Decades after arbitration was replaced by adjudication as the main means of resolving commercial disputes out of court, the Scottish Parliament’s Arbitration (Scotland) Act 2010, due to come into force this week, is tipped to bring the method back into favour.
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The new Act codifies arbitration law into statute for the first time, introducing new rules that require proceedings to conclude “without unnecessary delay”, which aims to remove the time-lags that sometimes saw arbitrations running for several years and turned businesses away from them.
Brandon Nolan, Scottish chair of the Chartered Institute of Arbitrators, said that the changes would make arbitration more attractive than adjudication again because it had the advantage that decisions were legally binding.
He called on the Scottish Government to back up its new legislation by inserting arbitration clauses into public sector contracts on a regular basis.
But Charles Brien, a senior associate at law firm Tods Murray, criticised the new legislation for removing flexibility by imposing a fixed set of rules.
He said: “The Act brings in a ‘one solution fits all’ approach in an attempt to speed up the process, but... it may become a catalyst for a new approach to dispute resolution...
“Mediation, which is driven by the needs of the parties involved and a philosophy for compromise, could prove to be a far more popular option.”
Nolan called this argument “absolute nonsense”, saying that the Act was not prescriptive and stressed the importance of proportionality.