In the Court of Session yesterday Lord Glennie issued a landmark decision in the first application of its kind put before the Court. It was an application for leave to appeal on grounds of legal error against a decision of an arbitrator appointed under the new Arbitration (Scotland) Act 2010 ("the 2010 Act").
Rule 69 of the Scottish Arbitration Rules ("the Rules"), which forms part of the new statutory regime introduced by the 2010 Act, gives parties to an arbitration the right to appeal to the Court on the ground of legal error. However, the parties can choose to forgo that right by disapplying that Rule. In this case, as will be the case in many others, the parties had not disapplied Rule 69. However, the right of a party to make a legal error appeal is constrained by the terms of Rule 70 of the Rules. It provides that such an appeal may be made only with the agreement of the parties or with leave of the Court. There was no such agreement of the parties in this case so, if one of them wanted to make a legal error appeal, leave of the Court was required.
Such leave may only be granted by the Court if certain difficult hurdles can be overcome. Rule 70 provides that leave will only be granted if (a) deciding the point will substantially affect a party's rights; (b) the arbitration tribunal was asked to decide the point; and, most importantly, (c) the decision was "obviously wrong" or, where the Court considers the point of law to be one of general importance, the arbitrator's decision is open to serious doubt.
In this case, which arose out of a building contract dispute, Lord Glennie granted leave to appeal on one of two issues, that of onus of proof. He was satisfied that the requirements of Rule 70 had been met and, in particular, that the point of law was one of general importance and the arbitrator's decision on it was open to serious doubt.
Given that this is the first decision of its kind, Lord Glennie - a designated arbitration judge - very helpfully sets out general guidance for parties and practitioners on the procedural aspects of such applications and how they will be approached by the Court. He stressed that the procedure will be speedy, simple and flexible reflecting the founding principles set out in section 1 of the 2010 Act. He also made clear that the Court will hear legal error appeals "within weeks of leave to appeal being granted". This will avoid the lengthy delays which arose before the 2010 Act was passed.
One last point. The decision is referred to as "Arbitration Application No.3 of 2011". The parties are not named. This is to maintain the anonymity of the parties, which is now possible under the 2010 Act.