Disputes between customers and ICT providers are not a new phenomenon, although it does seem to me that, with increasing frequency, more disputes are now getting beyond negotiation and escalation, and into a formal dispute resolution process. The jury is still out, so to speak – even to my litigation lawyer brethren – on which particular form of dispute resolution proceeding best suits a technology or ICT-related claim.
Traditionally, parties have favoured court-based litigation. It offers more readily the ability to obtain interim measures and summary determination via injunction if necessary, greater procedural certainty and enhanced coercive powers, which can be useful against a recalcitrant opponent. And, of course, it’s helpful to be able to rely on, and create, legal precedent.
Many people prefer the known quality that comes with a judge-led court, and the fact that, if all else fails, there could be the safety net of an appeal. And it's true that court proceedings are often better suited to disputes involving multiple parties or agreements. Many customers also like the fact that court proceedings are public, reasoning that because providers typically prefer the cloak of confidentiality about potential defaults, then the threat of open dispute might make early settlement more likely.
But the main alternative to court proceedings – arbitration – also has its benefits. These include the ability to keep proceedings and documents confidential. Arbitral awards are also relatively easy to enforce against foreign parties (there are international treaties on this); and arbitration offers greater procedural flexibility and enhanced finality of decisions, which gives rise to greater certainty. In the UK, for example, the Arbitration Act 1996 allows an appeal only for lack of substantive jurisdiction, serious irregularity, or on a point of law (but parties are free to exclude this last ground – and often do so). It's also possible to select a neutral and/or expert tribunal.
Other possible decision factors are more neutral, such as cost (the perceived lower costs of arbitration can be a false economy particularly as arbitration gives rise to additional costs such as the tribunal's fees and venue hire); speed (arbitration can be slower due to the need to agree procedural matters and relative unavailability of summary determination – or quicker due to reduced possibility of appeal); and document disclosure (arbitration allows the parties or tribunal to limit the scope of disclosure obligations – but so now do some courts).
So actually, there's probably no one-size-fits-all approach that works across the entire ICT sector. What remains true is that decisive early action is almost always the best policy, to protect one's position and try to separate the dispute from business-as-usual.
In recent years, I have also experienced parties considering other ways to resolve disputes. Expert Determination has worked well – especially in longer-term relationships where disputes are more often a sideshow (albeit a sideshow that can be very distracting, if not dealt with properly) to the main relationship. The concept of an expert determination is that the parties can define their own process and agree to accept the binding determination of a mutually acceptable independent expert such as a pre-eminent Q.C.
But, in those situations, one of the crucial aspects to ensure is that the expert is senior enough and has enough gravitas to ensure that the key stakeholders on either side accept his or her decision come-what-may. A close-call or split decision that leaves room for one party to disclaim the decision or treat it as non-binding risks wasting the entire process or, possibly worse, simply prolonging the bad feeling and preventing the parties moving on with the more positive aspects of their relationship.