Arbitration Flashcards
What is the aim of arbitration?
To obtain a fair resolution by an impartial tribunal
Where the parties have agreed to refer to arbitration, what does this imply?
They want a decision:
- By a tribunal they have chosen
- In a neutral location, with neutral arbitrators
- In privacy
- Speedily and efficiently
- With light but efficient supervision by the courts
What kind of disputes are referred to arbitration?
Almost any type of dispute can be referred
Arbitration is most used for contractual disputes, the agreement to arbitrate usually found in a clause within the contract
In contractual disputes, what are the 4 contracts usually in play in arbitration?
- The underlying substantive contract
- The agreement to arbitrate (separate even when contained within a clause)
- The agreement between the parties and arbitral institution referring the dispute to arbitration
- The agreement between the parties and/or the institution and arbitrators, appointing those arbitrators
What is the effect of the separability of the arbitration clause?
- An arbitration agreement contained in another does not become invalid just because main agreement is invalid, and it should be treated as a distinct agreement
- It will only be invalid if the alleged invalidity affects the arbitration clause itself
What is the mandate of the arbitral tribunal?
The courts tend to give a wide interpretation to the tribunal’s mandate (partly in support of the one-stop policy, partly in recognition that the precise scope tends to evolve as it is investigated)
- Depends on the mandate given by the parties
- A tribunal won’t have jurisdiction unless the dispute comes within the terms of the particular reference to arbitration
- Jurisdiction is limited by the agreement, and agreement between the tribunal/parties
- It is only authorised to determine the dispute referred to it and on the terms
By accepting their appointment, what do the arbitrators agree to do?
- To consider the evidence and make decisions on the matters referred to them
- They are obliged to make decisions on all the central issues of the dispute, as well as on subsidiary issues that have to be decided en route to the central issues
- Arbitrators are not necessarily prevented from making decisions on matters arising after appointment. What is covered depends on the terms of appointment
What are the requirements an effective reference to arbitration?
- Must be a dispute/difference
- Dispute must be ‘arbitrable’
- Must be an agreement to arbitrate
- (The agreement must be in writing for the AA to apply)
- Nature of the dispute must come within the terms of the agreement
- Parties must have had the capacity to enter into the agreement
- Conditions must be complied with
- Parties must find a tribunal willing to act and decide the dispute
- Dispute must come within the terms of the particular reference to arbitration
What is a dispute or difference?
A claim admitted does not develop into a dispute. It is a response that makes it a dispute
There will be no dispute if:
- D does not dispute liability
- The contention now being relied upon by D was never put to C
- The right to dispute the matter has been lost under the contract or by law
Which disputes are arbitrable?
- Only issues of a private law nature (with contractual basis)
- Public disputes are not completely off limit –EU competition law and ECHR
Agreement to arbitrate
- An ‘arbitration agreement’ is one to submit present or future disputes to arbitration
- Can be made before or after the dispute arose
- Can be express written term of the contract
What happens if a party breaches an agreement to arbitrate?
- A party is bound to its pre-dispute agreement
- If a party ignores the clause, any litigation may be stayed
- Litigation may also be a repudiatory breach of the agreement
- Correspondence denying its existence may also be a repudiation
- A party in breach may be liable in damages
Is a second contract subject to an arbitration clause in a main contract?
- Common to have an arbitration clause in main agreement, and a clause in a subsidiary contract to adopt all or some of the terms in the main contract (incl. arbitration clause)
- The subsidiary is subject to the arbitration clause only if there is a specific reference to it in the subsidiary contract
Can a third party enforce the arbitration clause under Contract (Rights of Third Parties) Act 1999?
A third party may in his own right enforce a term if:
- The contract expressly provides that he may
- The term confers a benefit on him (unless it appears that the parties did not intend the term to be enforceable by a third party)
Where a third party right exists and there is a valid arbitration agreement, the third party shall be treated as a party to the arbitration agreement
s8(2) applies where the parties expressly gave the third party a right to arbitrate (here, unlike s8(1), the third party can choose whether to arbitrate or not)
The courts are reluctant to find that third party rights come within arbitration clauses
What about disputes covering several contracts?
- Where each has a different arbitration clause, it must be agreed which takes precedence
- Otherwise the clause in the contract at the commercial centre of the transaction applies
What happens with a written agreement?
AA only applies to agreements if:
- The agreement is in writing, whether or not it’s signed by the parties (includes agreement by reference to terms that are in writing) OR
- Made by exchange of communication in writing OR
- Evidenced in writing