CHAPTER II COMMERCIAL POLICY "IN modern times Parliament has shewn a constantly increasing desire to aid and encourage private arbitration ”1. And, it may be added, the Legislature has enjoyed the whole-hearted support of the Courts of Justice. It therefore rests with the community at large to avail itself to the full of the licence which is offered. It will only do so, however, when advantage can be derived from so doing. Thus it is clear that the primary consideration in any given case is this-is arbitration going to pay ? Such are the conditions of modern trading, so many and various the considerations affecting commercial policy, that the choice between arbitration and litigation is one which is not lightly to be made. For our view is that in some kinds of commercial quarrels arbitration is (for one party or for both) a blessed relief, whereas in others it is an accursed trap. That is the basic thesis of this Chapter. No business man, however astute, can retain the initiative indefinitely. In the history of every transaction there is a moment of time at which an irrevocable decision must be made in so far as this problem-to arbitrate or not to arbitrate--is concerned. When that moment has passed, whether we be attackers or defenders we can no longer choose the field of battle except with our opponent's consent; for an agreement to go to arbitration (whether the dispute is already in being, is a probability, or is only a possibility) is, generally speaking, as binding as any other contract. In view of the foregoing the conclusion to be drawn is that he who has given some thought to the pros and cons of this question will, when the time comes to protect his business interests, have a considerable advantage over him who has given none. For it may be that ignorance, or, what is worse, a very superficial knowledge, of the results which are likely to flow from the adoption of one course or the other will induce an attitude of careless indifference which will prove disastrous to its possessor. For his adversary will almost surely lead him into the way in which he should not go. At the very outset we are confronted with a difficulty —that of having to deal comprehensively with an infinite variety of cases. The most that we can do is to catalogue the various aspects of the problem-or, indeed, only the most important of them-stubbornly resisting the temptation to lay down rigid rules. There can, in this instance, be no greater mistake nor one more far-reaching in its consequences than that of indulging in generalization. If we have laboured this point we have no regrets. It is the root of the matter. First and foremost, then, the question of time. There are two distinct considerations: first, how soon after the dispute arises can the hearing take place? And, secondly, how long will the hearing last? Each is of great importance, for an early trial almost invariably induces a more equitable decision, and a short trial necessarily saves money. Let us, then, examine these points in turn. It would appear at first sight that the law's delays can in every case be successfully avoided by resorting to arbitration, where the parties have a much more powerful . influence on the course of the proceedings than in the Courts. And such is no doubt the fact in a great number of cases. Especially is this so in many trades where there exists a complete organization for the holding of arbitrations, whose assistance can be invoked at a moment's notice, on payment of a small fee, by anyone engaged in that particular line of business. But-and this is true even in the case of some of those trades where arbitration has become a habit (or, as some would say, a vice)—there are outstanding exceptions to this rule. The fact that a dispute is to be decided by one tribunal rather than by another does not make the issues less complicated nor the evidence less voluminous. Inadequate preparations will lead to the same result in both cases. Where large sums of money are involved, where the facts are only to be determined after investigating a mass of testimony, or where a subtle point of law may be the deciding factor, the parties concerned will go warily to work, and the fact that the matter will not come before a Judge of the High Court will not make their legal advisers any more anxious to plunge them headlong into the fray. In theory it may seem easy for one party to force the pace; it is often far from easy in practice. How long will the hearing last? That is to say, will it be shorter in Court or out of Court? The answer must of necessity be different in every case, and must be influenced by several considerations. We can but indicate certain lines of thought, leaving each man, faced by his own particular problem, to come to the best conclusion he can. He must think, then, how the arbitral tribunal before which he would appear will be composed; how much influence the proposed terms of the agreement to arbitrate will allow him to bring to bear on its composition; how much power will, in this respect, be left in the hands of his adversary. He must consider whether he will be affected (favourably or adversely) by any practices of his trade which would be recognized by commercial arbitrators, but which it might be impossible (or, at best, very expensive) to establish in a Court of law as universal customs so that they might be given judicial recognition. He must try to determine in advance whether the controversy is likely to be highly technical and therefore requiring, for a speedy decision, the attention of technicians rather than of lawyers; for example, a contract for the sale of delicate scientific instruments and one for the transportation by sea of a cargo of pine-logs will probably give rise to very different types of disputes, the one involving intricate constructional details of the goods, the other abstruse legal points concerning, perhaps, the precise nature of the obligation to provide a seaworthy ship put upon the carrier by the contract of carriage. Such are the most important considerations with regard to the saving of time. Next, the question of place. There can be little doubt that, in nine cases out of ten, it will be a great convenience to both parties to be able to agree between themselves as to the exact locality in which the hearing is to take place, as against being bound to attend with their advisers, witnesses, documents and exhibits, in a Court which is, perhaps, far removed from their places of business. Complications will often arise, however, in the case of overseas contracts, for it may be that neither of the parties will agree to an arbitration taking place in the other's country. In many such cases there will thus be no advantage in avoiding the ordinary process of law. On the other hand it may turn out to be merely an extra risk to do so, since local pre judice is, on the whole, more likely to affect a lay tribunal than an established Court. This brings us to the next consideration-the question of prejudice in general. It is undeniable that there is, even in England where the average man's sense of fair play is greater than in any foreign country, a certain modicum of risk attached to entrusting the decision of a dispute to a body of laymen as opposed to His Majesty's Judges or a legal practitioner of high repute. It must not be thought that this is a slur on the honour of the business community. It is, on the contrary, merely a question of habit of mind. The long and arduous training of a successful lawyer produces in his mind a capacity for dispassionate appreciation of two points of view and absolutely unbiased choice of one of them (in accordance with the proved facts and the law of the land) which can seldom be attributed to one whose life has been passed in industry or trade. Further, the question assumes greater importance when it is realized that a lay arbitral tribunal constituted to hear a dispute in any given line of business is almost invariably composed of men who are themselves engaged in that same business, and often of men whose interests conflict in the course of everyday life. Suppose, for example, an arbitration in any given trade, the tribunal consisting of three arbitrators, one chosen by either side and the third by his brother judges. One may be a broker, the second a merchant, and the third a manufacturer-each of them engaged in a distinct branch of that same trade. It is more than probable that they will see the matter which is before them each from the standpoint of his particular calling; and, further, it is almost certain that the broker's point of view will be more favourable to one side than to the other, and likewise the manu |