THE SPIRALLING COST OF ARBITRATION
For many years litigation was the traditional and popular method of settling both international and domestic commercial disputes. It served as the precursor to the inception and development of the arbitration process, providing parties with the only formal way of resolving disputes when two or more were in disagreement. Yet the expensive and protracted nature of litigation caused a new form of dispute resolution to arise, which has proven to be incredibly popular.
A more consensual method of settling disputes, for many years arbitration has been a natural choice for many parties. Previously, the arbitration process was perceived to be more advantageous for many parties due to its cheaper, more flexible nature. Indeed, until very recently, due to its efficiency, arbitration had been considered a superior alternative to engaging in prohibitively costly and time consuming litigation. Conventional wisdom suggests that by avoiding court proceedings and entering into a more malleable form of dispute resolution such as arbitration, parties can minimise costs and expedite the dispute resolution process enormously, to the benefit the parties involved.
However, despite its previous popularity, there is an emerging sentiment within the alternative dispute resolution (ADR) community that the cost of arbitration has begun to spiral out of control. As a response to this perceived escalation in costs, a growing number of businesses are beginning to turn away from arbitration and are once again exploring other forums. Most notably, many companies are now returning to court-based litigation to settle their differences.
Apr-Jun 2014 issue
Richard Summerfield