The use of arbitration in the construction industry in England and Wales: an evaluation of its continuing role following the Arbitration Act 1996

Due to the influence of the construction industry on the country’s economy, resolution of disputes is very important. The Arbitration Act 1996 was passed to remedy the complaints that had made arbitration unpopular. Comments from academics and practitioners indicated that construction arbitration remained unpopular and procedural innovation anticipated had not materialised. This study considers arbitration in the construction industry in England and Wales and evaluates its use and role since the passing of the Arbitration Act 1996. It also explores the potential use of arbitration against the use of litigation, statutory adjudication, mediation and expert determination having regard to variables of size of claim and dispute. A pragmatic theoretical perspective was followed, using a survey strategy. Initially a quantitative methodology was used, with structured questionnaires sent to users of arbitration, their legal advisers and construction arbitrators. To provide extension and clarification of matters revealed from questionnaires, interviews were conducted with construction arbitrators and construction lawyers, thereby incorporating a qualitative methodology. The study shows a significant decline in the use of construction arbitration, but comparing the two periods investigated, there was less of a decline for the more recent period, compared to the earlier period. As a dispute resolution method, arbitration was considered neutral, being neither poor, nor excellent. Arbitration’s standing, overall, is poor; however, for claims between £1 million and £10 million it is similar to the other methods referred to above. Positive influences towards choosing arbitration are that arbitration is private, providing fairness, allowing control of the process with an award that is final. Negative influences are that arbitration is costly, complex with procedures styled on litigation, subject to delays and confidence issues with arbitrators' decisions. Cost and duration of arbitration remain the most problematic features, however the investigation suggests that users and particularly their lawyer advisers are reluctant to implement cost saving procedures.