Arbitration as a Method of Resolving Disputes - Assignment Example

Introduction Alternative dispute resolution is a procedure for settling a dispute outside the courtroom and it’s divided into four types which include Negotiation, Mediation, Collaborative law, and arbitration. Recently, arbitration was practiced within the community when members submitted disputes to a group of wise men for resolution. In India, modern arbitration was established by the British Rule by the Bengal Regulations in 1772. Wirth the consent from the parties involved, the Bengal Regulations adopted reference to an arbitration court both in partnership deeds, lawsuits for accounts, and breach of contract (Rajan & Khan, 1982). The law governing arbitration was not composed of the three statutes until 1996. Primary on the structure were, the 1961 Foreign Awards, the 1940 Indian Arbitration Act, and the 1937 Arbitration Act. , along the lines of the English Arbitration Act of 1934, the 1940 Act was the general law governing arbitration in India, while both the 1937 and the 1961 Acts were designed to enforce foreign arbitral awards. According to Mauro Rubino-Sammartano (2001), arbitration is a form of alternative dispute resolution that is a legal technique for the resolution of disputes outside the courts where the parties involved refer to it as one or more individuals like arbitrators, arbiters or arbitral tribunal by whose decision they agree to be bound. As a requirement for an arbitration, a third party adheres to the settlement technique by overseeing the case and imposing a legally binding decision, for the both parties. Arbitration is a good method of resolving disputes and can be applied to resolving disputes for suppliers and purchasers of computer systems. Furthermore, two forms of arbitration; voluntary and mandatory; exists depending on the way the contract was entered into. For instance, mandatory arbitration exists when the parties to the agreement voluntarily enter into the contract that anticipates resolving all their disputes by a legally binding arbitration alternative. Additionally, arbitration involves dispute resolution by an impartial adjudicator of whose decision is decreed by legislation and the parties to the agreement have to abide by and accept the decision, thereof. Just like litigation proceedings in a court an arbitration process is a legal-based process that involves similar type of argument. In arbitration the hearing is private in front of a nominated third party and the arbitrator makes a binding solution. The arbitrator as acknowledged by law does not operate formerly as a court judge but rather as an industry where judges resolve disputes upon professionally reaching an amicable agreement (Lynch, 2001). Many disputes can arise in the process of purchasing and supplying computers like dishonesty dispute, untrustworthy participants’ dispute, overcharging and undercharging dispute, failure of the buyers to pay on time or an agreed amount dispute, counterfeit products dispute, unwarranted products dispute and failure to agree on the appropriate method of solving the dispute (Redfern & Hunter, 2004). The method of solving the dispute can be both advantageous and disadvantageous, for example arbitration may become highly complex in a case where many parties are involved and not willing to disclose all the information which will lead to problem solving. In this case a supplier may not disclose all the information about computer costs to the buyer. This can be in reference to the case CMCS Common Market Commercial Services AVV v Taylor [2011] EWHC 324 (Ch), [2011] All ER (D) 269 (Feb). Arbitration may be subject to pressures from powerful law firms representing the stronger and wealthier party whereby such a party is likely to be favored. Like in the case of a wealthy computer selling firm sells faulty computers to a customer who is not very rich and this becomes hard for the customer to win the case. case example is Mason and others v Mills & Reeve (a firm) [2011] EWHC 410 (Ch), [2011] All ER (D) 11 (Mar) Arbitration agreements are sometimes contained in ancillary agreements, or in small print in other agreements, and consumers and employees often do not know in advance that they have agreed to mandatory binding pre-dispute arbitration by purchasing a product like a computer case where the writings about the warranty are not clear which states that if the processors power supply gets burnt because of excessive power supply then it will not be replaced. When such happens then disputes arises because of unclear agreement that was signed for (Lew & Kroell, 2003). Arbitration is mandatory and binding, the parties waive their rights to access the courts and to have a judge or jury decide the case like the case of Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) . In some arbitration agreements, the parties are required to pay for the arbitrators, which add an additional layer of legal cost that can be prohibitive, especially in small consumer dispute like in the case of inexpensive computer accessories like mouse which could be solved cheaply without going to the judges. This can be compared to the case of Levicom International Holdings BV and another v Linklaters [2010] EWCA Civ 494, [2010] All ER (D) 81 (May). In some arbitration agreements and systems, the recovery of attorneys' fees is unavailable; making it difficult or impossible for consumers or employees to get legal representation like in the case of a consumer who can afford only a cheap desktop computer and when there is a dispute the buyer cannot afford such