how arbitration works

7/31/2019 How Arbitration Works

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What is Arbitration?

The Center makes available a Guide to WIPO Arbitration, which may beordered ordownloaded(PDF).

Arbitration is a procedure in which a dispute is submitted, by agreement ofthe parties, to one or more arbitrators who make a binding decision on thedispute. In choosing arbitration, the parties opt for a private disputeresolution procedure instead of going to court.

Its principal characteristics are:

Arbitration is consensualArbitration can only take place if both parties have agreed to it. In the caseof future disputes arising under a contract, the parties insert an arbitrationclausein the relevant contract. An existing dispute can be referred toarbitration by means of asubmission agreementbetween the parties. Incontrast to mediation, a party cannot unilaterally withdraw fromarbitration.

The parties choose the arbitrator(s)Under theWIPO Arbitration Rules, the parties can select a sole arbitrator

together. If they choose to have a three-member arbitral tribunal, eachparty appoints one of the arbitrators; those two persons then agree on thepresiding arbitrator. Alternatively, the Center can suggest potentialarbitrators with relevant expertise or directly appoint members of thearbitral tribunal. The Center maintains an extensive roster ofarbitratorsranging from seasoned dispute-resolution generalists to highly specializedpractitioners and experts covering the entire legal and technical spectrumof intellectual property.

Arbitration is neutralIn addition to their selection of neutrals of appropriate nationality, partiesare able to choose such important elements as the applicable law, languageand venue of the arbitration. This allows them to ensure that no partyenjoys a home court advantage.

Arbitration is a confidential procedure
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TheWIPO Rulesspecifically protect the confidentiality of the existence ofthe arbitration, any disclosures made during that procedure, and the award.In certain circumstances, the WIPO Rules allow a party to restrict access totrade secrets or other confidential information that is submitted to thearbitral tribunal or to a confidentiality advisor to the tribunal.

The decision of the arbitral tribunal is final and easy to enforceUnder the WIPO Rules, the parties agree to carry out the decision of thearbitral tribunal without delay. International awards are enforced bynational courts under theNew York Convention, which permits them to beset aside only in very limited circumstances. More than140 Statesare partyto this Convention.

How arbitration works

Most people even those well versed in the world of defamation and medialaw are unfamiliar with arbitration and how it works. If youre facinga libel action and are considering your options, its worth understanding theEarly Resolution scheme and what benefits it can offer. Heres our quick

guide to the process.The goal of arbitration: early resolution

The outcome of most media disputes depends on four things:

Whether the words complained of actually refer to the claimant If the words are really defamatory as opposed to being just inaccurate
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Whether the words are honest comment or a statement of fact, and What the words complained of actually mean to the average

reasonable reader

In many cases, the issue of meaning will not be determined until trial, bywhich time both parties will have incurred substantial legal costs. The ERScheme has been set up to enable key issues like those set out above to be determined by experts, under a voluntary arbitration system, at theoutset of a dispute. Experience shows that once the meaning of the wordshas been determined or other key issues resolved, settlement of thecomplaint follows rapidly.

Arbitration can resolve disputes more quickly

The ER Scheme recognises that libel disputes need to be resolved quickly.Under the Scheme disputes are referred to an expert Arbitrator or Panel

within days of an arbitration agreement being signed by the parties. We atER help with the drafting of this arbitration agreement and the selection ofan Arbitrator from the list of experts we have in this field. The parties mayalso agree that the expert Arbitrator should be assisted by two lay assessors(the Panel). ER then helps with the instructions that need to be sent to the

Arbitrator and what issue(s) need to be determined &mdash usually"meaning". The Arbitrator/Panel Chair will then direct the parties tosubmit and exchange written Submissions on the law and the actual

meaning of the words complained of. The Arbitrator/Panel will then meetand consider the words/images complained of, plus the parties writtensubmissions. Within a few days of the meeting, the Arbitrator/Panel Chair

will send the parties the decision on meaning or any other key issue,together with brief reasons. The overall time taken to resolve key issues isusually 28 days from the appointment of the Arbitrator/Panel Chair.

Your dispute could be resolved within 28 days.

