Unit 4 - ADR

Question 1

‘arbitration claim’ means

Answer 1

(a) any application to the court under the 1996 Act;
(b) a claim to determine –
(i) whether there is a valid arbitration agreement;
(ii) whether an arbitration tribunal is properly constituted; or
what matters have been submitted to arbitration in accordance with an arbitration agreement;
(c) a claim to declare that an award by an arbitral tribunal is not binding on a party; and
(d) any other application affecting –
(i) arbitration proceedings (whether started or not); or
(ii) an arbitration agreement.

Question 2

Arbitration - Starting the claim

Answer 2

(1) Except where paragraph (2) applies an arbitration claim must be started by the issue of an arbitration claim form in accordance with the Part 8 procedure.
(2) An application under section 9 of the 1996 Act to stay legal proceedings must be made by application notice to the court dealing with those proceedings.
(3) The courts in which an arbitration claim may be started are set out in Practice Direction 62.
(4) Rule 30.5 applies with the modification that a judge of the Technology and Construction Court may transfer the claim to any other court or specialist list.

Question 3

(1) An arbitration claim form must –

Answer 3

(a) include a concise statement of –
(i) the remedy claimed; and
(ii) any questions on which the claimant seeks the decision of the court;
(b) give details of any arbitration award challenged by the claimant, identifying which part or parts of the award are challenged and specifying the grounds for the challenge;
(c) show that any statutory requirements have been met;
(d) specify under which section of the 1996 Act the claim is made;
(e) identify against which (if any) defendants a costs order is sought; and
(f) specify either –
(i) the persons on whom the arbitration claim form is to be served, stating their role in the arbitration and whether they are defendants; or
(ii) that the claim is made without notice under section 44(3) of the 1996 Act and the grounds relied on.
(2) Unless the court orders otherwise an arbitration claim form must be served on the defendant within 1 month from the date of issue and rules 7.5 and 7.6 are modified accordingly.
(3) Where the claimant applies for an order under section 12 of the 1996 Act (extension of time for beginning arbitral proceedings or other dispute resolution procedures), he may include in his arbitration claim form an alternative application for a declaration that such an order is not needed

Question 4

Stay of legal proceedings

Answer 4

(1) An application notice seeking a stay of legal proceedings under section 9 of the 1996 Act6 must be served on all parties to those proceedings who have given an address for service.
(2) A copy of an application notice under paragraph (1) must be served on any other party to the legal proceedings (whether or not he is within the jurisdiction) who has not given an address for service, at –
(a) his last known address; or
(b) a place where it is likely to come to his attention.
(3) Where a question arises as to whether –
(a) an arbitration agreement has been concluded; or
(b) the dispute which is the subject-matter of the proceedings falls within the terms of such an agreement,
the court may decide that question or give directions to enable it to be decided and may order the proceedings to be stayed pending its decision.

Question 5

The commentary on s9 of the Arbitration Act 1996

Answer 5

• “party” to an arbitration agreement against whom “legal proceedings are brought… in respect of a matter which under the agreement is to be referred to as arbitration” who may apply under s9(1) for a stay of such legal proceedings
• Party includes “any person claiming under or through a party to the agreement”

Question 6

S9 does not apply if the parties to the court proceedings are not the parties (or persons claiming through or under a party) to the arbitration agreement

Answer 6

it would be wholly inconsistent with the purpose or structure of the party to the agreement

Question 7

• Difficulties can arise based on arbitration agreement

Answer 7

o If one gives jurisdiction to the court and the other refers to disputes in arbitration

Question 8

“or after he has taken any step in those proceedings to answer the substantive claim”

Answer 8

• Application cannot precede the taking of the appropriate step if any to acknowledge the legal proceedings
  o The application must be made before taking any step to answer the substantive claim

Question 9

Onus of showing that claim should proceed

• It rests on C to show the dispute ought not to be referred to arbitration
• Two jurisdictional threshold:

Answer 9

1. Whether there is concluded arbitration agreement
2. Whether the issue in the proceedings is a matter which under the arbitration agreement is to be referred to arbitration

