ARBITRATIONLAW

ROBERT MERKIN, LLB, LLMLloyd's Law Reports Professor of Commercial Law

Southampton University

Consultant

BARLOWLYDE GT GILBERT

Consultant Editor

LOUIS FLANNERY, LLB, FCI ArbSohcitor Advocate

LLPLONDON SINGAPORE

2004

TABLE OF CONTENTS

Foreword v

Preface vjiBibliography xxxvTable of Cases xxxviiTable of Legislation, Rules and Reports xci

PART I—ARBITRATION AGREEMENTS

1 THE FRAMEWORK OF ARBITRATION LAW

ParaThe Purposes of Arbitration 1.1Development of English Arbitration Legislation

History 1.6Background to the Arbitration Act 1996

The Model Law 1.8Responses to the Model Law 1.13Steps towards legislation 1.17The final Arbitration Bill, December 1995 1.19The Arbitration Act 1996 and the Model Law 1.22

The Arbitration Act 1996: General PrinciplesLimitation to arbitration agreements 1.23Scope of party autonomy

Mandatory and non-mandatory provisions 1.24Contracting out of non-mandatory provisions 1.25

The role of the courts 1.26Territorial scope of the Arbitration Act 1996

Arbitrations to which the 1996 Act appliesPrevious law 1.27The 1996 Act: application follows seat 1.28The concept of the seat 1.29The determination of the seat 1.30Which court determines the seat of the arbitration? 1.32Exceptions to the seat: limited application of the 1996 Act 1.33

Respondents outside the jurisdiction 1.34Respondents outside the jurisdiction but in EU or EFTA countries 1.37

PartiesPersons within the 1996 Act 1 41Persons claiming "under or through" a party 1.42

Transitional provisions 1.43Types of Arbitration

Arbitration agreements and Submission agreements I.45Institutional and ad hoc arbitration 1 46

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Arbitrations Involving ConsumersGeneral 1-48Statutory control of consumer arbitration agreements 1.50

Parties to arbitration agreements 1.51Scope of the 1999 Regulations 1-52Exclusions 1-53Financial limits 1-54Cases outside the 1999 Regulations 1.55

International ArbitrationsArbitration in its international context 1.56International enforcement 1-57Disputes involving states

Conventions 1-58Sovereign immunity 1-59

International organisations 1.60International Chamber of Commerce 1.61London Court of International Arbitration 1.62UNCITRAL 163The International Bar Association 1-64

2 A P P L I C A T I O N S T O T H E C O U R T

The Procedural FrameworkOutline 2.1Transitional provisions 2.2

Applications Relating to the Arbitration Act 1996Arbitration claims 2.3Sending documents 2.4Form of arbitration claim 2.5Service of arbitration claims 2.6Acknowledgement of Service 2.7Directions 2.8Summary of procedural requirements 2.9Arbitration applications and allocation between the courts

Applications other than for stay of judicial proceedingsApplications and transfers 2.10Criteria for transfer 2.11

Applications for stay of judicial proceedings 2.12Participation in the application by the arbitrators 2.13Hearing of arbitration claims 2.14Effect of arbitration application on an award 2.16Security for costs 2.17Security for the sum awarded 2.18

Appeals from Court Decisions 2.19Applications under the Old Law

Forms of application 2.22Formalities and time limits 2.23

3 N A T U R E O F A R B I T R A T I O N A G R E E M E N T S

The Meaning of "Arbitration Agreement"Definitions 3.1Arbitration and dispute resolution 3.5Arbitration and trade association rules 3.6Arbitration and judicial decision 3.7

WritingThe need for writing 3.8"Other" agreements 3.9

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What constitutes writing 3.10"The agreement is made in writing" 3.11"The agreement is made by exchange of Communications in writing" 3.12"The agreement is evidenced in writing" 3.13"An exchange of written submissions" 3.14

Mutuality 3 15The Subject Matter of Arbitration 3.17Capacity of the Parties

Companies 3.18Infants 3 19

Termination of an Arbitration AgreementConsensual termination 3.20Termination by frustration 3.22Termination on allegation of fraud

Direct termination of the arbitration agreement 3.23Stay of judicial proceedings 3.26

Death of a Contracting Party 3.28Bankruptcy of a Contracting Party

Effect on existing arbitration agreements 3.30Effect on post-bankruptcy arbitration agreements 3.32Effect on arbitration proceedings 3.33

Administration or Liquidation of a Contracting CompanyAdministration orders 3.34Liquidation 3.35Removal of Company from register 3.36

Assignment of Arbitration ClausesConsensual assignment

Pre-arbitration assignment 3.37Assignment after commencement of arbitration proceedings 3.38

Assignment under StatuteThe Road Traffic Act 1988 3.43The Third Parties (Rights against Insurers) Act 1930 3.44Assignment after commencement of arbitration proceedings 3.45

4 S U B M I S S I O N A G R E E M E N T S

Submission Agreements under the Arbitration Act 1996 4.1Express Submission Agreements 4.4Agreement to Permit Submission to Arbitration 4.6Implied Submission Agreements

General considerations 4.7Writing 4.8Applicable law 4.10Legality of Submission agreements 4.12Alistake as to the scope or validity of the arbitration agreement

Implied contract 4.13Estoppel by Convention 4.16

Submission agreements involving third parties 4.17

5 A G R E E M E N T S T O ARBITRATE F U T U R E D I S P U T E S

Issues Arising from Arbitration AgreementsJurisdictional questions 5.1Scope of chapter 5.2

Existence of Dispute or DifferencesSignificance of the need for a dispute 5.3Definitions

Disputes 5.5

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Differences 5-6

Claims 5.7Dispute arising after reference 5.8

Existence of the Arbitration AgreementMinimum requirements

Issues 5.10Vagueness 5.11Permissive arbitration clauses 5.12Inconsistency with other contract terms 5.13Arbitration conditional on nature of dispute 5.15

Standard forms of clause 5.16Incorporation of Arbitration Clause

Requirements for incorporation 5.19Express or implied reference to a document containing an arbitration clause

General 5.20Subsequent addition of arbitration clause 5.21Variation of contract 5.22Disputes as to source of incorporation 5.23

