Arbitration

This Tutorial is broken up into stages, which include learning blocks, case studies,
and knowledge checkpoints. We recommend you complete this online session in
chronological order.

By the end you will be able to:

 Advise your client on the difference between arbitration and litigation

 Explain to your client the practical and procedural considerations when
drafting/choosing an arbitration agreement
 Advise your client on the operation of the Arbitration Act 1996

Contents
Arbitration ................................................................................................................... 1
Stage 1: Introduction ............................................................................................... 2
Stage 2: Advantages of Arbitration ......................................................................... 2
Stage 3: Advantages of Litigation ........................................................................... 4
Stage 4: Types of Arbitration Agreement ................................................................ 6
Stage 5: Activity ...................................................................................................... 7
Stage 6: Major International Arbitration Institutions................................................. 9
Stage 7: Arbitration in England and Wales ........................................................... 11
Stage 8: The Arbitration Act 1996 ......................................................................... 12
Stage 9: Arbitration Act 1996 – Mandatory Provisions .......................................... 14
Stage 10: Section 34 Arbitrator’s Power to Rule on Procedure............................. 15
Stage 11: Powers of the Tribunal .......................................................................... 16
Stage 12: Activity .................................................................................................. 17
Stage 13: Conclusion ............................................................................................ 17

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Stage 1: Introduction
Welcome to this Tutorial which introduces you to arbitration. We will look at the role
of arbitration in the dispute resolution process, what type of arbitration is suitable for
your client and The 1996 Arbitration Act.
Select the tabs below to read some key introductory points about arbitration.
Way of Resolving Disputes Without Going to Court
Arbitration is a long-established way of resolving disputes without going to court. An
arbitrator oversees proceedings and is, in effect, a judge chosen by the parties. Any
award made by the arbitrator is binding on all parties and, ultimately, it is enforceable
through the courts.
Impartiality and Procedure
An arbitrator must act impartially and must follow the procedure that the parties have
agreed upon or, failing agreement, that which the arbitrator considers appropriate in
order to achieve, in the words of section 1 of the Arbitration Act 1996, “a fair
resolution of disputes… without unnecessary delay or expense”.
Attractions of Arbitration
The principal attractions of arbitration include the greater flexibility this offers the
parties, as well as the ability to resolve disputes in private.
Stage 2: Advantages of Arbitration
Below are some of advantages of arbitration.
Neutrality
In international contracts arbitration allows the parties to choose a neutral forum, as
the parties are free to choose the venue for the arbitration.
Select the tab below to read more about how a neutral forum makes arbitration
attractive.
Advantages of Neutrality
One party does not have to submit to the “home” courts of the other, with the
advantages of familiarity, language, procedure and local counsel that this might
confer on it.
It also avoids the unattractive alternative of both parties submitting to wholly
unfamiliar courts of a third country.
Where one of the parties is a State or State entity, that state will often refuse to
submit to the courts of the other state as a matter of principle. Here, arbitration in a
neutral venue is an attractive alternative to litigation in the courts of that State.

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A further advantage of arbitration is the parties can choose their judges (for example
a non-lawyer) rather than having one imposed.
Privacy
Select the tab below to read about how privacy makes arbitration attractive.
Advantages of Privacy
Unlike court proceedings, arbitration proceedings are not public and what is said in
them is confidential. This may assist in preserving trade secrets and in some cases
even to rebuild the commercial relationship between the parties. It may also provide
an environment conducive to reaching a settlement. However, confidentiality will be
lost if there is an appeal of the arbitrator’s decision to the Commercial Court.
Speed
Select the tabs below to read about how the speed of the arbitration process can
make it attractive.
Advantages of Speed
Delays in bringing cases to court are frequently caused by long waiting lists for
judges and courts and the procedural rules in litigation which require many steps to
be taken. Commercial cases in court can take years rather than months to be
resolved. An advantage of arbitration is that cases can proceed as quickly as the
parties want them to.
However, speed relies on the co-operation of the parties and if one of the parties
wants to delay the process for a tactical reason and deliberately drags its feet,
arbitration can be just as slow as litigation.
Where there is a panel of three arbitrators delay can also occur because of an
inability to arrange a hearing date when all three arbitrators are available.
Select 'CONTINUE' to carry on with the Tutorial.
Disclosure
Select the tab below to read about how flexibility with regard to disclosure can make
arbitration attractive.
Advantages of Disclosure
The procedures adopted by arbitrations are frequently simpler and fewer and
therefore the process will be quicker than court proceedings. Some arbitration
schemes can be flexible with regard to disclosure. For instance Article 24 (3) of The
United Nations Commission on International Trade Law (UNCITRAL) rules allows an
arbitrator to order as much or as little disclosure as they wish. This may sometimes
include an order for less disclosure than is required in litigation which may add a
speed advantage.

