Arbitration: Down but not out

by Ted Lowery
Contribution to a construction programme for Video TEN (The Einstein Network)
April 2003

It seems to be an acknowledged fact that construction arbitrations are something of an endangered species. Figures produced by the RICS Dispute Resolution Service show a marked decline in the number of appointments over the last four years:

Anecdotal evidence suggests that the decline is more severe than these figures suggest.   The decrease in the number of domestic construction arbitrations has been particularly acute and this in turn has led to some commentators to suggest that this species of arbitration will shortly become extinct. That sounds premature, but the commentators are clear on one point: that the popularity of statutory adjudication is the fundamental cause of the infamy and decline of arbitration in construction disputes.

Arbitration, perceived to be a costly and lethargic process, has suffered by comparison with its young and dynamic cousin but this comparison is by no means fair. Under the 1996 Arbitration Act, arbitration can provide a dispute resolution service that is superior to adjudication.

The general impression of arbitration as a costly and lethargic process reflects developments prior to 1996. Although originally conceived of as a means of dispute resolution that was commercially superior to litigation, over the course of the 20^th century, arbitration evolved into a form of private litigation incorporating many of the expensive, time consuming and pedantic features of proceedings in the Courts. Arbitration even suffered by comparison with litigation where by contrast, both the Judge and the venue were provided by the state at no additional charge.

One of the perceived crucial weaknesses of arbitration was the frequent lack of finality: where the law was complex and confusing it was not too difficult to find grounds upon which to appeal the arbitrator's decision to the Courts⁽¹⁾ , so that in some cases, arbitration comprised a lengthy and expensive preliminary step to Court proceedings.

The Arbitration Act of 1996 was introduced against this background with the clear objectives of reforming both the law and procedure. The underlying principles of the Act were (unusually for an English statute) set out in the opening section and may be summarised as follows:

• The objective of arbitration should be to secure efficient, fair and impartial resolution of disputes. (Section 1(a))
• The parties should be free to agree how the disputes are to be resolved, subject to public interest safeguards. (Section 1(b))
• The Court's power to interfere should be limited. (Section 1(c))

The first principle is axiomatic but the second and third principles are rather more radical, asserting as they do the concept of party autonomy i.e. that consensus between the parties takes priority, whilst the Court's power to interfere contrary to that consensus is limited.  

The provisions of the Act are generally divided into two categories: those that are mandatory and those that are non-mandatory. Bearing in mind the second underlying principle, the latter greatly predominate, pre-fixed with the self-explanatory phrase, “Unless otherwise agreed by the parties…”. Thus, although the Act has much to say about how arbitrations ought to be conducted, the Act's provisions will be superseded by the parties' agreement, (except in relation to a limited number of fundamental matters).

These underlying principles are reflected in the subsequent sections. The inherent flexibility of arbitration under the Act can be illustrated by reference to the provisions dealing with the Arbitrator's powers and the procedure to be followed.  

Powers

Section 38 sets out the general powers of the Arbitrator.   Section 38(1) states that:

The balance of the section goes on to give examples of the powers that might be exercised, (unless otherwise agreed by the parties), which include

• The power to order a claimant to provide security for costs;
• The power to inspect, photograph, preserve or take samples of any property being the subject of the proceedings;
• The power to direct that witnesses be examined on oath;
• The power to order the preservation of any evidence.

Other sections contain specific powers as follows:

• Section 37 - unless otherwise agreed the tribunal has the power to appoint experts, legal advisors, or technical assessors;
• Section 39 - the parties are free to agree that the tribunal shall have power to make a provisional award.
• Section 41   - the parties are free to agree that the tribunal shall have the power in the event that one party's failure to do something or delay, to make peremptory orders and dismiss claims if that default continues.

Note that previously, these powers were the preserve of the Courts. It was a common complaint before 1996 that the Arbitrators lacked teeth and that useful interim measures such as an order for security for costs required separate (and expensive) proceedings in Court.  

However, Section 30(1) goes beyond confirming on the Arbitrator powers previously exercisable by a judge. The section also encompasses other powers that might not normally be exercised by the Court but which might be suitable for the particular dispute.  

For example, the parties could agree that the Arbitrator have the power to order that monies in dispute be transferred to an escrow account pending the award.   More radically, the parties could agree that the Arbitrator have the power to supervise the contract and/or final account.   The Court would be very unlikely to step in this manner – the Court will not generally order specific performance in construction disputes because the Court will not administer the contract. This would be particularly useful where the contract administrator had lost the confidence of one or both of the parties.

Procedure

Section 34(1) provides that the tribunal shall decide on procedural and evidential matters, subject to the party's agreement.   Section 34 (2) sets out a non-exhaustive list of procedural and evidential matters which include the exchange of pleadings, disclosure of documents, the application of the strict rules of evidence and whether or not the tribunal should take the initiative in ascertaining the facts and the law.  

As usual, the parties have the choice but the list of procedural and evidential matters included within sub-section 2 gives some idea of the possibilities offered by these provisions.   Note for example sub-section 2(d) begins with the words, “Whether any… documents…. should be disclosed”.   Arbitration without disclosure may be something of a chimera but in many disputes where the parties have gone through the exchange of final account documents they will already have seen virtually all up of the relevant material so why should extra costs be spent on lawyers and other resources in making these documents available again.  

Sub-section (2)(h) covers the possibility of the parties' agreeing that there be no formal hearing: if oral evidence is unnecessary why go to the expense of a hearing?   (The so-called “Documents only” arbitration is explicitly provided for in a number of Arbitration Rules, for example the CIMAR Rules and the ICE Rules).

The parties are also free to agree the criteria by which the disputes are to be decided, what is usually referred to as the “governing law” of the dispute.   Section 46(1) states that the Arbitrator is to decide the dispute:

• in accordance with the law chosen by the parties……, or
• ….in accordance with …other considerations as are agreed (by the parties) or determined by the tribunal

This allows the parties a considerable degree of flexibility. In accordance with sub-section (a) the dispute may be decided in accordance with any system of law the parties agree upon: say, for example, French law, or a body of principles (as distinct from the law of a nation state) such as those of ex aequo et bono , meaning in accordance with equity and good conscience.

Sub-section (b) is wider again and hypothetically encompasses any dispute resolution process agreed upon by the parties.   There are two main fetters upon the parties' choice:

The first is the public interest safeguard mentioned in Section 1(b).   At common law, judges have used the term, “public policy” rather than “public interest”, but these two phrases mean much the same thing: for example, an agreement (for arbitration or otherwise) that is in some way illegal or has an illegal purpose will be contrary both to public policy and the public interest and therefore will not be enforceable. ⁽²⁾

Secondly, whilst the Act offers no clarification as to what, conceptually an arbitration is, by definition, an arbitration does require some consideration of the merits of the dispute.   Thus whilst deciding a dispute by means of tossing a coin might not be contrary to the public interest ⁽³⁾ , it would probably not amount to an “arbitration” for the purposes of the Act.

