Arbitration is well known as a form of alternative dispute resolution ("ADR"), whether between companies or individuals. Arbitrations can take place pursuant to the rules of various arbitral bodies, such as the London Court of International Arbitration or the International Chamber of Commerce, or they may be "ad hoc", carried out by the agreement of the parties to resolve a particular dispute that has arisen under a particular agreement, or in relation to a certain matter.

Under English law, arbitrations are now governed by the 1996 Arbitration Act which, in certain ways, is echoed by some of the changes introduced to the rules of court by the Civil Procedure Rules which came into effect in April 1999.

The debate as to whether litigation, arbitration or mediation is the "best" way to resolve disputes is one which will probably never end. However, advantages that arbitration can sometimes give to disputants include confidentiality, speed, cost effectiveness, keeping the procedure free from intervention by the Court, and the power to appoint arbitrators who are knowledgeable in the field in which the dispute has arisen.

As always with legal advice, it is best taken early and the team at Charles Russell can assist at the contract negotiation stage with advice as to whether or not an arbitration clause is appropriate and, if it is, what form of clause would best serve your interests.

In drafting the arbitration clause, regard should be had in particular to the following matters:

1. How many arbitrators should there be? In the absence of agreement, the 1996 Act provides that the arbitration will take place before a single arbitrator.

2. Should the arbitrator(s) have any particular qualifications? Sometimes arbitrators are to be "commercial men", or "non-lawyers", or have certain special expertise.

3. Do the parties wish to exclude a right to appeal to the Court in relation to matters arising from the arbitrator's award?

4. If the agreement is being made with a party outside of the United Kingdom, will there be any problem in enforcement of an arbitration award?

5. What procedures should the arbitrator follow? It follows that, in disputes involving relatively modest amounts of money, or straightforward issues, the arbitral tribunal will be expected not to apply the full range of civil litigation procedures since the costs incurred would be disproportionate to the amounts and/or issues at stake.

Generally, individuals and companies can only be compelled to arbitrate their disputes if they are subject to an arbitration agreement, made either before or after the dispute has arisen. If necessary, the Court will stay Court proceedings brought in breach of an agreement to arbitrate the dispute.

Charles Russell has considerable expertise in the conduct of arbitrations and we recommend that one of the following individuals be contacted in the first instance for preliminary advice and assistance.