Arbitration is often referred to as a form of alternative dispute resolution (ADR), on the basis that it is a mechanism for resolving disputes outside the court system. However, arbitration is far more similar to court proceedings than other ADR mechanisms, inter alia, by virtue of a final and binding award. Recently, there has been scope for discussions about the use of mediation and other ADR methods in arbitral proceedings, with a view to improving the time and cost efficiency of the dispute resolution process. Due to different legal cultures and policy considerations, there is no uniform way in which different ADR methods may be integrated in arbitral proceedings.

Multi-tiered dispute resolution clauses

The most common way in which arbitration is used with other ADR mechanisms is by virtue of including a multi-tiered dispute resolution clause in one’s contract. Such a clause would indicate that the parties agree to attempt to resolve their disputes via an ADR mechanism before resorting to arbitration. Parties must ensure that such clauses are carefully drafted, as ambiguity or lack of relevant details may result in the unenforceability of the dispute resolution clause. In such cases, the arbitral tribunal may, for instance, find that it does not have jurisdiction to hear the dispute, because the preliminary ADR step was a condition precedent and the parties have failed to comply with it. Furthermore, this may also lead to the award being challenged on the basis that the tribunal lacked jurisdiction, because the relevant ADR steps have not been fulfilled.

Apr-Jun 2018 issue

Chartered Institute of Arbitrators