1. Particularly after the Arbitration Act of 1950 introduced a right of appeal to the Court by way of case stated although generally speaking rights of appeal were narrowed by the Arbitration Act of 1979.

Bearing these provisions in mind, the range of Section 46(1) may be considered in the light of the following examples:

Example 1

Example 2

Example 3

Example 4

Example 1 would fall foul of the public policy restriction. Trial by combat used to be legal in England ⁽⁵⁾ (arguably up until the 19 th Century in the form of the duel), but in our supposedly more enlightened times, the potentially fatal consequences for either participant would mean that any agreement to trial by combat would almost certainly be contrary to public policy as having a criminal object.   Likewise, exchanging blows with battle-axes does not amount to a review of the merits save in the eyes of providence.  

2. The classic example being that of the agreement between two highwaymen as to the division of the spoils.

3. In Woodward v Sarsons (1875) LR 10 CP 733 Lord Coleridge CJ indicated that deciding a local election by means of tossing a coin would not be lawful but that was in circumstances where electoral law required a secret ballot.

4. A body of rules devised by Hammurabi, King of Babylonia during 18 th Century BC.

Example 2 would work up to the point that the Hammurabic Code did not conflict with the public interest restraint.   For example Law 233 requiring a builder to rebuild toppling walls at his own costs would be fine, but Law 229 prescribing death for any builder who's works collapse and kill the owner would not be.

Examples 3 and 4 would both be acceptable without qualification.

The Act also imposes a co-existent obligation upon the Arbitrator to adopt a flexible approach.   Section 33 of the Act, which is mandatory, places a general duty upon arbitrators to act fairly and impartially (in accordance with the first principle). Section 33(1)(b) requires arbitrators to:

This is important because whilst the parties not may be able to agree on particular powers or procedures, under Section 33 the Arbitrator could still order that those powers or procedures apply.   It is to be noted that Section 33 reflects the spirit of the Woolf reforms introduced under the Civil Procedure Rules in 1999.   Lord Woolf has stressed the proactive approach required of Arbitrators under the Act:

5. In 1398 a Court of Chivalry ordered that a dispute between the Earls of   Mowbray and Bolingbroke (later Henry IV) be decided by trial by combat.

The Act should therefore have heralded a new era in arbitration practice. Unfortunately, despite the plethora of innovation and potential in the Act and the encouragement of Lord Woolf and others, in the construction field at least, the provisions of the Act remains largely under-used. There are a number of reasons why those involved in construction arbitration have not made full use of the Act's provisions:

• In contrast to the Civil Procedure Rules introduced by the Woolf reforms, the Act's provisions are not obligatory.   Arbitration remains a matter of private contract and therefore susceptible to party, lawyer and arbitrator conservatism.
• A sharp decline in a number of disputes being referred to arbitration.   This was in part caused by previous dissatisfaction which led to arbitration clauses in contracts being struck through as a matter of course, but primarily because of the impact of adjudication.    

Statutory adjudication has been available to parties to construction disputes since 1 st May 1998 and has proved phenomenally popular. The vast majority of construction disputes are now disposed of through adjudication. As a result, and contrary to the expectations of the Latham Report, adjudicators have been confronted with huge amounts of paperwork, and required to decide issues of great complexity carrying serious monetary consequences, all within 28 days. Moreover, as very few adjudication decisions are “revised” by Court or arbitration, in most cases, the Adjudicator's decision is final.

At a practical level, the increasing complexity and range of referred disputes has led to perceived problems with adjudication as follows:

• Some adjudicators lack the skill or experience to deal with complex claims, for example time claims which require planning and programming expertise, or money claims which require forensic accounting skills.
• The chances of successfully resisting enforcement proceedings are increasing.
• Unless extended, the 28 day period is simply too short to properly and fairly deal with the points in issue.
• The parties' costs are almost always unrecoverable and these costs may be significant where complex claims require detailed presentation by consultants, lawyers, experts etc.

On the legal side, with over 120 judgments on adjudication issues since 1999, a distinct body of adjudication law has developed.   In certain respects these developments may cause problems for a contractor wishing to bring a “typical” building claim. For example:

• To be referred to adjudication a “dispute” must have been fully explored and considered by the parties during the course of an open exchange of views and arguments ⁽⁷⁾
• This means that the claiming party must get the claim fully worked up in advance (with front end cost implications) and makes it easier for the receiving party to argue, tactically, that it hasn't had time to consider the claim.

6. Forward to the Handbook of Arbitration Practice – Sweet & Maxwell 1998

• Adjudicators may only deal with disputes arising out of contractual terms and the effects of contractual terms which are recorded in writing with a necessary degree of certainty⁽⁸⁾ .    Contractual documents are frequently incomplete and again the receiving party may find it easy to argue uncertainty of terms.
• Adjudicator's decisions may not be enforced by the Courts where there is evidence (which may be minimal) that the receiving party may not be able to repay the money if subsequently ordered to do so ⁽⁹⁾ .   Thus the principal aim of the adjudication legislation – that of improving cash flow - is thwarted.

These problems mean that those wishing to bring construction claims may have justifiable concerns about the effectiveness of adjudication, in particular bearing in mind the non-recoverability of costs. Alternatively, they may find that legal developments simply debar them from commencing adjudication proceedings.

• What about arbitration? The bulk of these problems could be circumvented if the parties chose arbitration instead. Compare adjudication and arbitration in the light of the problems listed above :
• Is there a dispute? Although a dispute needs to exist to be arbitrated, arbitrators are likely to be more flexible in their approach to interpretation and will usually allow amendments to claims even though the claim post-dates the proceedings.
• Are the contract terms all in place?   As long as you have an arbitration clause then you can arbitrate irrespective of the omissions in the balance of the contract papers.  
• Overall competence: a properly selected arbitrator should have all the requisite skills and experience to deal with the dispute.
• Costs: crucially, arbitrators have the power to award costs.  

So in these instances, adjudication's loss is arbitration's gain. It will be said that adjudication still enjoys the significant advantage of speed. Maybe so, but theoretically the parties may agree a 28 day period for their arbitration or any period which allows sufficient time to deal with issues properly whilst achieving a decision within a reasonable period of time.

Under the Act, here is nothing to stop the parties agreeing upon an expedited hybrid arbitration that combines the alacrity of adjudication with the flexibility of arbitration. Bearing in mind that flexibility, the possible permutations are endless but by way of example, construction specialist barrister Paul Darling QC recently suggested ⁽¹⁰⁾ an arbitration procedure with the following principal characteristics:

The arbitrator to publish the award within 100 days from the date of appointment and his/her remuneration based upon achieving that timetable.

