SCOTLAND will soon be competing with London as a centre for international corporate arbitration when new law is given Royal Assent next month, a leading solicitor claims.
Many European companies currently chose to undergo arbitration in London, feeding an industry of lawyers that has grown up to service their needs.
After the Scottish Parliament passed the Arbitration (Scotland) Act last week, Scottish lawyers are
looking at ways in which they can attract arbitration business north of the Border.
The income stream would come as welcome relief to many commercial law firms, which have been battered by the downturn in transactional work that has accompanied the banking crisis and recession.
Figures published earlier this year revealed that one in ten solicitors had fallen by the wayside during the downturn in what Law Society of Scotland chief executive Lorna Jack branded as "definitely the worst of any recessions".
Scotland's new arbitration law – which is expected to come into effect by February – replaces a series of old statutes and precedent.
Arbitration is used by companies and individuals as an alternative to litigation. Rather than going to a public court to air their problems, the two parties agree to having their case heard by an expert arbitrator behind closed doors. The arbitrator's decision is final and legally binding.
Lindy Patterson, head of construction and engineering at "big four" Scottish law firm Dundas & Wilson, said arbitration had been popular in Scotland up until the 1990s but had fallen out of favour because it was perceived as costly and time consuming.
She said: "In the past, the benefit of arbitration has been privacy. I think there will be a lead-in time – as it will take time for people to write arbitration into their contracts – but I think this will lead to a renaissance in arbitration, maybe as early as the end of next year."
Patterson doubted arbitration would eat into the growing fashion for mediation – in which companies or individuals sit down to negotiate without going to the courts – but she did foresee arbitration taking some of the workload away from the Court of Session in Edinburgh and from Sheriff Courts.
John Campbell QC, president of the Chartered Institute of Arbitrators and one of Scotland's leading advocates, said: "As well as this being an act for legal practitioners, giving the first code in Scotland for 300 years, it is also has the potential to bring quite serious economic benefit to Scotland.
He added that Scotland has lawyers with experience of arbitration who aren't as expensive as London rivals.
Sam Condry, of the Law Society of Scotland's arbitration working party, said: "Arbitrators will now have clear powers to grant remedies to parties, to make awards of interest, and to deal efficiently with questions of law.
"Parties will also have great choice over how they choose to arbitrate and will have recourse to the courts, in order to resolve remaining disputes in appropriate circumstances."