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Cost
Select the tab below to read about the costs related to arbitration.
Advantages of Cost
In most cases arbitration can be cheaper than litigation. However, in other cases, if
the procedures adopted are similar to those used in the court in can be just as
expensive as litigation. There are also arbitrators’ fees and venue costs that need to
be paid. This all adds to the cost of arbitration.
Enforcement
Select the tab below to read about the enforcement of arbitration awards.
Advantages of Enforcement
A key attraction of arbitration is that an arbitration award is binding on the parties and
can be enforced as if it were a court judgment.
The award can also be enforced abroad. The UN Convention on the Recognition and
Enforcement of Foreign Arbitral Awards 1958 (" the New York Convention") allows
English arbitration awards to be enforced in some countries that do not readily
enforce English court judgments. The New York Convention is not a panacea to
enforcement of an award outside Europe. There are some multilateral conventions
where the enforcement of a judgment in some countries is a much quicker and
simpler process than enforcing an arbitration award under the New York Convention.
Appeals
Select the tab below to read about arbitration and appeals.
Advantages of Appeals
A court judgment can be appealed either because the judge’s decision was
“manifestly contrary to the facts” or because the judge made a mistake on the law.
An arbitration award can only, if at all, be appealed on the grounds that the arbitrator
made a mistake on the law. This limited ability to appeal helps with speed, cost and
commercial certainty. In some arbitrations (for example under the International
Chamber of Commerce Rules) the right to appeal is waived entirely.
If you lose the arbitration, this limited facility of appeal can be a distinct
disadvantage.
Stage 3: Advantages of Litigation
Arbitration does have some disadvantages and for some cases litigation may be the
more appropriate forum to resolve a dispute. Below are some of advantages of
litigation.
A Court Can Grant an Injunction

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Select the tab below to read about litigation and injunctions.
Advantages of Courts Granting an Injunction
Sometimes the remedy that you require is not just damages but a final mandatory
injunction requiring your opponent to perform a particular act. Arbitrators do not have
the power to grant injunctive relief and if a final injunction is required to resolve the
dispute, litigation is the appropriate forum.
The courts of some jurisdictions (England and Wales for example) will grant interim
prohibitory injunctions that will be in place pending the final outcome of the
arbitration. In this respect the courts work in partnership with the arbitrators.
Court Procedure Can Confer an Advantage
Select the tab below to read about litigation and how court procedure can confer an
advantage in the context of the dispute.
Advantages of Court Procedure
Sometimes court procedure can confer a particular advantage in the context of the
dispute for example where the parties want the wider demands of disclosure to
provide documents that undermine their case or in England and Wales, a party may
want to use the pressure tactic of Part 36 to induce settlement.
Gives Publicity if Required
Select the tab below to read about how publicity can make litigation attractive.
Advantages of Publicity
Litigation in national courts is generally open to the public and the media. In
intellectual property and competition disputes, the publicity of court proceedings can
be deemed to be a particular advantage for the person who is publicly defending
their IP rights or complaining about the alleged anti-competitive conduct of their
opponent.
Richard Branson particularly relished the publicity gained for Virgin Airlines in their
disputes against British Airways regarding the allocation of flight slots to the East
coast of the USA.
Provides a Legal Precedent
Select the tab below to read about litigation and legal precedent.
Advantages of Legal Precedent
The parties might have a series of contracts where the clause in dispute has not
been tested. In this situation they might require a legal precedent to be set by the
court in respect of that clause. This would provide commercial certainty for future
disputes or contractual negotiations.

