Arbitration

Time limits

- limitation applies (s13) - expiry of time limit in arbitration clause bars commencement: - after exhaustion of arbitral processes (s12(2)) on application of party to HC, HC has discretion to extend time (s12(1)) after or before expiry of time limit (s12(4)) if: o change of circumstances not contemplated by parties; or o conduct of R makes it unjust to hold A to strict time limit (s12(3))

Requirements for arbitration

- There must be an arbitrable dispute: a private law dispute - There must be an agreement to arbitrate - Agreement to arbitrate must be in writing - Nature of dispute must come within the terms of the arbitration agreement. - any contractual precedent to arbitration must be complied with. - Parties must have legal capacity to enter into agreement. - Must find arbitral tribunal

Impartiality rather than independence

- can be impartial but NOT independent e.g. specialist area, acted for / against party before - arbitrator under duty to disclose any conflicts of interests - HC can remove arbitrator if impartiality is compromised (s24) • test: would a fair-minded and informed observer conclude there was actual bias / real possibility of bias?

Summary of drawbacks

- may not be cost-saving if process similar to trial is used. - decision left to third party which is binding. - abitrator may not have wide powers of the judge and may not be able to effectively control non cooperating party. -arbitrator needs to be selected with care as regards expertise, experience or to ensure parties will have confidence in the award made.

Summary of advantages

- parties can select arbitrator with appropriate expertise and experience - process is private - many aspects of process can be tailored to needs of dispute. - process can be relatively structured if parties wish it - can be relatively simple and cost effective IF decided on written submissions rather than hearing,

1. Preliminary meeting

- shortly after tribunal appointed for parties and arbitrators to meet. - tribunal may discuss jurisdictional matters and to make procedural directions for the preperation.

Commencement: How to start?

-By sending a notice of arbitration and then appointing the members of arbitral tribunal. -Notice has to be in writing and must comply with requirements for appointing the arbitral tribunal. - Can be met by a reasonably simple letter. - Parties free to agree on the procedure in agreeing arbitrator including procedure for appointing any chairman or umpire. - If 3 man, then parties choose one each and both arbitrators decide on last one together. - Arbitrators may be chosen via recommendation, knowing of, or nominated by institution or by President of a professional body. If parties don't agree: One arbitrator - jointly appoint within 28 days of notice of arbitration Two arbitrators - each party appoints one within 14 days of notice of arbitration Three arbitrators - rules for two + two appointed appoint third as chairman Two arbitrators + umpire - rules for two + two appointed appoint third before any substantive hearing / forthwith if can't agree on matter relating to arbitration Any other case: failure of appointment procedure (s18)

Arbitration v litigation

1. Choose arbitrators with specialist knowledge (could use same person used for mediation) v cannot choose judge 2.Don't have to wait - can choose arbitrator who's available when you want v need to wait for appropriate level of judge/courtroom 3.Can choose seat (whose law applies) and choose venue independently v can't choose which law applies 4.Enforceability anywhere, because of New York Convention v Jurisdiction, subject to mutual recognition 5.Impartial, not independent v Independent and impartial 6.Private (no legal aid) v Some legal aid 7.Flexible: place, seat, arbitrators (no.), procedure (disclosure, evidence, appeals), language v Not flexible 8.Can make arbitration final in way you can't with litigation 9.Cheaper (no court fees) BUT pay for arbitrator's time, and venue v Usually higher costs (court fees) BUT don't pay for judge's time or court 10. Arbitrators not necc lawyers, decision not necc on legal grounds e.g. equity arbitration, trade norms v Decision must be on legal grounds 11. Remedies flexible v Remedies mainly monetary 12. Privacy and confidentiality of all documents v Public 13. Allows parties to retain relationship v Relationship often destroyed 14. Virtually impossible to join third party (all parties must agree to joinder) v Can join in third party 15.Once choose to submit, must follow through 16.No power of tribunal / arbitrators to enforce procedural orders (s41 and 42) v Subject to CPR with strict sanctions if don't comply

Procedure in Arbitration:

Arbitral institutions usually have own stages and procedure. In the absence of agreement the default provisions of s4(2) Arbitration Act 1996 will apply.

