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BRANCH DEBATE [Documents only!] Cost effective management of arbitration proceedings Following the very interesting talk by Peter Aeberli on "Cost effective management of arbitration proceedings", which talk was given at the October 2007 Branch Meeting, I thought that it would be valuable if readers had the opportunity to debate one aspect of the topic in the columns of the Newsletter. Helena Brown has given a good account of the meeting and the report can be seen elsewhere in this issue so even those readers who did not attend will be able to join in. I have spoken to Francis Miller and he has agreed to kick-off the debate. The motion is this: "That arbitrators should bring all their experience to every arbitration, but not their own personal rule book for the procedure." Francis Miller says:- I am writing in support of the motion "That arbitrators should bring all their experience to every arbitration, but not their own personal rule book for the procedure." First, I wish to put the matter into perspective by referring to the flexibility of arbitration. Over the last 40 years or so, I have listened to speakers at meetings of the Chartered Institute of Arbitrators emphasize the fact that arbitration is a flexible procedure. The claim was that arbitration allows all sorts of disputes to be decided with the minimum of time and the minimum of costs. This type of comment was usually associated with the cry, "Bring all disputes to arbitration." Over the same period of time, I have rarely heard an arbitrator speak at meetings who did not have his or her own personal rule book for the best procedure or, in the alternative, who did not subscribe to the notion that a recognized procedure should be built into the arbitration agreement. Indeed, in addition, I believe it is also fair to say that professional bodies which have been associated with arbitration have generally produced their own procedural rules for arbitration. Thus, albeit often with the best of intentions, we have the standard deviation often found among professionals, namely: making strong claims about one point or another in connection with the service offered, whilst at the same time undermining those claims by the actual performance in providing the service. In short, in the context of this motion, actively encouraging disputants to use arbitration by selling the virtues of flexibility and low cost, when the word 'flexibility' is often the misleading word for the arbitrator's own rigid rule book for procedure and the 'low cost' is the myth that is often dispelled when the final costs are all added up. As I see it, arbitration is a procedure which should be driven by the parties in dispute. They should choose arbitration because they understand it, they should seek out an arbitrator who understands the nature of the dispute and they should drive the procedure. That is the basis of the Arbitration Act 1996 and that has always been the underlying basis of arbitration procedural law. The arbitrator only comes into play whenever the parties cannot agree, be that on procedure or on the substance of the dispute. Nevertheless, if the parties seem to be agreeing to go along a path which the arbitrator sees as not the best path, the arbitrator is, naturally, there to give guidance and assistance and to help as necessary, namely: a helpful role, rather than wielding the iron rod, which iron rod the arbitrator does not possess in respect of issues where the parties are in agreement. However, if the parties are on a course which is really unacceptable to the arbitrator [that is, unacceptable from an objective point of view], then the arbitrator has the power to resign. The position is relatively simple: the arbitrator is paid by the parties in accordance with the agreement between the arbitrator and the parties; the arbitrator is to decide matters of dispute in accordance with the arbitration agreement between the parties; and the arbitrator is there to serve the parties. An arbitrator should come to the duty with a mind that is fully submissive to the arbitration agreement because that is the agreement which expresses the core wishes of the parties. In so far as that agreement and also any other subsequently agreed wishes of the parties are not incompatible with public policy, these agreements control the activities of the arbitrator. As already stated, the arbitrator should, of course, give the full benefit of his or her experience because that is what the parties are paying for. However, that experience should be brought into play only after hearing what the parties have to say on matters of procedure. The arbitrator should not come to the duty of serving the parties with the prime intention of driving home his or her own ideas about procedure; and only succumb reluctantly should the parties be forceful about their rights to agree such matters. Over the period noted above, I have listened to some arbitrators who have sought powers of total control. This was usually on the basis that once the parties had appointed an arbitrator and the appointed arbitrator had accepted the duty, then the arbitrator was the master and the parties should comply with the arbitrator's requirements. The pitch of arbitrators demanding more and more powers in order to keep the parties in check and conform to the best procedure as seen by the arbitrator reached a high level in the early 1980s. Indeed, when the late Lord Donaldson was President of the Chartered Institute of Arbitrators [1980 -1983], I recall him saying on various occasions that he did not understand why arbitrators were always calling for more and more powers when they already had all the powers they needed to do the job. The demands for greater powers for the arbitrator were thought to have been laid to rest by the Arbitration Act 1996. The emphasis of the Act was on the autonomy of the parties; they were to decide how their disputes should be resolved. However, like most emphatic statements, they are often undermined by events. For example, powerful arbitrators coupled with inexperienced parties can often result in turning the balance of power away from that intended by the Act. On the other hand, it is a sad reflection of the spirit of arbitration when powerful parties, who understand arbitration, seek to do what they have a right to do, namely: decide upon how the dispute will be resolved, and yet that decision is often greeted by dismay and regarded as an affront by the arbitrator whose own proffered rules for procedure are rejected. Having listened, over a long period of time, to the anxieties of some potential arbitrators, and also a few quite experienced arbitrators, expressing their fears about being found wanting in the task, I have sometimes thought that the personal rules of procedure [and, of course, institutional rules] were the crutches which gave some comfort for those fears. These fears coupled with the cry for greater powers were perhaps understandable reactions in respect of a dispute resolution procedure which by its very nature is a one-off situation for both the parties and the arbitrator. In arbitration generally, there is no daily appearance in the same court, like the judge with a set of published rules, which govern all those involved. Instead, the arbitrator is just an ad-hoc manager and decider of a one-off matter; here today, gone tomorrow [sometimes longer, of course]. The point is that there is no prior definitive plan for the conduct of any particular arbitration. There are, of course, some definite wrong ways to do things, but there is no right way. There is only a final object. Thus, once one is faced with a dispute where the parties have agreed upon arbitration as the means of settlement, the object is the final award of the arbitrator, unless the parties reach agreement on the way towards that award. In concluding, I would stress that, unlike litigation, the private rules of individual arbitrators are not known in advance of the time when the parties enter into an arbitration agreement; indeed, they cannot be known before an arbitrator is selected. Further, the private rules are often not known until sometime after the arbitrator agrees to accept the appointment. Such a situation is quite unacceptable and it is not within the spirit of arbitration. Hence, it is my opinion that at the time of an arbitrator's first contact with the parties, the arbitrator should simply ask the parties how they want to proceed and tell the parties that he or she is at their disposal and cost. The arbitrator should then remind the parties that the Arbitration Act 1996 gives them the freedom to choose, if they have not already done so, their own procedure by agreement. He or she should then tell the parties that if they cannot agree upon procedure, the duty of the arbitrator is to decide the procedure and also that the extent of that duty and corresponding powers to make decisions is principally set out in s. 34 of the Arbitration Act 1996. Perhaps the things which I have related above provide some of the reasons why people now seem to preach the benefits of mediation more than they preach the benefits of arbitration. I am calling on readers to support the motion "That arbitrators should bring all their experience to every arbitration, but not their own personal rule book for the procedure." So, readers, it is over to you. Do you support or reject Francis's proposition? Whatever your views, let me know and I will publish a selection of replies. Murray Armes |
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