About Arbitration and Arbitration in Scotland
Arbitration, a form of alternative dispute resolution, is a non-judicial process for the settlement of disputes where an independent third party – an arbitrator – makes a binding decision. The role of an arbitrator is similar to that of a judge, though the procedures can be less formal and an arbitrator is often an expert in their own right.
Aside from mandatory arbitration prescribed in legislation, arbitrations may only proceed if all parties agree to go to arbitration. Typically there will be a clause in a contract that states what dispute resolution mechanism is to be used in the event of a disagreement. In the absence of a contract, for arbitration to take place all parties must agree. You cannot force the other parties to enter into such an arrangement. Arbitration is suitable for many different types of dispute of a civil nature.
The costs involved in arbitration vary. The arbitrator will set a fee, often an hourly rate. Costs will vary depending on the fee of the professional whether a hearing is required, venues and legal representation.
Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration is often agreed in the terms of employment or in commercial contracts and is also used in family matters.
Parties often seek to resolve their disputes through arbitration because of the potential advantages over the courts. Advantages include:
- Arbitration can be cheaper and more flexible, more commercial and less formal than court
- Arbitration is often faster than litigation in court, and a time limit can be placed on the length of the process
- Unlike court rulings, arbitration proceedings and arbitral awards are confidential
- The ability to select an arbitrator with an appropriate degree of practical experience
- Unlike in court, there are very limited avenues for appeal of an arbitral award, which limits the duration of the dispute and any associated liability
- Due to the provisions of the New York Convention 1958, arbitral awards are generally easier to enforce in other nations than court judgments
Arbitration has a long history in Scotland, spanning some seven hundred years, and yet in the Arbitration (Scotland) Act 2010 (“the Scottish Act”) Scotland has one of the most modern systems of arbitration in the world.
The Scottish Act is similar to the 1996 Act in use in England and Wales, and will feel instantly familiar to international arbitration practitioners. Indeed, the Scottish Courts have held that English case law applying to the Act in force there since 1996 can be used to interpret the Scottish Act. This provides predictability and certainty to the Scottish regime. However, there are some key differences:
- Arbitration in Scotland is a confidential process, and unlike the position in most jurisdictions, the duty to treat proceedings as confidential is backed up by legislation. The obligation to treat all matters relating to the arbitration confidentially is enshrined in the Scottish Act, and is has been strongly backed by the Scottish courts
- If a challenge is made to court in respect of an arbitration, the courts will keep the parties’ names, and details of the case anonymous, so as to preserve confidentiality. It is possible to persuade the Court that the case should not be reported at all
- There are no appeals on points of law where the arbitration is an international arbitration. Where the arbitration is ‘domestic’ (concerns two parties based in Scotland), the parties can exclude ‘legal error’ appeals by agreement
- To reduce unnecessary court challenges, the Scottish Act limits appeals to the Court, and from the Court to the appeal court (the Inner House). There is no appeal to the Supreme Court.
There are a number of reasons why parties may be attracted to Scotland. Advantages include the new state-of-the-art law, the cost effective nature of arbitration in Scotland due to the flexibility of the law and restricted appeal processes, being an English-speaking jurisdiction and separate from England in terms of arbitration (this neutrality may be attractive to foreign parties in dispute with English firms), Scotland being a very attractive venue in which to arbitrate, with good transport links and accommodation and our mature legal system to back up arbitration, with judges who appreciate the need to support the arbitral process, without unwanted interference.
The Centre is a non-profit company limited by guarantee. Our premises based in Haymarket in Edinburgh offer modern, centrally located, and affordable facilities for arbitration hearings, mediation, and other dispute resolution methods, and for conferences, events, and meetings.
The Centre also offers an arbitral appointments service in ad hoc cases, where the selection of an arbitrator is made by the Court of the Scottish Arbitration Centre (COSAC), which acts independently from the Board of the Centre. The Centre has a panel of arbitrators, which COSAC will consider when choosing a suitable arbitrator for the dispute.
The Centre is also involved in the provision of training events. This year, following the success of hosting the ICCA Edinburgh Congress in 2022, the Centre has hosted Scotland’s inaugural Edinburgh International Arbitration Festival (ArbFest 2023). The festival brought practitioners and experts to Edinburgh from around the world to to discuss contemporary arbitration topics including the future of arbitration. We are currently organising ArbFest2024. Click here for more information on ArbFest2024 where you can purchase your passes now. If you are interested in being a sponsor for ArbFest2024 please see here.
We actively engage with lawyers and other professionals involved in dispute resolution, attending and speaking at conferences and meetings locally and worldwide. We work with various international arbitration bodies. We also provide Scotland chapters with international arbitration guides. In addition, we work with the UK and Scottish Governments on arbitration-related matters, collaborating with them where possible. The Centre continues to develop and grow and our work is having an impact internationally.
The Centre has built a network of strong ties with the domestic and international arbitration community, and their prospective client bases. We understand that arbitration business is generally on the increase in Scotland, with the Centre’s clauses increasingly being used as the default dispute clause in contracts.
With its distinguished legal tradition, innovative legislation and the Centre, Scotland is well-placed to compete as an attractive and cost-effective venue for arbitration on the global stage. The Centre also has some of the most competitive prices in Europe for the administration of arbitrations under its Rules.