Arbitration (fundamental concepts)

Arbitrations governed by Arbitration Act 1996 are subject to three principles as set out in s1: (a) objective is to obtain fair resolution of disputes by an impartial tribunal without necessary delay or expense (b) parties should be free to agree how their disputes are resolved, subject only to safeguards for PI. (c)... the court should not intervene Where parties refer dispute to Arbitration it is implied that they want their dispute decided: (a) by a tribunal they chose (b) in a neutral location (c) in privacy (d) speedily and effectively (e) with light but efficient supervision by the courts o med-arb - must try mediation before arbitration

The hearing

Arbitrators can choose to adopt either and adversarial or inquisitorial (civil law system) approach to the hearing.

Closing of proceedings

Arbitrators may include mechanism to close proceedings: - under date designated in tribunal directions - set period after a stage in the process - after the last closing submission at the hearing.

Mediation- arbitration

As its name suggests, mediation-arbitration, or med-arb, combines mediation and arbitration. First, a mediator tries to bring the parties closer together and help them reach their own agreement. If the parties cannot compromise, they proceed to arbitration—before that same third party or before a different arbitrator—for a final and binding decision.

Enforcement of awards

Domestic awards: - May be enforced by bringin an ordinary civil claim or summary procedure under s66 - Section allows the court to grant permission to enforce award in the same manner as judgment or order of court. - Permission is sought by issuing an arbitration form in High Court which is considered without notice. Cross-border enforcement of arbitral awards: - Achieved through the New York Convention 1958 - Must produce the duly authenticated origninal award or duly certified copy and the original arbitration agreement or a duly certified copy. - Where permission is given, judgment may be entered in terms of award. -The New York Convention makes arbitral awards made in one signatory state enforceable in other signatory states as if they were court judgments. Many states have signed up to the new York Convention but it is easier to enforce an arbitral award internationally than it is to award a court judgment because court judgments are reliant on limited bilateral enforcement agreements.

Advantages of institutional arbitration

For those who can afford institutional arbitration, the most important advantages are: a. the availability of pre-established rules and procedures which ensure the arbitration proceedings begin in a timely manner; b. administrative assistance from the institution, which will provide a secretariat or court of arbitration; c. a list of qualified arbitrators to choose from; d. assistance in encouraging reluctant parties to proceed with arbitration; and e. an established format with a proven record.

Awards

Four different types of awards available: 1. Procedural orders- provide directions and measures designed to preserve evidence or the subject matter of the dispute ('conservatory matters') while an arbitration is proceeding. 2. interim awards and awards on different issues- disposes of one or more substantive issues leaving other issues ot be decided later. 3. main awards- terminates substantive proceedings 4. costs awards- provide for the payment of the costs incurred in the arbitration between the parties.

2. Pre-trial hearing

If arbitration complex may hold pre-trial meeting few weeks before expected date of hearing. Main purpose is to review what has been done in preparation for hearing and to make directions.

Contractual foundation

In situation where contractual dispute with agreement to arbitrate there will often be four contracts: - underlying contract - agreement to arbitrate - agreement between parties and and an arbitral institution referring the dispute to arbitration under aegis of that institution. - agreement appointing the arbitrators, made between parties or the abritral institution and the individual arbitrators.

