A critical analysis of the role of arbitrators in international commercial arbitration
Arbitration, which creates an internationally enforceable award, has historically been lauded as a confidential, quick and cost effective mechanism for resolving disputes. International commercial arbitration is growing very fast as more businesses seek to settle their commercial disputes out of court in order to save time, money, manpower and sustain healthier business environment. This state of affairs has made the role played by arbitrators in international commercial dispute resolution to be more important than ever before since arbitrators hold the key to the future success and continuity of commercial activities the world over. Arbitration has taken on such prominence in the international context that it has become the first choice for a binding dispute resolution. Over the years these virtues has eroded with the expansion of the number of parties using arbitration and shift in the group serving as arbitrators. With the advent of time arbitration has become costlier as litigation before courts and even time consuming. Confidentiality associated with awards has eroded due to international conventions and interventions of arbitral institutions. Arbitration awards do not have the same monopoly on streamlined enforcement mechanism. In the changing scenario what is left to make arbitration preferable to national courtsIt is neutrality of forum where the place of dispute resolution does not unfairly benefit parties to the dispute and neutrality of the decision making process that make arbitration preferable to national court. Constructive mechanism for regulating arbitrators conduct and scope to promote the integrity of arbitrations are required. This paper specifically argues that arbitrators in international commercial disputes play a very important role. This line of argument is sustained by way of enumerating and critically analysing some of these roles with a view to contrasting the arbitrator from the judge in a normal court setting.
Dispute resolution in the commercial context continues to be a major challenge facing businesses the world over; and the ability to have alternative ways of resolving them by means other than litigation is a great relief to businesses. With the rather lengthy and costly litigation process involved in seeking legal redress in contemporary commercial disputes, parties to such disputes have invariably chosen to go the private way of resolving their disputes. Furthermore, court processes have been deemed to be not only tedious and time-wasting but also the decisions thence are often disputed by parties for their being alleged partisan. This latter point is especially true of international commercial disputes where decisions taken by the court are largely believed to be biased in favour of the party that hails from the country in which the court is located. And owing to the fact that commercial disputes are a daily occurrence in the world today where globalization has made commercial activities to transcend national borders in a way never before witnessed, the ability to have them resolved amicably and to the satisfaction of both parties is a great milestone in general commercial dispute resolution.
Arbitration has come in handy as a favoured choice of an efficient mechanism for resolving international commercial disputes largely because it offers the parties embroiled in a tussle to dispute the opportunity to appoint their own arbitrators and so reduce the likelihood that justice is denied. Arbitration also offers the parties the opportunity to have an expeditious out-of-court settlement; yet the decision made by the arbitrators is legally binding and executable by the courts. Usually, international arbitration will seek to resolve the disputes that arise from the implementation of various international conventions, treaties, and agreements. Since different countries usually have different sets of laws, arbitration helps to overcome the differences that could be brought about by such variation in law as it provides for an amicable resolution of disputes without reference to any one country’s legal system. This helps companies in different court systems to have their disputes resolved fairly. More importantly, arbitration is faster and cheaper than a court process; and also eliminates chances that a decision taken by foreign courts becomes unenforceable in a given country.
A critical and succinct analysis of the role of arbitrators is therefore essential if the process of arbitration in international commercial disputes is to be understood in its entirety. This is partly because arbitrators hold the key to the final outcome of any commercial dispute – meaning that they must not only be fair but also non-partisan. This paper addresses the conception of the proper role of arbitrators, the adjudicatory functions of internal arbitrators; the constructive mechanism for regulating arbitrator conduct and scope to promote integrity of arbitrators. The importance to enhance the legitimacy of international arbitration is also touched up on.
2.Key findings about Arbitration
The importance of arbitration and so of arbitrators in the resolution of international commercial disputes can be better placed into context by considering the views of the public on the matter. That is why in a survey to establish the feasibility of arbitration as a method of resolving international disputes; interesting findings were reached which generally puts the method far ahead of litigation and other legal mechanisms of addressing international commercial disputes. Key among the findings was that about 86% of counsel is in one way or another satisfied with international arbitration; and that most corporations will rather have institutionalized arbitration instead of the ad hoc arbitration. This is largely because close to 86% of awards are known to have been rendered through institutions. A massive 92% of all arbitration disputes are believed to be resolved in a successful manner at some stage along the arbitration process. Furthermore, about 84% of counsel admitted that the party that failed to prevail in a dispute managed to comply voluntarily in over 76% of cases.
As far as recovery by way of settlements is concerned, close to 35% of corporations that were involved in the survey admitted to having recovered at least 76% of the total value of the award they desired. When it comes to efficiency, rapid results – lasting less than a year in at least 57% of cases – were realized through enforcement proceedings. Furthermore, recovery through such enforcement is thought to be high, with about 84% of the corporations surveyed admitting to have recovered over 75% of the total award value. Finally, in cases where corporations experienced enforcement problems, most of them were only circumstantial, stemming from issues such as the lack of traceable assets of the party that did not prevail as opposed to the process of enforcement itself. These findings clearly support the main argument of this paper that arbitration has become a leading and preferred method of commercial dispute resolution particularly on the international arena. By extension, therefore, it is important that arbitrators continue to understand the seriousness with which the process is taken and so carry out their duties in a manner that both upholds the dignity of arbitration as a legal process and serves the needs of the antagonists in the dispute.
3.From Court Alternatives to Promotion of Co-operation
Prior to considering the actual roles of arbitrators in international commercial disputes, it is critically important to have an understanding of the settings under which the current commercial activities operate or are based. With the increased role that globalisation is playing in world trade and general commercial activities, it has become rather important that commercial activities are secured from the possibility of getting damaged by vested interests. This is in essence indicative of the need for longer, more secure commercial contracts between different players. For instance, the world is now experiencing newfound commercial partnerships between states or corporations that never existed before. In addition, most of the business contracts signed are almost always long-term in order to ensure continuity over a long period of time. For instance, the Russian energy giant Gazprom now insists on long-term gas supply contracts with the EU – contracts extending up to 30 or 35 years into the future. The aim is to have assurances that the market will be readily available in the future as is today.
Therefore, owing to this growing need for long-term commercial contracts between international organizations and other businesses, the mechanisms employed for dispute resolution ought to be capable of not only offering an amicable solution but also ensuring business continuity. Not one business wants to lose business interests just because of a dispute. Since most litigation processes have the likely impact of causing severe damage to commercial contractual partnerships, arbitration has become the most preferred way of resolving commercial disputes on an international scale. But even with arbitration, there have remained concerns about the manner in which an award is rendered. Today, the emphasis has shifted from just rendering an award to settle the dispute to include seeking to preserve the existing relations between the parties to the dispute. This way, future cooperation is assured along with reduced confrontations. Under such circumstances and this context, an arbitrator is expected to play a social-legal role – use the law to resolve the dispute fairly but also ensure that the parties continue to work together in spite of the award rendered.
4. The Threefold Nature of the Sources of Duties for Arbitrators
Every party to a dispute has expectations from the arbiter in any commercial dispute. These expectations are largely driven by the need by each party to have a fair and free arbitration process, minimize costs, and earn an award that is not only effective but also binding. To achieve this, therefore, it is upon the arbiter to ensure that the whole process of arbitration is organized and controlled in an efficient manner. The main duties of an arbiter originate from three sources. The first one is the rules and laws that govern the specific arbitration process; the second is the agreement between the parties to the dispute; and the third is the ethical rules. From these three sources, this paper draws on the actual roles of an arbiter and critically analyses each.
5. The Role of Arbitrators as Imposed by Applicable Law or Rules
International arbitrators clearly have a more difficult role to play compared to national ones owing to the nature of disputes involved and the parties to those disputes. As a result, there has been a variation between institutional and ad hoc arbitration. Since the international community lacks cross-cutting laws on commercial dispute resolution, not every party that elicits the services of an arbitrator has the laws of arbitration entrenched in its by-laws. Under such circumstances, an ad hoc arbitration has to be followed whereby the rules to be followed have to be set and the other issues like the governing law, the number of arbitrators, and the place where the arbitration will occur have to be resolved prior to the commencement of the arbitration process itself. But whether an ad hoc or institutional arbitration is used, the roles that arbitrators play or are expected to remain more or less the same – and all are very important.
But before defining some of these roles, it is worth mentioning here that the changes brought about by a rapidly globalizing world have drastically changed the manner in which arbitration is handled. Today, for instance, arbitration is not just executed by the elderly or more experienced people. Instead, today’s arbitrators are young technocrats who have emerged to serve the ever-rising number of firms seeking international arbitration services. Besides, arbitration has increasingly become an adjudicative process, meaning that it almost lasts just as long as a normal court process. This leaves arbitration with only one key strongpoint – a point that also gives arbitrators their most important role in international commercial dispute resolution. This is that it has the neutrality stemming from the fact that it offers no ‘home court’ advantage and its adjudication process is equally fair. In essence, arbitrators are required to exhibit the highest level of neutrality and impartiality.
