Arbitration-part 2
The law considers that there is a strong public policy in favour of enforcing arbitration agreements. If parties have agreed after the dispute has arisen that it should go to arbitration, then they ought to have carefully considered the matter. Once agreement is reached in general they should not be allowed to change their minds.
In the same way the law takes the view that arbitration agreements in contracts should also be respected. Although a party might say that it had no choice but to agree the arbitration clause because otherwise there would be no deal, the legal view is that if the party viewed the terms as so unsatisfactory they should never have agreed to the deal. If parties are agreeing on a bundle of terms, one of which includes arbitration, then that should be respected. Particularly in the context where these are often commercial agreements where there may be strong practical reasons why there should be arbitration. Sometimes an experienced person in a particular industry could decide the question far more quickly and cheaply than a court could. Speed may also be critical because of the potential effect on other contracts. The delay caused in such circumstances by ordinary court proceedings could be commercially fatal. (Businesses can become insolvent or as it is popularly referred to "bankrupt", because their business activities are hampered while the dispute is sorted out). Therefore the starting point is that if the parties agree to arbitration the court should hold them to that bargain.
At the same time the courts will supplement and assist arbitration to allow various matters to be determined if they need to be. Part 62 CPR deals with arbitration proceedings. Relevant statutes which set out matters regarding arbitrations and legal proceedings relating to them are the Arbitration Act 1950 and the Arbitration Act 1996. The courts are essentially supplementing, subject to statute, the arbitration agreement.
CPR 62.8 deals with an application to stay legal proceedings under section 9 of the Arbitration Act 1996. Stay means stop them continuing. Thus the position is that if you have an arbitration agreement you can bring legal proceedings, but the other side can make an application to stay them. It has to do that after acknowledging the proceedings (if required –this is a way of accepting that the proceedings have actually been served upon you) but before taking any step to answer the substantive claim. That means that if the party takes any step consistent with the court proceedings continuing, then it is too late to object. The time therefore to object is at the outset.
The court will grant the application to stay the proceedings unless the court is satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed. This is obviously a very high test to satisfy. Therefore providing a party objects to court proceedings at the outset, if there is an arbitration agreement it will only be in very rare cases that the court allows a case brought to continue, where under the arbitration agreement it should properly have been arbitrated.