Pendulum Arbitration: What? Why? How?

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I delivered a paper last week for the South Australian Bar Association on pendulum arbitration. It met with a positive reaction, and I share it below.

The general drift – unsurprisingly enough, is that I believe pendulum arbitration to be underused in the commercial context. The principal reason for this is that most practitioners are unaware of it, and thus have no experience or knowledge about when and how it should be used. Hopefully, this paper will be a small step in rectifying this lacuna.

 

Pendulum Arbitration: What? Why? How?

 

Robert Fenwick Elliott[1]

 

Abstract

  1. Pendulum arbitration is a form of arbitration in which the arbitrator must adopt, as the award, one or other of the draft awards put forward by the parties themselves. It is widely and successfully used in other jurisdictions around the world and particularly in some types of dispute, but has been only rarely used in Australia as a means of resolving commercial disputes. Its advantage over conventional arbitration is that it is significantly faster and significantly cheaper. It may be implemented by entering into a suitable pendulum arbitration agreement, either ab initio in a contract or ad hoc, whether at the outset of the dispute or after a mediation has failed, or after litigation has become bogged down.
  2. There are good reasons why pendulum arbitrations could and should be more widely used.

 

What Is Pendulum Arbitration?

  1. Pendulum arbitration (also known as baseball arbitration, or last best offer arbitration, or final offer arbitration (FOA)[2], or straight choice arbitration) is a subset of arbitration whereby at the conclusion of the process, the parties each provide the arbitrator with a draft award, and the arbitrator adopts as the final award the draft which most closely accords with the arbitrator’s opinion.[3] There is no scope for the arbitrator to substitute his or her own judgement, and so there is a powerful incentive on the parties to pitch their draft awards at a moderate and reasonable level, so as to improve the prospect that their draft will be adopted.
  2. For practical reasons, discussed below, pendulum arbitrations are conducted much more rapidly, and less expensively, than conventional arbitrations. Usually, but not always, the arbitrator does not give reasons.[4]

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DRBF News

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The Dispute Review Board Foundation has sent me a certificate of appreciation, for being a member of the DRBF for more than 10 years, which is thoughtful of them. Actually, I think it is quite a bit more than 10 years!

And I see, with great pleasure, that my old friend, co-author and partner in the London firm that I founded (Fenwick Elliott LLP), Jeremy Glover, is on course to become the new President-elect of the DRBF. An excellent Continue reading →

Beware the Bot in The Law

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A friend of mine, who now lives in Spain and who has a wicked sense of humour, tells me that he asked Chat GPT this question:

“Has Robert Fenwick Elliott written any good books? “

The answer that he got is that I am a well known author and expert in construction law and that I am highly regarded in this field, and that my books are widely used and respected.

Well, nothing controversial there, you might think. But the wind rather goes out of these sails when one looks at the detail. What Chat GPT actually said is Continue reading →

Myponga Beach on the Map

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It is good to see Myponga Beach (where I am based) feature in the latest issue of Australian Construction Law Newsletter, in a piece on pendulum arbitration.

Myponga Beach has punched above its weight in the construction law world for a while. A week or so ago, I welcomed Julian Bailey (now based in London again, but an Adelaidean by birth) and have chewed the cud with a number of other construction lawyers here over the years. Continue reading →

A Farewell to Arms

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I am pleased to be able to report that, after umpteen tests, my health scare is now over. I am told that I have just one more exploratory medical procedure to go, but believe that the recommendation for that is merely precautionary. Meanwhile, during the three months that I have been recuperating, I have recovered much of my previous rude health.

During this period of recuperation, I have handed over the whole of my caseload to other counsel, and have now decided that, rather than resume my practice as a barrister, and after some 44 years since I first started practising as a specialist construction lawyer, this is the appropriate time for a change.

Henceforth, I will practice as a pendulum arbitrator and mediator.

Pendulum Arbitration

I am one of the few construction lawyers in Australia with experience of pendulum arbitration, and am, I believe, the only arbitrator specialising in this form of dispute resolution. It is a form of dispute resolution which I have long regarded as much underused in the construction sphere offering, as it does, massive advantages in terms of reduced cost, increased speed and the opportunity for disputants to get on with their business without distraction. A fuller explanation of how pendulum arbitration works is here. And some Q&A.

A feature of pendulum arbitration is that it works best if the disputants have a high level of confidence that the pendulum arbitrator has the necessary experience and expertise in construction law to be able quickly and reliably to make an assessment of the strengths of their cases. I believe that I have that necessary experience and expertise.

Mediation

Mediation is, of course much better known. I have been occasionally mediating construction disputes since the 1990s although not, hitherto, as a mainstay of my professional work[1]. So far, I have never failed to resolve a dispute in which I have been appointed as mediator. I do not expect this track record to survive indefinitely, but I hope it will give confidence that I am a safe pair of hands in this capacity.

It will not be necessary for me to maintain my practising certificate in these new roles, and I do not propose to do so once my current certification runs its course.  This means that I part company with Keating Chambers, of whom it has been my great pleasure to be an International Member for some years, not only because of my friends there, who I have known since my days as a young lawyer in London, but also because of its ever increasing status as the leading set of construction law chambers in the common law world.

Other methods of dispute resolution

I remain a registered adjudicator in the Northern Territory, and a member of the Dispute Review Board  Foundation, and am available for appointments in those Continue reading →

An Influential Text

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I am gratified to see that Construction Law Journal has published a review of my book by Dr Hamish Lal, Adjunct Professor of Law at Sutherland School of Law. There are several words and phrases which would warm the cockles of any author’s heart:

  • eminent in the field of construction law
  • the full spectrum of potential arguments
  • well researched
  • powerful
  • There is no obvious gap or need for improvement in this book
  • comprehensive
  • excellent point of reference to counsel, arbitrators, judges and construction industry professionals
  • forces readers to think creatively
  • an important compelling authority
  • an influential text

The review in full is on my reviews page.

I hope it is not unduly selfish of me to Continue reading →

Praemonitus praemunitus

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Praemonitus praemunitus (forewarned is forearmed) has always been a good motto, and I am pleased see that Richard Winward uses it to suggest that my new book is valuable for paymasters as well as contractors.

Happily, his review in Designing Building, the Construction Wiki is again favourable, concluding:

The book achieves a good balance between legal analysis and practical application … It should be a welcome addition to the bookshelves of contractors, clients/developers and their professional teams.

I have added the review to the collection of reviews.

ECR Reviews

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I have long thought that the Australian Construction Law Newsletter is rather a good publication.[1] and I am even more favourably disposed to it since they have just published a favourable review of my book Extra-Contractual Recoveries[2] by Phillip Greenham, until a few years ago the senior construction, engineering and infrastructure partner at Minter Ellison, Melbourne, and now arbitrator.

The review says that I have “vast knowledge and interests” and that the book is “informative, authoritative and comprehensive”. That is very flattering, of course, especially coming from someone with such formidable seniority and experience. More practically, it says

Any advisor looking to assist a contractor who has its back against the wall because of provisions in a contract will be greatly assisted by the book.

And that is certainly Continue reading →