Commercial Dispute Resolution/Arbitration Flashcards

1
Q

What is the result of less litigation and why is this an issue?

A

Mulcahy - fewer commercial contract disputes are going to court.

Lord Thomas - suggests that this is having a negative impact on the English judicial system.

Parties come to arbitrate in England due to its advanced legal system and precedent but ironically this phenomenon is eroding it!

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2
Q

How might parties renegotiate their contracts?

A

Beale and Dugdale - Contracts Between Businessmen - reaching compromise is crucial in business.

Macaulay found that businessmen are happy to reach a compromise in order to enable performance.

Fresh consideration is required for contractual renegotiation - Stilk v Myrick.

Williams v Roffey Bros - practical benefit consideration can give effect to renegotiated contracts, as long as there is no duress.

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3
Q

Why is it good that the law allows renegotiation?

A

Commercial contracts are often specifically drafted to suit the needs of the parties and so it makes sense that they are able to amend them.

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4
Q

What is mediation?

A

A neutral third party mediator aids the parties in reaching an agreement (this is non-binding).

Cable and Wireless v IBM - courts should not decline to enforce ADR on the grounds of intrinsic uncertainty (as long as the clause is well defined).

Mulcahy - the number of mediations has been growing steadily since 2000.

Mediation can be voluntary, ordered by court or under the UK Civil Procedure Rules (to save court workload and resources).

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5
Q

What is expert determination?

A

Where the parties elect a neutral third party expert to adjudicate a dispute or make a decision at a future date.

The benefit is that the expert knows the industry better than a judge might.

Third party adjudications may be stipulated in legislation - S108 Housing Grants, Construction and Regeneration Act 1996.

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6
Q

What was the decision in Sudbrook Trading v Eggleton?

A

It was stipulated that an option to purchase would be exercised by expert surveyors.

The clause was enforceable because there was a mechanism in place to determine the price.

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7
Q

What is Arbitration?

A

A form of dispute resolution in which the parties agree to submit their differences to a third party or tribunal for a binding decision.

The arbitrator determines the rights of the parties in a judicial manner in light of the evidence and representations submitted to them.

Arbitration can be voluntary, statutory or court-ordered.

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8
Q

Which statute governs arbitration in England and Wales and what principles underpin it?

A

Arbitration Act 1996.

This replaced the 1950 Arbitration Act which was seen to give too much power to the courts, making the LCIA uncompetitive.

  • Fairness, party autonomy and limited judicial intervention;
    1. The objective of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.
    2. The parties should be free to agree how their disputes are resolved subject only to such safeguards as are necessary in the public interest.
    3. The court should only intervene on matters provided by the Act.
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9
Q

What are the differences between Arbitration and Expert Determination?

A

(Can be used together to good effect).

Expert determination does not necessarily involve a dispute.

Experts may not need to act in a judicial function.

The arbitrator uses evidence, not his own knowledge, to reach a decision.

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10
Q

What are the main advantages of Arbitration over Litigation?

A
  1. Arbitrators can be appointed knowingly by the parties (S30) and are respected by them.
  2. Arbitrators can have specific industry knowledge, a judge may not.
  3. Parties have greater control over the proceedings.
  4. Rules of evidence, procedure and conflict of laws do not have to be adhered to.
  5. Proceedings are private and so there is no press coverage or reputational damage - Berezovsky - and class lawsuits can be avoided.
  6. Arbitration can be quicker and cheaper than litigation (although not always).
  7. The atmosphere of arbitration can be less hostile than litigation.
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11
Q

Why not Litigation?

A

Walford v Miles - parties’ positions are adversarial.

However, this is not the whole picture, businesses are concerned about their relationships and reputations - Macaulay.

‘Relational model’ of business contracts - Leggatt J.

Litigation is lengthy, expensive and ruins reputations/reputations - Abramovich v Berezovsky.

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12
Q

What are the differences between ad hoc and institutional arbitration?

A

Ad hoc arbitration gives the parties more leeway and can be cheaper.

Ad hoc arbitration can be delayed by disagreement over the appointment of arbitrators.

Institutional arbitration follows clear frameworks of procedure - LCIA/ICC are important arbitration organisations.

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13
Q

What are the sources of Arbitration Law?

A

The written agreement of the parties gives rise to the procedural rights and duties in the arbitration. The arbitration agreement is autonomous from the underlying contract.

The Arbitration Act gives almost total supremacy to the wishes of the parties.

In institutional arbitration, the parties agree to abide by the rules of the institution.

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14
Q

What questions need to be considered when drafting the arbitration agreement?

A
  1. Is arbitration the best method of DR? Could it be better to use expert determination or mediation?
  2. Should the arbitration agreement cover all disputes or only specific ones?
  3. Will the arbitration be ad hoc or institutional?
  4. How many arbitrators will there be? 1 or 3?
  5. Where is the arbitration to have its seat and what will be the applicable law? A New York Convention state should be chosen so that the arbitral award is enforceable.
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15
Q

What does ‘Fairness’ refer to under the Arbitration Act?

A

Parties should be given equality of treatment.

The arbitrators should be impartial.

Arbitrators have a general duty to act in good faith.

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16
Q

What does ‘Party Autonomy’ refer to under the Arbitration Act?

A

It is the private parties who seek a private conclusion.

The arbitration cannot be completely removed from the operation of law as there would be no route of recourse if the arbitrator behaved inappropriately.

