#10326 - Arbitration - BPC Alternative Dispute Resolution

ARBITRATION N.B. Provisions highlighted in red = mandatory provisions

Procedure (often non-mandatory and can be excluded to reduce chance of going to court)

1. commenced by a notice

2. preliminary hearing (sort out how arbitration going to work cf case management hearing) e.g.

   • points of claim / defence

   • disclosure

   • witness statements

   • expert reports (and meetings?)

3. hearing (mostly oral)

4. award

Key principles

• what is arbitration?

  • = a procedure by which an impartial tribunal decides the outcome of a dispute between parties, following their submission to that procedure

  • place on spectrum of dispute resolution

    • flexible, depends on type: quick and dirty (no set rules, decision possibly not made on legal basis) v arbitration by supreme court justices

  • med-arb - must try mediation before arbitration

• terminology

  • tribunal / arbitral panel / arbitrators = sir or madam

  • claimant

  • respondent

  • arbitration sometimes called a reference

  • seat = the jurisdictional seat of the arbitration designated by agreement of the parties / those authorised by them

• how do parties end up in arbitration under AA?

  • by effective reference:

1. dispute (s6) / "difference" (s82(1)) +

2. private law dispute (including ECHR + EU competition law) +

3. agreement to arbitrate / arbitration clause (submit present and future disputes to arbitration (s6(1)) +

   • can be before or after dispute arises

   • party bound by pre-existing arbitration clause even if subsequently changes its mind; if party ignores, can stay litigation under s9 (see below)

   • NOT discharged by death of a party (s8)

4. dispute comes within arbitration clause +

   • tribunal's mandate conferred by clause itself

   • not a technical exercise

5. parties have capacity to enter arbitration agreement +

6. condition precedent in arbitration clause complied with e.g. med-arb, arb-lit +

7. willing tribunal

• separability of arbitration clause

  • usually 4 contracts:

1. substantive contract on which dispute based

2. agreement to arbitrate

   • even if just a term in substantive contract = distinct agreement even if substantive contract invalid, agreement to arbitrate = valid (s7)

3. agreement between parties + arbitral institution referring dispute to arbitration under rules of institution

4. agreement between parties and / or arbitral institution + arbitrators

• typical content of arbitration clause

  • must:

    • be in writing, "recorded by any means" (s5)

    • agree to submit all present and future disputes to arbitration

  • may set out:

    • seat

    • venue

    • language

    • number of arbitrators

    • qualifications of arbitrators

    • how arbitrators to be appointed

    • criteria to be met before arbitration started e.g. how long after dispute arises

    • dates for disclosure

    • costs

    • ad hoc / institutional?

    • basis of arbitrator's decision (legal? factual?)

    • (if desired) med-arb clause

      • timing before arbitration kicks in

      • placement of mediation windows

      • escalation clause: make clear if failure to settle results in litigation or arbitration

      • whether mediator and arbitrator will be same person (confidentiality problems, usually only in very specialised dispute)

    • (if desired) arb-med clause

      • timing before mediation kicks in

    • (if desired) exclusion of appeal on point of law

    • (if desired) specify institutional rules

• types of arbitration

  • institutional:

    • arbitration administered by arbitral institution + conducted in accordance with its rules

    • institutional rules sit alongside AA e.g. AA "reasonable time" institution "28 days = reasonable"

    • Act silent agreement / rules

    • if rules silent Act

  • ad hoc: no arbitral institution - parties decide procedure themselves

• 3 key principles (s1)

1. object: fair resolution of disputes by impartial tribunal without unnecessary delay or expense (cf general duties s33 (tribunal) / s40 (parties))

2. party autonomy: parties free to agree how their disputes are resolved, subject only to safeguards necessary in the public interest

   • pre-existing arbitration clause

   • written agreement after dispute arises

   • during course of arbitration (s34)

3. judicial non-intervention: court should not intervene except as provided by AA (s1(c))

• duty of court and parties

  • parties (s40)

    • ensure proper and expeditious conduct of arbitration - comply without delay with all orders of tribunal

  • tribunal (s33)

    • act fairly and impartially between parties

    • give parties reasonable opportunity to put case and deal with opponents

    • adopt suitable procedures

      • can be inquisitorial as opposed to adversarial (s34(2)(e) and (g))

    • avoid unnecessary delay and expense

    • produce fair resolution

• seat (s3)

  • = system of law that governs arbitration

  • courts of seat have supervisory jurisdiction over arbitration

  • unlike litigation, need NOT be a jurisdictional connection to seat

  • seat need NOT be where hearing takes place

  • law governing substantive contract need NOT be that of seat, NOR must tribunal decide on strictly legal principles (s46(1))

