We have seen a steady increase in the use of arbitration in Scotland over the past decade, including to resolve real estate disputes.

Arbitration is an alternative to court action. Instead of one party suing another, parties instead submit their dispute to an independent, impartial third party known as an Arbitrator. The Arbitrator essentially acts as a judge and produces a determination, which is binding on both parties and is capable of being enforced.

So, why are parties more and more inclined to use arbitration rather than traditional litigation?

1. Confidentiality

One of the main differences between arbitration and litigation is confidentiality.

Unlike court proceedings, which can be attended by the public and reported on by the media, all evidence, hearings and awards in an arbitration are private. This can be attractive for many reasons, not least if a dispute involves commercially sensitive information.

2. Flexibility

Arbitration is inherently flexible. First of all, the procedure to be followed is flexible and can be tailored to suit the circumstances and parties.

In addition, the identity of the Arbitrator can be agreed between parties (either in the original contract between them or at the point of arbitration). So, parties can decide what attributes and expertise would be most fitting for the dispute at hand. For example, parties to a dilapidations claim may choose to appoint an experienced building surveyor as Arbitrator.

3. Certainty

There are limited rights to appeal the decision of an Arbitrator. Accordingly, an Arbitrator's determination generally represents a more reliable "end point" to a dispute than the decision of a court, which is generally open to appeal (and the risk of being overturned).

4. Speed

Arbitration is regularly embarked upon as a matter of agreement rather than forced by one party upon another (as is usually, though not always, the case with court proceedings). This often means that both parties are fully engaged with the process, which can help matters progress more efficiently.

In addition, the flexibility around procedure means that there is scope to tailor the timetable to ensure that time is not wasted. This, and the fact that the scope to appeal an Arbitrator's decision is limited, means that arbitrations are usually (though not always) done and dusted in less time than the equivalent court proceedings.

5. Cost

In many instances, arbitration can be a financially efficient way of resolving a dispute.

Streamlining the procedure can cut out some of the costs involved in court proceedings and, in some instances, an Arbitrator can even make a decision based on papers alone (without any need for an oral hearing to take place).

If you require advice on the best way to resolve a real estate dispute, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies' contact.


Gareth Hale