Arbitration

Introduction

**Arbitration** is a **consensual**, **private** and **binding** method of resolving disputes outside the ordinary courts. Although it shares features with **litigation** — it can be lengthy, costly and adversarial — it is prized for its **confidentiality**, **flexibility** and the parties' ability to **choose their own arbitrators**. This chapter examines the **characteristics** of arbitration, the framework of the **Arbitration Act 1996 ('AA')** (as amended by the **Arbitration Act 2025**, in force from 1 August 2025), the distinction between **ad hoc** and **institutional** arbitration, the **formalities** required for a valid arbitration clause (AA ss. 5 and 6), the **obligations** of the arbitrator (AA s. 33), the **nine-step arbitration process**, and the limited **grounds for challenge or appeal** against an award.

Assessment focus

For the SQE1 FLK1 Dispute Resolution assessment you must understand **when and how** arbitration is used as a method of dispute resolution and how it compares with **litigation** and with **ADR**. You should be able to identify whether an **arbitration clause** is enforceable (the requirement that it be **in writing** and refer to **'disputes'** rather than **'claims'** under AA ss. 5 and 6), explain the **non-excludable duties** of the arbitrator under **AA s. 33**, recognise the **separability** of the arbitration clause from the main contract, and advise on the **three limited grounds** for challenging an award and the **28-day** appeal window. Questions are single best answer questions (SBAQs) set in **realistic client-based scenarios**: you will be expected to **apply** these rules to commercial facts rather than merely recall them. This is a closed-book assessment.

Study tips

1) Remember the **golden formalities point**: an arbitration clause must be **in writing** and refer to **'disputes'** (not 'claims') — AA ss. 5 and 6 (frequently examined). 2) Memorise **AA s. 1** general principles: **fair resolution without unnecessary delay or expense**, **party autonomy**, and **minimal court intervention**. 3) **AA s. 33 is non-excludable**: the arbitrator must act **fairly and impartially**, avoid delay/expense, and provide a fair means of resolving the dispute. 4) Note **separability**: a challenge to the validity of the main contract does **not** automatically invalidate the arbitration clause. 5) Learn the **three grounds for challenge/appeal**: (i) substantive **jurisdiction**; (ii) **serious irregularity** causing substantial injustice; (iii) **appeal on a point of law** (non-mandatory — may be excluded). The appeal window is **28 days** from the date the arbitrator **signs** the award. 6) **Ad hoc v institutional**: ad hoc = no institutional fees, more flexibility, less certainty; institutional (e.g. **LCIA**) = set rules, more structure and certainty, possible fees.