Arbitration avoids the huge legal costs of a trial

ER Members, who are likely to be authors, journalists, publishers,broadcasters, public authorities, academics, scientists, NGOs and bloggers,will be told if their case is susceptible to early resolution through the ERscheme. ER will then help them achieve early resolution througharbitration. By joining ER, Members will be expected to share thePrinciples of ER. These normally require commercial defendants
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participating in the Scheme to pay the initial cost of determining themeaning of the words complained of or other key issues in the proceedings.

If the arbitrator rules in a Members favour, the Member will be expectednot to seek to recover any initial legal costs or the cost of the arbitrationfrom an unsuccessful claimant. But note: you need only opt for the ERscheme where there is a genuine ambiguity or real uncertainty about the

words you wrote AND they are clearly defamatory. The initial arbitrationcosts should not normally exceed 2,500 plus VAT a tiny fraction of thecost of going to a trial with all the attendant uncertainty that that entails.

If the arbitrator rules in the claimants favour, you will still be better offopting for the ER scheme than going to trial. You will be able to make animmediate offer of amends, pay less in damages, avoid the uncertainty of a

jury trial and save what may be hundreds of thousands of pounds in legalcosts.

The initial arbitration costs should not normally exceed 2,500 plus VAT a tiny fraction of the cost of going to trial.

An arbitrator is appointed

ER has drawn up a list ofexperts in media lawwho are ready and willing toarbitrate key issues in libel actions. Those on the list of experts are retired

Court of Appeal or High Court Judges and/or practising Queens Counsel inthe law of defamation. All of them possess wide experience of mediadisputes and have agreed to arbitrate key issues at fixed fees. Onceapproached by an ER member or an Associate law firm acting for aclaimant or defendant, we will, if asked to, approach the other side andinvite them to participate in the voluntary ER Scheme. If both parties agreeto the voluntary resolution of a key issue, such as meaning, bothsides will be sent a draft Arbitration Agreement including the List ofExperts. The parties will then be invited to agree an arbitrator from the list,

but in the absence of agreement ER will appoint the arbitrator after

confidential discussions with each party.

The ER list of experts are all retired High Court judges or QueensCounsel and ideally suited to resolve libel disputes.

The arbitrator makes a binding ruling
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All communications with ER are entirely confidential and without prejudice.Rulings by the arbitrator or panel are not appealable and are binding on theparties. Each party is encouraged to set out the meaning or meaningscontended for, and ensure that their written submissions deal succinctly

with any factual and/or legal issues arising. They will also be expected toagree the likely consequences of a finding or ruling in favour of one party orthe other. After the arbitrator or panel has delivered a finding/ruling, theparties will be invited to enter into without-prejudice negotiations, or forthe defendant to make an offer of amends, or for the claimant todiscontinue the complaint. If the parties have not agreed a settlement

within 14 days, either party has the right to refer any consequential issueback to the arbitrator or panel for a further and final ruling.

Rulings by the arbitrator or panel are not appealable and are binding on the

parties.

Read the full rules of the scheme for more information

For full details of the arbitration process and its terms and conditions,please seethe rules of the scheme.

The rules of Early Resolution

1. Key issues susceptible to early resolution

Is the Claimant identifiable from the words complained of? Are the words defamatory of the Claimant? What is the natural and ordinary meaning of the words complained to

the ordinary reasonable reader? Are the words honest comment/opinion on a matter of public interest

or a statement of fact, which needs to be justified? Are the words complained of words which have been published in the

public interest? Has the Claimant, if normally resident outside the United Kingdom,

suffered substantial damage to his/her/its reputation in the UnitedKingdom from the words complained of?

What damages should be awarded to the Claimant if, having agreedliability, the parties cannot agree on the quantum of damage?

Any other issue that the parties have agreed should be arbitratedunder the Arbitration Act 1996 and the Arbitrator is happy toarbitrate.
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2. Confidentiality

All correspondence/communications by either Party with Early Resolution(ER) leading up to the signing of an Arbitration Agreement or anyinstructions to ER by either Party or from the Parties to the

Arbitrator/Panel Chair shall be entirely without prejudice to any Courthearing and the eventual resolution of the Dispute.

