Click on your business type in the menu bar below to find specific insurance and funding information for you

Can litigation and arbitration comfortably co-exist? We think so.

documents being handed over

By David Chase, Senior Underwriter.

There are those who might say that arbitration is to be preferred because commercial litigation is time-consuming and expensive. Practitioners have become increasingly interested in Alternative Dispute Resolution (ADR) since the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) came into force, for the purposes of settling commercial disputes. This has increased the use of and relevance of Temple’s insurance policy – since cover is included for both mediator’s and arbitrator’s fees.

Parties can agree to arbitrate either at the time the contract is entered into, or after a dispute arises, but they must agree. The interpretation of an arbitration agreement’s clauses is often a source of dispute, the arguments first being heard by arbitral tribunals and then by the courts if necessary. If the arbitration clause is breached, then relief can be sought in the courts. Courts are often involved substantively in other routine ways during a dispute, such as being asked to give directions on the appointment/removal of arbitrators, assisting in giving force to a tribunal’s pre-emptory orders and deciding questions of law.

ADR has always been a viable option, and there are some vocal advocates promoting its use. As litigation costs have increased, so there is increased pressure from clients and practitioners alike to sensibly consider all options, including arbitration. All forms of ADR have been promoted regularly as a cheaper, quicker alternative. The features of arbitration include confidentiality, informality and sometimes being able to speed up matters – all of which could be music to a client’s ears.

There is an additional benefit of arbitration in that it has historically contributed to the development of the common law, particularly maritime-related cases which have established far-reaching legal principles. On the other hand, there is limited scope for appealing arbitral awards as a result of the Arbitration Act 1996 coming into play. Another down side is that delaying tactics are also regularly employed in arbitrations.

An ancillary benefit of arbitration is that it promotes healthy competition between the various methods of resolving a claim and can potentially lighten the load on the court system. In addition, the use of technology and highly motivated arbitrators can help parties to streamline the process and assist the parties to find their way through the fog that can sometimes threaten to descend.

The ‘elephant in the room’?

Why would an ATE provider and funder inform a litigator they should consider something other than litigation?
You may not be a fan of all forms of ADR, but if there is more than one way to approach a problem, then surely there is more than one way to resolve a dispute for your client? If litigation/ATE insurance provides cover for the financial risks of a case and funding can help to start a case and keep it going, then shouldn’t you be in the know?

In these days of uncertainty and tightening budgetary belts, together with the fulsome requirement for access to justice and a loosening of regulation regarding legal advisors, solicitors need to be competitive in the market in order to attract more business. ADR for commercial disputes might be a quicker solution, but it doesn’t necessarily make it cheap. Perhaps it is it only cheaper because it is quicker?

How best can you ease the precarious position your clients may find themselves in and win their business?

Temple’s development of ATE insurance for commercial disputes is long established and more recently we have produced market-leading funding options that are fully regulated by the FCA.

You may also want to read about:

To find out about using litigation insurance for arbitration and commercial dispute resolution please call our commercial team on 01483 577877 or email