Fergus Ewing: Reform could make Scotland the place to resolve business disputes

Published on Sunday 1 February 2009 19:08

ECONOMIC growth is the Scottish Government's key priority. As such, a modern system of arbitration can play a small but important role in bringing more legal business to Scotland.

In the 19th and 20th centuries, arbitration was, for some time, considered to be the method of dispute resolution of choice in the business world. The advantages of arbitration then were virtually the same as they are now, namely:

&149 Parties to a dispute can choose an arbitrator who has special expertise or knowledge of the subject matter of the dispute;

&149 Proceedings are usually confidential, which may be important for reasons of commercial sensitivity;

&149 Arbitration can provide flexible procedures to a greater extent within the parties' control, with location, timing and other arrangements planned to suit their particular needs;

&149 The arbitrator's decision or award is final and binding without further court hearing of the issues and may be enforced like a court decree;

&149 Within countries that have ratified the New York Convention on the recognition and enforcement of foreign arbitral awards, agreements to arbitrate and so awards made in other countries will be recognised without review of the issues, offering advantages to those engaged in international or cross-border trade.

In recent years, use of arbitration in Scotland has declined as a method of dispute resolution. Scotland is one of only a few developed nations that lacks a comprehensive statutory basis for its arbitration law. As a result of gaps in the law, difficulties in establishing exactly what the law is and the stated case procedure allowing the Courts to intervene, this country is not considered an attractive venue in which to conduct arbitration.

The key priority for the Scottish Government is to develop and enhance sustainable economic growth in order to generate wealth and prosperity. Any country with thriving economic activity, or aspirations to increase its economic activity, also requires efficient, affordable and just systems for dispute resolution.

In the interests of continuing and increasing economic growth, it is imperative that methods that facilitate the speedy, effective and just resolution of those disputes at an economically viable cost are available.

For that reason, the Government has brought forward a Bill to reform and modernise arbitration law in Scotland. The Bill, published on Friday, will put the majority of the general Scots law of arbitration into a single statute covering domestic and international arbitration. It will replace existing statutory provisions relative to arbitration and restate, codify and aim to improve the existing law, both common law and statutory.

In future anyone in Scotland, or doing business in Scotland, should be able to access, relatively easily, the principles and rules governing the law of arbitration in understandable language. This will bring Scotland into line with the rest of Western Europe and the major commercial countries of the rest of the world.

The objectives of the Bill are to: Clarify and consolidate Scottish arbitration law, filling in gaps where they exist; provide a statutory framework for arbitrations that will operate in the absence of agreement to the contrary (though some elements will be mandatory, as with the UK Arbitration Act 1996); ensure fairness and impartiality and minimise expense and ensure the process is efficient.

We hope the Bill will encourage the use of arbitration domestically and will attract international arbitration business to Scotland. We also hope it may encourage industries and professions to set up their own low-cost arbitration schemes, such as that operated by Abta and the Scottish Motor Trade Association.

We cannot guarantee that simply reforming the law will increase the use of arbitration domestically or attract international arbitration business. To a large extent that is up to those who see benefits in using the process as a method of commercial dispute resolution.

What I can say with some certainty is, if we do not reform and modernise the law, arbitration in Scotland may wither and die, at a time when its use is increasing in other parts of the world.

&#149 Fergus Ewing MSP is the Scottish Minister for Community Safety.