charges hence injustice is done (Sherwyn & Eigen, 1999). Arbitration is usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays now that in this day and age many people are buying computer and are the computer cases increasing hence increase the period of dispute resolution. Jerold (1983) believes that arbitrators are generally unable to enforce interlocutory measures against a party, making it easier for a party to take steps to avoid enforcement of member or a small group of members in arbitration due to increasing legal fees, without explaining to the members the adverse consequences of an unfavorable ruling. This can easily make the less fortunate party to easily give up like not a very rich buyer or supplier because of the hardships that one cannot withstand when solving the case arbitrarily. In some legal systems, arbitrary awards have fewer enforcement options than judgments; although in the United States arbitration awards are enforced in the same manner as court judgments and have the same effect so the involved both the computer supplier and buyer are left with limited options to choose from (Sustac, 2008). Rule of applicable law is not necessarily binding on the arbitrators, although they cannot disregard the law since they have to abide. Arbitration has positive importance like when the subject matter of the dispute is highly technical, arbitrators with an appropriate degree of expertise can be appointed unlike when one cannot choose the judge in litigation. This also makes the arbitration faster than litigation in court. Arbitration can be cheaper and more flexible for businesses because people easily reach agreement and not necessarily incurring costs in their dispute solving. Arbitral proceedings and an arbitral award are generally non-public, and can be made confidential without involving a big number of people like other computer buyers and suppliers (Ury, 2000). Litigation as way of dispute resolution According to the Permanent Court of Arbitration - International Bureau (2000), when a dispute has become a subject of a law or formal court action, it acquires as the title 'litigation' or it becomes 'litigated'. The participants in these proceedings (plaintiff, defendant, applicant, petitioner or respondent) are called litigants while the trial or case is ongoing. According to Varady et al., (2006), litigation certainly has disadvantages of which some of the criticisms of court adjudication are: It is becoming more expensive and time consuming like in the case of computer purchasing it may take long if there is a case between the time when the buyer gets to use his new computer because of series of cases as a result of his new purchase like an immigration case example of R (on the application of Murdock) v Secretary of State [2011] EWCA Civ 161, [2011] All ER (D) 254 (Feb); Judges with unending cause list involving multiple jurisdictions (Constitutional, Commercial, Civil) are unable to attend to finer issues involved in commercial litigation like in the sale of computers; Judges often lack expertise in the area of commercial disputes, resulting in wrong decisions and consequential appeals to higher forums; Courts mostly act as courts of law and not equity; Court decisions not acceptable to either party, result in disturbance of commercial relationship; Court adjudication results in win-lose scenario and not a mutually acceptable decision; Pleadings and documents filed in courts become public documents and copies thereof are available to anyone, to the disadvantage of parties. Comparison of arbitration to litigation Arbitration is indeed a true and excellent alternative to litigation provided that it is used correctly. One main advantage relates to the enforceability of an arbitration award. Unlike English court judgments which might be hard to enforce outside the European Union, unless there exist multilateral or bilateral treaties with the relevant country, an arbitration award is enforceable practically everywhere in the world. Arbitration can be civil and private unlike litigation which is civil and criminal types of proceedings Under arbitration the evidence allowed is limited unlike in litigation evidence is under rules Arbitration formality is informal unlike in litigation it’s formal like example case of commercial and labor cases Howsam v. Dean Witter Reynolds, Inc., 537 U. S. 79, 83 (2002) (quoting AT&T Technologies, Inc. v. Communications Workers, 475 U. S. 643, 649 (1986 In arbitration the binding is not with appeal unlike in litigation appeal is possible. The waiting time for case to be heard under arbitration is as soon as arbitrator is selected unlike in litigation it must wait for case to be scheduled long. Arbitration might be a better option in situations where the parties want a final, binding decision rendered by a neutral with expertise in a specific industry, legal or technical area. Or, the parties are seeking maximum flexibility and, thus, want to customize the discovery process. Or, the parties will be seeking enforcement in a country that is a signatory to the New York Convention for the Enforcement of Foreign Arbitral Awards (Dezalay & Garth, 1998). Litigation, however, may be the option of choice when a company wants to establish a legal precedent to discourage similar suits. Or, access to the full range of discovery allowed by the courts is necessary and cannot be obtained by mutual agreement of the parties. Mediation as away of solving dispute In mediation the parties jointly appoint a neutral facilitator, who provides a safe place for the parties to seek a solution on a ‘without prejudice’ basis, but the parties retain control. Mediation as a voluntary process for the parties in dispute does not compromise their rights in any way. Instead, a provision allows either of the parties to terminate the mediation process at any stage, and can choose to proceed to litigation or resume the mediation process. However, if the mediation option fails, the parties are left with the option of a settlement or making an agreement which becomes binding upon the parties formally record their agreement and signing a settlement document. Unlike other dispute resolution alternative, mediation parties do not forfeit any legal rights or remedies. Nevertheless, if the mediation process fails to result in settlement, an option allows each side proceed with enforcing their rights through appropriate court or tribunal procedures, different from arbitration as seen in the case of Boys Markets, Inc. v. Retail Clerks Union, 398 U.S. 235 (1970). In case where mediation results in a settlement has been reached, legal rights and obligations are affected in differing degrees (Cappelletti & Garth, 1978). Comparison of Arbitration to mediation In a process called mediation/arbitration, mediation has been adopted for good use is association with arbitration especially for binding arbitration disputes. Fortunately, if parties fail to reach a resolution through mediation, the mediator has the option of becoming an arbitrator, transforming the mediation process into an arbitral one. In such a twist, the mediator-arbitrator seeks additional evidence as required (especially from witnesses, if any, since witnesses are rarely consulted during mediation), to enable him finally render an arbitral decision. The mediation process is under the threat of distortion, if parties in a mediation are aware the mediator might later need to act in the role of judge. Advantages and disadvantages of arbitration According to Buhring-Uhle and Gabriele (2006), parties opt to resolve disputes through arbitration as opposed to judicial proceedings because of a number of reasons. Primarily, for a highly technical subject matter, parties to the agreement choose to appoint arbitrators qualified with the appropriate degree of expertise to preside over the dispute. Unlike the litigation in a court’s judicial process, an arbitration process is faster, cheaper and more flexible for business disputes. Because of the non-public nature of arbitral awards and arbitral proceedings, the processes can be made confidential compared to the judicial proceedings. Finally, the conventions in the alternative enforcing the arbitration awards can easily be implemented across nations compared to court judgments. Despite the numerous advantages, arbitration is at times not a favorable alternative because the recording of the agreements in ancillary contracts or in small prints exposes unaware employees and consumers to the mandatory binding pre-dispute arbitration upon purchase or use of a product or a service. A binding and a mandatory arbitration agreement forces the parties to waive their, rather natural rights to access the alternative of a court and have a jury or a judge make a ruling on their case. Certain arbitration agreements require the parties to pay for the arbitrators, which increases the legal costs, hence a bit prohibitive during rather smaller consumer disputes. Unlike actual court litigations, some arbitration agreements and systems deny the parties the option of recovering attorney’s fees, hence prohibiting employees and consumers the benefit of getting legal representation; which could otherwise be a right for the parties in a court. In a situation where the arbitration forum or the arbitrator relies on the corporation for repeat business, chances are the ruling will be in favor of the software corporations; thus denying justice to the consumer or employee. Once such a decision has been made, an arbitration agreement with very limited avenues of appeal means that the erroneous decision cannot be altered to grant justice rightfully. Arbitrations are usually a faster alternative compared to court proceedings; except when the panel is composed of multiple arbitrators, attempting to juggle their schedules for hearing dates for lengthy cases, might eventually result in unexpected delays. Depending on the jurisdiction and prevailing legal systems, arbitral awards may have fewer enforcement remedies than judgments (Born, 2009). Conclusion Arbitration is the best form of solving a dispute related to computer suppliers and buyers unlike other dispute solving solutions. This works perfectly well because under arbitration the parties can easily reach an agreement without involving a lot of efforts and costs. This favors also the people who buy less computers or computer accessories like hardware and software which means they would not involve themselves into lots of procedures which are tedious hence time consuming. Good example includes the following: The IBM-Fujitsu arbitration was a breakthrough in copyright dispute resolution and a showcase for the advantages of arbitration. However, the unique characteristics of the parties involved and some overriding reasons against copyright arbitration may have limited arbitration's use in future software copyright cases. Parties who share some of IBM and Fujitsu's characteristics may indeed need to choose to arbitrate. Arbitration has often been used successfully in purchase price disputes. The choice of arbitration provides flexibility to the parties not only for scheduling, but also from the standpoint of limiting the issues