What is ‘The Yorkshire Arbitration Scheme’?
The ‘Yorkshire Arbitration Scheme’ is an easy to use and transparent service for resolving disputes of low to medium value (£5,000 to £100,000) or, in the case of a commercial property rent review dispute, not in excess of £25,000 per annum payable and excluding other charges. It has the same legal standing as a County Court judgment. ‘The Yorkshire Arbitration Scheme’ has been developed with a fixed cost and ease of use in mind. The matters in dispute can be dealt with as set out below. (See “How much will it cost?”
What is Arbitration?
Arbitration is a process which provides the parties with a decision on their dispute. That decision, usually called an Award, is final and enforceable in the same way as a court judgment. An Arbitrator is a neutral person or persons agreed on by the parties, or appointed by someone at their request, who will consider the evidence and decide the dispute. This may be a lawyer or someone with other qualifications such as an architect, an accountant, a surveyor or an engineer. Arbitration is a flexible process which can be adapted to suit the dispute, to keep down costs and avoid delay.
Who can use ‘The Yorkshire Arbitration Scheme’?
‘The Yorkshire Arbitration Scheme’ is intended for use on medium to low value claims within the range indicated above. It can be used for both business disputes and for disputes involving the general public if all parties to the dispute agree. However, if you wish to use this service for a complex issue, then we strongly recommend that you consider appointing a solicitor to assist you. (See “Do I have to use a solicitor?”). In essence, the ‘Yorkshire Arbitration Scheme’ is available to anyone who has a dispute, providing that all parties to the dispute agree to use the process.
Why should I use ‘The Yorkshire Arbitration Scheme’?
When two parties fall into a dispute, the first reaction is to instruct a solicitor and issue a County Court summons. A claim of say £25,000 will cost between 4.5% and 5% (£1250.00) of the money claimed including fees and interest that is just to issue a summons through the courts. Then there is the cost of lodging documents and answering questionnaires, which could add, another £2 ,000.00 approximately as the case progresses and so the costs continue to rise.
In addition, there is also the matter of legal representation, which may be significant and add to the overall costs. Under current County Court guidelines, even if you win, you will not get all your costs back. In most County Court cases, if you win outright, recouping of costs is in the region of between 50-60%. Consider this with the length of time for a case to go through the courts, often counted in years, and from this you will see the ‘Yorkshire Arbitration Scheme’ starts to make sense. Unless the dispute is particularly complex or involves a number of parties, you will generally receive a decision on your dispute within 30 days from final submissions if longer than 89 days.
The decision of the appointed Arbitrator is legally binding and enforceable and will normally be upheld by the courts should the award be challenged.
Under arbitration, subject to the decision of the Arbitrator, all legal costs may be recoverable, not a percentage as with the County Courts, up to a maximum of £1,000.00 unless agreed otherwise by the parties.
Arbitration is a private and confidential process. No one other than the parties need know anything about the dispute.
Who Appoints the Arbitrator?
The Chairperson or, in his absence, the Secretary, of the Local Branch of the Chartered Institute of Arbitrators will select an Arbitrator from an approved panel or in the event of a conflict of interest the President of The Chartered Institute of Arbitrators shall make the appointment from the approved panel. The Arbitrator will be a professional person currently working in and with expert knowledge of your discipline and industry.
Do I have to use a Solicitor?
This is a personal choice. If your dispute is complex or you are a business where, by not using a solicitor there is an impact on the working day, it then makes sense to leave the work to someone more experienced. However, if it is only a small dispute or a simple, straightforward dispute, there is nothing stopping the parties acting for themselves. This is the benefit of the ‘Yorkshire Arbitration Scheme’. Just remember as long as you ask for the costs to be awarded, these can be, including up to £1,000.00 of solicitor’s costs, dependent on the final decision of the Arbitrator, unless the parties agree otherwise.
How much will it cost?
Setting aside the parties’ own costs, there are three service levels available under ‘The Yorkshire Arbitration Scheme’.
