Arbitration in United Kingdom

Definition of Arbitration

In accordance with the work A Dictionary of Law, this is a description of Arbitration :

The determination of a dispute by one or more independent third parties (the arbitrators) rather than by a court. Arbitrators are appointed by the parties in accordance with the terms of the *arbitration agreement or in default by a court. An arbitrator is bound to apply the law accurately but may in general adopt whatever procedure he chooses and is not bound by the *exclusionary rules of the law of evidence; he must, however, conform to the rules of *natural justice. In English law, arbitrators are subject to extensive control by the courts, with respect to both the manner in which the arbitration is conducted and the correctness of the law that the arbitrators have applied, although this control was loosened to some extent by the Arbitration Act 1996.

The judgment of an arbitrator is called his award, which can be the subject of an *appeal to the High Court on a question of law under the provisions of the Arbitration Act 1996. A 1979 Arbitration Act abolished the old *special case procedure. In some types of arbitration it is the practice for both parties to appoint an arbitrator. If the arbitrators fail to agree about the matter in dispute, they will appoint an umpire, who has the casting vote in making the award. English courts attach great importance to arbitration and will normally stay an action brought in the courts in breach of a binding arbitration agreement.

The modern origins of international arbitration can be traced to the Jay Treaty (1784) between the USA and the UK, which provided for the determination of legal disputes between states by mixed commissions. The *Hague Conventions of 1899 and 1907 contained rules of arbitration that have now become part of customary international law. The 1899 Conventions created the Permanent Court of Arbitration, which was not strictly speaking a court but a means of providing a body of arbitrators on which the parties to a dispute could draw. Consent to arbitration by a state can be given in three ways:

• by inclusion of a special arbitration clause in a treaty;
• by a general treaty of arbitration, which arranges arbitration procedures for future disputes; and
• by a special arbitration treaty designed for a current dispute.

Arbitration agreement

Also, following the work A Dictionary of Law, in relation to the entry Arbitration:

A contract to refer a present or future legal dispute to *arbitratio. Such agreements are of two kinds: those referring an existing dispute to arbitration and those relating to disputes that may arise in the future. The second type is much more commo No particular form is necessary, but the agreement should name the place of arbitration and either appoint the arbitrator or arbitrators or (more usually) define the manner in which they are to be appointed in the absence of agreement between the parties. The agreement should also set out the procedure for appointing an umpire if two arbitrators are involved and they fail to agree.

Definition of Arbitration

Settling a dispute by using a referee.

Brief Introduction to Arbitration in Partnership Law

Arbitration is an alternative method of resolving disputes without the need to go to court. The parties agree, when they enter into an agreement (in the case of partnership a Partnership Agreement) that they will use arbitration to resolve disputes. Other Short note (s) in relation wth Arbitration here:

• An arbitrator is appointed under the terms of the agreement to decide an outcome of the dispute. The decision of the arbitration is binding on the parties.
• The Arbitration Act 1996 sets out rules for the conduct of the artbitration.

History: Law of England

The law of England as to arbitration is now practically summed up in the Arbitration Act of 1889. This statute is an express code as to proceedings in all arbitration, but “criminal proceedings by the crown” cannot be referred under it (ss. 13, 14). The statute subdivides its subject-matter into two headings. I. References by consent out of court; II. References under order of court.

(1) Here the first matter to be dealt with is the submission. A submission is defined as a written agreement (it need not be signed by both parties) to submit present or future differences to arbitration, whether a particular arbitrator is References by consent of the court. named in it or not. The capacity of a person to agree to arbitration, or to act as arbitrator, depends on the general law of contract. A submission by an infant is not void, but is voidable at his option (see Infant). A counsel has a general authority to deal with the conduct of an action, which includes authority to refer it to arbitration, but he has no authority to refer an action against the wishes of his client, or on terms different from those which his client has sanctioned; and if he does so, the reference may be set aside, although the limit put by the client on his counsel’s authority is not made known to the other side when the reference is agreed upon (Neale v. Gordon Lennox, 1902, A.C. 465).

The committee of a lunatic, with the sanction of the judge in lunacy, may refer disputes to arbitration. As an arbitrator is chosen by the parties themselves the question of his eligibility is of comparatively minor importance; and where an arbitrator has been chosen by both parties, the courts are reluctant to set the appointment aside. This question has arisen chiefly in contracts, for works, which frequently contain a provision that the engineer shall be the arbitrator, in any dispute between the contractor and his own employer. The practical result is to make the engineer judge in his own cause.

