Arbitration
Businesses that contract with consumers must ensure that arbitration clauses are fully explained at the time the contract is entered into, warn lawyers.
In Mylcrist Builders Limited v Mrs G Buck a judge refused to enforce an arbitration award against the defendant (a consumer) who had engaged the firm on its standard terms and conditions which included an arbitration clause.
The court found the arbitrator had not been properly appointed however, and that the related clauses were not binding. The judge held that the inclusion of the clause had caused a significant imbalance in the parties’ rights and obligations under the contract, to the detriment of the defendant.
Steven Friel, partner at Davies Arnold Cooper LLP, says: “English courts have gone to great lengths recently to uphold arbitration clauses, on the basis that arbitration should be considered a stand alone dispute resolution process and relatively free from interference from the courts”.
However, the judgment means that arbitration clauses could be considered unfair in consumer contracts, says Friel.
“In this case the court decided that consumer protection trumps the usual policy in favour of arbitration,” he adds.
