Seepersad weighs pros and cons of arbitration, Senate passes bill

INDEPENDENT Senator Charrise Seepersad urged an update in TT's arbitration laws to attract foreign investment, but also weighed the benefits and the shortcomings of arbitration relative to formal legal proceedings, speaking on Tuesday in the Senate debate on the Arbitration Bill 2023.

The bill was amended at committee stage and passed by the Senate, and will head to the House of Representatives.

While arbitration is separate to court proceedings, an arbitrator can seek a court-input or alternatively a court can refer a matter to arbitration, Seepersad said.

She said the current arbitration act dated from 1939 – and was based on 1889 and 1934 British laws – before modern commercial legislation and best practices and before modern technology such as cellphones and the Internet had emerged.

"Trade and industrial practices have changed dramatically since 1939 but our laws relating to arbitration have not been modernised."

Seepersad said an updated model of arbitration law crafted by the UN (as amended in 2006) has been adopted by 119 jurisdictions including 86 States, including the US, Canada, Singapore India, Australia and Jamaica and Barbados.

She said arbitration had become a standard requirement in most modern contracts for dispute resolution and, if TT wished to attract international trade and investment and be an attractive venue for international arbitrations to be held, TT's arbitration laws must be internationally certified and be named in global lists of such jurisdictions.

Seepersad said arbitration could help avert the current backlog of cases in TT's law courts.

"Businesses including international investors demand neutral, timely, cost-efficient, enforceable and predictable arbitration and dispute resolution mechanisms."

She said modernised arbitration laws would encourage disputants to choose arbitration to resolve their differences and so greatly relieve the burden on TT's law courts.

"Mr President, businesses are not prepared to wait two years or more to have their cases heard and then face the possibility of an appeal resulting in further delay and possibly compromising operations.

"Businesses would prefer an independent neutral person with subject matter and dispute resolution experience to hear the evidence and submissions of the parties and then have an expert arbitrator rule on the matter, based on the provisions for dispute settlement which are included in the contract."

She said TT ranked a paltry 174th out of 190 countries in a 2019 World Bank study on the ease of doing business as regarded contract enforcement, taking three years and eight months to resolve a commercial dispute, worse than two years and two months for the rest of the Caribbean and Latin America.

Seepersad set out some of the advantages of arbitration as a process, over litigation. She said arbitration was quicker, offered more flexibility for scheduling and less formalities, and may involve arbitrators with specific technical knowledge (beyond the mere legal knowledge which judges may) and so as to give to more rounded judgments. Arbitration also offered better confidentiality, cheaper costs, plus a finality of decision, compared to litigation.

She added, "As arbitration offers a more co-operative and less adversarial environment, it can provide an opportunity for the parties to preserve their working relationship while resolving their differences."

While generally supporting arbitration over litigation, Seepersad said arbitration had some potential shortcomings.

She said arbitration offered limited avenues of appeal, with limited grounds for challenge based mainly on procedural wrongs. Seepersad said arbitration had less discovery than litigation. While arbitration was thought to be cheaper, she said in some cases it could be more costly than litigation.

Seepersad said an arbitration ruling had a very limited precedent value for subsequent cases.

"Arbitration may lack the consistency and predictability than could be achieved through a well-developed body of legal precedent in the court system."

She said on the flip side of confidentiality, arbitration lacked public scrutiny compared to litigation.

Seepersad said arbitration might offer a limited type of relief.

She warned of certain cases where arbitration may not be suitable. Those include cases where there is a big inequality of bargaining power between the parties, examining a matter of public interest or the interpretation of key principles where litigation would be better-suited to employ/establish precedent, matters requiring immediate relief, matters involving complex legal principles, matters needing an extensive discovery, and cases that may need an appellate review.

"The suitability of arbitration depends on the specific circumstances of each case.

"Careful consideration needs to be given to the parties goals, complexity of the dispute and the nature of the issues involved when deciding if arbitration is appropriate to resolve the dispute."