The failure of the arbitration process in England spawned the Housing Grants, Construction and Regeneration Act 1996 (HGCRA). This Act created the statutory right to adjudicate all disputes arising under a very wide range of construction contracts and provided a fast-track system of dispute resolution at relatively low cost compared with arbitration. It also enabled many disputes to be resolved during the contract period, rather than retrospectively.
The introduction of statutory adjudication was a response to the delays and cost of court proceedings, as well as of arbitration. Nevertheless, it was, significantly, the arbitration process that had let the construction industry down. Arbitration clauses were habitually written into construction contracts, while the arbitrations themselves were taking too long. Meanwhile, the legal costs – and often the arbitrator’s fees – were disproportionately high.
Those involved in arbitration in England have been slow to accept the implied criticism which statutory adjudication involved – and also to learn the lessons necessary to instil confidence in arbitration. Although the Arbitration Act 1996 is contemporaneous with the HGCRA – and embodies the principle that arbitration should be swift and cost-effective – confidence in arbitration will not return until its process and procedures undergo a metamorphosis and the mentality of many arbitrators change.
REGENERATION PROCESS
Arbitration is often considered to be necessarily retrospective. The forum of the arbitration is generally perceived to be a remote venue which the parties to the dispute must attend, bearing with them the ingredients of their dispute. There is, however, no reason why arbitration should not be a virtually contemporaneous process running alongside the performance of the contract and there is no reason why arbitrators should not commit themselves to attending on the parties at the scene of their disputes.
In the old days, if a dispute arose over whether corn was bad, or fish had gone off, an arbitrator would be called upon to attend for the briefest of arbitrations. There, they would look, feel and smell to determine who was right and who was wrong. Some of this immediacy needs to be restored to arbitration under construction and other large commercial contracts.
In any commercial contract of several months’ or years’ duration, an arbitration procedure could be devised under which the parties select an arbitrator from a shortlist to resolve disputes quickly. The selected arbitrator who accepted the appointment would sign an agreed set of terms with the parties. These parties could then require the arbitrator to resolve certain categories of dispute within a few working days and to make a decision within, say, a week after that. For less urgent disputes, the arbitrator could be required to make a decision within a month, similar to the adjudication process.
The machinery for this kind of arbitration needs to be developed and refined, which could take decades. Inevitably, different sectors of the economy will develop the process to suit their needs. Arbitrators able to respond quickly would inevitably be well remunerated. The nature of an arbitrator’s decision under this regime would need to be established either when the arbitration agreement was entered into or, at least, before any decision was made. By the Arbitration Act 1996, s.58, unless the parties otherwise agree, an award of an arbitrator is final and binding, even if it is an interim award. It would be prudent to agree that certain decisions made during the course of a contract were not final and could be reviewed. Decisions on certain matters could be treated as provisional orders or as provisional relief – the parties can agree this under s.39. Such orders are subject to adjustment in the final award and are brought into account in the final award.
THE ARBITRATOR IN ACTION
Perhaps the worst aspect of the arbitration process is delay. Arbitrators are often afraid to deal with delays by one party and to make peremptory orders. When both parties are in delay, arbitrators are often confused about how to proceed. Of course, if both parties openly apply to the arbitrator for a stay of proceedings – and the arbitrator is satisfied that they have access to proper advice – they will generally grant this stay providing the quality of the evidence is not compromised. For example, the arbitrator may insist that witness statements are taken and filed before the stay is granted, unless there are strong reasons for not doing so.
Those trained to be arbitrators in the early 1990s will recall being told to be authoritative. There is nothing wrong with this approach, provided that authority does not equate to self-importance. In modern arbitration, they should perhaps classify themselves as servants, albeit professional, of arbitration process. It may be necessary for modern arbitrators, like Mohammed, to travel to the mountain of the dispute. It may be necessary for them to act quickly and to be proactive rather than reactive. It may even be necessary for them to perspire in the pursuit of their duties. They should perhaps revise their self-image to that of effective technicians and managers of process rather bask in the reflected glory of their status.
Arbitration may have lost some of its salt, but its saltiness can be restored. This will require the reinvention of the arbitration process as a flexible dynamic for resolving disputes and it will require hard work and the willingness on behalf on the arbitrators to make themselves available and accessible in the rapid resolution of disputes.