Resolve IP issues with the help of a third party

This IP First Response website has been designed to help IP rights holders navigate IP infringement and enforcement by making it visible, accessible, and to provide information about the factors involved in pursuing different options. It does not provide legal, business or other professional advice, and none of the content should be regarded as recommending a specific course of action. We welcome any feedback via our IP First Response feedback form and by emailing us.

What is it?

Arbitration is a type of alternative dispute resolution (ADR) in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. The arbitrator is often someone with a high level of expertise in the specific field of law relevant to the industry or subject matter of the dispute.

Arbitration can be somewhat similar to court or tribunal hearing, but often shorter and more flexible version.

Parties are typically expected to produce evidence and submissions before the arbitrator to make a decision.
Usually, the parties to the dispute must agree before the process that arbitrator’s decision will be binding and enforceable.
Arbitration is generally seen as an efficient, impartial, and enforceable process to resolve both domestic and international commercial disputes, including IP matters.

Arbitration may be voluntary, required under a court order, or as part of a contract – arbitration clauses are often added to contracts, stipulating that the parties resolve future disputes using this method.

Arbitration requires agreement from both parties, which can be challenging to obtain after a dispute arises, especially in cases involving no prior contractual relationship.

What are the benefits?

The potential outcome(s) of arbitration are highly enforceable (under International Arbitration Act 1974 (Cth), as Australia is a signatory to New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.)
Arbitration can be conducted across different jurisdictions and arbitral awards are easy to enforce in foreign jurisdictions under the New York Convention, which is an advantage over court proceedings.
Parties can choose their arbitrator/s and have some flexibility and control over shaping the process (i.e. scheduling, rules of evidence and procedures).
Parties can narrow the scope of a dispute to the issues that matter to both sides.
Arbitrators are likely to have sector-specific expertise in relation to the subject matter of the IP dispute, which would be much desirable when the dispute concerns highly technical issues.
The details and outcome of arbitration can be confidential, subject to the parties’ agreement, allowing parties to discuss commercially sensitive topics freely.
Arbitration may offer a faster and more cost-effective alternative to court proceedings.

What are the Risks?

Arbitral awards are generally final with limited grounds for appeal, which can be a risk if the decision is unfavourable.
In some cases, arbitration can become as expensive as court proceedings, particularly if complex IP issues require specialised arbitrators.
The outcome of arbitration can be unpredictable as arbitration does not necessarily follow the rules of procedure and evidence applicable in court proceedings.
It is unclear if arbitration decisions set a legal precedent; its ruling will apply to the parties to the dispute only. This may be a concern if your IP strategy relies on setting a precedent for future decisions.

What are the possible outcomes?

There are a wide range of possible outcomes, including but not limited to:

If parties to a dispute agree to resolve their dispute via arbitration, the arbitrator will make a ruling (an ‘arbitral award’) at the conclusion of the process.
Parties might reach a negotiated settlement prior to the arbitrator making an arbitral award and withdraw from the process.
In some rare cases, the arbitral award can be subject to further court proceedings due to factors such as lack of validity in the arbitration agreement or the dispute concerning non-arbitrable subject matters.

What might the cost be?

The costs of arbitration will typically include:

Arbitrator’s fee
Administrative fees (i.e. filing fee) payable to the arbitral institution
Legal fees for engaging an IP professional to act on your behalf (optional).

A considerable portion in the costs of arbitration process is the arbitrator’s fee. The hourly rate of an arbitrator would differ significantly depending on the amount in dispute and which arbitration/arbitral institution the parties choose. Due to the high legal and subject-matter expertise required of an arbiter, the cost of engaging them can be extremely expensive.

The World Intellectual Property Organization (WIPO) Arbitration and Mediation Center, which is one such ADR provider offering both arbitration an expedited arbitration services, provides that cases under the WIPO Expedited Arbitration Rules cost around US$48,000 and cases under the WIPO Arbitration Rules cost some US$165,000 (48% of such cases involving a three member tribunal and 52% a sole arbitrator).

While legal representation is optional, very often parties to the dispute would choose to engage legal professionals to give advice and represent them. As such, the largest portion of arbitration-related costs is likely to be legal fees for engaging legal professionals.

How much time might be involved?

Length of arbitration process can vary drastically depending on the complexity of the subject matter and also the procedural rules agreed by respective parties. The International Chamber of Commerce (ICC)’s Dispute Resolution 2023 Statistics show the average duration of arbitrations was 27 months. Some arbitration providers also provide expedited arbitration processes designed to resolve the dispute in a shortened timeframe.

Who can use this?

Anybody who is a party to a dispute.

Who’s involved?

Parties to the disputes.
Arbitrator(s), whose role is to hear both parties and make a ruling.
(Optional) Legal representation for one or more of the participants.
(Optional) Experts giving evidence for the arbitrator to consider.

How much is this used?

This is still being investigated and will be updated as the tool is refined.

What do you need to proceed?

Before you engage in arbitration, you should think about whether arbitration is a suitable dispute resolution method for your situation and which arbitration types would suit your needs best.

Some questions to consider before you take your dispute to arbitration:  

Is there an existing contractual relationship between the parties which requires them to take disputes to a specific arbitral institution?
If not, is the other party likely to agree to take the dispute to an arbitrator or an arbitral institution?
Does the dispute concern a highly technical matter which would benefit from having a decision-maker with a high level of expertise in the specific sector or technology?
Is the subject matter of the dispute considered arbitrable in relevant jurisdictions? Though most areas of IP are considered arbitrable in many jurisdictions, questions relating to validity or registrability of intellectual property are deemed as non-arbitrable in some jurisdictions.
Is there a clear benefit that can be achieved from having the matter heard under procedural and evidence rules different from those of court proceedings?
Is more than one arbitrator required? For example, do the parties come from different cultural and linguistic backgrounds? Or would it be beneficial to have both a technical expert and a legal practitioner as co-arbitrators?

There is a wide range of arbitrators and arbitral institutions, ranging from public-funded bodies to private practitioners. Here’s a list of directories and arbitral institutions that may assist you in finding an arbitrator/s you would like to engage:

The Resolution Institute's Dispute Resolver Directory list
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) provides small business and family enterprises with information about dispute resolution options, access to mediation and alternative dispute resolution processes including arbitration.
The World Intellectual Property Organization's (WIPO) Arbitration and Mediation Center offers mediation, arbitration and expert determination to enable private parties to settle their international commercial disputes. For more information, see WIPO ADR options.docx
the Australian Centre for International Commercial Arbitration  
the Australian Disputes Centre.

You can also seek help from legal professionals to seek advice on whether arbitration or other forms of ADR would be suitable for your situation and represent you throughout the dispute resolution process. You can find a qualified IP attorney to assist you at: Find an IP attorney or firm | Trans-Tasman IP Attorneys Board.