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Transcript of 20 Questions About Arbitration
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The Arbitration Act20 Frequently Asked Questions
Dispute
Resolution
AtAGlanceGuide
1
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Whilst care has been taken in the preparation of this guide, the matters referred to herein are subject to change and no liability or responsibility is accepted by
anyone for any errors or omissions which may exist in it. The contents of this booklet are descriptive only and should not be used as a substitute for legal advice.
Contents
Section: Page No.
Introduction 2
1 Can I contract out of the Act? 3
2 How many arbitrators are there on the tribunal? 3
3 How do I start an arbitration? 4
4 When must I start an arbitration? 5
5 Is the arbitration agreement valid even though the main contract is void? 5
6 What happens if it is alleged that the arbitrators have no jurisdiction? 5
7 What can be done if one party ignores the arbitration agreement and commences
proceedings elsewhere? 6
8 What is the duty of the arbitrators? 6
9 What is the duty of the parties to the arbitration? 7
10 What are the powers of the arbitrators in the conduct of proceedings? 7
11 What happens if a party defaults or disobeys an order made by the arbitrators? 8
12 Under what law do the arbitrators decide the dispute? 9
13 What remedies can the arbitrators award? 10
14 How are legal costs and arbitrators fees dealt with in arbitration? 10
15 What is an arbitration award and what must it look like? 11
16 How can I enforce an arbitration award? 12
17 What is the courts role in arbitration proceedings? 12
18 How can I challenge an award? 13
19 If I am unhappy about an arbitrator, what can I do? 15
20 Can I appear before arbitrators with a lawyer? 15
The Arbitration Act
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2
Introduction
The Arbitration Act 1996 marks an attempt to consolidate modern English arbitration law and procedure
in statute form. The Act also changes fundamentally some aspects of the law.
The Acts mission is explained in Section 1:
the fair and impartial resolution of disputes, without delay and expense;
party autonomy: the parties should be permitted to agree how their disputes are resolved;
minimal intervention by the court.
The Act applies to all arbitrations commenced on or after 31 January 1997. Arbitrations commenced
before that date will continue to be governed by the Arbitration Acts of 1950, 1975 and 1979.
This publication is intended to be a guide to the meaning of the Arbitration Act 1996 and to arbitration
law. Whilst care has been taken in the preparation of this guide, the matters referred to herein are subject
to change and no liability or responsibility is accepted by anyone for any errors or omissions which may exist
in it. If you wish to use any of the information contained in this publication, it is recommended that you
seek legal advice. If you have any questions concerning the Arbitration Act 1996, Hill Dickinson will be
pleased to discuss them with you.
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3
1 Can I contract out of the Act?
Yes - in part. The Act lays down procedures which apply if the parties do
not agree different procedures. The Act classifies each section as mandatory or
non-mandatory. The parties cannot contract out of the mandatory sections,
but can contract out of non-mandatory sections. Mandatory sections are
marked with an asterisk (*).
2 How many arbitrators are there on the tribunal?
If the parties do not agree the number of arbitrators, the tribunal will
consist of a sole arbitrator.
If the parties agree that there should be only two arbitrators, they will
be understood as having agreed that a third arbitrator will also have to
be appointed.
If three arbitrators are to be appointed and if one party fails to appoint
an arbitrator, the other party can appoint his arbitrator as sole arbitrator.
If there is a failure to appoint any arbitrator in accordance with the above
procedure, any party may apply to the court to appoint an arbitrator and
to give other directions.
Section No.of the Act
4
15(3)
15(2)
17
18(2)
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4
3 How do I start an arbitration?
Where the arbitration agreement names the arbitrator to be appointed,
the arbitration commences when one party serves written notice on the
other requiring that arbitrator to be appointed.
Where the tribunal consists of a sole arbitrator, the arbitration commences
when one party serves written notice on the other requiring an arbitrator
to be appointed. Such appointment must take place not later than 28 days
after the service of the written notice.
If the parties agree that there should be two arbitrators, the arbitration
commences when one party serves written notice on the other requiring that
party to appoint his arbitrator. The other party must appoint an arbitrator
not later than 14 days after service of the notice.
If the parties agree that there should be three arbitrators, the same procedure
applies as for two and the two so appointed must appoint a third arbitrator
forthwith as chairman.
If the parties agree that there should be two arbitrators and an umpire, the
same procedure applies as for two and the two shall appoint the umpire at
any time before any substantive hearing or forthwith if they disagree on
any matter.
If the parties agree that the tribunal is to be appointed by a person other
than a party, the arbitration commences when one party sends that person
a written request to make the appointment.
Section No.of the Act
14(3)
14(4) and
16(3)
14(4), 15(2)
and 16(4)
14(4) and
16(5)
14(4) and
16(6)
14(5)
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4 When must I start an arbitration?
Within the time limit specified in the arbitration agreement, unless the
court extends the time for the commencement of the arbitration.
If there is no contractual time limit, generally within 6 years of the breach
of contract.
