[Note: Mr. Carrow limits his direct professional contacts relating to a particular dispute to counsel for an involved party regarding his selection as a party selected neutral, concurrently to counsel for the involved parties regarding his selection as sole arbitrator and concurrently to party selected neutrals regarding his selection as a neutral arbitrator. The following discussion is for general information purposes only.]

Arbitration is a well established dispute resolution process by which the parties agree to refer their existing or future disputes to a neutral third party for hearing and decision. The arbitration is conducted outside the formality and publicity of the courts of law and is generally considered binding upon the parties, with very limited right of appeal or review. "Judicial arbitration" is a court annexed procedure available in some jurisdictions which makes the arbitral award, which is the product of an abbreviated hearing before a lawyer, subject to nullification by any party within a limited time following award. Should the party refusing to accept the judicial arbitration award not do better at trial, consequences follow. References hereinafter to arbitration shall be to traditional binding arbitration.

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Arbitration can be conducted under either self-administered ad hoc or institutional procedures and rules. Since there are distinct differences between the two approaches, the distinguishing characteristics of each are worth noting. The arbitration language agreed to, either by way of an underlying contract or by the parties subsequent to the dispute arising, should take into account and reflect the ad hoc or institutional procedures and rules contemplated or agreed upon.

Ad hoc Arbitration    

Ad hoc arbitration is a proceeding that is not administered by others and requires the parties to make their own arrangements for selection of arbitrators and for designation of rules, applicable law, procedures and administrative support. Provided the parties approach the arbitration in a spirit of cooperation, ad hoc proceedings can be more flexible, cheaper and faster than an administered proceeding. The absence of administrative fees alone make this a popular choice.

The arbitration agreement, whether arrived at before or after the dispute arises, might simply state that "disputes between the parties will be arbitrated", and if the place of arbitration is designated, that will suffice. If the parties cannot agree on arbitral detail, all unresolved problems and questions attending implementation of the arbitration, for example "how the arbitral tribunal will be appointed", "how the proceedings will be conducted" or "how the award will be enforced" will be determined by the law of the place designated for the arbitration, i.e., the "seat" of the arbitration. Such an abbreviated approach will work only if the jurisdiction selected has an established arbitration law. The ad hoc proceeding need not be entirely divorced from its institutional counterpart. Oftentimes the appointment of a qualified and/or impartial arbitrator (actual or perceived) constitutes a sticking point in ad hoc proceedings. In such case, the parties can agree to designate an institutional provider as the appointing authority. Further, the parties can at any time in the course of an ad hoc proceeding decide to engage an institutional provider to administer the arbitration.

Parties wishing to include an ad hoc arbitration clause in the underlying contract between them, or seeking to arrive at terms of arbitration after a dispute has arisen, have the option of negotiating a complete set of rules, establishing procedures which fit precisely their particular needs. Experience has shown that this approach can require considerable time, attention and expense without providing assurance that the terms agreed will address all eventualities.

Other options available to parties wishing to proceed ad hoc, who are not in need of rules drawn specially for them, or of formal administration and oversight, include: (i) adaption of the rules of an arbitral institution, amending provisions for selection of the arbitrator(s) and removing provisions for administration of the arbitration by the institution, (ii) incorporating statutory procedures such as the United States Federal Arbitration Act (or applicable state law) or the English Arbitration Act 1996, (iii) adopting rules crafted specifically for ad hoc arbitral proceedings such as the UNCITRAL Rules (U.N. Commission on International Trade Law) or CPR Rules (International Institute for Conflict Prevention and Resolution), which may be used in both domestic and international disputes, and (iv) adopting an ad hoc provision copied from another contract. Risks accompanying two of the available options are worthy of particular note.

Incorporating rules drawn by an institutional arbitration provider, amending provisions for appointment of the arbitrator(s) and excising provisions requiring administration by the provider, carries with it the risk of creating ambiguities in the institutional rules as amended, despite efforts to redraw them to suit an ad hoc proceeding. It is also possible that in the adaptation process the parties may inadvertently create an institutional process. Copying an ad hoc arbitration clause from another contract may also result in later grief if the purloined clause was originally crafted for a particular, possibly unique, set of circumstances and/or was drafted taking into account different applicable arbitration law.

