“There is a way out of every box, a solution to every puzzle; it's just a matter of finding it" Captain Picard, Star Trek
Contractual and commercial disputes will inevitably increase as a result of the economic shockwaves breaking on our shores and we need to find flexible, cost-effective and innovative ways of dealing with them.
Litigation or arbitration are traditionally expensive, formal, and relatively long-winded. Cost and time rapidly become disproportionate for smaller disputes and can be a deterrent for pursuing valid claims.
Alternative Dispute Resolution methods, which are much more adaptable, are likely to become more important and popular. These include mediation, expert determination, facilitated negotiation, early neutral evaluation and adjudication.
Cost, however, is likely to become more important than it has been previously in selecting a dispute resolution method and smaller disputes are likely to multiply.
Pre pandemic, dispute resolution bodies had already been responding to the commercial demand for fast track, low cost dispute resolution models. The RICS, TeCSA and the CIC, for example, have introduced new adjudication procedures for lower value disputes. There are a number of lower cost arbitration rules available for smaller claims, for example CIMAR and the CIArb Business Arbitration Service.
The latest addition to this menu of ADR choices, driven primarily by the coronavirus emergency, is the Pandemic Business Dispute Resolution Service, introduced by the Chartered Institute of Arbitrators and the Centre for Effective Dispute Resolution.
I like the procedures in the new service, and I believe it will be a valuable tool to assist in resolving disputes, particularly where the parties have an ongoing business relationship that can be preserved. This can only benefit everyone. With no definite end of the pandemic in sight, I hope it will be available for some time.
The service is designed for two-party, UK jurisdiction disputes of between £5,000 and £250,000. Other parties can be added, and cross border disputes are eligible, but only if the law of England and Wales applies.
The beauty of the procedures is in its 3 options, which can be used individually or progressively, depending on need. They are inherently flexible and can be used by parties to suit their particular circumstances. An added feature is the costs limit on each option. As you would expect, all of the options are designed to be run online.
Option 1 is facilitated contract negotiation. A neutral third party will work with the parties to negotiate changes to an existing contractual relationship.
Option 2 is mediation.
The costs of Options 1 and 2 are calculated on the same basis, which is £1000 plus VAT per party for each 10-hour block of time spent on facilitation or mediation. Five hour blocks are £500 plus VAT per party. Additional charges are imposed if these time limits are exceeded.
Option 3 is a fast track arbitration, using the CIArb’s Business Arbitration Service, slightly adapted. On its own, the Business Arbitration Service was originally designed for disputes of between £5,000 and £100,000. It has limits on the amounts of documentation that can be submitted to the arbitrator, for example witness statements cannot exceed, in total, 5,000 words.
The arbitration costs are fixed at £1,250 plus VAT per party.
So you can pick and choose your option, depending on what stage the parties are at. If you feel a dispute might be looming and you need some help to see if you can catch it before it takes off, option 1 is for you. If you have a dispute already underway, options 2 or 3 will be worth considering. If mediation fails, then you will have done much of the work necessary for an arbitration, so you can move to this as the next step with relative ease.
Alternatively, I see no reason why you should not pursue one or more options at the same time. If speed is of the essence, could you use 1 and 3, perhaps, together?
Another suggestion, for construction disputes, might be to use options 1 and 2 and follow it with an adjudication, rather than an arbitration?
Involving lawyers might not even be necessary, particularly for option 1, or even, for confident parties, for options 2 and 3.
There is the added comfort that both CIArb and CEDR are long-standing organisations with enormous experience in administering dispute resolution, of all types.
If you have a lower value dispute looming, or already underway, I recommend that you at least consider the Pandemic Business Dispute Resolution Service. It may offer you a solution.