Woolf calls for arbitration overhaul as he launches new guidance
International arbitration has ‘lost its way’, the former lord chief justice Lord Woolf (pictured) told the Gazette this week, as he launched a set of guidelines which will build mediation into the arbitration process.
Woolf co-chaired an international commission for the Centre for Effective Dispute Resolution (CEDR) to examine how the international arbitration process could be improved, with Swiss lawyer Gabrielle Kaufmann-Kohler. It launched the new guidelines at CEDR’s arbitration conference in London last week.
The guidance will streamline proceedings at a time when there has been a marked increase in disputes.
It includes a ‘mediation window’ to be inserted into arbitral proceedings to make it easier for parties to come to a settlement in international arbitrations. This would enable proceedings to be adjourned so that mediation can take place at the request of the parties.
The guidance allows an arbitrator, with the parties’ permission, to give a preliminary view on the merits and issues in the case and the evidence required for a party to prevail.
The guidance also recommends that the parties themselves should attend the initial hearing and be encouraged to speak directly to the tribunal on matters relating to settlement.
Explaining why the guidelines were needed, Woolf told the Gazette that international arbitration had ‘lost its way’ and is falling behind the commercial courts because its procedures have not been modernised.
‘Litigation in the commercial courts has improved, and if we aren’t careful international arbitration will suffer and be left behind because it hasn’t made changes to its procedures,’ he said.
‘Mediation and other early settlement techniques are being encouraged by the commercial court, but this is not taking place in international arbitration. If this continues clients will walk away from it.’
Karl Mackie, CEDR chief executive, said settlement was less frequent in arbitrations than in the commercial court. ‘This is the first global effort to make settlement more frequent in international arbitration,’ he said.
The rules take the best procedures from different jurisdictions to try to develop a more consistent approach.’
Conference delegates welcomed the new rules. Patrick Dean, senior legal counsel at Nestlé, said: ‘We’re seeing an increase in the number of claims and everything is calling out for a more streamlined process. These rules and guidelines are timely.’
Ian Luke, managing director of construction company Skanska, said: ‘We spend a fortune each year trying to resolve disputes. As a businessman, that’s not good. Anything that reduces the need for litigation or arbitration is worthwhile.’
Comments
Lord Woolf's arbitration reforms
I am afraid that Woolf has got it wrong; there is no crisis within International Arbitration and, from my personal experience, the arbitration business has never been better.
I think that the continued success of International Arbitration results from its flexibility because a skilled arbitrator can (and should) manage the case on an individual basis with an ultimate aim of achieving what is equitable for the Parties - equity as much as the law will allow - in as fast a time as possible.
It is not necessary to have any more rules than are contained within the various arbitral institution rule books - some of these are already too extensive - and this pursuit, by Lord Woolf, of having even more rules fills this particular arbitrator with dread.
Aristotle said it right in 300 BC "It bids us remember ... to settle a dispute by negotiation and not by force; to prefer arbitration to litigation -- for an arbitrator goes by the equity of a case, a judge by the strict law, and arbitration was invented with the express purpose of securing full power for equity." I am afraid the increasing use in arbitration of retired judges is bringing too much law back into arbitration at the expense of equity.
Give arbitration back to the arbitrators and the need for reforms shall diminsh.