What is arbitration?

Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute.

Arbitration is different to mediation because the arbitrator's decision ("award") is binding on the parties. It is enforceable, upon registration with the relevant court, as a judgment of the court. There are very limited rights to seek judicial review of the award.

Paul Cutler - Arbitrator 

I am a arbitrator accredited by both the Resolution Institute and also the NSW Bar Association.

I have practised as a commercial litigation lawyer since 1996 and as a barrister since 2006.

Before that, I was an industrial chemist for over 10 years and have research and industry experience in water/wastewater, enviornmental chemistry and in the food industry.

Get in touch

If you would like to discuss any aspect of arbitration or to find out my rates and availability

Advantages of arbitration

Faster and cheaper

Arbitration is generally faster and less expensive than litigation

Private

Arbitrations are held in private and there is no public record of the dispute.

Flexible

The parties are able to choose the rules that will govern the conduct of the arbitration.

Legally binding

The Arbitrator's decision is binding on the parties and enforceable.

Choice of arbitrator

The parties are able to choose the arbitrator

Some arbitration FAQ

Do I have to agree to arbitration?

Yes, arbitration gets its authority from the consent of the parties. In many instances, commercial agreements contain enforceable arbitration clauses. Even if there is no arbitration clause, parties can agree to arbitrate their dispute.

Why would I agree to arbitration?

For many commercial disputes, arbitration is an  alternative to litigation. It is usually faster than litigation, less formal and cost effective approach. 

It provides the parties with greater control of the process than a court hearing and unlike litigation it is held in private.

 

How to choose an arbitrator?

The two main ways that arbitrators are appointed are either: (a) by the parties in dispute who can choose an arbitrator; or (b) by an industry body. It is not unusual to see a clause in a contract which says something along the lines of "an arbitrator appointed by [named professional body].

Often the choice is based on the arbitrator's knowledge or expertise in a particular area. It is common for architects, engineers and builders to act as arbitrators.

What rules and procedure apply?

Litigation is conducted according to the rules of practice and procedure. In NSW this is usually the Uniform Civil Procedure Rules and the Civil Procedure Act.

In arbitration, the parties can agree the rules which govern the process.  Typically the parties adopt a set of published "arbitration rules" (see for example the Resolution Institute Arbitration Rules 2020). Often parties agree that the rules of evidence aren't to be strictly applied.

The parties may agree on other procedural matters such as whether there should be time limits on oral evidence or whether the matter should be dealt with on the papers alone.

 

Where can we have the arbitration?

It really depends on what the parties want and how complicated (or lenghty) the arbitration is likely to be.

It is possible to have the arbitration in person in which case the parties will need to find a venue. There are many suitable places available for hire and often professional firms have good facilities in their conference room.

The arbitration can also be conducted online using Zoom or Teams or a specialist platform such as Immeditation

In some cases it is possible to conduct the arbitration on the papers only.

What if I am not happy with the outcome?

Once an arbitral award is registered in a court of competent jurisdiction it is final. There is a very limited right of appeal on the basis that there has been an error of law. This is similar to an appeal from a judgment. Please see section 34A Commercial Arbitration Act 2010.

What is an arbitration agreement?

Section 7 of the Commercial Arbitration Act 2010, defines  "arbitration agreement"as an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement and it must be in writing.

A typical arbitration clause

The parties to a commercial contract often include an arbitration clause in their agreement. 

A typical arbitration clause (this is the Resolution Institute one) will say something like: "Any dispute or difference whatsoever arising out of or in connection with this contract or the performance or non-performance of the obligations of the parties under it shall be submitted to arbitration in accordance with, and subject to, the Resolution Institute Arbitration Rules"

The agreement may also stipulate the location of the arbitration and the manner of selecting an arbitrator.

A basic arbitration agreement

The parties can still agree (submit to) arbitration after a dispute has arisen by entering into an arbitration agreement. This agreement can be as simple as (and again this is from the Resolution Institute): "We the undersigned, agree to refer to arbitration under the Resolution Institute Arbitration Rules all disputes or differences arising out of or in connection with: [#insert brief description of contract, project or relationship under which disputes or differences have arisen or may arise]". More complex agreements are possible.

Are arbitration clauses enforceable?

The short answer is "yes". There are numerous judgments (see for example Cessnock City Council v Aviation and Leisure Corporation Pty Ltd [2012] NSWSC 221) where it is found that: 

 "Where parties to a commercial contract agree at the time of the making of the contract, before any disputes have yet arisen, to refer disputes arising under their contract to an expert for binding determination, the construction of the dispute resolution clause should be approached liberally and not narrowly. The starting point is that the parties should be held to their bargain. It is for the party opposing the stay to show good reason why the action should proceed and the onus is a heavy one."