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As so much is at stake, the parties might want to retain a right to appeal which could
otherwise be prohibited in the place of arbitration.
A 3rd Party Can be Joined to the Action
Select the tab below to read about litigation and the joining of 3rd parties to an
action.
Advantages of 3rd Party Joining to the Action
Unlike a court, a tribunal generally has no powers to join a third party to arbitration.
This can cause a problem with chains of contracts or situations where interlinked
disputes are likely to arise under separate related contracts.
This is a particular problem for the reinsurance industry. Almost all insurance treaty
wordings contain arbitration clauses. In a dispute between reinsured, re insurer and
broker the broker cannot be joined into the arbitration proceedings without their
consent. This means that many disputes do not end with the arbitration award but,
instead go to a second stage involving Commercial Court proceedings to determine
the liability, if any, of the brokers concerned.
Litigation in one forum is a solution that can avoid inconsistent awards in this
situation.
Stage 4: Types of Arbitration Agreement
Here, we will learn about three different types of arbitration.
Select the tabs below to read about these three different types of arbitration.
Ad Hoc Arbitration
Where there is no prior agreement to arbitrate, it is still possible to refer a dispute to
arbitration after it arises provided all parties agree. This is known as “ad hoc”
arbitration. If no system of rules is agreed to govern the proceedings, the arbitrator
will have greater freedom to set the procedure. (For example whether detailed
statements of case or witness statements are required.)
Once a dispute has arisen it is harder to agree which dispute resolution procedure to
use because the parties will often have different perceptions of what is in their best
interests.
Any set of arbitration rules will generally give a wide discretion to the arbitrators to
decide on the procedures and the timetable.
Arbitration Under General Provisions
The parties can agree a set of general arbitration provisions to apply such as the
United Nations Commission on International Trade Law rules. These general rules
make it unnecessary for the parties to attempt to draft their own rules. Drafting under

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general provisions or under institutional rules provides certainty and minimises the
opportunities for delaying or disrupting the arbitration process.
Where general rules are used such as UNICITRAL it will still be up to the arbitrators
or the legal team to hire a venue and administer the arbitration process.
Administrated Arbitration Under Institutional Rules
Administrated arbitration under institutional rules such as the International Chamber
of Commerce and London International Court of Arbitration, means more
involvement by the institution in establishing any advance on costs to be paid by the
parties, confirming the parties’ nominations of arbitrators, and dealing with
preliminary challenges to the jurisdiction of the arbitrators. As a result of the
administrative involvement the fees of the institution can be higher.
Stage 5: Activity
The next Activity requires you to think about the issues for an arbitration agreement.
Follow the instructions below to complete the Activity.
In the box below, list six important issues that you would want to include in an
arbitration agreement. Select 'SUBMIT' to review your answers. When you're
finished, select 'CONTINUE' to carry on with the Tutorial and find out the suggested
answers.
Activity Available Online
CONTINUE
The suggested answers are stated on the tabs below. Select the tabs to read more
about the suggested answers.
Limitation
For commercial certainty you may want to set a time limit in which to bring
proceedings subject to the power of the arbitrator to extend that time.
Mediation
Do you really want arbitration? Many parties want to resolve their differences quickly
and in a business-like manner. Arbitration is probably better than litigation, but, is still
very adversarial. You may want to consider using mediation as a preliminary.
Choice of Law
Some parties want to provide that the law of a particular jurisdiction will be followed.
Unless the arbitration agreement clearly indicates that the arbitrator's judgment on
the law of the jurisdiction shall be final and binding, such a clause invites a losing
party to go to court to set aside the award on the grounds that the arbitrator has
misapplied the law.

