Our multi-disciplinary practice is made up of specialist lawyers that have market-leading experience in handling multi-million pound litigation cases and bringing complex claims to settlement through alternative forms of dispute resolution (“ADR”), where necessary.
Our specialist commercial arbitration lawyers have market-leading experience of handling multi-million pound arbitration and bringing complex claims to settlement. We understand the potential benefits of arbitration and how it can be a valuable alternative to litigation, particularly where confidentiality and privacy are of paramount concern. Our clients are confident that their case receives high-level personal care and supervision and all of our commercial arbitration cases are conducted by small, partner-led teams.
If you have a dispute that is subject to an arbitration clause, our team of alternative dispute solicitors and barristers have extensive experience in overseeing all manner of arbitration. We provide authoritative advise on single issue disputes to high value, complex cross-border disputes for individuals, SMEs and companies.
Our firm is unique in that we are based in a leading set of barristers chambers with access to top level QCs and we are based opposite the International Arbitration Centre.
What is Arbitration?
Arbitration is a means of resolving disputes as an alternative to litigation, it is a type of alternative dispute resolution (ADR). It is based on the consent of the parties involved: every party involved must agree to submit the dispute for arbitration. The decision of an arbitral tribunal is conclusive and enforceable, much like a judgement.
How is Arbitration Different from Litigation?
The following are key differences between arbitration and litigation:
- Contractual foundation: arbitration is based on contract with the rights and duties of the parties to arbitrate arise from the contract itself.
- Location: the parties can choose the location of arbitration proceedings.
- Appointment of the arbitrator/panel: the parties are able to choose the arbitral tribunal.
- Primacy of confidentiality: arbitration is ordinarily confidential
- Finality of the decision: a decision by an arbitral tribunal is usually final and cannot be appealed (however a court may set aside an award in exceptional circumstances).
- Enforceability: tribunal decisions are widely enforceable given the primacy of a number of conventions such as the New York Convention.
What are the Advantages of Arbitration?
In disputes where the subject matter is highly technical, arbitrators with an appropriate degree of expertise can be appointed (as opposed to litigation). The arbitration process on the whole is faster than court proceedings. Arbitration may be cheaper and offer more flexible outcomes for companies. Arbitral awards are generally non-public and can be made confidential. Arbitration awards are generally easier to enforce in other nations than court judgments. If you are successful in arbitration, there are limited avenues for the other party to appeal an arbitral award.
What is an Arbitration Agreement?
A contract that stipulates that disputes between the parties will be settled by arbitration as opposed to litigation is known as an arbitration agreement or clause. Thus, the parties consent to submit disputes between them for binding arbitration by one or more individuals of their choosing (or by a procedure outlined in the arbitration agreement) following a confidential hearing process. An arbitration clause may be included as a stand-alone agreement or, more frequently, as a part of a larger contract. Numerous types of contracts have provisions for arbitration. Such a clause is a stand-alone contract that is not a part of the underlying or main contract, and it will not be deemed invalid, nonexistent, or ineffective only because the primary agreement has flaws. Additionally, it could be governed by a distinct set of rules than the main contract.
Arbitration Rules and Institutions
Institutional arbitration rules are typically included in arbitration agreements. There are well-established arbitration norms, which are enforced by arbitral organisations including the International Chamber of Commerce (ICC), the Singapore International Arbitration Centre (SIAC), and the London Court of International Arbitration (LCIA). These are frequently included by adopting the institution’s standard arbitration clause, but this is not necessary; in most cases, a specific reference to the rules the parties intend to use would do.
There are numerous arbitral institutions and various, slightly different sets of arbitration rules. The fundamental provisions for initiating arbitration, forming the arbitral tribunal, and outlining the steps to be taken in the arbitration up until the final award are typically contained in institutional rules. When parties need immediate relief before the tribunal is established and without having to appear in court, some incorporate provisions for an expedited procedure or the appointment of an emergency arbitrator.
The selected arbitral institution may be requested to manage an arbitration in addition to supplying rules. Most arbitral institutions charge a fee for their services (albeit not for the use of its rules), but using an arbitral institution to manage the arbitration might have significant benefits. The level of regulation differs amongst institutions.
Even if parties choose not to abide by the rules of an arbitral institution, they may still seek to establish independent arbitration rules, such the UNCITRAL Arbitration Rules, or arbitration rules tailored to a particular industry.
The arbitration legislation of the venue of arbitration may establish default rules for the process in the absence of rules and fill in any other voids that may exist in the parties’ arbitration agreement. For instance, the Arbitration Act 1996 (“AA 1996”) will mostly fill in the gaps where the arbitration’s seat is in England or Wales, but doing so may require filing an application to the English court.
Location of Arbitration
Subject to any elements of the parties’ arbitration agreement that are not in conflict with required provisions of legislation, the law of the “seat” of the arbitration will typically control the procedural aspects of the arbitration. For instance, in England and Wales, where the “seat of the arbitration” is in England, Wales, or Northern Ireland, the requirements of Part 1 of the AA 1996 apply (section 2, AA 1996).
The seat will not necessarily be in accordance with the law chosen to govern the arbitration agreement or the main agreement in which the arbitration clause is found. The primary agreement and the arbitration clause contained inside it, for instance, might be governed by French law and have London as its seat.
Arbitration is governed by legislation in the majority of nations. Although there has been some harmonisation as a result of the work of the United Nations Commission on International Trade Law (UNCITRAL), the laws are not necessarily the same. The UNCITRAL Model Law had a significant influence on the AA 1996.
The following inquiries should be made if arbitration is required to begin:
- Is there a dispute?
- Is there a deadline to start arbitration?
- What steps must be taken to start the arbitration?
Is there a dispute?
Only after a dispute has developed between the parties should a party request arbitration. Starting arbitration before then is premature. For the purposes of English arbitration law, an acknowledged or inadmissible monetary claim that has not been satisfied counts as a dispute, while other countries may have alternative rules.
Is there a deadline to start arbitration?
The same time restrictions that apply to legal proceedings also apply to arbitration. As an alternative, an arbitration clause (or rules) may:
- Place a deadline on when arbitration procedures must begin.
- Specify that if arbitration is not started within the allotted period, a claim will be barred or void.
Such time-bar provisions in contracts are strictly interpreted against the party relying on them. Under section 12 of the AA 1996, a party in England may petition the court for an extension of a contractual time limit (but not a statutory time limit). Before making an application to the court under section 12 of the AA 1996, certain arbitration rules provide the tribunal or an arbitral institution authority to extend contractual time limits.
The AA 1996 gives the parties the freedom to decide when an arbitration should be regarded as starting. Section 14 of the AA 1996 lays out guidelines to establish when the arbitration has begun in the absence of agreement.
What steps must be taken to start the arbitration?
The arbitration agreement or the arbitration rules included in that agreement may contain a specific clause that governs how the arbitration will proceed. Steps to get started could include: Making a claim; selecting an arbitrator by name and with his or her previous consent; Notifying the opposing party of the intent to arbitrate and the name of any arbitrator chosen or proposed.
A party must serve a notice in accordance with section 14 of the AA 1996 to begin arbitration in the absence of any special provisions in the arbitration agreement.
If the parties don’t follow the terms of the contract, the arbitration may not be able to proceed or the arbitrator not having jurisdiction in the matter (Lafarge (Aggregates) Ltd v Newham London Borough Council  EWHC 1337 (Comm)). If a limitation period expires before the problem is fixed, this is a serious problem.
What is an Arbitration Notice?
A party may begin an arbitration by giving the other side a written notice of arbitration. If the arbitration agreement or applicable arbitration rules contain any explicit requirements as to what the notification must contain, those requirements must be strictly followed.
If there are no requirements for the notice’s format, the claimant may simply write a letter to respondent stating that the claimant wants to use the pre-arranged arbitration procedure. But the notification should: Comply with the provisions of AA 1996 Section 14, clearly state what the other party is expected to do (for example, to agree the appointment of an arbitrator). Specify in language both explicit and general the issues in dispute to be resolved in the arbitration. Typically, it is best to construct the notification broadly to incorporate all conceivable dispute.
