Many business leaders and in-house counsel say that they strongly prefer alternatives to litigation. So why is litigation still the default process for most commercial disputes?
My previous Slaw column looked at the question of whether lawyers are “hijacking” mediation and arbitration. I speculated that one of the problems may simply be that lawyers are risk-averse. This leads them to follow the well-trodden path of litigation, rather than exploring less well-known alternatives.
Some recent research may shed light on the apparent disconnect between the dispute resolution parties say they want and what they actually do.
Pre-empting and Resolving Technology, Media and Telecom Disputes, an international dispute resolution survey published in 2016 by the School of International Arbitration, Queen Mary University of London, found that mediation is the stated preferred way to resolve disputes in the technology, media and telecom (TMT) fields.
Most companies surveyed said they encourage mediation in their dispute resolution policies, either on its own or as a step before litigation or arbitration. Arbitration is preferred over litigation, especially for international disputes.
Seventy-five percent of the organizations surveyed had a dispute resolution policy. Those companies reported that mediation was the preferred method of dispute resolution, followed closely by arbitration. Even those with no formal policy said they encouraged mediation. Very few of the survey respondents (11%) said they discouraged mediation (vs. 29% that discouraged litigation).
The most common disputes reported in the TMT field related to IT system development and implementation; collaborations, joint ventures or partnerships; intellectual property; and licensing. More than 90% of those surveyed said international arbitration was well-suited for TMT disputes. And more than 80% said they expect the number of arbitrations to increase.
The most attractive features of international arbitration were enforceability, the ability to avoid a foreign jurisdiction, expertise of the decision maker, and confidentiality and privacy. The biggest negatives were cost, unsatisfactory results and limited remedies, difficulty finding qualified arbitrators and delays in getting a final result.
Interestingly, customers favoured arbitration much more strongly than suppliers. The suppliers, especially in the IT sector, preferred litigation or expert determination.
However, the responses were quite...