was until 1998.

Perhaps CIArb and RICS might knock on the JCT door, do some first-footing, sing Auld Lang Syne and recite “Haste ye back, we love you dearly”.

Happy new year.

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple