Arbitral Tribunals

Question 1

Importance of the commencement date

Answer 1

• There are two potential sets of time limits that may result in unsuccessful arbitration:
• Any contractual restriction on bringing claims
• Any limitation period

Question 2

Contractual time limits

Answer 2

Unless the wording of the clause makes it clear that compliance with a time limit is a condition, but does not limit the right to arbitrate, expiry of a contractual time limit will bar commencement of arbitration

Question 3

Limitation periods

Answer 3

• LA 80 – in contract and most tort claims the period is six years
• Limitation runs from the day after the cause of action accrues until the date a claim is brought

Question 4

Date of commencement of arbitration

Answer 4

• The parties are entitled to agree when the arbitration is regarded as having commenced for limitation purposes
• If there is no agreement, there are three rules for commencement:
  
  • Where the arbitrator is named in the agreement, it’s when one party services on the other party notice in writing requiring him to submit the dispute to the arbitrator
  • Where the arbitrator is to be appointed by the parties, it’s when one party serves on another notice in writing requiring him to appoint an arbitrator or to agree on an appointment
  • Where the arbitrator is to be appointed by someone else, it’s when one party gives notice in writing to that person requesting him to make such an appointment

Question 5

Avoiding the consequences of failing to comply with a time limit

Answer 5

• With a contractual limit, there may be a provision in the institutional rules giving a discretion to the tribunal or institution to grant more time (rare)
• Alternatively, C may apply to the High Court under AA for an extension
• Any arbitral process must be used first
• Other than LA 80 provisions which give the court some flexibility over certain limitations, there is no power to forgive a C who fails to comply with a limit
• However, since limitation is a procedural defence, it is only effective if raised by the respondent, and a time-barred arbitration will continue if limitation is not pleaded!

Question 6

NOTICE OF ARBITRATION

Answer 6

• A notice has to be in writing and must comply with the relevant subsection of s14 on appointing the tribunal
• These requirements can be met with a simple letter, which tends to include various other details in order to comply with further institutional rule requirements, e.g.
  
  • C’s address of service
  • Brief statement of the nature and circumstances of the dispute
  • Brief statement of the relief claimed
  • C’s proposal for the number of arbitrators
  • Name and address of the respondent
• Notice is often sent to the respondent (and institution too, if this applies)

Question 8

Number of arbitrators

Answer 8

• The parties are free to agree this
• If there is no agreement, the tribunal will be one arbitrator
• A clause that stipulates ‘arbitrators’ but fails to specify the number has the same effect
• Unless otherwise agreed, an agreement of an even number of arbitrators (risking deadlock) shall be understood as requiring an additional arbitrator

Question 9

Appointing the arbitrators

Answer 9

• The parties are free to agree on the appointment procedure
• Appointment may also be done by an institution
• The application form for institutional appointment asks for details e.g. the nature of the dispute, whether there is an agreement, which rules apply, the seat, law and language

Question 10

Chairperson

Answer 10

• Where the tribunal has a chair, the parties are free to decide on his functions and powers
• Absent such an agreement, decisions, orders and awards are all made by all/majority of the arbitrators
• Where there is an even split, the chairperson’s view prevails

Question 11

Umpire

Answer 11

• Absent a contrary agreement, the umpire attends the proceedings and receives the same documents
• Decisions are made by the other arbitrators unless and until they cannot agree
• In that event they must give notice in writing to the parties and the umpire, and the umpire then replaces the tribunal as if he were the sole arbitrator
• It’s not that efficient to pay an arbitrator to wait in the wings, so it isn’t common

Question 12

Judges as arbitrators

Answer 12

• A judge of the Commercial Court or the Tech and Construction Court may accept an appointment as sole arbitrator or umpire
• Requires permission of the Lord Chief Justice having regard to the state of business

Question 13

Failure of appointment procedure

Answer 13

• Where the above procedures break down, there are default powers in the AA
• These may result in C’s nominee becoming the sole arbitrator, or may require an application to the HC to resolve the problem

Question 14

CONTRACTUAL BASIS OF THE ARBITRATOR’S MANDATE

Answer 14

When a person accepts an appointment as arbitrator, they enter into a contract with the parties, with the terms usually including:

