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Starting an arbitration proceeding
What is needed to commence arbitration?
Parties may often agree to the application of institutional rules to their arbitration and these will usually address the commencement of an arbitration. To the extent that the parties have not agreed on a process, Section 14 of the Arbitration Act 1996 states as follows:
- Where the arbitrator is named or designated by the parties in the arbitration agreement, the proceedings are commenced when one party serves a notice in writing to the other party, requiring them to submit the matter to the person named/designated.
- Where the parties are to appoint the arbitrator, arbitration is commenced when one party serves on the other party notice requiring them to appoint an arbitrator or to agree to the appointment of an arbitrator.
- Where the arbitrator or arbitrators are to be appointed by a third party, proceedings are commenced when one party gives notice in writing to that third party requesting it to make the appointment in respect of that matter.
Are there any limitation periods for the commencement of arbitration?
There are no specific statutory limitation periods for the commencement of arbitration unless the parties have agreed to them. Where they have done so, the court may extend that period at its discretion (Section 12).
Where the contract under which the dispute has arisen is governed by English law, normal limitation periods for commencing legal actions in the United Kingdom apply to arbitration proceedings (Section 13). For contractual claims this will usually be six years from the date of breach and for non-contractual (tortious) claims, this will generally be six years from the date on which the cause of action accrued (subject to specific rules for certain types of claim).
Are there any procedural rules that arbitrators must follow?
The act allows parties to determine the applicable procedural rules, which can be done by reference to the rules of a particular arbitral institution. The tribunal has wide-ranging powers and discretion to decide procedural and evidentiary matters under Section 34, subject to the parties' right to agree on any issue and the tribunal's general duties (Section 33).
Are dissenting opinions permitted under the law of your jurisdiction?
Although there is no specific mention that dissenting opinions are permitted, Section 20(3) states that awards can be rendered by a majority. It is not uncommon for a dissenting arbitrator to issue a dissenting opinion to explain his or her reasons for disagreeing with the majority.
Can local courts intervene in proceedings?
English courts will not intervene in proceedings sua sponte. However, they can intervene in accordance with the powers set out in the Arbitration Act when approached for assistance or support by a party to an arbitration or by an arbitrator.
Can the local courts assist in choosing arbitrators?
The English courts do not generally assist in choosing arbitrators. They will usually become involved only where there is a failure of the appointment process or where there is no agreement as to the appointment process (Section 18).
What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?
Where a respondent fails to participate in arbitration without showing sufficient cause, the tribunal may continue the proceedings without that party and without any written evidence or submissions from them. The tribunal may then make an award on the basis of the evidence before it (Section 41(4)).
A tribunal has no power to force a third party to attend a hearing. The court has power to secure the attendance of witnesses, provided that they are in the United Kingdom and the arbitration is being conducted within England, Wales or Northern Ireland (Section 43), but cannot compel other third parties which are not party to the arbitration agreement.
In what instances can third parties be bound by an arbitration agreement or award?
Under English law a party needs to have agreed to arbitrate in order for that party to be bound by an arbitration agreement or award.
However, various English common law principles might bind a third party to an arbitration agreement, such as where an agent-principal relationship exists or where the original agreement has been assigned or novated to a third party or where rights or claims have been subrogated. Where non-parties to a contract have rights under it pursuant to the Contracts (Rights of Third Parties) Act 1999 and that contract contains an arbitration agreement, the third party may also be able, or be required, to arbitrate to enforce those rights. The group of companies doctrine does not form part of English law and group parties will not be recognised as parties to an arbitration agreement unless expressly agreed (eg, Peterson Farms Inc v C&M Farming Ltd  EWHC 121 (Comm)). However, the corporate veil may be pierced to bind a third-party group company to an arbitration agreement where the existence of a separate corporate entity is a façade.
An arbitration award is binding on the parties to the arbitration and on any persons claiming through or under them. Depending on the parties' agreement, the award may also bind other parties, such as guarantors.
Default language and seat
Unless agreed by the parties, what is the default language and location for arbitrations?
