How to select and appoint arbitrators

One of the key benefits of arbitration over litigation is flexibility. That flexibility can be applied not only to the procedure to be adopted in resolving the dispute but also in the identity and skill set of the decision maker. In a court case the person making the decision – the judge – will always have a legal background. Not every dispute will be best resolved by a lawyer, however. There are many types of disputes in which the decision maker having an expertise in a field other than law could lead to more efficient resolution, so how should an arbitrator be selected?

Institutional

The starting point for selecting an arbitrator is usually the arbitration agreement. Where the agreement to arbitrate is found in a contract between the parties to the dispute, the clause will often provide for arbitration to take place under the rules of a particular arbitral institution. The rules of that institution will then determine how the arbitral tribunal is to be appointed.

Specific qualities

If the rules of a particular institution are not to be followed, and the arbitration is to be run ad hoc, the agreement might be that the arbitrator is to be selected by a particular professional body or have a particular qualification. It is common, for example, to see arbitration clauses in contracts that provide for the arbitrator to be nominated by the President of the Law Society of Scotland or the Royal Institution of Chartered Surveyors. When including an arbitration clause in a contract, thought should be given to the purpose of the contract and the types of disputes that might arise under it.

How many

The arbitration agreement should also specify the number of arbitrators to be appointed most commonly, either one or three arbitrators are involved. Where there are to be three, some further thought should be given to how all three are to be appointed. Two might be nominated by the parties (one each) who then agree on the third arbitrator to chair the tribunal or the third arbitrator might be nominated and appointed by a third party.

Appointing the tribunal

If institutional arbitration is chosen, depending on the particular rules of the institution, it is usual for it to oversee and administer the appointment of arbitrators. It will also likely be responsible for fixing the fees to be payable to the arbitrator and the terms of their engagement.

What role, if any, the parties have in the appointment of the arbitrator(s) depends on the institution's rules. The rules of the London Court of International Arbitration, for example, provide that the court will be solely responsible for the appointment of arbitrators, though it will take into account any agreement by the parties to jointly nominate an arbitrator. Other institutions, such as the International Chamber of Commerce will both appoint arbitrators itself or confirm appointments made by the parties.

Rules governing the process of appointment vary by institution. Usually, the process will begin with one of the parties serving a request for arbitration which sets out key information including the identity of the parties, the nature of the dispute and a copy of the arbitration agreement. The other party or parties will then usually have a period of time to serve a responding document.

Professional and other bodies which are commonly asked to appoint arbitrators for ad hoc arbitrations will have their own processes. An arbitrator appointed in these circumstances will set their own terms of engagement, which will include fixing their own fee levels.

Court involvement

It is unusual, but possible, for an arbitration agreement not to make any provision for the selection or appointment of the arbitrator(s). Where this happens, it is first up to the parties to seek to agree upon an appointment. It is not unusual to find in this situation that parties cannot agree on an arbitrator – often because they are already down the line in a dispute and relations are strained. The law of the country where the arbitration has its seat will often provide a fall back.

In Scotland, for example, where there is a failure to appoint a tribunal in accordance with the arbitration agreement, the Scottish Arbitration Rules provide that a party may refer the matter to an arbitral appointments referee to appoint a tribunal. A number of organisations are authorised to act as arbitral appointments referees. Where that process itself fail, the courts can ultimately be tasked with appointing the tribunal. Other jurisdictions also have provision for the involvement of the courts in the appointment of a tribunal where the parties cannot agree.

Taking best advantage

Flexibility is at the heart of arbitration as a dispute resolution process. To make the most of that flexibility, thought should be given when drafting arbitration clauses to the nature of disputes that might arise under the contract and what qualities the person best placed to resolve them would have. One size does not fit all. Whilst it will be impossible to foresee every type of dispute that might arise, bespoke drafting will help the parties take the best advantage of arbitration, should the need arise.