The Role of Arbitrator
Arbitration, as already stated, is a procedure of settling disputes in which both disputing parties, except in case of non- binding arbitration, agree to accept the decision of the arbitrator as legally binding. Therefore, the role of arbitrator is more or less similar to the role of judge. But still there are some ambiguities on the role of arbitrator because arbitrators, particularly party appointed arbitrators, consider themselves as advocators of disputing parties than their being a judge. Even practices and the laws of countries on arbitration except the role of arbitrator as judge and allow them to serve disputing parties as an advocator in some conditions.
Even if the role of arbitrator may differ from one country to another, analyzing the above questions and resolving the same based on the law in a country at hand would give better understanding on the role of arbitrator.
Impartiality of arbitrator
The issue of partiality or impartiality has something to do with the role of arbitrator. Most of the time arbitrator has the role of a judge though he/ she is privately appointed unlike government appointed judges. Whenever judges render decision they have to bee impartial to the parties at a dispute so as to maintain ‘justice.’ similarly the rule of impartiality should apply in arbitration process as to different scholars. Scholars express their view as “ partiality is by far the most ground for which an arbitrator be disqualified since Justice must be beyond all suspicion as to the independence and impartiality of the judges, and this basic principle of justice in the court is no less fundamental in the case of justice administered by an arbitral tribunal”
As to the above expression, impartiality of arbitrator has paramount importance as of what judge is expected.
Arbitrator, as a principle at least, should conduct in an impartial way: his conduct should not indicate any sort of biasness. Moreover, arbitrator need to avoid circumstances which lead to ‘reasonable apprehension of bias’ , that is a scenario which gives a fair- minded person reason to doubt arbitrator impartiality. Conditions which create reasonable suspicion on the impartiality of arbitrator are infinite: relationship between arbitrator and one of the disputing party; arbitrator’s loss or gain out of the award and other similar cases might be possible examples.
Concerning impartiality of arbitrator scholars dared to conclude as “It is difficult to find an argument against the preposition that each party to arbitration is entitled to be treated fairly and impartially”
It is really difficult to define either partiality or impartiality in black and white and that might be the reason most arbitration rules including the Ethiopian arbitration rules fail to give what it mean. Ato Zekarias Keneaa, however, in his article entitled ‘The formation of arbitral tribunals and disqualification and Removal of arbitrators under the Ethiopian law’ summarized partiality in the following manner.
‘The concept of impartiality may be concerned with bias of arbitrator either in favor of one the parties or in relation to the issue in a dispute. partiality would be the state of mind which is harbored by an arbitrator and which dictates the out come of the proceeding so much so that the arbitrator whose impartiality is challenged would decide or oppose to decide the case in front of him favouring the party to whom he is predisposed and naturally against the party about whom he is biased.’
Once arbitrator becomes biased he will decide cases at his disposal based on his own biasness instead of reason and evidences available to him/her.
To re-state, the idea of impartiality has been given special emphasis to maintain fair administration of justice by arbitral tribunal. On top of that, arbitrator, especially party appointed arbitrator, starts his arbitral process having the mentality that he has to struggle for the success of the party who appoint him. In extreme eases arbitrators assume themselves as advocators than being party appointed judge.
Besides arbitrators perception as if they were parties’ advocators, practices in certain countries allow arbitrators’ partiality in limited manner. For example in England there was a practice that parties in a dispute appoint arbitrators, one from each side. Then, these two arbitrators would try to resolve the case but if they could not settle the case themselves, they used to appoint an umpire, sole adjudicator whist the two arbitrators represent the parties who appointed them.
Apart practice or laws which sometimes except the impartiality role arbitrator for party appointed arbitrator, disputing parties also could agree to exclude the impartiality principle in general.
To sum up impartiality of arbitrator is the principle but this principle might be devoid by parties through their agreement or the law may specify exception thereof.
When we turn our face to Ethiopian case one can not find definition about what partiality or impartiality is all about. Nevertheless, Art 3340(2) civil code of Ethiopia specifies ‘partiality’ as one of grounds to the disqualification of arbitrators. Art 3340(2) reads “The arbitrator appointed by agreement b/n the parties or by third party may be disqualified where there are any circumstance capable of casting doubt upon impartiality or….”
This article tells us the following matters:
- Let alone real biasness of an arbitrators even circumstance which gives reason for reasonable person to doubt the impartiality arbitrator can be ground to disqualify arbitrary.
- Only arbitrators who are appointed by agreement of conflicting parties or by third party, who is entrusted to appoint arbitrators, are duty bound to be impartial. Party appointed arbitrator seems can be partial to a party who appointed him.
Sub article 3 of similar provision remarks the impartiality an arbitrator who is appointed as an umpire despite his appointment procedures.
Countries’ laws give conditions in which arbitrator may act in favour of one of the disputing parties. However, the idea does not escape critics from scholars. As to the view of these scholars designing a system which does not require impartiality of arbitrator would affect genuine disputing party who always appoint impartial arbitrator.
Independency of arbitrator
Earlier we stated that” impartiality” and/or “independency” of arbitrators is equally important as the impartiality of judges in court of law. Despite their over- lapping nature, “impartiality” and “Independency” are not one and the same, that why the civil code of Ethiopia specifies both issues separately. An arbitrator, who has not any relationship whether financially or not with one of conflicting parties, might be independent but we could not conclude that this person is impartial also. The other possibility is that an arbitrator, who is dependent for one of disputing parties, may give an award with out any partiality.
As far independency concerned causes are many in number and the civil code of Ethiopian also does not mention conditions that constitute dependency of arbitrator, it lets the issue as check in blank.
Arbitration procedure accommodates processes which include from the establishment of arbitral tribunal to declaration of award by the tribunal.
Formation of Arbitral Tribunals
Constitution or establishment of arbitral tribunal is obviously the primary step in arbitration procedure. One of the typical features of arbitration is, indeed, establishment of private arbitral tribunal, which investigates and resolves the case unlike government established courts. This also highly demands appointment procedures of arbitrator (s).
Establishing private tribunal by appointing arbitrator(s) through their agreement is primarily left to the disputing parties. “Parties are free to provide as they wish for the choice of arbitrator” or “they are free on a procedure for appointing an arbitrator including naming person to make the appointment.”
In this regard scholars have the opinion that it hardly possible to find ”private” or “public policy” which recommends the restriction of power of parties to choose their own tribunal -arbitrators.
This is to mean that arbitration agreement may provide for the appointment of a single arbitrator by consensus. It may only provide agreement for settling dispute by arbitration, setting aside the number of arbitrators and method of their appointment to arbitration statute/ laws. It may name the arbitrator. It may specify that each party shall appoint one arbitrator and those two shall appoint a third arbitrator.
In relation to the second inquiry above, the role of a court on appointment of arbitrators, Art (3) and (4) of UNICITRL MODEL LAW ON INTERNATIONAL ARBITRATION of 1985 (A proposal for national legislation) gives us some clue how and/or when courts may appoint arbitrator (s).
The full version of the provision reads.
Appointment of arbitrators
2. The parties are free to agree on a procedure of appointing the arbitrator or arbitrators subject to the provisions of paragraphs (4) and (5) of this article.
- Failing such agreement.
- In arbitration with three arbitrators, each shall appoint one arbitrator and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator with in thirty days of receipt of request to do so from the other party or if the two arbitrators fail to agree on the third arbitrator with in thirty days of their appointment, the appointment shall be made upon request of a party by the court or others authority specified in art
- In arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he shall be appointed upon request of a party by the court or other authority in article 6
- Where under an appointment procedure agreed upon by the parties
- i. A party fails to act as required under such procedure or
- ii. The parties or two arbitrators, are unable to reach an agreement expected of them under such procedure or
This provision gives power to court in order to appoint arbitrator (s) when the procedures set out in an agreement do not result in the requisite appointment.
The above article seems to use the “policy of saving” agreement of arbitration. The policy empowers court to appoint an arbitrator in every case in which there is no other machinery for making appointment. The subsequent articles i.e. Art 13, 14 and 15 of UNICITRAL MODEL Law gives power for court when appointed arbitrator fails to perform his function due to different reasons. Saving all arbitral agreement by giving power to the court to appoint arbitrators do not escape opposition.
According to this opposition the difficulty to save arbitrate agreement happens when “parties name an arbitrator in the agreement to arbitrate and the named arbitrator is unwilling or unable to act.” And further asked question as “Is it better to assume that personality of arbitrator is so important that arbitration should not go on with another arbitrator? “
Arbitral Proceedings in general
Article 21 of the UNCITRAL Model Law on international arbitration provides that in the absence of agreement to contrary, the arbitral proceedings commence on the date on which a request for a dispute to be referred to arbitration is received by the respondent.
Should there be rules to conduct arbitration proceeding?
Can parties avoid such rules by their agreement?
What sort of procedures may arbitral tribunal use with absence of procedures specified by a parties or law?
For arbitral proceedings there might be different procedural rules thought it might differ from one country to another. The presence of rules, however, will not over ride contrary agreement of the parties. Section 36 of AIC Draft rule, for example, provides for rules which would apply if the parties do not agree on procedure or if am arbitration agreement is silent or deficient with respect to a specific question of procedure.
Parties in arbitration agreement are free to set the kind of procedure they want. This is consistent with the notion of arbitration as a private contractual arrangement b/n the parties. The freedom includes freedom to agree to follow the rules of professional or of an organization under whose auspices the parties agree to hold arbitration.
In the absence of agreement by the parties or binding rules, an arbitrator may prescribe his own procedure.
Should the parties to arbitration be required to define the issues in writing?
It has been suggested that it is vital for a good arbitration that the parties define the issues which are to be arbitrated. Without defining issues arbitration will have no focus. On the other hand, a rigid procedural requirement may inhibit unsophisticated party from starting arbitration proceedings, and the arbitrator can exert pressure on the parties to define their issue once they are before him.
The ICAA(ICAA/Model law Art.23) requires the claimant to state the facts supporting his claim, the points at issue and the relief sought. It requires the respondent to state his defence in respect of these particulars. This must be done with in the time periods agreed on by the parties or set by arbitrator. The parties may agree otherwise ‘’ as to the required elements of such statements”. The ICAA, of course applies mostly to arbitrations which are among sophisticated business people and which involve substantial amounts of money
Should it be mandatory that arbitrator adhere to the rules of natural justice or to some of them?
If so, should the arbitration statute talk in terms of “rules of natural justice” or should it lay down specific rules intended to ensure fairness to the parties?
Sujan explains the Indian practice in the following way. As to him in India though the arbitrator could not use civil procedure which is applicable for judicial proceedings in courts, in the absence of stipulated procedure by the disputing parties, the arbitrator is duty bound to follow “ ordinary rules” laid down for the administration of justice unless he is expressly absolved form doing so. “Ordinary rules of administration of justice” refers to rules which are applicable in Indian civil bench but they do not include all rules which are applicable in ordinary courts. He further explains that though the arbitrator will not tightly bound to use rules and procedures observed in courts, his procedure may not be opposed ‘natural justice.’ His procedure should, therefore, be such as a reasonable man should follow in deciding the dispute impartially.
An excerpt from Sujan’s book states as:
An arbitrator constitutes a quasi judicial tribunal and it is implied terms of an arbitration agreement that appointed arbitrator will determine the disputes referred to him according to the law of the land. Even a recital in the agreement that the arbitrator can decide in whatever he thinks fit, can not be interpreted to empower to him to deviate from the law or the principle of natural justice and to base his decision on his personal knowledge. An arbitrator is required to consider the evidence; oral or documentary evidence placed before him and to conduct hearing in the presence of both, parties and base his decision on that evidence. The parties will be unaware of the contents of his personal knowledge and would have no opportunity to correct any misconceptions that may have crept in to neutralize the assumption made; this would result in denial of justice to the parties.
What is mean by the power of arbitrator to decide in accordance with natural justice?
When parties fail to specify the procedure in which the arbitrator use during his arbitration, the arbitrator will use some basic principles of justice though he/ she is not conform to minor regularity due to his lack knowledge on them. The court will invalidate the arbitration resolution where the arbitrator disregards basic principles of justice. Principles of nature justice, in this context refers, “ principles which the arbitrator must conduct a fair and impartial trial and afford full and equal opportunity to both parties.” He must hear evidence and a arguments in the presence of both parties and give an opportunity to the parties to cross-examine the witness who gives oral evidence. The arbitrator, nevertheless, can hear one party alone when the other party is not willing to present at the time of hearing after the latter is notified. More over the arbitrator need to give equal chance for disputing parties to present their relevant and admissible evidence, be it oral or documentary.
When we investigate laws of arbitrations, they incorporate the idea of natural justice either directly or indirectly. Some countries’ arbitration act ,for example, give power to court to remove an arbitrator or to set aside or remit an award on the grounds that an arbitrator has” misconduct himself” and the courts have held an arbitrator who has failed to follow the rules of natural justice has misconduct him self. Therefore mixture of statute and common law effectively requires an arbitrator to follow those rules.
The UNCTRAL model law on international arbitration also incorporates the following provision which have direct or indirect impact on the concept of natural justice.
Equal treatment of parties
The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.
Hearing and written proceeding
2. The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of good, or other property or documents.
3. All statements, documents or other information supplied to arbitral tribunal by one party shall be communicated to the other party. Also any expert report or evidentiary documents on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.
Art 34(2) (a) of the same model law also states that an award may be set aside on the grounds that the party applying to set it aside was not given proper notice of the appointment of arbitrator or of the arbitral proceedings or was otherwise unable to present his case.
There are strong arguments in favour of legal requirements that require arbitration be conducted fairly, though it may be argued on the other side that the judicial system which the parties have agreed to avoid, should not intrude itself through the back door. If fairness is to be required, there are strong arguments in favour of having the fundamental requirements of the arbitration process stated in the arbitration statute, so that there may be no doubt bout them.
To incorporate natural justice in arbitration legislation may not necessary mean to write the phrase natural justice in the document; it is possible to state different rules like the UNCITRAL model law which ensure natural justice. In fact there is argument against to specify natural justice in legislation.
Argument in favour of referring to ‘natural justice ‘ is that it is concept which is flexible and which continues to be developed by the courts. The argument against it is that it is a term which is likely to be forbidding and unintelligible to many of the non- lawyers who use it and who should be able to find in the statute rules which are plain and comprehensible.
Should a hearing be mandatory in arbitration proceeding?
Under the present law the parties can agree that there be no hearing. They may agree that arbitrator can make a decision upon files or other materials which they submit to him or that he can examine goods to decide whether they meet a contractual term about quality.
The UNCITRAL MODEL Law states the following concerning hearing.
Hearing and written proceeding
- Subjects to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearing for the presentation of evidence or for oral argument or whether the proceedings shall be conducted on the basis of documents and other materials. However, unless the parties have agreed that no hearing shall be held, the arbitral tribunal shall hold such hearing act an appropriate stage of the proceeding if so requested by a party.
According to this article parties can decide whether or not to hold a hearing and if they do agree on the presence of hearing that is the end of the matter- there will be hearing. Secondly if they make no agreement on the point, the arbitrator can decide whether to hold a hearing or to proceed on the basis of documents and/or materials but, thirdly, either party can still demand hearing.
Should the arbitrator be bound by the rules of evidence applicable to proceeding in court of law?
If not what evidence should the arbitrator be entitled and obliged of receive?
As to various literatures (1) the arbitrator has the power to admit evidence whether or not it would be admissible in court of law (2) that he be required to admit evidence which would be admissible in court, and (3) that he has power to admit evidence on oath, affidavit, or otherwise as in his own discretion he consider proper.
An arbitrator has power to call a witness on his own motion but that witness called by him be subject to cross examination and rebuttal as specified in arbitration rules of countries.
Art 26 of UNCITRAL mode law in powers the arbitrator to require a party to give an expert called by the arbitral tribunal relevant information and to allow inspection of documents and things.
Regarding the Ethiopian arbitration rules one can find few provisions which deal with arbitration proceeding independently. Art 317 of the civil procedure code which gives guideline what procedure arbitration tribunal needs to follow while conducting its function obliges tribunal to follow almost similar procedures what civil court would follow during its proceeding. See chapter three.
Legal effects of Arbitration
The term “arbitration “ is to mean a process by which a tribunal other than the a court decides a dispute b/n parties under a prior agreement by which the parties have agreed to honour the decision of the tribunal( the arbitrator). And there are also conditions where parties in a conflict should submit their dispute to arbitration before they proceed to court regardless of their consent.
The legal effect of arbitration emanates form the nature of arbitration itself. In arbitration there are two kinds of awards: binding and non-binding. In case of non-binging arbitration, conflicting parties refer the dispute to an arbitrator whose decision will not be binding. However, some people deny the use of the word arbitration for a process in which third party gives non-binding decision on the disputed matter. As to the idea of these people, the world arbitration is used to denote and to denote only, a process which will result in an award which is binding upon the parties to the dispute.
A part the above argument against the use of the word “arbitration” for non- binding decision of third party for a dispute, commonly arbitration has two effects. It decides the case either in binding manner or as mere opinion of the arbitrator on the case, and these can be considered as the effects of arbitration.
The most dominant effect of arbitration, in fact, is producing an award which is binding upon parties as if it were court judgment. Here under the types of award and challenges against award have been dealt as legal effect of arbitration has close relation with these concepts.
