We have looked at the principles of Arbitration, grounds to commence and how through the New York Convention the award in the event it is an international Arbitration can be enforced.
As the process is slightly more formalised than other forms of ADR, we need to look at how the process of the Arbitral Tribunal, which is the collective name of the Arbitrator / Arbitrators that sitting to determine the outcome of a referral.
Arbitrations are usually divided into two types of Arbitration, these being:
• Ad Hoc Arbitrations; and
• Administered Arbitrations
These two distinctive types of Arbitration can be defined as follows:
In an Ad Hoc Arbitration, the parties or the appointing body determine who the arbitral tribunals will be. Following the commencement of the Arbitration, appointing body will have no further part to play and the Arbitration will be managed by the tribunal.
In an Administered Arbitration, the Arbitration will be administered by a professional arbitration body providing arbitration services, such as the LCIA or ACAS. In normal circumstances the Arbitration body will also be the appointing authority. These Arbitration bodies usually tend to have their own rules and procedures, and may be more formal. As a consequence they tend to be more expensive, and, for procedural reasons, slower to reach consensus and agreement.
The duties of the Arbitral Tribunal
The Arbitral Tribunal duties will be established by a combination of the provisions of the arbitration agreement and by the procedural laws which apply in the jurisdiction of the Arbitration. The extent to which the laws in the jurisdiction of the Arbitration permit “party autonomy” (the ability of the parties to set out their own procedures and regulations) determines the interplay between the parties.
However, in most countries the tribunal owes several non-derogable duties. These will usually be:
• Acting impartially and at all times fairly between the parties, including allowing each party the reasonable opportunity to set out their case and deal with the case of their opponent. This in effect complying with natural justice
• Adopting procedures suitable to the circumstances of the case they are engaged in, which will allow the best possible opportunity for the resolution of the dispute
In most cases the Arbitration awards are an award of damages against a party, however in most jurisdictions Arbitral Tribunals will have a wide range of remedies that can form a part of the award. These could include:
1. The payment of a sum of money, also known as conventional damages
2. The making of a “declaration” to any matter that was to be determined in the Adjudication
Arbitration in some jurisdictions can have the same powers of a legally constituted court and then will result in it have its own set of powers which may include:
1. Ordering a party to undertake or refrain from an activity, this is known as Injunctive Relief
2. Ordering the specific performance that may be required under the contract
3. Ordering the rectification, setting aside or cancellation of a contract or other document.
In other jurisdictions, the parties may have expressly granted the Arbitral Tribunal the right to decide these matters and while Arbitral Tribunal powers may be limited to deciding whether a party is entitled to damages. However the Arbitral Tribunal may not have the legal authority to order injunctive relief, issue a declaration, or rectify a contract, with these powers being reserved to the exclusive jurisdiction of a legally constituted court.
Challenge of an Arbitral Tribunal Award
In normal circumstances arbitration proceedings will tend not to be subject to appeal, in the traditional sense of the word.
However, in most countries, the court system will maintain a supervisory role to set aside awards in extreme cases, such as where there has been a serious legal irregularity which has impeded natural justice or where the decision may have resulted in fraud. Usually only domestic Arbitral awards are able to be set aside.
The cost of an Arbitration
Under both civil and common law in a large number of legal systems it is normal practice for the courts to award the legal costs of the case against the losing party. In effect the winner becomes entitled to recover an approximation of what was spent in pursuing the claim or defence of a claim brought against it.
Much like courts, Arbitral Tribunals usually have the same power to award costs in relation to the determination of the dispute.
In both domestic and international Arbitrations, governed by the laws of countries in which courts may award costs against a losing party, the Arbitral Tribunal will determine the proportion of the arbitrators’ fees that the losing party will be required to pay.
The cost of arbitration can generally be relatively accurately estimated on the websites of international arbitration institutions as well as on website of the International Arbitration Attorney Network. However the overall cost of administrative and arbitrator fees in a domestic Arbitration is on average less than 20% of the total cost of international arbitration.
Next time we will look at Adjudication.