Appropriate words of incorporationGeneral considerations 5.24Effect of the Arbitration Act 1996 and the Human Rights Act 1998 5.25Significance of wording of primary contract 5.27Bills of lading cases 5.29

Applicability of arbitration clause to contract disputesGeneral considerations 5.34Bills of lading cases 5.35

Repugnancy 5.38Application of the Arbitration Clause to the Dispute

Scope of the agreement to arbitrate 5.39The concept of severability

Severability and kompetenz-kompetenz 5.40Early decisions 5.41Common law acceptance of severability 5.42Statutory reform 5.43Severability and jurisdiction 5.45

No underlying agreementArbitrability 5.46Forms of wording 5.47

Illegal agreementArbitrability 5.48Forms of wording 5.51

Voidable agreementArbitrability of actions for avoidance 5.52Arbitrability of claims for damages under voidable contracts 5.55Forms of wording 5.56

Dispute as to terms of agreementIncomplete agreements: arbitrability 5.57Arbitrability of rectification disputes 5.59Forms of wording 5.60Variation 5.63

Breach of contractArbitrability 5.64Forms of wording 5.65

Consensual termination 5.66Frustration

Arbitrability 5.67Forms of wording 5.68

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Tortious and other ancillary claimsTort cases 5 69Other related claims 5 72

Dispute as to resolution of dispute 5.73

6 ALTERNATIVE D I S P U T E R E S O L U T I O NNature of Alternative Dispute Resolution

History of alternative dispute resolution 6.1Forms of alternative dispute resolution

General considerations 6.4Mediation and conciliation 6.6"Med-arb" 6.7Expert determination 6.8Adjudication 6.10

Alternative Dispute Resolution and Judicial ProceedingsBackground 6.11The Civil Procedure Rules 1998 6.13ADR in the Commercial Court 6.16The costs sanction 6.17

Binding Effects of Alternative Dispute Resolution AgreementsEnforceability of ADR agreement 6.20Stay of proceedings as means of enforcement 6.21

7 C H O I C E O F L A W

Arbitration and Choice of Law Rules 7.1The Law Governing the Agreement to Arbitrate

Choice of law rules 7.4Significance of the applicable law

Substance and procedure 7.5Validity 7.7

Express choice of applicable law 7.8No express choice of applicable law 7.10

Choice of law of the Substantive dispute 7.12Choice of seat

Express choice of seat 7.13Delegated choice of seat 7.14Seat and the enforceability of the award 7.15

The role of the arbitratorsThe relevant issues 7.16Express choice of law governing the arbitration agreement 7.17No express choice of law governing the arbitration agreement 7.18Delegated choice of law 7.19

The Law Governing the Substance of the DisputeEnglish law and the Rome Convention 7 20Significance of the applicable law

Matters governed by the applicable law 7.21Law applicable to validity of agreement 7.22Determining the content of applicable law 7 24

Choice of law rules under the Rome ConventionExpress or implied choice of law under the Rome Convention 7.25Applicable law in the absence of choice 7.26

Express choice of law governing the substance of the disputeApplication of the Rome Convention 7.28The role of the arbitrators

Duty to honour express choice 7.29Exclusion of renvoi 7.30

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Failure by arbitrators to adheve to the parties' choice 7.31Implied choice of law governing the substance of the dispute

The common law: relevance of the seat 7.32Choice of more than one forum 7.35Impact of the Rome Convention 7.36

Absence of express choice of Substantive lawThe Rome Convention 7.39The role of the arbitrators

The issues 7.40Choice of conflicts rules 7.41Application of chosen conflicts rules 7.42

Delegated choice of lawValidity of delegation 7.43Effect of the Rome Convention 7.44Effect of the Arbitration Act 1996 7.46

"Equity" clausesUse and forms 7.47Possible construetions 7.48Significance 7.49Validity of underlying contract 7.50Validity of the arbitration clause 7.52What is permissible under an equity clause? 7.55

Equity clauses under the Arbitration Act 1996Authorisation of equitable arbitration 7.57Agreement for equitable arbitration 7.58Effects of equitable arbitration 7.59

The Law Governing the Reference to Arbitration 7.60The Law Governing Procedure of the Arbitration

Significance of the curial law 7.61Common law or Rome Convention? 7.63Express choice of curial law

Validity of choice 7.64Agreement for non-seat curial law 7.65

Implied choice of curial lawImplied choice at common law 7.66Selection of curial law by the arbitrators 7.69Choice of law delegated to the arbitrators 7.70

Transnational arbitrationsNo recognition of "delocalised" arbitrations 7.71Effect of institutional rules 7.72English curial law derived from institutional rules 7.75International treaties 7.76

8 BREACH OF T H E ARBITRATION A G R E E M E N T :STAY OF J U D I C I A L P R O C E E D I N G S

General PrinciplesConcurrent arbitration and judicial proceedings 8.1The statutory framework

The pre-1996 position 8.2The Arbitration Act 1996 8.3

Effect of the grant of a stayGeneral effects 8.5Grant of security in Admiralty proceedings 8.7

Appeals in stay cases 8.8Interpleader 8.9Summary of this chapter 8.10

Domestic and Non-domestic Agreements

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Significance of the definition 8 11"Domestic arbitration agreement" 8 12

The Conditions for the Grant of a StayElements of an application for a stay

The Arbitration Act 1996, s 9(1) 8.14"A party. . . against whom legal proceedings are brought" 8.15"Arbitration agreement" 8.16"Legal proceedings" 8.17"Whether by way of claim or counterclaim" 8.18Third-party proceedings 8.19"A matter which is to be referred to arbitration" 8.20

Procedural aspects of an application for a stayForm and timing of application 8.21Loss of the right to seek a stay 8.22

Set-off and counterclaim 8.23Grounds for refusing a stay

Arbitration Act 1996, s 9(4) 8.27Resolution of the jurisdictional issue where a stay is sought 8.28"Null and void" 8.32"Inoperative" 8.33"Incapable of being performed" 8.34Absence of a dispute

The position before 1996 8.35The common law position 8.36The Arbitration Act 1996, s 9 8.38Contested and admitted liability 8.41

