ROLE OF ARBITRATOR IN FINALISING THE ARBITRATION AGREEMENT
Project Report submitted to Professor Mr. V. Inbavijayan.
(Faculty: ADR )
Project submitted by MANO !"MAR.A
Semester VIII Section-B
THE TAMILNAD" DR.AMBED!AR LA# "NIVERSIT$ %HENNAI&'(.
ROLE OF ARBITRATOR IN FINALISING THE ARBITRATION AGREEMENT
Introduction The source of the jurisdiction of the arbitrator is the arbitration clause. The arbitration clause is normally a part of the main contract governing the parties. An arbitration agreement on the other hand constitutes a separate agreement, distinct from the main contract, and is binding on the parties. Parties can, even after the disputes have arisen, agree to have their disputes referred to arbitration. The agreement, however, must be in writing. Although contracts are required to be signed by the parties, arbitration clause need not be signed by the parties. An arbitration clause is binding if the parties have given their express or implied or tacit consent to refer the disputes to arbitration. Subject to the law of limitation, parties can refer their disputes to arbitration any time. The Arbitrator while dratng an Arbitration agreement ta!es into account the several para meters for smooth fuctioning of the process. "e plays a !ey role in drafting and constructing the Arbitration agreement. The following are essential attributes Arbitration Agreement An arbitration agreement is collateral to the substantial stipulation of the contract. #t is merely procedural and ancillary to the contract and it is a mode of settling the disputes, though the agreement to do so is itself subject to the discretion of the court. #t is distinguishable from other clauses in the contract. $egal Advice %o part of this &uidance %ote should be ta!en as legal advice. 'ou should see! legal advice when adopting the sample arbitration agreement or clause so that they can be tailored to your particular scenario.
(uties #mposed by Parties in the Arbitration Agreement The parties may impose specic duties on the arbitrator either in the arbitration agreement or in any subsequent agreement. Such duties may be imposed either before the arbitrator is appointed or after her appointment. #t is important for a prospective arbitrator to loo! carefully at the agreement to ascertain whether it contains duties that she may not be able to full in the event that she is appointed arbitrator. As a matter of courtesy, parties should consult the arbitrator prior to the imposition of any additional duty after appointment. )here the arbitrator nds that she is unable to perform such a duty and the parties insist on its performance, the arbitrator may have to o*er her resignation. Powers of Arbitrator Section + lays down the powers of arbitrators or umpire. #t is subject to the agreement of the parties. -ut they cannot be compelled to exercise those powers. This section is applicable to statutory arbitration as well. The various powers are as under /+0 To administer oath to parties and witnesses appearing before him1 /20 To state a special case for the opinion of the court on any question of law or state the award in the form of a special case for the opinion of the court1 /0 To ma!e the award conditional or in the alternative1 /30 To correct in an award any clerical mista!e or error arising from any accidental slip or omission1 /40 To administer any party interrogatories. Power of Arbitrator to Dee!ate "is Duties The Arbitration and 5onciliation Act, +667 does not ma!e any special reference as to the power of arbitrator to delegate his duties in a proceeding. "owever, under Sec.7 of the Act reference has been made as
to the ta!ing of Administrative Assistance in an arbitration proceeding. Along with this, under Secs.27 and 28, an arbitrator has been empowered to
see!
assistance
from
experts
and
from
the
court.
Section#$ Of t"e Act% 9#n order to facilitate the conduct of arbitration proceeding, the parties, or the arbitral tribunal with the consent of the parties, may arrange for administrative assistance by a suitable institution or person.: This section provides freedom to the parties to choose suitable experts in arbitration as and when required to facilitate smooth conduct of the arbitration. #n the context of Sec.7 9administrative assistance: includes services in respect of arbitration such as receiving and sending communications, arranging meeting, translation, interpretation etc. Ree&anc' of O(inion of E)(ert in a dis(ute% Secs.34;4+ of the #ndian
that
9)hen the court has to form an opinion upon a point of foreign law or of science or art, or in questions as to identity of handwriting or nger impressions, the opinions upon that point of persons specially s!illed in such foreign law, science or art, or in questions as to identity of handwriting or nger impressions are relevant facts. Such persons are called experts.: To ta!e the assistance from experts in solving an issue has been an old tradition of the courts. #n some matters, there is need of professional or technical s!ill which the courts do not always possess. So in such cases the opinion of experts becomes crucial. As for example, when the court has to determine the cause of a ship;wrec! or an air;crash, there may be many technical causes behind it and, therefore, the court will need the assistance acquainted
of technicians, they being better with
such
cases+
The above section permits only the opinion of an expert to be cited in +. =olo!es v. 5hadal, /+8>20 (oug. ?.-. +48
evidence. The weight that ought to be attached to the opinion of an expert is a di*erent matter from its relevancy. The Act only provides about the relevancy of expert opinion but gives no guidance as to its value. "owever, it is settled legal position that ordinarily an expert opinion needs no corroboration, it cannot be treated to the same class of evidence as that of an accomplice and insist upon corroboration2 An expert should be an independent person and not an associate of the company in whose favour his opinion was expressed Section.37 of the #ndian 82 provides that facts, not otherwise relevant, are relevant if they support or are inconsistent with the opinions of expert, when such opinions are relevant. The e*ect of the provision is that when the opinion of expert is relevant and has been cited, any fact which will either support his opinion or contradict it will also become relevant. #t is to be noted that the provisions of the #ndian 82 do not apply to the arbitral proceedings in strict sense. Sec.28 of the Act @nder Sec.28 the arbitral tribunal can see! assistance of the court in ta!ing evidence by sue motu or on request of a party. The arbitral tribunal no power to issue summon to persons except the disputing
parties
in
the
arbitration.
Thus, in order to facilitate smooth conduct of an arbitration proceeding an arbitrator with the prior consent of the parties can delegate his functions to experts for their assistance in solving the dispute. The expert may be legal or a technical expert depending upon the nature of the issue to be decided. This process of delegation to experts has been well;recognised in civilised nations in suits and in arbitral proceeding. Power of Arbitrator to Punis" for *onte+(t Section 28 /40 of the Arbitration and 5onciliation Act
2 urari $al v. Stat of .P., A#B +6>C S5 4+ Bamnathan v. State of Tamilnadu, A#B +68> S5 +2C3
The decisions of the Supreme 5ourt fail to ta!e notice of Section 28 /40 of the Arbitration and 5onciliation Act, which expressly confers the power on the arbitral tribunal to punish for its contempt. Section 28 /40 species that 9Persons failing to attend in accordance with such process, or ma!ing any other fault, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the li!e disadvantages, penalties and punishments by order of the 5ourt on the representation of the arbitral tribunal as they would incur for the li!e o*ences is suits tried before the 5ourt:. (elhi "igh 5ourt on interpretation of Section 28 /40 of Arbitration and 5onciliation Act #n a case titled Sri ?rishan v. Anand, the (elhi "igh 5ourt was seiDed of the question whether a whether a petition under Section 6 of the Arbitration and 5onciliation Act would lie for the same interim measure which has already been granted by the arbitral tribunal under Section +8. The petitioner had sought to justify the petition under Section 6 on the ground that orders passed by an arbitral tribunal are toothless and unenforceable. T"e Arbitrators "a&e no Power% • • • •
To allow withdrawal of the reference To receive or realiDe monies Alter the terms of arbitration agreement Award damages otherwise than in accordance with law.
Duties of Arbitrator +. (uty to follow rules of natural justice An arbitrator must observe the rules of natural justice. "e must act in a judicial manner.
"is enquiry should not be slip;shod but full and
complete. "e must give due notices and maintain proper record of the proceedings. "e ought not hear one side in the absence of the other side. Any departure from the rules of natural justice is sure to vitiate the award. 2. (uty to act fairly to both parties The arbitrator must act fairly to both parties. "e must not favor one party more than another, or do anything for one party which he does not do for another. . (uty not to delegate An arbitrator must not delegate his duties to a third person, or to a co; arbitrator. Since one who has an authority to do an act for another, must do it himself and cannot delegate to another. This rule is, however, subject to the exception that an arbitrator may delegate to another the performance of an act of ministerial character only. 3. (uty to decide according to law #t is duty of an arbitrator, in the absence of a provision to the contrary, to decide the question according to legal rights of the parties and not according to what he may consider to be fair and reasonable under the circumstances. #f an arbitrator decides honestly, through wrongly, he is not guilty of misconduct. -ut deliberate disregard of law in matters of arbitration is misconduct. 4. (uty not to exceed his authority An arbitrator cannot go beyond the scope of his authority. "e derives his authority from the arbitration agreement. "e cannot ta!e upon himself an authority which is not conferred by the submission. #f the arbitrators go beyond the scope of reference and decide a dispute not referred to them, the award is bad.
