Arbitration (W19)

Question 1

CPR 62.2 - Arbitration claims

Answer 1

• “arbitration claim” means:
  (a) any application to the court under the 1996 Act;
  (b) a claim to determine:
  (i) whether there is a valid arbitration agreement;
  (ii) whether an arbitration tribunal is properly constituted; or what matters have been submitted to arbitration in accordance with an arbitration agreement;
  (c) a claim to declare that an award by an arbitral tribunal is not binding on a party; and
  (d) any other application affecting:
  (i) arbitration proceedings (whether started or not); or
  (ii) an arbitration agreement.

Question 2

CPR 62.3 - Starting the claim

Answer 2

• Except where paragraph (2) applies an arbitration claim must be started by the issue of an arbitration claim form in accordance with the Part 8 procedure.
• An application under section 9 of the 1996 Act to stay legal proceedings must be made by application notice to the court dealing with those proceedings.
• The courts in which an arbitration claim may be started are set out in Practice Direction 62.
• a judge of the Technology and Construction Court may transfer the claim to any other court or specialist list.

Question 3

CPR 62.4 - Arbitration claim form

Answer 3

An arbitration claim form must:

(a) include a concise statement of:
(i) the remedy claimed; and
(ii) any questions on which the claimant seeks the decision of the court;
(b) give details of any arbitration award challenged by the claimant, identifying which part or parts of the award are challenged and specifying the grounds for the challenge;
(c) show that any statutory requirements have been met;
(d) specify under which section of the 1996 Act the claim is made;
(e) identify against which (if any) defendants a costs order is sought; and
(f) specify either—
(i) the persons on whom the arbitration claim form is to be served, stating their role in the arbitration and whether they are defendants; or
(ii) that the claim is made without notice under section 44(3) of the 1996 Act and the grounds relied on.
- Unless the court orders otherwise an arbitration claim form must be served on the defendant within 1 month from the date of issue.
- Where the claimant applies for an order under section 12 of the 1996 Act (extension of time for beginning arbitral proceedings or other dispute resolution procedures), he may include in his arbitration claim form an alternative application for a declaration that such an order is not needed.

Question 4

CPR 62.8 - Stay of legal proceedings

Answer 4

• An application notice seeking a stay of legal proceedings under section 9 of the 1996 Act must be served on all parties to those proceedings who have given an address for service.
• A copy of an application notice must be served on any other party to the legal proceedings (whether or not he is within the jurisdiction) who has not given an address for service, at
  (a) his last known address; or
  (b) a place where it is likely to come to his attention.
• Where a question arises as to whether:
  (a) an arbitration agreement has been concluded; or
  (b) the dispute which is the subject-matter of the proceedings falls within the terms of such an agreement,
  the court may decide that question or give directions to enable it to be decided and may order the proceedings to be stayed pending its decision.

Question 5

Vol 2 2E-107 - A party to an arbitration agreement (s.9 Arbitration Act 1996)

Answer 5

• It is “a party” to an arbitration agreement against whom “legal proceedings are brought … in respect of a matter which under the agreement is to be referred to arbitration” who may apply under s.9(1) for a stay of such legal proceedings.
• In this context, “a party” includes “any person claiming under or through a party to the agreement”.
• Section 9 cannot apply if the parties to the court proceedings are not the parties (or persons claiming through or under a party) to the arbitration agreement.
• It is possible for the court to impose a stay in favour of a third party on the basis of an intention to rely on a contractual defence which was subject to a term providing for the submission of disputes to arbitration.
• Difficulties can arise where the provisions in one agreement give jurisdiction to the court, and in another refer disputes to arbitration.
• Case: although an action against a company was stayed under the Arbitration Act 1996 s.9 where the same matter had been referred to arbitration, an action against the company’s parent on a guarantee which contained no arbitration agreement should not be stayed; the claimant bank was entitled to enforce the guarantee, if it could make good its claim, regardless of the claim against the principal debtor and the secondary nature of the claim against the guarantor.