But the courts will not in such cases prevent the engineer from acting, where the contractor was aware of the facts when he signed the contract, and there is no reason to believe that the engineer will be unfair (Ives and Barker v. Willans, 1894, 2 Ch. 478). Even the fact that he has expressed an opinion on matters in dispute will not of itself disqualify him (Halliday v. Hamilton’s Trustees, 1903, 5 Fraser, 800). So, too, where a barrister was appointed arbitrator, the 325 court refused to stop the arbitration on the mere ground that he was the client of a firm of solicitors, the conduct of one of whom was in question (Bright v. River Plate Construction Co., 1900, 2 Ch. 835).

Under the law prior to the act of 1889:

• an agreement to refer disputes generally, without naming the arbitrators, was always irrevocable, and an action lay for the breach of it, although the court could not compel either of the parties to proceed under it;
• an agreement to refer to a particular arbitrator was revocable, and if one of the parties revoked that particular arbitrator’s authority he could not be compelled to submit to it;
• when, however, the parties had got their tribunal fixed, and were proceeding to carry out the agreement to refer, the act 9 and 10 Will. III. c. 15 provided that the submission might be made a rule of court, a provision which gave the court power to assist the parties in the trial of the case, and to enforce the award of the arbitrators;
• the statute 3 and 4 Will. IV. c. 42 (s. 39) put an end to the power to revoke the authority of a particular arbitrator after the reference to him had been made a rule of court; and—a liability which existed also under the act of 9 and 10 Will. III. c. 15— any person revoking the appointment of an arbitrator after the submission had been made a rule of court might be attached.

The Arbitration Act 1889 provides that a submission, unless a contrary intention is expressed in it, is irrevocable except by leave of the court or a judge, and is to have the same effect in all respects as if it had been made an order of court. The object of this enactment was to save the expense of making a submission a rule of court by treating it as having been so made, and it leaves the law in this position, that while the authority of an arbitrator, once appointed, is irrevocable, there is no power—any more than there was under the old law—to compel an unwilling party to proceed to a reference, except in cases specially provided for by sections 5 and 6 of the act of 1889. The former of these sections deals with the power of the court, the latter with the power of the parties to a reference, to appoint an arbitrator in certain circumstances.

Section 5 provides that where a reference is to be to a single arbitrator, and all the parties do not concur in appointing one, or an appointed arbitrator refuses to act or becomes incapable of acting, or where the parties or two arbitrators fail, when necessary, to appoint an umpire or third arbitrator, or such umpire or arbitrator when appointed refuses to act, or becomes incapable of acting, and the default is not rectified after seven clear days’ notice, the court may supply the vacancy. Under section 6, where a reference is to two arbitrators, one to be appointed by each party, and either the appointed arbitrator refuses to act, or becomes incapable of acting, and the party appointing him fails, after seven clear days’ notice, to supply the vacancy, or such party fails, after similar notice, to make an original appointment, a binding appointment (subject to the power of the court to set it aside) may be made by the other party to the reference.

The court may compel parties to carry out an arbitration, not only in the above cases by directly appointing an arbitrator, etc., or by allowing one appointed by a party to proceed alone with the reference, but also indirectly by staying any proceedings before the legal tribunals to determine matters which come within the scope of the arbitration. Where the agreement to refer stipulates that the submission of a dispute to arbitration shall be a condition precedent to the right to bring an action in regard to it, an action does not lie until the arbitration has been held and an award made, and it is usual in such cases not to apply for a stay of proceedings, but to plead the agreement as a bar to the action (Viney v. Bignold, 1887, 20 Q.B.D. 172). The court will refuse to stay proceedings where the subject-matter of the litigation falls outside the scope of the reference, or there is some serious objection to the fitness of the arbitrator, or some other good reason of the kind exists.

An arbitrator is not liable to be sued for want of skill or for negligence in conducting the arbitration (Pappa v. Rose, 1872, L.R. 7 C.P. 525). When a building contract provides that a certificate of the architect, showing the final balance due to the contractor, shall be conclusive evidence of the works having been duly completed, the architect occupies the position of an arbitrator, and enjoys the same immunity from liability for negligence in the discharge of his functions (Chambers v. Goldthorpe, 1901, 1 Q.B. 624). An arbitrator cannot be compelled to act unless he is a party to the submission.

An arbitrator (and the following observations apply mutatis mutandis to an umpire after he has entered on his duties) has power to administer oaths to, or take the affirmations of, the parties and their witnesses; and any person who wilfully and corruptly gives false evidence before him may be prosecuted and punished for perjury (Arbitration Act 1889, sched. i. and s. 22). At any stage in the reference he may, and shall if he be required by the court, state in the form of a special case for the opinion of the court any question of law arising in the arbitration. The arbitrator may also state his award in whole or in part as a special case (ib. s. 19), and may correct in an award any clerical mistake or error arising from an accidental slip or omission.

The costs of the reference and the award—which, under sched. i. of the act, must be in writing, unless the submission otherwise provides—are in the arbitrator’s discretion, and he has a lien on the award and the submission for his fees, for which—if there is an express or implied promise to pay them—he can also sue (Crampton v. Ridley, 1887, 20 Q.B.D. 48). An arbitrator or umpire ought not, however, to state his award in such a way as to deprive the parties of their right to challenge the amount charged by him for his services; and accordingly where an umpire fixed for his award a lump sum as costs, including therein his own and the arbitrators’ fees, the award was remitted back to him to state how much he allotted to himself and how much to the arbitrators (in Re Gilbert v. Wright, 1904, 20 Times L.R. 164). But in the absence of evidence to show that the fees charged by arbitrators or umpire are extortionate, or unfair and unreasonable, the courts will not interfere with them (Llandrindod Wells Water Co. v. Hawksley, 1904, 20 Times L.R. 241).

If there is no express provision on the point in the submission, an award under the Arbitration Act 1889 must be made within three months after the arbitrator has entered on the reference, or been called upon to act by notice in writing from any party to the submission. The time may, however, be extended by the arbitrator or by the court. An umpire is required to make his award within one month after the original or extended time appointed for making the award of the arbitrators has expired, or any later day to which he may enlarge it. The court may by order remit an award to the arbitrators or umpire for reconsideration, in which case the reconsidered award must be made within three months after the date of the order.

An award must be intra vires: it must dispose of all the points referred; and it must be final, except as regards certain matters of valuation, etc. (see in Re Stringer and Riley Brothers, 1901, 1 K.B. 105). An award may, however, be set aside where the arbitrator has misconducted himself (an arbitrator may also be removed by the court on the ground of misconduct), or where it is ultra vires, or lacks any of the other requisites—above mentioned—of a valid award, or where the arbitrator has been wilfully deceived by one of the parties, or some such state of things exists. An award may, by leave of the court, be enforced in the same manner as a judgment or decree to the same effect. Under the Revenue Act 1906, s. 9, a uniform duty of ten shillings is payable on awards in England or Ireland, and on decreets arbitral in Scotland.

Provisions for the arbitration of special classes of disputes are contained in many acts of parliament, e.g. the Local Government Acts 1888, 1894, the Agricultural Holdings (England) Acts 1883 to 1906, the Small Holdings and Allotments Act 1907, the Light Railways Act 1896, the Housing of the Working Classes Act 1890, the Workmen’s Compensation Act 1906, etc.

The Conciliation Act 1896 provides machinery for the prevention and settlement of trade disputes, and in 1892 a chamber of arbitration for business disputes was established by the joint action of the corporation of the city of London and the London chamber of commerce. At the time when the London chamber of arbitration 326 was established, there was considerable dissatisfaction among the mercantile community with the delays that occurred in the disposal of commercial cases before the ordinary tribunals. But the special provision made by the judges in 1895 for the prompt trial of commercial causes to a large extent destroyed the raison d’être of the chamber of arbitration, and it did not attain any great measure of success.

(2) The court or a judge may refer any question arising in any cause or matter to an official or special referee, whose report may be enforced like a judgment or order to the same effect. This power may be exercised whether References under order of court. the parties desire it or not. The official referees are salaried officers of court. The remuneration of special referees is determined by the court or judge. An entire action may be referred, if all parties consent, or if it involves any prolonged examination of documents, or scientific or local examination, or consists wholly or partly of matters of account.

Source: Encyclopedia Britannica (1911)

Scots Law

History

The Arbitration (Scotland) Act 1894, unlike the English Arbitration Act 1889, did not codify the previously existing law, and it becomes necessary, therefore, to deal with that law in some detail. It differs in important particulars from the law of England. Although (as in England apart from the Arbitration Act 1889) there is nothing to prevent a verbal reference, submissions are generally not merely written but are effected by deed. The deed of submission first defines the terms of the reference, the name or names of the arbiters or arbitrators, and the “oversman” or umpire, whose decision in the event of the arbiters differing in opinion is to be final. Formerly, where no oversman was named in the submission, and no power given to the arbiters to name one, the proceedings were abortive if the arbiters disagreed, unless the parties consented to a nomination.

But under the Arbitration (Scotland) Act 1894, s. 4, here arbiters differ in opinion, they, or, if they fail to agree on the point, the court, on the application of either party, may nominate an oversman whose decision is to be final. The deed of submission next gives to the arbiters the necessary powers for disposing of the matters referred (e.g. powers to summon witnesses, to administer oaths and to award expenses), and specifies the time within which the “decreet arbitral” is to be pronounced. If this date is left blank, practice has limited the arbiter’s power of deciding to a year and a day, unless, having express or clearly implied power in the submission, he exercises this power, or the parties expressly or tacitly agree to its prorogation.