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A well-drafted arbitration agreement will clearly indicate whether the arbitrator's
judgment on questions of law shall be final and binding, or subject to review in court.
A well-drafted clause may also identify the jurisdictions whose law is to apply to the
contract.
Arbitrator Selection and Qualifications
How many arbitrators will there be? What will be their minimum qualifications? How
will they be selected? A well-drafted arbitration clause will answer these questions.
Some ideas: if you want more than one arbitrator, use an odd number to avoid
deadlock. If the amount in dispute is likely to be under £50,000, you will probably
want to use a single arbitrator. If the amount in dispute may be in the millions, you
may want several arbitrators, to protect yourself against the whim of one arbitrator.
Your agreement may provide for the number of arbitrators to vary, depending upon
the amount in dispute. Qualifications should be tailored for the type of dispute
Timetable
You may wish to provide for scheduling when the arbitration will occur (with
reference to the completion of the selection of the arbitrator), as well as any limit on
the number of days that arbitration hearings will continue (this necessarily implies
limits upon the amount of time each party will have to present direct testimony, and
limits on the amount of time for cross-examination).
Example: Unless extended by the arbitrator for good cause shown, arbitration
hearings shall begin no later than 4 months after the selection of the arbitrator ___
days shall be allotted to the arbitration hearings, and the arbitrator shall determine
how much of the hearing time shall be allocated to the direct and cross examination
of witnesses. The arbitrator shall allocate time equally amongst the parties.
Statements of Case
You may want to require that each party prepare statements, no more than 5 pages
long, setting forth the parties position at the outset of the arbitration. You may want
to vary the length of statements of case allowed, depending upon the amount in
controversy, or you may wish to allow the arbitrator to decide this matter.
Disclosure
How much disclosure will be allowed? In what form? If disclosure is to be allowed,
for what period of time and when should it be provided?
Rules of Evidence
It is taken as a given in most arbitrations that the arbitrator has discretion to consider
whatever evidence he wants. If you want a different result, say so in your arbitration
agreement.
Privacy

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You may want to include a confidentiality provision, keeping confidential any dispute,
any testimony, any documents produced, and any outcome of the arbitrator.
Appeal-Enforcement
Arbitration awards are generally thought to be final and binding. You should say this
in your arbitration agreement. But you may want to consider that courts sometimes
get involved, unless the arbitration agreement prevents their involvement. For
example, courts may become involved if it is claimed that the subject matter is
outside the scope of the parties agreement to arbitrate (this is called substantive
arbitrability).
Generally, courts maintain that questions of substantive arbitrability are for the courts
to resolve. But the parties to an arbitration agreement could agree otherwise. In
contrast, procedural arbitrability involves whether the procedures for arbitration have
been properly invoked, as, for example, whether time limits for invoking arbitration
have been followed.
Many courts have a rule that questions of procedural arbitrability are for the
arbitrators to decide. A well-drafted arbitration agreement will set forth the precise
agreement of the parties on both substantive and procedural arbitrability.
Limit: The Arbitrators Authority
Most statutes allow a court to set aside an award if the arbitrator exceeds his
powers. A well-drafted arbitration clause defines the powers of the arbitrator. For
example, "The arbitrator shall have the authority to award compensatory damages."
An award of punitive damages by an arbitrator, would undoubtedly exceed his
authority under such a clause.
Interim Remedies
Do you want the arbitrator to have the power to Award Interim payments or security
for costs?
Costs
A well-drafted arbitration clause should provide for the division of expenses incurred
in arbitration.
Stage 6: Major International Arbitration Institutions
Some institutions are administrative and provide an active role in the arbitration
process. For example The International Chamber of Commerce International Court
of Arbitration (The ICC) and The London Court of International Arbitration (The
LCIA).
Select the tabs below to read about the ICC.
Background Information

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The ICC's Court of Arbitration was founded in 1923 and is a division of the non-profit
global business organisation the International Chamber of Commerce. It is based in
Paris and staffed by a Permanent Secretariat It also has a network of National
Committees around the world.
What The ICC Does
It establishes, for example, advances on costs to be paid by the parties; confirms the
parties' nominations of arbitrators; deals with preliminary challenges to the
jurisdiction of arbitrators; determines the level of fees payable to the arbitrators; and
the ICC Court (essentially a committee of experienced international lawyers) reviews
the award of individual tribunals for formal defects.
Where the ICC is required to appoint an arbitrator, it frequently does so by reference
to the ICC National Committee established in the relevant country.
Administrative Costs
As a result of the more involved administration, its administrative costs are higher
than the other major institutions. Arbitrators in an ICC arbitration charge a fixed fee
according to the amount in dispute.
Select the tabs below to read about the LCIA.
Background Information
The LCIA was founded in 1892. It is based in London but also has Users' Councils
around the world which support and advise its Secretariat, based at the International
Disputes Resolution Centre in London.
Arbitration Administration
It does not involve itself in the administration of arbitrations to the same extent as the
ICC (it does not, for example, require terms of reference or review awards) this
reduces the time taken before the arbitrators issue an award.
It will administer arbitrations under the UNCITRAL rules as well as under its own
1998 Rules which give arbitrators the power to order disclosure and security for
costs.
Administrative Costs
The LCIA fixes administration fees and arbitrator's fees by reference to the number
of hours spent on arbitration. This obviously has advantages and disadvantages
when compared to calculating fees by reference to the amount in dispute. Of course,
in an efficiently run arbitration, it can lead to significant cost-savings.
In addition, a sum equivalent to 5% of the tribunal's fees is payable for overheads.
UNCITRAL is not an administering institution, but a United Nations Commission
which has been active in the drafting of uniform rules for ad hoc arbitration (the

