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Arbitration: The Last Word in Saving Time and Money

By James W. Durham and John W. Hinchey
March 24, 2011

In today's business climate, every general counsel is being required to do more at a lower cost. To the bottom line of a business, legal costs look no different than any other overhead cost. In other words, less is better; and lower costs equal higher profits. For many years, arbitration of business disputes provided for a more cost-effective and timely resolution of disputes than litigation. However in recent years the business community has complained that arbitration of commercial disputes is becoming just as time-consuming and costly as litigation. Consequently, businesses and their general counsel are looking for other options to resolve disputes.

The legal community has taken notice. Fulbright & Jaworski commissioned an independent research firm in 2009-2010 to survey corporate counsel in the United States and the United Kingdom on their experiences with litigation and arbitration ([email protected].) Some of the highlights of this study were:

  • More than 25% of the responders expect the number of disputes their companies face to rise in the next year;
  • In disputes that are not international in character, and when given a choice, 58% of all responders would opt for litigation; only 38% would choose arbitration; and approximately 10% say, “it depends”;
  • More than 40% of corporations plan to increase their budgets for electronic discovery in coming years, and they firmly believe that applicable discovery rules should be stricter in limiting the scope of electronic discovery.

As to corporate attitudes toward international arbitration, White & Case, acting with the Queen Mary School of International Arbitration, University of London, has just published the results of its 2010 survey on corporate attitudes and practices regarding international arbitration (www.arbitrationonline.org/research/2010/index.html). Reporting on complaints about excessive time and cost, the White & Case survey reported:

  • Disclosure of documents, written submissions, constitution of the tribunal and hearings are the main stages of the arbitral process that contribute to delay; and
  • According to the respondents, parties contribute most to the length of the proceedings, but it is the tribunal and the arbitration institution that should exert control over them to keep the arbitral process moving quickly.

As further evidence of the widespread concern among business users of domestic and international arbitration, virtually every arbitration provider institution have commissioned similar studies or published protocols, guidelines and rules ' all with a view to addressing business users' concerns about excessive time and cost of arbitration to resolve commercial disputes.

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