Question 6

Vol 2 2E-111 - ‘or after he has taken any step in those proceedings to answer the substantive claim’ (s.9 Arbitration Act 1996)

Answer 6

• Though the application cannot precede the taking of the appropriate step if any to acknowledge the legal proceedings, the application must be made before taking any step to answer the substantive claim.
• Steps to answer the substantive claim:
  (a) application for security for costs
  (b) an application for disclosure
  (c) attending case management conference or an application for directions
  (d) after defence
  (e) after defendant has obtained time to plead and agreed to take short notice of trial
• Opposition to an application for final judgment may constitute a step in the action; but no “step” is taken by a defendant opposing an application who not merely raises the matter of the arbitration clause in his affidavit (or witness statement), but also at the same time takes out an application to stay the claim.
• A defendant’s application for an extension of time to serve its defence does not amount to a “step in the proceedings” to answer the substantive claim.
• The defendant must, however, act timeously. Thus if a defendant resists summary judgment proceedings by serving an affidavit or witness statement in opposition, but omits to issue an application to stay the claim until after a first hearing of the claimant’s application which is merely adjourned for a further and fuller hearing, he will be deemed to have taken a step in the claim.
• A party who initiates an application for a stay pending an arbitration does not take a “step” in the proceedings.

Question 7

Vol 2 2E-112 - Onus of showing that the claim should proceed rather than be stayed for arbitration

Answer 7

• It rests on the claimant to show that the dispute ought not to be referred to arbitration.
• two jurisdictional thresholds which were to be decided by the court before a stay could be granted: first, whether there was a concluded arbitration agreement; and secondly whether the issue in the proceedings was a matter which under the arbitration agreement was to be referred to arbitration.
• The question of whether an arbitration agreement had been effectively superseded in respect of a particular matter by a subsequent consensual contractual process formed part of the second jurisdictional question.
• The standard of proof is the balance of probabilities.

Question 8

s.1 Arbitration Act 1996 (2E-89)

Answer 8

• the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense
• the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest
• in matters governed by this Part the court should not intervene except as provided by this Part.

Question 9

s.9 Arbitration Act 1996

Answer 9

• A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
• An application may be made notwithstanding that the matter is to be referred to arbitration only after the exhaustion of other dispute resolution procedures.
• An application may not be made by a person before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him or after he has taken any step in those proceedings to answer the substantive claim.
• On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed.
• If the court refuses to stay the legal proceedings, any provision that an award is a condition precedent to the bringing of legal proceedings in respect of any matter is of no effect in relation to those proceedings.

Question 10

Jackson ADR - Arbitration

Answer 10

Arbitration involves an impartial arbitrator or tribunal considering both sides of a dispute and making a decision on the issues raised by the parties.

Question 11

Jackson ADR - Arbitration agreements and upholding them

Answer 11

• It is based on an agreement between the parties to refer their dispute or difference to arbitration. That agreement may be made before or after the relevant dispute has arisen.
• This means that there may be a pre-existing arbitration agreement which, when a dispute arises, one of the parties wishes to evade. There is a strong public policy in favour of upholding arbitration agreements.
• An arbitration clause in a contract is separable from the rest of the substantive contract (and so continues to apply even if the substantive contract is avoided).

Question 12

Jackson ADR - Mandatory and non-mandatory provisions in the Arbitration Act 1996

Answer 12

• The intention is that the mandatory provisions cover only the matters that are essential for the effective resolution of disputes referred to arbitration, with everything else covered by non-mandatory fall-back provisions.
• It is common for parties to a particular arbitration to agree to the replacement of all or most of the non-mandatory sections of the Arbitration Act 1996 by agreeing to be bound by the rules of a named arbitration institution, which will typically make alternative provision for the non-mandatory areas.

Question 13

Jackson ADR - Deciding an arbitration

Answer 13

• Where the parties have agreed to refer their dispute to arbitration, that implies they want their dispute decided:
  (a) by a tribunal they have chosen
  (b) in a neutral location (this is of particular importance in international arbitration) and with neutral arbitrators
  (c) in privacy
  (d) speedily and efficiently
  (e) with light but efficient supervision by the courts.

