Half of UK companies include arbitration clauses in contracts

Companies in the UK are more likely than those in the rest of Europe to anticipate the use of arbitration in the event of a dispute.

The findings are revealed in a survey carried out by DLA Piper Rudnick Gray Cary involving more than 120 large companies across Europe.

More than half (56 per cent) of UK companies include arbitration clauses in contracts, compared with 54 per cent of Spanish and Italian companies. But arbitration clauses are much rarer in France and Germany, with 33 per cent and 15 per cent of respondents respectively saying contracts typically include arbitration clauses.

However, nearly half of those surveyed said that they had found arbitration unsuccessful as a method of dispute resolution during the past two years. Nearly as many respondents, 40 per cent, had found litigation unsuccessful. Mediation appears to be a far better way of resolving a dispute, with 22 per cent of companies finding it successful against 25 per cent thinking it unsuccessful.

German companies appear to be happiest with their court system. Only a third of German respondents specify the method of resolving a potential dispute on contracts, and 77 per cent of companies prefer to resolve a dispute within Germany. Nearly half (43 per cent) of German organisations say they have been “very successful” at avoiding disputes during the past two years.

In contrast, almost all French companies (83 per cent) always specify dispute resolution methods in a contract, but are just as keen as German companies to resolve litigation in their home jurisdiction.

Companies in the UK are more likely than those in other European countries to have staff solely responsible for dispute resolution. UK legal departments have more power than any country except Germany in the drafting of contracts. In contrast, only 23 per cent of French in-house lawyers influence contract drafting.

DLA Piper litigation head David Gray said of the survey: “Arbitration has become very like litigation in its formality, its cost and direction, and therefore, in relative terms, it doesn’t surprise me that there’s now a lack of a feel-good factor in dispute resolution.”