#10328 - Institutional Arbitration - BPC Alternative Dispute Resolution

INSITUTIONAL ARBITRATION

• institutional arbitration - arbitral institution acts as authority in default / administrator or supervisor

• ad hoc arbitration - no institution, only parties and arbitrator(s) involved

• UNCITRAL Arbitration Rules 2010

  • UN agency - harmonises international commercial law within UN

  • govern arbitrations not otherwise governed by institution i.e. ad hoc arbitrations can use half way between ad hoc and institutional

• history

  • ad hoc arbitration ancient

  • 1892 LCIA set up institutional started C19th

ADVANTAGES AND DISADVANTAGES

What kind of disputes go to institutional / ad hoc?

• generally (but are exceptions)

  • small disputes ad hoc as don't have to pay institution

  • state-state disputes go ad hoc as don’t have to submit to private institution

• BUT no set formula

Cost

• not clear cut, depends on circumstances which cheaper

• not necessarily cheaper for smaller institutions to go ad hoc

• institutions usually not for profit - assist business community

• arbitrators in ad hoc arbitrations ARE run for profit

• pricing structures for institutional

  1. ad valorem system: cost is percentage of amount in dispute

  2. hourly rate

  • depends on circumstances which is cheaper

INSTITUTIONS

• big 3:

1. International Chamber of Commerce (ICC) - Paris

2. London Court of International Arbitration (LCIA)

3. American Arbitration Association (AAA)

• also regional ones

• trend towards more institutions

• full list EXAM - know names

  • AAA American Arbitration Association wide range, domestic + international

  • CEDR Centre for Effective Dispute Resolution commercial, applies UNCITRAL rules

  • CIA Chartered Institute of Arbitrators for trade associations + prof bodies

  • CIETAC China International Economic + Trade international commercial ssssssss Arbitration Commission

  • FOSFA Federation of Oils Seeds + Fats Association commodity disputes

  • GAFTA Grain and Feed Trade Association commodity disputes

  • HKIAC Hong Kong International Arbitration Centre international commercial

  • ICC International chamber of Commerce international commercial, financial, technical

  • ICE Institute of Civil Engineer civil engineering

  • ICSID International Centre for Settlement of Investment investment disputes ffffffffffff ggggg gg Disputes

  • JCT Joint Contracts Tribunal building disputes

  • LCIA London Court of International Arbitration international commercial

  • LMAA London Maritime Arbitrators Association shipping

  • LME London Metal Exchange metals trade

  • PCA Permanent Court of Arbitration differences between states

  • SIAC Singapore International Arbitration Centre shipping, banking, insurance, construction

• rules

  • UNCITRAL UN Commission on International international commercial contracts dd Trade Law

• structure

  • court / board: non-permanent; supervisory; well-known practitioners, academics, retired judges volunteer; apply institutional rules; make decision

  • secretariat: permanent; admin of cases; headed by registrar

LEGAL STATUS OF INSTITUTIONAL RULES

• contractual in nature - incorporate institutional rules into contract by reference, unless expressly agree to vary / exclude

• agree to submit to future disputes authority of institution

STAGES

1. initiate proceedings

   • file request with institution: basics of claim, contact details, constitution of tribunal

2. send copy of request to respondent (sometimes institution does, sometimes C does)

3. response to request

4. tribunal appointed

   • parties nominate

   • institution confirm appointment (ensures impartiality, any challenges decided by institution)

5. parties submit 'SoCs'

6. usually hearing(s) (sometimes on papers)

7. award(s) made in name of arbitrator send to institution

8. scrutiny / review of award by instutution

FOUNTAIN COURT PODCASTS

BIAS

• 3 routes to disqualification

  • automatic disqualification = decision maker = party and / or has direct interest in common with one party; subject to waiver i.e. man may not be judge in own cause

    • what type of interest? financial; shareholding in party; close connection of interests with related party

    • barristers - no financial interest (if no CFA)

    • solicitors share profit

  • actual bias = conclusive vitiating factor (largely redundant)

  • apparent bias = "real danger or real possibility of bias" cf s24(1)(a) AA "justifiable doubt"; objective test - perceptions of a "fair minded and informed observer"

BARRISTERS AND ARBITRATORS IN THE SAME CHAMBERS

A DEFENCE OF STATUS QUO i.e. that barristers and arbitrators from same chambers CAN appear in same arbitration

• typical objection = foreign clients suspicious of system

• only possible problem is apparent bias

• why is established practice unobjectionable?

  • Basis of objection 2 essential steps in establishing bias

1. ID matter which will cause judge to decide otherwise than on merits

2. logical connection between matter and feared deviation from course of deciding case otherwise than on merits

   • "fair minded and informed observer" - must be taken to understand English legal traditions and culture; no unduly suspicious nor complacent

   • 4 key reasons why reasonable observer should NOT fear bias

1. structure and organisation of independent bar

   1. barrister practises individually (own reputation) despite being member of chambers - don't share income or profits

   2. not entitled to refuse on basis arbitrator in same set (cab rank rule)

2. absence of conflict of interest

   1. only arises if same person undertakes conflicting duties to different clients / self interest and that of client

   2. arbitrator gets no benefit of any particular result

3. public policy

   1. benefits for users of system - clients have access to biggest pool of advocates

   2. specialists often in same chambers can't conflict out whole sets (would restrict public choice)

   3. cab rank rule ensures barristers don't e.g. only act for banks

4. culture and practice

   • true objection = mere fact will KNOW each other may favour client of barrister concerned

     • answer = all barristers in COMPETITION with each other for work! barristers on circuit know each other anyway

• why is established practice a good thing?

  • Taylor v Lawrence

    • "fair minded and informed observer" - must be taken to understand English legal traditions and culture

    • connection between bench and bar is "inimicable (hostile) to bias"

    • no reason why following creates bias (in fact, often reduces it)

      • judges and barristers from same chambers in same case

      • barristers from same chambers on opposite sides

  • by extension, applies to

    • arbitrators and barrister from same chambers

    • 2 arbitrators from same chambers on same panel

    • 2 barristers from same chambers on same panel

  • no cases have come up which have alleged / proved bias in question

A CRITIQUE OF THE STATUS QUO i.e. that barristers and arbitrators from same chambers SHOULD NOT appear in same arbitration

• context - about arbitration community at large, not just in London - London is competing within that

• important for arbitration to be seen as impartial (even if no actual bias)

• = threat to (perception of) impartiality must be challenged

• defence of status quo too insular - need to look at wider consequences - threat to London's ability to attract business

• "fair minded and informed observer" - NEED NOT be taken to understand English legal traditions and culture

  • circumstances include that English system is wholly foreign to international clients

• IBA guidelines on conflict of interest - traffic light system

  • chambers' promotional material and way market selves as single entity creates "understandable perception" that chambers should be treated in same way as law firms

• reasonable man needs to be INTERNATIONAL not English

• may result in challenge which, although unmeritorious, causes delay

THE WAY FORWARD

• code of conduct preventing?

  • advantages

    • clear and authoritative guidance on position under English law

    • meet concerns about maintaining confidence about impartiality

    • prevent unscrupulous lawyers by instructing junior member to...