What sorts of arbitration of varieties do you know ? What is (are) the role(s) of arbitrator to you ? Should arbitrator as a general rule be required to be impartial or independent of the parties ?

Definition and Meaning

 Arbitration involves a neutral third party (chosen by the parties) listening to the evidence and arguments and then deciding which the parties have brought before him or her. The neutral third party has the power to issue a binding decision[1].  The distinctive feature of arbitration is that it is a private dispute resolution mechanism, which nevertheless provides arbitrators with judicial power. More specifically:

 X       arbitration is a private dispute resolution method, in which the arbitrators’ mandate to resolve a dispute derives generally from a contract (i.e., an arbitration agreement or arbitration clause).

 X       arbitrators have the power to deliver an award that finally resolves the dispute that is binding on the parties.

 Arbitration is a form of alternative dispute resolution (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 (the “arbitrators”, “arbiters” or “arbitral tribunal“), by whose decision (the “award“) they agree to be bound.

The advantages of arbitration include privacy and confidentiality of proceedings, procedural flexibility, and high rates of enforceability of arbitral awards. Despite its many advantages, there is growing concern that arbitration is becoming increasingly expensive and time-consuming. This concern, although not unfounded, is often overplayed. Ultimately, it is down to the users of arbitration to draft effective arbitration agreements and to put an effective arbitration procedure in place. To arrive at a successful resolution of disputes through arbitration, the parties involved should pay particular attention to the choice of arbitrators and the arbitration institution, and, most importantly, give due consideration to the drafting of the arbitration agreement.

 Voluntary and Mandatory Arbitration

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 existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding. Non-binding arbitration is similar to mediation in that a decision cannot be imposed on the parties. 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. By one definition arbitration is binding and so non-binding arbitration is technically not arbitration.

 Types of arbitration

Arbitration can be either domestic or international; and institutional or ad hoc. An arbitration may be termed domestic where all the relevant factors in the dispute, i.e. subject matter, domicile of the parties, place of arbitration, applicable law, etc., converge in a single place, basically in a country[2].

 1)Domestic arbitration

It generally refers to commercial and family arbitration. In commercial arbitration, the commercial or contractual disputes between business ventures are sorted out, whereas in family arbitration, family disputes relating to divorce, maintenance or custody of children take place.

 2) International Arbitration

The more diverse these connecting factors, the more likely that the arbitration will be international. International arbitration is a contractually based dispute resolution mechanism that offers an alternative to national courts. International arbitration can be defined as a specially established mechanism for the final and binding determination of disputes concerning a contract between two or more parties that has an international element. The disputes are determined by independent arbitrators in accordance with standards and procedures chosen by the parties involved in the dispute[3].

 3)Ad hoc and Institutional Arbitration[4]

In addition, there are two basic types of arbitration: ad hoc and institutional ad hoc and institutional. Parties are free to choose between these two types in their arbitration agreement. If the parties fail to specify in their agreement which type of arbitration they prefer, the arbitration will be presumed to be ad hoc. Ad hoc arbitration is an arbitration that is specifically designed by the parties for a particular dispute. Here there are predetermined rules for the arbitrators to rely on when conducting the proceedings.  Thus, it is up to the parties to determine the proceedings and to the arbitrators to fill any gaps. Ad hoc arbitration is more flexible than institutional, as the parties are completely free to adapt the proceedings to the particulars of the case. It can also be less expensive than institutional arbitration, as the parties avoid the fees of the institution and they can negotiate the fees of the arbitrators. However, for an ad hoc arbitration to work, the parties must have provided for a clear set of proceedings in advance, as there are no institutional rules to fall back on if they disagree on the arbitration process after the dispute arises.

 Institutional arbitration is an arbitration that is conducted under the auspices of a particular arbitration institution and in accordance with the rules of that institution. Institutional arbitration is more popular among international parties. This is because the parties feel more comfortable with experienced institutional administrators (known as “case managers”) who are willing to take care of any issue that might arise during the proceedings. Parties are also attracted by the reputation and the strong brand name of many established arbitration institutions, which, as many parties believe, increases the enforceability of an arbitration award.