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UNCITRAL Arbitration Rules 1996) and uniform statutes for arbitration (the Model
Law 1985).
Stage 7: Arbitration in England and Wales
London is one of the world’s leading international and commercial arbitration centres.
This is due to London’s long history as a centre for international trade and finance
and its prime role in the insurance industry.
English arbitrators have a reputation of being impartial, independent and
commercially minded. This means that arbitration in England and Wales may be
selected even though the parties and the claim itself have no connection with
England and Wales.
Here is a list of some of the trade associations or professional bodies that provide
arbitration in the jurisdiction:

 Chartered Institute of Arbitrators

 London Maritime Arbitrator's Association
 Royal Institute of Chartered Surveyors
Grain and Feed Trade Association
So when are Disputes referred to Arbitration? Select the tab below to find out the
answer to this question.
When are Disputes Referred to Arbitration?
Most arbitrations arise because your client has entered into a contract which has as
one of its terms a clause which says that all disputes will be referred to arbitration.
Such “arbitration agreements” are often very simple and say little.
Don’t forget that the parties to a dispute can agree to refer it to arbitration as and
when it arises even if there is no pre-existing agreement to go to arbitration.
Remember also that the Arbitration Act 1996 will only apply if there is an agreement
in writing to go to arbitration. This is broadly construed. An exchange in
correspondence may be enough. It is important, since it will determine the scope of
the matters that can be referred to arbitration.
For example, a clause referring to arbitration for all disputes arising under a contract,
might not cover a dispute as to whether the contract had ever been concluded.
Mostly, people want to ensure that any dispute that arises will be covered.
Select the tab below to read about a relevant case – Premium Nafta Products Ltd &
Others –v– Fili Shipping Company Ltd & Others ([2007] UKHL 40).
Premium Nafta Products Ltd & Others –v– Fili Shipping Company Ltd & Others

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In the case of Premium Nafta Products Ltd & Others –v– Fili Shipping Company Ltd
& Others ([2007] UKHL 40), the House of Lords said you should start from the
assumption that the parties were likely to have intended the arbitration clause to
cover any dispute arising out of their relationship.
The document below contains the London Court of International Arbitration
recommended clauses. Open the document and take a moment to read it. Select the
document to open it. You can then opt to view only or print. When you're ready to
carry on with the Tutorial, select 'CONTINUE'.
Document Available Online
CONTINUE
It is a sample clause for parties who wish their future disputes to be referred to
arbitration. It is comprehensive enough to cover any dispute which could arise,
whether it be about the existence, creation, performance or termination of a contract
or about related pre-contractual matters.
Stage 8: The Arbitration Act 1996
London’s share of the international arbitration market has suffered a decline over the
last two decades. One purpose of introducing the Arbitration Act was to halt that
decline by addressing some of the issues that were making London a less popular
arbitration venue.
Section 1 of the Act sets out guiding principles which attempt to address the
criticism.
The document below contains Section 1. Take a moment to read it. When you're
ready to carry on with the Tutorial, select 'CONTINUE'.
Document Available Online
CONTINUE
Select the tab below to read about the first principle.
The First Principle
The first principle is aimed at addressing the criticism. It is that the principle objective
of any arbitration is to achieve a fair resolution of the dispute without unnecessary
delay or expense.
Of course, since the Act came into effect the litigation process has been overhauled
by the CPR and now contains the overriding objective, which is similarly aimed at
forcing the parties to focus on finding a cost effective and expeditious resolution of
the dispute.
Inevitably, the changes introduced by the CPR have had an effect on the way
arbitrations are conducted. For example many arbitration organisations such as the