Properly structured, ad hoc arbitration should be less expensive than institutional arbitration and, thus, better suit smaller claims and less affluent parties. Ad hoc arbitration places more of a burden on the arbitrator(s), and to a lesser extent upon the parties, to organize and administer the arbitration in an effective manner.  A distinct disadvantage of the ad hoc approach is that its effectiveness may be dependent upon the willingness of the parties to agree upon procedures at a time when they are already in dispute. Failure of one or both of the parties to cooperate in facilitating the arbitration can result in an undue expenditure of time in resolving the issues. The savings contemplated by use of the ad hoc arbitral process may be somewhat illusory if delays precipitated by a recalcitrant party necessitate repeated recourse to the courts in the course of the proceedings.

 Institutional Arbitration    

Often, the contract between the parties will contain an arbitration clause which will designate an institution as the arbitration administrator. If the institutional administrative charges, which may be substantial, are not a factor, the institutional approach is generally preferred. The advantages of institutional arbitration to those who can afford it are apparent. Foremost are: (i) availability of pre-established rules and procedures which assure that arbitration will get off the ground and proceed to conclusion with dispatch; (ii) administrative assistance from institutions providing a secretariat or court of arbitration; (iii) lists of qualified arbitrators, often broken out by fields of expertise; (iv) appointment of arbitrators by the institution should the parties request it; (v) physical facilities and support services for arbitrations; (vi) assistance in encouraging reluctant parties to proceed with arbitration and (vii) an established format with a proven record. 

The primary disadvantages attending the institutional approach are: (i) administrative fees for services and use of facilities may be high in disputes over large amounts, especially where fees are related to the amount in dispute. For lesser amounts in dispute, institutional fees may be greater than the amount in controversy; (ii) the institution's bureaucracy may lead to added costs and delays and (iii) the disputants may be required to respond within unrealistic time frames.

There are many institutional arbitration administrators, some of which are associated with a trade association and many of which are independent. The London Court of International Arbitration, The Chartered Institute of Arbitrators (UK), The National Arbitration Forum (USA) and The International Court of Arbitration (Paris) are four of many.

Care should be taken in the selection of an arbitral institution. There are approximately 1,200 institutions, organizations and businesses worldwide offering institutional arbitral services. Some are excellent. Some are not as good. Some are bad. Many arbitral institutions are operating under rules not artfully drawn or rules which may be applicable to a particular trade or industry, but not to the existing or prospective needs of one or more of the parties. The greatest threat presented by the less prestigious arbitral institutions is the possibility that the institutional provider will be unable to deliver what motivated the parties to select institutional arbitration over ad hoc proceedings, i.e., a proper degree of supervision, which often is the key to whether the arbitration will prove successful.

 International Arbitration    

Pursuing, defending against or arbitrating an international arbitral claim typically presents problems and concerns substantially different than those encountered in a domestic arbitration. How does the international arbitration differ? Why is it that exceedingly skilled lawyers, who have had great success presenting or defending against court and arbitral claims at the domestic level, often have considerably less success in the international arbitral arena? Why should the party involved internationally take care to be represented by counsel versed in pursuing arbitral claims on the world stage?

The following observation, attributed to an international litigator by Christian Buhring-Uhle in his 1996 publication entitled "Arbitration and Mediation in International Business" succinctly, albeit somewhat cynically, describes some of the problems which may be presented in the course of international arbitral proceedings:

"International arbitration is at once serious business and great fun, but it isn't everyone's cup of tea. You may have to structure your arguments under a substantive law you have never considered before, appear in a hearing in a remote country before arbitrators trained in three different legal systems who have worked out some weird, fish-and-fowl rules of procedure which are revealed to you as you go along. If you are truly lucky, your case will depend on your skill in cross examining a brilliant rogue who insists he can express himself only in Greek or Danish or Thai, and who lengthily answers the questions he thinks you ought to have asked, through a befuddled interpreter, all the while the jet-lagged chairman's concentration seems exclusively focused upon his watch. Many litigators who perform superbly in their home courts are unable to function in this kind of environment."

The UNCITRAL Rules are designed with resolution of international disputes by way of ad hoc arbitration in mind. It is possible, for a fee, to have an institutional provider act as appointing authority when using ad hoc arbitration procedures such as the UNCITRAL Rules. A number of arbitral institutions, e.g., The London Court of International Arbitration (LCIA), offer rules specifically addressing problems peculiar to resolution of international disputes.

Mr. Carrow offers his services as an arbitrator with respect to disputes in the following areas of law: commercialconstruction, and business tort and related claims, both domestic and international.

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