Question 14

Jackson ADR - Requirements for there to be an effective reference to arbitration

Answer 14

(1) there must be a dispute or difference
(2) the dispute must be ‘arbitrable’. This means there needs to be a private law dispute capable of being determined within the limits of a private contractual process.
(3) there must be an agreement to arbitrate
(4) for the Arbitration Act 1996 to apply, the agreement to arbitrate must be in writing
(5) the nature of the dispute must come within the terms of the arbitration agreement
(6) the parties must have had legal capacity to enter into the arbitration agreement
(7) any contractual condition precedent to arbitration must be complied with
(8) the parties must find an arbitral tribunal willing to act and decide the dispute
(9) the dispute must come within the terms of the particular reference to arbitration.

Question 15

Jackson ADR - Contractual foundation of arbitration

Answer 15

• Almost any type of dispute can be referred to arbitration, regardless of the legal classification of the underlying cause of action.
• Arbitration is most commonly used for resolving disputes arising out of a contract between the parties, frequently with the agreement to arbitrate being found in a clause in the substantive contract.

Question 16

Jackson ADR - Mandate of the arbitral tribunal

Answer 16

• The jurisdiction of an arbitral tribunal depends on the mandate given to it by the parties.
• An arbitral tribunal will not have jurisdiction unless the dispute comes within the terms of the particular reference to arbitration.
• This will be limited by the terms of the arbitration agreement.
• It means, for example, that the arbitrators cannot make a decision against a person who is not a party to the arbitration agreement, or on matters not covered by the arbitration agreement, or on matters not covered by the parties’ agreement with the arbitrators.

Question 17

Jackson ADR - Stay of Legal Proceedings

Answer 17

• To prevent a party from breaching an agreement to arbitrate by bringing court proceedings, s 9(1) Arbitration Act 1996 allows the other side to apply for a stay of those court proceedings.
• A stay can be sought whether the legal proceedings said to breach the arbitration agreement are brought by way of claim or counterclaim.
• A stay under s 9 imposes a halt on the legal proceedings, and in practical terms usually has the consequence that the dispute will be referred for final determination by arbitration.
• The main question under s 9 Arbitration Act 1996 is whether the dispute raised in the litigation is a matter ‘which under the [arbitration] agreement is to be referred to arbitration’.
• If it is the court ‘shall’ grant a stay (so this is mandatory rather than discretionary), unless the court is satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed.

Question 18

Jackson ADR - Commencement of arbitrations

Answer 18

• Arbitrations are commenced by sending a notice of arbitration and then appointing the members of the arbitral tribunal.
• A notice of arbitration (also known as a notice to arbitrate) has to be in writing and must comply with the requirements for appointing the arbitral tribunal.
• The parties are free to agree on the procedure for appointing the arbitrator or arbitrators, including the procedure for appointing any chairman or umpire.
• Where the parties agree to a three-member tribunal, the usual position is that each party appoints one arbitrator, and these two arbitrators then appoint a third member who acts as the chairman.
• Arbitrators may be chosen because they are known professionally by, or recommended to, the appointing parties, or may be nominated by an arbitral institution.
• In the absence of contrary agreement, there are default provisions for different types of arbitral tribunal.
• Before being appointed, and throughout the arbitration, each arbitrator is under a duty to disclose to the parties potential conflicts of interest that may give rise to justifiable doubts over their independence or impartiality. Parties are usually given a short period to raise any objections.

Question 19

Jackson ADR - Procedure in Arbitrations

Answer 19

• The complexity of the procedure adopted in an arbitration will depend on what the parties have agreed, which will be influenced by the nature and importance of the dispute
• The overall aim is the fair resolution of the dispute without unnecessary delay or expense.
• Different stages in the process may be heavily prescribed by the rules of an arbitral institution as chosen by the parties. In the absence of agreement the default provisions of the Arbitration Act 1996 will apply.

