Arbitration Law essay

Introduction

Arbitration is among the most preferred means of dispute resolution by parties that find themselves in controversy to each other or even foresee the likelihood that a dispute may arise from their relationship. It is not only employed in the national spheres but also in the international arena and dealings. It is created as an option available to the parties through a contract that contains an arbitration clause. “If on the true construction of the arbitration clause it is found to be valid and binding, there will be no immunity from liability for damages.” Arbitration, virtually in every sense, is the most favorable mechanism of resolving disputes. For instance, it is available at the choice of the parties in dispute. The parties also get to choose the arbitral tribunal and even set particular rules that they would like to be followed in the arbitral proceedings. The process is, in general, relatively expedient, simpler, and less costly under a neutral arbitral tribunal. This is unlike other dispute resolution mechanisms such as litigation where the parties do not have any power to set necessary rules that they would wish the court to follow. Instead, it is the court’s power to set the rules of dispute resolution according to the existing laws of the land. Any default or noncompliance with these rules of the court bears serious penalties such as contempt of court proceedings and fines.

 

Type of service

Type of assignment

Title of your paper *

Academic level

Pages

Timeframe

Spacing

Currency

  Order now

In arbitration, the arbitrators are well protected by the principle of arbitral immunity. This keeps them from potential suits by arising from their carrying out their duties as arbitrators. Such immunity applies in respect to both national and international arbitral proceedings. At the international level, there have been established different ways through which such arbitral immunity may be perceived, while others simply rely on the general provisions at the national levels. Even so, there is a general acknowledgement by both international and national legal operations that the immunity of international arbitrators should be offered as a means of protection from suits under national law. This is the stance taken and propagated by the International Bar Association (IBA). The only exception that the IBA justifies for any possible national law suits against international arbitrators includes extreme instances of deliberate or reckless neglecting the legal obligations given to them. Even in the most ideal situations, the principle of arbitral immunity bears different advantages and disadvantages.

Scope of the Arbitral Immunity

The most important aspect of the principle of arbitral immunity is the fact that it is aimed at the protection of arbitrators being sued in competing jurisdictions for decisions and actions they carried out in the process of executing their judicial capacities. According to the understanding of this concept, it is necessary to acknowledge that the arbitral immunity principle would not apply in the event of actions that any arbitrators, whether in the international or national sphere, performed without their having the required judicial authority in order to act the way they did. Arbitration is considered to be a judicial process because of the capability of the decisions made by the arbitrators to be enforced by the courts of the land. The arbitrators, in this sense, are considered to carry out their judicial duties in a similar manner as judges. This is the position taken for arbitrators under common law. In this case, therefore, the arbitral immunity of the arbitrator is only limited in so far as their actions are completely aligned with the jurisdiction under which they are empowered to act. As the ruling in the Marshalsea Case, an arbitrator’s immunity is lost upon their acting in utter absence and disregard of their jurisdiction. As a result of this holding, an arbitrator can be subject to individual liability thereby losing out on the protection by the principle of arbitral immunity.

Stay Connected

Live Chat Order now

In civil law jurisdictions, however, the position considered for arbitrators is the one of the traditional parties to a contract. Their contractual function in civil jurisdiction arbitrations is the provision of their expertise. As a consequence of such a position, arbitrators would be considered individually and collectively liable in these jurisdictions as demonstrated in Floyd and Baker. This case sought for the point that such immunity does not extend to protect arbitrators in activities that, in their nature, are legislative, individual, and administrative. With the arbitration process being a simple civil contract and the arbitrator being a mere party of the contract, the latter would strongly lose such protection in civil law jurisdictions. Most likely, this makes the arbitrator fully accountable for any committing wrongful actions. In addition to this, the arbitrator may even be at the center of criminal proceedings and sanctions.

The United Arab Emirates (UAE) has no particular rules or provisions in relation to the principle of arbitral immunity. DIFC courts are “bound by the New York Convention, and the awards made within the jurisdiction of the DIFC are to be enforced by Dubai courts without further review of the tribunal’s decision.” The concept of arbitration and its arbitral immunity principle, however, is setting the pace and having support in the region. This has been illustrated in the recent arbitration cases that took place in Dubai. The cases were between Meydan Group and WCT Holding, and a separate case against a sole arbitrator. The main standing was brought out through the way all the Dubai Courts, to the topmost Court of Cassation, handled and ruled the cases. The court, in general, ruled that the claims by the Meydan Group were against Stephen Furst QC, Humphrey Lloyd QC, and Doug Jones, who were arbitrators in a disagreement between Meydan Group and WCT Holding. In these cases, the court's most obvious holding was that the arbitral tribunal could not be sued for damages of having carried out their duties as it was required from them before and after the two parties decided that they would settle the dispute with the use of negotiations. Additionally, the courts also ruled that the members of the arbitral tribunal still held their independent and impartial status unless the claimant could prove otherwise. The court stated that “arbitrators will only be held responsible for “major errors”. The court described ‘major errors’ as “the failures to follow up clear legal principles […] with clear facts”.

