Q6. Financial Conduct Authority, Office of Fair Trading and Financial Ombudsmen. Explain their roles.
Litigation is conducted in the courts. Court Reform (Scotland) Act 2014. S39 Civil proceedings – Sheriff Court < £100,000. S44 Summary Sheriff – Simple procedure < £5000 (s72). S92 Importance/difficulty = Court of Session.
The disadvantages of Litigation is that it is conducted ion public which is a drawback for commercial organisations as they would like to avoid information which affects their reputation in a negative way. It is also costly and finally it takes a long time and during the course of this parties may stop trading with each other as relationship is irretrievably damaged.
Remedies include payment, declarator, specific implement, interdict and reduction. This is always open to parties in order to enforce their rights. However, this can be contrasted with arbitration in terms of a contractual agreement.
Arbitration (S) Act 2010 has replaced the common law. If parties wish a binding resolution of their dispute, but don’t want to go to court then this is the main alternative. S1 of the act stated that the object of the arbitration is to resolve disputes without unnecessary delay or expense. One of the main advantages is that a party has the capacity to appoint as an arbitrator a person who is an expert in the field of the particular commercial dispute. Another key benefit is it’s confidential. It can be cheaper than litigation. The procedure is generally more flexible than a court procedure. Parties may refer disputes between themselves to arbitration in terms of a contract.
Common law position is represented by the statement by Lord Dunedin in Sanderson v Armour 1922 that “if parties have contracted to arbitrate to arbitration, they must go”. It may be difficult however, to persuade a court that an arbitration clause in a contract between two businessmen is unfair. Unfair Terms in Consumer Contract regulations 1999. Generally, this acts on the basis that a consumer can decline to arbitrate where the arbitration is unfair, however in Mylcrist Builders v Buck 2009 the arbitration had gone ahead without the participation of the consumer and the company was seeking to enforce award. It was held that since the agreement was not binding on Mrs Buck, the tribunal lacked jurisdiction to make the award, so enforcement was impossible. An example of this is what happened to Mobile Mechanic London . Very interesting outcome
As an alternative to litigation or arbitration, parties may seek to settle their disputes via procedures which do no not result in a binding decision being handed down by a 3rd party.
Only a natural person can be an arbitrator R3. Arbitrator must be over 16 and must not be incapable of acting R4. Arbitrator must disclose to parties before and during process of any conflict of interest R8. But need not resign!
Negotiation, can be carried on directly between parties or through representatives such as legal advisors. An agreement to negotiate is not binding. Walford v Miles 1992