• A Statement of Case to be served within 7 days of commencement and the Response to be served within 28 days thereafter.
  
• Within 7 days of receipt of the Response, the Arbitrator (as empowered under Section 39 of the Act) to decide whether or not to make a provisional award.
  
• Limited provision for disclosure of documents.

for Advanced Legal Studies – Autumn 2002

It is tolerably clear that the relationship between the parties inter se to a domestic arbitration is contractual albeit that, where the arbitration is subject to the Arbitration Act 1996, (“the Act”) the statutory influence on that contract is considerable. What is more uncertain, and largely unexplored either by commentators or in the authorities, is the legal nature of the relationship between the Arbitrator and the parties; yet the dynamic of this relationship is fundamental to an understanding of the arbitral process. And an understanding of the true nature of arbitration is, it is suggested, a prerequisite for further development so as to realise more efficiently the aims of the parties, and to ensure that there is recourse to clear points of first principle when questions arise in practice to which case-law and statute have no specific answer.

The relationship may, it is suggested, be resolved in any of three fundamental ways: quasi contract, contract, or status. But these possibilities are not necessarily discrete: there may be at work coexisting parallel relationships, one status based and the other contractual. Or the relationship may be hybrid: primarily status based but subject to a consensual element (“status-with-contract”) or primarily contractual but subject to a regulatory, status element (“contract-with-status”).

Historical basis of arbitration in England and Wales

At this point it is constructive to consider the historical basis of English domestic arbitration and examine whether its roots give any guidance as to the nature of the relationship.

Such consideration readily reveals how much of the confusion over the nature of the relationship has arisen. By 1698, the year in which arbitration first became the subject of statutory influence, there were in existence three ways in which an arbitration could arise and operate.

1. The first was an arbitration commenced at Common Law without the Court's involvement. This was the traditional method of arbitration whereby the parties agreed on an arbitrator who then proceeded to determine the issues privately between the parties without recourse to the Court. Whilst the procedure was a judicial process in that, in very limited and ill defined circumstances, the parties could invoke the aid of the Court by way of a Bill in Equity, it was not subject to systematic Court regulation or assistance. Most importantly, the authority of the Arbitrator could be revoked unilaterally by either party, albeit that such revocation would constitute a breach of contract for which an action in damages (if any) would lie; and later, revocation gave rise to a substantive financial penalty where the parties mutually provided penal bonds.
2. The second form of arbitration was a reference by the Court in a pending suit. Since medieval times the Court had recognised that arbitration had a role to play in the resolution of disputes, and the Year Books frequently record the referral by the Court of some or all of the issues in a pending suit to the decision of an arbitrator: in practice usually a referral of issues of fact. This procedure had the advantages of, on the one hand, enabling the parties to select the tribunal best qualified to decide the dispute, or part of it, while nevertheless retaining the sanction of the Court for a party's refusal to proceed with the arbitration, or for arbitrator's misconduct - because the procedure remained inherently a Court process.
3. The third method comprised reference to arbitration pursuant to statute. The success of referrals to arbitration in a pending action culminated in an Act of 1698 which enabled parties to an arbitration to make the reference a rule of Court. That is, the parties could effectively register their arbitration agreement with the Court; and their agreement thereby became subject to a similar sanction for non-observance as obtained in suits commenced in Court and subsequently referred to arbitration.

Thus, by the end of the 17th Century there were, effectively, three forms of arbitration in existence exhibiting the characteristics of a status or contractual relationship between the Arbitrator and the parties in varying degrees. In arbitrations of the first type set out above, the Arbitrator derived his authority solely from the agreement of the parties, and the Court had extremely limited ability to intervene in the Arbitrator's relationship with them. In such arbitrations, the relationship of the Arbitrator and the parties appeared to owe little to status and much to consent, or contract. Conversely, in references to arbitration in a pending suit, the Court retained an inherent power of intervention throughout the proceedings, in particular possessing coercive sanction for failure of the parties to honour the agreement to arbitrate, or for misconduct by the Arbitrator. In these arbitrations, despite the requirement for consensus to bring the arbitration into being, the authority of the Arbitrator appeared to owe far more to the external authority of the State through the Court than to the parties' consent. In the third method, an intermediary position was reached whereby the parties initiated the arbitration without reference to the State, and then invoked the State's authority for regulatory purposes.

It is the third method which is the truest ancestor of arbitration under the Act, for the 1889 Arbitration Act repealed all previous legislation on arbitration, effectively taking the position back to pre-1698, except for the provisions of the 1889 Act itself; and first 1950 Act and then again the Act repealed all previous legislation, albeit effectively reinstating it by way of consolidation. Consequently, the inherent powers of the Court to regulate an arbitration, i.e. those powers, such as attachment for contempt, with which the Court was vested because arbitration was essentially a Court process, have now disappeared and with them the clearest hallmarks of a State-oriented process featuring a tribunal answerable to the Court rather than to the parties. What remains is a system of regulation; of mandate and prohibition, intended to assist in the progress of the arbitration to ensure compliance with the agreement to arbitrate and the honouring of the award.

It is, therefore, necessary to consider further whether arbitration as now constituted springs from a relationship between the Arbitrator and the parties which is essentially status or contractual based.

First Principles

Consideration of the question from first principles produces no obvious answer. It is suggested that an analysis of the relationship between the Arbitrator and the parties in terms of quasi contract can readily be rejected as that concept could only account for the remuneration of an arbitrator, and not for the entire gamut of the Arbitrator's and the parties' liabilities and responsibilities. In fact, quasi contract does not even constitute a satisfactory theoretical concept for dealing with the remunerative aspects of the relationship since, historically, arbitrators often acted without payment, but this did not negative the existence of other rights and liabilities.

However, many of the aspects of the relationship can be viewed in contractual terms. Thus, arbitrators, unlike judges, are now generally paid for their services. Even to the extent that they are not, as Mustill & Boyd point out at page 221: “the relationship does have some semblance of mutuality, and strict compliance with the doctrine of consideration is no longer essential to the existence of a contract, if the circumstances are such as to show that a legally enforceable contract is what the parties intended - New Zealand Shipping Co v A M Satterthwaite & Co, “The Eurymedon” (1974) 1 Lloyds Rep 534 (1975) AC 154.”

Almost all the other elements of a contract - offer, acceptance, legality, certainty and an intention to enter into a legal relationship are obvious requirements of an arbitration, though not necessarily capacity: there is nothing in modern authority to suggest that a minor cannot make a valid award.

