Football is not arbitration’s only playing field - comment

The flexible dispute resolution method is used in many sectors, with key benefits, says Andrew Mackenzie, chief executive of the Scottish Arbitration Centre.
Hampden Park, headquarters of the Scottish Football Association. Picture: John Devlin.Hampden Park, headquarters of the Scottish Football Association. Picture: John Devlin.
Hampden Park, headquarters of the Scottish Football Association. Picture: John Devlin.

Arbitration is in the spotlight as Hearts and Partick Thistle dispute their relegation. As members of the Scottish Football Association, these teams must resolve such disputes by arbitration under the organisation’s articles of association. Arbitration is often the preferred method of resolving disputes in football and other sporting matters.

There is even an international private court (Court of Arbitration for Sport) to settle disputes relating to sport, which, for example, presides over all disputes in connection with the Olympic Games. However, arbitration is not just for football and other sport. It has benefits for all and has never been more attractive, given that the Covid-19 lockdown is impacting on court business and creating a backlog of litigation work.

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Arbitration is a cost-effective, confidential, fast and flexible method of resolving disputes outside of the courts. Parties to a dispute refer it to an arbitrator for a binding decision. The process requires the agreement of the parties, which is often provided for in a contract, so getting the dispute clause right is important.

Arbitration is a flexible and commercial process, says Mackenzie. Picture: Helen Pugh Photography.Arbitration is a flexible and commercial process, says Mackenzie. Picture: Helen Pugh Photography.
Arbitration is a flexible and commercial process, says Mackenzie. Picture: Helen Pugh Photography.
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Having said that, parties can agree at any time on the method of dispute resolution, so even if there is a contract in place that does not allow for arbitration, parties could still agree to arbitrate if a dispute arises. Scotland has a modern and innovative arbitration regime under the Arbitration (Scotland) Act 2010 and arbitration is growing here in respect of commercial disputes.

In addition to its use in football, arbitration is often the dispute resolution method provided for in leases, construction and energy sector contracts, employment matters and partnership agreements. Arbitration can be more cost-effective than litigation, often because of the ability to resolve the dispute quickly.

There is no requirement to have a substantive hearing, so there can be further savings where matters are determined on the papers. There are also restrictions on the right of appeal, which avoids spiralling costs often associated with appeals in the court. However, there are costs involved and the arbitrator has discretion to make an award allocating the parties’ liability for the recoverable arbitration expenses, and costs generally follow success.

Confidentiality

Arbitration is confidential, which contrasts with the public nature of litigation. Unless agreed otherwise, all parties to the arbitration have a duty to maintain confidentiality. A breach of confidentiality is actionable and any resulting losses can be recovered through the courts.

If there is an application to the court in respect of arbitral proceedings, anonymity is often sought so the court hearings are held in private and parties’ names are anonymised in the decision. These strict provisions on confidentiality, extending to references to the court, are particularly advantageous in respect of sensitive disputes that parties want to remain private.

Arbitration is often faster than litigation and, unlike with mediation, parties are guaranteed a decision on their dispute at the end of the process. Disputes can be disposed of in a matter of weeks with sufficient cooperation of the parties.

Arbitration is a flexible and commercial process allowing parties to drive matters forward where there is agreement. Parties can appoint an arbitrator with an appropriate degree of practical experience, such as an engineer or a surveyor, or select a solicitor, an advocate or a retired judge with legal expertise.

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Where parties cannot agree on an arbitrator, the contract will normally provide the mechanism for the appointment of the arbitrator, often involving a third party, such as the Scottish Arbitration Centre. Parties can also agree on the procedure and approach to hearings. If no agreement is found, procedure is a matter for the arbitrator and he or she must have regard to their duty to act fairly, impartially and without unnecessary delay and expense.

Where a substantive hearing is required it can be arranged quickly and in suitable business premises, ensuring a more commercial approach and a less formal setting than in court. Of course, with the Covid-19 lockdown, a physical hearing is not possible. This has not posed a problem for arbitration, though, as substantive hearings have moved online in recent months using platforms such as FaceTime, Skype, Microsoft Teams and Zoom.

So, arbitration might be in the headlines because of football, but this flexible dispute resolution method is used in many sectors. For those less familiar with its benefits, I would encourage careful consideration of arbitration before kicking the ball into court.

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