Demystifying Arbitration: Taking the “Alternative” Out of Dispute Resolution for Commercial Clients in the Caribbean

Posted on February 6, 2018
in Publications, Legal Insights

Lex Caribbean

A growing number of economic stakeholders in the Caribbean increasingly value the link between maintaining a stable and efficient justice system and improving (a) local business activity, and (b) the region’s prospects of receiving crucial foreign direct investment (FDI). In the region, stories of heavy court caseloads and backlogs are common, and the sometimes uncertain, unpredictable and dilatory nature of the litigation process can serve as a deterrent to doing business in the region and hamper the effort to obtain FDI. Whilst governments have recognised the need to reform the system, and have taken active steps in that direction, actual implementation has been gradual rather than radical.

In this current environment, legal practitioners and clients alike are actively exploring alternatives to litigation in the region. Happily, this trend has led to the opening of arbitration and mediation centres in Jamaica (2015), the British Virgin Islands (2016), and, most recently, Barbados (2017). Bringing arbitration into the mainstream for dispute resolution, in the Caribbean context, is a sensible and progressive step. Arbitration enjoys a reputation internationally for being a preferred form of dispute resolution for and between commercial entities. Further, several Caribbean jurisdictions have enacted legislation resulting in legal regimes supporting both domestic and international arbitration. These developments augur well for improving the region’s profile as a nurturing environment for investment.

Arbitration is a binding form of consensual dispute resolution, in which courts play a limited, supporting role. Parties who incorporate arbitration clauses in their contracts, or agree to arbitrate subsequently, can benefit from several advantages:

  1. Time.Significantly, arbitration typically provides a speedier resolution of disputes. Thanks to more simplified procedures and a dedicated calendar fixing the timeline of each stage of the process, parties may spend less time and money resolving disputes. As a result, businesses can dedicate more time and resources to running their enterprises efficiently and profitably.
  2. Cost.Increased speed usually permits parties to manage and/or lower the expenses associated with the proceedings. Parties are able to factor certain quantifiable costs into their current budgets, and obtain more precise estimates of future costs when making projections and provision for contingencies.
  3. Flexibility.Parties to an arbitration are not beholden to cumbersome litigation processes. They are free to agree every aspect of procedure, as well as the level of detail to be included in the eventual award. Unlike judges, arbitrators are not constrained by involved statutory or common law rules of evidence. They may consider any evidence they deem relevant and issue an award based on relative fairness and/or equity between the parties.
  4. Expertise.In litigation, parties cannot control which judges are assigned to their matter. Moreover, specialist courts dedicated to certain types of disputes are in the minority. Parties to an arbitration agreement, on the other hand, may select a tribunal whose expertise is tailored to the nature and complexity of the dispute at hand. This is especially useful in highly technical or specialized areas. The tribunal should therefore spend less time (and expense) synthesizing the material and issues, and should be better placed to avoid arbitrary decision-making.
  5. Finality.One tremendous advantage of arbitrating disputes is that the successful party is able to quickly proceed to enforcement. There are very limited grounds for court interference, appeal or setting aside an award. Whilst some might consider an appellate process to be an important procedural safeguard, parties with strong views on this are free to agree to some element of appeal into the chosen procedure.
  6. Privacy & Confidentiality.In contrast to litigation, arbitration requires no public filings, no public hearings and no public record. The privacy of proceedings is normally presumed. However, parties may further strengthen this position by agreeing, as part of their arbitration agreement or subsequently during proceedings, to keep the proceedings and/or the award confidential. The benefit to parties desirous of avoiding publicity, especially in commercially sensitive disputes (e.g., where trade secrets are involved), is obvious.

In sum, arbitration offers commercial parties a viable – and increasingly mainstream – alternative to litigation in the Caribbean. Parties should, however, seek the appropriate legal advice before deciding if arbitration is the best choice for resolving their actual or potential disputes.

This article, current at the date of publication above, is for general purposes only. It does not constitute legal advice and should not be relied upon as such. You should not act upon any information contained herein without first seeking qualified legal advice on your specific matter.

For more information, contact Garth Patterson, Q.C., Partner, Tammi C. Pilgrim, Partner or your usual Lex Caribbean contact.