Question 20

Jackson ADR - Preliminary meeting

Answer 20

• A preliminary meeting will often be convened shortly after the tribunal is appointed. It is an opportunity for the parties and arbitrators to meet, but its main purpose is as a forum for the tribunal to discuss jurisdictional matters and to make procedural directions for the preparation of the evidence needed.
• It may well be possible for directions to be agreed between the parties, which will make a preliminary meeting less necessary. It is becoming increasingly common to hold preliminary meetings by conference telephone calls or through video-conferencing.

Question 21

Jackson ADR - Directions on procedure and evidence

Answer 21

• It is for the arbitration tribunal to decide all procedural and evidential matters that have been referred to it, subject to the right of the parties to agree such matters between themselves.
• The tribunal may fix the time within which any directions are to be complied with, and may if it thinks fit extend the time so fixed.
• Occasionally, court assistance may be sought in securing the attendance of witnesses and taking the evidence of witnesses.

Question 22

Jackson ADR - No right to an oral hearing

Answer 22

• Subject to contrary agreement between the parties, the tribunal can decide whether and to what extent there should be oral or written evidence or submissions.
• In deciding whether to deal with the dispute on the documents or after an oral hearing the tribunal must bear in mind the need to act fairly, giving every party a reasonable opportunity of putting its case and dealing with that of the other side, and the need to avoid unnecessary expense and delay.
• A number of institutional rules reverse this position, and give the parties the right to insist on an oral hearing.

Question 23

Jackson ADR - The hearing

Answer 23

Arbitrators can choose to adopt either an adversarial (the traditional English court method of conducting hearings) or inquisitorial (civil law system) approach to the hearing.

Question 24

Jackson ADR - Closing of proceedings

Answer 24

• The arbitrators will include a mechanism for closing the proceedings. This may be a date designated in the tribunal’s directions, or a set period after a stage in the process, or after the last closing submission at the hearing.
• After the closure of proceedings the usual rule is that no further evidence or submissions can be given to the tribunal.

Question 25

Jackson ADR - Privacy and confidentiality

Answer 25

There are long-established principles of arbitration law that arbitral proceedings are private and confidential.

Question 26

Jackson ADR - Awards

Answer 26

• There are four different types of awards and orders that are available to arbitrators:
  (a) procedural orders, which provide procedural directions and measures designed to preserve evidence or the subject matter of the dispute
  (b) interim (also referred to as partial) awards and awards on different issues, which finally dispose of one or more of the substantive issues in the arbitration, leaving the other issues to be decided later
  (c) final awards, finally disposing of the arbitration
  (d) costs awards, which provide for the payment of the costs incurred in the arbitration between the parties.
• Usually, once an order or award is made it is binding on the parties.

Question 27

Jackson ADR - Enforcement of awards

Answer 27

• A domestic arbitral award may be enforced either by bringing an ordinary civil claim on the award in the High Court or by using the summary procedure under s 66(1) Arbitration Act 1996.
• This section allows the court to grant permission to enforce an award of an arbitral tribunal in the same manner as a judgment or order of the court.
• Permission is sought by issuing an arbitration claim form in the High Court, which is considered without notice.

Question 28

Jackson ADR - International enforcement of arbitration agreements

Answer 28

• Cross-border enforcement of arbitral awards can usually be achieved through the New York Convention 1958, which applies to arbitral awards made in the territory of a state other than the state where the recognition and enforcement of such awards are sought.
• In deciding whether the Convention applies, an award is treated as made at the seat of the arbitration, regardless of where it was signed, despatched, or delivered to any of the parties.
• A party seeking the recognition or enforcement of a New York Convention award must produce the duly authenticated original award or a duly certified copy, and the original arbitration agreement or a duly certified copy.
• Where permission is given, judgment may be entered in terms of the award.

Question 29

Jackson ADR - Appeals

Answer 29

• In accordance with the principle of limited court intervention in arbitrations, there are only limited grounds for seeking judicial review of arbitral awards.
• Under s 68 it is possible to challenge an award on the ground of serious irregularity.
• Unless the parties agree to exclude the right, under s 69 it is possible to appeal on a point of law.
• Both provisions are applied restrictively. There are also restrictions on appeals within the court system in the limited cases where court applications can be made in arbitration claim.