(Powers, parties and presumptions - or, in particular, section 34 of the Act.)

So, Geoffrey King was right! But to that I shall attend later.

Richard Swan (Newsletter, issue 41, p.17) and Rod O'Driscoll (Newsletter, issue 39, p.20) and I are all really sitting on the same side of the fence. We would all, in a practical sense, approach section 34 of the Act in much the same way, but there must be something between us.

I believe the difference between us lies in the historical bones of section 34. Indeed, the bones of section 34 are the bones of arbitration itself, but a treatise cannot be tackled in this Newsletter, so I must confine myself to the time when those bones were covered with some new flesh - the judges had previously hacked off the flesh from the old bones of section 12(1) of the Arbitration Act 1950 and reduced its true meaning by substituting an adversarial flavour. As for the new flesh, I turn to the Department of Trade and Industry's Consultation Paper on Draft Clauses and Schedules of an Arbitration Bill, February 1994.

Draft clause 11(1) (Conduct of proceedings: powers of arbitrators) stated: "The parties to a reference shall agree the procedure for the reference, and in so far as the parties do not agree, the tribunal shall determine all procedural matters including the admissibility, relevance, materiality and weight of any evidence.".

There was much discussion about party autonomy - a battle raged between those who believed that the arbitrator should always have the final word and those who believed that the parties must always be able to agree upon procedure. One of the principal proponents of the former was Geoffrey King, I fell into the camp supporting the latter.

In 1995, Lord Saville entered upon the scene. He, so it was said, virtually single-handedly drafted the next Bill. This draft was the July 1995 version. The stamp of Lord Saville could be seen everywhere, but clause 34 (Procedural and evidential matters), as the clause became numbered, remained much the same as the previous draft in respect of the issue being discussed in this article. It stated: "[34(1)] The parties are free to agree on all matters of procedure and evidence arising in connection with the arbitral proceedings. [34(2)] If or to the extent that there is no agreement, it shall be for the tribunal to determine all procedural and evidential matters.". Thus, Lord Saville endorsed the concept of party autonomy. Even though differing in part, the remainder of the sub-clauses of the clause 34 of Lord Saville's first draft were compatible with the present sub-sections 34(2)(a)-(h) of the Arbitration Act 1996. Lord Saville, in introducing his draft, referred to the details set out in these sub-clauses as "an illustrative but not exhaustive list of powers (p. 32 of the Consultative document).". He stated that the parties will know that the tribunal will have those powers if the parties do not have a written agreement to exclude those powers.

The object of the default powers was to set out what Lord Saville imagined the parties to an arbitration would normally want, if they thought about it in advance. The desire was not to stitch-up parties who did not think in advance in order that an arbitrator by default could reverse the concept of party autonomy. Indeed, it was made possible for the parties at any time during an arbitration to agree upon what they wished but they had to do so in writing. If an arbitrator did not like what the parties agreed after the appointment he or she would have an escape route in the form of resignation (see section 25 of the Act).

As stated above, Geoffrey King was (and perhaps still is) a supporter of greater powers by statutory right for the arbitrator. At the debates at King's College, in July 1995 (part of the consultation process), Geoffrey made several passionate contributions in favour of his belief in greater powers for the arbitrator. The essence of his case was that it was necessary to strengthen the powers of the tribunal in order to bring about the just, speedy and cost effective resolution of disputes by arbitration. Geoffrey proposed the deletion of clause 34(1) and (2). In their stead, he proposed this: "After consultation with the parties, the tribunal shall determine all matters of procedure and evidence arising in connection with the arbitral proceedings.".

Although these proposals fell upon seemingly deaf ears, I do recall an oral plea (Geoffrey may like to provide greater details) for Lord Saville to change at least the emphasis by putting the tribunal first. I also recall, there being an ambivalent sense about the response to the plea, which response meant "would it make much difference either way.". Geoffrey King clearly thought that it would.

When the Arbitration Bill was presented to Parliament, clause 34 commenced with the statement that, "It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter.".

Lord Saville, in the Departmental Advisory Committee on Arbitration Law's Report on the Arbitration Bill, February 1996, made a note that "a number of arbitrators who responded to [the July 1995] draft suggested that the tribunal should be entitled to have the last word, i.e., should be given the power to override the agreement of the parties and follow a different course (para. 173).". Lord Saville disagreed with the suggestion. In particular, he stressed that, "To allow the tribunal to override the agreement of the parties would ... constitute an indefensible inroad into the principle of party autonomy, upon which the Bill is based.".

That was the basis of the Act.

I understand that Geoffrey King believed that people who, in years to come, used the Act would read those opening words and say that the tribunal has these powers, and the proviso - "subject to the right of the parties to agree any matter" - would have less effect than believed. It was when I read the observations of Richard Swan and Rod O'Driscoll that I realised that Geoffrey King may have been right - Geoffrey may have lost the argument at the King's College debate, but did he win the battle?

However, it seems to me that one cannot refer to the Arbitration Act 1996 and talk about powers or, indeed, anything at all - except the mandatory sections - because the Act is entirely impotent in all respects until two or more parties agree to settle their differences by arbitration. Once two or more parties have entered into an arbitration agreement, the Act comes alive in a unique way for that particular agreement. And, whatever those parties choose to agree in writing will take precedence over anything which the arbitrator may do at any time.

Throughout the entire history of arbitration, I would imagine that an arbitrator was always without power whenever the parties found themselves to be in agreement. The power of an arbitrator has always been vested in disputes and differences. In the absence of conflict, the only power left to an arbitrator is the power of persuasion, based upon ability and personality, to influence and mould the parties to his or her own way of thinking. There is, of course, also the great power of the potential arbitrator to refuse to accept an appointment unless the parties agree to particular procedures, but that may not be wholly effective when there are many others who may without prior conditions be willing to jump into the role at any time. But, for those arbitrators who have not, prior to appointment, set down conditions which they believe are important to themselves, the power to resign is made virtually ineffective.

Richard Swan's closing suggestion that this section is one which must be discussed in some detail at the preliminary meeting is clearly very sound, but it is only sound advice for arbitrators who have not at that time accepted the appointment. For those arbitrators who have accepted the appointment, they will be totally subject to party autonomy.