Question 10

what is arbitration

Answer 10

• Involves an impartial arbitrator or tribunal considering both sides of a dispute and making a decision on the issues raised by the parties

Question 11

is the form of arbitration flexible

Answer 11

no = can take a wide variety of forms and can arise in a wide variety of legal contexts

Question 12

arbitration is based on an agreement between the parties to refer their dispute or difference to arbitration

Answer 12

o Agreement can be made before/after the relevant dispute has arisen

Question 13

Fundamental concepts in arbitration
- Governed by Arbitration Act 1996
- Subject to three general principles

Answer 13

a. The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense;
b. The parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest; and
c. … the court should not intervene except as provided by the Arbitration Act 1996

Question 14

Where the parties have agreed to refer their dispute to arbitration, that implies that they want their dispute decided:

Answer 14

o By a tribunal they have chosen
o In a neutral location (this is of particular importance in international arbitration) and with neutral arbitrators
o In privacy;
o Speedily and efficiently; and
o With light but efficient supervision by the courts

Question 15

In order for there to be an effective reference to arbitration, the following requirements must be met:

Answer 15

o There must be a dispute or difference;
o The dispute must be ‘arbitrable’. This means there needs to be a private law dispute capable of being determined within the limits of a private contractual process, rather than a dispute relating to public or legal status;
o There must be an agreement to arbitrate;
o For the Arbitration Act 1996 to apply, the agreement to arbitrate must be in writing;
o The nature of the dispute must come within the terms of the arbitration agreement;
o Any contractual condition precedent to arbitration must be complied with;
o The parties must find an arbitral tribunal willing to act and decide the dispute; and
o The dispute must come within the terms of the particular reference to arbitration

Question 16

• Any dispute can be referred to arbitration
  o This is often used to resolve disputes arising out of a contract with agreement to arbitrate being found in a clause in the substantive contract – often four contracts:

Answer 16

 The underlying substantive contract on which the dispute is based (the substantive contract)
 The agreement to arbitrate, which is separable from the substantive contract
 The agreement between the parties and an arbitral institution referring the dispute to arbitration under aegis of that institution. Often the parties agree that the institution’s arbitration rules will apply to the arbitral proceedings; and
 Agreement(s) appointing the arbitrators, made between the parties and/or the arbitral institution and the individual arbitrators. There is an implied term in this contract that the arbitrator will act fairly and impartially

Question 17

Mandate of arbitral tribunal

Answer 17

• Depends on the mandate given to it by the parties
• Will not have juris unless the dispute comes within the terms of the particular reference to arbitration
• Limited by the terms of the arbitration agreement + separate agreement between the tribunal and parties appointing the tribunal
• Decision cannot be made against a person who is not party to the arbitration agreement, or on matters not covered by the arbitration agreement

Question 18

Stay of legal proceedings

• To prevent a party from breaching an agreement to arbitrate by bringing court proceedings, Arbitration Act 1996, s9(1) allows a stay of court proceedings

Answer 18

• This imposes a halt on the legal proceedings and in practical terms usually has the consequences that the dispute will be referred for final determination by arbitration

Question 19

test for stay of legal proceedings for arbitration

Answer 19

Test = is the dispute raised in litigation is a matter which arbitration agreements refers to arbitration.

If so = court shall grant stay, unless if court is of the view that agreement is;
o Null;
o Inoperative; or
o Incapable of being performed

Question 20

arbitration: who picks the arbitrators?

