May 22, 2017
The Gambling Commission of Great Britain is reviewing the effectiveness of the ADR framework put in place in recent years to protect UK players. However, it is not just at a consumer level where the merits of alternatives to litigation are currently in focus.
Acquisitions, complex business integration projects, platform migrations and outsourcing to suppliers, often for ground-breaking technologies, make for a buoyant industry, but are often fertile ground for disputes. Delays, disappointing technical and financial performance, cost overruns and project terminations lead to friction that on occasion can only be resolved by third party intervention.
A wish list of dispute resolution in the betting & gaming sector might look something like this – fast, private, predictable, fair, final, expert, and enforceable across borders. Litigation has its place, but brings with it a host of often destructive features – long delays, high cost, and invasive disclosure – and all played out in the public eye. In technical disputes we’ve seen the rapid emergence of expert determination in new areas. They tend to hit most of that wish list, but have real limitations on enforceability, and to an extent predictability and fairness too. Awards have no greater status than the underlying contract, are not enforceable without further court action (and certainly not cross border), and experts have no back-up rules to aid them in getting evidence out of an uncooperative party.
Another alternative, arbitration, has most of the key features parties might look for. It also has the benefit of a settled international legal structure meaning that awards are enforceable as of right, almost everywhere in the world and including jurisdictions like Montenegro, Curacao, Malta & the Isle of Man. The problem has been that arbitration has for many become as slow and expensive as litigation. Getting to a final award may take upwards of two years – in particular defensive moves by parties to engage only top-rated arbitrators has led to real difficulties in getting cases concluded, and as demand increases, prices have moved up too.
The need for quicker and cheaper options has prompted a number of arbitral institutions to put in place expedited arbitration procedures, the latest being in March 2017 by the ICC – the “IBM” choice of arbitral bodies. In doing so it is following moves by the US body the AAA, and the SCC in Sweden among others. What the new rules provide are resolution times measured in months (weeks in respect of the AAA), often dispensing with mandatory hearings and big disclosure exercises, but maintaining confidentiality and enforceability.
That is driving down the resolution time and cost, and as a consequence we are seeing mandatory arbitration clauses making a comeback in contracts, explicitly on these new expedited terms. Operators are able to make positive choices about the autonomy, confidentiality, enforceability of arbitration with less exposure to the cost and delay that have made the process an increasingly uncommercial option.