Directions on procedure and evidence

It is for the tribunal to decide all procedural and evidential matters that have been referred to it, subject to the rights of the parties to agree such matters between themselves (s34(1) 1996). Such matters may include: -when and where to hold the proceedings -the languages to be used and whether translations are required. - whether written points of claim and defence will be used and their form - whether documents should be disclosed and produced and at what stage - whether to apply the strict rules of evidence - whether expert evidence is required, and the time manner and form in which evidence should be exchanged and presented. - whether tribunal should take initiative ascertaining the facts law and - whether and to what extent there should be oral or written evidence or submissions. Tribunal may fix the time within which any directions are to be complied with and may if it thinks fir extend the time so fixed

Mandate of arbitrator

Jurisdiction of arbitration depends on the mandate given by parties. Will not have jursidiction unless dispute comes within terms of particular reference to arbitration and the separate agreement between the tribunal and the parties appointing the tribunal. Meaning that, arbitrators cannot make a decision: - against a person who is not a party to the arbitration agreement - on matters not covered by the arbitration agreement or - matters not covered by the parties' agreement with the arbitrators.

Confidentiality

Long established principle of arbitration law that proceedings are private and confidential. Written agreement usually includes terms as regards confidentiality. Parties normally agree on extent of mutual disclosure. If no agreement, tribunal will determine scope of disclosure. It is not normally acceptable for one party to provide information to the other side. Arbitrator usually bound by a contract confidentiality clause. Court known to support confidentiality of documents prepared for the process. However, disclosure may be permitted where : - there is consent - where court grants permission - disclosure reasonably necessary for the protection of the legitimate interests of an arbitrating party; or where the interests of justice require disclosure. Once again, it is not normally possible in an adjudicative process for one party to provide confidential information to the tribunal which is not disclosed to the other side.

No right to an oral hearing

Subject to contrary agreement between parties, tribunal can decide whether and to what extent there should be oral evidence or submissions. s33(1) 1996 Act - must have regard to: - need to act fairly; giving each party chance to put case and deal with case of other side. - need to avoid unnecessary expense and delay. Arbitrators have right to proceed with hearing even where unwise to do so. Institutional rules may give powers the right to insist on an oral hearing.

Silence in arbitral institutional rules

Where rules of an arbitral institution apply to an arbitration, but are silent on non-mandatory matter covered by the AA, the relevant provision of the AA applies. This follows 4(3), which allows parties to make use of institutional rules, read together with 4(2). This provides that while the parties can make the own arrangements by agreement, the non-mandatory provisions lay down rules which apply in the absence of such agreements.

Advantages of ad hoc arbitration

a. A properly structured ad hoc arbitration should be more cost effective, and therefore better suited to smaller claims and less wealthy parties. b. A primary advantage of the ad hoc process is its flexibility, enabling the parties to decide the dispute resolution procedure themselves. However, this will of course require a greater degree of effort, cooperation and expertise from the parties to determine the arbitration rules. c. Another reason why ad hoc arbitration is less expensive than institutional arbitration is that the parties will only have to pay fees for the arbitrators, lawyers or representatives and the costs incurred in conducting the proceedings rather than paying fees to an arbitration institution.

Disadvantages of adhoc arb

a. Parties wishing to include an ad hoc arbitration clause in the underlying contract between them, or seeking to agree the terms of arbitration after a dispute has arisen, have the option of negotiating a complete set of rules which meet their needs. However, this approach can require considerable time, attention and expense with no guarantee that the terms eventually agreed will address all eventualities. Furthermore, if parties have not agreed on arbitration terms before any dispute arises they are unlikely to fully cooperate in doing so once a dispute has arisen.

Disadvantages of institutional arbitration

a. The primary disadvantages of institutional arbitration are: administrative fees for services and use of the facilities, which can be considerable if there is a large amount in dispute - sometimes, more than the actual amount in dispute; b. bureaucracy from within the institution, which can lead to delays and additional costs; c. the parties may be required to respond within unrealistic time frames.

