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Posted on 25-11-2019

#Arbitration At first glance, arbitration appears to be more expensive than going to court. The experts and lawyers involved do not charge less because the case is in arbitration. In addition, the parties must pay the fees and expenses of the tribunal and, if there is to be a hearing, the cost of renting of a large room for the hearing as well as a room for each party to store their documents and hold their discussions. However, in some cases, a well-managed arbitration’s flexibility can yield substantial cost savings to the parties. As well as economic efficiency, arbitration offers substantial advantages, especially in international disputes. Advantages of Arbitration Neutrality In an international relationship that has soured, neither party is eager to trust the resolution of the dispute to the courts of the former partner, now opponent. Each party suspects, rightly or not, that the opponent’s home court will offer an advantage: at the very least, familiar customs, advocates, language, and procedure. By choosing international arbitration in a neutral locale with no relationship to the parties or their circumstances, the parties create a level playing field, equally inconvenient to both, where they can expect an unbiased decision-maker and informal proceedings. Flexibility The parties and tribunal can craft a procedure to suit the circumstances of the parties and the dispute. In some cases, it makes sense to have the tribunal decide the entire case on the basis of documents. Pleadings set out each side’s version of the facts and their contentions as to the law, the issues to be resolved, and arguments in favour of each party’s case. Along with the pleadings will be evidence (correspondence, agreements, diagrams, photographs, charts, etc.) from each side. The tribunal then may decide the dispute by reading, evaluating, and analysing the documents and basing the award on them, without ever meeting the parties or their representatives. On the other hand, unless there has been a prior agreement to the contrary (including by choice of rules that do not allow a hearing) if a party requests it, the tribunal must hold a hearing.4 The hearing may be a simple half-day affair, or it may extend to several days or weeks, with opening statements, witnesses, cross-examinations, final speeches, and post-hearing submissions. If there is to be a hearing, that hearing will take place at the convenience of the parties. If they cannot agree upon the timing of the hearing, the arbitrator will decide. This is in sharp contrast to state courts. In most courts around the world, the court administrator announces that the parties’ action will be heard on a particular date (at the convenience of the court, not of the parties). The parties prepare for that date, all the while knowing that their case may not proceed as scheduled. If one’s case is second on the list for that date, and the case before it settles, all is fine. If the first case does not settle, there will be a delay of an unpredictable length. The parties, however, cannot go home – there may, at any time, be a switch to another judge if one becomes available. Representation 1.29 Parties to arbitration can bring their own counsel or other representatives, as in most jurisdictions there is no need for advocates in arbitration to be locally qualified. That said, it is often wise to obtain local counsel for assistance. Privacy and Confidentiality A basic principle of the public justice system is that justice must be seen to be done. A courtroom is generally open to the public, with official reports containing the judgments in important cases, and unofficial law reports giving details of specialist cases on taxation, planning law, building law, arbitration law, and other subjects. Arbitrations, however, are private, because the parties have agreed to renounce the right to public justice, sometimes precisely in order to protect their private information. In arbitration, only the parties, their representatives, experts, and witnesses can attend, unless the parties consent otherwise. Even to have a pupil arbitrator or tribunal secretary attend an arbitration will require the arbitrator to obtain the consent of the parties. The pupil or secretary must agree never to use or reveal details of the case to anyone. Most arbitration awards are never released to the public, and if they are, it will be with the consent of the parties and in a redacted form – that is, with all identifying information removed so as to protect the parties’ anonymity. Although privacy is a hallmark of arbitration, not all jurisdictions recognize confidentiality. In jurisdictions such as England and Singapore, which recognise the confidentiality of arbitral proceedings, neither the award nor any of the evidence or information arising out of the arbitration can be divulged to anyone not involved with the arbitration. Confidentiality means that a company knows that its trade secrets, balance sheets, and predictions for the future are revealed only to the other party, and then only as far as the case requires. If the award is challenged in court, some of these jurisdictions even provide that the challenge will be heard by the court sitting in private (“in camera”). Confidentiality may also mean that the findings in an award and the evidence of witnesses cannot be referred to in any legal or other proceedings against a third party.5 However, even where confidentiality is the norm, it is limited – by parties’ obligations to their shareholders, for example, or because of statutory duties which may bind them. A state court judge may decide that there is an overriding interest of justice that requires that a document be divulged. This ‘interest of justice’ might arise if it appears that a fraudulent act has been committed but is being hidden by confidentiality agreement or rule. – Glidepath BV v Thompson (2005).6 Other jurisdictions, such as Australia and Sweden, do not subscribe to the inherent confidentiality of arbitration proceedings, as was seen in Esso v Plowman (1995).7 Parties who consider confidentiality important should take the precaution of inserting a confidentiality agreement into their dispute resolution clause in order to maximize the protection of their sensitive information. Expertise A judge is almost invariably a legal professional. An arbitrator may be legally trained, or chosen for expertise in a given industry. A dispute about delay on a multi-million dollar construction site may benefit from the experience of a structural engineer or quantity surveyor. A claim against a financial advisor arising out of allegedly negligent advice may be safe in the hands of a forensic accountant. The point is that the parties will not have to educate the judge about the customs and practices of their industry. However, because legal liability may rest on the interpretation of a clause in one of these contracts, this will require the arbitrator to make a finding in law. The engineer or the accountant must be able to rule on these legal questions as competently as a judge, otherwise the parties, or one of them, will feel let down. How far is an expert on an arbitral tribunal able to use its own expertise to assess conflicting evidence and resolve the dispute? One arbitrator, in a case concerning the correct rent payable for a shop, went and counted the number of pedestrians – i.e. potential customers – who passed the shop at various times of the day himself. He did not give the 14 Esso Australia Resources Ltd et consorts v. The Honourable Sidney James Plowman (The Minister for Energy and Minerals), [1995] April 7,11 Arb. Int. (1995) pp. 235 et seq. 5 6 7 Myanma Yaung Chi Oo v Win Win Nu [2003] 2 SLR 547. [2005] EWHC 818 (Comm) Workbook: Module 2 Law of International Arbitration Chapter One: Methods of Settling Disputes parties any opportunity to comment on this count but relied upon it when making his finding. The court removed the arbitrator for misconduct – Top Shop Estates Ltd v Danino (1985).8 The proper test seems to be whether the arbitrator merely relied upon information he or she would be expected to have – which is permissible – or drew on knowledge outside that field – which is not. In the latter, the award can be set aside for a procedural irregularity. Enforceability A major advantage of arbitration for international business operators is the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This convention gives arbitration awards common currency among all the states which have agreed that their courts will treat arbitration awards made in one convention state as if they were local judgments of their own state. The Convention is the backbone of international arbitration today.

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