3. Binding nature of findings/rulings

The Parties agree to be bound by the Arbitration Act 1996 and accept thatany decision of the Arbitrator/Panel on any key issue shall be binding on

both Parties even if the Dispute does not settle and reverts to courtproceedings.

4. Time

Both parties and ER agree that time is of the essence and shall use allreasonable endeavours to comply with the following time scales:

1.Agree an Arbitrator/Panel Chair within seven days of signing anArbitration Agreement

2.Agree instructions to the Arbitrator/Panel within 7 days of theArbitrator/Panel being agreed and appointed

3. Send written submissions to the Arbitrator/Panel Chair and ERwithin 14 days of his/her appointment and exchange the same withthe other side

4. The Arbitrator/Panel Chair shall arrange a deliberation/meetingwithin seven days of receipt of written submissions and notify theParties of the date

5.Write up and record the decision of the Arbitrator/Panel and submitit to both parties within seven days of the Arbitration meeting

6. Immediately on receipt of the Arbitrators/Panels decision enter intowithout prejudice negotiations to resolve the dispute

7. If agreement is not reached within 14 days of the Arbitration decisionbeing handed down report back to the Arbitrator for furtherconsequential rulings or advice

5. Failure to agree an arbitrator from List of Experts


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If the parties are unable to agree an Arbitrator from the List of Experts heldby ER then either party may put forward names of other possible experts. Ifthe parties cannot agree an Arbitrator after seven days, ER will ask theParties to list the Experts in order of preference and then appoint theExpert who commands most support.

6. Panel with two lay assessors

The parties may agree that the Arbitrator should be assisted by two layassessors. In such event, the Arbitrator shall appoint two independent andneutral lay assessors (one male and one female) from friends or colleaguesand notify the Parties of their names, sex and professions and anything else

which might cause a conflict of interest or be relevant to their appointment.Either Party can object, giving reasonable grounds, to a lay assessor so

chosen and the Arbitrator shall select someone else in his/her place.

7. Instructions to Arbitrator/Panel Chair

Within seven days of the Arbitrator or full Panel being agreed, the Partiesshall, with the help of ER, agree instructions to the Arbitrator/Panel Chairon what the key issue(s) is/are and what needs to be decided by the

Arbitrator/Panel. In the case of a meaning dispute the Parties may set outthe contended for meanings or their preferred meaning and ask the

Arbitrator/Panel if there is some other or a lesser defamatory meaning than

those contended for by the parties. Instructions shall, when agreed by theParties, be sent to ER which shall forward them to the Arbitrator/PanelChair with copies of the words complained of.

8. Written submissions/hearings

Each side shall be invited to make written submissions to theArbitrator/Panel on matters of law or fact within a set time frame. Any legalsubmissions may be limited by the Arbitrator to a certain number of pages.

Any submissions relating to matters of fact or what the words actually

mean to the average reasonable reader shall be attested to by the Partymaking the submission and that Party may be cross-examined on any factsset out in the submission by the other Party with the consent of the

Arbitrator. The Arbitrator shall retain an absolute discretion to order anoral hearing if thought appropriate but this shall be the exception ratherthan the rule.


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9. Arbitration Decision

The Arbitrator shall notify both parties of any decision on meaning or anyother key issue within seven days of the Arbitration meeting. Either Partymay then revert to the Arbitrator for clarification on any part of thedecision but all correspondence must be copied to the other party and ER.The Parties shall then enter into without prejudice negotiations to try tosettle the dispute as soon as possible. If the Parties have not resolved thedispute after 14 days from the decision being handed down then eitherParty may apply to the Arbitrator for consequential or further rulings orseek help from ER.

10. Consequential or further Rulings

If the Parties cannot agree the wording of a correction and/or apology or itspositioning or the issue of damages, either Party shall have the right toapply to the Arbitrator for:

1.A fair and accurate summary of the decision handed down (no morethan a 150-word summary)

2.Where the correction and apology should reasonably appear and if itdoes not, how much more might be added in damages if thecorrection/apology does not so appear

3.And what the damages should be with any possibleJimmy Naildiscount if the Respondent has made an offer of amends.