5.1 The Need to Ensure Neutrality, Independence, and Impartiality
International arbitrators are selected by the respective parties to a commercial dispute in order to act as their representatives in the matter. These arbitrators are usually served with relevant information regarding the particular dispute by the given parties, arbitration attorneys, after which they have the responsibility of reaching a decision that both parties will abide by. Neutrality in the discharge of one’s duties as an international arbitrator requires that one acts in accordance with the legal requirements of the process of arbitration – in this case in line with the governing law that is agreed upon or that exists. Honouring the expectations of the parties to the dispute is very important in the arbitration process, especially where the stakes involved are very high. The expectations that parties to a dispute have are usually many and, quite unwittingly on their part, they seek to influence the outcome of the arbitration process. Arbitrators must strive not to bow to any pressure that might be applied by parties or one of them in order to achieve this goal.
The main goal of entering into any legal battle between two aggrieved parties is for each to get the arbitral award rendered by the arbitrators. Depending on the nature of the award, different parties will be tempted to influence their representatives on the arbitration tribunal or so that the adjudication process is carried out with favouritism. But this ought not to be the case. It is the duty of the arbitrators to ensure that the adjudication process is fair and neutrality is maintained. In essence, there is no need for any arbitrator to seek to advance the interests of the nominating party – the party that one represents. Instead, it is very important that once one is appointed to arbitrate in any commercial dispute then one must let go of any vested interests and serve the interests of the process. And the process of arbitration seeks to resolve disputes in an amicable and fair manner. Quite often than not, arbitration has been marred with allegations of favouritism, rendering not only the process itself ineffective but also affecting the legitimacy of international arbitration. Even where institutional arbitration is used, the institution ought to have as arbitrators’ people who are best placed to be neutral, and this is achievable by way of having all people with vested interests in the matter not being appointed to be arbitrators.
But the need for neutrality in international mediation is almost paradoxical because of several reasons. First of all, the very essence of arbitration is to have disputing parties legally and fairly resolve their dispute without the need for a court of law. Therefore, each party has the responsibility of working to ensure that the outcome of the arbitration process – the award – is generally acceptable. A prerequisite for acceptability of a decision reached by any arbitrator is evidence that there will be fairness in the process. And this fairness is ensured by having each party appointing a representative to the arbitration tribunal. Otherwise, each party has to consent to a particular agency acting as an arbitrator in the dispute. In the latter case, the agent selected has to prove to be fairly neutral and non-partisan. But the very fact that such an agency has been hired by a certain party means that its ability to remain impartial is compromised. Like arbitration attorneys who have the interests of one party at heart, the appointee to an arbitration tribunal almost always seeks to serve the interests of the appointing authority – their client. This drastically limits the ability of the arbitration process to be neutral. Instead, it becomes more like another battle between representatives of the two disputing parties.
Without pre-empting anything, many players have taken arbitration to be a rather quasi-legal process, and have almost come to believe that its outcomes can just be contested as one pleases. That is not entirely true; and arbitrators ought to help end this analogy by presiding over arbitration proceedings that are free from controversy and render awards that are binding legally. That arbitration is entrenched in international law means that it is indeed a quasi-legal process in that its outcomes are binding and executable by any court of law yet the process affords the privacy and informality not found in any court of law. But the need for neutrality on the part of the arbitrator is not to be affected in any way by virtue of the process being quasi-legal. In fact neutrality is called for by law – both article 9 and article 10 of the Arbitrations Rules categorically place the role of seeking neutrality on the arbitrator. Further, Section 8 of the Arbitration and Conciliatory Act provides that every arbitrator must strive to be independent and impartial – this includes avoiding engaging in any correspondence or any other form of communication with one party without the knowledge of the other party. This is partly attributed to the norm in legal circles that justice ought to be applied equally and that no one person or individual can be a judge in one’s own cause. Therefore, an arbitrator is bound by law not to favour any party or to be predisposed as regards the question that is under dispute. This is what constitutes impartiality.
Independence, on the other hand, is a call to the arbitrator not to have any current or past dependent relationship with one or more of the parties to the dispute. However, this is just as far as the relationship or dependence is deemed to affect or actually affects the freedom of the arbitrator to make a judgment that is free. This point is critical and delicate because any legal judgment must be based on evidence as provided during the proceedings and not from any other source – least of all from the relationship a judge or arbiter has with a party to the case. This is the principle that underlies sound judgment. Any judge must reach a decision based only on evidence implied or expressed by the parties in the dispute. However, any dependence on either party will likely cloud all judgements and so result in a ruling that is at best unfair.
5.2 The Role of Disclosure of Information
It is upon the arbitrator in any commercial dispute to ensure that any information that is critical is disclosed to both parties in the dispute. In fact Section 8(1) of the Arbitration and Conciliatory Act requires the arbitrator to disclose every relevant fact that is deemed likely to cause justifiable doubts about the arbitrator’s impartiality and/or independence. Arbitrators must not deliberately conceal information that is relevant to the arbitration proceedings. But disclosure of relevant information or facts is not enough to ensure that the arbitration proceedings are free and fair. Rather, the timing of the disclosure is also very important. In the past, a lot of controversy has arisen from allegations of arbitrators disclosing key information at the wrong time – when the irreparable damage has already been done. The best time to disclose information is at the earliest possible opportunity – preferably before the arbitration proceedings commence. In fact an arbitrator ought to disclose any important information at the time of one’s interview before one is appointed to take up the role of arbiter.