The Discretion to Refuse a StayRelevance of the discretion 8.43Elements in the discretion

The nature of the arbitration clause 8.44Factors affecting the claimant/respondent 8.45

(a) Availability of defence 8.46(b) Fraud 8.47(c) The claimant's financial position 8.48

Factors affecting the suitability of arbitration 8.50(a) Complex questions of law 8.51(b) Foreign applicable law 8.52(c) Seat of the arbitration 8.53(d) Multiplicity of actions 8.54(e) Arbitration remedies inadequate 8.57(f) Issues unclear 8.58(g) Partial arbitrator 8.59

Readiness of the defendant/applicant to arbitrate 8.60The Residual Power to Stay 8.68Arbitration as a Condition Precedent: Scott v. Avery Clauses

Nature of Scott v. Avery clausesLegality 8.69Effects 8.70Fraud 8.72The respondent's obligations after stay 8.73Construction 8.74Scope 8.75

Loss of right to rely on Scott v. Avery clauseThe common law position 8.76Statutory discretion to override Scott v. Avery clause 8.77Compulsory insurance 8.78

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Effect of Scott v. Avery clause on assignees 8. /9Foreign Judicial Proceedings in Breach of an Arbitration Agreement

The issues 8-8 0

Determining whether arbitration clause has been infringed 8.81Stay of foreign proceedings: anti-suit injunctions 8.82

Jurisdictional matters °-"Discretion to stay

General considerations 8.86Discretion in EU and EFTA cases 8.90

Damages for breach of arbitration agreement 8.91Refusal to recognise or enforce foreign judgments

Non-EU or EFTA cases 8.92EU and EFTA cases 8.97

Restraining and recognising EU and EFTA proceedings: illustrations 8.106Foreign Judgment in Favour of Arbitration 8.107

P A R T 2 — A R B I T R A T O R S

9 T H E J U R I S D I C T I O N OF ARBITRATORS

Legislative Approach to Questions of JurisdictionJurisdictional and non-jurisdictional issues 9.1The structure of the pre-1996 law 9.2The structure under the Arbitration Act 1996 9.3

The Right of Arbitrators to Determine their Own Jurisdiction"Kotnpetenz-kompetenz" in English law

The position prior to the Arbitration Act 1996 9.4The Arbitration Act 1996 9.6The distinction between separability and kompetenz-kompetenz 9.7

The wording of the arbitration clauseContracting out 9.8Standard wordings 9.9

The Statutory Right to Challenge an Award on JurisdictionStatutory framework 9.10Procedure

The application 9.12Extension of time 9.13Awards capable of challenge 9.14Security 9.15The power to order reasons 9.16

Loss of the right to challenge 9.17The hearing 9.18The court's order 9.19

Failure to Appear and Subsequent ChallengeThe common law position 9.20The statutory right to refuse to appear 9.21

Appearance under Protest and Subsequent ChallengeThe common law position 9.23The statutory right of conditional appearance

Nature of the right 9.24Initial objection on jurisdictional grounds 9.25Subsequent discovery of jurisdictional issues 9.26Effect of an objection on jurisdictional grounds 9.27The effect of an objection on the proceedings: the arbitrators' options 9.28

Judicial Preliminary Ruling on JurisdictionNature of the preliminary ruling 9.29Procedural requirements 9,30

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Effect of a ruling 9 31Injunctive and Declaratory Relief

The right to seek injunctive or declaratory relief 9.32Injunctive relief 9 35Declaration 9 39

Ad Hoc Agreements relating to JurisdictionThe role of ad hoc agreements 9.43Is there an ad hoc agreement? 9.44Ad hoc agreements and jurisdiction 9.46

Validity and effects of an ad hoc agreement 9.47Possibility of challenge in the absence of an ad hoc agreement 9.49Waiver 9.50

10 T H E O F F I C E OF ARBITRATOR

The Status of Arbitrators 10.1Judges of the Technology and Construction Court (Official Referees)

General considerationsOutline 10.3Principles of jurisdiction 10.5Jurisdiction over appeals against arbitration awards 10.7Powers 10.8Appeals 10.9

Judges of the Technology and Construction Court as arbitrators and umpiresJurisdiction 10.10Allocation of business 10.12Conduct of the arbitration and appeals 10.13

Judge-Arbitrators and Judge-UmpiresPower of judges to take arbitrations 10.14Modifications to general arbitration law 10.16

The Qualifications of ArbitratorsGeneral qualifications 10.18Contractual qualifications 10.19Impartiality

The significance of impartiality 10.22Impartiality: legal safeguards on appointment 10.23Impartiality: post-appointment legal safeguards 10.24Contractual challenge procedures 10.26Grounds for judicial intervention for potential lack of impartiality 10.27Impartiality v. independence 10.28Impartiality: the legal Standard 10.29Impartiality: relationship between party and arbitrator 10.33Impartiality: arbitrator's personal interest 10.34Impartiality: predetermination of the dispute 10.35

The Immunity of ArbitratorsCommon law immunity

The basis of judicial immunity 10.36Extension to arbitrators 10.37Rationale of immunity 10.38Scope of immunity 10.39No statutory duty of care 10.40

Statutory immunity: the Arbitration Act 1996Immunity of arbitrators 10.41Immunity of arbitral institutions 10.43

Immunity under institutional rules 10.45The scope of immunity: arbitration and valuation 10.46

The General Duties of ArbitratorsThe conduct of the arbitration 10.50

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Duty to proceed with reasonable despatchContractual provisionsNo agreement as to time: the fallback position

Power of court to remove a dilatory position 1 0 ^When power becomes exercisable '"•3°Financial consequences of removal -iConsequences for the arbitration W.so

Remuneration of ArbitratorsThe scheme of the 1996 Act 1 ° 5 9

Express agreement as to amount or method of calculationForms of agreement 1°-60

Agreement with one party only \0.blNo express agreement as to amount or method of calculation

Liability to make payment 10-63Determining the level of payment 10.64Challenging the arbitrators' determination of remuneration

The Arbitration Act 1950 1°-65

The Arbitration Act 1996: powers of adjustment 10-66Repayment of excessive fees and costs 10.67