Prior to making an award of damages, the Arbitrator shall have the powerto call on the Parties to serve written submissions on the issue of quantumof damages. The Arbitrator cannot order an apology to appear in aparticular place or exactly what any apology/correction should say. The

Arbitrator is limited to a fair and accurate summary of the decision made.

11. Costs

Costs shall also fall within the category of consequential rulings. TheArbitrator may award the Claimant his/her reasonable costs and order thatthese be paid by the Respondent. The Arbitrator may not order that anysuch costs be anything other than a reasonable, proportionate and fairamount to recompense the Claimant for bringing the claim. The Arbitratormay not award any success fee to the Claimants solicitors if they are

working on a CFA basis nor award the Claimant a sum in respect of any


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ATE insurance premium taken out by the Claimant if and only if theRespondent has agreed to pay the cost of the Arbitration and given up anyright to recover costs from the Claimant if the Claimant is unsuccessful.Prior to any award of costs, the Arbitrator may call on the parties to submitschedules of costs.

Advantages and disadvantages

Parties often seek to resolve their disputes through arbitration because of anumber of perceived potential advantages over judicial proceedings:

when the subject matter of the dispute is highly technical, arbitratorswith an appropriate degree of expertise can be appointed (as one cannot"choose the judge" in litigation)

arbitration is often faster than litigation in court

[citation needed]

arbitration can be cheaper and more flexible for businesses[citation needed] arbitral proceedings and an arbitral award are generally non-public, and

can be made confidential[5] in arbitral proceedings the language of arbitration may be chosen,

whereas in judicial proceedings the official language of the country ofthe competent court will be automatically applied

because of the provisions of theNew York Convention 1958, arbitrationawards are generally easier to enforce in other nations than court

judgments in most legal systems there are very limited avenues for appeal of an

arbitral award, which is sometimes an advantage because it limits theduration of the dispute and any associated liability

Some of the disadvantages include:

arbitration may become highly complex[citation needed] arbitration may be subject to pressures from powerful law firms

representing the stronger and wealthier party[citation needed] arbitration agreements are sometimes contained in ancillary agreements,

or in small print in other agreements, and consumers and employeesoften do not know in advance that they have agreed to mandatory

binding pre-dispute arbitration by purchasing a product or taking a job if the arbitration is mandatory and binding, the parties waive their rights

to access the courts and to have a judge or jury decide the case
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in some arbitration agreements, the parties are required to pay for thearbitrators, which adds an additional layer of legal cost that can beprohibitive, especially in small consumer disputes[citation needed]

in some arbitration agreements and systems, the recovery of attorneys'fees is unavailable, making it difficult or impossible for consumers oremployees to get legal representation[citation needed]; however mostarbitration codes and agreements provide for the same relief that could

be granted in court if the arbitrator or the arbitration forum depends on the corporation for

repeat business, there may be an inherent incentive to rule against theconsumer or employee[citation needed]

there are very limited avenues for appeal, which means that anerroneous decision cannot be easily overturned

although usually thought to be speedier, when there are multiplearbitrators on the panel, juggling their schedules for hearing dates inlong cases can lead to delays

in some legal systems, arbitrary awards have fewer enforcement optionsthan judgments; although in the United States arbitration awards areenforced in the same manner as court judgments and have the sameeffect

arbitrators are generally unable to enforce interlocutory measuresagainst a party, making it easier for a party to take steps to avoidenforcement of member or a small group of members in arbitration dueto increasing legal fees, without explaining to the members the adverse

consequences of an unfavorable ruling rule of applicable law is not necessarily binding on the arbitrators,

although they cannot disregard the law[citation needed] discovery may be more limited in arbitration or entirely nonexistent the potential to generate billings by attorneys may be less than pursuing

the dispute through trial unlike court judgments, arbitration awards themselves are not directly

enforceable. A party seeking to enforce an arbitration award must resortto judicial remedies, called an action to "confirm" an award

although grounds for attacking an arbitration award in court are limited,efforts to confirm the award can be fiercely fought[citation needed], thusnecessitating huge legal expenses that negate the perceived economicincentive to arbitrate the dispute in the first place.
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