Any specified contractual requirements must be followed for service of a notice of arbitration, or in the absence of such requirements, any legally valid method must be used (section 76, AA 1996).
In general, the arbitration agreement or the arbitration rules that have been integrated into that agreement specify the required tribunal composition and the procedure for appointment. The rules that will apply will be determined by the arbitration law of the “seat” of the arbitration if there is no such stated provision.
However, the parties should have regard to:
- The express terms in the agreement;
- The applicable arbitration rules (the provisions relating to the number of arbitrators and the manner of their appointment shall be incorporated by reference into the arbitration agreement. They might also specify requirements for availability or nationality);
- The statute (When the arbitration agreement does not expressly or implicitly address the number and appointment of arbitrators, the provisions of the AA 1996 will take effect. One arbitrator will be chosen, for instance, in cases where the arbitration agreement does not specify the number of arbitrators (section 15(3), AA 1996). Each party shall nominate one arbitrator, and the two appointed arbitrators shall appoint the third, if the arbitration agreement calls for three arbitrators but does not specify how they are to be chosen (section 16(5), AA 1996). If required, the AA 1996 also allows the court to intervene and provide assistance with the appointment procedure (section 18, AA 1996).
Chair of Tribunal
When three arbitrators are selected, one is typically designated as chairman (or presiding arbitrator). In order to maximise efficiency, the arbitration agreement, applicable arbitration rules, or the parties’ agreement after the arbitration has started may grant the chairman the authority to make procedural decisions without consulting the other arbitrators.
Fees and Expenses
The arbitrators shall be due fees and expenses, including any necessary travel and lodging charges. If an arbitral institution is involved, a filing fee and other administrative fees might be due. There will also be costs associated with hiring hearing rooms and any appropriate appointing authorities.
The amount of costs that must be paid to institutions and arbitrators can differ greatly. There are two typical ways to calculate fees:
- Fees based on the amount of time spent (a method used, for example, in LCIA arbitration).
- Fees that are partially based on a proportion of the amount in controversy, sometimes taking into account the intricacy of the controversy and other pertinent facts; (a method used, for example, in ICC arbitration).
All fees payable should be fixed at the start of the arbitration. It is customary to withhold an award from the parties until any unpaid fees are paid. When the prize is prepared, upon receipt of any unpaid fees, the tribunal or institution will notify all parties that it is ready. Any one or both parties may pay the required payments to accept the reward
Jurisdiction of the Arbitrators
The arbitration agreement between the parties gives the tribunal the authority to resolve disputes. As a result, conflicts that are not covered by the arbitration agreement cannot be decided by the tribunal. Parties are not required to submit these matters to arbitration or to participate in an arbitration that has been requested by another party in this case. Any “award” made by a tribunal in cases not covered by the arbitration agreement will have no legal weight. In England and Wales, a decision may be contested on the grounds that the arbitral tribunal lacked jurisdiction over the dispute (articles 30, 67, and 72(2) (a), AA 1996).
What are Awards and Challenging Awards?
An award is similar to a judgement in litigation. It is “final and binding” in the sense that it provides the tribunal with a definitive decision about a claim or issue in the arbitration, with only a limited number of statutory rights to oppose it.
The tribunal may issue any of the subsequent awards:
- Final award: This award addresses all of the disputed issues.
- Partial award: his award addresses a specific point of contention. Where there is a series of partial awards, the last award dealing with all outstanding issues is called the “final award”.
To make enforcement easier, the terms of a settlement struck by the parties may be incorporated into the award (known as an “agreed award” or an “award by consent”). This is specifically addressed in the AA 1996 (section 51).
The tribunal may order, on a provisional basis, whatever relief it could issue in a final award if the parties agree or have made provision for this in the arbitration agreement (section 39, AA 1996). Provisional orders do not have legal force and effect. They are subject to the final determination of the tribunal and any necessary modifications to the final award. Typically, provisional orders will include an order to pay money.
The award must:
- Be in writing.
- Be signed by all assenting arbitrators.
- Explain the reasons for award.
- Indicate the location of the arbitration and the date the award was given.
The deadlines for contesting an award are fairly severe under English law. Normally, a request must be submitted within 28 days after the date of the award (sections 57(4) and 70, AA 1996), albeit the situation can be different if there is another arbitral procedure for appeal or review.
