A recurring issue in contract negotiations is often whether to include an arbitration or litigation clause in the event of a dispute. In contrast to litigation, arbitration is an alternative dispute resolution, whereby the dispute is resolved privately outside the court by one or more arbitrators that the parties themselves have appointed.
The reason that arbitration is often the preferred dispute resolution in agreements that are more complex is among others, the confidentiality and the legal expertise of the arbitrators chosen specifically for that case. This combined with presumably shorter run time has often resulted in arbitration being chosen as the dispute resolution mechanism, which again results in fewer complex cases being processed for the ordinary courts.
In the Act relation to mediation and procedure in civil disputes (the “Dispute Act”) which was introduced in 2005, a provision was included, stating that if the parties agreed, they may appoint an expert lay judge to ensure that there were expertise present that suited the case. The provision was included to entice more business to choose ordinary litigation, rather than arbitration. However, pursuant to the Dispute Act, the court were ultimately in charge of determine whether the appointed expert lay judge should be appointed.
It has been argued that the provision as stated does fulfil the purpose it is set out to fulfil, and that the ordinary courts should be chosen more often as the dispute resolution, than what the case is today. It was specifically pointed out that by revising the provision, the parties involved in contract negotiations may be more enticed to choose ordinary litigation, which again would result in more cases being treated before the ordinary courts, which ultimately would lead to a boost in recruitment for the ordinary courts, alongside a greater public clarification on certain legal subjects.
On 12 July 2018, a consultation paper was released by the Department of Justice, proposing certain changes in the Dispute Act as a part of their evaluation of the Act. In addition to the proposed changes concerning the rules of appeal, mandatory proceeding before the Conciliation Board and small claims procedure, an evaluation of today’s arrangement in relation to expert lay judges was conducted.
In the consultation paper, the Department of Justice points out arguments made against the provision as stated today and argues that the provision should be amended in such a way that more cases of a complex nature are facilitated towards the ordinary courts. The department further suggests that the way to facilitate is by changing the provision in a way that makes litigation a more viable solution for the contracting parties. They recommend that a new provision be added in § 9-12 of the Dispute Act, stating that the court shall be appointed with a legal expert lay judge if it is agreed between the parties. The appointment is therefore not subject to the approval of the court. However, the appointment is still subject to the ordinary qualifications, i.e. that the appointment shall not be unnecessary given the size of the case, the importance of the case and the legal questions raised or that the court finds particular reasons against it.
The deadline for filing a response to the consultation paper is set to 20 October 2018.