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A new vision for arbitration

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Legal matters

Harold Crowter, incoming chairman of the Chartered Institute of Arbitrators, is to be congratulated on his 'State of the Union'-style address to members given in June. The institute recognises that the industry with the largest amount, both in terms of number and value, of domestic arbitrations is the construction industry. At the same time the future of arbitration as a means of resolving construction disputes is open to question.

Crowter identified the uncertain quality of arbitrators as the prime reason for this. He suggested that although the introduction by Parliament of adjudication, which he considered ill advised, was unlikely to provide the hoped-for panacea, it does raises further questions over the future of arbitration. He did not, but could have, mentioned the effect of the House of Lords decision over Beaufort Developments which removes the requirement that certain disputes, particularly claims relating to delay and expense, be dealt with by arbitration. The balance has tipped away from arbitration as the chosen route for dispute resolution in the construction industry, demonstrated by the introduction by the jct, for the first time, of a means of opting out of its standard arbitration clause. How then, asks Crowter, can the industry be encouraged to keep faith with its historic reliance on arbitration as the best form of dispute resolution? The solutions he proposes are threefold:

Encourage arbitral excellence. This is not easy. The cia may appoint few construction arbitrators compared with, for example, the riba, but it is responsible for training most of them. Crowter recognises that qualifying involves years of study and thousands of pounds in training fees and materials. This is usually done while pursuing a primary career. Even achieving fellowship offers aspirant arbitrators little practical hope of obtaining appointments unless they also complete an arbitral pupillage and are admitted onto the panel from which the chairman selects arbitrators. After all this, the would-be arbitrator has still yet to do an arbitration.

In this respect, Crowter believes, the cia seriously lets its members down. The result is that appointments are limited to a tiny handful of the total panel membership. Crowter proposes that senior arbitrators should act as mentors for less-experienced panel members and that novice arbitrators should be appointed to deal with 'up to 10 documents only'-style disputes referred under the abta travel agency scheme. Thus, it is suggested, the Catch 22 cycle would be broken and capable new contenders would gain relevant experience of actual arbitrations.

Meet industry leaders. Crowter is anxious to reassure industry leaders that arbitration under the Arbitration Act 1996 has a lot to offer the construction industry. In particular, he suggests, lower costs, greater flexibility and a prompt answer. Of all the provisions of the act which might interest them, such as cost capping, security for costs and a general obligation to get on with it, I would have thought that the most compelling was the arbitrator's power to award compound interest, which is unavailable in the Courts.

Form closer links with the lawyers. Crowter was keen to dismiss any suggestion that lawyers were responsible for wrecking arbitration. So far as it was suggested that this was their aim, he said the ultimate responsibility rested with the arbitrators to see that they were unsuccessful. Lawyer bashing, he said, was no answer whatever.

Crucially, Crowter recognises that domestic arbitration will have a very limited future unless lawyers can be persuaded that arbitration is a good thing. Why? Because lawyers draft the contracts and if they leave out the arbitration clause there can be no arbitration.

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