Arbitration or Litigation?
The parties to a dispute are in principle to choose a method of resolving it. Arbitration and litigation each offer certain advantages. Even where a contract contains a clause stating that disputes shall be settled by arbitration, the parties may agree to ignore this and instead go to court. However, the presence of an arbitration clause in the contract will normally mean that, unless both parties agree otherwise, the dispute must be settled by arbitration.
of course, such a clause affects neither the statutory right of adjudication nor the option of finding a settlement through a form of amicable dispute resolution.
Relative advantages and disadvantages
As to which procedure would be a more appropriate means of resolving a dispute, no definitive answer can be given, but there are various matters that may be taken into account in any particular case.
In briefly noting these factors, one point should be borne in mind. while ” litigation” will follow much the same pattern wherever it take place. ” Arbitration” covers a much wider range of possible procedures. Thus, any comparison between litigation and arbitration inevitably raises the question of what kind of arbitration is being considered. the relative merits of the two forms of dispute resolution, which are described below, are largely based on the assumption of a large scale construction arbitration involving complex, large representation and procedures similar to those in court.
Advantages of Arbitration
Arbitration is a viable option for businesses and individuals who want to resolve disputes outside of court. This private form of dispute resolution involves a neutral third party arbitrator, who is chosen by the parties involved in the dispute. Here, we’ll explore the advantages and disadvantages of using arbitration to resolve business disputes.
Efficient and Flexible: Quicker Resolution, Easier to Schedule
One of the biggest advantages of arbitration is the speed with which disputes can be resolved. Court trials can take years to schedule, but with arbitration, a hearing can usually be scheduled within a few months. The arbitration hearing can also be scheduled around the parties’ and arbitrator’s availability, which makes it more convenient and easier to plan around.
Less Complicated: Simplified Rules of Evidence and Procedure
Arbitration proceedings have simplified rules of evidence and procedure compared to court trials. This makes it easier to admit evidence, and it reduces the need for time-consuming and expensive procedures like discovery. Most matters, such as witness testimony and document production, are handled with simple phone calls with the arbitrator.
Privacy: Keep it out of the Public Eye
Arbitration is a private process that keeps the dispute and its resolution confidential. This is particularly important for public figures and businesses who want to keep sensitive information private. In contrast, court trials may expose sensitive business information to the public, even if certain records are not released.
Impartiality: Choosing the “Judge”
Parties to the dispute choose the arbitrator together, ensuring an impartial and unbiased decision. This can give both sides confidence that the dispute will be resolved fairly.
Usually Less Expensive
Arbitration is generally less expensive than litigation, although not always. The reduced time spent preparing for arbitration and the lower attorney fees make it a more cost-effective option. However, there may still be expenses for the arbitrator’s fees and other administrative costs.
Finality: The End of the Dispute
Arbitration decisions are usually final and binding, with limited opportunities for appeal. This finality can be advantageous, as it avoids the prolonged litigation process that may result in multiple appeals and new trials.
Advantages of Litigation
the perceived advantages of litigation include the ability to join third parties in the action, the availability of legal aid, the ability to deal with legal complexities and a more decisive approach by the decision maker.
Arbitration in UAE
Arbitration has become increasingly popular for businesses operating in the UAE due to its flexibility, confidentiality, and professionalism. However, the use of arbitration in the UAE is currently not governed by any formal legislation. Instead, it is regulated by the UAE Civil Procedure Code, Federal Law No. (11) of 1992.
In this article, we will explore the legal framework surrounding arbitration in the UAE, including relevant sections of the UAE Civil Procedure Code. We will also discuss the advantages of arbitration over traditional litigation and the implications of the UAE’s adherence to the New York Convention on the Recognition and Enforcement of Arbitral Awards.
Legal Framework for Arbitration in the UAE
As mentioned, there is currently no formal legislation in the UAE that governs the use of arbitration. However, the UAE Civil Procedure Code provides certain provisions for arbitration. These provisions apply to both domestic and international arbitration.
Article 203 of the UAE Civil Procedure Code states that “the parties to a dispute may agree to submit their dispute to one or more arbitrators to issue a binding award.” This means that parties can agree to resolve their disputes through arbitration instead of going to court.
Article 206 provides for the appointment of arbitrators. If the parties do not agree on the appointment of an arbitrator, the court can appoint one upon request by either party.
Article 211 allows parties to apply to the court to set aside an arbitral award if there are certain grounds for doing so. These grounds include a lack of capacity to enter into the arbitration agreement, a lack of proper notice of the arbitration proceedings, or if the award goes beyond the scope of the arbitration agreement.
Advantages of Arbitration over Traditional Litigation
Arbitration offers several advantages over traditional litigation. These include:
- Flexibility: Parties can choose the arbitrators, the location of the arbitration, and the rules that will govern the arbitration proceedings. This allows for a more tailored and flexible process that can better suit the needs of the parties.
- Confidentiality: Arbitration proceedings are usually confidential, which can help protect sensitive information and trade secrets.
- Professionalism of Experts and Arbitrators: Arbitrators are usually experts in the relevant field, which means that they are better equipped to handle complex disputes. They are also neutral and impartial, which can help ensure a fair and unbiased process.
- Co-operation: Parties are encouraged to co-operate in arbitration proceedings, which can lead to a more collaborative process and a greater likelihood of reaching a mutually beneficial outcome.
- Speed: Arbitration proceedings are usually faster than traditional litigation. This can save parties time and money.
Implications of the UAE’s Adherence to the New York Convention
The UAE’s adherence to the New York Convention on the Recognition and Enforcement of Arbitral Awards is significant for international businesses operating in the UAE. The New York Convention is an international treaty that provides for the recognition and enforcement of arbitral awards in signatory countries.
The UAE’s ratification of the New York Convention means that international arbitration awards are more likely to be recognized and enforced in the UAE. This provides greater certainty and predictability for businesses operating in the UAE and can help encourage the use of arbitration as a means of resolving disputes.
Arbitration has become a popular means of resolving disputes for businesses operating in the UAE. While there is currently no formal legislation governing the use of arbitration, the UAE Civil Procedure Code provides certain provisions for arbitration. The advantages of arbitration over traditional litigation, such as flexibility, confidentiality, and professionalism, make it an attractive option for parties seeking to resolve disputes. The UAE’s adherence to the New York Convention on the Recognition and Enforcement of Arbitral Awards further strengthens the case for the use of arbitration in the UAE.