5 Is the arbitration agreement valid even though the main
contract is void?
The Act specifically provides that an arbitration agreement can be treated
as a distinct agreement so that even if the main contract is void, the
arbitration agreement contained, or even only intended to be contained,
in that contract can still be valid.
There may of course be a question as to whether or not there was in fact
an arbitration agreement in the first place; the arbitrators can determine
this question themselves.
6 What happens if it is alleged that the arbitratorshave no jurisdiction?
An application can be made to the arbitrators because they now have the
power to rule on their own jurisdiction.
An application can still be made to the court either (a) with the agreement
of all other parties or (b) with the permission of the arbitrators (provided
certain conditions are satisfied).
Section No.of the Act
12*
13*
7
30(1)(a)
30 and 31*
32*
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7 What can be done if one party ignores the arbitration
agreement and commences proceedings elsewhere?
If the proceedings are commenced in the UK, the court will stay those
proceedings unless it is satisfied that the arbitration agreement is null and
void, inoperative or incapable of being performed.
If the proceedings are commenced outside England, Wales or Northern
Ireland, the other party can apply to the English court for damages for
breach of the arbitration agreement or an injunction to restrain those
foreign proceedings or obtain such other relief as is available under
foreign law.
8 What is the duty of the arbitrators?
To act fairly and impartially as between the parties.
To give each party a reasonable opportunity of putting his case and dealing
with the case of his opponent.
To adopt procedures which are suitable to the circumstances of the case.
To adopt procedures to avoid any unnecessary delay or expense.
To provide a fair means to the parties for the resolution of the dispute.
Section No.of the Act
9*
33(1)(a)*
33(1)(a)*
33(1)(b)*
33(1)(b)*
33(1)(b)*
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9 What is the duty of the parties to the arbitration?
The parties shall do all things necessary for the proper and expeditious
conduct of the arbitration, including:
complying with any determination, order or directions of the
arbitrators without delay; and
taking steps without delay to obtain a decision of the court on any
preliminary question of jurisdiction or law.
10 What are the powers of the arbitrators in the conduct
of proceedings?
The arbitrators are given wide-ranging powers to determine matters of
procedure and evidence. The Act gives examples of such matters:
when and where any part of the proceedings is to be held;
the language to be used and whether any documents are to
be translated;
the form which pleadings should take, when they should be suppliedand whether they can be amended;
what documents should be disclosed between the parties;
whether any questions should be put to the parties;
what rules of evidence should apply;
contd
Section No.of the Act
40(1)*
40(2)(a)*
40(2)(b)*
34(2)
34(2)(a)
34(2)(b)
34(2)(c)
34(2)(d)
34(2)(e)
34(2)(f)
The Arbitration Act
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8
10 contd
whether the arbitrators themselves should take the initiative in
determining the facts and the law (i.e. to adopt an inquisitorial approach);
whether there should be written or oral submissions;
to appoint their own legal and technical experts.
The arbitrators may order a claimant to provide security for costs. This
power is not limited to claimants resident outside the jurisdiction.
Indeed, residence may not be relied upon as a ground for such
an order.
The arbitrators may order that any property which is the subject of
the proceedings be inspected, detained or preserved.
The arbitrators may direct a party to preserve evidence in his control.
11 What happens if a party defaults or disobeys an order made
by the arbitrators?
If the claimant has been guilty of inordinate and inexcusable delay, giving riseto substantial risk of unfairness or a likelihood of serious prejudice,
the arbitrators may dismiss the claim.
If a party fails without cause to attend a hearing or to make submissions,
the arbitrators may continue in the absence of that party or in the
absence of any submissions from that party and may proceed to an award.
Section No.of the Act
34(2)(g)
34(2)(h)
37
38(3)
38(4)
38(6)
41(3)
41(4)
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9
If there is a failure to comply with any other order of the arbitrators, then
the arbitrators may make a peremptory order and failing compliance with the
peremptory order the arbitrators may make the following orders:
If the order relates to provision of security for costs by the claimant,
the arbitrators may make an award dismissing the claim.
In all other cases:
the arbitrators may order that the defaulting party cannot rely
upon the allegations/material which were the subject matter of the
order; or
the arbitrators may draw adverse inferences from the non-
compliance; or
the arbitrators may proceed to an award on the basis of the materials
then before them; or
the arbitrators may make any orders as to payment of costs as they
think fit.
12 Under what law do the arbitrators decide the dispute?
The arbitrators will apply the law which is chosen by the agreed parties.
However, if the parties so agree, the arbitrators are authorised to apply
other considerations so that they can decide matters without necessarily
applying strict law (e.g. equity and honourable engagement clauses).
If the parties have not chosen or agreed which law is to apply, the arbitrators
shall determine this on conflict of law principles.
Section No.of the Act
41(5)
41(6)
41(7)(a)
41(7)(b)
41(7)(c)
41(7)(d)
46(1)(a)
46(1)(b)
46(3)
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13 What remedies can the arbitrators award?