Answer 20

Parties are free to agree on the procedure for appointing the arbitrator or arbitrators, including the procedure for appointing the chairman or umpire

Question 21

Procedure - arbitrator

Answer 21

Complexity will depend on what parties have agreed

Overall aim = to reach fair resolution of the dispute without unnecessary delay or expense

In absence of agreement = bound by rules within Arbitration Act 1996

Question 22

Preliminary meeting - arbitration

Answer 22

• Will be convened shortly after the tribunal is appointed
• It is an opportunity for the parties and arbitrators to meet, but its main purpose is as a forum for the tribunal to discuss jurisdictional matters and to make procedural directions for the preparation of the evidence needed for deciding the reference

Question 23

Preliminary meeting - arbitration - Procedural matters to be considered =

Answer 23

o Decide all procedural/evidential matters that have been referred to it;
o When and where to hold the proceedings;
o The languages to be used and whether translations are required;
o Whether written points of claim and defence will be used, and their form;
o Whether documents should be disclosed and produced, and at what stage;
o Whether to apply the strict rules of evidence;
o Whether expert evidence is required, and the time, manner and form in which such evidence should be exchanged and presented;
o Whether the tribunal should take the initiative in ascertaining the facts and the law; and
o Whether and to what extent should there be oral or written evidence or submissions

Question 24

Pre-trial hearing/conference - arbitration

Answer 24

If complex = may be sensible to hold this

Normally take place a number of weeks before the expected start of hearing

Question 25

Pre-trial hearing/conference - arbitration = main purpose

Answer 25

o review what has been done in preparation for the hearing
o to assess whether the parties are going to be ready for the hearing; and
o to make decisions

Question 26

no right to an oral hearing - arbitration

Answer 26

• tribunal can decide whether and to what extent there should be oral or written evidence or submissions
• arbitrators have power to proceed without a hearing

Question 27

closing of proceedings - arbitration

Answer 27

• set by arbritrators
• after this, usual stance = no further evidence or submissions can be given to the tribunal

Question 28

arbitration - privacy?

Answer 28

private + confidential

Question 29

four types of awards and orders that are available to arbitrators namely:

Answer 29

o procedural orders – provide procedural direction and measures designed to preserve evidence or the subject matter of the dispute
o interim awards and awards on different issues – finally dispose of one or more of the substantive issues in the arbitration, leaving the other issues to be decided later
o final awards – finally disposing of the arbitration
o costs awards – provide the payment of the costs incurred in the arbitration between the parties

Question 30

is the award binding

Answer 30

yes

once award is made = normally binding

Question 31

Enforcement of awards

Answer 31

domestic arbitral award may be enforced by either bringing an ordinary civil claim on the award in the HC or by using summary procedure via Arbitration Act 1996, s66(1)

• allows court to grant permission to enforce an award of an arbitral tribunal in the same manner as a judgment or order of the court
  o via arbitration claim form in the HC, app without notice

Question 32

cross-border enforcement of arbitral award?

Answer 32

o usually achieved through New York Convention 1958
o applies to awards made in the territory of a state other than the state where recognition and enforcement of such awards are sought
o to seek the enforcement of this, party must procedure the duly authenticated original award or a duly certified copy, and the original arbitration agreement or a duly certified copy
o where permission is given, judgment may be entered in terms of the award

Question 33

appeals of arbitral awards

Answer 33

limited grounds for seeking JR of arbitral awards

Question 34

under s68, it is possible to challenge arbitral awards on the grounds of:

Answer 34

o serious irregularity
o unless the parties agree to exclude the right
o point of law

Question 35

Expert or neutral determination - what is it?

Answer 35

process in which an expert is appointed to make a determination on the issues referred to him or her by the appointing parties

Question 36

Expert or neutral determination - is an expert always needed

Answer 36

no

o in appropriate cases, the parties can agree that the determination is carried out by an independent third party, or even by a panel consisting of a number of neutral third parties and a lawyer

Question 37

final binding determination in Expert or neutral determination = cannot be reviewed or appealed

Answer 37

o if not expressly recorded in the contract, court can imply such a term
o can be agreed to be binding for some time
o contact may provide for some exceptional circumstances in which the determination can be challenged, such a manifest error on the part of the expert

Question 38

Expert or neutral determination = Not subject to supervision of the court

Answer 38

o court may be involved if a dispute arises to the jurisdiction of the expert, or one or both parties wish to challenge the determination
o a court order may also be necessary if there is a need to enforce the determination in the event of non-compliance by one party

Question 39

is Expert or neutral determination the same as expert evidence?

