REUTERS | Alex Domanski

Delay in arbitration: is it really so bad?

Arbitration users’ perceptions of the speed of the arbitral process have been a bit of a roller-coaster. Initially arbitration was trumpeted as being speedier than litigation, but users have increasingly expressed frustration at the delays experienced in obtaining an arbitrator’s award. Earlier this year, Berwin Leighton Paisner (BLP) surveyed arbitration users regarding delay in the arbitral process, and if its findings are not shocking, they are certainly worthy of a raised eyebrow.

BLP’s survey: the key facts

74 people responded to BLP’s questionnaire, representing private practitioners and in-house counsel from across the globe. Questions focused on delay in appointment of the tribunal, the time taken to complete the procedural timetable and how long users had to wait for an award.

Dissatisfied users

The key findings include:

  • There was much dissatisfaction with the time taken to form the tribunal. Many respondents blamed their opponents’ behaviour, but over 30% felt the arbitral institution or their nominated arbitrator were responsible.
  • The greater the sums at stake, the longer the arbitral process tends to be.
  • Most arbitrations take 12–18 months to get to closing submissions. However, many take two years or more: 27% of respondents said a quarter of their cases took that amount of time, while 12% said three-quarters of their disputes took that long.
  • While many awards are published within a year of final submissions, the majority of respondents said that applied to less than 50% of their cases.
  • 86% of respondents thought that three-six months after completion of the procedural timetable was an acceptable target time for the publication of the award, dropping to 30% for six-nine months. No-one thought a delay of more than a year was appropriate. Most respondents thought that their clients would be less patient.
  • 66% of respondents were dissatisfied with the time taken to produce an award. Most respondents thought awards were taking longer to produce than five years ago.
  • However, the vast majority of dissatisfied users made no representations about the delay, because they feared prejudicing their client’s case. Only a fraction of those who complained were happy with the response they got from the tribunal or arbitral institution. 58% felt that the institutions should do more to ensure that awards are published promptly.

Possible solutions

When asked how parties may seek to address these problems a number of options were raised:

  • A minority of respondents said they drafted arbitration clauses that impose deadlines for various stages in the process.
  • Almost 50% of respondents make inquiries of potential arbitrators’ availability before appointing.
  • Many respondents agreed that a solution would be to appoint a sole arbitrator or a less experienced or popular arbitrator. However, very few said that they would decide on the appointment of an arbitrator for those reasons alone.
  • 85% of respondents felt that rewarding the tribunal for producing its award expeditiously should not be necessary. Respondents generally favoured penalising the tribunal financially for late awards. The majority felt that the best solution was for arbitrators to block out time immediately following the final procedural step to produce the award, and a significant number of respondents said they would be happy for the parties to be asked to pay cancellation fees if the arbitrators finished early.

Where does that leave us?

The survey confirms that there is a problem with delay in arbitrations. Clients have a choice as to whether to use arbitration, so that needs to be addressed. However, what is surprising, and perhaps disappointing, is that in many cases the solution to the problem is in the hands of the parties, but they choose not to take it.

Delays with the appointment of the tribunal are inherent in the arbitral process. Parties in dispute will naturally cause problems for each other, but delays can be minimised by providing for a sole arbitrator. However, most respondents would not chose to appoint a sole arbitrator to avoid delay. As with much in arbitration, perception counts for a lot and the perceived benefits of a three-person tribunal clearly still weigh heavily on users’ minds.

Similarly, if the parties want to avoid delay caused by arbitrators being too busy to produce an award, they can simply appoint less-popular and therefore less experienced arbitrators. That would give “new” arbitrators more experience and increase the available pool of experienced arbitrators. But again it is safety first and parties become the architects of their own misfortune by appointing people who they know won’t have the time to produce an award speedily.

Perhaps most telling is that despite widespread dissatisfaction with the delay in producing awards, most respondents did not complain. One is tempted to ask how things will change if no-one complains. Arbitration is supposed to be attractive because the parties control the process. If parties do not complain about receiving bad service because of fears of retribution, that is a matter of concern.

Leave a Reply

Your email address will not be published. Required fields are marked *

Share this post on: