Introduction:
1.1 Arbitration, a form of alternative dispute regulation (ADR), is a legal technique for the resolution of disputes outside the courts , where the parties to a dispute refer it to one or more persons by whose decision they agree to be bound. It is a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides. Other forms of ADR include meadiation(1) and non-binding resolution by experts. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transations. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts. Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that is voluntarily entered into, where the parties agree to hold all disputes to arbitration, without knowing, specifically, what disputes will ever occur) and can be either binding or non- binding . Non-binding arbitration is, on the surface, similar to mediation. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed, or legislation has decreed, will be final and binding. Arbitration is a consensual process; a party cannot be forced to arbitrate a dispute unless he agrees to do so. In practice, however, many fine-print arbitration agreements are inserted in situations in which consumers and employees have no bargaining power. Moreover, arbitration clauses are frequently placed within sealed users’ manuals within products, within lengthy click-through agreements on websites, and in other contexts in which meaningful consent is not realistic.
?(1) Mediation, as used in law, is a form of ADR , a way of resolving disputes between two or more parties. A third party, the mediator, assists the parties to negotiate their own settlement .In some cases, mediators may express a view on what might be a fair or reasonable settlement, generally where all the parties agree that the mediator may do so .Mediation has a structure, timetable and dynamics that “ordinary” negotiation lacks. The process is private and confidential. The presence of a mediator is the key distinguishing feature of the process. There may be no obligation to go to mediation, but in some cases, any settlement agreement signed by the parties to a dispute will be binding on them.
Arbitration often allows you to resolve disputes more quickly and cheaply than by going to court. Instead of judges or juries, arbitrators decide if wrongdoing occurred and how to correct or compensate you for it. When the arbitration is over, the decisions of the arbitrators are final and not subject to appeal. If you are unhappy with the result, you cannot go to court to try again. The arbitrators’ decisions can only be challenged under very limited circumstances. To take advantage of your legal rights, you must take legal action promptly or you may lose the right to seek a remedy or recover funds. Time restrictions, called “statutes of limitations(1),” vary from state to state. Arbitration is a dispute resolution process(2) in which the disputing parties present their case to a third party intermediary who examine all the evidence and then make a decision for the parties. This decision is usually binding. Like court-based adjudication, arbitration is adversarial. The presentations are made to prove one side right, the other wrong. Thus the parties assume they are working against each other, not cooperatively. Arbitration is generally not as formal as court adjudication, however, and the rules can be altered to some extent to meet the parties’ needs Arbitration is a very common approach for resolving international commercial or business disputes, and a number of international organizations have been established for doing this. These include the International Chamber of Commerce, the Arbitration Institute of the Stockholm Chamber of Commerce, and the International Court of Arbitration administered by the World Business Organization. Each of these bodies has its own procedures for arbitration which avoids the problem of one country having different procedures from another, thereby creating a conflict over which jurisdiction should hear a case. It is common for international contracts to mandate that arbitration be used to resolve any disputes that arise. Sometimes, the contract specifies that one of these bodies be used. At other times the procedures to be used for such arbitration are spelled out in the initial contract itself.
? (1) A statute of limitations is an enactment in a common law legal system that sets the maximum time after an event that legal proceedings based on that event may be initiated. In civil law systems, similar provisions are typically part of the civil code or criminal code and are often known collectively as periods of prescription.
? (2) A dispute resolution process is legal system provides a necessary structure for the resolution of many disputes. However, some disputants will not reach agreement through a collaborative processes. Some disputes need the coercive power of the state to enforce a resolution. Perhaps more importantly, many people want a professional advocate when they become involved in a dispute, particularly if the dispute involves perceived legal rights, legal wrongdoing, or threat of legal action against them. some have criticized these methods as taking away the right to seek redress of grievances in the courts, suggesting that extrajudicial dispute resolution may not offer the fairest way for parties not in an equal bargaining relationship, for example in a dispute between a consumer and a large corporation. In addition, in some circumstances, arbitration and other ADR processes may become as expensive as litigation or more so.
2. Sorts of arbitration varieties
Arbitration is a formal procedure for resolving any dispute outside the court. It is expected to be non judicial in nature. It is always in the form of negotiations. The person who holds such conciliation for resovling dispute and whose decision both the parties are expected to follow is the Arbitrator. The Sorts of arbitration varieties are –
Binding Arbitration is a process usually enforced or coerced into contracts to avoid litigation in the public domain, to ensure secrecy of the conversations(1), and the outcomes. Typically used to hide abuse and discourage common public knowledge or scrutiny of actions and consequences. Often compared to Sharia Law for lack of understanding in common culture.
