Using the Courts to determine your dispute (known as litigation) may force you to rely on commercially sensitive or other information concerning the internal workings of your business which you would rather not share with your competitors or the press.
Arbitration has therefore established itself as a popular alternative to the Courts when resolving commercially sensitive claims as it allows for more private and confidential handling of a dispute.
Any person can search the court’s register for a claim and make a written request (for a fee) to view all public orders and statements of case in an action. The court does not need to inform parties when a request for information is made.
It is possible to seek restrictive orders to preserve the confidentiality of certain information. However, these can be difficult to obtain given that the Court’s starting point is that proceedings should be open to allow the public to know that justice is being administered impartially.
Arbitration serves as an alternative, more private forum for resolving your dispute. Typically, arbitration is used when the parties have agreed (by inserting an arbitration clause in their agreements) that in the event of a dispute, arbitration (as opposed to the Courts) should be used to determine it. It is possible for parties to agree to use arbitration at any time. However, after a dispute has arisen, given that the relationship is likely strained or at an end, and suspicions are running high, it may not be possible to agree much at all, let alone the forum for resolving the dispute.
One of the key benefits of Arbitration is that parties can agree the rules which will govern the resolution of the dispute (e.g. the LCIA Rules) and have greater control over the process. Arbitration is also confidential and so the dispute is much less likely to be picked up in the press and monitored by your competitors / the public.
The cost of arbitration is comparable these days to the cost of using the Courts for larger claims. The process can be faster than litigation (as you are less tied to the availability of the Courts) and it may be tailored to the nature of the dispute (whereas the Court tends to provide more of a “one size fits all” model).
In essence, if you value confidentiality, it is worth considering whether to agree an arbitration clause at the outset of your business relationships as arbitration can be an effective form of determining a dispute which will minimise the reputational and other business risks associated with having your grievances aired in public.