In conversation with Christian Marney
Why would professionals consider arbitration?
Being involved in a litigation is probably not a happy prospect for either party. However, within the context of a dispute arising out of the performance of professional services, parties also face the prospect of their case being played out in a public forum. For the pursuer that might mean financial or personal details related to their life or business entering into the public domain. For the defender it may also raise the prospect of unmeritorious claims gathering adverse publicity and leading to reputational damage. Once such claims have entered the public domain and, for example, are the subject of digital commentary or speculation, then they are liable to stay there. Indemnified litigants who have been through that will tend to find that their name appears in search engines but with the unflattering commentary high on the list.
If there is no particularly difficult point of law involved in the claim, such that might require clarification by an appeal court, and in many cases there isn’t, then parties might also find it attractive to enter into a process which is designed to offer finality of the dispute. By that I mean that there are limited rights of appeal from the determination of an arbitrator.
In professional indemnity cases is arbitration an option?
Arbitration is often referred to as, “a creature of consent”. What that means is that parties can go to arbitration if they have agreed in their contract that they would do so or if there is no prior contractual agreement, they are agreed, nonetheless, that they wish to have their dispute arbitrated.
Thus, in their terms and conditions of engagement, professional service providers might want to give greater consideration to their dispute resolution clause. Such a clause might seek resolution by reference to arbitration or there is scope to have further provision, for example reference to mediation in the first instance, failing which, arbitration.
Should the contract specify the arbitrator?
If arbitration is to feature then the arbitrator, that is to say, the type of person in contemplation should be identified in the contract preferably with the mechanism of appointment. In that regard the Faculty of Advocates is able to offer arbitrators and arbitral counsel. Many members of faculty are admitted to membership of the Chartered Institute of Arbitrators and some to fellowship. There is, in any event, a wealth of talent and experience within the faculty, whether or not formal accreditation is held. An online facility is under development at the moment which should simplify the process of getting an arbitrator appointed and conducting the arbitration. In the meantime, within the Faculty of Advocates web page any interested party can access the Faculty Dispute Resolution Service where a list of arbitrators can be found.
What if there is no pre-existing contractual agreement to arbitrate?
If arbitration is the chosen dispute resolution mechanism, then an agreement can be entered into to that effect.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.