A further point in favour of viewing the relationship as one of contract (a point which also militates against the status theory) is the ability of the parties, within the limits of public policy and prior to the appointment of the Arbitrator, to enlarge or restrict the Arbitrator's powers by means of the provisions of the arbitration clause. Thus, the parties may require the Arbitrator to operate a specific body of arbitral rules such as those of the JCT, ICE or ICC. This appears inconsistent with the immutability of mandate which would be expected if his authority were determined by status: if status is of the essence of the relationship, it is an unusual status which can be widely drawn by the parties themselves or, alternatively, the relationship may be a hybrid, founded on status but regulated by contract - i.e. status-with-contract. Thus, the right to payment could be regarded as emanating from the Arbitrator's status but with the level of payment determined by contractual principles.

Equally, certain aspects of the relationship are antipathetic to the contractual approach. In particular, the parties' remedies for breach of duty by the Arbitrator (where the arbitration is subject to the Act) are alien to those habitually associated with breach of contract. The assistance that the question of arbitrators' immunity from suit can give to the analysis of the relationship will be considered in detail below. For present purposes it is sufficient to note that immunity is confirmed by Section 29 of the Act, except where the Arbitrator acts in bad faith. Therefore, the parties' rights against an arbitrator who acts contrary to his brief are limited to applications to have him removed pursuant to Section 24 of the Act, or to have his award set aside for serious irregularity pursuant to Section 68. There are, however, two ways of considering this apparent divergence from a contractual structure. One is to accept that the Arbitrator's authority is in fact status based, albeit a status which the parties can define by agreement at the beginning of the reference. The other is to regard the Arbitrator as fundamentally a creature of contract, but a contract of a rather special kind: a contract which operates within a statutory framework. That latter method of analysis is supported by the fact that the statutory process is permissive. The parties are free to agree (contract for) a Common Law arbitration which does not take place in accordance with the Act. However, if they decide upon an arbitration under the Act (i.e. enter into an “arbitration agreement” within the meaning of Section 6 of the Act), they are bound to accept the scheme of the Act in its entirety. English law is no stranger to statutory interference in parties' contracts, for example the non-excludable provisions of the Unfair Contract Terms Act 1977 and of the Sale of Goods Act 1979 and, therefore, the statutory framework of the Act is not in itself a bar to analysis of the relationship between the parties and the Arbitrator in contractual terms.

Superficially, an analysis based on the coexistence of two relationships, one status generated and the other contractual is attractive: thus, those aspects which concern remuneration and other rights and liabilities specific to the particular reference could be seen as arising pursuant to contract, and those elements of the relationship which constitute non-excludable obligations - such as the Arbitrator's obligation to avoid bias towards the parties, could be seen as arising pursuant to a separate, status based relationship.

However, on closer examination this approach is open to serious objection. In particular, various fundamental aspects of the relationship do not obviously fall exclusively into one or other category. Thus, in deciding the procedure to be followed for the specific reference, it is necessary to have regard both to the arrangements the parties have made themselves and to the provisions made by the State by means of statute or case-law. Even more significantly, there is no universal source of an arbitrator's authority: i.e. it can be brought into being either by statutory imposition or by consent. Thus, Section 18 of the Act makes provision for appointment of an arbitrator in default of consensus between the parties, but the parties are not obliged to look to the Court (i.e. the State) at all, in which case the appointment is purely a matter of private arrangement. Further, the extent to which the relationship derives from one or other source is itself a variable: in respect of a statutory County Court arbitration, the Arbitrator's authority derives solely from status; in a private arbitration pursuant to the Act it is a hybrid; and in a Common Law arbitration, not subject to the Act at all. It is suggested, therefore, that the absence of a logical manner of unravelling the strands of fundamental aspects of arbitration and identifying them variously as status or contract based, militates against the idea of two distinct relationships with differing bases for each.

Accordingly, on the above analysis, there appears to be no answer as to the nature of the relationship capable of arbitration from first principles.

Effect on the relationship of terminating the reference

In the absence of clear guidance from first principles it is appropriate to consider the matter from a different angle, i.e. by examining aspects of arbitration in operation, empirically, and see if that assists in establishing the true position. One obvious area of consideration is the manner in which the parties' contract inter se, i.e. the contract to arbitrate, can be terminated. This may occur in two ways, either consensually, because the matter settles or, more unusually, by one of the contractual methods contemplated by the cases, e.g. by repudiation (in very limited circumstances) - Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Limited (1981) AC909, 962 (1981) All ER 289, (1981) 2WLR 141 or consensual termination without an award - Allied Marine Transport Limited v Vale do Rio Doce Navegacao SA The Leonidas D (1985) 2 All ER 796, (1985) 1 WLR 925. What, in such circumstances, are the consequential effects on the parties' relationship with the Arbitrator? Do those consequences give any insight into the nature of that relationship?

Dealing first with determination by settlement. If the parties request the Arbitrator to embody that settlement in an award then plainly he has always had the power to do so: the fact of settlement does not render him functus officio; and that power is now embodied in Section 51 of the Act. Any other conclusion would frustrate the purposes of Section 6 of the Act which is intended to assist enforcement of awards. Prior to the Act, the Arbitrator's making of the consent award could be resolved in either contractual or status terms: he was doing what he contracted with the parties to do, or he was doing what his status empowered him to do.

More difficult was the question which also arose prior to the Act of whether the Arbitrator became functus officio if the parties reached a settlement but did not request the Arbitrator to publish a consent award. Did the Arbitrator retain authority until he made a formal award? If yes, his relationship with the parties appears to be largely status orientated, the formality of an award being an irremovable condition precedent to the termination of the reference. If no, the process has a greater semblance of contract: the Arbitrator's relationship with the parties could either terminate through abandonment or, alternatively, remain extant indefinitely but with all the parties' rights to require the Arbitrator to make an award ultimately becoming statute-barred. Mustill and Boyd at page 128 adopt the former approach: “If (a settlement agreement) took place before the Arbitrator was appointed, he has no jurisdiction, for this appointment relates only to current disputes. If it took place afterwards, the Arbitrator will have jurisdiction, for it was not only his right but his duty to deal with all matters in dispute, and a matter does not cease to fall within his duty merely because the parties are agreed upon the outcome.”

The suggestion that the Arbitrator had a “duty”, to make an award as well as a right which subsisted after the parties have reached a settlement, and irrespective of their wishes, was plainly to adopt the status viewpoint, but Mustill and Boyd advance no authority in support of the proposition. Indeed, their view seems to sit uncomfortably with the position regarding Common Law arbitrations. Cases as early as Vynior's Case (1610) 8 Co Rep 80 demonstrate that the arbitration mandate was (and is) revocable by either party unilaterally at any time before the award.