Enforcement of payment 1068Action 10-69Lien

Existence of the lien 10-70Rights of the parties to obtain release 10-71

Financial guarantees and advance payments 10.72Fees payable on early settlement

The issues 10-73(i) Fees for time actually spent 10.74(ii) Compensation for time lost: commitment fees 10.75

Fees and expenses payable following an arbitrator's default 10.76Removal of Arbitrators

Revocation of authorityHistory

Permission for revocation of authority 10.77Exercise of judicial discretion 10.78

Revocation under the Arbitration Act 1996Circumstances in which authority can be revoked 10.79

Consequences of revocationThe Arbitration Act 1950 10.80The Arbitration Act 1996 10.81

Removal of arbitrators by the courtGrounds for removal 10.82The application 10.83Consequences of removal 10.85

Resignation of an ArbitratorThe right to resign 10.86Express agreement on financial consequences of resignation 10.87Default rules on financial consequences of resignation 10.88Forms of resignation 10.89

11 T H E A P P O I N T M E N T OF ARBITRATORS

The Role of the Parties and the CourtsThe principle of party autonomy 11.1The supporting role of the Arbitration Act 1996 11.2

Appointment of Arbitrators: General ConsiderationsAppointment by the parties

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Commonly found provisions 113Formalities of appointment 114Challenges to appointment 115Effects of an appointment 11.6

Appointment by the courtJurisdiction 118International cases 11.9The court's discretion

Exercise of the discretion 11.10The appointee 11.11

Procedural mattersApplications to the court 11.12

Appeals 11.13The Number of Arbitrators: Default Provisions

No agreement as to numbers: sole arbitratorThe presumption in favour of a sole arbitrator 11.14Strength of the presumption 11.15

Even number of arbitrators 11.17The Appointment of a Sole Arbitrator

Appointment in accordance with the parties' agreement 11.18Default powers of appointment 11.19Appointment by a third party 11.20

The Appointment of Two or More ArbitratorsThe number of arbitrators 11.21Appointment of the parties' arbitrators: s 17 of the Arbitration Act 1996

Initiating the appointment procedure 11.22Failure of appointment procedure

Scope of default provisions 11.23Procedural aspects 11.24Alternative procedures 11.26

Cases falling outside s 17 of the Arbitration Act 1996 11.27Casual Vacancies

How casual vacancies arise 11.29Consequences of a casual vacancy

Agreement by the parties 11.30Filling the vacancy. default provisions 11.31Continuing the proceedings: default provisions 11.34Existing appointments: default provisions 11.35

12 U M P I R E S

The Office of Umpire 12.1The Position Prior to Disagreement

The role of the arbitrators 12.3The appointment of an umpire

Tuning of the umpire's appointment 12.4Method of appointment 12.5

Default powers of the court 12.6The Status of the umpire

Powers and role 12.7Remuneration 12.8

The Position Following DisagreementThe transfer of the reference 12.10The jurisdiction of the umpire 12.13Procedural matters 12.14Effect of procedural irregularities by the arbitrators 12.15

Errors by the arbitrator as arbitrator 12.16

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Errors by the arbitrator as advocate 1 — 1/T h e costs of the proceedings ' -•' °

T h e Advocacy Function of the Arbitrators 12-19

PART 3—ARBITRATION P R O C E E D I N G S

13 COMMENCING AN ARBITRATION: TIME LIMITS

Statutory and Contractual Time Limits 13'Statutory Time Limits

The Limitation Act 1980 l3-3

Choice of law issues 13-4Application to arbitration

S c o p e " • • )

Starting and finishing points: commencing the arbitration 13.6Scott v. Avery clauses 13-7Service of the notice 13-8Content of the notice 13-9Identification and existence of dispute 13.11Suspension of limitation period where award is challenged 13.12Expiry of limitation period 13.13Amendments to the claim 13.14

The Carriage of Goods by Sea Act 1971 13.15Contractual Limitation Periods

Issues arising from contractual clauses 13.17Barring the claim and barring arbitration

The two types of clause 13.18Clauses barring the claim 13.20Clauses barring the right to go to arbitration 13.23Unilateral clauses 13.24Waiver of a time bar 13.25Loss of the right to rely on a time-bar clause: fundamental breach 13.26

The commencement of the running of time 13.27Commencing the arbitration

Typical contractual provisions 13.29Compliance with commencement provisions 13.30Arbitration notice not complying with agreement 13.31

Construction of the arbitration clausePrinciples of construction 13.32Counterclaims 13.33

Successive claims 13.34Extension of Time: Section 12 of the Arbitration Act 1996

The Provision and its rationale 13.35Procedural aspects

The application for an extension 13.36Declaration as to the limitation period 13.37

Elements of the power to extend"Agreement to refer future disputes" 13.38"Claim" 13.39"Claims shall be barred, or the claimant's right extinguished" 13.40"To begin arbitration proceedings or other dispute resolution procedures" 13.41"A time fixed by the agreement" 13.45

Consequences of extending time 13.46Jurisdictional issues 13.47The judicial power to extend time

General principles 13 48Circumstances not contemplated by the parties 13.49

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The conduct of the respondent 13.53Discretion 13.55

Imposition of terms 13.57

14 A R B I T R A T I O N P R O C E E D I N G S

Determining the ProcedureHow the procedure is determined 14.1Party or arbitrator autonomy? 14.2Procedural and evidential matters 14.3Objection to the parties' choice: the right to resign 14.4Incorporation by reference of arbitration procedures 14.5Common types of procedure 14.7

Challenging the Chosen ProcedureDuties of the arbitrators in choosing a procedure 14.8Challenges to arbitrators' choice of procedure 14.10

Challenging the Exercise of Procedural PowersScope of the arbitrators' procedural powers 14.11Challenges to the exercise of procedural powers 14.12

An Outline of the Steps in Arbitration ProceedingsGeneral considerations 14.13Commencing the arbitration 14.14Alternative dispute resolution as a prerequisite to arbitration 14.15The preliminary meeting 14.18Points of claim and defence

Exchange of points of claim and defence 14.20Amendments 14.22

Disclosure of documents 14.23The Substantive proceedings

Time and physical location 14.24Language 14.25Legal and other representation 14.26Who may be present 14.28

Termination of the arbitration proceedings 14.29Appeal against the award

Appeal procedures 14.30Status of the original award 14.32Review of the original award 14.33Consequences of an appeal 14.34

Determination of Preliminary Point of LawLegislative structure

Background 14.35Points of law 14.37Jurisdiction to apply 14.38Consents 14.39Contracting out 14.41

Procedure 14.42The court's discretion to hear an application

Elements in the discretion 14.43Appeal against the exercise of discretion 14.44

Appeals against the court's final decision 14.45Security in the Arbitration

Forms of security available in arbitrationThe earlier law 14-46The Arbitration Act 1996 14.47Exclusion of the court's powers 14.49Relationship between the arbitrators and the court 14.50

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Appeal against decision as to exercise of powersThe court ^-51The arbitrators 14-52

Procedure l4-5 3

Territorial restrictions on judicial assistancePersons outside the jurisdiction 14.54Foreign arbitrations 14.56

Protection of the subject matter of the dispute 14.57The appointment of a receiver 14-59Injunctions

Forms of relief available 14.61The freezing injunction (previously the Mareva injunction) 14.62

Securing the amount in dispute 14.63Security for costs

The power to order security for costsPowers of the arbitrators under the Arbitration Act 1950 14.65Powers of the High Court under the Arbitration Act 1950 14.66The Arbitration Act 1996 14.68

Parties 14.69General grounds for making an order 14.70Grounds for an order in arbitration proceedings

The general discretion 14.71Residence as a factor 14.73

The order and its enforcement 14.75Arrest of vessels

Admiralty jurisdiction to arrest in respect of arbitration 14.76Jurisdiction to arrest: the present position 14.78Procedural aspects 14.79Exercise of discretion 14.80Acceptance of security in place of arrest 14.81

15 EVIDENCE IN A R B I T R A T I O N S

Obtaining EvidenceStructure of the legislation

The powers of the arbitrators and the court 15.1Challenging the arbitrators' exercise of their powers 15.2

Oral evidenceThe parties

The right to take oral evidence 15.3Evidence on oath or affirmation 15.5

WitnessesSecuring attendance of witnesses 15.6Use of court powers for foreign arbitrations 15.7Taking evidence from witnesses 15.8Taking evidence for foreign arbitrations 15.9

Documentary evidenceDisclosure

The parties 15.10Third parties 15.12

Inspection of documents 15.13Inspection of property

Orders by the arbitrators 15.14Orders by the court 15.15Inspection of property belonging to or in the possession of third parties 15.17

The Presentation and Reception of EvidencePrinciples governing arbitration hearings

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The rights and duties of the arbitrators 15.18Consequences of breach of duty by the arbitrators

Intervention where the arbitration is in progress 15.19Effect on the award 15.20

Equal treatment of the partiesThe principle 15.21Specific illustrations 15.22

Conduct in accordance with agreed or accepted rules of evidence 15.23The right to be heard

Scope of the right 15.24Failing to hear one of the parties

(a) Summoning meetings and evidence 15.25(b) Adjournment for fresh evidence 15.26(c) Denial of right to present evidence 15.27

Denying the parties the right to reply(a) Oral hearings 15.28(b) Disclosure of documents 15.29

Receiving evidence not disclosed to either party(a) The general prohibition 15.30(b) Exceptions 15.31

Late evidence(a) Post-hearing independent evidence 15.32(b) Post-hearing party evidence 15.33(c) Unavailable late evidence 15.34(d) Post-award evidence 15.35

Expert evidenceExpert evidence in judicial proceedings 15.36Expert evidence in arbitrations 15.38

Acting judicially in the assessment of evidenceThe supervisory jurisdiction of the courts 15.39Reliance on inadmissible evidence 15.40Disregard of admissible evidence 15.41Findings not supported by evidence

(a) Pre-1979 1aw 15.42(b) The Arbitration Act 1979 15.43(c) The Arbitration Act 1996 15.44

Consideration of evidence by the arbitratorsThe principle 15.45Failure by an arbitrator to artend hearings 15.46Delegating decision-making 15.47

Experts Appointed by ArbitratorsThe use of experts by arbitrators

The power to appoint experts 15.48Delegation of decision-making to experts 15.50

Arbitrators as expertsDispensing with a hearing 15.51Limits on the use of expert knowledge

(a) Adherence to the arguments 15.52(b) Refusal to receive evidence 15.56

16 DELAY AND LACK OF CO-OPERATION BY THE PARTIES T O T H EARBITRATION

Powers Available to Counter Delay and Lack of Co-operationReasons for delay 16.1The Arbitration Act 1950

Powers of the arbitrators 162Powers of the courts in respect of arbitral delay 16.3

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Statutory reform prior to 1996 }"/The Arbitration Act 1996 j ° £

Agreed Default Powers '"•"Contractual Solutions to the Problem of Delay

Possible Solutions ,Repudiatory breach of contract 1"°Frustration 1 6 J "Lapse 1 6 1 2

Abandonment by agreementThe legal requirements for abandonment 16.13Conceptual difficulties 1 6 1 6

Examples of abandonment ' " • ' 'Consequences of abandonment 16.18

Estoppel 1 6 1 9

Inordinate and Inexcusable Delay: Striking out by Default AwardStriking out by the courts l°-20Extension of the power to arbitratorsLegislative history 10-' i l

Elements of the striking-out powerGeneral criteria l°-22

Jurisdiction, discretion and challenge 16.23Effect of the arbitrators's order 16.24Striking out within the limitation period 16.25

Peremptory OrdersBackground to the peremptory order 16.26Section 5 of the Arbitration Act 1979: extension orders 16.27The peremptory order under the Arbitration Act 1996

The concept 16.29Peremptory orders made by arbitrators 16.30Enforcement of peremptory orders by the arbitrators 16.31Enforcement of peremptory Orders by the court 16.32

Ex Parte ProceedingsProceedings ex parte at common law 16.33The statutory powers

The specific power to proceed ex parte 16.34Peremptory order and ex parte proceedings 16.35