2.2 Non-binding arbitration
Non-binding arbitration is a type of arbitration in which the arbitrator makes a determination of the rights of the parties to the dispute, but this determination is not binding upon them, and no enforceable arbitration award is issued. The “award” is in effect an advisory opinion of the arbitrator’s view of the respective merits of the parties cases. Non-binding arbitration is used in connection with attempts to reach a negotiated settlement(2). The role of an arbitrator in non-binding arbitration is, on the surface, similar to that of a mediator in amediation. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground to compromise at, the arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable.
*(1)Conversation is a form of interactive, spontaneous communication between two or more people who are following rules of etiquette. Conversation analysis is a branch of sociology which studies the structure and organization of human interaction, with a more specific focus on conversational interaction.
*(2) negotiated settlement -the emphasis on negotiation and out-of-court settlement can help avoid an environment in which bona fide differences of opinion become protracted legal battles, where antagonism and intransigence overcome reason and compromise, and where neither party truly wins.
2.3 Ad hoc arbitrations
In ad hoc arbitrations, the arbitral tribunals are appointed by the parties or by an appointing authority chosen by the parties. After the tribunal has been formed, the appointing authority will normally have no other role and the arbitation will be managed by the tribunal. It is one which is not administered by an institution and therefore, the parties are required to determine all aspects of the arbitration like the number of arbitrators, manner of their appointment, procedure for conducting the arbitration, etc. Provided the parties approach the arbitration in a spirit of cooperation, ad hoc proceedings can be more flexible, cheaper and faster than an administered proceeding. The absence of administrative fees alone makes this a popular choice.
2.4 Administered arbitrations.
In administered arbitration, the arbitration will be administered by a professional arbitration institution providing arbitration services, such as the LCIA in London, or the ICC in Paris, or the American Arbitration Association in the United States. Normally the arbitration institution also will be the appointing authority. Arbitration institutions tend to have their own rules and procedures, and may be more formal. They also tend to be more expensive, and, for procedural reasons, slower.
2.5 Judicial Arbitration
Judicial Arbitration is, usually, not arbitration at all, but merely a court process which refers to itself as arbitration, such as small claims arbitration before the County Courts in the United Kingdom.
2.6 High-Low Arbitration
High-Low Arbitration, or Bracketed Arbitration, is an arbitration wherein the parties to the dispute agree in advance the limits within which the arbitral tribunal must render its award. It is only generally useful where liability is not in dispute, and the only issue between the party is the amount of compensation. If the award is lower than the agreed minimum, then the defendant only need pay the lower limit; if the award is higher than the agreed maximum, the claimant will receive the upper limit.
Pendulum Arbitration refers to a determination in industrial disputes where an arbitrator has to resolve a claim between a trade union and management by making a determination of which of the two sides has the more reasonable position. The arbitrator must choose only between the two options, and cannot split the difference or select an alternative position.
2.8 Simplified Arbitration
Simplified arbitration. If your claim is $25,000 or less, you generally will not have to appear in person at a hearing. In simplified arbitrations, the arbitrator will make a decision on your case by reviewing documents and written descriptions of what happened from you and your broker. This is a less costly alternative because you do not have to travel to a hearing and appear in person to give testimony and answer questions. You should carefully review the rules governing simplified arbitration before you file a claim.
2.9 Voluntary Arbitration
Voluntary Arbitration is a binding, adversarial dispute resolution process(1) in which the disputing parties choose one or more arbitrators to hear their dispute and to render a final ecision or award after an expedited hearing oluntary arbitration implies that the two contending parties, unable to compromise their differences by themselves or with
the help of mediator or conciliator, agree to submit the conflict/ dispute to an impartial authority, whose decisions they are ready to accept.
In other words, under voluntary arbitration the parties to the dispute can and do they refer voluntarily and dispute to arbitration before it is referred for adjudication. This type of reference is known as “voluntary reference”, for the parties themselves volunteer to come to a settlement though an arbitration machinery.The essential elements in voluntary arbitration are : The voluntary submission of dispute to an arbitrator. The subsequent attendance of witnesses and investigations.
?(1) adversarial dispute resolution process – Judicial dispute resolution is typically adversarial in nature, for example, involving antagonistic parties or opposing interests seeking an outcome most favorable to their position. The legal system provides a necessary structure for the resolution of many disputes. However, some disputants will not reach agreement through a collaborative processes. Some disputes need the coercive power of the state to enforce a resolution.
2.10 Compulsory Arbitration
Compulsory Arbitration is a non-binding, adversarial dispute resolution process in which one or more arbitrators hear arguments, weigh evidence and issue a non-binding judgment on the merits after an expedited hearing. The arbitrator’s decision addresses only the disputed legal issues and applies legal standards. Either party may reject the ruling and request a trial de novo in court.Compulsory arbitration is one where the parties are required to accept arbitration without any willingness on their part. When one of the parties to an industrial dispute feels aggrieved by an act of the other, it may apply to the appropriate government to refer the dispute to adjudication machinery. Such reference of a dispute is known as “compulsory” or “involuntary” reference, because reference in such circumstances does not depend on the sweet will of either the contending parties or any party to the dispute. It is entirely the discretion of the appropriate govt. based on the question of existing dispute, or on the apprehension that industrial dispute will emerge in particular establishment.Under compulsory arbitration, the parties are forced to arbitration by the state when:The parties fail to arrive at a settlement by a voluntary method. when there is a national emergency which requires that the wheels of production should not be obstructed by frequent work-stoppages. The country is passing through a grave economic crisis. There is a grave public dissatisfaction with the existing industrial relations.Public interest and the working conditions have to be safeguarded and regulated by the state.Compulsory arbitration leaves no scope for strikes and lock-outs; it deprives both the parties of their very important and fundamental rights(1).
2.11 Night Baseball Arbitration
Night Baseball Arbitration is a variation of baseball arbitration where the figures are not revealed to the arbitration tribunal. The arbitrator will determinate the quantum of the claim in the usual way, and the parties agree to accept and be bound by the figure which is closest to the tribunal’s award(2).
?(1) Fundamental rights are a generally regarded set of entitlements in the context of a legal system, wherein such system is itself said to be based upon this same set of basic, fundamental, or inalienable entitlements or “rights.” Such rights thus belong without presumption or cost of privilege to all human beings under such jurisdiction. The concept of human rights has been promoted as a legal concept in large part owing to the idea that human beings have such “fundamental” rights, such that transcend all jurisdiction, but are typically reinforced in different ways and with different emphasis within different legal system
?(2) Until 1999 the statutory maximum limits on monetary awards which employment/industrial tribunals could make were fixed on a somewhat haphazard and irregular basis. This has now been changed. The Secretary of State must now make annual orders to index-link most maximum limits by reference to changes in RPI for September, up or down, in each year (see Employment Relations Act 1999 s.34 and notesat Indexationofawards
2.12 Contractual Arbitration
The Parties agree that any claim or dispute between them or against any agent, employee, successor, or assign of the other, whether related to this agreement or otherwise, and any claim or dispute related to this agreement or the relationship or duties contemplated under this contract, including the validity of this arbitration clause, shall be resolved by binding arbitration by the American Arbitration Association , under the Arbitration Rules then in effect. Any award of the arbitrator(s) may be entered as a judgment in any court of competent jurisdiction. We agree that any claim, dispute or controversy between us or claim by either of us against the other or the employees, agents or assigns of the other and any claim arising from or relating to this agreement or the relationships which result from this agreement, no matter against whom made, including the applicability of this arbitration clause and the validity of the entire agreement, shall be resolved by neutral binding arbitration by the American Arbitration Association , under the Arbitration Rules in effect at the time the claim is filed. Any arbitration hearing at which you appear will take place at a location near your residence. This arbitration agreement is made pursuant to a transaction involving interstate commerce.
2.13 Institutional Arbitration
An institutional arbitration on the other hand is one in which a specialized institution with a permanent character intervenes and assumes the functions of aiding and administering the arbitral process, as according to the rules of that institution. It is important to note that these institutions do not arbitrate the dispute, it is the arbitrators who arbitrate, and so the term arbitration institution is inapt and only the rules of the institution apply. In institutional arbitration, the first issue arising for agreement of the parties is choice of the institution, appropriate for the resolution of disputes, arising out of their contract. Whilst making such choice, there are various factors to be considered i.e. nature & commercial value of the dispute, rules of the institution as these rules differ, past record and reputation of the institution and also that the institutional rules are in tune with the latest developments. It is also alleged that national courts have a tendency to grant enforcement of awards made in institutional arbitration, though doubts have been raised, since international arbitration institutions have the benefit of worldwide recognition and their professional capability adds to the certainty and finality of the proceedings. Courts are more likely to even enforce an award obtained in default of the other party, which they would refuse had it been obtained in ad hoc arbitration, in view of the strict arbitration procedures followed by these institutions.
