ARBITRATION PROCEDURE Francis Miller

The law of arbitration is a law about procedure, so it is to be expected that much of the debate is about procedure. The problem when debating procedure in arbitration is that one’s thinking is apt to move freely between the policy which set the framework in the Arbitration Act 1996 and the permissible activities within that framework.

The Framework

Some commentators seem to believe that they have uncovered flaws in procedural aspects of the Arbitration Act 1996, which flaws have not been adequately addressed before. This article is not a suitable vehicle for addressing this important topic. However, for those who have such thoughts, may I suggest that they read the Departmental Advisory Committee on Arbitration Law’s “Report of the Arbitration Bill”, February 1996. This report is material which can be read under the Pepper -v- Hart [1993] 1 All ER 42 guidelines. A brief study of this report will demonstrate quite clearly that such topics were considered in considerable detail. Moreover, the report explains why the Act was framed in its present form. This is especially relevant to sections 1, 33, 34 and 40 of the Arbitration Act 1996.

The Activities within the Framework

Above all, it must be remembered that the Arbitration Act 1996 is an irrelevant piece of legislation unless the parties to a dispute or a potential dispute chose to bring it into play. When such parties do think about bringing the Act into play, they had better understand what it is all about before they agree to it; because, as was clearly stated many times over during the discussions at the time of the Bill going through Parliament, there is one thing that is clear about arbitration, and that is it takes away the rights of the parties to resolve their disputes by litigation. Thus, it is important that one believes that arbitration has something better than litigation to offer if one is going to make use of it. It is also important to make sure that the chosen arbitrator is going to be a constructive part of that better procedure for the resolution of one’s own disputes.

Any problem with arbitration is likely to be caused by the parties, their representatives and the arbitrator, either individually or in some way collectively. Problems are unlikely to be caused by the actual Arbitration Act. Further, most of the problems are likely to be caused at the very beginning.

When the Arbitration Bill was being debated at King’s College in 1994, I stood up and asked this question: “Is it not clear that much of the discussions about problems in arbitration arise simply because the parties enter into an arbitration agreement before they know whether or not there will be a dispute; and before knowing who will be the claimant; and before knowing what the dispute will be about?” I asked for a Government health warning to be attached to every arbitration agreement incorporated in a standard form of contract in order to encourage parties to a contract to think carefully about that agreement.

Both my question and statement were greeted with virtually blank expressions on the faces of most of those in the forum, but I was happy that I made the point. In fact, I had been canvassing the matter at the Institute and elsewhere over many years before and by that time the issue had become of considerable importance to me. As a matter of interest, most of the responses which I did get were based on the notion that if parties did not enter into an arbitration agreement before they were in dispute, they probably would not do so after a dispute had arisen. Stimulated by such unacceptable observations, I wrote a small booklet in 1994 under the title, “The arbitrator and the parties”, in which I canvassed my views. Again, in 1996, I stressed the importance of this issue in my pamphlet, ―“?Arbitration – The Arbitration Bill [Second Reading]”, which I distributed to Members of Parliament who sat on the Second Reading Committee. The Government did not accept my views, but they did agree (in response to a question raised in the House of Commons on my behalf by Mr Nick Harvey MP) to publish a guide to assist people to understand what arbitration was about (see “Arbitration for Consumers and Small Businesses – Guide to the Arbitration Act 1996”, published by the Department of Trade and Industry)

I have referred to these matters because it seems to me that much of what people are still saying about procedure stems from parties who have entered into a binding arbitration agreement without too much thought. Moreover, if what one reads is true, this obviously unsatisfactory position is made worse by some people who are overly anxious to secure an appointment as an arbitrator. These keen potential arbitrators seem to be anxious to accept an appointment before clarifying important procedural matters.

Arbitration is a valuable tool for dispute resolution, but it needs to be understood if the full benefits are to be achieved. In this respect, I recall that Her Hon. Jean Graham-Hall gave a talk to the South East Branch (Newsletter, Issue 21 July 1993, p. 4). She said that arbitration is an esoteric process, devised for and used by the favoured few. She added that it was a haven for the respectable and thoughtful who realise that they may require some dispute resolution process, particularly if they operate in specialised fields.

Her Hon. Jean Graham-Hall was, of course, totally correct in so far that people who appreciate what arbitration has to offer and who understand what it is all about are likely to use it with some success. The underlying reality of what she seemed to be saying is that those who do not understand arbitration and who come to it for the first time with an unexpected dispute are likely to be disabused of any notions they may have had – if, indeed, they had any notions at all – about arbitration. For these disputants, perhaps the majority, the learning curve displays a rapid and unsavoury upward increase immediately after an arbitration has commenced – too late for reflection upon how best to have really started. This situation is, based on what one reads, apparently made worse because the flexibility of arbitration seem to be misunderstood, or perhaps even feared, by some arbitrators.

The facts of the matter of procedure are simple: An arbitrator is, in so far as the parties have jointly consented, and public policy does not prevent, the total master of procedure and there are no binding precedents to restrict the process. So where is the problem?

I recall hearing Lord Donaldson (when he was President back in 1981-3) asking why arbitrators were always complaining about a lack of power when they obviously had all the powers they needed to do the job. Plus ça change, plus c’est la même chose.