However, the question can be considered in more depth by analogy with the High Court process. In the High Court, beyond doubt, the Judge is a creature of status - see the analysis respecting immunity (post). Thus, in a case which went to trial before an Official Referee in 1991, judgment was given and the parties were asked to agree a trial certificate; and until a trial certificate is formally registered the case remains technically incomplete. Usually the trial certificate is drafted by the Court, but in this case there were special reasons why it was considered desirable that it should be agreed by the parties themselves. By December 1995 the parties had still not reached agreement. If the certificate were to remain unagreed in five years or fifteen years time it is suggested that the case would remain on the Court record and the Court would have “the right and the duty” formally to issue the judgment. The rationale for this is that the State does not die: even if the Judge concerned retires (as, in fact, occurred here) the Court's rights and duties subsist; and the process being one of status the parties cannot terminate the process by consent, even though they, or one of them, invoked its operation.

Arbitrations look superficially similar, for an arbitrator too is, unlike an expert decision maker, part of a larger and continuing system: indeed the same system of which the Judge is an organ. On the death of an arbitrator, even if the parties cannot agree on a replacement, and even if the arbitration agreement (or any rules it incorporates) fails to incorporate a mechanism for replacement, the State makes provision for a replacement by operation of Section 18 of the Act. So to this extent the Arbitrator, like a judge, looks like a creature of status.

However, it can be legitimately argued that the analogy is unfounded. If a judge retires, the State retains uninterrupted responsibility for his part-heard cases. If an arbitrator dies, or refuses to act, there is no automatic replacement of the Arbitrator: a new arbitrator is appointed only as a function of the parties' continuing obligations under their contract to arbitrate. There is no subsisting authority with an obligation to give an award, and if a new arbitrator is appointed, that appointment is pursuant to a new arrangement with a new individual, quite possibly on different terms. And, in any event, no assistance is given by the State in respect of a Common Law arbitrations, emphasising the fact that the State is a facilitator of, rather than an originator of, the arbitral process. This favours the contractual, or at least contract-with-status analysis.

The position is equally uncertain on consideration of the effect on the relationship between the parties and the Arbitrator should the contract between the parties inter se be terminated by one of the contractual methods contemplated in Bremer Vulkan and The Leonidas D, such as repudiation or abandonment. In such a case there is no settlement for the Arbitrator to ratify by award either as a matter of right or duty, and a respondent may not wish to risk stirring the matter into life by seeking a formal termination of the proceedings. There appears to be no authority as to whether the Arbitrator's authority subsists in such circumstances, but for the reasons enunciated in the above paragraph, i.e. the absence of any continuing authority over the reference on an arbitrator's ceasing to act, e.g. consequent upon death or disability, the contractual or contract-with-status analysis again seems more likely. On abandonment or consensual termination the Arbitrator would be entitled to recover remuneration on ordinary contractual principles.

The Act has imported a degree of clarity into the position. Section 51 provides that if the parties settle their dispute the Arbitrator must terminate the substantive proceedings and, if so requested by the parties, and not objected to by the Arbitrator, must record the settlement in the form of an agreed award. Insofar as the Act regulates the settlement process, that regulation by definition tends to direct the Arbitrator/parties relationship towards status orientation. However, the position remains open where the reference terminates at common law without settlement.

Arbitrator's immunity

As noted above, a further potential source of understanding of the relationship arises from examination of the Arbitrator's immunity: whether it exists and, if so, the source from which it derives. The issue is now put beyond doubt by Section 29 of the Act but it is, for present purposes, instructive to consider the pre 1996 authorities. The most important authorities relevant to the this issue were Sutcliffe v Thackrah (1974) All ER 859 and Aranson v Casson Beckman Rutley & Co (1975) 3 All ER 901. Those cases were inconclusive in that:

1. whilst the majority of their Lordships in each case considered that arbitrators were indeed immune, that view was by no means unanimous;
2. since the cases concerned the separate question of whether a certifier or valuer was immune from suit, the views expressed as to arbitrations were, in any event, obiter.

In both Sutcliffe and in Aranson , the majority of their Lordships seemed to have assumed that an arbitrator had immunity, and there is little consideration in the judgments as to the rationale behind such analysis. In Sutcliffe, Lord Reid, with whom Lord Hodson agreed, and Lords Morris and Dilhorne all made the assumption that the proposition was “clear in law”. Lord Reid held that the basis of the immunity was that without it, arbitrators would potentially be harassed by actions which had little prospect of success. Lord Morris stated simply that immunity arose because the Arbitrator, in contradistinction to a valuer, is fulfilling a “judicial function”. Little more assistance is to be gleaned from Lord Salmon's judgment. He said that judges, barristers, solicitors, jurors and witnesses all have immunity for reasons of public policy. However, his analysis was confined to stating that immunity is “vital to the efficient and speedy administration of justice,” and that immunity was extended to arbitrators because they are “in much the same position as judges, in that they carry out more or less the same functions.”

The Judges in Sutcliffe then went on to articulate the distinctions between arbitration and valuation, thereby purporting to explain why immunity did not (and does not) extend to that latter category.

There is little material here with any bearing on the nature of an arbitrator's authority. Emphasis was laid on the Arbitrator's fulfilment of a “judicial function” which hints at a status rather than a contractual analysis, but it was the performance rather than the source of the mandate of the Arbitrator which was analysed in judicial terms, or quasi judicial terms: an extremely important distinction noted by Lord Kilbrandon in Aranson (see below).

The judgments in Aranson are slightly more illuminatory. Lords Simon, Wheatley and Salmon simply affirmed the reasoning in Sutcliffe. However, Lord Salmon did admit the possibility that the Arbitrator in a commodity arbitration might incur liability for the negligent performance of his duties:

In that case ( Finnegan v Allen (1943) 1 All ER 493 (1943) KB 425) Goddard LJ, for whose views I have always had the greatest respect, stated that if a dispute arose between a buyer and a seller, e.g. as to whether goods sold and delivered corresponded with the sample or were of merchantable quality, an expert appointed as an arbitrator to inspect the goods and decide the question in dispute was automatically immune, in any circumstances, from being sued in negligence by either party. This may be so, but I prefer to offer no concluded opinion on this question. Undoubtedly such an expert may be formally appointed as an arbitrator under the Arbitration Acts, notwithstanding that he is required neither to hear nor read any submission by the parties or any evidence and in fact, has to rely on nothing but his examination of the goods and his own expertise. He, like the valuer in the present case, has a purely investigatory role; he is performing no function even remotely resembling the judicial function save that he finally decides a dispute or difference which has arisen between the parties. If such a valuer who is appointed as an arbitrator, makes a decision without troubling to examine the goods, surely he is in breach of his duty to exercise reasonable care, so would he be if he made only a perfunctory and wholly careless examination.

Thus, Lord Salmon appeared to accept that immunity might not be available to an arbitrator in such circumstances because he was not carrying out “judicial functions”. However, it is suggested that Lord Salmon elided two concepts which are, in fact, distinct: the carrying out of a process in a judicial manner, and the carrying out of a judicial process. The parties could, even pre Act, consent to the Arbitrator's acting in a non-judicial fashion - Town & City Properties (Development) Ltd v Wiltshier Southern Limited and Gilbert Powell (1988) 44BLA 109 That does not of itself signify that the process undertaken is non-judicial. And whether the process is or is not judicial may well assist determination of the question of the nature of the Arbitrator's authority.

Lord Kilbrandon, with whom Lord Fraser appears to have intimated agreement in this respect, grasps the point precisely in not only holding that a valuer might be sued for negligent performance but also in expressing the view that an arbitrator also lacked immunity:

Accordingly, Lord Kilbrandon, after careful juridical analysis, regarded the relationship with the Arbitrator as contractually based: and the Arbitrator's authority is contractually based because he is brought into the arena by the consent of the parties; he is not imposed upon them in the manner of a judge.

But is this analysis correct? In order to determine this question it is necessary briefly to consider the foundations upon which judicial immunity is based. In Garnett v Farrand (1827) 6 B&C 611 (1824-34) All ER 244 at 246 the rationale was held by Lord Tenterden CJ to enable judges to decide “free in thought and independent in judgment, as all who are to administer justice ought to be.” Similarly in Taafe v Downes (1813) 3 Moo PCC 36 Fox J referred to decision “uninfluenced by fear and unbiased by hope”. The rationale behind those cases appears to apply equally to arbitration: indeed, Lord Tenterden specifically states: “as all who are to administer justice ought to be.”

However, those cases, it is suggested, are underlaid by the tacit understanding that the entity to which the immunity was held to attach was an organ of the State. This is, perhaps, apparent from the use of the word “administer” in the above quotation which, even at the time the judgment was delivered, was probably inappropriate to cover private methods of dispute resolution. Certainly, the juridical analysis of Lord Kilbrandon's judgment in Aranson is absent and that analysis, being internally consistent, is difficult to refute. It is, of course, possible simply to state baldly, as the Judges did in Sutcliffe and as did the majority in Aranson , that public policy demands arbitral immunity so that arbitrators, as judges, can decide without fear or favour. This would favour a viewing of the Arbitrator's authority on a status basis. Lord Kilbrandon, however, also disposed of that point. If an arbitrator had such an immunity, why not a valuer or certifier? For the purposes of determining immunity there is little to differentiate the processes. Both are private methods of dispute resolution brought into operation by the agreement of the parties, and even arbitrators are not obliged to pursue a quasi curial procedure. A more convincing distinction is between adjudication by an individual chosen by the parties for his skills, and judgment by a judge imposed on the parties by virtue of a system, the State, whose very existence is only comprehensible in terms of public policy. If this analysis of Lord Kilbrandon is correct, this is a factor in favour of the viewing of the relationship between the Arbitrator and the parties in contractual or at least contract-with-status terms.

Arbitrators' appointments

Further pointers to the nature of the Arbitrator's authority may be extracted from consideration of the manner in which arbitrators are appointed, and accept their appointment. Of course, in one sense, the appointment of an arbitrator clearly has the appearance of a contractual process. He enters the arena because the parties have asked him to enter it, and they generally agree with him the terms on which he will act, and his remuneration. Unlike the operation of the High Court system, the parties are unrestrained as to the identity of the Arbitrator. However, in the event that the parties cannot agree an arbitrator, one will be appointed for them, either by an institution such as the CIArb, RICS, RIBA, ICE or ICC, or (as a final resort and if the arbitration is subject to the Act) by the Court pursuant to Section 18 of the Act. The latter method of appointment appears superficially similar to the assignment of a judge to a particular case, suggesting that the authority of an arbitrator may be one of status. In fact, the residual nature of the Court's power of appointment makes it more likely that the Court is merely facilitating an arrangement of the parties rather than providing the basis of it. The issue is strengthened by the absence of such assistance for Common Law arbitrations.

Greater profit can be obtained, however, by examining the situation where one of the parties refuses to agree the terms of an arbitrator appointed by an institution or by the Court. Plainly, if a party unreasonably refuses to agree, he is in breach of his contractual obligations vis a vis the other party. But enforcement of such obligations is problematic. It seems unlikely that, in practice, specific performance could be compelled and damages for breach of contract are probably unquantifiable. If arbitration agreements are not to be avoidable by non-compliance, it is essential, therefore, that they are otherwise enforceable.

In considering appointment by institutions it is immediately apparent that there is no consistency. Under the RICS regime, the Arbitrator is appointed from the moment he receives notice of the appointment. If one of the parties refuses to agree the Arbitrator's rates, or other terms proposed, it is suggested that the Arbitrator cannot impose them. Equally, there is no provision for the Arbitrator to retire from acting once appointed. However, it is suggested that whether the Arbitrator's authority is analysed in terms of status or contract, the position is the same: in either case the Arbitrator is entitled to be paid a reasonable sum whether his contract or his status is the source of that entitlement.

More difficulties arise, however, where the appointment is made by, for example, the RIBA. Such appointments are not perfected until the Arbitrator confirms his willingness to act; and he may make that willingness conditional upon his terms being accepted. If one party, in bad faith, refuses to accept any set of proposed terms, it appears at first sight that the arbitration agreement may be frustrated as the proposed arbitrator may refuse the appointment in such circumstances. It is suggested that the lack of compulsion on an arbitrator to accept the reference and the lack of a procedure by which a party can be obliged to submit to reasonable terms gives the look of the Arbitrator's relationship with the parties a quality that appears to have more of the contractual than of status about it. In fact, if an arbitrator's terms cannot be agreed such that the Arbitrator refuses the appointment it seems that the Court's residual power of appointment pursuant to Section 18 of the Act becomes operable. On its face, such appointments appear to be founded in status, being made by an organ of the State. However, as indicated earlier it is more likely that the Court is merely assisting the operation of an underlying contract. As in the case of RIBA appointments, a Court appointed arbitrator would be entitled to reasonable remuneration whether the relationship with the parties is resolved in contractual or status terms.

