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Arbitration clause interpretation and appointment of arbitrator Interpret provisions of the Arbitration Act 1998 and advise your client on: When are disputes referred to arbitration?
How to commence arbitration
Where there is no prior agreement to arbitrate, it is still possible to refer a dispute to arbitration after it arises provided all parties agree to "ad hoc" arbitration. Most arbitrations arise because your client has entered into a contract which has as one of its terms a clause which says that all disputes will be referred to arbitration. Must agree in writing for Arbitration Act 1996 to apply (Premium Nafta Products Ltd) - assume that parties have intended the arbitration clause to cover any dispute arising out of their relationship The arbitration agreement will usually tell the parties how to begin the arbitration. A common procedure is for the applicant to send a written request to arbitrate to the respondent, setting out: (a) the names and addresses of the parties; (b) a brief statement of the nature and circumstances of the dispute and the relief being sought; and (c) who the claimant thinks the arbitrators should be and/or how they should be appointed (if the claimant has to appoint an arbitrator, the request would contain the name and address of the nominated arbitrator). The request will often be accompanied by a copy of the arbitration agreement Under s 14, if the arbitration agreement identifies who the arbitrator shall be, the arbitration commences when one party gives written notice to the other requiring him to submit the dispute to arbitration. If the parties are to appoint the arbitrator or arbitrators when a dispute arises, the arbitration will commence when one party serves the other with written notice requiring it to appoint or agree to the appointment of an arbitrator. Such notice should deal with the following points: (a) reference to the arbitration clause in the contract; (b) the dispute that has arisen; (c) requirement for the party to agree with the appointment of an arbitrator - often the notice will give a list of several proposed arbitrators.
How to appoint and remove and arbitrator
If the arbitrator is to be appointed by a third party, the arbitration commences as soon as one party asks the appointing authority to make an appointment. s.15(1) - parties free to agree number of arbitrators and whether chairman/umpire s.15(3) - if no agreement then tribunal shall consist of sole arbitrator s.16(1) - parties can agree own appointment procedure s.16(3) - if no agreed then one party can make a written request to the other to make joint apt within 28 day s.16(5) - if agreed to have 3 arbitrators, parties free to agree procedure for apt
but if cant then each appoint one within 14 days and the two arbitrators will appoint the third s.17 - if one party failed to appoint in above scenario then other party can give written notice and he then has 7 more days to appoint and if he doesn't then he sole arbitrator can be confirmed s.15(2) - Any agreement saying 2 arbitrators is understood as requiring apt of a 3rd as chairman (parties can expressly say no chairman though) s.17 - applies again if one party doesn't apt an arbitrator when there should be two s.22 - arbitra tor decisions by majority vote s.18(3) - If procedure for apt doesn't work then either party can apply to the court. Court usually appoints an arbitrator but may simply give directions s.18 - party who failed to appoint an arbitrator in accordance with s.16(5) only remedy is to apply to court and ask them to revoke the other partied appointment (will need a good reason for not appoint their own) s.18 - if two arbitrators cant agree on third the can ask court to solve s.18 - court can make app for directions is split vote of arbitrators
Who can't be an arbitrator?Same barrister as retained in the caseOne of clients employeesBUT can use a QC you instructed in the past but who isn't
Appointing the arbitrator Chairman - member of arbitration from outset and has casting vote if a tie in decision Umpire -appointed when arbitrators can't agree, if this doesn't happen then before final hearing s.16(6) s.21 - parties agree on his function but if not then takes over as if sole arbitrator when the others can't agree 23(3)(a) revocation of arbitrators authority by acting jointly, must be agreed in writing; 23(4), 23(5)(b) nothing affects the ability of the court to remove an arbitrator s 23 parties may agree to revoke the arbitrator's appointment if all agree in writing. If the parties cannot agree on the revocation of the arbitrator's powers, either party may apply to the court for an order removing the arbitrator from office on certain grounds. Section 24, which gives this power, cannot be suspended by the agreement of the parties. The grounds for removing an arbitrator under s 24 are either: (a) that there are justifiable doubts about his impartiality; (b) that he lacks the qualifications required by the arbitration agreement; (c) that there are justifiable doubts about his physical or mental ability to conduct the proceedings; or (d) that he has failed to conduct the proceedings properly or with reasonable speed, and this will cause substantial injustice. If applying to the court need to use CPR 62 - ask for courts help within arbitration
(commercial court) Consideratio ns for an arbitration agreement??????