17
Q

What are some of the rules relating to arbitrability?

A

Not all issues are arbitrable, it must generally involve the agreement from which the dispute arises.

Arbitrators cannot determine questions of legal status i.e. marriage/criminality or make awards affecting third parties.

Arbitrations cannot refer issues of EU law to the ECJ.

18
Q

What are three theories of Arbitration?

A
  1. Arbitrators’ powers are determined by national law.
  2. The arbitration agreement constitutes an autonomous source of authority wholly independent of any national legal system.
  3. The agreement brings into play an autonomous arbitral order derived from the national character of arbitration.
19
Q

What does Lew say about arbitration? Is this correct?

A

Arbitration is autonomously conducted outside of national legal boundaries.

But total freedom from national cannot exist without government consent.

Enforcement is dependent on national government.

20
Q

What is the law relating to applicable law for Arbitration?

A

The parties are free to select the governing law of the arbitration.

This could involve using the UNIDROIT Principles or lex mercatoria.

21
Q

Why is the arbitrator’s independence and impartiality important?

A

The arbitrator must have no personal, social or financial relationship with on of the parties. This puts them at risk of bias.

Having a completely neutral third arbitrator can help avoid bias.

22
Q

What is the importance of the arbitrator’s jurisdiction?

A

The arbitrator must determine that he has jurisdiction.

If the arbitrator does not have jurisdiction, the award cannot stand.

23
Q

What can a party do if they do not believe the arbitrator has jurisdiction?

A
  1. Decline to partake in the arbitration and challenge the award when it is made - a very risky tactic.
  2. Contest the jurisdiction before the arbitrator and then challenge the award.
  3. Apply to the court during the proceedings for a declaration that the arbitrator lacks jurisdiction or an injunction to halt proceedings.

The right to challenge jurisdiction is waived by participating in the proceedings without objecting.

24
Q

What is unique about the Arbitration agreement?

A

It is separable from a primary agreement.

This was found in Harbour Assurance and is now enshrined in S7 Arbitration Act 1996.

Fiona Trust - the arbitration clause must be kept separate from the contract, the bribe taken in the case did not go to the arbitration clause - a wide interpretation should be given to the scope of the arbitration clause.

25
Q

Outline the features of arbitration proceedings.

A

Implied term that the proceedings are private and confidential.

There is a general duty to act in good faith.

Witness evidence is usually submitted in writing before the proceedings and the arbitrator can call for cross-examination.

The arbitrator can call upon independent experts or they can be appointed by the parties.

The proceedings can be adversarial or inquisitorial.

26
Q

What awards are permitted and which aren’t?

A

Agreed sums, damages, interest, costs, specific performance/rectification or injunctions are all permitted.

Penal sanctions and awards affecting the rights of third parties are prohibited.

27
Q

How might the court get involved with the arbitration?

A

The court can check the initial arbitration agreement and may issue an anti-suit injunction - West Tankers.

The court supports the proceeding by ruling on points of law.

The court will review the award issued by the arbitrator.

28
Q

On what grounds can an arbitral award be judicially reviewed?

A
  1. Erroneous assumption or rejection of jurisdiction.
  2. Serious irregularity.
  3. Error of law.
29
Q

Explain the challenge as to jurisdiction.

A

Challenge to jurisdiction is outlined in S67 Arbitration Act which cannot be excluded if the parties wish.

The grounds for challenge can be;

  1. The arbitrator was not validly appointed.
  2. The award involved a person not party to the arbitration agreement.
  3. The issue was outside the scope of the arbitration.
30
Q

Explain the challenge based on serious irregularity.

A

S68 Arbitration Act 1996 outlines this challenge, which like S67 cannot be excluded.

Serious irregularity occurs when the arbitrator exceeds procedural powers, exercises bias or is bribed etc.

The standard for serious irregularity is incredibly high.

31
Q

Explain the appeal on a point of law.

A

Unlik S67 and S68, this can be excluded. The parties agreed to the arbitrator and may want to agree that he might get the law wrong.

Four conditions must be met;

  1. The question substantially affects the rights of a party.
  2. The tribunal was asked to determine the question.
  3. The decision was obviously wrong or open to serious doubt.
  4. It is just and proper for the court to resolve the issue.
32
Q

Explain the enforcement of arbitral awards.

A

S66 Arbitration Act 1996 enables arbitral awards to be enforced in the same way as court judgments.

English awards are recognised in any state party to the New York Convention.

S103 Arbitration Act 1996 states that a foreign arbitral award which is against UK public policy will not be enforced.

33
Q

What is the law relating to the applicable law of the arbitration?

A

S46 Arbitration Act 1996 - the tribunal shall decide the dispute in accordance with the law chosen by the parties.

The dispute can be determined by reference to the lex mercatoria or the UNIDROIT Principles.

34
Q

What reasons does Goode give as to why conflict of law rules might want to be avoided?

A
  1. The applicable law may be insufficiently developed.
  2. A neutral law may be more sensitive in a particular area.
  3. The laws might lead to the same result.
  4. The choice between systems might be incredibly finely balanced.
35
Q

What does Goode say about Arbitration/Litigation?

A

Arbitration still requires expensive lawyers (most disputes lawyers practice arbitration too!)

Arbitration allows for the exclusion of judicial review.

It is harder to have an arbitral award set aside than a decision appealed.

Substantive awards made by arbitrators can better reflect the commercial needs of the parties.