It thus appears from the above that one, at least, of the parties to an arbitration agreement can be compelled to enter into a relationship with the Arbitrator; and this at first sight appears to militate against that latter relationship's being contractual. Moreover, if that agreement were itself contractual it might be argued that the underlying arbitration agreement constitutes an agreement to agree and, as such, is void for uncertainty. However, closer analysis shows this reasoning to be false. To the extent that an institution or the Court appoints an arbitrator in circumstances where one of the parties refuses to agree terms, effect is being given to the underlying contract between the parties: the appointment of the Arbitrator, even if that appointment brings into being a further contract, is what the parties bargained for. On that analysis it is an implied term of the agreement between that parties that they will appoint the Arbitrator on terms which are agreed between all of them or, in default of agreement, on the basis of payment of reasonable remuneration to the Arbitrator. Similarly, arbitrators prepared to offer themselves for appointment by the Court or the RICS are also, on this analysis, through the medium of the Court or the RICS making an open offer to contract with parties who wish to arbitrate on terms which are agreed between the Arbitrator and the parties or, in default of agreement, on the basis of reasonable remuneration. Alternatively, the Court or the RICS could be seen as acting as the Arbitrator's agent to bind him into a contract with the parties. Again, examination of Common Law arbitrations is useful. If the parties refuse to agree an arbitrator there is no mechanism for arbitral appointment - the State will not intervene. This absence of an inherent right of State intervention to appoint again tends to support a contractual view of the Arbitrator/parties relationship. What is true of Common Law arbitrators must also be true of arbitrations under the Act, unless it can be demonstrated that the two processes are jurisprudentially distinct, although it is indeed possible to mount a respectable argument that Common Law arbitrators are indeed distinct from arbitrations under the Act and their functions are more akin to expert adjudication).

A bilateral or tripartite contract

A further investigation which may be illuminatory, on the hypothesis that the relationship between the Arbitrator and the parties is contractual, relates to whether that contract is bilateral, i.e. between the parties jointly and the Arbitrator, or tripartite, i.e. a three way contract. Again, there is little useful authority. Section 28 of the Act confirms that the parties are jointly and severally liable for an arbitrator's fees, but this does not resolve the issue in favour of a tripartite relationship: that may amount to no more than an acknowledgement that the single contracting entity (i.e. the disputants together) have separate legal personae and, despite contracting jointly, have individual responsibilities to the Arbitrator.

The Court's view of the relationship may be evidenced by the manner of proceeding in the High Court to be pursued by a party in the event of an arbitrator's default. If the relationship were bi-lateral it would be consistent to expect any action for dismissal for misconduct to lie at the suit of the parties jointly, naming the Arbitrator as respondent in the appropriate originating summons; and if one party should refuse to be joined as applicant, he would be named as second respondent with the Arbitrator. If the relationship were a tripartite contract, the action would be prosecuted by either party as applicant naming the Arbitrator as respondent, and the other party would not need to be joined in the proceedings. In fact, the appropriate procedure is for the applying party is simply to name the other party as respondent on the originating summons, leaving it for the Arbitrator to seek leave to be joined in as co-defendant if he wishes to oppose the application. This procedure appears contrary to a contractual view of the relationship as it results in proceedings being brought for breach of a contract where the party in breach is not named in the action: if one party applies and names the other party as respondent, and that party consents to the application, and if the Arbitrator has not applied to be joined into the proceedings it is difficult to see how the appropriate costs award on the application, i.e the costs to be borne by the Arbitrator, can be made.

Equally, however, this does not of itself demonstrate the relationship to be one of status: it is arguable that proceedings against the Arbitrator for failure properly to conduct the proceedings are simply a necessary adjunct of the statutory framework provided by the Court and Parliament to assist arbitrations under the Act: i.e. such procedure is purely mechanical and do not arise by reason of the fundamental source of the Arbitrator's authority.

As noted above, historically, a Bill in Equity would lie in respect of Common Law arbitrations in certain limited circumstances which might include arbitrator's misconduct. Technically, it may be the case that such a remedy is available today, although there appears to be no modern authority on the point. Whether, such equitable relief predicated a status or contractual relationship is unclear: the Court appears to have had in mind only the rights between the parties inter se.

Whether any contracts between the parties is tripartite or bilateral at all events remains uncertain.

Arbitrators' procedural powers where the parties are agreed

The Act has put it beyond doubt that the parties have procedural autonomy (e.g. Section 34(1)). Prior to the Act there was considerable debate as to whether the Arbitrator or the parties had ultimate authority to mandate procedure. The issue largely fell to be determined by the nature of the relationship between the Arbitrator and the parties itself and, therefore, analysis of that issue, ignoring the new provisions contained in the Act, is informative as to the nature of the relationship.

If the parties reached an agreement as to the substantive issues, it is suggested that, even prior to the Act, it was clear that the Arbitrator had to implement the parties' wishes and could not refuse to ratify the settlement so reached, provided that he was not asked to grant relief that exceeded his powers or to ratify a settlement that was per se unlawful. The Court would not regard it as the function of the Arbitrator to amend the bargain of the parties, albeit that the Arbitrator might consider that bargain unconscionable: since the Arbitrator is not privy to the parties' negotiations, or to such of their circumstances as make a particular level of settlement desirable, he would in practice be unable to form a proper view of the adequacy of the settlement.

The grounds upon which the Court would have restrained the Arbitrator from intermeddling at Common Law can be accommodated equally into the status-with-contract or contract-with-status rationalisations of the parties' relationship with the Arbitrator. If considered in terms of status-with-contract, the rationale is simply that it was a facet of the status derived authority of an arbitrator that he had to ratify any decision by the parties to terminate their contractual relationship consensually (which may perhaps best be analysed as a form of accord and satisfaction) which in turn brought the Arbitrator's status to an end. If considered in terms of contract-with-status there was simply an implied term of the contract so as to give it business efficacy that where the parties' dispute which the Arbitrator had contracted to resolve came to an end, the Arbitrator had to formalise the termination of that dispute in the manner required by the parties. Until he did so the underlying agreement to arbitrate the dispute in question subsisted: the parties' agreement for an accord and satisfaction remained unperfected. On either analysis, if the Arbitrator sought to interfere with the parties' agreement and refused to ratify it, the parties' remedy was dismissal for misconduct. If the parties sought to compel the Arbitrator to make an award which was somehow improper, e.g. because it was intended to defraud a third party, such as the Revenue, the Arbitrator's entitlement to refuse to acquiesce was, again, readily understandable either in terms of status or contract.

However, the position respecting agreement of the parties was, it is suggested, fundamentally different in respect of interlocutory matters. Certainly, it was open to the parties to provide for whatever procedures they considered appropriate at the time they entered into their agreement to arbitrate: indeed at any time throughout the Arbitrator's appointment. The only limits to that principle were that they could not (and cannot) provide for the Arbitrator to proceed in a manner contrary to public policy - Doleman & Sons v Ossett Corporation (supra). The more difficult question was whether the Arbitrator could overrule the wishes of the parties - contrary to the generally acknowledged position that the Arbitrator was the master of his own procedure once his appointment was confirmed and the reference commenced.

