International Arbitration V Litigation: Is ADR Really Better?

How many times have we heard the old cliches about arbitration being faster, cheaper and preferable to litigation? Well, that may be true in some cases, but often a party may be better off with litigation. Making that determination depends on multiple factors. This article will address seven of them.

  1. Speed – Surveys note a growing perception that arbitration is no faster, no cheaper and less reliable than litigation. In theory, there are many methods to speed up arbitration, such as using just one arbitrator, rather than three; restricting discovery, witnesses and submissions; submitting the case on the pleadings; and so forth. However, parties may feel such limitations inhibit their ability to fairly present their case and receive a correct decision. Consequently, such methods may be less suitable for more costly or complex disputes.
  2. Cost – Resolving a US$10 million dispute in the International Court of Arbitration, using three arbitrators, will cost $397,367 in administrative costs and arbitrator fees; a US$5 million dispute with one arbitrator will cost $132,349; but those figures don’t include fees for attorneys and experts. As with speed, the parties may reduce cost by limiting evidence, procedures and number of arbitrators; but, again, any savings must be weighed against the possibility of compromised justice.

When looking for a location for arbitration for international commercial disputes, one of the major criteria should be a location that conveys a feeling of impartiality amongst all the parties involved. This should facilitate the agreement to engage in the process by mitigating this roadblock. What is needed is a location within a country whose legal framework is designed to facilitate the arbitration procedure. Such a country is Canada. With a long history of neutrality, multiculturalism and diversity, Canada is also a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Because of this, Canada enjoys reciprocated rights of enforcement of arbitral awards with any other jurisdiction in a member state which is a party to this convention. As of October 1, 2009, this accounted for 142 of the 192 member states of the United Nations.

The provincial and territorial governments, as well as the Canadian Federal government, have adopted international arbitration laws based on the 1985 model the United Nation’s Commission on International Trade Law drafted. Because of this, the various Canadian international arbitration laws reflect this model law with minor variations. Also, Canadian courts give strong deference to international arbitration agreements by staying court proceedings and enforcing rewards.

Arbitration is initiated by an agreement between parties in writing. In arbitration lawyer , one party may compel another party into arbitration if it is within their initial or subsequent contract to do so. If there exists one or more clauses of an agreement to arbitrate in a broader or more comprehensive document, the clause to arbitrate will survive the termination of the main contract. The tenor of the United Nation’s Commission on International Trade Law’s 1985 Model Law is such as to limit court intervention in international commercial arbitration. A Canadian court must pass any case onto arbitration when any of the international commercial arbitration legislative acts apply; unless it finds that an arbitration agreement is null and void, defunct or non-performable.