The rules about when you can challenge an arbitral award seem remarkably strict, but without such rules, arbitration would cease to be an attractive method of dispute resolution for parties.
When reading this chapter, I was continually reminding myself that this is a commercial context and that fairness does not trump all other considerations. It suits a some parties to have a result (and therefore an end to the dispute) rather than the uncertainty of having no settled result at all. This makes a lot of sense to me: it is bad for business if you can't predict how much of next year’s profits are going to be swallowed up paying to argue as case through the appeal courts. Once you have got the arbitral award it is final. At least it usually is. And if it is not final, then arbitration will start to look increasingly like litigation.
Honestly, I had almost the opposite reaction! I was alarmed that there were so many avenues to challenge or avoid the arbitration award, because they can reduce the efficiency and hence the attractiveness of the process.
ReplyDeleteAnymore, you've got the stats on your side. From memory here, only 11% of awards had to be enforced, rather than just performed, and of those only 20% had problems. If so few awards are disputed, then the ability to challenge may not be such a threat after all.
Certainly it makes more business sense to not have uncertainty. However, doesn't the appeals process make a more "fair" result possible for parties who may not have equal bargaining power? I know I've hated on appealing in arbitration, but there may be good reasons for allowing it... but then again, I guess if you want fairness you can just go to the courts and be in for the long run.
ReplyDeleteHi Linda, I realise now that my post assumes equality of bargaining power. From everything I have so far read, it would seem pretty tough for a consumer to be required to arbitrate rather than litigate. This presumably explains the (sensible sounding) Swiss rule that for consumers, arbitration agreements are enforceable only if entered into after the dispute has arisen.
ReplyDeleteRhiannon - I think you are right about parties wanting certainty and a dependable outcome. Given that this is a commercial dispute - concerns for expediency may trump other traditional due process concerns.
ReplyDeleteI guess what was most disconcerting to me is that the arbitration result isn't always "final" if another forum won't recognize or enforce it... it does start looking a lot like litigation.
ReplyDeleteI totally agree! Plus, I find that using the losing party's business reputation as a way of pressuring them to follow up on the award makes a lot of sense
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