17 T H E E F F E C T OF ARBITRATION ON T H I R D PARTIES

The Parties to an Arbitration Agreement 17.1String and Connected Contracts

Nature of string and connected contracts 17.3String and connected contracts and arbitration

Joinder of proceedings under English law 17.4Appointment of a common arbitrator 17.7Evidence by earlier arbitrators 17.8Refusal of stay 17.9

Express string contract arbitration provisionsJoinder provisions 17.10"Name-borrowing" 17.12Limitations on joinder 17.13

Co-defendantsConcurrent alternative actions 17.14Concurrent connected actions 17.15

Effect of an Award on Third PartiesGeneral principle: no effect on third party rights 17.16Exceptions to the general rule 17.17Binding effect of award in proceedings involving a third party 17.18

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Finding of liability by reason of breach of duty by third party 17.19Finding of non-liability by reason of breach of duty by third party 17.20Proof of wrongful act by party to arbitration proceedings 17.21Contractual indemnification Obligation on third party 17.22Default liability on third party 17.23

The Use of Material in Later Proceedings Involving Third PartiesThe general duty of confidentiality 17.26Confidentiality in relation to the award

Use of award in later proceedings involving different parties 17.29Use of award in later proceedings involving the same parties 17.32

Confidentiality in relation to evidence and documents 17.33Confidentiality in challenge proceedings 17.35Confidentiality in enforcement proceedings 17.37Express confidentiality agreements 17.38

Contracts for the Benefit of Third PartiesAgency

General agency principles 17.39Personal liability of agent 17.40Ratification 17.41

Contracts (Rights of Third Parties) Act 1999Rights under the 1999 Act 17.42Variation of rights 17.44Performance and discharge 17.45Defences 17.46Breach of contract 17.47Benefits and burdens 17.48

The 1999 Act and arbitration clausesThe issues 17.49

Enforcing a beneficial term made subject to an arbitrationThe statutory provisions 17.50Application of the 1996 Act to the arbitration 17.51Stays 17.54

The bürden of an arbitration clause 17.55Sub-bailment on terms

The principle 17.56Possible application to arbitration clauses 17.58

PART 4—THE AWARD

18 ARBITRATION AWARDSTypes of Award

Legislative structureThe Arbitration Act 1950 18.1The Arbitration Act 1996 18.2

Final awards 18-3Partial and provisional awards

Partial awardsJurisdictional aspects '8-4Discretionary aspects 18-5Applications to overturn partial awards 18.6

Provisional awards '"•'Challenging the exercise of discretion as regards partial and provisional awards

Classifying the decision 18-9Decision itself a partial award 18.10Decision itself not a partial award 18.11

The problem of set-off and other defences 18.12

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Effects of partial and provisional awards l 8 ' 3

Agreed awardsMaking an agreed award 1°-14

Effects of an agreed award l 8 "Draft awards 1 8 1 6

The Formal Requirements of an AwardThe making of the award l8-!7

Formalities relating to the award l 8 * 8

WritingOral and written awards l ö J y

Drafting the award l8-2 0

Signature by the arbitrators 18-21The date of the award

Significance of the date 18-22

Fixing the date of an award 18-23Decision by arbitrators 18-24No decision—sole arbitrator 18-25No decision—more than one arbitrator 18.26No decision—dissenting arbitrator 18.27

Time within which an award must be madeGeneral principles 18-28Extension of time 18-29

The place of the awardSignificance of the place of the award 18.30Identifying the place of an award 18.31

Notification of award to the parties 18.32The Substantive Requirements of an Award

General requirements 18.33Resolving all referred issues

Issues not determined by the arbitrators 18-34Single award for multiple issues 18.35

Issues beyond the scope of the referenceThe principle 18.36Jurisdictional and non-jurisdictional matters 18.37

Final and unconditional awardThe principle 18.38Delegation to a future decision of the arbitrators 18.39Delegation to the courts 18.40Delegation to a third party 18.41Delegation to the parties 18.42Awards conditional on external events 18.43

Award certain and capable of Performance 18.44Reasons for the award

Earlier legislation 18.45Reasons under the Arbitration Act 1996 18.46Agreement to dispense with reasons 18.47Confidential reasons 18.48The adequacy of reasons in an award 18.49Reasons and recitals 18.52

Involvement of the entire tribunal: unanimity 18.53Enforceability of the award 18.54

Remedies Awardable by ArbitratorsThe general powers of the arbitrators 18.55Remedies conferred by agreement 18.56The payment of money

General considerations 18.57Award in a foreign currency 18.58

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InterestThe general powers of the arbitrators to award interest 18.61Interest on sums outstanding at the date of the award

The statutory power 18.62Common law background 18.63Statutory reform 18.64Operation of the 1996 Act 18.65

Motor Insurers' Bureau arbitrations 18.66Interest on sums paid during the course of the arbitration 18.67Interest on sums paid prior to the commencement of the arbitration 18.68Interest on sums awarded

Pre-1996 18.69The Arbitration Act 1996 18.70

Injunctions and declarations 18.71Specific Performance 18.72Rectification, setting aside or cancellation of contracts or deeds 18.73

The Award of CostsCosts in the arbitration

Typesof costs 18.74Jurisdiction to make an award of costs 18.75Costs of an arbitration application to the court 18.76

The allocation of costs between the partiesEffect of express agreements

The prohibition on pre-dispute agreements 18.77Submission agreements 18.78

Allocation of costs by the arbitratorsCosts prima facie follow the event 18.79Partial success in the arbitration 18.80Exceptions to the general rule 18.81Costs in judicial proceedings 18.82Costs awarded against third parties 18.83

Challenging the arbitrator's allocation of costs: appeal on error of lawHistorical: Arbitration Act 1950 18.85Arbitration Act 1979 18.86Arbitration Act 1996: the present position 18.87Reasoned award required 18.88Unreasoned award required 18.89The basis of a challenge 18.90Effect of a successful challenge 18.91

The effect of offers on the award of costsThe issues arising from offers 18.92"Without prejudice" negotiations 18.93"Open" offers 18.94"Sealed" offers 18.95Calculating the amount of the offer 18.97