to be resolved by the tribunal. The speeds with which the decision can be rendered reduces costs and the amount of management distraction and also help preserve the working relationship among the parties and allow them to quickly resume their ongoing business transactions. Reference list Born, G. B 2009, International Commercial Arbitration, 3rd ed, Wolters Kluwer. Buhring-Uhle, Christian & Gabriele Lars Kirchhof, 2006 Arbitration and Mediation in International Business, 2nd Edition Cappelletti M. and Garth, B 1978 “Access to Justice - the worldwide movement to make rights effective: a general report” in M. Cappelletti and B. Garth   (eds.), Access to Justice–A World Survey, Volume I, Sijthoff & Noordhoff – Alphanaanderijan, 5 at 8-9. Dezalay, Y & Garth, B. G 1998, Dealing in Virtue: International Commercial Arbitration and the Construction of a Transnational Legal Order, University of Chicago Press Permanent Court of Arbitration. International Bureau, 2000, International alternative dispute resolution: past, present, and future: the Permanent Court of Arbitration centennial papers, Kluwer Academic Publishers Jerold S. Auerbach, 1983 Justice Without Law?: Non-Legal Dispute Settlement in American History, Oxford: Oxford University Press. Lew, J, Mistelis, L & Kroell, S 2003, Comparative International Commercial Arbitration, Kluwer Law International. Lynch, J 2001, "ADR and Beyond: A Systems Approach to Conflict Management", Negotiation Journal, Volume 17, Number 3, Volume, p. 213 Mauro Rubino-Sammartano, 2001, International arbitration law and practice, 2nd Ed, Kluwer Law International Rajan V.N.and Khan, M.Z 1982 Delay in Disposal of Criminal Cases in the Sessions and Lower Courts in Delhi, Institute of Criminology and Forensic Science. Redfern A and Hunter, H 2004, Law and Practice of International Commercial Arbitration 4th Ed., Sweet & Maxwell. Sherwyn, D, & Eigen, Z 1999, In Defense of Mandatory Arbitration of Employment Disputes: Saving the Baby, Tossing out the Bath Water, and Constructing a New Sink in the Process, 2 U.PA. Journal of Labor and Employment Law 73 Sustac, Z. I. C 2008, Alternative ways of solving conflicts (ADR), Publisher: University, p. 242. Ury, W 2000, The Third Side: Why We Fight and How We Can Stop. New York, NY: Penguin Books. Varady, T, John J. Barcelo, JJ & Von Mehren, T 2006, International Commercial Arbitration, 3rd Ed. Appendix 1 Disclosure CMCS Common Market Commercial Services AVV v Taylor [2011] EWHC 324 (Ch), [2011] All ER (D) 269 (Feb) There was no difference in principle between the ambit of the solicitor's duty, on the one hand, in the conduct and supervision of disclosure and, on the other hand, in the conduct and supervision of any redaction of disclosable documents before they were offered for inspection. Listing documents for the purposes of disclosure and making them available for inspection were both parts of the process more generally called disclosure, and the court was heavily reliant upon the solicitor's duty to carry out or at least personally to supervise both tasks. The opposing party was entitled to assume, and ordinarily would assume, that his opponent's solicitors would have carried out and/or supervised the whole of the disclosure process in the manner set out both in the standard text books and in well known authorities. Appendix2 Solicitor Mason and others v Mills & Reeve (a firm) [2011] EWHC 410 (Ch), [2011] All ER (D) 11 (Mar) A solicitor's duty to his client was primarily contractual and its scope depended on the express and implied terms of his retainer. The key implied term of any solicitor's retainer was that the solicitor had a duty to exercise reasonable care and skill. The extent of his duties depended upon the terms and limits of the retainer and any duty of care to be implied had to be related to what he had been instructed to do. The duties owed by a solicitor to his client were high, in the sense that he held himself out as practising a highly skilled and exacting profession but the court had to beware of imposing upon solicitors duties which went beyond the scope of what they had been requested or had undertaken to do. The scope of the duty to exercise reasonable care and skill depended on the circumstances of the case and would depend first and foremost upon the content of the instructions given to the solicitor by the client. One of the relevant circumstances was the nature of the client. Another relevant circumstance was the degree of expertise which the solicitor (or other legal advisor) held himself out as possessing. Where the retainer involved different areas of specialisation, an aspect of the duty of care involved coordination between the specialists. It was a solicitor's responsibility to ensure that it was clear what the solicitor was being asked to advise about. There could be circumstances in which the solicitor's duty extended to advising upon matters that lay beyond the express instructions that he had been given by his client. On the other hand, a solicitor was not under a duty to advise his client in respect of matters in relation to which he reasonably believed the client to be receiving advice from another advisor. If a solicitor wished to place limits upon the scope of his duty of care, then he had to ensure that the client had clearly understood and consented to that. Appendix 3 Levicom International Holdings BV and another v Linklaters [2010] EWCA Civ 494, [2010] All ER (D) 81 (May) A recent Court of Appeal decision may make it harder for defendant professionals to establish a causation defence in a narrow class of cases. On 11 