2.14 Satutory Arbitration
“Statutory arbitration” is arbitration pursuant to an enactment which provides for a dispute to be submitted to arbitration. Parties are generally required to attend arbitration proceedings in person. The Act permits arbitrating commissioners to dismiss matters if the referring parties fail to appear or to send representatives. If the other party is absent, the commissioner may either postpone the matter or continue in its absence, ie proceed ‘by default’. If, however, parties give compelling excuses for their absence, matters should for the sake of prudence be postponed, even if no formal application has been filed. Otherwise, the default proceedings may have to be rescinded. An arbitrator is obliged to ensure that all parties who may be affected by the award are joined in the proceedings. The test for whether a person should be joined is whether the person has a ‘direct’ and ‘substantial’ interest in the matter, ie whether the award would affect the person’s legal rights. It is the arbitrator’s duty to ensure that all interested parties have been cited as such and have been informed of the proceedings. Parties may be joined in arbitration proceedings even if they were not parties to the preceding conciliation proceedings.In any arbitration proceedings, a party to the dispute may appear in person or be represented only by a legal practitioner or a director or employee of that party or, if a closed corporation, a member, or by any member, office-bearer or official of the referring party’s registered trade union or a registered employers’ organisation. In matters concerning dismissals relating to the conduct or capacity of the employee. Legal practitioners may appear only with the consent of the commissioner and all the other parties. This applies only to the hearing on the merits in such matters; points in limine and applications for postponements may be argued by legal practitioners. Consent by the parties to legal representation is not sufficient; commissioners must apply their minds independently to such applications, and exercise their discretion judicially.Legal representation may be allowed if the commissioner finds that it would be ‘unreasonable to expect a party to deal with the dispute without legal representation’, given the nature of the questions of law raised by the dispute, its complexity, the public interest, and ‘the comparative ability of the opposing or their representatives to deal with the dispute’. Legal representatives seeking right of appearance in matters concerning dismissals for misconduct and incapacity should bring their applications before the matter is set down. Commissioners may require proof of the representative’s bona fides and qualification.
Roles of an Arbitrator
The role of an arbitrator is to hear both sides of a conflict and decide the outcome. An arbitrator should be completely impartial to either side to ensure fairness. This excellent treatise provides an in-depth analysis of virtually every aspect of international commercial arbitration. A comparative approach to arbitration examining the provisions of different nationals, arbitration rules and international conventions. The present review is focused on which explore and explain respectively: (i) the selection, challenge and replacement of arbitrators; and (ii) the rights and duties of arbitrators. Generally, provide a thorough understanding of the diverse legal traditions that underlie these issues. comprehensively covers all issues which should be considered regarding the means of selecting the tribunal that will decide the parties’ dispute, with a comparative approach. It explains all aspects which should be taken into account before and during the proceedings. While the author indicates that there is no “optimum number of arbitrators in an international arbitration” parties should always consider “cost, diversity, speed, expertise, consistency and decisiveness”. The author explains the importance of the principle of party autonomy(1), as a basic pillar of arbitration, nevertheless limited by the applicable laws to safeguard the independence and impartiality of arbitrators. In a like manner, the selection of a sole or presiding arbitrator is also dealt with. The duties of the presiding or sole arbitrator are substantial and the requirements of independence and impartiality are even more salient in these cases
?(1) The term autonomy state the position of a person or a group of person being in which they take their own decision in all regards. It is the condition of being autonomous. By being autonomous it means that the person or the group of person will control themselves own their own. There could not be any other person or condition governing the decisions of their lives. An autonomous person does not follow the decision imposed on him by anyone else. Individuals are not told by anyone else as to what they should do. He takes his own decisions and is held responsible himself for whatever the outcome of the decision taken by him comes out to be. No one else can impose their own decision. People are free to live their life according to their own particular way and not get influenced and forced by any other individual or party to do something specific. It is the state of being independent. With independence individuals are free to have their own lifestyle following this kind of lifestyle one can develop their skills and talents. It gives full space and time to make the thoughts come into reality and gives an opportunity to an individual to prove himself in front of whole world.
Partly devoted to the procedures of challenging arbitrators in situations where a party becomes dissatisfied with the choice of an arbitrator, typically because of doubts as to the arbitrator’s impartiality or independence. The different scenarios and available procedures under the most important institution rules and national laws. The move on to discuss the most relevant issues in relation to the replacement of arbitrators. The devoted to the question of “truncated tribunals(1)” – i.e., where the tribunal continues the arbitration with either only two members or with three members, one of whom does not participate in the tribunal’s actions. An essential aspect of the arbitration process concerns the status, rights and obligations of the arbitrators. The source and content of the individual arbitrator’s obligations to the parties, and his or her rights and protections, in relation to the arbitral proceedings. Some legislations reveal remarkably little attention to the subject, while the most developed legal systems impose various legal obligations on arbitrators. These include the duty to resolve the parties’ dispute in an adjudicatory manner, to conduct the arbitration in accordance with the parties’ agreement, to maintain the confidentiality and to fulfill their mandate. These obligations are clearly set out and explained in providing an excellent guidance for students, advocates and arbitrators. Generally, a significant contribution in a field which gives cause for concern of every arbitration practitioner(2), as every issue in relation to the status of arbitrators and their liabilities continues to be controversial with little harmonization in different legal systems. The important merit of Gary Born’s work on these questions is the extensive research and analysis of virtually all important domestic and international sources.