When can court get involved?

o general rule: judicial non-intervention o exceptions: 1. enforcement of arbitration clause in an agreement 2. commencing an arbitration: composition of tribunal 3. interim stages and remedies e.g. compelling witness, security for costs (tribunal can make BUT can't enforce, court will look whether tribunal has tried; court = last resort) 4. reviewing awards 5. enforcement of awards

Types of arbitration

o institutional: - arbitration administered by arbitral institution + conducted in accordance with its rules - institutional rules sit alongside AA e.g. AA "reasonable time" institution "28 days = reasonable" - Act silent : agreement / rules - if rules silent : Act o ad hoc: no arbitral institution - parties decide procedure themselves

Duties of the tribunal and parties

o parties (s40) - ensure proper and expeditious conduct of arbitration - comply without delay with all orders of tribunal o tribunal (s33) - act fairly and impartially between parties - give parties reasonable opportunity to put case and deal with opponents - adopt suitable procedures - can be inquisitorial as opposed to adversarial (s34(2)(e) and (g)) - avoid unnecessary delay and expense - produce fair resolution

Main awards

o parties can agree on form of award (s52(1)) o BUT default provisions usually adopted to ensure enforceability: - in writing, signed by all arbitrators (s52(4)) - reasons for decision (unless agreed award / parties agree to dispense) (s52(4)) • if reasons dispensed with o CANNOT appeal to HC on point of law under s69 o jurisdiction of HC to determine preliminary points of law excluded (s45(1)) - state seat + date of award (s52(5)) o date of award - tribunal may decide what is taken to be date (unless parties agree otherwise) (s54(1)) - if no decision, date = when signed by last arbitrator (s54(2)) o remedies - parties free to agree (s48(1)) - if no agreement, arbitrators can: • make declarations (s48(3)) • order payment of sum of money in any currency (s48(4)) • order specific performance of a contract (other than for land) • order rectification, set aside or cancellation of deed / document (s48(5)(c)) • grant final mandatory and prohibitory injunctions (s48(5)(a)) • award simple / compound interest to meet justice of case (s49(3), (4)) o notification of award - parties free to agree - if no agreement, notified by service of copies of award without delay (s55(2)) o binding effect - parties free to agree - if no agreement = final + binding on parties + those claiming though / under them (s58(1)) challenging the award • if arbitral processes exhausted (s70(2)), can appeal to HC within 28 days of completion of arbitral process (s70(3)) Costs awards o tribunal may make costs award (unless parties agree otherwise) (s61(1)) o costs follow the event, unless inappropriate (s61) o recoverable costs of arbitration and arbitrators must be reasonable (s63, 64) o agreement for party to pay whole / part of costs = only valid if made after dispute arises (s60)

Serious irregularity

o serious irregularity (s68) - test: is there a serious irregularity causing substantial injustice? (s68(1)) - meaning of serious irregularity (s68(2)) (a) tribunal fails to comply with general duty to act fairly + impartially (b) tribunal fails to use parties' agreed procedure (c) tribunal fails to deal with issues (d) arbitral institution exceeds powers (e) effect of award uncertain / ambiguous (f) award obtained by fraud / in fashion contrary to public policy (g) failure to comply with requirements as to form of award (h) any irregularity in conduct of proceedings / in award that is admitted by the tribunal / arbitral institution Powers of HC to deal with serious irregularity (s68(3)) (d) remit whole / part of award to tribunal for reconsideration; or, only if (a) inappropriate (e) set aside whole / part of award; or (f) declare whole / part of award to be of no effect o loss of right to object (s73) - right to challenge lost if not made at the time ("forthwith") or within time stipulated in the arbitration agreement / AA (unless shows that couldn't have discovered grounds with reasonable diligence)

Appeals

s1(c) 1996- Principle of limited court intervention in arbitrations- limited grounds for seeking judicial review of arbitral awards. Under s68 it is possible to challenge an award on the ground of serious irregularity. s69 it is possible to appeal on a point of law- parties may exclude this in agreement. Both provisions are applied restrictively.

Stay on proceedings

s9(1) AB Act 1996 allows other party to apply for a stay of court proceedings (to be referred to arbitration) - to prevent a party from breaching an agreement to arbitrate in bringing court proceedings Test: Is dispute in the litigation a matter *which under the (arbitration) agreement is to be referred to arbitration?* If it is the court 'shall' grant a stay, unless the court is satisfied that the arbitration agreement is null and void, unoperative, or incapable of being performed.