The process of Arbitration
Updated: Apr 17
Arbitration is a process for the settlement of disputes in which an independent and impartial arbitrator makes a decision after considering the representations of the parties. This includes both the landlord and tenant in a rental dispute. The arbitrators decision is called an award and is normally final and binding on the parties. The award is written and is enforceable by the courts. The Arbitration Act 1996, together with subsequent amendments, contains statutory provisions that govern the arbitration process.
Typical Building Rental Arbitration:
The arbitration commences when one party to the rental dispute seeks to have that settled by arbitration. Usually upon advice from the registered valuers, both parties agree on the sole arbitrator. A written agreement is entered into with the sole arbitrator and this often includes the arbitrators basis for his or her fee.
One of the first tasks the arbitrator carries out is to arrange a teleconference with the parties and sometimes this includes the valuers.
To clarify the terminology, once the sole arbitrator has been appointed, the registered valuer settles into the role of expert witness. In the past it was not unusual, although incorrect, to have the parties valuers also referred to as arbitrators.
Typical matters discussed in a teleconference include provision of a copy of the the lease agreement, along with the timetable for the valuers and all the parties to exchange, by email, written submissions. These submissions including the detailed evidence used for the rental valuation. Timetable provision is then made some one or two weeks following for rebuttal submissions, these usually agreed to be based on factual matters only. Other teleconference matters include who will be attending the hearing and options for the venue. Also, whether or not a transcript of the hearing is necessary or just a recording made by the arbitrator.
Typical rental matters may only involve up to a one day hearing. More complicated rental matters may take longer and involve legal counsel. leading their expert witnesses.
Where there are just the valuers and no legal counsel, the often used process in the hearing is for the lessor or landlords appointed valuer to present their submission and talk to the matters considered most important for the sole arbitrator to consider.
The other parties valuer then gets a chance to ask questions of the first valuer as may the sole arbitrator.
Then, the reverse presentation takes place, along with the questioning.
At the conclusion of the hearing the valuers will have an opportunity to either verbally sum up and suggest the best evidence for the arbitrator to consider or they may wish to make written submissions.
Submissions on costs of the arbitration are often asked for at the hearing conclusion but again these can be reserved by the parties until the interim award is released. If the parties have come to agreement on the costs then this should be advised at the hearing conclusion.
The interim award will deal with all matters in dispute except the costs and how these costs may be allocated between the parties.
Sometimes both parties agree that the cost will be split evenly, irrespective of the interim award result. However, it is usual for the parties to reserve making a decision on costs until they have seen the interim award.
Offers to settle the rental dispute that have not been conveyed to the arbitrator, can also be a matter for costs that the arbitrator is required to consider in that final award.
It is unusual for arbitration awards to be successfully challenged in the courts. The court will usually uphold an award, as the parties agreed in contract to appoint their own arbitrator and they must abide by their decision, even if one of the parties believes it is wrong.
The interim and final awards are private and confidential to the parties and their advisors, which usually include the valuers.
Nevertheless, awards have a habit of surfacing and being circulated. An arbitrator though, is bound by the Act to keep the decision confidential, unless released from this by both parties to the rental dispute.