Advantages of Arbitral Immunity

The principle of arbitral immunity presents a number of advantages. These advantages offer a strong case that seeks for promoting the use of arbitration in ever increasing business world. Arbitral immunity encourages dealing with and resolving disputes in a more neutral manner due to the fact that the arbitrators gain the courage to arbitrate over the disputes without fear that they might face subsequent suits in the court. In addition to this, the arbitrators are given more assurance that they later deliver a decision being best suited for a particular case. In the event that there was no arbitral immunity, there would be an increased probability that the arbitrators would seriously fail in delivering their duties whether in a judicial or purely contractual context. They would fear that the disputing parties could oppose their decision and, as a result, could sue them simply because of minor issues. They would be greatly hindered from interpreting and solving the existing issue openly.

Arbitral immunity provides an opportunity for the implementation or prevention of potential violations in public policy. In any given position in which an individual is expected to deliver his/her responsibilities as a judicial officer, there should be an environment that allows this person to act freely and independently. He or she should be able to act free of intimidation or harassment.

“It is of great public importance that they shall all perform their respective functions free from fear that disgruntled and possibly impecunious persons who have lost their cause may subsequently harass them with litigation.”

With the protection that is availed by the principle of arbitral immunity, these arbitrators can carry out their responsibilities openly and without fear of civil suits and other negative forces in the justice system. In light of this principle, the safeguard of the public interest is also guaranteed. This is because the general characteristic and air that often surround matters touching the citizenry are the ones full of threats and corrupt moves.

Arbitral immunity also has the advantage of preventing the abuse of the court process. Such abuse would present itself through various ways. For instance, if one of the disputing parties felt displeased by the decision of the arbitrators, they would simply petition the court by suing the unfavorable arbitrator seeking for their decision quashed. In some instances, the arbitrator may aspire to save both parties their time and money through the delivery comprehensive and expedient awards. Due to the lack of understanding by some of the parties to the disputes regarding general content and rationale of the award, they may make some moves to court against the arbitrator. In such cases, the given party may claim that the arbitrator violated the laid down arbitration rules. Other circumstances under which the court process may be violated include cases where the displeased party, in relation to the arbitral award, files a suit with trivial claims that are based on the sole existence of the arbitrator. For example, a party may claim that the arbitrator was partial in the sense that they stood for different views.

Disadvantages of Arbitral Immunity

Arbitral immunity is one of the most common causes of the delivery of partial arbitral awards by arbitrators. Some of the arbitrators, without obvious claim or proof of such issues as deliberate or reckless actions in contradiction of their arbitral duties, take it upon themselves to issue awards that do not resonate with the desired outcome. In some of the cases, these arbitrators simply pursue their individual interests. Some of them may be purely in the path of adventure while others may represent the wish of persons that are not even involved in the dispute in question. An example of such a case may occur where the given arbitration is crucial in the revolution of the existing arbitration rules. In fear that such a change may take place, the particular arbitrator may take it upon themselves to deliver decision that would impede the occurrence of that change.

Preferential treatment is also a disadvantage of the principle of arbitral immunity. In arbitration, a certain arbitrator may act preferentially to one of the parties. Such preferential treatment may not be exhibited by that arbitrator in an obvious manner. The occurrence of preferential treatment is commonly brought about by the soliciting of favors such as the issuance of an award in the favor of one party over the other. Another interesting favor is the reduction of possible liability on the party from which the claim is sought. In the ordinary world, the main solicitor of favors is the party that seeks for the arbitral tribunal to rule in their favor.

Conclusion

Arbitration is a favorite means of dispute resolution among many people. It is consistently on the rise, especially in the business world. This is because of the basic requirement of an arbitration proceeding being a device of conflict resolution is an arbitration clause. The latter is found in a contract at the choice of the contracting parties. Arbitration is also preferred due to its simplicity coupled with the relatively faster and cheaper nature it exhibits. Under arbitration, the arbitrated parties of the dispute choose the arbitrators and the rules to be followed. The arbitrators, in such cases, are well protected by the principle of arbitral immunity. This principle seeks for safeguarding the arbitrators from any civil suits that may arise as a result of their actions in relation to their duties as arbitrators. The adaptation of this immunity principle, in spite of its general acceptance in the international legal world, varies from one jurisdiction to another. Arbitral immunity is applied in particular instances depending on the legal system. For example, the United Arab Emirates does not have a specific stand on the application of the principle of arbitral immunity. This is the same for the arbitration virtually in its entirety. The general rule in the application of arbitral immunity, however, is that the given arbitrator acts in line with their arbitral duties. This mainly requires the duties to be of judicial nature just as in the case with judges and magistrates. Activities that are carried out with regard to the legislative or administrative duties of the involved individual do not qualify for arbitral immunity.

Arbitral immunity offers several advantages and disadvantages. For instance, it allows for free and neutral execution of the duties of arbitrators, because it provides some sense of assurance and protection to the arbitrators from potential civil suits by displeased parties to the arbitration. It also promotes the implementation and protection of public policy due to the fact that the position of the arbitrators requires that they should operate in an environment characterized as free from harassment and intimidation. In addition to these advantages, arbitral immunity helps in the prevention of the abuse of the court process. It ensures that the court simply deals with the issues and cases that it is required to. This may be as a result of the individual motive by either party to sue the arbitrators on trivial matters. Some of the disadvantages of the principle of arbitral immunity include high likelihood and encouragement of the propagation of the individual interests of the given arbitrators. Another disadvantage is the promotion of such issues as preferential treatment of the disputing parties. This is commonly due to the striving of the parties for having the arbitrators issue the arbitral award in their favor. In some instances, the preferential treatment may be provided due to the individual bribing of the arbitrators in order to reduce the extent of the claim being sought by the claimant.