  • decided by intention of parties, directly / via institution

  • English court will grant stay under s9, regardless of whether seat is England (s2(2)(a))

  • award

    • seat = place award treated as being made, unless parties agree otherwise (s53)

    • applications for enforcement of award take place in country of enforcement NOT seat (s2(2)(b))

  • if seat = England

    • procedure = AA + English law

    • supervisory jurisdiction = English courts

    • hearing = anywhere

    • award made in England

    • applicable law of substantive contract = any

• mandatory provisions

  • s9 - 11 stay of legal proceedings

  • s12 power of court to extend time for beginning arbitral proceedings

  • s13 application of Limitation Acts

  • s24 power of court to remove an arbitrator

  • s26(1) effect of death of an arbitrator

  • s28 liability of parties for fees + expenses of arbitrators

  • s29 immunity of arbitrators

  • s31 objections to the substantive jurisdiction of arbitrators

  • s32 determination of preliminary point on jurisdiction

  • s33 general duty of arbitral tribunals

  • s37(2) items to be regarded as expenses of arbitrators

  • s40 general duties of parties

  • s43 securing the attendance of witnesses

  • s56 power to withhold award on non-payment of arbitrator fees

  • s60 agreements between parties to pay costs in any event

  • s66 enforcement of award

  • ss67, 68, 70, 71 challenging award for lack of substantive jurisdiction / serious irregularity

  • s72 parties not taking part in arbitration

  • s73 loss of right to object

  • s74 immunity of arbitral institutions

  • s75 charge to secure payment of solicitors' costs

• non-mandatory provisions

  • = detailed default provisions

  • can override expressly or impliedly (by choice of other rules)

  • don't apply unless parties don't specify procedure in relevant area

  • s3 seat

  • s4 whether to adopt institutional rules

  • s7 whether to agree the arbitration clause is not a separable agreement

  • s8 effect of death of a party

  • s14 when arbitral proceedings are regarded to commence

  • ss15 - 22 constitution etc. of tribunal

  • s23 circumstances in which arbitrator's authority may be revoked

  • s30 whether tribunal can rule on own jurisdiction

  • s35 conferring power to consolidate

  • s36 rights to be represented in arbitration

  • s37 tribunal's power to appoint experts

  • ss38 - 41 powers available to tribunal

  • s44 exclusion of court's powers in support of arbitration

  • s45 exclusion of court's power to determine points of law

  • s46 which substantive law should apply

  • ss47 - 49 powers available to tribunal when making award

  • ss52 - 58 form, date etc. of final award

  • s69 excluding appeals to court on point of law

  • ss 76 - 79 time limits and service of notices

• When can court get involved?

  • general rule: judicial non-intervention

  • exceptions:

    • enforcement of arbitration clause in an agreement

    • commencing an arbitration: composition of tribunal

    • interim stages and remedies e.g. compelling witness, security for costs (tribunal can make BUT can't enforce, court will look whether tribunal has tried; court = last resort)

    • reviewing awards

    • enforcement of awards

The arbitral tribunal

• commencement

  • time limits

    • limitation applies (s13)

    • expiry of time limit in arbitration clause bars commencement:

      • after exhaustion of arbitral processes (s12(2)) on application of party to HC, HC has discretion to extend time (s12(1)) after or before expiry of time limit (s12(4)) if:

        • change of circumstances not contemplated by parties; or

        • conduct of R makes it unjust to hold A to strict time limit (s12(3))

  • parties agree when arbitration to be regarded as commenced for limitation purposes (s14(1))

  • if no agreement

    • commenced one party serves notice in writing ("notice of arbitration") on:

      • arbitrator named in arbitration clause - other party requiring them to submit dispute to named person (s14(3))

      • arbitrator to be appointed by parties - other party requiring them to appoint arbitrator / agree to appointment (s14(4))

      • arbitrator to be appointed by 3rd party - to 3rd party requesting him to appoint arbitrator (s14(5))

• appointment (ss15 - 22)

  • number of arbitrators

    • parties free to agree (s15(1)) - usually 1 or 3

    • if no agreement, 1 arbitrator (s15(3))

    • agreement to even number of arbitrators requires appointment of additional arbitrator as chairman (unless otherwise agreed) (s15(2))

  • procedure on appointment (s16)

    • parties free to agree (s16(1))

    • if parties don't agree

      • one arbitrator - jointly appoint within 28 days of notice of arbitration

      • two arbitrators - each party appoints one within 14 days of notice of arbitration

      • three arbitrators - rules for two + two appointed appoint third as chairman

      • two arbitrators + umpire - rules for two + two appointed appoint third before any substantive hearing / forthwith if can't agree on matter relating to arbitration

      • any other case failure of...