Limitation Choice of law and jurisdiction Arbitrator selection and qualifications Timetable Statements of case Disclosure Rules of evidence Privacy Appeal/enforcement Limit of arbitrator's authority Interim remedies costs
Powers and duties of arbitrator under Arbitration Act 1996. Powers of arbitral tribunal
Both in the preparation for the hearing and during the hearing itself the arbitrator must comply with s 33(1) of the AA 1996. This states: The tribunal shall---
(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. Section 33(2) goes on to provide: The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it.
Powers and duties of parties under Arbitration Act 1996. Parties' rights and obligations
s 40 of the AA 1996. This provides: (1) The parties shall do all things necessary for the proper and expeditious conduct of the arbitral proceedings. (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 ...
Involvement of court in arbitration proceedings Party seeks the assistance of the court under the provisions of the Arbitration Act, other than staying legal proceedings s 9 S 12 S 13
Power of court to extend time for beginning of arbitral proceedings where circumstances were outside the reasonable contemplation of the parties and it would be just to extend the time or the conduct of one party makes it unjust to hold the other party to the strict terms Court may order that period between commencement of arbitration and date of order be excluded under Limitations Act
S 18(4) S 24 S 32 S 42 S 43 Ss 44
S 45 S 66 S 67
Either party may apply to court to appoint an arbitrator, appoint a replacement or make directions to resolve problem May apply to court to remove arbitrator Court may on application determine any question of substantive law May apply to court for enforcement of peremptory orders after exhaustion of other remedies - Seek assistance of court for injunctions which carry the sanction of imprisonment for non-compliance May seek assistance of the court in relation to witnesses within UK and arbitration within UK. court has power under s 44 to make orders relating to: (a) taking evidence from witnesses; (b) preserving evidence; (c) inspecting, photographing, preserving, taking samples or experimenting on any property or goods involved in the proceedings and for the custody or detention of such property. To do this, it can authorise any person to enter the premises of any party; (d) selling goods which are involved in the proceedings; (e) interim injunctions; and (f ) appointing a receiver. The arbitration agreement may exclude all or part of the court's powers under s 44. The court will, in any event, make an order only if the arbitrator has no power to make the order or his order would not be effective. Refer matter of point of law to court for a decision on legal point on any question of law which substantially affects the rights of one or more parties. The normal way of enforcing the award is under s 66 of the AA 1996 (which cannot be excluded by the parties). This enables the winning party to apply to the High Court for leave to enforce the award as if it were a court judgment. Section 67 of the AA 1996 (which cannot be excluded by agreement) gives a party the right to apply to the court to challenge an award on the grounds of lack of jurisdiction. The courts have so far considered applications on the basis that: (a) the arbitration agreement was not binding on the applicant; (b) the arbitration clause was void for ambiguity and uncertainty; and (c) the arbitrator did not have the jurisdiction to deal with issues covered by his award. It is possible to challenge the arbitrator's award on the basis of a serious irregularity under s 68 of the AA 1996 (which cannot be excluded by the parties). Section 68 defines a serious irregularity as any of the following: (a) failure to comply with the general duties imposed on the arbitrator by s 33 (see
13.6.1); (b) exceeding the arbitrator's powers or the powers of anyone else involved in the arbitration (although this would normally fall under s 67 (see 13.8.1)); (c) failure to follow agreed procedures; (d) failure to deal with all the issues; (e) uncertainty or ambiguity as to the effect of the award; (f ) the award was obtained by fraud; (g) the award (or the way in which it was obtained) is contrary to public policy; (h) the award fails to comply with the required formalities; (i) an admitted irregularity in the conduct of the proceedings a party may appeal to the court on any question of law arising out of the award.
Recording settlement. Although the parties are, of course, free to agree what they like about the form and content of the arbitration award, under s 52, unless agreed to the contrary, the award should be
? in writing and
? signed by the arbitrator, and
? should give reasons for the award. By s 55, unless agreed to the contrary, the arbitrator will serve copies of the award on the parties.
