Fine tuning the Arbitral process

Vinayak Pradhan discusses the importance of minimizing time and expense of arbitral proceedings.

 

 

Court delays have been one of the vaunted reasons for parties to resort to arbitration. It is ironic therefore that there are innumerable accounts of delays and never ending arbitrations, with attendant cost implications. That brings this wonderful system of private dispute resolution into disrepute and jeopardy, as many people who have lost faith in the process would discourage others from attempting arbitration to save them from undergoing a similar experience.

 

 

 

TIME

It is always important for arbitrators to keep in mind the considerations of achieving a speedy resolution of the dispute and giving both parties full opportunities to be heard before a result is announced. There are however ways in which arbitral processes can be moved along at a quicker pace without sacrificing the obligation to do justice in accordance with the law. Those who have had experiences in international arbitrations comprising tribunals of three arbitrators conducted under international institutional rules and involving expensive counsel from various parts of the world know that the process in those arbitrations is far quicker than that in domestic arbitrations. This again is ironic because, at least in terms of accommodating various diaries, it should be possible to fix domestic arbitrations at earlier dates far more easily than international arbitrations.

 

Delays, of course are caused by factors, which are unavoidable and perfectly understandable. When both disputing parties want the process suspended because they are attempting to resolve it themselves, arbitrators should not concern themselves about the delay in any final resolution of the dispute. The autonomy of the parties in this regard must be respected as it is their interests and not the arbitrator’s that must be paramount. Again, factors such as sudden illnesses, urgent appearances because of unforeseen notices from superior courts requiring the presence in court, on the days fixed for the arbitration, of participants in the arbitration are justifiable reasons for deferments.

 

On the other hand, delays caused by a recalcitrant party aided by unscrupulous lawyers moving for postponements on the flimsiest of excuses and then moaning, when postponements are not granted, of the unfairness of the process and a lack of opportunity to be heard, are to be deprecated and not countenanced.

 

 

 

THE ARBITRATOR AS CASE MANAGER

There is a growing tendency for arbitral tribunals, while ultimately respecting party autonomy, to be proactive case managers rather than non-interfering common law arbitrators. Directions for the progress of the arbitration are more detailed with a greater emphasis on extensive pre-hearing written presentations. Some of the techniques now utilized to speed up the process including exchanges of witness statements and responsive witness statements, executive summaries of witnesses’ evidence, live note transcription services, early delineation of issues and limited time or “chess clock” hearings. In addition, witness conferencing including the “hot tubbing” or forced inter-action of experts can expedite the process.

 

With respect to matters of procedure, it is sometimes sensible to give the Chairman of a panel of three or more arbitrators the general power to make procedural decisions except when both parties specifically require the entire tribunal to deal with the same or where the Chairman feels that this is necessary. Indeed, in Malaysia, this is given statutory support through sec. 31(2) of the Malaysian Arbitration Act 2005 which provides as follows:

 

 

Where so authorized by the parties or by all the members of the arbitral tribunal, questions of procedure may be decided by the presiding arbitrator.

 

Arbitrations under the auspices of the International Chamber of Commerce (“ICC”) are helped by the requirement to settle the Terms of Reference in accordance with Article 18 of the ICC Rules. The Terms of Reference require the issues to be listed early in the process and helps focus the parties’ and the arbitrators’ minds on the matters in dispute from this early stage. The list of issues also provides a useful check list at the time of the drafting of the Award.

 

 

 

COSTS

 

Quite apart from the control of costs after the reference to arbitration, cost control can be exercised the time the arbitration agreements are entered into. Well drafted arbitration clauses providing for particular institutional arbitrations, procedural rules, appointment of arbitrators, venue, choice of law and other matters will avoid disputes as to these later.


 

Recent developments include the more difficult concept of capping the costs of proceedings. In this regard, sec. 65 of the English Arbitration Act 1996 gives the tribunal the power to cap costs. This power, which can be excluded by an agreement to the contrary by the parties, enables the tribunal to encourage parties to exercise restraint and to avoid unnecessary expense by imposing an upper limit on the recoverable costs.

 


 

CONCLUSION

 

Increasing expenditure of time and cost issues in arbitrations has inevitably led to increasing awareness of these factors as crucial issues to be addressed by the arbitration community. With this has come the recognition that the mere disposal of the disputes referred is no longer the sole, or even the paramount, objective of the arbitral process.  Instead, the manner in which the disputes are resolved, notably the efficiency of otherwise thereof, is a matter of equal, or sometimes greater, concern.

 

 

Whilst in an ideal world it will be the task of all stakeholders in the arbitral process to co-operate in achieving these ends, the inevitable desire of the parties and their representatives to secure the most favourable outcome to themselves (and one not necessarily linked to the eventual resolution of the dispute) makes it incumbent on those sitting as arbitrators to take the lead in devising, promoting and implementing measures to control time and costs. To achieve this beneficial end they must be fully appraised of the extent (and more importantly the limits) of their powers under the Arbitration Act 2005 to control the course of the proceedings. At the same time they must remain sufficiently sensitive to the desires of the parties so as not to jeopardise their trust in the achievement of a just outcome, yet sufficiently robust to give short shrift to the adoption of positions which will have time and cost implications disproportionate to any benefit in terms of fairly resolving the dispute. This is a daunting burden, but one which Malaysian arbitrators must not merely accept, but actively embrace, if arbitration as a system of dispute resolution is not to collapse under the sheer weight of its own cumbersome processes.

 


 

VINAYAK P. PRADHAN ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it )

 

 
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