?(1) Truncated tribunals – under some laws and rules, a truncated tribunal may proceed only if an arbitrator fails to participate without justified reasons. Certain institutional rules stipulate additional requirements for the admissibility of a decision rendered by a truncated tribunal , example, the ICC Rules allow decision making by a truncated tribunal only in cases where the proceedings have already been closed. Prior to the closing of the proceedings, the ICC Rules require that an obstructing arbitrator is replaced and the proceedings are then continued with the participation of three arbitrators. Other institutional rules take a broader approach and admit decisions of truncated tribunals both prior to and after the closing of the proceedings
?(2) arbitration practitioners regularly work together to represent international commercial and state-party clients across a wide variety.
The entire treatise benefits from an elegant and concise language, concentrating primarily on the exposition of the law and discussion of the different issues, without endeavoring to put a subjective approach or to add the author’s rich practical experience, without distracting the rigor of the presentation. Every business or other areas of human endeavour has some or the other kind of disputes in various spheres, To resolve these disputes parties will often seek an amicable resolution of whatever gripe they maybe harbouring. And as a result the role of third parties in assisting to resolve contentious issues becomes a pertinent one which requires careful and balanced handling, and in many cases arbitration is used as a settlement technique that involves third party input – it takes a resolute decision that is legally binding for the quarrelsome parties. Mediation is another form of alternative dispute resolution (ADR) in which a settlement negotiation is strengthened by a third party leading to a non-binding resolution unlike with arbitration that can be likened to litigation in courts. Arbtration is utilized by the cases involving Commercial disputes and this is usually the case with international commercial transactions. Consumer and employees cases often witness mandatory arbitration by virtue of the fine print contracts, and as a consequence this translates to the denial of the right to access the courts as individuals. The difference between non-binding arbitration and mediation is that the mediator works to assist the parties to establish common ground from which they can reach a compromise, the arbitrator does not actively participate in the settlement process, but instead only offering a determination of liability or an indication of the quantum of damages payable. As far as advantages are concerned, arbitration takes over judicial proceedings in that expert arbitrators are called upon whenever a case pertains to highly technical issues, arbitration usually takes less time compared to litigation in court, and can be much cheaper and flexible. Proceedings in arbitration matters can be confidential unlike most cases, and disadvantages are that due to ancillary agreements on the ambiguity of the small print in the agreements. Consumers and employees often find themselves in a situation where they lack prior knowledge when purchasing a product or taking a job covered by mandatory arbitration which limits on rights to access courts of law. Other major drawback of this practice is that the recovery of attorney’s fees is unavailable and avenues of appeal are also very limited
The practice of arbitration comes into picture since 16th century as the first act of law on arbitration was passed under English law, yet it had already begun before the official act was introduced. Greater sophistication brought about by the expansion in international trade transformed the procedures for resolving disputes between merchants, and as a measure aimed at resolving disputes under international commercial contracts, international arbitration was formally enacted as a variation.
Should arbitrator as a general rule be required to be impartial and or independent of the parties?
Much has been written upon arbitrators’ independence and impartiality. The capacity of an arbitrator to act as a neutral party, rendering a decision which is based solely on the merits of the case, can be considered to be essential to arbitration. At the same time, it raises many practical difficulties. These difficulties are exacerbated in the current context of a rising number of challenges to arbitrators, which is the result, we believe, both of a broad trend towards the moralization of commerce generally, and at the same time of a more aggressive attitude of parties and counsel in international arbitration. This article will begin with an introduction on the very notions of neutrality, impartiality and independence of the arbitrator(s), and their translation in a number of modern arbitration laws and arbitration rules . The focus will then be on the practical questions called upon by this colloquium (1). This requirement may even be considered to be more stringent in the case of arbitration as in the case of state court proceedings. Indeed, there are generally no professional requirements for being an arbitrator, as opposed to a judge: no condition of age, years of experience, or diploma, which are generally required from judges, with a view to guarantee that the judges will be competent. On the other hand, unlike state judges, the professional life of the arbitrators is generally not restricted to their function as arbitrator. Arbitrators are generally chosen among lawyers, who have a professional life full of encounters; this is especially the case of lawyers practicing within large multinational firms, if one counts all the encounters of the lawyers of those firms. Also, arbitrators are generally chosen by one party , and it can be expected that a party (and its counsel) will favour the nomination of someone it (or its counsel) has encountered before, or with whom it has some connection or share some background .
