Arbitration is quicker and more cost-effective than court. And no one likes paying legal bills.
Life can be strange, however, and, in the arbitration context, perhaps neither of these “truisms” stands up any longer. It is now generally accepted that arbitration is at least as expensive as litigation, and takes just as long. More surprisingly perhaps, there are now people who actually want to get your lawyers’ invoices. Imagine that you have a sound claim against another party – Party A – which has to be resolved in arbitration. Party A is unscrupulous but wealthy. He could pay your claim if he wanted to. His assets are in a place where arbitral awards are easily enforceable. And he knows something you wish he did not: that a consequence of what he has done to you is that you can no longer afford to pay for a contested arbitration case.
Party A, therefore, refuses to pay your claim, because he can. He knows you cannot afford to chase him. He does not care about his reputation. He has no incentive even to negotiate a discounted settlement. In short, Party A holds all the aces.
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Charles W Allen is a partner and Carmen Wong is an associate at Orrick, Herrington & Sutcliffe in Hong Kong
