Five Reasons why SMEs should use the Business ... - Solicitors Group

Five Reasons why SMEs should use the Business Arbitration Scheme

By Keisha Williams

The Chartered Institute of Arbitrators (CIArb) has launched a new fixed cost arbitration scheme, aimed at disputes valued between £5,000 and £100,000.

The scheme, entitled the Business Arbitration

Scheme, was developed by the Institute with small businesses in mind, at a time when many small business owners expressed dismay over the price of litigating through the courts.

Small and medium sized enterprises (SMEs) are often embroiled in legal problems just as much as larger corporations, except without the benefit of in-house lawyers, a human resources team, and, crucially, the financial means to protect their legal interests. Disputes can range from intellectual property and employment conflicts, to, most frequently, chasing late payments.

However,

notwithstanding the reputational damage and cost implications that can result from pursuing a court action, alarmingly there are still many SMEs who have never heard of arbitration, or any form of alternative dispute resolution (ADR).

A recent survey by IPSE, the Association of Independent Professionals and the Self-Employed, lays bare the extent of the problem: only 5.5% of its members are aware of ADR. Whilst the recent wave of court fee increases may prove the driving force in getting SMEs to seek alternatives, the incentives of arbitration and ADR have always been there.

Arbitration, one of the most common forms of ADR, is often cheaper and quicker than litigation and has the added advantage of being confidential. It also offers limited grounds of appeal and provides the parties with the opportunity to agree on a tailored procedure overseen by an expert decision maker of their choice.

Most notably, as a result of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (known as the New York Convention), arbitral awards may be enforced in the same way as a court judgment in any of the 156 countries which have ratified the Convention. By contrast, court judgments are generally only enforceable where reciprocal enforcement arrangements exist.

With that in mind, the Business Arbitration Scheme (BAS) further provides an attractive proposition for small businesses. BAS delivers what SMEs want from dispute resolution: speed, certainty of costs, and certainty of result.

Here are the top five reasons SMEs should be contracting to use BAS in the

event disputes arise.

The Chartered Institute of Arbitrators (CIArb) | 12 Bloomsbury Square | London | WC1A 2LP | United Kingdom T +44 (0)20 7421 7444 F +44 (0)20 7404 4023 E [email protected] W www.ciarb.org Registered Charity No: 803725

1. Fixed Fee

BAS is a fixed fee scheme, providing certainty as to the costs of the arbitration at the outset of the case. A fee of £1,250 + VAT per party is payable upon commencement of the arbitration to cover CIArb’s administrative costs and the arbitrator’s fee. An increment of £500 + VAT per party is payable where a half day hearing or site visit is required.

2. Decision in 3 Months

The length of arbitration proceedings is a particular concern for parties, especially given its direct impact on costs and productivity. BAS offers the certainty of a final and legally binding award in less than 90 days from the appointment of the arbitrator.

3. Simplicity

The BAS rules were created with simplicity in mind, allowing ease of use and flexibility. The scheme is simple enough for businesses to present their own case without legal representation if they so wish. Formal procedural steps have deliberately been kept to a minimum, facilitating the adoption of the simplest procedure tailored to match the dispute in question.

The word count of each side’s

statements of case and witness statements has been limited to a total of 5,000 words, whilst the hearing bundle (if a hearing is required) shall be no more than one A4 lever arch file.

4. Limitation on Legal Costs

The amount of legal costs recoverable under the Scheme is limited to £1,000, unless the parties agree otherwise. The winning party may also recover the fixed fee paid by them. The costs recoverable have been limited to protect parties against liability for their opponents’ high legal bills.

5. Specialist Panel of Arbitrators Appointments under the Scheme are to be made by the Chairperson of the Applicant’s Local Branch of CIArb from a Branch approved panel within 10 days of the commencement of the arbitration. In the event of conflict, the appointment may also be made by CIArb’s President. All those listed on the BAS Panel of Arbitrators are experienced dispute resolution practitioners, who have obtained a high level Diploma qualification at the Institute, and have demonstrated to CIArb that they have a suitable level of


Knowledge, skill and experience in their discipline. The Scheme is administered by CIArb’s Dispute Appointment Service.

The Scheme has already gained traction with lawyers and small businesses alike. A recent survey conducted by the Institute indicated that within a pool of UK Fellows and small businesses: 

94% found the Scheme to be an attractive proposition for small businesses involved in low to medium value disputes;



93% found the cost of the Scheme appealing;



98% found the short timetable of benefit; and



96% found the Scheme easy to understand.

With increased court fees providing a catalyst for change in the way SMEs approach business disputes, it is hoped that ADR will be propelled into the spotlight once more as a quick, reliable, and cost effective option for the resolution of disputes. Solicitors will continue to have a critical role to play in ensuring that ADR solutions, such as the Business Arbitration Scheme, are on the agenda when strategising with clients. For more information on the Business Arbitration Scheme, please contact CIArb’s Dispute Appointment Service (DAS) by email: [email protected] or call +44 (0)20 7421 7444.

The Chartered Institute of Arbitrators (CIArb) is a leading professional membership organisation representing the interests of alternative dispute resolution (ADR) practitioners worldwide. With 14,000 members located in 133 countries, CIArb supports the global promotion, facilitation, and development of all forms of private dispute resolution.
