Relationship to ordinary courts

In general terms, the courts have no objection to individuals settling their disputes on a voluntary basis but, at the same time, they are careful to maintain their supervisory role in such procedures. Arbitration agreements are no different from other terms of a contract and, in line with the normal rules of contract law, courts will strike out any attempt to oust their ultimate jurisdiction as being contrary to public policy. Thus, as has been stated above, arbitration proceedings are open to challenge, through judicial review, on the ground that they were not conducted in a judicial manner.

                The Arbitration Act 1950 allowed for either party to the proceedings to have questions of law authoritatively determined by the High Court through the procedure of case stated. The High Court could also set aside the decision of the arbitrator on grounds of fact, law or procedure. Whereas the arbitration process was supposed to provide a quick and relatively cheap method of deciding disputes, the availability of the appeals procedures meant that parties could delay the final decision and, in so doing, increase the costs. In such circumstances, arbitration became the precursor to a court case, rather than a replacement of it. The Arbitration Act 1979 abolished the case stated procedure and curtailed the right to appeal and, as has been seen, the Arbitration Act 1996 has reduced the grounds for appeal to the court system even further.

Small claims procedure

Arbitration proceedings begin with an individual filing a statement of case at the county court. This document details the grounds of their dispute and requests the other party to be summonsed to appear. There may be preliminary hearings, at which the issues involved are clarified, but it is possible for the dispute to be settled at such hearings. If no compromise can be reached at this stage, a date is set for the small claims hearing.

            Arbitration hearings are usually heard by the district judge, although the parties to the dispute may request that it be referred to the circuit judge or even an outside arbitrator. The judge hearing the case may, at any time before or after the hearing, with the agreement of the parties, consult an expert on the matter under consideration and, again with the approval of the parties, invite an expert to sit on the arbitration in the role of assessor.

            If one of the parties fails to appear at the hearing, the dispute can be decided in their absence. Alternatively, the parties may agree to the case being decided by the arbitrator, solely on the basis of documents and written statements.

            The arbitration procedure is intended to be a less formal forum than that provided by the ordinary courts and, to that end, the CPR 1998 provide that the strict rules of evidence shall not be applied. Parties are encouraged to represent themselves rather than make use of the services of professional lawyers, although they may be legally represented if they wish.

            The CPR 1998 give judges wide discretion to adopt any procedure they consider helpful to ensure that the parties have an equal opportunity to put their case. This discretion is not limitless, however, and it does not remove the normal principles of legal procedure, such as the right of direct cross-examination of one of the parties by the legal representative of the other party

            On the basis of the information provided, the judge decides the case and, if the claimant is successful, makes an award for appropriate compensation. A no-costs rule operates to ensure that the costs of legal representation cannot be recovered, although the losing party may be instructed to pay court fees and the expenses of witnesses. Judgments are legally enforceable.