The deed of submission then goes on to provide that the parties bind themselves, under a stipulated penalty to abide by the decreet arbitral, that, in the event of the death of either of them, the submission shall continue in force against their heirs and representatives, and that they consent to the registration, for preservation and execution, both of the deed itself and of the decreet arbitral. The power to enforce the award depends on this last provision. Under the common law of Scotland, a submission of future disputes or differences to an arbiter, or arbiters, unnamed, was ineffectual except where the agreement to refer did not contemplate the decision of proper disputes between the parties but the adjustment of some condition, or the liquidation of some obligation, contained in the contract of which the agreement to submit formed a part.

And by the Arbitration (Scotland) Act 1894, s. 1, an agreement to refer to arbitration is not invalid by reason of the reference being to a person not named, or to be named by another, or to a person merely described as the holder for the time being of any office or appointment. An arbiter who has accepted office may be compelled by an action in court of session to proceed with his duty unless he has sufficient cause, such as ill-health or supervening interest, for renouncing. The court may name a sole arbiter, where provision is made for one only and the parties cannot agree (Arbitration [Scotland] Act 1894, s. 2); and may name an arbiter where a party having the right or duty to nominate one of two arbiters will not exercise it (ib. s. 3). Scots law as to the requisites of a valid award is practically identical with the law of England. The grounds of reduction of a decreet arbitral are “corruption,” “bribery,” “false hold” (Scots Act of Regulations 1695, s. 25). An attempt was made to include, under the expression “constructive corruption,” among these statutory grounds of reduction, irregular conduct on the part of an arbitrator, with no suggestion of any corrupt motive.

But it was definitely overruled by the House of Lords (Adams v. Great North of Scotland Railway Co., 1891, A.C. 31). The statutory definition of the grounds of reduction was intended, however, merely to put an end to the practice which had previously obtained of reviewing awards on their merits, and it does not prevent the courts from setting aside an award where the arbitrator has exceeded his jurisdiction, or disregarded any one of the expressed conditions of the submission, or been guilty of misconduct. A private arbiter cannot demand remuneration except in virtue of contract, or by implication from the nature of the work done, or if the reference is in pursuance of some statutory enactment (e.g. the Lands Clauses [Scotland] Act 1845, s. 32).

Judicial References have been long known to the law of Scotland. When an action is in court the parties may at any stage withdraw it from judicial determination, and refer it to arbitration. This is done by minute of reference to which the court interpones its authority. When the award is issued it becomes the judgment of the court. The court has no power to compel parties to enter into a reference of this kind, and it is doubtful whether counsel can bind their clients in such a matter. A judicial reference falls like the other by the elapse of a year; and the court cannot review the award on the ground of miscarriage. By the Court of Session Act 1850, s. 50, a provision is introduced whereby parties to an action in the supreme court may refer judicially any issue for trial to one, three, five or seven persons, who shall sit as a jury, and decide by a majority.

Source: Encyclopedia Britannica (1911)

Indian and Colonial Law

The provisions of the English Arbitration Act 1889 have in substance been adopted by the Indian Legislature (see Act ix. of 1899), and by many of the colonies (see, e.g., Act No. 13 of 1895, Western Australia; No. 24 of 1898, Natal; c. 20 of 1899, Bahamas; No. 10 of 1895, Gibraltar; No. 29 of 1898, Cape of Good Hope: s. 7 of this last statute excludes from submission to arbitration criminal cases, so far as prosecution and punishment are concerned, and, without the special leave of the court, matters relating to status, matrimonial causes, and matters affecting minors or other perons under legal disability; Trinidad and Tobago, No. 35 of 1898).

Source: Encyclopedia Britannica (1911)

Arbitration in other legal encyclopedias

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Link	Description
Arbitration	Arbitration in the International Legal Encyclopedia.
Arbitration	Arbitration in the American Legal Encyclopedia.
Arbitration	Arbitration in the Asian Legal Encyclopedia.
Arbitration	Arbitration in the European Legal Encyclopedia.
Arbitration	Arbitration in the Australian Legal Encyclopedia.

Resources

See Also

Alternative dispute resolution

Arbitration

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The Arbitration

Name

The Arbitration is the standarized name of one of the UK Tribunals and Government Offices (see the entries in this legal Encyclopedia about court rules and procedural law for more information on some aspects of the Arbitration in the UK). [rtbs name=”courts”]