• Identification of the dispute
• The terms on which the adjudicator will act (incl. fees)
• Basis on which the arbitration is to be conducted
• Agreement by the arbitrator to conduct the arbitration and issue an award without undue delay (or within any time frame agreed with the parties or in accordance with institutional rules)

Once appointed, he is contractually bound to complete the mandate

Question 15

Qualifications of arbitrators

Answer 15

There are no requirements in general law

Arbitration agreements commonly specify such qualifications, or status

Question 16

Impartiality and independence

Answer 16

• All arbitrators must be impartial
• It is ‘impartial’ rather than ‘independent’, because it is possible to be impartial and not be independent
• If their impartiality is compromised, it is possible to be removed
• This may happen if there is actual bias or real possibility of bias (based on whether a fair-minded and informed observer would conclude a real possibility of bias)
• Some institutional rules require ‘independence’

Question 17

TERMS OF REFERENCE

Answer 17

• Formal terms of reference are unusual but are standard with ICC arbitrations
• Drawn up by the tribunal on the basis of the documents or after an initial hearing
• In addition to the details of those involved, place of arbitration etc, it summarises the respective claims and counterclaims and relief sort.
• It sets out a list of the issues to be determined, thereby providing a clear definition of the limits of the arbitrator’s mandate

Question 18

Removal

Answer 18

• Parties are free to agree in which circumstances arbitrator’s authority may be revoked
• Absent an agreement, his authority may not be revoked except by the parties jointly, or the institution
• Joint revocation must be in writing, unless the parties agree to terminate the agreement
• Early termination is potentially a breach of contract that may lead to a claim of damages
• It is not a breach if the appointment contract is discharged or if the termination is for a reason permitted in the agreement
• It may be discharged if the arbitrator is in fundamental breach or it becomes impossible for him to continue
• Provided every other avenue has been exhausted, a party may apply for a removal order if:
  
  • There are justifiable doubts as to his impartiality
  • He does not possess the required qualifications
  • He is physically or mentally incapable or conducting proceedings or there are justifiable doubts as to his capacity to do so
  • He has refused or failed to properly conduct proceedings, or to use all reasonable dispatch in conducting or making an award, and substantial injustice has been/will be caused to the applicant
• The court may make such an order as it thinks fit with regard to his entitlement (if any) to fees/expenses, or repayment of such

Question 19

Resignation

Answer 19

Also a potential breach of contract, so AA provides the parties are free to agree with an arbitrator on:

• The consequences of his resignation
• His entitlement, if any, to fees/expenses
• Any liability incurred by him as a result of having resigned

If agreement can’t be reached, the arbitrator can apply to the court for relief on the ground that resigning was reasonable in the circumstances

Question 20

Death

Answer 20

• His authority ceases on his death
• This can have serious consequences for the parties, who may have to start over
• It is common for parties to insure against death

Question 21

Vacancies

Answer 21

Where an arbitrator ceases office, the parties are free to agree:

• Whether and how the vacancy is to be filled
• Whether and to what extent the previous proceedings should stand
• What effect his ceasing has on any appointment made by him

Absent an agreement, the same procedures apply as where there is a failure to make an initial appointment

• One possibility is that the vacancy will not be filled. In a multi-member tribunal this is called a truncated arbitral tribunal
• The tribunal then determines whether and to what extent the previous proceedings should stand

Question 22

Immunity of arbitrators & arbitral institutions

Answer 22

Immunity of arbitrators

He is not liable for any act/omission unless it is shown to have been in bad faith

This immunity does not apply to any liability upon resignation

Immunity of arbitral institutions

It is not liable for any act/omission unless it is shown to have been in bad faith

It is not liable, by reason of having appointed an arbitrator, for any act/omission by him

These immunities do not cover every situation, e.g. negligence

Question 23

LIABILITY FOR ARBITRATORS’ FEES

Answer 23

• Parties are jointly and severally liable to pay the arbitrators such reasonable fees/expenses as are appropriate
• This does not affect the liability of any party to pay costs of the arbitration or any contractual right of the arbitrator to payment of his fees and expenses
• The tribunal may refuse to deliver an award except upon full payment of fees/expenses
• Applications may be made to the court in the event of an impasse