The benefits of the Business Arbitration Scheme for small businesses

How arbitration could help avoid lengthy court cases to resolve intellectual property infringements, employment conflicts, or late payment

Small businesses are one of the most valuable assets to the UK economy. The department for business innovation & skills recently reported that small businesses accounted for 99.3% of all private sector businesses in the UK and 48% of private sector employment.

Although most small businesses will take it for granted that a sound business strategy, adherence to rules and regulations and thorough risk assessments are all vital elements to the success of a company, it is important to note that an effective dispute management strategy is just as valuable.

Small businesses may face a variety of challenges over their lifetimes, but lengthy court cases do not need to be added to the list. Intellectual property and employment conflicts, or late payment issues can be managed without resorting to litigation.

Alternative Dispute Resolution (ADR) is an umbrella term for a whole range of processes and techniques that help parties resolve disputes without going to court. ADR usually involves the assistance of a neutral third party, and is often less formal, cheaper and quicker than litigation.

In addition to being highly time and cost efficient, ADR is also confidential and offers a discrete and neutral setting for the resolution of disputes.

The value of arbitration

Arbitration is one of the most popular forms of ADR; it is final and legally binding, and an arbitral award is enforceable in the same way as court judgement. It also offers limited grounds of appeal and provides the parties with the opportunity to agree on a tailored procedure overseen by an expert decision maker of their choice.

One of the greatest strengths of arbitration is that as a result of the New York Convention 1958, arbitral awards can be enforced transnationally. By contrast, court judgments are generally only enforceable where reciprocal enforcement arrangements exist.

With that in mind, the Business Arbitration Scheme (BAS), launched by the Chartered Institute of Arbitrators (CIArb) in 2015 for disputes between £5,000 and £100,000, delivers five tangible benefits which small businesses should consider before making their decision as to whether or not it is in their best interests to resort to litigation.

1. Fixed fees

First and foremost, BAS is a fixed fee scheme, giving parties certainty as to costs from the outset. A fee of £1,250 + VAT per party is payable upon commencement of the arbitration to cover CIArb’s administrative costs and the arbitrator’s fee.

2. Legally binding

Secondly, BAS offers the certainty of a final and legally binding award in less than 90 days from the appointment of the arbitrator.

3. Simple and flexible

Thirdly, the BAS rules were created with simplicity in mind, allowing ease of use and flexibility. The scheme is simple enough for businesses to present their own case without legal representation if they so wish. Formal procedural steps have deliberately been kept to a minimum.

4. Protected against liability for legal costs

Fourthly, the costs recoverable have been limited to protect parties against liability for their opponents’ high legal bills.

5. Experienced expertise

And finally, CIArb provides a specialist panel of arbitrators. All those listed on the BAS Panel are experienced dispute resolution practitioners, who have obtained a high level Diploma qualification at the Institute, and have demonstrated to CIArb that they have a suitable level of knowledge, skill and experience in their discipline.

The Scheme is administered by CIArb’s Dispute Appointment Service (DAS), and the appointment made by the Chairperson of the Applicant’s Local Branch of CIArb.

Businesses that wish to use BAS, or indeed any form of ADR, should consider drafting an appropriate dispute resolution clause into their commercial contracts or into terms and conditions, before any dispute arises.

A proactive approach is necessary because, unlike litigation, the use of ADR requires the agreement of the parties to the dispute, and that agreement is often harder to reach once the dispute has actually arisen. A free dispute resolution clause for BAS can be found here.

In the current climate of rising court fees, the benefits of ADR, together with the certainty that BAS brings in terms of cost, timeframe, and result, provide an attractive proposition for small businesses seeking more effective dispute resolution tools at their disposal.

Olivia Staines, PR and Communications Manager, CIArb

Keisha Williams, head of DAS, CIArb

For more information on the Business Arbitration Scheme, please call +44 (0)20 7421 7444, email das@ciarb.org, or visit our website at www.ciarb.org/das.

The Chartered Institute of Arbitrators (CIArb) is a leading professional membership organisation representing the interests of alternative dispute resolution (ADR) practitioners worldwide.

With 14,000 members located in 133 countries, CIArb supports the global promotion, facilitation, and development of all forms of private dispute resolution.

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