ARBITRATION

Definition
Broadly defined: a mechanism in which a dispute is decided by one or more arbitrators
who are usually experts chosen from a particular field or professional body in often in
line with the nature of the conflict.

“A consensual system of judicature directed to the resolution of… disputes [especially

commercial] in private”. – Rowland (1988)

An Arbitrator– “a disinterested person, to whose judgement and decision matters in

dispute are referred”.

Salient Features of Arbitration

1. The arbitral process is consensual, based on an agreement between the parties.
2. The parties have procedural freedom– the freedom to organize the proceedings
as they like and may therefore choose an adversarial or inquisitorial procedure or
a mixture of the two, as they so wish.
3. The arbitrator, after the parties have agreed, is entirely in control of the arbitration
procedure.
4. Impartiality and independence of arbitrators
Arbitrators must in accordance with codes of ethic and conduct discharge their
functions in a fair, just and impartial manner. A breach of such duty may results
in the arbitrator being challenged and eventually removed by a court of
competent jurisdiction or arbitration institution, and may also lead to the
annulment of the arbitral award (if rendered).
S.12 & 13 TT AA 1939 – Court Granting relief where arbitrator is impartial or
where fraud occurs
S. 19– Power of Court to Set Aside Award
 Airport Authority of TT v CEC
Claimant purported to cancel and rescind contract on the grounds of fraud and
bribery pursuant to a clause 21 in their agreement with the defendant. The
contract provided for any claim rising out of or related to the contract to be
subject to arbitration. The court found that this was wide enough to include a
claim that the contract should be rescinded for bribery and fraud and an
Arbitrator was well equipped to deal with such a question. Further, there was
nothing to suggest that the arbitrators had gone wrong or had mistaken the law
and the claim by the plaintiff was dismissed.
 Demonstrates the reluctance of the court to interfere with arbitration
agreements and the stringent exercise in favour of honouring such
agreements.

5. The arbitrator(s) must act in accordance with the rules of natural justice
particularly the audi alteram partem rule: hear both sides.
6. An arbitral award for all intents and purpose is meant to be binding upon the
parties and may be enforceable by a court of law. S.20 TT Arbitration Act 1939
7. Separability– the arbitration clause must be treated as separate from underlying
the underlying contract that gave rise to it. Even if the underlying contract is null
and void, the arbitration clause within the contract is not null and void.
Summary: Consensus, Procedural Freedom, Procedural Control, Impartiality
and Independence, Observance of Natural Justice, Bindingness of Decision

COP(F/C)BII

NB: The sources of the law of arbitration lies in a number of international

conventions, international model law and model rules, institutional rules(ICC for
instance) and domestic legislation.

Distinguishing Arbitration from Mediation/Conciliation

 1. An agreement to enter into arbitration will be enforced by the courts whilst an
agreement to enter into mediation will generally not be enforced by the courts.
2. Arbitration has the quality of delivering a final and binding award. The
arbitrator has the legal authority to make a binding award, a mediator has no
such authority.
3. Arbitration is subject to an extensive statutory regime; mediation is generally
not so regulated.
4. Arbitral procedures require the employment of natural justice, mediation is
not so bound.

Advantages of Arbitration

1. Freedom of choice to select a tribunal that fits the nature of the parties’ dispute.
So, for instance, for highly technical trade disputes, the parties may select an
expert in that field as the arbitrator.
2. Confidentiality and Privacy – since arbitrations are held in private and
protected by the laws of privacy, they facilitate a high level of confidentiality not
afforded by litigation. This could be crucially important in a dispute between rival
companies in a competitive business field for instance, who would like to keep
their know-how, business strategy et cetera, from the public.
3. Ease of Enforcement of Arbitral Awards– The Convention on the Recognition
and Enforcement of Foreign Tribunal Awards (CREFTA)/New York Convention in
Article III provides that “each contracting state shall recognize arbitral awards as
binding and enforce them in accordance with the rules of procedure of the
territory where the award is relied upon…”.
4. Cost Effective– generally, arbitration is less costly than formal litigation.
5. More Suitable for Certain Specific Commercial Disputes– for instance in the
construction and maritime industry where an arbitrator with a special skill in the
trade may be more appropriate than a judge who would not have the special
training.
6. More Flexible than Litigation– in resolving issues arbitration does not follow the
strict rules of evidence the courts are bound to uphold.
7. Because Arbitration is a Contractual Creature it is accordingly more
consensual than litigation.
8. Procedural Freedom
9. Finality of Decision– court judgements can be appealed all the way up to the
apex court, arbitral awards are more final and only in very narrow circumstances
can be challenged.
10. Provides a more consistent and interactive adjudication process than in
court.
11. In international Arbitration a state may seek arbitration to avoid subjection
to a foreign state court which may appear as a affront to its sovereignty.