EM Law are experts in supporting clients bringing or defending arbitration claims. Our lead lawyers are Joanna McKenzie and Patricia Rosario who have extensive experience in advising clients on a wide range of dispute resolution processes.
What is arbitration?
Arbitration is an alternative to litigation as a means of resolving disputes. It is based on the parties’ agreement: all parties must agree to submit the dispute in question to arbitration. Like a judgment, the decision of an arbitral tribunal is final and binding. However, arbitration differs fundamentally from litigation in the following ways:
Arbitration rules and institutions
Arbitration agreements frequently incorporate institutional arbitration rules. Arbitral institutions (such as the International Chamber of Commerce and the London Court of International Arbitration) have well-established rules of arbitration that are often incorporated by adopting their standard arbitration clause.
In addition to providing rules, the arbitral institutions can be called on to administer an arbitration. In the absence of rules, the arbitration law of the seat of arbitration may set default rules for the procedure. For example, the Arbitration Act 1996 will fill most of the gaps where the seat of arbitration is in England or Wales, but it may involve an application to the High Court.
The “seat” of the arbitration will usually determine the law governing the procedure of the arbitration. The seat is the juridical seat (that is, the country in which the arbitration is “rooted”). This is not necessarily the same as the place where any hearing will take place.
Parties will normally agree to arbitrate for one or more of the following reasons:
The composition and appointment of the tribunal is governed expressly or impliedly by the arbitration agreement or, in the absence of this agreement, by the law of the “seat” or “venue” of the arbitration.
Where a panel of three arbitrators is appointed, one will usually be appointed chairman with power to make procedural rulings and to cast the final vote. In the absence of agreement, the view of the chairman will prevail in relation to a decision, order or award in respect of which there is neither unanimity nor a majority.
There are no legal requirements to become an arbitrator. The arbitration agreement may require the arbitrator(s) to have special qualifications (for example, a solicitor, or other professional). Certain arbitral institutions run courses and award recognition to those it regards as competent arbitrators..
Arbitrators must be impartial and independent. In addition to remedies conferred by the AA 1996, the major arbitral institutions provide procedures for challenging arbitrators on the grounds of bias.
Appointment of arbitrators
The arbitration agreement, or the rules incorporated into it, will usually contain a procedure for appointing arbitrators. If parties fail to agree on the tribunal, the arbitration agreement usually provides for powers of appointment to be exercised by a third party, for example, the president of the Law Society. Referring to a third party is quicker and cheaper than applying to the court. An appointing authority may be a specialist professional institution, a trade association or arbitration institution. They normally charge a fee. Parties may make submissions on the identity, qualifications and characteristics of appointees.
If there is no provision for a third-party appointor, the parties may apply to the court to resolve disputes on appointment. The court can give directions on the making of an appointment, direct how the tribunal is to be constituted, and revoke and make an appointment. The court may also deal with arbitration agreements that fail to be specific about the tribunal.
Fees will be payable to the tribunal, usually on appointment. Also, an additional administration charge may be payable if an arbitral institution is involved. There may also be expenses for the place where the hearings take place and of any appointing authority.
The level of fees varies considerably. Two common methods of calculating fees are:
Advance payments are common, for example, deposits and/or commitment fees to cover the loss of business likely to result if the hearings are postponed or cancelled at short notice.
The tribunal will commonly withhold the award from the parties until any outstanding fees have been paid. When the award is ready, the tribunal will notify both parties that it is ready, on payment of their fees. Either party or both may pay the fees to take up the award. If only one party pays, even though it is not liable under its terms, that party may recover from the other party the costs, including the tribunal’s fees, that the award imposes.
Conduct of the arbitration
Following the appointment of the tribunal, there will often be a preliminary meeting, at which the tribunal will set down the procedural timetable for all or part of the arbitration after hearing the parties’ submissions. The parties should seek to agree the procedure in advance.
None of the court restrictions on advocacy or form apply.
Arbitration proceedings in England and Wales are subject to duties of confidentiality. Unless there is an agreement otherwise, hearings may be attended only by the tribunal, the parties, and their representatives. The requirements of confidentiality also restrict the disclosure of documents produced during or for the purposes of an arbitration.
Awards and challenging awards
An award is equivalent to a judgment in litigation. It is “final and binding” in that it provides a final determination of the dispute, subject only to closely defined statutory rights of challenge.
The tribunal may make either of the following types of award:
Where the parties have reached a settlement, and agreed terms, these terms may be incorporated into an award to facilitate enforcement (known as an “agreed award” or an “award by consent”). By contrast, purely procedural directions, for example, relating to timetabling, do not constitute awards and are not capable of either specific enforcement or of appeal.
Where there are no specific provisions in the arbitration agreement or applicable arbitration rules, the award must:
Under English law, the time limits for challenging an award are very strict. Normally, an application must be made within 28 days of the date of the award (although the position is different if any other arbitral process of appeal or review exists). There are several grounds for challenge to an award under the AA 1996:
Wherever the award is made, the procedure for enforcement in England is usually the same. The Arbitration Act 1996 provides for summary enforcement with leave of the High Court. Leave is usually given on terms that the award may be enforced in the same manner as a judgment or order to the same effect, which means that all the methods of enforcing a judgment of the High Court are then available to enforce the award.
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