Avoid unnecessary delay and expense
Fine words, you might think, but a positive obligation is placed on arbitrators to "adopt procedures ... avoiding unnecessary delay and expense ..." and the whole principle of arbitration is laid down as "... the fair resolution of disputes ... without unnecessary delay or expense ...". While arbitrators have legal immunity for their actions they nevertheless can be made accountable before a court for their fees. In our view an arbitrator who has allowed the delay and expense of an arbitration to run up the costs to the parties may well find that, following application from a disgruntled party, a court will make a reduction to his fees.
An arbitrator is not powerless in the face of delay and expenditure by the disputing parties who are contravening the principles of arbitration. The arbitrator can give directions. A party who is a little late in complying with a direction is probably safe from a sanction but for "inordinate and inexcusable delay" or "without showing sufficient cause" they may find that the arbitrator has gone ahead without them and come to his conclusion on the basis of the evidence he has received and made his award. As always, the mere possibility of the arbitrator using these powers will be enough to keep the other party on their toes.
Limiting recoverable costs.
The arbitrator's powers to limit the recoverable costs in an arbitration are commensurate with the principle of no responsibility without authority. While an arbitrator cannot be capricious and must obviously take the nature of the circumstances of the dispute into account he may direct that there is a cap on the costs that may be recovered by the winning party in an arbitration. There is nothing to stop a party spending as much as they like on promoting their case but the losing party need not be afeared that he will be asked to pay more than the amount of the cap.
Bear in mind that an arbitrator has to use his capping powers to meet his general duty to avoid unnecessary expense. He is immune from suit if he does not use these powers when a party thinks he should have. However he is vulnerable to an order from the court reducing or eliminating his fees on account of a bad job done in not meeting his statutory responsibilities. A wise arbitrator will be directing parties to declare how they intend to run an action so that he can limit costs "to a specified amount ... sufficiently in advance of the incurring of costs ... for the limit to be taken into account." An arbitrator also needs this information in order to meet his responsibilities of "avoiding unnecessary delay".
Agreeing out appeals to the court
"The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense." We would expect the parties to agree that the arbitrator does not have to give reasons for his award and there is then no possibility at all of an appeal to the courts. There can be no doubt that the buck can be made to stop at the arbitrator so choose him wisely.
Appeals to the court can be excluded to the point that the parties can have the arbitrator decide the dispute according to such other considerations than the law as they are able to articulate. We postulate as an example a somewhat vague "Principles for the sharing of risk" document agreed by the parties before there was any sign of a dispute. But telling the arbitrator "to hell with the law, just be fair" would do just as well. Be warned, the parties CAN agree to go outside the law but then they are putting all their trust in the arbitrator.
A fair balancing and consideration of the evidence is at the heart of an arbitrator's task in reaching his conclusions. Fair consideration involves unnecessary delay and expense when the weight of evidence is given its meaning as avoirdupois rather than relevance. For this reason the arbitrator is given control over what is to be put before him as evidence. The requirement on arbitrators to "adopt procedures suitable for the circumstances of a particular case" quite rightly prevents us presenting preconceived notions. However, delay and expense are both time related so "time required to assimilate" would appear to be a good starting criteria for an arbitrator in selecting procedures. Beyond that it is for the parties to put their most relevant evidence first and then the arbitrator can start avoiding unnecessary delay and expense when the evidence ceases to advance the matter.
Once a dispute resolution process is in train it is imperative to add all the feathers of minor disagreements. To do so is essential as most disputes settle using time honoured words such as "full and final settlement of all claims" and feathers blowing in the wind that were never claims are still there to be fought over on another day. When it comes to a court trial or an old style arbitration every feather becomes a battle in a war for which deuce is the inevitable final score. One important feather not to be forgotten is simple or compound, yes compound, interest. An arbitration is the only place where compound interest may be awarded in England.
State your case.
It would not be right for arbitrators to be able to determine the issues over which the parties are to do battle. However, arbitrators can determine whether the issues are covered by the arbitration agreement and how the battle is to be joined, ie matters in issue stated and the various ripostes that may be made. As the arbitrator has to decide the issues and probably knows the terrain well it becomes a procedural matter for him to decide the form in which statements of claim, if any, are to be presented. As it may well cost as much or more to decide featherweight issues the arbitrator has a responsibility to guide the parties so that they can be of greatest assistance to him within the time and cost constraints laid down in the statute.
A reading of the Arbitration Act 1996 makes clear the wide scope of procedures that may be followed by parties in an arbitration. The procedures are set out in defaults which the parties may override if they agree on alternative arrangements. Our own view is that the procedures in the Act are set out in a clearer way than most instruction manuals. On a scale of one to five the Act would rate a four.
In almost all matters of a procedural nature the "parties are free to agree" some other arrangement if they wish. In practice of course parties do not agree to one another's suggestions when a dispute arises because of the "they wouldn't have suggested it if it wasn't to their advantage, would they?" syndrome. Within the defaults there is scope for fashioning almost any dispute resolution procedure that even the most protective lawyer can devise. We would forecast the end of the so-called "expert determination" process because its sole advantage will be that it has become about the only dispute resolution process where it will be possible to bring the like of an arbitrator into a court action as a delaying tactic. The Arbitration Act 1996 sets out a flexible dispute resolution process that is there to be exploited for the benefit of disputing parties, for the benefit of arbitrators and for the benefit of lawyers who are prepared to come to terms with the new law. Make no mistake about it, responsibilities and authorities have been changed by the new statute and it will be uncomfortable for the few who do not notice.
There are two final points that need to be mentioned for the avoidance of doubt. Schedule 1 of the Act lists mandatory provisions. However, in our view none of these mandatory provisions is in any way onerous or undesirable. We take as an example the mandatory provision regarding the action to be taken in the event of the death of an arbitrator. The mandatory provision just says to repeat the process used to appoint the first arbitrator and only if that fails ( only mark you) then the court has a residual power. The other point is that an arbitration under the Act has to have a "judicial seat". This does not mean that the arbitration or anything else has to take place at the "judicial seat". The location of the "judicial seat" will only, repeat only, matter in the international enforcement of arbitral awards where certain countries require awards to be in relation to a judicial seat before they can be enforced. We foresee large numbers of arbitral awards saying that the arbitration was seated in London to no practical effect whatsoever. The reason for the requirement that a "judicial seat" be named in domestic arbitrations is to avoid there being any difference between domestic (all English parties), intra EU and wider international awards.
New legislation always presents opportunities to be exploited. For good or bad and for whose benefit only time will tell. The Arbitration Act 1996 was six years in the making and is probably the most unrestricting user-friendly legislation ever passed by the UK Parliament. The Act means that the English and Welsh have turned the table on the Scots, who have always had superior domestic arbitral procedures, perhaps because theirs is based on laws passed before the Union with England. Let the new benefits of dispute resolution by arbitration now flow through to the business community. Disputes no longer need be a nagging drag on business activity but can and must be actively managed just like any other enterprise. There is money to be made or saved in the use of the new Arbitration Act.