Arbitration is an alternative mode of dispute resolution which affords parties and the tribunal tremendous flexibility. Generally speaking, the power of arbitrators is found in the arbitration agreement, the arbitral rules if and when applicable, and the legislation of the seat of arbitration. Such flexibility also extends to the qualifications of the tribunal. In other words, unless the parties specify criteria in the arbitration agreement, an arbitrator generally does not need to be a lawyer or have a legal background and there are no specific licencing or accreditation requirements. Arbitrators are not necessarily regulated. Some jurisdictions may, however, require arbitrators to hold the appropriate licensure or entry permits before attending meetings and hearings. For this reason, it is prudent for parties to select their arbitrators carefully.
Arbitrators are not necessarily regulated. Some jurisdictions may, however, require arbitrators to hold the appropriate licensure or entry permits before attending meetings and hearings
The act of appointing an arbitrator and the act of an arbitrator serving on a tribunal is an art. While there are no known statistics concerning the number of "professional" arbitrators around the world, the Chartered Institute of Arbitrators, one of the leading qualifications and professional bodies for dispute avoidance and dispute management has a global network of 16,000 members. This is just one institution. How does a user, especially a newcomer to the process, find an arbitrator to entrust its matter to?
It is important that the arbitrator not only fits the mould of what the parties have agreed, the arbitrator must also be a role model when it comes to ethics and have the necessary skills, experience and time to dedicate to his or her role.
Essentials of a Good Arbitrator
It is challenging to prepare a checklist of the qualities one should look for in a good arbitrator. Whether a particular individual might be suitable for an arbitral appointment will depend on a case-by-case basis. Some of the key factors to consider are the amount in dispute, the nature and complexity of the dispute, the jurisdiction in which the dispute takes place, the type of arbitration (i.e.: institutional or ad hoc arbitration), and the number of arbitrators residing on the tribunal. If the amount in dispute is small and the parties have agreed that the arbitration shall be administered by a reputable arbitral institution (i.e.: ICC, LCIA, AAA, SCC, HKIAC, SIAC), the pressure is less on finding an experienced arbitrator. If the dispute involves a specific industry like construction, it may be more desirable to appoint an arbitrator who has subject matter expertise (i.e.: an engineer or surveyor) instead of one who is a lawyer. Some parties may find comfort in appointing an arbitrator who in on the panel or list of a reputable arbitral institution; which generally includes lawyers and non-lawyers.
An experienced arbitration counsel could provide invaluable guidance to a party during the arbitrator selection process to ensure that the composition of the tribunal strikes the right balance. There are broadly four "essential" ingredients to look for when selecting an arbitrator.
First, an arbitrator must possess all specific qualifications and criteria agreed upon by the parties. Party autonomy is a cornerstone of international arbitration. Accordingly, when determining the suitability of an arbitrator, one must refer to the arbitration agreement to confirm whether there are particular requirements for the tribunal, including arbitrator qualifications and experience. Failure to meet the parties' requirements when putting together a tribunal for the arbitration proceeding could create difficulties when trying to enforce an award rendered. Such scenario is one of the grounds for challenge under The Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
When determining the suitability of an arbitrator, one must refer to the arbitration agreement to confirm whether there are particular requirements for the tribunal, including arbitrator qualifications and experience
Secondly, an arbitrator must have the highest standard of integrity. This includes being impartial and independent so that he or she can make decisions that are fair and free from bias. The legislation of developed arbitration jurisdictions; particularly those who have adopted the UNCITRAL Model Law on International Commercial Arbitration the UNCITRAL Arbitration Rules and the arbitral rules of many institutions, contain a provision that enables a party to challenge an arbitrator in circumstances that give rise to justifiable doubts as to the arbitrator's impartiality or independence. For further guidelines on how to approach the issue of conflicts of interest, one may refer to the International Bar Association's Guidelines on Conflicts of Interest in International Arbitration. A good arbitrator ought to be honest, transparent and trustworthy and not susceptible to abuse of power.
Third, an arbitrator must be competent. In other words, the arbitrator should have an appropriate set of skills and experience to minimize the risk that the arbitrator renders an award that is not enforceable. This includes, among other things, understanding the scope of his or her authority. In some cases, having language skills, subject matter expertise or knowledge of the governing law might be considered necessary for the arbitrator to carry out his or her duties. He or she should also possess soft skills such as the ability to listen and to communicate. An arbitrator should be decisive and capable of making decisions. Further, an arbitrator should have sufficient time to dedicate to the matter and should be capable of taking control and managing the proceedings efficiently and effectively. Where the parties have agreed to an ad hoc arbitration, an arbitrator who is experienced will be even more crucial.
