Why A Different Arbitration?

Why people resort to arbitration?

Bearing of course in mind that it is not possible to generalize, it is suggested that very frequently one resorts to arbitration because one looks at a dispute resolution mechanism which

  • be different from court proceedings (a remark which is more than obvious since otherwise one would stay with court proceedings)
  • and be better than it.

The choice of arbitration is then justified only if it provides a service which is better than the one provided by court proceedings.

Is generally arbitration better than court proceedings?

This comparison will be limited to four areas:

  • the composition of the arbitral tribunal
  • the remedies for a review of the decision
  • the taking of evidence
  • the duration.

The composition of the arbitral tribunal

Very frequently a panel of three arbitrations is selected, since one sees in this a tribute to symmetry and one may appoint “his” own arbitrator.

However, the result of this is that frequently in practice two arbitrators, out of a panel of three, are not always able to remain indifferent to the psychological pressure of their respective appointor.

Is this practice better than court proceedings?

The remedies for a review of the award

It is widespread that the remedy available against an award is only for procedural errors, excluding any review of the merits.

As a consequence, if the arbitral tribunal has erred in selecting the proper law, or has wrongly applied it, or has made errors as to the facts or wrongly appreciated the evidence, there is no remedy.

In court proceedings a full review of the merits, through a de novo rehearing of the case, is allowed and is generally considered as a fundamental right.

Is this practice then better than court proceedings?

The taking of evidence

In common law jurisdictions each party just calls her witnesses, examines them, then they are cross examined and possibly there is a redirect examination, the judge just supervising that this goes through properly.

In many civil law jurisdictions counsel must seek leave to call each witness, must submit the list of questions which he would like to be put to the witness and cannot examine the witness. The acceptance of his witnesses and of his proposals for questions and the actual examination of the witnesses is exclusively in the hands of the judge/or arbitrator who may, out of mere benevolence, allow counsel to put some but not too much questions.

In international arbitration, when the chairman comes from a civil law jurisdiction, the civil law system is more or less followed.

In any event, the parties are not placed in a position to know the rules of the game before starting it.

Is this practice better than court proceedings?

The duration

Some arbitrations last one year.

Others two years, several other ones three or more years.

In one case, in which I acted as counsel (and which ended up above any expectation by the client and by myself) it took 10 years.

Court proceedings frequently last – depending from the jurisdiction – between one and several years.

Is uncertainty about the duration of arbitral proceedings and signs that the arbitrator is very frequently quite relaxed and not disturbed by his/her duty to decide expeditiously better than court proceedings?

A different arbitration

It is suggested that this is not the arbitration which many parties look for, and that all such practices have to be corrected [1].

The European Court of Arbitration[2] has since 1997 Rules which provide for:

  • the appointment by its Nominating Committee of a sole arbitrator,
  • a duration of no more than 12-15 months, after which the arbitrator is functus ex officio,
  • an intra arbitration appellate proceedings, which provides for a full de novo review being conditional upon the deposit by the loser in the first arbitral proceedings of an amount, which in case of his loss of the proceedings will be paid by the Registrar to the victorious party the same day of the issue of the appellate award, and
  • the full right of counsel to examine and cross examine the witnesses[3].

This different arbitration has been described as a “fourth generation” arbitration.

[1] RUBINO-SAMMARTANO, International Arbitration – Law and Practice, Juris 2014.

[2] See www.cour-europe-arbitrage.org

[3] The Main Points of the Rules of the European Court of Arbitration.

Mauro Rubino-Sammartano

Mauro Rubino-Sammartano

Partner at www.lawfed.com

Email: [email protected]
Tel: +39 02 77 07 5500

Mauro Rubino-Sammartano chairs the European Court of Arbitration and is the Immediate Past Chairman of the IBA Mediation Committee. He is an arbitrator, litigator and counsel in business law, in particular in contract law and construction. He is admitted in Italy and Paris and is a door tenant of a barristers’ set of Chambers in London. He has teached international arbitration at the Universities of Padua and Milan. He writes extensively on arbitration (International Arbitration Law and Practice, 3rd Edition, Juris 2014) and regularly lectures on it.

Share

About Mauro Rubino-Sammartano

Email: [email protected]
Tel: +39 02 77 07 5500
Mauro Rubino-Sammartano chairs the European Court of Arbitration and is the Immediate Past Chairman of the IBA Mediation Committee. He is an arbitrator, litigator and counsel in business law, in particular in contract law and construction. He is admitted in Italy and Paris and is a door tenant of a barristers’ set of Chambers in London. He has teached international arbitration at the Universities of Padua and Milan. He writes extensively on arbitration (International Arbitration Law and Practice, 3rd Edition, Juris 2014) and regularly lectures on it.