The Arbitration Act contains no default position on language or location. If the parties have not reached an agreement on these issues, the tribunal has the discretion to decide the language and the seat of the arbitration proceedings (Sections 3 and 34(2)(a) and (b)).
How is evidence obtained by the tribunal?
In the absence of party agreement, the gathering of evidence falls within the tribunal's discretion under Sections 34, 43 and 44 of the act. Documentary evidence is usually obtained through a document production process but may also be provided by parties as annexes to their pleadings, witness statements and expert reports. Witness and expert evidence will usually be provided in the form of a written statement or report, followed by oral examination at a hearing. Subject to the parties' agreement to the contrary, the tribunal may also appoint its own legal or technical expert (Section 37).
What kinds of evidence are acceptable?
The tribunal has broad discretion to decide issues of evidence including whether to apply strict rules of evidence (or any other rules) on admissibility, relevance or weight, as well as the time, manner and form in which such material should be exchanged and presented (Section 34(2)(f)). Some tribunals will apply or be guided by the International Bar Association's Rules on the Taking of Evidence in International Arbitration.
Is confidentiality ensured?
There is no express provision on confidentiality in the act. Parties may provide for confidentiality in their arbitration agreements expressly, or may rely on the implied duty of confidentiality under English common law (see Ali Shipping Corporation v Shipyard Trogir ( EWCA Civ 3054) and Emmott v Michael Wilson & Partners Ltd ( 1 Lloyd’s Rep 616 (CA))). The parties to the arbitration and the tribunal are under implied duties to maintain the confidentiality of the hearing, documents generated and disclosed during the arbitral proceedings and the award. The implied duty is subject to certain exceptions (see below).
Can information in arbitral proceedings be disclosed in subsequent proceedings?
Information produced in or prepared for arbitral proceedings can be disclosed in subsequent proceedings only in certain limited circumstances. These include where:
- consent to disclosure has been given;
- matters in the arbitration are before the court (eg, for preliminary relief, enforcement or challenge);
- disclosure is reasonably necessary to establish or protect a party's legal rights or legitimate interests; or
- disclosure is necessary in the interests of justice.
These exceptions have developed through English common law.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?
The Solicitors’ Regulation Authority Handbook 2011 (including the SRA Code of Conduct 2011) binds solicitors in England and Wales, registered foreign lawyers and registered European lawyers.
Barristers of England and Wales are subject to the Code of Conduct of the Bar of England and Wales.
These do not apply to foreign lawyers involved in arbitral proceedings in the United Kingdom. However, certain prohibitions on fee arrangements may apply to foreign lawyers working on English-seated arbitrations.
Estimation & allocation
How are the costs of arbitration proceedings estimated and allocated?
In the absence of agreement between the parties, the tribunal can determine which costs of the arbitration are recoverable (Section 63(1)) and make an award allocating those costs (Section 63). In advance of the parties incurring costs, the tribunal may also direct that recoverable costs be limited (Section 65).
The costs of the arbitration include:
- the fees and expenses of the arbitrator or arbitrators (provided that they are reasonable or appropriate in the circumstances (Section 64(1));
- the fees and expenses of any arbitration institution concerned; and
- the legal and other costs of the parties (Section 59).
The general principle under English law is that costs should follow the event (ie, the successful party will be awarded its costs), unless this is not considered appropriate in the circumstances (Section 61(2)).
If the tribunal does not determine what costs (if any) are recoverable, any party to the arbitration may apply to the court for a costs determination (Section 63(4)).
There is no requirement for the parties to provide an estimate or budget of the anticipated costs at the outset of the arbitration proceedings.
Security for costs
Can the national court or tribunal order security for costs under the law in your jurisdiction?
Unless the parties agree otherwise, the tribunal may order a claimant to provide security for the costs of the arbitration under Section 38(3) of the act. If a claimant then fails to comply with such an order, the tribunal may make an award dismissing the claim (Section 41(6)).
While the court cannot order security for costs in the arbitration, it may order an applicant or appellant to provide security for costs for court proceedings relating to an arbitration, such as a challenge to an arbitral award (Section 70(6)).
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