May the Court of Appeal allowed the appeal in. It ruled that where a firm advises its client to pursue litigation, rather than settle, and the client does so, the normal inference is that the client acted on that advice. The burden shifts to the firm to prove that the client would have gone ahead whatever the advice and that their advice did not therefore cause the loss to the client. After this ruling, defendants in professional negligence claims will need some evidence to establish that a client would have proceeded, even if their advice had been different. Linklaters had advised the claimants, two companies in the Levicom group (Levicom), on a dispute they had with two Swedish companies. Levicom alleged based on the advice from Linklaters given negligently, and that in full dependence of that advice Levicom was unsuccessful in settling the dispute, but instead resulted in costly arbitration proceedings that it was forced to settle on unsatisfactory terms. Levicom entered into shareholder agreements with the Swedish companies, governing their investments by way of share acquisition in two Estonian subsidiaries of Levicom. The relationship between the shareholders in the two companies was regulated by the shareholder agreement. Because of the competitive nature of businesses in the same industry, the CSA, being one of the agreements, contained an agreement by the Swedish companies prohibiting running any similar cellular network business within the Baltic States similar to Levicom’s. One of the Swedish companies subsequently acquired a mobile phone operator (Baltkom) in Latvia. Levicom considered that the Page 1 Swedish companies were in breach of the covenant in the CSA. Appendix 4 Immigration R (on the application of Murdock) v Secretary of State [2011] EWCA Civ 161, [2011] All ER (D) 254 (Feb) It would be contrary to the policy and objects of the Nationality, Immigration and Asylum Act 2002 Act (NA2002) to impose an obligation on the Secretary of State when refusing an overstayer's application for leave to remain to make at the same time an appealable refusal decision so as to confer a right of appeal. It would be contrary to the policy and objects of the 2002 Act because the list of appealable immigration decisions in s 82(2) made it clear that Parliament did not intend that overstayers, unlike those who were lawfully in the UK with leave, should have a right of appeal against a refusal of leave to remain. It was one thing to say that if there was a right of appeal under NA 2002, the policy of the Act was that all outstanding issues should be dealt with at that appeal; it was quite another to say that where there was no right of appeal a decision had to be made so as to confer such a right. Appendix5 Commercial and labor cases Howsam v. Dean Witter Reynolds, Inc., 537 U. S. 79, 83 (2002) (quoting AT&T Technologies, Inc. v. Communications Workers, 475 U. S. 643, 649 (1986 It is well settled in both commercial and labor cases that whether parties have agreed to “submit a particular dispute to arbitration” is typically an “‘issue for judicial determination.’” It is similarly well settled that where the dispute at issue concerns contract formation, the dispute is generally for courts to decide When deciding whether the parties agreed to arbitrate a certain matter . . . courts generally . . . should apply ordinary . . . principles that govern the formation of contracts explaining the settled rule in labor cases that “‘arbitration is a matter of contract’” and “arbitrators derive their authority to resolved disputes only because the parties have agreed in advance to submit such grievances to arbitration distinguishing treatment of the generally non arbitral question whether an arbitration agreement was “ever concluded” from the question whether a contract containing an arbitration clause was illegal when formed, which question we held to be abatable in certain circumstances. If the formation dispute were typical in this case, these principles would neatly dispose of this case. But it is not. Instead, it relies on when (not whether) the CBA that contains the parties’ arbitration clause had been ratified. the party resisting arbitration, not only conceded the formation, but also the validity of the CBA’s arbitration clause during the period when the District Court considered Local’s demand to send this issue to an arbitrator, Granite Rock. Under such unusual circumstances and facts, parties will be required to reemphasize the proper framework for deciding when disputes are arbitrable under our precedents. Under that framework, if the court is dissatisfied about the parties’ decision to arbitrate the dispute, it may order arbitration. Appendix 6 Strike dispute Boys Markets, Inc. v. Retail Clerks Union, 398 U.S. 235 (1970) Being parties to a collective bargaining agreement, a Petitioner Company and respondent union had the provision or resolution via arbitration for all controversies concerning its interpretation or application, and that there should be no work stoppage, lockout, picketing, or boycotts during the life of the contract. However, failure of a petitioner to accede to a respondent’s demand, a dispute arose and a strike was called and the union begun to picket a petitioner’s establishment. A temporary restraining order was issued for an injunctive relief sought in a court after an unsuccessful effort by the Petitioner to invoke the contract's arbitration procedures. Eventually, arbitration was ordered in support for the strike and picketing after the union had removed the case to the Federal District Court. Read More