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.’