(1)The word “colloquium” is derived from the Latin “colloquium,” meaning “to talk together.” The word conveys a conversation that is both structured and informal, a meeting of minds that is both serious and spirited. This is not a course in which somebody lectures and you listen. It is a course in which you participate actively in the discussion of questions that you feel are important. Central to the colloquium is the idea of intellectual freedom — your freedom to pick a topic that mirrors your interests and to pursue questions that fire your imagination. Faculty from every department and program across the campus teach in the College Colloquium: Music and Physics no less than History and Philosophy. In choosing your colloquium you will be taking an important first step in creating your intellectual journey at Willamette.
It is commonly accepted, in most if not all arbitration laws and arbitration institutions rules, that all arbitrators are to be neutral, impartial and independent. Looking closer, the concepts that are used are not always the same, nor are the sanctions for a lack of these qualities unanimous. There is no express duty for an arbitrator, prior to accepting his nomination, to sign a statement of independence and disclose any circumstance that may question that independence in the eyes of third parties. A declaration of independence is, however, provided in the CEPANI (1) Rules of good conduct and therefore will be signed by any prospective arbitrator in the case of a CEPANI arbitration. The Code, on the other hand, expressly provides that the lack of independence or impartiality can never be invoked to justify the setting aside of an award .A challenge to an arbitrator needs to be raised in a specific proceeding as soon as the party becomes aware of the circumstances it is invoking, and will be heard by the Tribunal of First instance, with an appeal possible to the Court of Appeals. The Code further organises a challenge proceeding before the Tribunal of Grande Instance but without specifying the causes for recusal (2). At the same time, it is accepted that a lack of impartiality or independence of an arbitrator may lead to the setting aside of the award, on the legal basis of irregular formation of the arbitral tribunal or otherwise.A challenge proceeding is organised where circumstances exist that give rise to justifiable doubts as to the impartiality of the arbitrator. The lack of impartiality may also be invoked as a serious irregularity justifying the annulment of the award. The Arbitration Act does not provide for any disclosure obligation and the courts have not imposed such duty on the arbitrators. On the other hand, a declaration of independence and disclosure is required in the case of a LCIA arbitration .
(1)The party that wishes to resort to CEPANI arbitration shall send its request to the Secretariat of CEPANI. The Request for arbitration shall contain, inter alia, the following particulars :
- Full name, capacity, address and telephone and fax numbers of each party;
- A recital of the nature and circumstances of the dispute that gives rise to the claim;
- The object of the claim, a summary of the means invoked and, if possible, a financial assessment of the claim;
- Any information that may assist in determining the number of arbitrators and their choice in accordance with the provisions of Article 10;
- Information regarding the seat and language of the arbitration.
(2) Judicial disqualification, also referred to as recusal, refers to the act of abstaining from participation in an official action such as a legal proceeding due to a conflict of interest of the presiding court official or administrative officer. Applicable statutes or canons of ethics may provide standards for recusal in a given proceeding or matter. Providing that the judge or presiding officer must be free from disabling conflicts of interest makes the fairness of the proceedings less likely to be questioned.
It should be noted that the Arbitration Act does not refer to independence, but merely to impartiality. Indeed, the idea is that what really matters is the impartiality of the arbitrator(s), and that the requirement for independence that it often provided for is just a tool to achieve impartiality. The ICC Rules, conversely, focus on the independence of the arbitrator. Article 7.1. provides that “every arbitrator must be and remain independent of the parties involved in the arbitration“, without referring to impartiality. Article 7.2. further requests any prospective arbitrator to sign a statement of independence – a document that has been pioneered by the ICC – and disclose “any facts or circumstances which might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties“.The statement of independence has recently been revised to become a “Statement of Acceptance, Availability and Independence”. It is now required that a prospective arbitrator should take into account, for the purpose of Article 7.2. of the Rules “whether there exists any past or present relationship, direct or indirect, between him/herself and any of the parties, their related entities or their lawyers or other representatives, whether financial, provisional or of any other kind”, and that “any doubt must be resolved in favour of disclosure”. Only after the submission of such statement of acceptance, availability and independence and its communication to the parties will the Court of Arbitration decide to appoint or confirm an arbitrator. Where an allegation of lack of independence is raised after the arbitrator has been appointed or confirmed, the challenge is decided by the ICC Court of Arbitration, as the authority administering the arbitration. The UNICITRAL Rules (1)provide likewise that a prospective arbitrator has a duty to disclose “any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence and impose on any arbitrator, as from the time of his or her appointment, such disclosure obligation.