Costs recoverable in the arbitration"Recoverable costs" 18.100Party and other costs

Methods of determining recoverable costs 18.101Agreement between the parties 18.102Directions by the arbitrators 18.103Award of the arbitrators 18.104Determination by the court 18.106

Determination of costs of legal representationThe classes of recoverable costs 18.108Wasted costs orders 18.110Conditional fees 18.111

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Persons whose costs may be determined by arbitrators 18.112The arbitrators' fees and expenses

The right to determine arbitrators' fees and expenses 18.1 UThe right to be paid and the right to determine fees and expenses 18.114Practical application \l\\lAllowable expenses l 8 1 1 6

The Effects of a Binding AwardFinality

The principle 1 8 U /

The correction of errorsStatutory power: the extended "slip" rule 18.118Time limits for seeking corrections 18.119Time limits for correcting the award 18.120Application to challenge a corrected award 18.1/1Effect of corrections on costs 18.122Inapplicability of the slip rule 18.123

Additional awardsJurisdiction 18.124Time limits 18.125When is an award supplementary? 18.12o

Appeal against refusal by arbitrators to exercise powers 18.127Effect of the award on the parties

The award as a cause of action(a) The award extinguishes the earlier cause of action 18.128(b) Exceptions 18.129

The duty to honour the award 18.131Effect of the award on the matters arbitrated

Effect on later proceedings 18.132Effect on the subject matter of the arbitration 18.133

19 E N F O R C E M E N T OF A R B I T R A T I O N AWARDS

Legal Structure 19-1Enforcement of English Awards

Enforcement by claim on the awardNature of the action 19.2Jurisdictional matters 19.3Defects in the Submission agreement 19-4Defects in the award 19.5Remedies 19.6

Summary enforcementThe nature of summary enforcement 19-7Relationship with an action on the award 19.8Limitations on summary enforcement 19.9

Oral arbitration agreement 19.10Award defective in form 19.11Excess of jurisdiction 19.12Other defects in the award 19.13

The need for serious doubt as to validity 19.14Estoppel by reason of a foreign judgment 19.15Discretion of the court to refuse execution 19.17Procedural aspects

Application for enforcement 19.18The enforcement order 19.19

Enforcement of Foreign Arbitration AwardsBackground

The structure of enforcement 19.20

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Relationship between the various forms of enforcement 19.21Effect of a foreign award on the cause of action 19.22Foreign awards enbodied in foreign judgments

(a) Is a foreign judgement on the award a precondition for enforcement of theaward in England? 19.23

(b) Can either the award or the judgement be enforced in England? 19.24Enforcement by an action on the award

General requirements for enforceability 19.25Validity of Submission under its applicable law 19.26Binding and final award

(a) Binding awards: non-jurisdictional error 19.27(b) Binding awards: jurisdictional error 19.28(c) Finality 19 29

Public policy defences 19.30Limitation of actions 19.31Estoppel 19,32

Enforcement by freezing (Mareva) injunctionDefendants within the jurisdiction 19.33Defendants outside the jurisdiction 19.34

Summary enforcement of foreign awardsApplication of s 66 of the Arbitration Act 1996 19.35Awards capable of summary enforcement 19.36

Enforcement under the Administration of Justice Act 1920The registration requirement 19.37Grounds for refusal of or setting aside registration 19.38

Enforcement under the Foreign Judgments (Reciprocal Enforcement) Act 1933The registration requirement 19.39Grounds for refusal of or setting aside registration 19.40

Enforcement under Part II of the Arbitration Act 1950Scope of Part II 19.41Effect of the Geneva Convention 19.42Conditions for enforcement 19.43Procedural aspects 19.44

Enforcement of New York Convention awardsScope of the Arbitration Act 1996: "Convention awards" 19.45Recognition and enforcement of a New York Convention award 19.47Persons against whom the award can be enforced 19.48Grounds for refusing enforcement 19.50

Party under an incapacity 19.51Arbitration agreement not valid under law 19.52Party not given proper notice 19.53Difference not contemplated by Submission 19.54Arbitration not in accordance with agreement 19.55Award not yet binding on parties 19.56Matter not capable of settlement by arbitration 19.57Enforcement contrary to public policy 19.58

Stay of enforcement 19 59Adjournment of enforcement proceedings pending judicial review 19.60Procedural aspects 19.65

Special CasesCarriage of Goods by Road Act 1965 19 66Arbitration (International Investment Disputes) Act 1966 19 67Multilateral Investment Guarantee Agency Act 1988 19.68

Enforcement of United Kingdom AwardsRegistration of UK awards 19.69Other forms of enforcement 19.71

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Public Policy . „ -~The significance of public policy j 'Award obtained by fraud •Breach of the rules of natural justiceIUegality .

General principles of law l^'J

IUustrations ^ JEuropean Union law •Uncertain or invalid award J •Matters arising after award J •Double jeopardy J * !Other public policy grounds affecting foreign awards

Limitation of ActionsTime limits for the enforcement of awards

Obligatory awards J9-8°Extension of limitation period ^ ° 'Declaratory awards

Actions on a specialtyThird Party Debt Order

Nature of third party debt Orders 19-9IJLimitations on third party debt orders 19-91

20 CHALLENGING THE PROCEEDINGS AND THE AWARD

Legal FrameworkGrounds of challenge 20-'Challenges during the currency of the arbitration

The old law 20-2

The Arbitration Act 1996 20-4

Challenges to the awardThe old law 20-5

The Arbitration Act 1996 20-6

Grounds for Challenging an Award: Serious IrregularityUnderlying principles

The basis for setting aside an award"Serious irregularity" 20-7"Substantial injustice" 20-8

Procedural mishapOrigins 20.9The conditions for remission 20.10The nature of procedural mishap 20.11Procedural mishap under the Arbitration Act 1996 20.12

The principle of finality 20.13Ground (a): breach of the Arbitration Act 1996, s 33

Duty to act fairly 20.14Loss of confidence in arbitrator 20.15Right to present case denied 20.16