 The most popular institutions are the International Chambers of Commerce (ICC), the London Court of International Arbitration (LCIA), the American Arbitration Association (AAA), and the Stockholm Chamber of Commerce

Bangladesh Perspective

 In Bangladesh, the present law of arbitration is contained mainly in the Arbitration Act, 2001. Three prominent business chambers of Bangladesh, namely, International Chamber of Commerce–Bangladesh (ICC-B), Dhaka Chamber of Commerce & Industry (DCCI), and the Metropolitan Chamber of Commerce & Industry (MCCI), Dhaka, responding to the felt needs of their members, decided to open a dispute resolution centre, called the Bangladesh International Arbitration Centre (BIAC). BIAC provides neutral, efficient and reliable dispute resolution service in this emerging hub of South Asias industrial and commercial activity.


Parties to arbitral proceedings generally expect an arbitrator to organize and control the arbitration process efficiently, minimize costs, accord fair and equal treatment to the parties, and to ultimately resolve the issues in dispute by making an effective and binding award. To enable the arbitrator meet these expectations he has certain duties towards the parties from whom he/she derives jurisdiction. This paper examines in duties of an arbitrator, the sources of which are threefold[5]. These are:

(i)     the agreement of the parties;

(ii)   rules and laws of arbitration and

(iii) ethical rules.

Arbitration Agreement

 In Bangladesh, the present law of arbitration is contained mainly in the Arbitration Act, 1940, there being separate Acts dealing with the enforcement of foreign awards. There are also stray provisions as to arbitration, scattered in special Acts. Three types of arbitration are contemplated by the Arbitration Act of 1940, namely (i) Arbitration in the course of a suit, (ii) Arbitration with the intervention of the court, and (iii) Arbitration otherwise than in the course of a suit and without the intervention of the court. In practice, the last category attracts the maximum number of cases.

 Under the Act of 1940, an arbitration agreement must be in writing, though it need not be registered. The agreement might make a reference about present or future differences. The arbitrator may be named in the agreement, or left to be designated later, either by consent of the parties or in some other manner specified in the agreement. Very often, the rules of prestigious commercial bodies lay down that a person who becomes a member of the association must accept the machinery of arbitration created or recognized by the rules of the association. This also amounts to an “arbitration agreement” for the purposes of the Arbitration Act, 1940.

Once an arbitration agreement is entered into for submitting future differences to arbitration, it is not, necessary to obtain the fresh consent of all the parties for a reference to arbitration at the time when the dispute actually arises.

 Duties Imposed by Parties in the Arbitration Agreement: The parties may impose specific duties on the arbitrator either in the arbitration agreement or in any subsequent agreement. Such duties may be imposed either before the arbitrator is appointed or after her appointment.  It is important for a prospective arbitrator to look carefully at the agreement to ascertain whether it contains duties that she may not be able to fulfill in the event that she is appointed arbitrator.

 Duties Imposed by Applicable rules or law: Where arbitration is conducted under international or institutional rules of arbitration, the applicable rules impose specific duties on the arbitral tribunal in addition to those imposed by the parties.

 Duty to disclose: Arbitrator has a duty to disclose all relevant facts which are likely to give rise to any justifiable doubts about her independence and impartiality. The Arbitrator must discharge this duty of disclosure at the earliest opportunity, usually at the time of her interview by the parties before the confirmation of her appointment. The arbitrator’s duty of disclosure extends to all information which could be relevant. The duty continues after the appointment of the arbitrator and subsists throughout the proceedings.

 Roles and responsibilities of Arbitrators in Arbitration Award: Although arbitration awards are characteristically an award of damages against a party, in many jurisdictions tribunals have a range of remedies that can form a part of the award. These may include:

X       payment of a sum of money (conventional damages)

X       the making of a “declaration” as to any matter to be determined in the proceedings in some jurisdictions, the tribunal may have the same power as a court to:

X       In other jurisdictions, however, unless the parties have expressly granted the arbitrators the right to decide such matters, the tribunal’s powers may be limited to deciding whether a party is entitled to damages. It may not have the legal authority to order injunctive relief, issue a declaration, or rectify a contract, such powers being reserved to the exclusive jurisdiction of the courts.

Impartiality of Arbitrators

The impartiality and/or independence of an arbitrator are essential features of this quasi-judicial process. The long-standing norms that no one should be a judge in his own cause and that justice should be seen to be done apply equally to arbitration. The arbitrator must avoid communicating with one party without the knowledge of the other. Impartiality requires that an arbitrator neither favors one party nor be predisposed as to the question in dispute. Independence on the other hand requires that there should be no such actual or past dependant relationship between the parties and the arbitrators which may affect, or appear to affect the arbitrators’ freedom of judgment[6].

