Arbitration Notes

ADR: ARBITRATION WHAT IS ARBITRATION? "Arbitration" * Adjudicative process * No statutory definition of "arbitration" * Involves: * Agreeing with the other side * To refer a dispute/difference * To an impartial tribunal * For a decision which will bind the parties * Independent arbitrator/tribunal considers both sides of dispute and makes a decision on the issues referred to him/them * Due to contractual basis, not every dispute can go to arbitration * Agreement to arbitrate can be made before/after dispute arises * Arbitration takes place outside the court system but with a measure of supervision/review by the courts. Public Policy * Strong public policy in favour of upholding arbitration agreements, supported by: * Arbitration clause is contract separable from rest of substantive contract # therefore remains binding even if substantive contract is void * Court's jurisdiction to stay proceedings brought in breach of arbitration agreement. Aim of Arbitration * s1 Arbitration Act 1996 ("AA") - To obtain a fair resolution of the dispute by an impartial tribunal without unnecessary delay or expense Arbitration & Litigation * Arbitration - private version of litigation * Differences: * Dispute only referred to arbitration if agreed by both parties * Arbitrator/tribunal appointed by parties unlike Judges. * Arbitration is confidential. GENERAL PRINCIPLES & FUNDAMENTAL CONCEPTS General Principles - s1 The provisions of this Part are founded on the following principles, and shall be construed accordingly--- (a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense; (b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest; (c) in matters governed by this Part the court should not intervene except as provided by this Part. Fili Shipping Co - Once parties refer dispute to arbitration, this implies they want the dispute decided: * By a tribunal they have chosen * In a neutral location with neutral arbitrators * In private * * Speedily and efficiently With light but effective supervision by the courts Principle 1: Fair Resolution of the Dispute * Similar to Overriding objective * Most cases the tribunal will seek to resolve the dispute by applying the appropriate law - though parties may agree to apply some other system of rules or principles in resolving their dispute. * Must be resolved by an "impartial" tribunal (rather than independent)(s1(a) AA) Saving Costs & Expedition * s40(1) - The parties shall do all things necessary for the proper and expeditious conduct of the arbitral proceedings. * s40(2) - This includes--- (a) complying without delay with any determination of the tribunal as to procedural or evidential matters, or with any order or directions of the tribunal, and (b) where appropriate, taking without delay any necessary steps to obtain a decision of the court on a preliminary question of jurisdiction or law General Duty of the Tribunal * s1(a) AA supported by s33(1) - Imposes general duties on the arbitral tribunal to: (a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and (b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined. Follow Rules of Natural Justice * Follows from s33(1) that the tribunal is required to follow the rules of natural justice. * Breached if the tribunal fails to give each party opportunity to deal with factors the arbitrators intend to take into account in making a decision (Gbangola v Smith & Sheriff Ltd [1998]) * Giving the parties a fair opportunity to present their case may not mean that the arbitrators are obliged to follow the strict rules of court procedure Arbitration need not be Adversarial * Arbitrators can completely depart from the usual adversarial system of the English courts. * This follows from s34(2)(e) - Tribunal has right to decide all procedural and evidential matters (subject to parties' right to agree any matter) including (e) whether and which questions should be put to the parties and how they should be answered. * Read together with s43(2)(g) - Tribunal can determine whether and to what extent it should take its own initiative to assert facts and law. * Therefore arbitrators can adopt an inquisitorial as opposed to adversarial method for resolving the dispute. Principle 2: Party Autonomy * Parties should be free to decide how their dispute should be resolved. * Concept of arbitration is that it is a consensual process based on agreement between the parties. * Regime of AA largely expressed in permissive terms (ie. the non-mandatory provisions) with an emphasis on party autonomy (B v S) Principle 3: Minimal Court Intervention * The Court should not intervene in the arbitration except as provided by the AA * Principle of non-intervention: Where parties have agreed to resolve their dispute by arbitration, the court should not intervene except to the extent that this is necessary. * 2 main reasons for court to intervene: * In order to give support to the arbitral proceedings, or * In order to put right any serious injustice CONTRACTUAL FOUNDATION The Contracts * Where the dispute is referred to arbitration pursuant to a term in the substantive contract: 1. Underlying contract 2. Agreement to arbitrate (clause as separate contract) 3. Agreement between parties and arbitral institution referring the dispute to arbitration under the aegis of that institution 4. Agreement between parties (and arbitral institution) and individuals who will act as arbitrators - appointing them to preside over and decide dispute. Separability of the Arbitration Clause/Contract * s7 AA - Unless otherwise agreed by the parties, * an arbitration agreement, * which forms (or was intended to form) part of another agreement (whether or not in writing), * shall not be invalid/ineffective/non-existent because other agreement is invalid/did not come into existence/has become ineffective For that purpose it shall be treated as a distinct agreement. MANDATE OF ARBITRATOR / ARBITRAL TRIBUNAL The jurisdiction of the arbitral tribunal depends on the mandate given to it by the parties Contract Appointing Arbitrator * When arbitrator accepts appointment enters into a contract with the parties on agreed terms - usually include: * Identification of the dispute/difference to be adjudicated * Terms on which the adjudicator is prepared to act, including the fees payable to the arbitrator, * Basis on which the arbitration is to be conducted, # usually in accordance with the terms of the arbitration agreement between the parties and any institutional rules what have been incorporated or otherwise agreed, * Agreement by the arbitrator to conduct the arbitration and to issue an award without undue delay (s33(1)(b) AA) or within any agreed time-frame or in accordance with the institutional rules. * Once appointed the arbitrator is contractually bound to complete their mandate. * The mandate also has the effect of limiting their jurisdiction to the matters referred to them in the mandate. Jurisdiction * Tribunal only has jurisdiction to resolve the dispute if it falls within: 

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