A Possible Appeal Process for Arbitration

International Arbitration is largely carried out through a small number of Arbitral Institutions - International Chamber of Commerce, London Court of Arbitration, Singapore International Arbitration Centre, American Arbitration Association &c.

Elsewhere on the site, I have posted a contribution made to the discussion, at last year's Geneva Global Arbitration Forum, of an over-arching international arbitration appeal court. The purpose of this note is to take one idea a little further and invite comment.

Most institutional systems have limited scope for dealing with the possibility of error by an arbitral tribunal. They may have drastic procedures for removal and substitution of arbitrators, but those procedures are necessarily limited to matters of what might be called egregious misbehaviour (or administrative necessity, as when an arbitrator dies or is incapacitated).

For various reasons, well rehearsed, the work of an arbitral institution in this field is essentially administrative. Thus, where there is an issue, it has to be dealt with administratively and there is no real facility for the submission of argument, still less evidence, to be dealt with in a judicial way.

If it is a Respondent who is dissatisfied, two avenues are open: he may seek to have the award set aside at the locus of the arbitration, he may seek to oppose enforcement on his own patch (or wherever he is at risk). There is a problem with examples such as Hilmarton, but they are rare and there is a logical justification for them (which I will not discus now - Hilmarton was one of a very small number of cases where a Court in one country has enforced an Award made in another, although the Court in the place of arbitration has set aside the same Award)

A Claimant has less choice; generally, he may only have recourse to setting aside at the locus. Although he may have a costs order to resist elsewhere, in a major matter, that may not be the dominant factor. Even if he is successful in having the Award set aside, nevertheless, there may be a problem, first in re-arbitrating (the institution may decline jurisdiction on the ground that it has discharged its task), and then in enforcement elsewhere of the new Award (the Hilmarton point inverted, so to speak).

I have always opposed the creation of some over-arching national or international Court with inherent jurisdiction to hear appeals from arbitration. That would be contrary to the voluntary principle of all IDR (Independent Dispute Resolution). Nevertheless I do see some merit in having some facility for appeals. Even Homer may nod, and perhaps even carry his co-arbitrators with him.

To comply with the voluntary principle, it seems to me that consideration might be given, within institutional rules, to an appeal procedure, subject to a stringent requirement for leave. A majority of the Tribunal could give such leave, the granting of leave could be treated administratively or handled by a special tribunal, not permanent and perhaps not too close to the Institution. You would expect me to venture the view that a lay person might well be involved, if only to represent the ordinary commercial world and to avoid the image of a closed circle.

As to the appeal process itself, again I rather think that it would call for a tribunal distinct from the Institution. I have heard it suggested that Institutions have an interest in the arbitrations under their auspices, such that the Institution cannot be expected to take an objective view of complaint. I do not subscribe to that view, but I can see that it might be expressed.

Professor Mauro Rubino-Sammartano pointed out in Geneva that there is such an appeal arrangement in existence at the European Court of Arbitration in Strasbourg. I believe that parties may elect to dispense with it; I do not know if that is much done. Nor do I know if the facility is often used. There is also, of course, an appeal system in ICSID, (under the Washington Convention) but that is rather different.

My interest is in making IDR, and particularly arbitration, as complete as is reasonably practicable, so that commercial communities truly may be said to regulate their own differences. I would argue that is a logical extension to the theory of party autonomy and, indeed, one which state jurisdictions will accept without any alterations to existing arrangements -- an arbitration agreement which invokes rules having an appeal procedure remains an arbitration agreement. I note, incidentally, that the English Arbitration Act of 1996 specifically provides for, or rather recognises the possibility of, such a process, in deference, I imagine, to the existing rules of the commodity associations.

I would also suggest that such a provision would forestall the drive for an over-arching Court created from national legal systems, with all the political baggage that such a system would carry.

Finally, it has occurred to me that, provided there is good will, and provided satisfactory arrangements could be made in respect of the cost of the work, the PCA might be a convenient external point of reference. There is precedent of a kind in the Secretary-General's role in arbitrations under the UNCITRAL Rules. That I have not researched, but I hope to do so.

Comments are invited on this brief paper, my e-mail address is at the top.