Answer 39

no

not to be confused with rules under part 35 about expert evidence o	expert = decision maker, not an expert

Question 40

Cases suitable for expert determination

Answer 40

• useful for determining cases of highly technical nature
• can be used in a wide range of commercial cases, eg:
  o rent reviews
  o company
  o Asset
  o Share valuations
  o Construction disputes
  o Real property dispute
  o Land valuation
  o Energy disputes

Question 41

Contractual nature of expert determination

Answer 41

Used in advance in the underlying contract between them to use expert determination to resolve a specified or any dispute arising out of the contract

A separate contract is formed between parties + expert when referred to the appointed expert for determination

Question 42

expert determination: the procedure that is typically agreed will provide for each party to send to the expert:

Answer 42

o Written submissions setting out their case on each of the issues
o Copies of all relevant documents (the parties should cooperate to produce an agreed bundle of documents if possible)
o In some cases, the parties may agree that the parties or their lawyers should make submissions at a meeting or hearing and, although this is usually not required, the attendance and cross-examination of witnesses
o The parties may also agree that the expert can conduct his or her own lines of inquiry

Question 43

expert determination: is the decision binding:

Answer 43

• Parties will usually agree that the decision will be binding on them
• The court will uphold the decision, unless there are grounds for setting it aside
• Not an award

Question 44

Ignoring an expert determination clause

Answer 44

ED Clauses, if clearly and unambiguously drafted = will be upheld by the court

Question 45

If one party refuse to comply with ED clause =

Answer 45

other party may be entitled to damages

Question 46

Court will prevent applications for pre-action disclosure used maliciously with ADR processes

Answer 46

Especially in cases where the parties agreed by the terms of the contract between them to refer any disputes arising out of or connection with subject matter of the agreement for ED

Question 47

Applications to stay court proceedings pending expert determination - has the court have this power?

Answer 47

yes - Court has power to stay court proceedings issued by a party who failed to use the contractually agreed machinery in the contract to determine the dispute

o Burden on party who disagree with stay to show grounds why the claims should not be stayed

Question 48

Applications to stay court proceedings pending expert determination

o Court to consider:

Answer 48

 whether the agreement creates an enforceable obligation requiring the parties to engage in expert determination, including machinery for appointing the determiner, without requiring any further agreement by the parties
 the extent to which the parties have complied with the requirements in any pre- action protocol
 whether the dispute is suitable for determination by the ADR process the parties have contractually agreed to use;
 the costs of that ADR process compared to the costs of litigation;
 whether the dispute could be resolved more quickly by court proceedings than by requiring the parties to use the contractually agreed ADR machinery#
 whether a stay would accord with the overriding objective;
 whether an element of the claim was not subject to expert determination so that the proceedings relating to that part could not be stayed, and having parallel litigation and expert determination proceedings is likely to increase costs and time, and be contrary to the interests of justice
 In exercising its discretion to stay proceedings the court will have regard to the public policy interest in upholding the parties commercial agreement and furthering the overriding objective in assisting the parties to resolve their dispute. There is a strong Public policy in favour of enforcing ADR provisions and encouraging parties to attempt to resolve their disputes without litigation.

Question 49

Grounds for challenging the decision following expert determination =

Answer 49

• Court will give primary consideration to the terms of the contract
• If both parties agree to ED + ED has done exactly what he was meant to + agreement binding + final = generally cannot be challenged

Question 50

Grounds for challenging the decision following expert determination =

Procedure for making a challenge

Answer 50

Will usually be made by issuing part 8 proceedings

Part 8 can also be made in advance of an expert determination to decide any disputes about the interpretation of the expert determination clause or to resolve disagreement about matters that should be referred to the expert pursuant to the clause

Question 51

Enforcing an expert determination decision

Answer 51

Decision reached by expert/neutral determination cannot be enforced like a court decision

but failure to honour decision = breach of contract + proceedings can be issued