Award – this is the decision of an arbitrator which decides the dispute and the rights of the parties with respect to it. Award can be said in trim and final awards, both of them are results of arbitration.
- Intrim awards
Does the arbitrator have the power to make an in trim award?
An interim award is on which disposes of one or more issues in the arbitration but which does not dispose of all issues. It may, for example, be useful for an arbitrator to decide about liability before entering upon a complex determination of amount which may be wasted if there is no liability. Depending on the circumstance of the case interim awards can be given where: jurisdiction of the arbitral tribunal is contested by any of the parties and the law applicable to substance is not determined.
Since in trim awards may cause delays on the proceeding, precaution has to be given before it is chosen. Even some countries, like Australian state of Victoria, permit interim awards if an arbitration agreement provides for the same and the general view seems that in absence of express power, an arbitrator can not make an interim award.
- Final awards
Where the award of the arbitrator eventually settles all issues which were forwarded for him, there will be final award. The final award will put an end to the dispute b/n the parties. There are various questions related with nature or scope of the award given by tribunal. Among these questions the following are examples.
Should an arbitrator have the power to decide about his own jurisdiction?
Should an arbitrator be obliged to make his decision on the basis of the law which courts apply? If so, should the parties be able to agree to the contrary?
Regarding these questions the’ Arbitration issue paper’ prepared by the Alberta Law research and reform Institute incorporates comments and positions hold by national and international instrument on the same . Concerning the first point the comment suggests that an arbitrator can not make a binding decision as to whether or not the arbitration agreement came in to existence, because if there is never was a contract he could not have the power to act as arbitrator, and it further explains that, it has seemed wrong to say that he has the power to decide that he has no power to decide. The comment adds also that the arbitrator can not make a binding decision as to a fact upon which his jurisdiction depends, e.g that certain event has occurred which must occur before a party has certain aright to arbitrate.
Regarding the second point above the paper incorporates a general principle by showing experiences adopted by different instruments. The general rule, as to this source, is that arbitrator must apply the law but that the parties can agree that arbitrator should be able to decide on another basis. The ICAA provision is that “the arbitration tribunal shall decide ex aequo et bono or amiable compositor only if the parties have expressly authorized it to do so.” The parties may agree that arbitrator can decide with out following what the law says but the difficulty is to know whether the arbitrator is bound by the express terms of the parties and, if so how he is to be held to them or whether he can simply ignore public policy as set out in the legislation or in such rules as that against enforcing contracts to commit crimes.
When we come to the point (legal effect of arbitration) , Once the arbitrator gives final decision on the case , parties or one of them can not bring the case to court -it will have resjudicata effect. Having rendered the final judgment, the arbitrator, unless he/she is requested to revise his award by the court would make himself/ her self free from obligations because arbitration agreement imposes obligations not only on disputing parties to a bind by the award, but it also imposes duties on the arbitrator to give judgement.
Unless an award is set aside or declared to be nullity it is final and binding. The parties’ original right and obligations are to the extent of that they were the subject of arbitration, at an end. Instead they have the rights and obligations which the award gives and imposes. Neither party can, as against the other, dispute the facts which the arbitrator has found.
In summary an arbitrator’s award is final and government can not interfere with it except in some specific situations where the courts deemed the award as unlawful or inappropriate.
The grounds to nullity or set aside arbitral award may differ from country to country. Often the following grounds are taken as grounds to set aside awards or send back the arbitrator for reconsiderations. These are:
- Where the arbitrator has not conducted the proceeding according to the arbitration agreement, has acted in a way which is contrary to public policy, has dealt with issue which is out side his jurisdiction, has not dealt with an issue which was referred to him or has given an award which is not clear.
- Where the arbitrator is corrupt or biased.
- Where the arbitrator has been “improperly procured”. Apart from cases in which the arbitrator has been corrupted, which will fall under misconduct as well as improper procurement, there may be a case in which a party has deceived the arbitrator or concealed evidence.
- Where the arbitrator has made a mistake and asked to have the award remitted to him for reconsideration where fresh evidence of some weight has been discovered and the evidence could not be due diligence have been obtained for the arbitration proceeding
- Where there is error the face of the award.
A look at Art 319 of the civil procedure code of Ethiopia clearly indicates the effect of arbitration award. This article assimilates arbitration award and court judgment –arbitral tribunal has to decide the issue in the dispute and state the reason for the decision thereof. And in effect the award is implemented as of court judgment.