Transcript A FUTURE FOR ARBITRATION IN AN AGE OF AUSTERITY

Dr. Michael Reynolds
All together now
 Dispute resolution’s weakness is its diversity: rival
systems in competitive organisations and competing
professions in ever decreasing markets. Ironically
that may also be its strength albeit paradoxical.
 It is not a case of preferring one system to another:
litigation or arbitration; mediation or adjudication it
is as Professor Capper of King’s College, London said
many years ago a matter of appropriate dispute
resolution.
 What may be appropriate in one case is not so in
another.
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Objective: dispute resolution
 But whether you be a judge, arbitrator, adjudicator,
mediator or negotiator your aim is the sameresolution.
 The manner is different according to the process but
everyone whether lawyer or other professional has
that great objective in common.
 Whilst arbitration is more informal it has the ability
to apply the lessons and practices of commerce and
economic common sense, something Lord Brougham
recognised advocating a new arbitration provision in
April 1854 [HL Deb. 6 April 1854 vol.132 cc 491-6]
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Lord Brougham’s object
 Great complaints had been made by the Judges that
matters which ought to be referred to arbitration
frequently came on for trial in courts of justice,
which were very ill adapted to deal with them—
particularly in matters of account.
 This led to the Common Law Procedure
(Amendment) Act 1854 but that was a failure and
such references were superseded by references to
Official Referees under the Judicature Acts 1873-75.
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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1871 Select Committee on
Tribunals of Commerce
 But there was similar dissatisfaction with the
conduct of commercial litigation said to be due to the
following causes:
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Delay in the progress of the cause;
Expense in preliminary procedure and in the trial;
Difficulty of bringing the real question before the court in a
satisfactory manner;
The frequent inability of the court to try the cause and the
consequent reference to arbitration;
The inefficiency, delay and expense of the arbitration to
which the cause was remitted.
Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Where does arbitration stand in
this new age?
 Negotiation is still the most popular method of
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dispute resolution.
Adjudication would appear to follow
For construction the TCC remains the predominant
litigation forum
Mediation may follow with 8,000 cases per annum
reported by CEDR and finally
Arbitration whilst not so popular in construction it
still holds its own in valuation and rent review
matters and primarily in international arbitration
where its ascendancy is obvious.
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Where does arbitration stand in
this new age?
 ICE
 In 2012 the ICE reported 12 adjudication
appointments as opposed to 1 arbitration
appointment.
 In 2011 they reported 60 adjudication for 5 arbitration
appointments.
 The King’s College Report (May 2009) concluded
that 76% of cases referred to mediation in TCC
actions resulted in cost savings of over £25,000.
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Decline in TCC claims
 Whilst in 2009-10, 873 claims were issued in the
TCC London and Regions 54 were tried. A mean
average of 11% of cases issued have been tried over
the 4 years preceding 2009.
 In 2011-12, 550 new claims were issued in the
London TCC a decline of 40% of claims issued in the
previous year.
 There were reportedly 157 adjudication claims issued
in the TCC in 2009-10, possibly a sign of some
questioning or discontent of the process.
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Reform of adjudication: an ever
widening jurisdiction
 Until now adjudication has always been perceived as
cheaper and quicker.
 Now the increased interpretative jurisdiction given
to adjudicators by Parliament under the LDEDCA
2009 may increase the number of referrals,
jurisdictional challenges, and require a deeper
understanding of law and evidence than was
formerly the case. More oral evidence will be
required and possibly longer hearings leading to
much increased time and costs.
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Decreasing jurisdiction of
specialist court: TCC London
 The court has now narrowed the jurisdiction to
claims of value in excess of £250,000 save in
exceptional cases e.g adjudication and arbitration
matters, international cases, difficult points of law
etc. Claims under that sum go to the county courts.
 On the 14 December 2010 Mr Djanogly (MoJ)
announced the closure of 49 county courts.
 This may have negative effects on the industry and
possibly a movement to reconsider arbitration where
no specialist court is available.
20/07/2015
Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Decentralisation of cases to
county courts
 The County courts may find difficulty in accepting
TCC cases below £250,000.
 Even the City and Mayor’s Court which Professor
Roberts in 2007 reported as processing 5,777 claims
and trying 140, is part of MoJs cuts.
 This court has been in existence for nearly 500 years
Sir Thomas More being its most illustrious
incumbent. The City is essentially the quintessence
of the world’s financial system.
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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The dangers: more access less
justice
 Much of the haste for reform of the courts was
misguided: there was no crisis as any High Court Master
could have attested.
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There was no case for case management save in complex cases
(Commercial Court and TCC)
The attacks on the legal profession were unjustified
Jackson says costs have increased as a result of Woolf.
You can have the most efficient process in the world but the worst
justice: there is a need to consider quality of decision as the
primary aim not the result of process.
Less law more process (CPR) is incompatible with jurisprudence.
The so called reforms like the cuts are all about money not justice
but they do not save money they have frontend loaded cases and
deterred litigants.
Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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General Suggestions for debate
 The CPR does not permit judges to initiate
settlement albeit that was Lord Woolf’s declared aim
of the CPR.
 Arbitrators are not judges and act with less formality
and as commercially minded professionals may be
more inclined to facilitate such discussions between
the parties.
 Arbitration clauses might lay down the rules for the
arbitration so that directions are reduced
encouraging much tighter management of the
process.
20/07/2015
Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Specific Suggestions for debate
 With Conditional Fee Agreements and ATE
Insurance components driving up costs in litigation
arbitration may compete:
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Less formal-parties in person;
Lawyers recoverable costs limited
Arbitrators fees fixed and secured on appointment
Process bound to complete in minimum time
Limits on scope of disclosure and e-disclosure
Parties and arbitrator in breach if not completed.
More effective costs sanctions
Arbitrator to effect compromise in certain uneconomic
cases.
Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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A NEW DAWN for arbitration
 Whether there is such prospect will depend upon:
 The integrity of arbitrators;
 The attainment of Lord Saville’s objectives;
 Education of the professions; and
 Shift in culture away from an obsessive focus on
process and procedure to substance.
 A more supportive attitude from the courts
 An assimilation of ADR processes
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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Epilogue
Government policy over the last decade here and elsewhere
has led to increased expenditure on criminal justice and
created pressure on the justice budget. The response has been
to look for savings in civil justice. This has been achieved
through a civil reform programme involving diversion of cases
away from public courts and into private dispute resolution,
stripping down court procedure and making litigants pay for
court buildings, judges and administration through full fee
cost recovery...These reforms have been facilitated by an antijustice, anti-adjudication discourse which undermines civil
justice and which is internalised by the public.
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Professor Dame Hazel Genn, Dean of Laws, University
College, London.
Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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To seek a newer world
 Decreasing jurisdiction of the TCC and increasing
complexity of adjudication will encourage the
industry to reconsider arbitration by specialist and
experienced arbitrators.
 Greater difficulties for clients as to the appropriate
cost effective course. i.e. less access to justice.
 Focus should be recalibrated towards substance
rather than form or process. Quality of the result is
key.
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Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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From court to clinic
 In most EU countries CADR Consumer ADR is
taking the place of the courts as are ombudsman type
processes. With the State’s declining support for the
court system and their encouragement to ADR
arbitration has an increasing opportunity.
 The success of international arbitration is a clear
indicator that arbitration can work, but to succeed in
this austere climate a new model arbitration may be
required.
20/07/2015
Dr Michael Reynolds M.Sc.,
LL.M.,C.Arb.,F.C.I.Arb.,F.C.I.O.B.
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