But there has been debate on what exactly is considered relevant information. Some arbitrators have knowingly withheld certain information even when it has been clearly important; and asked later about it they have been quick to point out that they never thought such information was important in the first place. While relevance of information, as required by law, is not clearly defined, it is the duty of the arbiter to judge from the arbitration agreement what might be important and what is not important. The importance extends only to the matter at hand or under deliberation; and it is only the individual concerned that can understand what is likely to cause justifiable doubts on the part of the parties to the dispute. The arbitrator is required to keep revealing any such information even after one’s appointment and all the way through the arbitration proceedings. Once the arbitrator dully carries out this role of disclosure, then neither party is legally capable of contesting the award on the basis of the disclosure made by the arbiter because every party effectively waives its rights and submits to the arbiter’s jurisdiction once disclosure is made.
Lacking proper definition in statute law, disclosure has come to be interpreted based on case law. In the AT & T Corporation vs. Saudi Cable Company case, disclosure came to be defined as the real danger there is for bias on the part of the arbitrator. In essence, it is the information that only the arbitrator knows and which, unless disclosed at the right time and in the right manner, has the capacity of making the arbiter to appear as biased or favourably disposed towards one party. It was ruled in the case that disclosure does not mean a reasonable suspicion threshold. In the case, the Chair to the arbitration tribunal had failed to disclose that he was a non-executive member of one of the firms allied to the prevailing party. Although the defendant claimed that the omission of the information, which was supposed to be contained in his CV, was a secretarial error, the plaintiff held that it tantamount to concealment of information because it caused real danger of bias. For the plaintiffs, there was no doubt that such a Chair could discharge his duties fairly and without bias given that he was strongly dependent on one of the parties. However, the court ruled that an inadvertent failure to disclose a given fact that could affect the appointment of the Chair was in itself not sufficient enough to constitute a real danger of bias. Therefore, the court held that the award rendered should be enforced.
The basis of the ruling, put more simply, was that the problem was one that could affect the process of appointment of the arbitrator and not the arbitration process itself. Therefore, it was not important what was not disclosed at that time, let alone it having been inadvertently omitted. For the defendants clearly proved that the omission resulted from the Chair’s CV having been printed from a file that did not have the particular information even though a different file stored on a different computer had the Chair’s CV with the said information. Anyone seeking to intentionally conceal a fact cannot have that same fact retained in any other document. Instead, one will have all evidence of the fact cleared as far as possible so that nothing comes to the fore. Therefore, disclosure is so much a role that is executable depending on the arbitrator concerned and not really the parties. For what parties may view as capable of causing real danger of bias might just be reasonable suspicion threshold which is not admissible before court as constituting concealment of information.
5.3 The Role of Effective Dispute Resolution through Valid Award Rendering
Every party to a dispute expects to win and get the award. It is the role of the arbitrator to ensure that the rendering of the award is valid, and this is only possible by way of ensuring that the entire process of dispute resolution through arbitration is handled well and resolved effectively. Every arbitration process is only as credible as its outcome; and the rendering of an award is the final yet most important stage in the entire process. For this reason, it is upon the arbitrator to ensure that there are no unnecessary hitches at this all important stage. This might appear to be something rather simple in the eyes of the non-interested, partisan party. However, rendering an award can be the most delicate moment of the arbitration proceedings as it determines not only who wins what award but also whether or not the parties to the dispute are going to work together again or will go separate ways afterwards. It is a time to make that hardest decision without fear of reprisals – in any case the award has to be rendered and as in any dispute one party must win if the other has to lose.Only in exceptional cases does there result a zero sum – there being no winner-take-it-all situation but rather a case of sharing the spoils.
So what is the role of the arbitrator in this caseWell, the arbitrator is expected to ensure that all issues that might threaten the validity of the award to be rendered are considered. It is the arbitrator’s role to ensure that the decisions are made not based on matters that are beyond the scope of the submissions made to the arbitration but on those that are within the scope. No party will want a decision on a matter that is not in dispute or contention –that will only serve to curtail the process of arbitration. Furthermore, the conduct of the reference ought not to be afflicted with any form of misconduct – actual or technical – as this would serve as legal basis for the setting aside of any award rendered as this is in contravention of both Section 29 (2) and Section 30 of the Arbitration and Conciliatory Act. The challenge here is that the Arbitration and Conciliatory Act does not contain any clause on the definition of the concept of misconduct. Therefore, just like the concept of disclosure, its scope has been determined largely on the basis of case law.
Over a time, there has been attempts at drawing up a list of what is deemed to constitute misconduct as it is applicable in the context of arbitration as has been held in past cases; and the list covers a wide array of issues. The first one is where the arbitrator does not comply with the terms of the arbitration agreement. This is regardless of whether it is expressed or implied. This effectively means that it is the role of the arbitrator to ensure that there is full compliance with both the expressed and implied terms of the arbitration agreement. The second case is where an award is made by the arbitrator but on public policy grounds that award ought not to be enforced. Third, there are cases where the arbitrator acts beyond the authority that is conferred by the arbitration agreement, in which case a mistake is made. Since the agreement is like the compass that offers directions all through the arbitration process, the terms therein must be adhered to fully by the arbitrator.Misconduct is also deemed to have been exhibited where the arbitrator is corrupted or receives a bribe; where all matters referred to the arbitrator are not decided; where the award rendered is either ambiguous or inconsistent; and where the rules of natural justice have been breached or violated. Natural justice violation was the basis for misconduct claims in the Arbico Nigeria Limited v Nigeria Machine Tools Ltd case.
Corruption is a means of perverting justice, and bribes always bring about favouritism because they are intended just for that purpose. Both are contrary to the spirit of fairness, impartiality, and neutrality.Misconduct is also evident in cases where an error of law which is apparent of the award face is made by the arbitrator – but only in case where the point of the law that was decided erroneously could not be specifically referred for the arbitrator to make a decision on. This was demonstrated in the case of Taylor Woodrow Nigeria Ltd v Etina Werk GMBH. Finally, misconduct can be cited where evidence that touches on the root of the question that is submitted to the arbitrator is wrongfully admitted and subsequently acted upon by that arbitrator as in the KSUDB v Fanz Construction Company Limited and the Compt. Comm. & Ind. Ltd v OGSWC cases.This, however, excludes cases where the arbitrator judicially and honestly decides on what is admissible. In this exceptional case, any award rendered based on such a decision cannot be set aside on the basis of misconduct.
Based on these, the arbitrator is tasked with ensuring that the arbitration process remains free and fair at all times; and that what is decided upon is based on the terms of agreement implied and expressed. This ensures that the award rendered at the end stands little or no chance of being challenged in a court of law. By acting in a manner that openly demonstrates that their authority has been exceeded, arbitrators are effectively setting the stage for possible legal challenges to the final award.This is because any aggrieved party might easily prove that the award has dealt with a dispute which does not fall within the terms of the submissions made to the arbitrators in question.
Therefore, it is important that the arbitrator focuses on matters that are within one’s jurisdiction as only then will it be difficult for the award to be contested. In any event where an aggrieved party seeks to set aside the award, only that part of the award that has decisions on matters that were not submitted can be set aside. It is therefore critical that the arbitrator clearly draws a distinction between those issues that fall within one’s jurisdiction and those that are not submitted. Such issues of setting aside part of the award because of the arbitrator failing to act within the jurisdiction were witnessed in the Bellview Airlines Limited v. Aluminium City Limited case.
There is an interesting twist to the role of arbitrators as effective dispute resolvers by way of rendering valid awards. This is because there is a very big difference, albeit not clearly evident to the lay person, between the validity of an arbitral award and enforceability of the arbitral award. This distinction has been a cause of ripples across many nations as what is valid as an arbitral award may not necessarily be enforceable in every nation of the world. Therefore, it is upon the arbitrators to ensure that they do not overstep their mandate. Therefore, this is an appropriate opportunity to mention that arbitrators have the role of ensuring that an award rendered is valid. However, it is not their role to enforce that award. This is largely because the conditions that call for the enforcement of an award differ from one country to another, meaning that an arbitral award that is valid and enforceable in one country might be unenforceable in another country owing to differences in legal jurisdictions. But even if this is so, the arbitrator has to ensure the validity of the award without caring whether it will be enforced in the required country or not. In fact the arbitrator ought not to care where the award will be enforced and how that will be done. Instead, arbiters have the duty to validate the award and leave the enforcing to the country required.
6. The Role of Conducting Arbitral Proceedings
International commercial disputes can take on very different forms – some of which require a lot of patience and tolerance on the part of arbitrators. Furthermore, commercial disputes usually have a lot at stake and any wrong decision made by the arbitrator might prove to be very costly to the non-prevailing party. Besides, the fact that these are cross-cultural deliberations carried out in a private setting means that they have to be conducted in the most open, fair, and free manner in order to be legitimate. Like the umpire who plays a neutral role but presides over hotly contested matches, the arbiter has the role of conducting the arbitral proceedings in such a way that they are concluded without any misgivings on the part of the antagonists. To do this effectively, the arbitrator must be both physically and mentally fit. In fact the Arbitration and Conciliation Act’s (1988) Section 10 (1) (b) expressly provides for the removal of any arbiter that lacks the capability to conduct the arbitral proceedings due to such factors as mental and physical impairment. This removal can occur during the appointment process or even during the arbitral proceedings – as long as it is proven that the arbiter can no longer be relied upon to carry out one’s tasks in relation to the reference.
Apart from being required to be physically and mentally capable, the arbitrator has the role of ensuring that the arbitral proceedings are expedited so as to reduce the costs associated with arbitration procedures that drag on for too long. In fact, as earlier mentioned, one of the main reasons why arbitration has become one of the leading methods for the resolution of commercial disputes especially on the international level is because litigation seems to drag on forever, increasing the losses that parties incur partly by way of lost business revenue and time; and partly through high legal fees. Therefore, the faster the process is undertaken the better for the parties involved.
This role of arbitrators, however, is not without its own flaws. There are many issues that need to be addressed before this role can be performed effectively. For instance, it is difficult to judge a person’s state of health – both mental and physical – based on medical records available. Many people who outwardly appear sound might not really be capable to deal with commercial disputes of international magnitude. Even the sanest person can easily become incapable of conducting arbitrary proceedings because of the complexity of their nature and the many expectations placed on one. As such, the role of conducting arbitral proceedings ought to include counsels who can step in where they believe the process is not being undertaken in the right way. Counsels have been given limited powers; and in fact it is not mandatory for parties to have them unless they opt to. In the coming days, it ought to be a requirement for all parties to appoint counsels who can ensure that the process of arbitration remains on course at all times.
6.1 The Role of Adopting Procedures Suitable for the Specific Case
Specificity is a concept that is highly regarded in international commercial arbitration. Since arbitration is largely viewed as a method that seeks to bring justice to aggrieved parties in a just and ethical manner, it has been common practice for parties to want to have each case treated differently and approached from a perspective that is only unique to the particular dispute.As an arbiter, one is expected to ensure that this is actually done – that the specific case is treated differently from any other that the same or different arbiter might have participated in. The arbiter is required to conduct the reference skilfully and with reasonable diligence by adopting procedures which have been tailored to that particular dispute. This is a very important role because duplication of decisions as is common with litigation processes can be very disastrous if applied to arbitration.
Powers which arbitrators have in determining how to conduct the reference is only an emphasis of the need for treating every dispute uniquely. This power is determined by the ability of the arbiter to act subject to the agreement reached and signed by parties to the dispute and the legal provisions on the matter. That is why it is a provision of the Arbitration and Conciliatory Act’s First Schedule (Article 15(1)) that an arbitral tribunal can conduct the arbitration in the way it deems appropriate as long as each party is treated equally, including being given a fair chance to present its case to the tribunal. Again, it is important for every arbiter to understand that different disputes call for different approaches to their resolution. Therefore, it is the arbitrator’s role to ensure that this is done.
6.2 Ensuring Fairness and Expediency
Speed is of the essence in the process of resolving any commercial dispute – international or national. Delays, as earlier mentioned, have the impact of causing many losses in terms of time, revenue, business, and even manpower and capital. While delays might not be avoidable under certain circumstances, undue delays are unnecessary and discredit the arbitration process and the arbiter overseeing it. Sometimes there is a lot of work that an arbiter has to do during the process of the arbitration. In such circumstances, it is the role of the arbitrator to inform the parties in advance of the workload so that they have prior information. This way, they can decide whether or not to appoint such an arbiter. Otherwise, the arbitrator understands clearly that some existing workload will hamper one’s ability to carry out one’s duties expeditiously ought to disqualify oneself from the work if already appointed, or reject it if one is proposed for appointment as arbitrator.
Closely related to speed is fairness in making decisions. Arbitrators must not only speed up the arbitration process but also do it fairly so that the award stands little chance of being contested by the non-prevailing party. According to Section 14 (Cap. A.18) of the Arbitration and Conciliation Act, every party ought to be given a fair chance to present its case to the arbitration tribunal. This legislation is based on Article 15(1) of the UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules and Article 18 of the Model Law. They provide that all parties ought to be treated equally and offered the full chance to present their submissions. But fairness can also be and has actually been interpreted differently by different courts in different jurisdictions. The most inclusive meaning of fairness can be traced from the Court of Appeal’s ruling in the cases of Umar v. Onwudiwe and African Assurance Corp. v. Aim Consultant Ltd where fairness in the context of arbitration process was held to mean two issues. The first is where the arbitrator hears both sides and then considers all the issues that pertain to the case before making a decision; and the second is having the arbitrator according equal opportunity, treatment and consideration to all the parties.
The audi alteram partem principle ought to be the guideline for the arbitrator in matters of fairness as it calls on one to hear both sides before making a ruling. This principle ought to be observed by all people who have quasi-judicial as well as judicial functions as is the case of arbiters in commercial disputes at the international level. Fairness is a role that is quite important as it also adds to the legitimacy of the arbitral proceedings. Arbitrators can best ensure fairness by giving every party not just enough and reasonable time to present their submissions but also to respond to the case by the other party. Finally, fairness might also include ensuring that the arbitration fees charged is commensurate with the specific case, taking into account aspects like complexity of the case and the time taken by the parties.
6.3 Maintenance of Confidentiality
Arbitration proceedings are only quasi-judicial and they have to enjoy the privilege of not being so public. In fact so keen on confidentiality are commercial firms embroiled in disputes that they desire to maintain their reputation and as much as possible keep their business. Confidentiality is also important as it helps protect the arbitrators themselves from possible kickbacks from the non-prevailing parties and the criticism by international media. Without arbitrators, such a noble role would not be executable, meaning that arbitrators play a most important role in ensuring that confidentiality of the arbitral proceedings is maintained at all times during and even after those proceedings.
More importantly, the need for confidentiality is enshrined in the Arbitration Rules’ Article 25(4), requiring that arbitration proceedings be held in camera except in cases where the parties agree to go public. Furthermore, the arbitration agreement always implies that the arbitration proceedings ought to be confidential and private. In discharging one’s duty of preserving privacy and confidentiality of the proceedings, the arbiter strives not to communicate any information, particularly details of names and locations, without the permission – express or implied – of the parties. But common practice has arbitrators treating almost all aspects of the arbitration to be private and so keeping them confidential. However, the most important facts kept secret are the award and the records of the arbitration proceedings.
6.4 Circumstantial Choice of the Language to be Used
International commercial disputes can be tricky and difficult to handle especially where the parties do not share a common language. Quite often than not, the parties usually are drawn from very different countries where either several languages are spoken or only one language is used. Once again it is the arbitrator who will have to resolve this problem by considering the relevant circumstances before and when settling on the language for use at the arbitral proceedings. It is upon the arbitrator to consider both parties and the prevailing circumstances before deciding on the language for the arbitral proceedings – powers conferred to one by the Arbitration and Conciliatory Act’s Section 18(1).Sometimes, the language to be used can generate a lot of controversy; and the arbitrator has the power to overrule the parties and, based on the circumstances, decide on a language that is to be used even if neither party wants it used.
6.5 Communication of Expert Report
Any report which is or might be the basis for the ruling to be made by the arbitrator has to be communicated to the parties, and it is the work of the arbiter to do this. The right to do this is provided for in Section 20(4) of the Arbitration and Conciliatory Act. The importance of this role lies in the truth that parties to a dispute often wish to understand how an award came to be rendered, including the basis for the ruling made. By communicating such a report, the arbiter not only reduces the possibility of contesting the award but also upholds the credibility of the arbitral process. Evidentiary documents and/or expert reports are also very necessary on account of their being the only mechanisms through which parties can reasonably get the opportunity to comment on advice, opinion, and any other information by legal advisors and other experts. Ultimately, arbitrators – by playing this role – set the stage for a fair and equal treatment of every party. These are very important requirements for any credible arbitral proceedings.
6.6 Ensuring ex aequo et bono or as amiable compositeur
Both Sections 22(3) and 47(4) of the Arbitration and Conciliatory Act prohibit the arbitration tribunal from deciding ex aequo et bono or as amiable compositeur unless there is prior authority from the parties. In essence, there ought not to be any waiving of the legal, strict rules of interpretation by the arbitral tribunal except when the parties authorise otherwise. This role, also enforceable by arbitrators, is important as it discourages use of extra legal arbitration, minimizing arbitrariness in dispute resolution. As noted in the Orion Espanola De Seguros vs. Belfort Maatshappy Voor Algemene Verzeekgringeen case, only a recognizable and fixed law system ought to be applied.
6.7 The Roles as Imposed by Parties in the Arbitration Agreement
Arbitration agreements might be drafted prior to a dispute or when a dispute is already at hand. This means that there is really no specified time for drafting an arbitration agreement – it all depends on the parties involved. Ad hoc arbitrations proceedings are designed to suit a specific dispute, and parties generally tend to prefer it. However, institutionalized arbitration agreements are designed before any dispute emerges and are entered as compulsory arbitration clauses in the laws of firms. Under such cases, the parties to a dispute are expected to adhere to the provisions in the arbitration clause. However, these disputing parties might require specific agreements to be added or removed to the agreement, meaning that arbitrators must be careful to follow what is required by the parties. It means an arbitrator will have to perform duties imposed by the parties to a dispute – and all this is very important if the award is going to be acceptable to all parties.
