UK Contract? Today Is The Day To Review Your Dispute Resolution Provisions

• Published date: 06 September 2020
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Proskauer Rose LLP
• Author: Ms Dorothy Murray

Whether you are a regular user of arbitration, a default user of your local courts or pick and choose a forum depending on the deal it always pays to take a cold look at those choices. Do they still work for you? Will they work in the future when a dispute arises Have you taken into account developments in law and current best practice?

Today is the day to review your dispute resolution (DR) provisions. Why? We give you 5 good reasons.

1. Brexit (aka enforcement and service)

The UK left the EU on January 31, 2020, and the current transition period is due to expire on December 31, 2020. After this date, EU law ceases to apply within the UK unless expressly preserved (and the terms of any future deal are still under debate). The result is that UK judgments may no longer be automatically enforceable in EU Member States and vice versa Enforcement will still be possible but local law procedures, such as an action on a debt, are typically more expensive and less certain.

The enforcement of arbitration awards, however, is largely unaffected by Brexit. All EU jurisdictions and the UK are parties to the New York Convention, which severely limits the grounds to challenge the enforcement of an arbitration award.

So, if you intend to do cross border deals or trade post Brexit within the EU and have previously relied on national courts arbitration could be a good option.

If you do stick with national courts, ensure parties appoint a local process agent to accept service of proceedings as the EU Service Regulation with its simplified service options may no longer apply starting in 2021.

2. The post-pandemic dispute resolution landscape (aka speed and cost)

Despite the English Courts' valiant attempts to operate virtually and with social distancing, we predict that once business as usual resumes, there will be a significant backlog of cases leading to lengthier times to trial.

Arbitration may provide quicker resolution of disputes in these circumstances. Tribunals can be more flexible, being able to adopt paper only processes, virtual hearings and other procedural measures to streamline the process and reduce costs. The lockdown has shown this, with common arbitral rules providing suitable and sufficient powers to tribunals, and the market collaborative creating and pooling resources (see, for example, the Virtual Arbitration forum).

Our experience of standard commercial claims is that costs are largely comparable between court proceedings and arbitration. It has...