Under the AA 1996, awards can be challenged on a number of grounds, including:
- The award is not complete and does not address a point of contention. In this case, applying to the tribunal is the right course of action (section 57(3) (b), AA 1996). After that, it might be feasible to ask the court to remit or set aside the award due to a substantial irregularity.
- There is a typographical error, clerical ambiguity, or both in the award. The appropriate action in this case is to apply to the tribunal to have this error rectified (section 57(3) (a)).
- A tribunal without substantive jurisdiction made the award. In this case, a court application may be submitted in accordance with section 67.
- There has been a serious irregularity affecting the tribunal, the proceedings or the award within section 68. The applicant must demonstrate that the major irregularity has caused or will cause the petitioner substantial unfairness in each case. In this extreme circumstance, the tribunal “has gone so wrong in the conduct of the arbitration that justice calls out for it to be addressed,”
- The award contains a legal error. Under section 69 of the AA 1996, an appeals right may be available in this situation. The legal issue that is to be brought before the English court pursuant to Section 69 must be one of English law (section 82). Just keep in mind that convening the arbitration in London guarantees that English law will be used as the procedural basis for the proceedings. The actual issue shall be settled in line with the contract’s governing law or any other applicable legislation.
Arbitral awards rendered in the territory of a state (other than the United Kingdom) that is a party to the New York Convention (“NYC”) may be enforced under Sections 100 to 103 of the AA 1996. No matter where the arbitration took place, all domestic and international awards are enforceable under Section 66 of the 1996 Arbitration Act (AA) (section 2(2) (b), AA 1996).
Sections 66(1) and 101(2) of the AA of 1996 allow an enforcing party to request authorization before enforcing the award. If approved, this implies that the award will be enforced in the same way as a court judgement and that the award creditor will have access to all of the enforcement options accessible to judgement creditors under the English Civil Procedure Rules. According to sections 101(3) and 66(2) of the AA 1996, an enforcing party may also ask the court for permission to enter judgement in accordance with the award.
The enforcement process is a quick one. Without giving prior warning and on paper, the award creditor requests an order authorising enforcement. If the court issues the order, the award debtor has a specific amount of time to ask for it to be revoked. Section 103 of the AA 1996 outlines the legal justifications for contesting the enforcement of a NYC award. When an application for enforcement is brought according to section 66 of the AA 1996, enforcement may be denied in certain circumstances (see section 66(3) of the AA 1996) or at the court’s discretion.
Arbitration and the Role of Courts in England
The parties have the option to apply to the court for help in resolving problems before the arbitral tribunal is appointed:
- Obtaining a stay of proceedings ordered due to a violation of arbitration agreement by an English court (section 9, AA 1996).
- Selection of arbitrators (where the parties cannot agree on the arbitral tribunal or there is no default mechanism for appointment).
- Extending the deadline for initiating arbitration
In order to facilitate (rather than supervise) the arbitration, the English courts are permitted to use a range of statutory powers. These are some of their abilities:
- Injunctions to restrain court or arbitral proceedings.
- Resolving disagreements over the jurisdiction of arbitrators.
- Procedures that a tribunal of arbitration cannot impose or implement. For example, issuing a witness summons and enforcing judicial orders
- Maintaining the status quo, such as, by providing urgent interim injunctive relief
- Extending the deadlines for making the award.
- Determining preliminary points of law. (Section 45, AA 1996).
- Removing arbitrators and selecting new ones. (Section 24, AA 1996).
- Calculating the arbitration’s recoverable expenses. (Section 63(4), AA 1996).
The courts power include:
- Hearing challenges to the award
- Enforcement of awards.
- Making decisions about arbitrator fees
City Of London Expert Commercial Arbitration Lawyers
Our London Alternative Dispute Resolution (ADR) Solicitors and Barristers provide bespoke ADR and litigation advice. We invite you to contact us so one of our legal team can assess your dispute. We can subsequently provide urgent help, advice or representation from our expert team of leading ADR lawyers. Call or email us to start the process of instructing us; our ADR team are waiting to help.
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