7. Arbitration In Icp Notes

Arbitration

This is a type of ADR whereby a third party is empowered to determine a dispute between parties.

Can be arranged by prior determination (i.e. in a contract) or after a dispute has arisen.

Key point of arbitration v Mediation is that procedure and enforcement can occur though the High Court. Arbitration falls between court proceedings and other extrajudicial forms of dispute resolution. Clearly this creates a scope for a great deal of case law too.

Arbitration Agreement

Section 5 Arbitration Act (AA) – Agreements to be in writing BUT “in writing” has much broader meaning:

• S5(4) can be made otherwise than in writing and recorded with parties consent by one of the parties or 3^rd party

• S5(2)(c) somehow evidenced in writing

• S5(3) agree otherwise than in reference to terms which are in writing

What is covered by the Arbitration Agreement?

Fiona Trust and Holding Corporation v Yuri Privalov [2007] EWCA Civ 20

Arbitration Agreements to be given as wide a meaning as possible – “If businessmen go to the trouble of agreeing that their disputes be heard in the courts of a particular country or by a tribunal of their choice, they do not expect (at any rate, when they are making the contract in the first place) that time and expense will be taken in lengthy argument about the nature of particular causes of action and whether any particular cause of action comes within the meaning of the particular phrase they have chosen in their arbitration clause”

This was affirmed in the HoL sub nom Premium Nafta Products Ltd v Fili Shipping Company Ltd [2007] All ER 951

• Disputes referred because of neutrality, expertise, privacy and unobtrusive efficiency of English supervisory law;

• Parties want quick and efficient adjudication and do not want to risk delay and partiality before a national jurisdiction;

• Unlikely that national businessmen will have intended that only some questions arising should be arbitrated and others for the national courts;

• No rational basis to assume that businessmen would have wished questions of validity, enforceability and misrep for one tribunal and performance issues another

• If such a distinction were to be drawn then clear language would be needed;

• Presumption that disputes form same relationship to be before same tribunal;

• If businessmen wish to exclude disputes then clear language required in the contract

Lack of jurisdiction

Where the clause does not extend to the dispute or is otherwise not valid arbitrator has no jurisdiction.

Typically arises:

• Whether arbitration clause properly concluded

• Whether tribunal is properly constituted;

• What parts of the contract are subject to the clause

S30 – tribunal’s power to rule on its own jurisdiction

S32 – apply to the court to challenge arbitrator’s jurisdiction

S67 – apply to have the award set aside for lack of jurisdiction.

Both applications need to be made swiftly.

Staying proceedings where there is an arbitration agreement

I.e. there is an arbitration agreement in place and one side issues court proceedings in any event. May happen where court proceedings are thought to be more beneficial.

D will have an option – he can file a defence and carry on with the litigation e.g. where the matter is solely one of law and therefore unsuited to arbitration, or made an application to stay the court proceedings.

To stay:

• Acknowledge service of Claim Form (CPR r.58.6) and;

• Apply to the court to stay proceedings under s9 AA (using a Part 7 claim form) asking for referral to arbitration

Do not file a defence because this will indicate a willingness to fight proceedings and will lose entitlement to stay (s9(3))

Court must exercise its power to stay unless arbitration is inoperative, void, incapable of performance (Haiki Shipping Corp v Sopex Oils Ltd [1997] 1 WLR 1268)

N.b. Scott v Avery clause whereby arbitration shall be a condition precedent to court proceedings – ousted if court refuses to stay under s9(5)

Where do the Arbitration Rules comes from?

Parties can choose whatever rules they like. Either previously established rules or setting out their own by mixing and matching e.g. ICC, LCIA, AAA, CIArb.

Arbitration Act 1996

This will apply where the judicial seat of the arbitration is in England and Wales and the agreement is in writing. Parties can still mix and match the terms of the arbitration and can exclude the non-mandatory parts of the Act.

Arbitration Act Orders

Range of orders can be made.

Approach taken by the court is that it will make the order provided it will save costs.

The place whose judicial system will intervene in this manner is the SEAT of the arbitration (not necessarily where the arbitration hearing takes place)

Part 8 Claims

Applications above do not have substantive proceedings because the arbitration is the substantive proceedings there Part 8 mechanism is used. Part 8 is an expedited procedure where matter are factually uncontentious. Check which form the application needs to be made on as they may differ.

Part 8 are always allocated to the multi track, no judgment in default. Part 8 Claim Form to be served within 1 month.

N.b. where a claim has been issued and D seeks to stay as there is a valid arbitration clause then an application is made as there are substantive proceedings involved – see above.

Arbitral Awards

Remedies

The range of remedies can be agreed upon by the parties when setting out their chosen terms.

If no specifically agreed terms and the seat of the arb is in England then AA 1996 ss48(3), (4) and (5) apply:

• make a declaration as to any matter determined in the proceedings

• payment of a sum of money in any currency

• same powers as the court to order a party to do/not do something, specific performance, rectification or setting aside or cancellation of a deed or other documents

Form of the Award

Parties can agree but if not then:

• In writing and signed by arbitrators

• State the seat of arb

• State the date when award made

• Contain reasons for award unless agreed reasons not to be given

...

Buy the full version of these notes or essay plans and more in our International Commercial Practice Notes.