European dispute resolution

Arbitration has been a bugbear of mine for many years now. I gave a talk on “Why Arbitration is failing the Reinsurance Community” last December to a panel of…arbitrators (yeah, great idea, huh?) and we surprisingly only lost the vote by the smallest of margins.

The truth is that arbitration is slow, expensive, uncertain and often produces bizarre results. Litigation, especially with new added ADR, is much more efficient and reliable.

So I was pleased to see results in a survey the other day conducted amongst some European companies (some though by no means all in the insurance field) which showed that

• though litigation is still king, mediation and ADR are rapidly gaining ground
• over half the companies has used ADR in the last 2 years, while less than a third had used arbitration
• about 50% of those who had used arbitration thought it unsuccessful

My usual advice to my clients is not to arbitrate if possible. Unless my clients are brokers. And then it’s a very good idea to put an arbitration clause in the contract because it makes it that much harder for the principals to join you into the action…which takes me straight back to my usual advice for non-broker clients.