Sometimes, parties to a dispute might impose duties on an arbitrator even before the arbitrator is appointed, in which case the arbitrator must have to carefully review the roles one is expected to play before committing oneself to act in that capacity. Quite often than not, organizations that have an arbitration clause in their bylaws usually predetermine the roles that an arbitrator has to play. They duly require, in the event of a dispute, that the arbitrator abides by the provisions in the arbitration agreement. On the other hand, the parties embroiled in a commercial dispute might require that arbitrators adhere to certain rules formulated after the arbitrator has been appointed. In such circumstances, the arbitrator is expected to be part of the agreement setting process so that any role expectations that one finds hard to perform is discussed further; and if one still finds it impossible to perform that role then one must disqualify oneself from being an arbitrator. For instance, parties might require that the Chair of an arbitration tribunal must not be in any way a holder of any position in either of the disputing firms. In essence, the Chair must be neutral. So, any arbitrator appointed as Chair of an arbitration tribunal must ensure that that neutrality is maintained at all times during the process of arbitration. Otherwise – in case there are vested interests – one must not Chair such a tribunal.
As is clearly implied in the case of AT&T Corporation v Saudi Cable Co, the arbitration tribunal’s Chair is a very important personality. In this particularly case, the award issued was contested by the non-prevailing party because the Chair of the arbitration tribunal was allegedly associated with the prevailing side. In essence, the non-prevailing side felt that by having a Chair that had vested interest in the dispute effectively eroded the very principle of neutrality by which all arbitrators ought to abide.Therefore, arbitrators are bound by duty to follow every provision in the agreement or else they must choose to abstain.
Having said that, it is very important, even courteous, for parties to have the arbitrator informed about any new roles which they want the arbitrator to undertake. Lack of information or misinformation might work against both parties if not one of them and so compromise the outcome of the arbitration. But more importantly, every arbitrator appointed must prove one’s capability and openly disclose it before agreeing to take up on the role. Arbitration processes are high-stake processes and failure on the part of an arbitrator will go a long way in affecting international commercial activities.For instance, an arbitrator must not seek or even attempt to conceal any information that might be important to the parties. Any concealment of important information erodes the trust that parties have in the process and so in its outcome.
6.8 Ethical Roles
Being a quasi-legal process, arbitration requires that ethics be maintained at all times. Arbitrators have to ensure that this happens because moral and ethical issues are very important. In fact some arbitrators, especially the institutionalized ones, have designed their own code of ethics to ensure that parties are treated ethically and morally. This is a very important role because without ethics being incorporated in such heated disputes there would be the risk of disagreements and endless legal battles.
Arbitration plays a very important role in international dispute resolution. This is largely because commercial disputes have tended to be better resolved in a quasi-legal manner as opposed to strictly legal processes that are not only costly but also time-consuming. The role that arbitrators play in international commercial disputes has increasingly become important in the recent times. While each dispute is unique in its own way, arbitrators have had to grapple with certain issues that keep recurring, giving them roles that are rather standardized. In arguing that arbitrators play a very important role in international commercial disputes, this paper attempts to bring out the roles that arbitrators play, roles that have made arbitration what it is now – not only a cheap, faster, and confidential alternative to litigation but also a real effective means of resolving commercial disputes and enhancing cooperation between the parties so that there is continuity of their business relationship.
These important roles played by arbitrators have their origins in three main areas: the role of arbitrators as imposed by applicable law or rules; the roles as imposed by parties in the arbitration agreement; and ethical roles. These roles include ensuring neutrality, independence, and impartiality; disclosure of information; effective dispute resolution through valid award rendering; conducting arbitral proceedings; adopting procedures suitable for the specific case; and ensuring fairness and expediency. Others are maintenance of confidentiality; circumstantial choice of the language to be used; communication of expert report; ensuring ex aequo et bono or as amiable compositeur; and upholding ethics during the arbitration process. All these are very important and suffice to underscore the significant role that arbitrators play in internal commercial dispute resolution.
Over the years the role of arbitrators has evolved as the number of commercial disputes continued to increase and the assembly of arbitrators continued to swell. International arbitrators have metamorphosed in to a group who are experts in arbitration procedure and theory. The service they render has to be professionalized. They are the patrons of a system that is indispensable for the growth of international trade. Stipulating the role of arbitrators will promote legitimacy of the system critically impacting the global economy. It is more desirable that parties, arbitrators and professional organisations should clearly give expression to what sort of conduct is expected of international arbitrators and endow with incentives to avoid inapt behaviour. This way it will be possible to promote the ultimate objective of promoting justice, integrity of dispute resolution mechanism with critical international application.
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