Arbitration

Arbitration is a type of alternative dispute resolution.

Arbitration may be suitable if you want a private, legally binding decision from an independent person without going to court or a tribunal.

Advantages

• Arbitration is usually quicker, less stressful and cheaper than going to court.
• You can use arbitration to decide part of a wider dispute. This can reduce the number of issues that need to be decided by a tribunal or court, and can reduce the overall cost.

Disadvantages

• Both parties usually need to agree to arbitration instead of other ways to resolve the dispute. Some contracts specify that arbitration must be used to resolve disputes.
• Although arbitration is cheaper than court, for some types of dispute it can be expensive, for example if the disagreement is complicated or if there is a lot of money at stake.
• An arbitration decision is binding but may need further legal action to enforce it.
• Appealing an arbitration decision is not usually allowed.

Step 1: Formally agree to arbitration

If you’d like to use arbitration to resolve a dispute, contact the other party to suggest it.  Each side will need to agree in writing to use arbitration to resolve a dispute and to treat the outcome as legally binding.

Step 2: Choose an arbitrator

Check your lease or contract to see if it says how an arbitrator should be appointed if there is a dispute.

If the lease does not say how to choose an arbitrator, ask the other party to agree how one should be appointed. Try to choose someone with expertise or experience in the subject being disputed, such as right to manage or building safety.

If you cannot agree, the Law Society and Royal Institution of Chartered Surveyors (RICS) both offer arbitration services:

• The Law Society: appointing an arbitrator
• Royal Institution of Chartered Surveyors (RICS): arbitration services

Step 3: Choose a location

Agree a neutral, convenient location for the arbitration session. The session can also happen online.

Step 4: The arbitration session

The arbitrator starts by explaining the procedure and ground rules of the arbitration session. Both parties present their views of the dispute, uninterrupted by the other.

After listening to both sides and looking at relevant evidence, the arbitrator makes an award. This is the arbitrator’s final written decision.

Step 5: Outcomes

Most arbitration decisions are final and legally binding. However, if the losing party does not follow the decision, further legal action may be needed to enforce it through a court.

You and the other party are both responsible for paying the cost of arbitration. You’ll usually agree these costs at the start.

However, the arbitrator’s decision can include an instruction on how to split the costs, if you and the other party agree to this at the start of the process.

Most arbitration decisions are final and cannot be appealed unless the correct process was not followed.

If a party fails to follow an arbitration decision, the other side can sue for breach of contract.