Arbitration is a form of voluntary (normally contractually-agreed) dispute resolution. Among the defining features of arbitration is that it is a private and confidential process rather than a public proceeding before the courts.
Arbitration is, first and foremost, based on the principle of party autonomy: parties are free to agree any matter. They may agree to conduct the arbitration under the auspices of one of the arbitral institutions (such as the LCIA or ICC), or they may agree to conduct the arbitration according to their own bespoke set of rules. Of course, the parties to a dispute are not the only parties involved in an arbitration: there must always be an tribunal, consisting of one or more arbitrators.
Arbitrators have significant powers. Arbitration is, by design, not a court process. However, an arbitral tribunal is typically invested with powers analogous to those of the court so that it has at its disposal the tools to enable it to resolve the dispute before it. Thus, a tribunal has the power to award damages and make orders for specific performance or rectification, and to grant injunctive relief.
For these reasons, there must also be basic safeguards to ensure that justice is done between the parties. As a result, the law imposes duties on arbitrators.
These duties are not procedural niceties. In fact, the duties to which the tribunal is subject have their basis in the founding principles of both the English and Scottish Arbitration Acts: that the object of arbitration is to resolve disputes fairly, impartially and without unnecessary delay or expense.
Any arbitrator is therefore under a duty to:
- be impartial;
- treat the parties fairly, including giving each party a reasonable opportunity to put its case and to respond to that of its opponent; and
- to conduct the arbitration without unnecessary delay and expense.
Duty of impartiality
Impartiality has been described recently by the UK Supreme Court as the cardinal duty of an arbitrator.
Arbitral awards must be seen to have been determined fairly and without bias. What is important is not only that there is no actual impartiality on the part of the tribunal or any of its members but that there is no perception of any real possibility of bias. Accordingly, not only do arbitrators have to remain impartial, but they also have a continuing duty to disclose any facts or circumstances which may give rise to a perception of bias.
Duty of fairness
The duty of fairness intersects the duty of impartiality. Fairness means ensuring that the procedures adopted by the tribunal do not unfairly favour one party over the other. It does not mean that the tribunal must treat the parties identically: for example, one party might quite reasonably need more time to present its case than the other party requires. What matters is that the approach the tribunal adopts affords all parties a reasonable and proper opportunity to present their case.
Efficient conduct of the arbitration
The tribunal must adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense. Therefore rather than applying a "one size fits all" approach, the tribunal is required to consider what is truly required for the resolution of the particular dispute before it. This might lead the tribunal to restrict or even dispense entirely with certain aspects of procedure; in some cases, even an oral hearing might be deemed unnecessary.
Arbitration is often attractive to parties because it proceeds in private and is protected by confidentiality, unlike public court proceedings. However, parties can have confidence that, although conducted in private, arbitration is conducted in accordance with the same standards of fairness, justice and efficiency that apply in public court proceedings.
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