I'd be grateful for feedback on this business idea, especially from people involved in small businesses. It could run in CH, the UK or elsewhere, depending on different laws.

Basically, I'm considering setting up a low cost arbitration service.

At the moment, arbitrations have two main advantages over court proceedings:

1. They are fast (especially as they are generally without a right of appeal).
2. They are confidential.

Another advantage is that the parties can opt to have the case tried for fairness rather than under strict law (though imho this should very rarely change the result).

However, arbitrations are expensive. Although some things tend to reduce the price (e.g. relaxed rules of evidence, and speed) the effect is minimal and the arbitrators' own fees can mean arbitration costs more than litigation.

The service I'm considering would allow the parties to make submissions in writing, which the arbitrator(s) would consider before making an award. There would be the option of setting a fee before submissions, by determining the volume of documents the parties were allowed to submit and the time the arbitrators could spend considering them. Even if this was not done, the process would be much faster and cheaper than normal arbitration.

Of course, I would take care to use appropriate arbitrators.

Assuming no logistical difficulties, what do you think?

Im thinking you would need a recognition of whichever trade association was implicated in the dispute.
Im thinking that the contract between the two parties would require to specifiy that first resort is arbitration before resorting to the countries legal system
Im thinking that you would need registered and qualfied arbitrators because nobody will accept the opinion of one, and im thinking that you will need to set up a system of appeal with a panel of alternative arbitrators to hear the appeal.

This would be a really difficult idea for a new expat business in my opinion. It is all about trust. You are (presumably) a foreigner trying to create a new (cheap) service which many feel should be reassuringly expensive and most of all reliable and run by the most trustworthy of tenth generation swiss.

Who would believe in a new unproven service when a dispute (based on lack of trust between the parties) is clouding the air and lots of their own money is at stake on your decision ?

Who are you and why should the parties involve you ? Are you government or industry backed ? With whom do you play golf ? In such a business I suspect credibility and demonstrable impartiality is everything.

AYB

In Switzerland, many disputes both private and commercial have to go through a round of arbitration (mediation), before they are handled by the courts. These mediation channels are provided by the state. There are quite a few independent arbitrators, who freelance offering their services to mediate when conflicts arise and both parties are desirous of seeking a settlement. These are not legal processes and have no binding decisions, except at the point when both parties have a written agreement that has been signed and authorized by a notary.

arbitration and mediation are 2 different things. mediation is a service where the mediator helps the parties to find a solution. Mediator does not make the decision. if the parties cannot agree, they can go to court.

arbitration is an alternative to court. the decision is enforceable and is made by the arbitrator(s). It is generally final and you cannot go to court with the same matter. The arbitration clause in contracts does not have to be notiarized, according to New York convention (art 2 (1)), "in writing" is sufficient.

But I digress.

so sure, you can try, ad hoc arbitration is always an option. but then again, if your main selling point is the price, then those "appropriate arbitrators" would also have better opportunities somewhere else. Nobody would pay for a service where some random people are deciding over your case though. So is here anything particular about your service why people should use it?

What can you offer that ICC (Inernational Chamber of Commerce/Paris) doesn't already offer ?

Why would i want to trust you or your service on an arbitration for what quite often amounts to large sums of money ?

Both parties would need to sign up to your services or it would need to be written in to the contract (instead of ICC rules/force majeur/arbitration clauses already used) and how do you legally enforce it ?

This is probably a non starter !

In case it was not clear, the information was provided in the prevailing Swiss context. Yes there is a fine line between arbitration and mediation and the comment is to read in the expression to offer arbitration services without a due process as envisaged by a legal system. Commercial contracts can mention an arbitration process as a first course of resolution, including where the arbitration is to take place. In the same vein, an arbitration process is a simpler and quicker process that generally costs less than a due legal process. A ruling by an arbitrator is not binding to either party. Many commercial contracts must be notarized, before they can take effect; This again in Switzerland. The extent to which parties can come to legally binding agreements in Switzerland that do not conform to Swiss OR rules would be an interesting subject.

If there is an arbitration claus ein a commercial contract that is signed by both parties, it is enforcable, legally.

One of the usual clause states each side appoints their own arbitor, who then either make an agreeement of failing which, the two arbitors appoint a third arbitor who makes a ruling. Costs are bourtne by the losing party.

Hmmm... where do I start. Send me a PM if you need advice on arbitration.


@Geox: arbitration is a due legal process; a ruling by an arbitrator is binding; generally only real estate, inheritance and marriage contracts must be notarized, most commercial contracts do not!

I do not know the Swiss legal system, but if it is remotely similar to the US system I think you are going to have a difficult time with this venture for several reasons. First, if you are not a lawyer then you will have a difficult time obtaining the necessary credibility to break into the system which is going to be controlled by the profession. Second, the idea of deciding a dispute on paper is probably not going to appeal to most people in a dispute. Third, the costs are not going to be substantively different between a normal binding arbitration and the model you suggest. I do not mean to sound negative about your idea, however, and I hope it does well. Perhaps these comments will help you market your concept more effectively. Best wishes.

^^^
what is the point of making a comment if you have no understanding of the relevant context.

I mean, to put it this way, what you are saying is almost the same as:

I don't know anything about oranges, but if oranges are like apples, then they are sweet and they don't need to be peeled and have little seeds inside.

Sort of contradictory, no?

Point I'm trying to make is that you could use less of the appropriate arbitrators' time = lower costs.