7. (uty to decide all matters referred #t is the duty of the arbitrator to decide all the matter referred to him. )here he omits to decide some of the important questions referred the award is bad. A partial award is invalid and should be remitted for reconsideration. 8. (uty to act together )hen there are several arbitrators, all must act together. The presence of all the arbitrators at all the meetings is essential to the validity of the award. Emission on the part of the arbitrators to act together amounts to misconduct. >. (uty not to accept hospitality An arbitrator should not accept hospitality from one of the parties, if the invitation is given with the intention of inducing him to act unfairly. -ut merely dining or lunching with one of the parties and his witness in the absence of other will not invalidate an award.
Arbitrators Et"ics Guideines •
The purpose of these
•
Arbitration ; either entered into voluntarily after a dispute has occurred, or as agreed to in a pre;dispute contract clause ; is
generally binding. -y entering into the Arbitration process, the Parties have agreed to accept an ArbitratorGs decision as nal. There are instances when an ArbitratorGs decision may be modied or vacated, but they are extremely rare. The Parties in an Arbitration trade the right to full review for a speedier, less expensive and private process in which it is certain there will be an appropriately expeditious resolution.
•
Ether sets of ethics guidelines for Arbitrators exist, such as those promulgated by the %ational Academy of Arbitrators and jointly by the
American
Arbitration
Association
and
the
American
-ar
Association. An Arbitrator may wish to review these for informational purposes.
•
These &uidelines are national in scope and are necessarily general. They are not intended to supplant applicable state or local law or rules. An Arbitrator should be aware of applicable state statutes or court rules, such as laws concerning disclosure that may apply to the Arbitrations being conducted. #n the event that these &uidelines are inconsistent with such statutes or rules, an Arbitrator must comply with the applicable law.
•
#n addition, most states have promulgated codes of ethics for judges and other public judicial oHcers. #n some instances, these codes apply to certain activities of private judges, such as court;ordered Arbitrations.
Arbitrators
should
comply
with
codes
that
are
specically applicable to them or to their activities. )here the codes do not specically apply, an Arbitrator may choose to comply voluntarily with the requirements of such codes.
Misconduct of an arbitrator The following is an illustrative list of what has been held to constitute 9misconduct: in the context of arbitral proceedings •
)here the arbitrator fails to comply with the term, express or
•
implied of the arbitration agreement1 )here the arbitrator ma!es an award which on ground of public
• •
• • • •
policy ought not to be enforced1 )here the arbitrator has been bribed or corrupted1 )here the arbitrator ma!es mista!e as to the scope of authority conferred by the agreement1 )here the arbitrator fails to decide all the matters referred to her1 #f the award is inconsistent or ambiguous1 )here the arbitrator breached the rules of natural justice1 )here the arbitrator ma!es an error of law that is apparent of the face of the award, but only if the point of law erroneously decided
•
was not specically referred for the decision )here the arbitrator wrongfully admits and acts on evidence
Findin!s The Arbitrator has to uphold the dignity by not ma!ing a bias towards any party and must duly serve the duty imposed on him through the agreement. Enly a competent arbitrator can be presided over and he must meet out the requirements mentioned by the parties in the agreement. The role and duties of the arbitrator and the parties relationship with the arbitrator has to be clearly dened. $i!ewise any government record which is !ept condential the arbitrator must protect the
condentiality of the parties
to the arbitration
agreement, which is a implied duty. #f the arbitrator has to see! any assistance with regard to the dispute, he can share the matter on the basis.
any arbitration proceedings are interrupted by conIict of interest, as the arbitrator fails to disclose any personal interest towards anyone of the parties which may reult in a partial decision. #n order to avoid such conIict this should be avoided. The decision with regard to the arbitration must be made in a deliberate manner and the arbitrator can ta!e as much time if he nds that the arbitration process is somewhat lagging.
*oncusion The Arbitrator has the implied duty to follow the guidelines and rules which is prescribed under the +667 Act and has a duty to be bound to the parties by whom he is appointed. To act fairly and impartially between the parties, and to allow each party a reasonable opportunity to put their case and to deal with the case of their opponent complying with the rules of Jnatural justiceJ and to adopt procedures suitable to the circumstances of the particular case, so as to provide a fair means for resolution of the dispute. As the importance of the arbitration is to avoid the interference of the court, so the arbitrator must be competent enough with that of the court and the parties while choosing the arbitrator must ensure that he act in accordance with the agreement between the parties.