(1)UNICITRAL Rules- the UNCITRAL Arbitration Rules provide a comprehensive set of procedural rules upon which parties may agree for the conduct of arbitral proceedings arising out of their commercial relationship and are widely used in ad hoc arbitrations as well as administered arbitrations. The Rules cover all aspects of the arbitral process, providing a model arbitration clause, setting out procedural rules regarding the appointment of arbitrators and the conduct of arbitral proceedings and establishing rules in relation to the form, effect and interpretation of the award. The UNCITRAL Arbitration Rules were adopted in 1976 after extensive deliberations and consultations with various interested international organizations and leading arbitration experts. The General Assembly of the United Nations has recommended the use of the UNCITRAL Arbitration Rules in international commercial contracts. Revised UNCITRAL Arbitration Rules were adopted in 2010 and are intended to reflect the evolution in arbitral practice in the period since the adoption of the 1976 Rules.
Neutrality – to which the title of this contribution refers – is not a concept that is generally used in the arbitration laws or rules. At the same time, international arbitration has been developed, precisely, with the aim of offering parties a dispute resolution mechanism that is neutral, in the sense that it is not linked to the country of one of the parties. Neutrality is therefore important in international arbitration. It may express itself in the form of a neutral seat of the arbitration, a neutral applicable law and, indeed, a neutral tribunal. Certain arbitration rules express the neutrality of the tribunal by providing, such as the ICC Rules, that the sole arbitrator or the chairman of the arbitral tribunal shall be of a nationality other than those of the . Neutrality has been defined as a state of mind, a certain distance that the arbitrator establishes vis-à-vis his or her legal, political and religious background. It is also the absence of parti pris vis-à-vis the parties or the dispute, and it is in that respect difficult to distinguish from impartiality. Impartiality has indeed been defined as the aptitude of the arbitrator to be free of subjective biases, predispositions or affinities interfering with the conduct of his mission. On the other hand, independence is the quality of someone who does not depend upon someone else. The idea is that independence is required from the arbitrator for him or her to be impartial, neutral, and exercise independent judgment on the case. Conversely, it is presumed that dependence of the arbitrator towards a party would not allow him or her to exercise independent judgment. But the question that immediately arises is towards whom the arbitrator must be independent. Indeed, the arbitrator is not independent per se, as he or she is an active professional, with many relationships, and is not working in an ivory tower with no dependence, links or relationships with any other individual or entity.The starting point is obviously that the arbitrator may not be dependent on the parties. The requirement of independence has however also grown to generally include the independence of the arbitrator and his law firm from the parties, the parties’ subsidiaries and counsel to the parties. In a new development, independence vis-à-vis the subject matter of the arbitration, including mere legal issues is sometimes referred to. The question may arise whether the focus on independence does not go too far away from the primary aim, which is that the arbitrator acts impartially, and may render an independent judgment, i.e. a judgment not affected by concerns other than the merits of the case to be decided. However, this primary concern does not appear in reality to be the only one at stake. The appearance of impartiality is indeed also important, maybe as important as impartiality itself. And, precisely, connections between the arbitrator or his firm and the parties or their counsel, may create the appearance that the arbitrator will not be able to render an impartial decision. As per the famous words of Lord Hewart, “it is of fundamental importance that justice not only be done, but should manifestly and undoubtedly be seen to be done .
If this is true for justice, it is even more so regarding arbitration, whose legitimacy stems from the agreement of the parties. Hence it is important that both parties be at ease with the arbitrators and have confidence, during the whole proceedings, that their case will be decided impartially by the tribunal. It is generally considered that impartiality is a subjective notion, relating to the state of mind of the arbitrator and not to be measured easily, whereas independence is more objective, as it is appreciated on the basis of factual elements. This allows a distinction to be made between those two notions, although they are generally used together, without any distinction. The question of whether they need to be distinguished at all has been raised. In Belgium, the view is generally expressed that impartiality is more important than independence and that the parties may validly waive the requirement that an arbitrator be independent, but not that he or she be impartial. This position is along the lines of that of English law, as we have seen earlier. To help prospective arbitrators fulfilling their disclosure duty and to assist institutions or state courts deciding on challenges, the IBA produced in 2004 its famous IBA Guidelines on Conflicts of Interest in International Arbitration. The Guidelines contain general standards regarding impartiality, independence and disclosure, and a section dealing with the practical application of these general standards, listing a variety of circumstances. These are divided among the “Non-waivable Red List”, i.e. situations of conflict that can not be waived, the “Waivable Red List”, i.e. situations which are waivable by express and informed consent of the parties, the “Orange List”, with situations that need to be disclosed to the parties, and the “Green List”, with situations the arbitrator has no duty to disclose. The Guidelines state expressly that they do not purport to be exhaustive, nor to override statutory provisions of law. They are merely guidelines, as their name indicates and they appear, six years after their enactment, to have exactly served that purpose, as they are used as a reference (not as mandatory provisions obviously) by arbitral institutions, notably by the ICC and by tribunals that must decide on arbitrators’ challenges. It even occurs that parties specifically provide that any challenge will be decided by sole application of the IBA Guidelines. he party will normally look for a profile of arbitrator who will have the necessary qualities to understand the case and to be heard within the arbitral tribunal. A research will also be conducted on the arbitrator’s writing or position, to assess possible affinities with the legal issues that are at stake, or to avoid the nomination of an arbitrator that has taken adverse positions. Prior experience or contacts of any sort with this arbitrator are normally a plus, as these will allow the party or its counsel to assess the qualities of the bitrators and to build the necessary trust.
