The problem of too much court intervention in the arbitral process

with the arbitral process and the award. There are many sections of the AA that involve the courts, but this discussion is limited to questions of law raised during the arbitration, question of law arising out of the award and procedural matters affecting the award, as these were the areas of concern with arbitration as discussed above. The AA commences in s.1(c) limiting court intervention only to those provisions that allow court intervention in Part 1. This in itself is a limitation of court intervention, although the wording is that the court “should not” as opposed to “shall not” intervene. Furthermore none of these provisions allow the court to unilaterally intervene as all the provisions require a party to involve the courts. It was considered by the DAC that the provisions relating to the courts were one of support to arbitration and not of intervention⁷⁹.

78 DAC Para. 173

79 DAC Para. 22

CHAPTER 2 BACKGROUND TO ARBITRATION and its development

28 2.5.3.1 Consideration of a preliminary point of law raised during the

arbitration

One of the main areas of concern was the ability of the court to be involved with questions of law. The AA retained the facility for a party to have the court determine a preliminary point of law⁸⁰. The DAC considered that the provision is useful and suggested that a determination of a point of law can help to bring a speedier conclusion to a particular arbitration and could be useful where a determination would assist a large number of arbitrations that involved the same point of law⁸¹. The parties can agree that this provision will not apply and the court be excluded. Even if the parties do not exclude this provision, there are a number of conditions that apply that make an application to the court more difficult to succeed. Before the court can consider the application it has to be satisfied that there will be a substantial saving in costs and that the application was made without delay⁸². The court must also be satisfied that the question of law substantially affects the rights of one or more of the parties⁸³. The situation therefore is very restrictive and application to the court merely as a delaying tactic is unlikely to succeed.

2.5.3.2 Consideration of errors of law arising out of the award

With respect to errors of law arising out of the award, the AA continued the facility for a party to raise objection⁸⁴. The DAC considered a number of responses from their consultations that there should not be any right of appeal on the substantive issues in the arbitration. Such responses held that the parties had chosen arbitration as the method of resolving their dispute and not the court. The DAC put forward the argument that the arbitrator was under an obligation to deal with the arbitration under the law chosen by the parties and if he did not do so, the result would not be what was intended⁸⁵. The parties however can agree to exclude the court if they wish to do so and in any event should the parties agree to dispense

80 AA s.45

81 DAC Para.218

82 AA s.45(2)(b)

83 AA s.45(1)

84 AA s.69

85 DAC Para. 285

CHAPTER 2 BACKGROUND TO ARBITRATION and its development

29 with a reasoned award; this is taken as agreement to exclude the court on matters of law⁸⁶. In the event that they do not agree to exclude the court, there are a number of conditions contained in the AA that make a successful application to the court very difficult.

An aggrieved party has 28 days, from the date of the award⁸⁷, in which to appeal.

This in itself stops a party from procrastinating if it intends to appeal. In addition before the court can grant leave to appeal, it has to be satisfied that the determination will substantially affect one or more of the parties and that the question was one that the arbitrator was asked to determine. The DAC referred to the situation where previously a disgruntled party, having lost their case, might make an application under a point of law that was not raised in the process of the arbitration and that to allow this to occur would be a step backward to old practices⁸⁸. A further requirement is that based on the finding of fact by the arbitrator, the decision was obviously wrong⁸⁹, or the question is of public importance and the decision of the arbitrator is in serious doubt and considering the circumstances it is just and proper for the court to determine the question⁹⁰.

These restrictions are quite substantial and will no doubt restrict application on questions of law. They have not, however, completely stopped parties from raising questions of fact, which are not reviewable, as questions of law, which are reviewable. The courts however are well aware of this ploy and Mr Justice Akenhead in Penwith District Council v V.P. Developments Ltd⁹¹ said that parties should not go to the court on apparent questions of law when in reality they are questions of fact and that the court will not treat an incorrect finding of fact as a question of law. The courts are therefore supportive of the AA and whilst there remains the facility to appeal, the restrictions and the court’s support make such applications difficult to succeed. If parties wish to exclude the court on matters of

86 AA s.69(1)

87 AA s.70(3)

88 DAC Para. 286(ii)

89 Coal Authority v Davidson [2008]EWHC 2180 (TCC) In this case the arbitrator applied the wrong law to the facts found.

90 AA s.69(3)

91 Penwith District Council v V.P. DevelopmentsLtd. [2007] EWHC 2544 (TCC) Para. 23

CHAPTER 2 BACKGROUND TO ARBITRATION and its development

30 law during the arbitration or arising out of the award, then they are at liberty to do so. They do however have to be quite specific that it is their intention to exclude the courts; the wording that the award “shall be final, conclusive and binding on the parties...” was considered by Mrs Justice Gloster to be insufficiently clear that the intention was to exclude the court on matters of law under s.69 AA⁹².

2.5.3.3 Challenging the award due to serious irregularity by the arbitrator The AA also retained the right of a party to appeal against an award for what is known as serious irregularity. The AA does lay out a series of matters that are serious irregularities under the AA⁹³ and the list is closed, hence the courts do not have any power to extend the list, therefore if a subject of appeal does not fall within that list there is no right of appeal. The DAC go to some length to explain that the provision is intended to provide a remedy where the arbitrator has clearly made a mistake that is far removed from what might reasonably be expected⁹⁴. They also make reference that the test is not related to what would have happened had the matter gone to court⁹⁵. Furthermore, there has to be a test of substantial injustice, hence, even if there is found to be a serious irregularity on the part of the arbitrator, if there is not also substantial injustice affecting the party, the appeal will fail⁹⁶. Moreover, appeals have to be made within 28 days from the date that the award was signed⁹⁷ and an appellant has to have exhausted any other method of review and any recourse that allows the correction of the award or the issuing of an additional award⁹⁸.

These matters themselves are quite restrictive against an appeal being successful.

However, a party who raises an objection that the proceedings have not been conducted properly, or there has been failure to comply with the arbitration

92 In Shell Egypt West Manzala GmbH & Another v Dana Gas Egypt Ltd. [2009] EWHC 2097

93 AA s.68((2)(a) - (i)

94 DAC Para. 280

95 DAC Para. 280

96 London Underground Ltd. v Citylink Telecommunications Ltd [2007] EWHC 2544 (TCC). There were numerous grounds of appeal, all failed, but in one instance an irregularity was found to exist, but it was held that there was not substantial injustice, therefore the appeal on that point failed. Para. 206

97 AA s.70(3)

98 AA s.70(2)

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31 agreement or the provisions of Part 1 of the AA, or that there has been an irregularity affecting the arbitrator or the proceedings, must raise that objection forthwith⁹⁹, or within other specified times. As a guide to the meaning of forthwith under the AA, Harris et al¹⁰⁰ includes the words “promptly” and “immediately”.

There is therefore the right to appeal under serious irregularity, but the restrictions do make it difficult to be successful. In Weldon Plant Ltd v The Commissioners for the New Towns¹⁰¹ judge Humphrey Lloyd said that awards should be read supportively and that in his opinion the principles in s.1 of the AA suggest that awards should be read such that they would be upheld. This indicates the support of the courts in making appeals difficult to succeed.

2.5.4 There is too much lawyer involvement making arbitration like litigation