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London Maritime Arbitrators’ Association have introduced a “short claims procedure”
that mirrors the fast track.
Although one of the original attractions of arbitration was that it offered a quicker
alternative to litigation, the reality is that post-CPR High Court litigation has
significantly decreased, whilst the popularity of arbitration can make it slow.
Select the tab below to read about the second principle.
The Second Principle
The second guiding principle is that the parties should be free to agree on
procedures.
The idea is that instead of being bound by the rules of court, the parties are more or
less free to construct a procedure that suits them. In reality, much arbitration is
conducted according to the standard rules for arbitration of a particular body. The
arbitration clause will simply state that the rules of that body are incorporated into the
contract.
Some arbitration bodies prepare various standard form contracts that parties use,
(rather than stating in the contract that the rules of that body will apply).
Of course, the parties may also adapt a standard scheme to suit their needs.
You should also note the third principle that the court should not intervene except as
provided by the Arbitration Act. Select the tab below to read more about the third
principle.
The Third Principle
This principle was aimed at the concern that foreign businesses who chose to use
London as an arbitration centre were getting dragged into the English courts more
often than they liked. Just because a foreign business wishes to arbitrate in London,
does not mean it is willing to be involved in litigation here.
The Act limits and defines the extent to which the courts can intervene in arbitration.
If you want to apply to the court for an order relating to the conduct of the arbitration,
you will have to make an extremely convincing case to justify this course of action.
Similarly, if your opponent wants to make an application to the court, you will be able
to pray in aid the provisions of section 1 if you wish to oppose that application.
Anything not covered in the arbitration agreement will be governed by the 1996 Act.
The general philosophy behind the Act is that the parties should be free to agree
what they like on most aspects of an arbitration and that their freedom of action
should only be constrained where it is absolutely necessary to do so.
As a result, most provisions are on the basis that they will apply unless the parties
have agreed otherwise. Some provisions are, however, mandatory. This also means

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that the parties have a strong influence over the arbitrator where they are both
agreed as to what procedures they want to follow.
Stage 9: Arbitration Act 1996 – Mandatory Provisions
Although parties are free, by agreement, to tailor the arbitration to meet their
requirements, they cannot contract out of various provisions of the Arbitration Act.
Two of the mandatory provisions which cannot be excluded are stated on the tabs
below. Select the tabs to read more about these provisions.
Sections 9-11
This gives the court power to stay legal proceedings brought in contravention of an
arbitration agreement.
Where there is a valid arbitration agreement, a stay is mandatory unless the
agreement is void, inoperable or incapable of being performed. There have been
more applications under s9 than any other section of the 1996 Act.
A party who wishes to apply for a stay of court proceedings must do so after taking
any appropriate procedural step to acknowledge the proceedings (for example, filing
an Acknowledgement of Service) but before taking any steps in the proceedings to
answer the substantive claim .
Section 12
This governs the court's power to extend agreed time limits for commencing
arbitration or other dispute resolution procedures.
The document below contains section 12 of the Act. Please take a moment to read it.
Select the document to open it. You then then opt to view only or print. When you're
ready to carry on with the Tutorial, select 'CONTINUE'.
Document Available Online
CONTINUE
Select the tabs below to read more about section 12.
Time-Bar Provision
Section 12 lays down the power of the court to extend time for commencing
arbitration where there is a time-bar provision in the arbitration agreement. The time-
bar may relate to commencement of arbitration or to other dispute resolution
procedures which must be exhausted before arbitration can begin.
Section 12(3)
Section 12(3) provides that the court may extend time only if satisfied either:

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(a) that the circumstances were outside the reasonable contemplation of the parties
when they agreed the time-bar provision, and that it would be just to extend the time,
or
(b) that the conduct of one party makes it unjust to hold the other party to the strict
terms of the provision in question.
The requirement to show in typical cases that the circumstances are unexpected will
mean that it will often be difficult to obtain an extension under the first requirement
where the deadline is missed inadvertently or through mishap. This means that it is
most important to ensure that any formal requirements for commencing arbitration
are strictly complied with.
Harbour & Gen Works v Environment Agency CA
In the case of Harbour & Gen Works v Environment Agency CA ([2000] 1 Lloyd's
Rep 65) Lord Justice Waller said that the aim of s.12(3)(a) was to prevent court
interference with a contractual bargain unless the circumstances were clearly outside
the contemplation of the parties at the time they made the agreement.
It was then for the court to decide whether justice required an extension to be given.
In practice it is likely that exceptional circumstances will have to be demonstrated.
Where Section 12(3) May Apply
Section 12(3) may also apply, for example, where a party has led the other party to
believe that the time limit would not be relied on, perhaps during settlement
negotiations.
Section 33 explains the general duty of the tribunal to act fairly and impartially
between the parties, giving each party a reasonable opportunity of putting their case
and dealing with their opponent’s case and to adopt procedures suitable to the
circumstances of the particular case, avoiding unnecessary delay or expense.
Section 40 states that the parties have a duty to comply without delay with any
decision or order of the tribunal.
Under section 56 the tribunal may refuse to deliver an award to the parties except on
full payment of its fees and expenses.
Stage 10: Section 34 Arbitrator’s Power to Rule on Procedure
Section 34 lists the various procedural and evidential matters which the tribunal (or
the parties) can decide, and they are very wide.
Unless the parties agree, the tribunal can decide on:

Unless the parties agree, the tribunal can decide on:

 The timing and form of any written statements of claim and defence

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  The extent to which any documents should be disclosed
 Whether the strict rules of evidence should be applied and the form which any
evidence should take
 Whether the tribunal itself should take the initiative in establishing the facts
and law
 Whether and to what extent there should be oral or written evidence or
submissions
 Unless the parties agree otherwise, the tribunal will have a fairly free hand to
decide whether there should be a hearing
Stage 11: Powers of the Tribunal
Generally the parties are free to agree what powers the tribunal will have. Section 38
sets out the tribunal's powers to the extent that the parties do not agree.
So the tribunal may order the claimant to provide security for costs. The principles on
which the arbitrators will exercise their power are different from those applicable to
court proceedings. One of the grounds on which security for costs is granted in court
proceedings is that the claimant is ordinarily resident out of the jurisdiction.
Section 38(3) expressly provides that the power to order security shall not be
exercised on that basis. Select the tab below to read about why this provision was
introduced.
Why the Provision was Introduced
This provision was introduced to remove what had been a powerful disincentive to
foreign parties to use England as the forum for their arbitrations.
The committee responsible for the Act recognised that arbitrators may well exercise
their powers differently from a court and in practice arbitrators will have a broad
discretion as to the circumstances in which they will grant security, subject to their
duty to act fairly in accordance with section 33.
Select the tabs below to read more about the powers given under section 38 and 39.
Section 38
Section 38 gives the tribunal powers to make orders in respect of property which is
the subject of the proceedings, including its inspection, photographing, preservation,
custody or detention, as well as orders that samples be taken, observations be made
or experiments conducted. It may also direct the examination of witnesses and
preservation of evidence.
Section 39
Under section 39 the parties can empower the arbitrators to grant interim relief by
way of a provisional award, subject to final adjudication, including provisional orders

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for the payment of money. However, they have no such power unless the parties
agree.
Stage 12: Activity
This Activity asks you to analyse a problem. You will need to select the link below to
the LMAA arbitration procedure second schedule to assist you in resolving the
problem.
Once you have followed the link to the LMAA arbitration procedure second schedule,
select 'CONTINUE' to carry on with the Activity.
Link Available Online
CONTINUE
Now, please consider the following scenario set out in the tab below.
SCENARIO
You act for Yarmouth Shipping Ltd who are defending arbitration proceedings in
London issued under the LMAA rules by Seoul Shipping Corp a company domiciled
in South Korea. Yarmouth are concerned that there are no assets in the jurisdiction
to enforce the Award in the event that they successfully defend the arbitration.
Yarmouth wish to know whether it is possible to apply for Security for Costs from
Seoul under the LMAA rules and what procedure is required.
Advise Yarmouth. Type your answer into the box below. When you're finished, select
'SUBMIT' to view the suggested answer.
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Stage 13: Conclusion
That concludes this introduction to the topic of arbitration.
You should now be able to:

 Advise your client on the difference between arbitration and litigation

 Explain to your client the practical and procedural considerations when
drafting/choosing an arbitration agreement
 Advise your client on the operation of the Arbitration Act 1996

End of Document

Arbitration Tutorial Transcript

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