Almost all the Arbitration legislations around the glove provide that the arbitrator must act impartially and fairly, giving each party a reasonable opportunity of putting their own case and dealing with their opponent’s case, and must adopt procedures suitable to the circumstances of each case, avoiding delay and expense, so as to provide a fair means for the resolution of the dispute. This provision gives some flexibility to the arbitrator, and means they can adopt an inquisitorial approach, rather than the adversarial approach which has traditionally been adopted by courts.

 Misconduct of Arbitrators[7]

The following is an illustrative list of what has been held to constitute “misconduct” in the context of arbitral proceedings:

X       Where the arbitrator fails to comply with the term, express or implied of the arbitration agreement;

X       Where the arbitrator makes an award which on ground of public policy ought not to be enforced;

X       Where the arbitrator has been bribed or corrupted;

X       Where the arbitrator makes mistake as to the scope of authority conferred by the agreement;

X       Where the arbitrator fails to decide all the matters referred to her;

X       If the award is inconsistent or ambiguous;

X       Where the arbitrator breached the rules of natural justice;

X       Where the arbitrator makes an error of law that is apparent of the face of the award, but only if the point of law erroneously decided was not specifically referred for the decision of the arbitrator

Ethical Duties

 It is generally considered that an arbitrator has certain moral or ethical duties towards parties involved in the proceedings. One of such is his obligation to decline to accept an appointment if, as a prospective arbitrator, he is manifestly unable to give the case sufficient time and attention. Some Arbitral institutions have their established code of ethics. For instance the American Association of Arbitrators (AAA) has its Code of Ethics for Arbitrators in Commercial Disputes[8]. The International Bar Association (IBA) has also published Rules of Ethics for International Arbitrators. The code of ethics can be imposed on an arbitral tribunal by agreement of the parties. The code of ethics can be imposed on an arbitral tribunal by agreement of the parties.

 Source of Law[9]

States regulate arbitration through a variety of laws. The main body of law applicable to arbitration is normally contained either in the national Private International Law Act (as is the case in Switzerland) or in a separate law on arbitration (as is the case in England). In addition to this, a number of national procedural laws may also contain provisions relating to arbitration.

By far the most important international instrument on arbitration law is the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. Some other relevant international instruments are:

X        The Geneva Protocol of 1923

X        The Geneva Convention of 1927

X        The European Convention of 1961

X        The Washington Convention of 1965 (governing settlement of international investment disputes)

X        The UNCITRAL Model Law  (providing a model for a national law of arbitration)

X        The UNCITRAL Arbitration Rules  (providing a set of rules for an ad hoc arbitration)


 Arbitration is the procedure whereby parties in dispute refer the issue to a third party for resolution , rather than taking the case to the ordinary law courts . It is proved that informal procedures tend to be most effective where there is a high degree of  mutuality and independency and that is precisely the case in most business relationship. The problem with the law is that the court case tends to terminally rupture such relationships. There are various types of arbitration for applying it in different perspective to avoid the lengthy and complicated procedure in the law courts. This practice is well established and its legal effectiveness has long been recognized by the law . Therefore , for the legal justification for both the parties arbitration should be impartial and independent .

Reference list

1) Cownie, F., Bradney, A., & Burton, M. ( n.d) .English Legal System in Context (Fourth Edition). 303-329

2) Bradgate & White (2011) Commercial Law 2011  retrieved from


3) Lew, j.,  Mistelis, F., & Kroll, L., (2003).Comparative International Commercial Arbitration .1-1

4) Adams , B . (2004). International arbitration basic principal and characteristics .  retrieved from


5)  Arbitration (2004), The duties of arbitrators . retrieved from


6) Slapper & Kelly . (2004). The English legal system .(seventh edition). 346-349

7) AAA  .(2004)  Code of Ethics for Arbitrators in Commercial Disputes. 116

[1] Fiona Cownie, Anthony Bradney, & Mandy Burton: English Legal System in Context (Fourth Edition)

[2] Bradgate & White: Commercial Law 2011

[3] Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration (2003), para 1-1

[5] Slapper & Kelly . (2004). The English legal system .(seventh edition). 346

[7] Ibid

[8] AAA’s Code of Ethics for Arbitrators in Commercial Disputes ( 1977) and was

amended in 2004 to reflect modern practice

[9] http://en.wikipedia.org/wiki/Arbitration