Level One is a documents only process. Each party sets out in writing their claim and response together with any supporting evidence. Other documentation may be required by the Arbitrator for matters of clarification, and these will be simultaneously communicated to both parties. The cost of this level is £2,000.00, £1,000.00 paid by each party (exclusive of Value Added Tax). This sum is paid to the Arbitrator at the time of referring the dispute. This fee does NOT allow for any meetings with the parties or their representatives.
Level Two is where the parties decide that they would benefit from a hearing, or meeting, with the Arbitrator. The additional fee over Level One cost for a half-day hearing or meeting is £500.00 (exclusive of Value Added Tax), plus the Arbitrator’s expenses, which the Arbitrator will set out to the parties to the dispute before the hearing or meeting takes place.
Level Three is where a site visit is required. This might arise in construction disputes where the parties feel the Arbitrator would benefit from seeing the site to better appreciate the matters in dispute. Photographs are often sufficient but, on the occasions that they are not, a provision can be made for a site visit (maximum time one-half day). The site visit will be an additional fee of £500.00 (exclusive of Value Added Tax), plus expenses, over the Level One or Level Two costs.
So, in conclusion, for a dispute up to £100,000 limited to a documents only arbitration the Arbitrator’s costs will be £2,000 (exclusive of Value Added Tax). This will produce a decision that has as much legal standing as a judgement in the County Courts. If you have both a hearing and site visit, then the Arbitrator’s costs would be £3,000.00 (exclusive of Value Added Tax), plus expenses. Expenses cover such things as meeting venue hire, travel costs and overnight accommodation, if appropriate.
All costs are subject to VAT where applicable.
What if my dispute exceeds £100,000?
The parties are not excluded from using ‘The Yorkshire Arbitration Scheme’ if the value of the dispute is over £100,000. However, the costs might change depending on the complexity of the dispute and amount of work required by the Arbitrator. When a dispute is referred to the appointment panel, and it is over £100,000, then the parties will be advised if the cost does not fall within the scheme as set out above. An appointment can still be made, if all parties agree to proceed.
How long will it take?
It is recognised that not all disputes are the same and each has its own requirements. However, the following is given as guidance so that users can gauge the timescale of the process.
Once agreed, or if an arbitration agreement exists, the Localt Branch of the Chartered Institute of Arbitrators will make an appointment within seven days of receipt of an application (see application form) to use ‘The Yorkshire Arbitration Scheme’.
Following the appointment, the Arbitrator will notify the parties within seven days that he/she has accepted the appointment and will issue a timetable for the arbitration, subject to the information that has been supplied at the time. This timetable is flexible and can be altered as the arbitration proceeds, preferably by agreement, if unforeseen external events impact upon the previously agreed timetable.
It is for the Arbitrator to set the timetable in order to ensure an expedient decision to the dispute(s) is achieved. The target time is 89 days from receiving the dispute referral by the Arbitrator to the issuing of a decision. However, this is very much dictated by the receipt of the final submissions, in which case it will be 30 days from that date, if it appears that the 89 day period will be exceeded.
A full set of rules can be found under the heading of ‘The Yorkshire Arbitration Scheme Rules’.
Who appoints the Arbitrator?
The appointment will be made by the Chairperson of the Local Branch of the Chartered Institute of Arbitrators or, in his/her absence, the Branch Secretary. If specialist knowledge is required then this should be specifically noted on the request for appointment document (see application form).
If you are entering into an agreement with another party to receive or provide services of any kind then you can specify within that agreement that any dispute that may arise out of the agreement is resolved by arbitration. A suggested arbitration clause is:-.
Any dispute or difference arising out of or in connection with this contract shall be determined under the rules of ‘The Yorkshire Arbitration Scheme’ by appointment of a single Arbitrator to be agreed between the parties, or failing agreement within fourteen days, after either party has given to the other a written request to concur in the appointment of an Arbitrator, by an Arbitrator to be appointed by the Chairperson of the Local Branch of the Chartered Institute of Arbitrators.
This may be the most cost effective paragraph you will ever include in your terms of business!