Ground (b): excess of powers by the arbitrators 20.21Ground (c): failure to conduct the proceedings in accordance with the arbitration

agreement 20.22Ground (d): failure by the arbitrators to resolve all matters in dispute referred to

them 20.23Ground (e): excess of powers by any arbitral Institution or other person 20.24Ground (0: uncertainty or ambiguity in the award 20.25Ground (g): award obtained by fraud or in a manner contrary to public policy 20.26Ground (h): failure to comply with formal requirements relating to the award 20.27Ground (i): admitted irregularity in the proceedings or the award 20.28

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RemediesEffect of serious irregularity

Available remediesThe award 20 31The arbitrators 20 32Statutory discretion 20 33

Setting the award aside or declaring the award to be of no effect 20.34Remission of an award

The consequences of remission 20 35The rehearing 20.36Effect on the award 20 37Timing 20.38

Procedural Aspects of Remitting, Avoiding or Setting Aside an AwardApplications for setting aside, avoidance and remission

Procedure 20.39Time limits 20.40Security for the sum awarded 20.41

CostsCosts of the application 20.42Costs of the proceedings 20.43

Appeal 20.44Loss of the Right to Challenge

Circumstances in which the right may be lost 20.45Anterior agreement 20.46Post-breach waiver

The waiver principle 20.47Waiver by agreement 20.48Time for registering an objection 20.49Conduct amounting to waiver

(a) Waiver during the proceedings 20.50(b) Waiver following the making of the award 20.51

P A R T 5 — J U D I C I A L C O N T R O L

21 J U D I C I A L REVIEW OF ERRORS OF LAW IN ARBITRATION AWARDS

Legislative FrameworkJudicial review prior to the Arbitration Act 1979 21.1

The move to reform 213The Arbitration Act 1979

Statutory right of appeal 21.4Relationship between the Arbitration Acts 1950 and 1979 21.5

The Arbitration Act 1996 21.6Questions of Law

The distinction between law and fact 21.7Questions of mixed fact and law 21.8Question of law and error of law 21.9Conclusion of law not supported by the evidence 21.10

Reasons for the Award and Judicial ReviewThe Arbitration Act 1979

The significance of reasons under the 1979 Act 21.12Statutory scheme for the giving of reasons 21.13Exercise of the court's discretion to order reasons 21.14Alternative methods of obtaining reasons 21.15

The Arbitration Act 1996Statutory provisions for reasons 21.16The right of the parties to obtain reasons 21.17

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Standard contractual arrangements 2J-jj|Agreement that there is to be no appeal on a point of law 21.1VAgreement for a reasoned award 21-2^Agreement for an unreasoned award }.No agreement, and neither party requests reasons 21.22No agreement and one party requests reasons 2\2T>No agreement and one party requests an unreasoned award 2 1 - 2 4

Procedural aspects of obtaining reasons 2 1 - 2 'Costs of an application for reasons 2 1 - 2 6

Consensual AppealsAgreements to permit appeals 2 1 - 2 'Effect of an agreement for reasons 2\2V>Scope of agreements to appeal 2 1 - 2 "

Non-consensual Appeals: Permission to AppealThe statutory provisions 2 1 - 3 ^Substantial effect on the rights of the parties 21-31Question of law not raised before the arbitrators

Appeal on a question of law not raised before the arbitrators 21.32Defence based on question of law not raised before the arbitrators 21.33

Grounds upon which permission to appeal can be sought: error in the awardDetermining whether there is an error of law 21-34

The statutory criteriaBackground to the 1996 Act 21.35The guidelines in The Nema 21.36Statutory implementation by the 1996 Act 21.37

The distinction between cases of general public importance and other casesThe basic distinction 21.38Rent review clauses 21.39

Cases of general public importance: award "open to serious doubt"The test for permission to appeal 21.40"Open to serious doubt" 21.41"General public importance" 21.42

Cases not of general public importance: award "obviously wrong" 21.43Just and proper

The court's general discretion 21.44Creating serious injustice by granting permission to appeal 21.45

Procedural Aspects of Appeal to the CourtThe form of application for permission to appeal

Statutory requirements 21.46Permissible documentation 21.47Time limits 21.49Imposition of conditions by the court 21.50Determining the application for permission to appeal

Consideration of the application for permission to appeal 21-51The giving of reasons for the determination of the application 21-54

The appealThe hearing of the appeal 21-56Concurrent question of jurisdiction 21-57

The court's order following an appealAvailable remedies 21-58Effect of setting aside the award on the arbitration clause 21-59

Appeals against decisions on the grant of permission to appeal 21-61Appeal from a Substantive Decision of the Court

The availability of appeals 21-64Conditions for an appeal 21-65Suitable point of law

General considerations 21.66

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Question of law of general public importance 21.67Some other Special reason why permission should be given 21.68Time at which point of law is to be assessed 21.69

Discretion to give permission to appeal 21.70Appeal against refusal or grant of permission to appeal to the Court of Appeal 21.71Scope of an appeal to the Court of Appeal: fresh points of law

Jurisdiction to raise a fresh point of law before the Court of Appeal 21.72Alternative scenarios 21.73

Appeals Involving Points of EU LawPreliminary rulings on points of EU law 21.74References by arbitrators 21.75Permission to appeal

The granting of permission to appeal 21.76Permission to appeal where the applicable law is that of another EU member State 21.77

22 E X C L U S I O N O F J U D I C I A L CONTROL

Permissible Exclusions under the Arbitration Act 1996 22.1Determination of a Preliminary Point of Law

Jurisdiction of the court 22.3Agreements to exclude the jurisdiction of the court 22.4

Exclusion of Judicial ReviewEarlier legislative provisions

The concept of the "exclusion agreement" 22.5Domestic and non-domestic agreements 22.6The Special categories 22.7Statutory arbitrations 22.8

Exclusion agreements under the Arbitration Act 1996 22.9Agreements to exclude the right of appeal 22.10Cases involving EU law 22.11

APPENDICES

APPENDIX AARBITRATION ACT 1996 App A

APPENDIX B CIVIL PROCEDURE RULES 1998, PART 62 ANDPRACTICE DIRECTION 62

Part 62: Arbitration Claims App B.lPart 62: Practice Direction—Arbitration App B.2

Index 1055

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