If the relationship with the Arbitrator was analysed in contract-with-status terms it is suggested that the better view is that the Arbitrator's decision as to procedure was final. For, in seeking to alter the method of procedure, the parties were effectively attempting unilaterally to vary their contract with the Arbitrator. A superficially attractive argument was that if it was accepted that the parties could agree to terminate the reference, then, a fortiori, they could agree to vary the procedures utilised in its conduct. The fallacy of this argument is that whilst the continued existence or otherwise of the reference was a matter referable only to the contract between the parties, it is suggested that the manner of proceeding, which was expressly or impliedly agreed by the parties with the Arbitrator at the commencement of the reference, constituted a term of the contract: it was an agreed method statement which the Arbitrator had both the duty and the obligation to comply and which could only be varied by agreement. Only if the original procedure became plainly inappropriate or insufficient was there possible room for the implication of a term that the Arbitrator had a duty to deviate from his original terms of reference: whether such a duty actually arose would be a question of fact in each case. The observance of that duty would, however, be an application of the Arbitrator's contractual obligations; it would not constitute evidence of a superior authority vested in the parties to override the Arbitrator's discretion in the operation of the agreed procedure.

Support for the broadly contractual nature of such a method statement is the fact that unilateral changes in it by the parties could significantly affect the Arbitrator's personal interests: a procedure akin to that employed in the High Court plainly constitutes a greater commitment than adherence to the informal procedure of a commodity arbitration. Business efficacy did not require implication of a contractual term that the Arbitrator would adopt any given procedure that the parties themselves selected subsequent to his appointment. Therefore, provided the Arbitrator did not transgress the boundaries of discretion set out in the original contract, it seems likely that he could impose such procedures as he deemed fit. It might have been possible to imply a term, however, that he would employ that procedure best calculated to realise the mutual aims of the parties.

Resolving the issue of the Arbitrator's autonomy in procedural matters was much more uncertain if the relationship is seen in status-with-contract terms. This is because the answer could be dictated according to whatever the requirements of public policy were perceived to require: except as limited by Common Law or statute, authority derived from status can be circumscribed or extended as deemed appropriate by public policy. So examining the question by reference to the essential nature of status derived authority is of relatively little assistance. On balance, however, arbitrator autonomy is more compatible with the immutability of a status-holder's mandate. Comparison here can be made with a High Court Judge's position: e.g. the decision of His Honour Judge Bowsher QC in R G Carter (West Norfolk) Limited v Ham Gray Associates Limited (1994) (unreported) where it was held that a judge is not bound by an agreement between the parties as to procedure, in that case an agreement that the Plaintiff would be entitled to judgment if pleadings were not served by a particular date. The parties could only agree to seek from the Court an order in the agreed terms.

Conclusion - The Arbitration Act 1996

Although the Act has not set out in terms the nature of the relationship it has certainly affected it. The DAC February 1996 Report identifies in paragraphs 18 to 22, at pages 10 and 11, three fundamental principles upon which the drafting of the Act is based, and two of those principles are relevant to this Paper. The first, as noted above, is that of party autonomy. As the DAC records at paragraph 19: “An arbitration under an arbitration agreement is a consensual process. The parties have agreed to resolve their disputes by their own chosen means...In general the mandatory provisions are there in order to support and assist the arbitral process and the stated object of arbitration.” The second, set out in paragraph 22 is that “Nowadays the Courts are much less inclined to intervene in the arbitral process than used to be the case...the Courts nowadays generally only intervene in order to support rather than displace the arbitral process. We are very much in favour of this modern approach and it seems to us that it should be enshrined as a principle...”

These principles suggest withdrawal of the State from intervention in the arbitral process, thereby appearing to support the contractual view of the relationship. However, that appearance may be illusory. For example, on first consideration, the concept of party autonomy tends to suggest a contractual relationship in that the Arbitrator is not invested with ultimate procedural authority, as might be expected in a creature of status. However, the mere fact that the State, through the Statute, has itself specifically enacted the principle of party autonomy reinforces the view of the relationship's being one that is status regulated, even though the Act circumscribed the Arbitrator's powers rather than taking the opportunity to increase them.

Accordingly, it is suggested that the better view is that, insofar as the Act has made express provision concerning the relationship, the relationship is increasingly dependent upon status than on contract.

Nevertheless, the Act has not dealt with all issues that might arise out of the relationship. Thus, to turn again to the matter of party autonomy, the question adverted to earlier remains unresolved, i.e. the position of the Arbitrator and his entitlement in the event that the parties seek to fix him with the administration of a process which he regards as misconceived, or which he considers to go beyond what he understood would be required of him at the time he agreed to act. Section 25 of the Act provides for the consequence of an arbitrator's resignation but, regrettably, is silent as to the circumstances in which resignation may be permissible. Accordingly, although the Court has power to decide (in the absence of agreement between the Arbitrator and the parties) what the remuneration of a resigning arbitrator should be, there is no principle to which the Court may have regard in making its assessment. Are the parties in breach of a contract with the Arbitrator if they require him to proceed inconsistently with his reasonable belief as to what would be involved - in which case, should the resigning arbitrator be entitled to his fees assessed on the basis of breach of contract? The wording of the Section, stipulating that the Court may make “such order as it thinks fit” suggests a discretionary basis for assessment rather than a contractual basis; and this in turn tends to suggest a status relationship. But the Section also provides that if the Court “is satisfied that in all the circumstances it was reasonable for the Arbitrator to resign” it may grant “relief from any liability incurred by him”. The Act itself does not provide for such liability; on the contrary the immunity provision referred to above militates against it. Therefore, it seems that the liability referred to can only arise at Common Law: which suggests a contractual relationship.

Accordingly, it follows that there are still likely to be occasions when the nature of the relationship will have practical consequences and, therefore, will require investigation; and it is perhaps, unfortunate that the Act did not put the matter entirely beyond doubt. What is clear is that the relationship is, in arbitrations pursuant to statute, becoming increasingly to have the look of status about it although, at present, it still remains a contractual element. However, despite being inconclusive, the investigation into the fundamental nature of the relationship, and its development, assists in the general understanding of the arbitral process so as to facilitate the provision of answers to practical problems where detailed rules are silent, and in considering how the process should be developed.

7. Edmund Nuttall Limited v R G Carter Limited – judgment of HHJ Richard Seymour QC dated 21 March 2002 (unreported); Carillion Construction Limited   v   Devonport Royal Dockyard Limited 27 November 2002 (unreported)  

8. RJT Consulting Engineers Ltd v DM Engineering (Northern Ireland) Limited – judgment of the Court of Appeal dated 8 March 2002 (unreported); Carillion Construction Limited   v   Devonport Royal Dockyard Limited 27 November 2002 (unreported)

9. Rainford House Limited v Cadogan Limited, CILL March 2001 page 1709; Herschel Engineering Limited v Breen Properties Limited (No 2) (unreported); Baldwins Industrial Services Ltd v Barr Ltd 6 th December 2002 (unreported).

10. Article in the TECBAR   Review for March 2002 entitled “What is the future for arbitration in the light of adjudication?”