The arbitrators may provide any remedies which the parties agree upon.
Otherwise, the arbitrators can award:
a declaration;
an order for the payment of money in any currency.
Or can exercise the same powers as the court to:
order any party to do or refrain from doing any thing;
order specific performance of a contract (except for a contract relating
to land); and
order rectification, setting aside or cancellation of any deed/document.
The arbitrators have a general power to award simple or compound interest
(unlike the court).
14 How are legal costs and arbitrators fees dealt within arbitration?
Unless the parties agree otherwise, the arbitrators will award costs and fees
on the general principle that they follow the event, i.e. costs are awarded
to the successful party except where that is not considered appropriate.
Section No.of the Act
48(1)
48(3)
48(4)
48(5)(a)
48(5)(b)
48(5)(c)
49
61(2)
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Section No.of the Act
63(3)
63(4)
65
52(3)
52(3)
52(4)
52(5)
52(5)
While the parties are free to agree what costs and fees are to be recoverable, this
may be determined by the arbitrators who are required to set out the
basis on which they have awarded these costs.
If the costs and fees are not determined by the arbitrators, any party to
the proceedings can apply to have them determined by the court.
Unless the parties agree otherwise, the arbitrators can direct that the
recoverable costs and fees shall be limited to a specified amount.
15 What is an arbitration award and what must it look like?
The award is the embodiment of the decision of the arbitrators in relation
to the dispute between the parties.
Unless the parties agree otherwise, the award shall:
be in writing;
be signed by all the arbitrators or those assenting to the award;
contain the reasons for the award (unless the parties have agreed to
dispense with the reasons);
state the seat of the arbitration; and
state the date when the award was made (i.e. published).
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16 How can I enforce an arbitration award?
An award is final and binding, subject to any successful challenge or appeal.
With the permission of the court, a judgment may be entered in the terms
of the award and the award can be enforced as a judgment.
The award may be enforced under the New York Convention on the
Enforcement of Foreign Arbitral Awards 1958.
17 What is the courts role in arbitration proceedings?
The Act expressly states as one of its guiding principles that the court should
not intervene in arbitrations except to the extent provided. The court may
act to:
enforce the peremptory orders of the tribunal;
secure the attendance of a witness before the tribunal to give testimony
or produce documents or other evidence;
make orders for the preservation of assets or evidence, the inspection of
property, Search orders or interim (such as Freezing) injunctions, if thetribunal has no power or is unable to act;
determine a preliminary point of jurisdiction; and
determine a preliminary point of law.
Section No.of the Act
58
66*
66(4)* and1950 Act*
1(c)
42
43*
44
32*
45
12
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18 How can I challenge an award?
There are only three bases on which an award can be challenged and these
require an application to the court:
Substantive jurisdiction. This is where a party alleges that, for whatever
reason, the arbitrators did not have the jurisdiction to make the award.
Serious irregularity. The Act has replaced the concept of misconduct
and now lists the various grounds (apart from jurisdiction or appeal)
on which an award can be challenged.
These are:
failure by the arbitrators to comply with their duty referred to in
question 8; or
the arbitrators exceeding their powers; or
failure by the arbitrators to apply the procedure agreed by the
parties; or
failure by the arbitrators to deal with all the issues put to them; or
any arbitral or other institution or person vested by the partieswith powers in relation to the proceedings or the award exceeding
its powers; or
uncertainty or ambiguity as to the effect of the award; or
contd
Section No.of the Act
67*
68*
The Arbitration Act
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18 contd
the award being obtained by fraud or being contrary to public
policy; or
failure to comply with the requirements as to the form of the
award; or
any irregularity in the conduct of the proceedings which is admitted
by the arbitrators or the institution or person who has powers in
relation to the arbitration.
Appeal on point of law. A party can only appeal on a point of law
either with the agreement of all the other parties to the proceedings
or with the leave of the court.
The court will give leave if it is satisfied that:
the point substantially affects the rights of one or more of the
parties; and
the arbitrators were asked to determine the point; and
the arbitrators decision is obviously wrong, or, if the point is one
of general public importance, the arbitrators decision is at leastopen to serious doubt; and
it is just and proper for the court to determine the point.
Section No.of the Act
69(1) and69(2)
69(3)
14
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Section No.of the Act
24(1)
24(1)(a)*
24(1)(b)*
24(1)(c)*
24(1)(d)*
36
19 If I am unhappy about an arbitrator, what can I do?
The court can remove an arbitrator if:
there are justifiable doubts as to his impartiality; or
he does not possess the qualifications required by the arbitration
agreement; or
he is physically or mentally incapable of conducting the proceedings
or there are justifiable doubts as to his capacity; or
he has failed to conduct the proceedings or to make or use reasonable
despatch in conducting the proceedings or making an award and
substantial injustice has resulted or will result.
20 Can I appear before arbitrators with a lawyer?
Yes - you are entitled to legal representation as of right, but you may
waive this right.
The Arbitration Act
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