Enforcement of arbitration award. Arbitration is the only alternative to litigation which produces a result which can be enforced without commencing litigation. The normal way of enforcing the award is under s 66 of the AA 1996 (which cannot be excluded by the parties). This enables the winning party to apply to the High Court for leave to enforce the award as if it were a court judgment. If leave is granted, the order must be served on the debtor who has 14 days to apply to have it set aside (eg because the award is tainted by misconduct or is wrong in law). (The order must inform the debtor of this right.) If no such application is made or it fails, the applicant can use all the usual methods of enforcement. Under s 62.18 CPR, an application for permission to enforce a judgment may be made without notice. The application must be supported by written evidence (CPR 62.18(6)) with copy of the arbitration agreement and the original award. AA 1996 s 101 recognition and enforcement of awardsNew York Convention award shall be recognised as binding and may be enforced in the same manner as a judgment or order of the court to the same effect.
How to appeal an arbitration award: Parties must first exhaust their remedies under agreement Issues of jurisdiction: S.67 - mandatory provision - apply to court on basis that: a) agreement was not binding b) clause was void for ambiguity/uncertainty c) arbitrator didn't have jurisdiction to deal with issues covered in his award Issues of fact: Arbitrators decision is final - no appeal (subject to arbitration agreement) Serious irregularity s.68 - mandatory provision: a) b) c) d) e) f) g) h)
failure to comply with general s.33 duties arbitrator exceeded powers failure to follow agreed procedure failure to deal with all issues uncertainty/ambiguity as to effect of award award obtained by fraud award contrary to public policy award fails to comply with required formalities (s.57 arbitrator has power to correct errors in award)
i)?admitted irregularity in conduct of proceedings If app succeeds court normally refer matter back to arbitrator but court can set aside all or part of the award Threshold for bringing a challenge is very high and it doesn't permit a challenge on ground that tribunal arrived at wrong conclusion as to law/fact O8.8 CCG allows court to exercise power under CPR to dismiss s.68 app if has no prospect of success. D can challenge this and request a hearing but may be liable for costs on indemnity basis
Issues of Law: s.69 - non-mandatory - party may appeal. 69(1) - Agreement that arbitrator doesn't need to give reasons for his decision excludes this Appeal only if court grants permission (will only do so if decision substantially affects rights of party(s) and the decision was obviously wrong/one of public importance)
- appeal usually sent back to arbitrator but court can set aside all or part of the award Supplementary mandatory provision: s.70(3) appeal must be made within 28 days form date parties informed of result s.70(4) court may require arbitrator to give additional reasons for award
- Court may require applicant to provide security for costs of amount of award pending appeal s.71(3) arbitrator must make fresh decision within 3 months s.73 - party may lose right to appeal under 67/68 but not 60 is he unreasonably delays Further appeal - if permission from commercial court to COA
Procedural steps to take under s.9 AA1996 where court proceedings have been issued in breach of an arbitration agreement
1. s.9(1) an defendant party to an arbitration agreement can apply to stay court proceedings
2. s.9(3) Defendant must acknowledge service of claim (to avoid Default Judgment)
- CPR 6.14 - Claim Form deemed served second business day
- CPR 10.3 - Defendant has 14 days to acknowledge
- must tick box "I intend to contest jurisdiction" Don't file a defence (this is a substantive step under s.9(2) and it will waive your right to enforce arbitration clause)
** Before date for filing defence (28 days from receipt of POC) [this prevents Default Judgment]
Apply to court with an interim application using application notice form N244 + Witness Statement CPR 62.3(2)
- Box 3 needs to make specific reference to s.9 AA96 (i.e. want a stay pursuant to s.9) Should contain:relevant clause(s) of the contractthat dispute falls under arbitration agreementconfirmation that you have acknowledged service but taken no further step Witness Stateme nt??
Check precedent N244 for this Application must be served on all parties CPR 62.8 Intro Factual Background Arbitration Agreement Breach of Arbitration Agreement
Once court has stayed proceedings you then need to commence the arbitration: Letter commencing arbitration proceedings s.14-18 AA96 Intro who we act for Nature of the dispute The arbitration agreement (relevant clause of contract/referenc e to s.14(4) AA Identity of the Arbitrator (specific request to appoint s.16(3)/ deadline to appoint/what will happen in default
(backgrounds facts, including alleged breach)
- Clause 16 of the contract is an arbitration clause and the AA96 will apply because the clause is in writing in accordance with s.5 AA96
- This letter commences arbitral proceedings as under s.14(4) of the act this letter requires you to appoint an arbitrator from the list attached in respect of this matter
- In accordance with Clause 16 of the contract the tribunal is to consist of a sole arbitrator, and under s.16(3) this arbitrator shall be appointed not later than 28 days after service of this letter.
- If you do not select an arbitrator then in accordance with Clause 16 the President of the British Computer Society shall appoint the arbitrator
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