Also, there is the general tendency to choose someone that is known, or at least with which some common background is shared. Failing so, general reputation or recommendation will come into play. In this context, contacts between a party and the person that party contemplates appointing as arbitrator was in continental Europe generally limited to a mere phone call to ask the prospective arbitrator about his or her availability, and to request him or her to check conflicts. Also, after the appointment of the two party-appointed arbitrators, each party had contacts with “its” arbitrator for the mere purpose of the selection of a person who may act as chairman. such preliminary contacts are still customary and accepted. It is normal that, before accepting to intervene, the prospective arbitrator be informed of the name of the parties involved, the nature of the dispute, and the names of the other arbitrators, if already known.
These elements are necessary to allow the arbitrator to conclude that he or she may serve as arbitrator, possessing the necessary qualities and competence to act. During such preliminary contacts, the prospective arbitrator must however immediately act as a (future) arbitrator, i.e. act towards the party (or its counsel) with the distance imposed by the (potential) function of arbitrator. Indeed, impartiality and independence of the arbitrator is essential, and therefore pre-dates his or her nomination. Originating from the U.S., a practice has developed in which the selection process takes a form close to a “beauty contest”, where several prospective arbitrators are being interviewed, and the results of these interviews compared before the selection is made. This practice has been imported in Europe for large arbitrations. While it is not certain that the aim of the parties conducting such preliminary interviews is clearly to influence the independence of the arbitrator, these preliminary interviews are obviously delicate and risky for the arbitrator and cannot be accepted as such without limitation or rules on their format, and a clear prohibition that legal issues be tested on the arbitrator.
In the case of an institution arbitration, the institution will generally request the arbitrator to fill in and sign a form which shall expressly refer to that obligation, mention the type of undertakings that are made, and the type of information to be disclosed. Even if no express obligation is formulated, the arbitrator should, we believe, take into account (i) his or her present and past activities, (ii) the activities of the law firm he or she is working with and (iii) the activities of his or her close family (spouse, parents, children), and identify any connection these activities .
Conclusion
Parties often seek to resolve their disputes through arbitration because of a number of perceived potential advantages over judicial proceedings. when the subject matter of the dispute is highly technical, arbitrators with an appropriate degree of expertise can be appointed . arbitration is often faster than litigation in court and it can be cheaper and more flexible for businesse. Arbitral proceedings and an arbitral award are generally non-public, and can be made confidential. It may be chosen, whereas in judicial proceedings the official language of the country of the competent court will be automatically applied in arbitral proceedings the language of arbitration because of the provisions of the New York Convention 1958, arbitration awards are generally easier to enforce in other nations than court judgments. In most legal systems there are very limited avenues for appeal of an arbitral award, which is sometimes an advantage because it limits the duration of the dispute and any associated liability.
Arbitration may become highly complex. It may be subject to pressures from powerful law firms representing the stronger and wealthier party. Arbitration agreements are sometimes contained in ancillary agreements, or in small print in other agreements, and consumers and employees often do not know in advance that they have agreed to mandatory binding pre-dispute arbitration by purchasing a product or taking a job. If the arbitration is mandatory and binding, the parties waive their rights to access the courts and to have a judge or jury decide the case. In some arbitration agreements, the parties are required to pay for the arbitrators, which adds an additional layer of legal cost that can be prohibitive, especially in small consumer disputes. In some arbitration agreements and systems, the recovery of attorneys’ fees is unavailable, making it difficult or impossible for consumers or employees to get legal representation[citation needed]; however most arbitration codes and agreements provide for the same relief that could be granted in court if the arbitrator or the arbitration forum depends on the corporation for repeat business, there may be an inherent incentive to rule against the consumer or employee. Arbitrators are generally unable to enforce interlocutory measures against a party, making it easier for a party to take steps to avoid enforcement of member or a small group of members in arbitration due to increasing legal fees, without explaining to the members the adverse consequences of an unfavorable ruling.
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10.(23) E.g., Section 44.103, Florida Statutes
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15. See C. Salomon, “Selecting an international arbitrator: five factors to consider”, in Mealey’s International Arbitration Report, vol. 17, October 2002
16. See e.g. Article 33 (1)(a) of the English Arbitration Act.
17. Article 3 of the Rules of good conduct, Appendix II to CEPANI Rules., p. 352, and ref. cited in note 5.