He or she should also possess soft skills such as the ability to listen and to communicate
Finally, diversity is becoming an important part of the discourse in the arbitral selection process. The arbitration community is increasingly seeing the value that diversity brings and how it is improving the quality of the tribunals. Many agree that a diverse tribunal tends to render better decisions on the merits and heightens the possibility of coming up with flexible procedures to create greater efficiency and to meet the parties' needs.
Modern trends in arbitration
As arbitrations are mostly confidential and unlike court judgments, access to published awards is limited, therefore one must rely on first-hand experience, appointments from institutions or word of month when the time comes to select an arbitrator. Arbitrator Intelligence (https://arbitratorintelligence.com/) is an example of an artificial intelligence tool aimed at improving the arbitrator selection process. It collects information and feedback about key features of arbitrator decision making from users and counsel and uses data analytics to provide parties and counsel with insight about arbitrators' track records to improve the arbitrator selection process.
The reports generated by Arbitrator Intelligence provide data on how prospective arbitrators compare with other arbitrators on a range of data collected through its questionnaire, including frequency of granting interim measures and document production requests, interpretative methodologies in construing contracts and treaties and timeliness in issuance of awards.
Ensuring successful outcome of an arbitration
Not all arbitrators are regulated by a professional body. Parties entrust arbitrators to resolve their disputes and will often seek to appoint someone who has a track record of sitting as arbitrator and who has a good reputation. Since awards are generally not published as most arbitrations are confidential, a possible source of insight into an arbitrator's mind set is through reading articles published by the arbitrator or attending conferences where he or she is a panellist. As are limited avenues to challenge awards, there is no formal appeal process. In this regard, arbitrators need to take particular care to ensure that parties maintain trust and confidence in the arbitration process.
Since awards are generally not published as most arbitrations are confidential, a possible source of insight into an arbitrator's mind set is through reading articles published by the arbitrator or attending conferences where he or she is a panellist
Arbitrators need to be effective listeners and communicators. When dealing with parties, arbitrators need to show the parties that the process is focused on them. Arbitrators must listen carefully to what matters to the parties and implement procedures that suits all parties. They need to be able to digest the issues and ask the right questions. Further, they need to communicate decisions that enable each party to understand reasons for their decisions.
When dealing with co-arbitrators, arbitrators need to have the ability to work well with others. Again, communication skills are key. Strong communication and listening skills coupled with an openness to debate issues freely among members of the tribunal will improve the tribunal's deliberations process, drawing out on each arbitrator's strengths to form better decisions.
An arbitrator's role is to understand the parties' needs, to be empathetic and to help the parties to resolve their dispute. Therefore, it is important that the arbitrator not only fits the mould of what the parties have agreed, the arbitrator must also be a role model when it comes to ethics and have the necessary skills, experience and time to dedicate to his or her role. When considering the composition of a tribunal, the issue of diversity must not be forgotten.
Before taking on appointments, arbitrators have a responsibility to ensure that they are in a position to make independent and impartial decisions and have the requisite skill set and knowledge to carry out their duties effectively and in a timely manner.
A common criticism of the arbitration process is that it is too slow and costly. A good arbitrator needs to have the ability to take control of the proceedings and to make decisions and awards within a reasonable time frame. With regard to "reasonable" it depends on numerous factors such as the complexity of the case, among other. A good arbitrator needs to ensure that all parties feel that they have had an equal opportunity to be heard. But he or she also needs to know how to identify and put a stop to improper behaviour, for instance, attempts to use "guerrilla" tactics or unethical practices to create unnecessary delay.
When communicating an award, a good arbitrator will understand that the focus of the award is usually directed towards the losing party so that such party understands the reasons. A good arbitrator will also be familiar with how to write an enforceable award.
Arbitration only exists where the parties agree to arbitrate. Arbitrators therefore have an essential role in upholding the quality in arbitration so that users feel comfortable with this mode of dispute resolution and continue to choose arbitration to resolve their disputes.
- Are there any restrictions in the appointment of arbitrators?
- Chartered Institute of Arbitrators
- Born, G.B. (2015). International Commercial Arbitration. (2nd edn). Kluwer Law International (Volumes II and III).
- Blackaby, N. and others. (2015). Redfern and Hunter on International Arbitration. (6th edn.). Oxford: OUP
- Reyes, A. (2017). The Practice of International Commercial Arbitration: A Handbook for Hong Kong Arbitrators. (1st edn). New York: Lloyd's Arbitration Law Library.
- Turner, R. (2005). Arbitration Awards: A Practical Approach. (1st edn). Wiley-Blackwell.