Model Law
Article 5 of the Model Law provides an overriding statement that no court will intervene unless specifically stated in the Act. Exceptions are the need to appoint an arbitrator (Art. 11.3);
breach of agreement (Art. 11.4); challenges to a given procedure (Art. 13.3); failure or inability on the part of the arbitrator to act (Art. 14.1); and decisions on jurisdiction (Art. 16.3).
The question often asked, especially by a ‘losing party’ is, can I appeal against an arbitrator’s award" This is dealt with under specified conditions in Art. 34, which states in part that an appeal may be allowed if:
[a] party to the agreement was under some incapacity, or that the agreement was not valid under the laws to which the parties have agreed to act. Further, that a proper notice was not given of the appointment or to some part of the proceedings. The other grounds is that the Tribunal exceeded its authority under the agreement or that the award either did not address, or exceeded the mat- ters set out in the agreement to be arbitrated. An appeal must be made within three months of the award.
Domestic legislation
In the Australian Uniform Acts, Part 5 deals with the power of the courts. The arbitrator makes the award on the basis of the law and of the facts. There are three distinct areas to consider, as well as a number of general areas:
• Appeals Against the Award (s. 38) • Preliminary Points of Law (s. 39) • Misconduct (s. 42)
Appeals against the award
Section 38 states that the courts do not have the jurisdiction to set aside an arbitrator’s award just because of an error of fact or law on the face of the award. If an appeal is to be made, the Act requires it to be made to the relevant state or territory Supreme Court. In some states and territories prior to 1993 the discretion to permit an appeal was left to the presiding judge. Post 1993 there were amendments made in the various legislation to ensure uniformity, based on the NEMA judgment which limited the for- mer discretion by placing judicial fetters upon it.
The NEMA Principle was so named after the case decided in England in the House of Lords (Pioneer Shipping Ltd v. BTP Tioxide
Ltd [1982] AC 724). Diplock LJ set out the proposition that: If on such perusal it appears to the judge that it is possible that argument might persuade him, despite first impression to the contrary, that the arbitrator might be right, he should not grant leave; the parties should be left to accept, for bet- ter or for worse, the decision of the tribunal that they had chosen to decide the matter in the first instance.
The NEMA Principles that are now embodied in the Uniform Acts require that at least one of the following exists:
1 That strong evidence of error was required (a manifest error of law on the face of the award)
2 That the award substantially added to the uncertainty of the commercial law 3 No appeal of a one off contract rather than a standard form.
Preliminary Points of Law
An application can be made to the court for determination of any question of law arising in the course of the arbitration, with con- sent of the arbitrator or consent of all the other parties. The courts will only hear an application if the determination will produce a substantial saving in the costs of the arbitration and or is affected by matters above in s. 38.
Misconduct
The Australian Acts give the courts the power to set aside an award where there has been misconduct on the part of the arbi- trator or the award has been improperly procured. This is also a useful back door attack on an award when there is a doubt about obtaining leave to appeal. Section 44 sets out the manner of removal of the arbitrator where misconduct has been proved.
The reluctance of arbitrators to depart from curial procedures and adopt simplified, speedier and less cumbersome procedures is a reflection of the readiness of the courts to intervene where there is a claim of procedural misconduct. It would have been logical to think that this section empowered the courts to lend their support for arbitration proceedings where there was a weakness in the arbitral process by reason of lack of the coercive powers of the state, whereas the opposite appears to be true. This empower- ment should include such areas as preservation of assets; the sub- ject matter of the proceedings; or the granting of an injunction to detain assets in the jurisdiction that may be otherwise transferred abroad to defeat enforcement of an award. Power to grant such ancillary relief in aid of arbitration has long been a feature of leg- islative enactments governing arbitration. However, the courts have interpreted the legislation in s. 42 as providing a power to intervene in procedural aspects of the arbitration itself. An exam- ple of this can be found in Leighton Contractors Pty Ltd v. South
Australian Superannuation Fund Investment Trust [1994] SASC 4846.
Under s. 44 of the Act, the court may remove an arbitrator if it can be shown that he/she has been guilty of misconduct, the
arbitrator has been shown to have exercised undue influence, or where an arbitrator has been shown to be incompetent or unsuit- able to deal with a specific dispute. An example of this is where one side claims the medical health of the arbitrator makes it impossible for him/her to act. One such case was that of Korin v.
McInnes (unreported 1984) where the arbitrator informed the par-
ties that he was recovering from a major operation and might have to interrupt the hearing from time to time to visit the toilet. One party objected and asked the arbitrator to stand down. On medical advice, the arbitrator refused the request. The matter was taken to the Supreme Court, where Justice Brooking held that the arbitrator’s inability to act was not proved in terms of the Act.
Further sections of relevance are s. 47, which permits the courts to make interlocutory orders in relation to the arbitration. Section 48 permits the court to extend the time of the appointment of the arbitrator and under certain circumstances permit extension of the start of the hearing. Whilst not common, there have been applications made to the court to require the arbitrator to deliver the award where the time given by the arbitrator for handing down the award has been exceeded — usually by a substantial period of time.
New Zealand
Schedule 1, s. 5 states that no court shall intervene unless specially provided for within the Act. Section 3 includes that if a party applies to a court for an interim injunction when an arbitral ruling has already been made, the courts cannot overrule the arbitral ruling.
An appeal to have an award set aside has to be made to the High Court. It can only set aside an award where one party was in some way incapacitated; the agreement to arbitrate was invalid; proper notice of the appointment of the arbitrator was not given to one party; the award deals with matters outside of the original agreement; or where the arbitral tribunal or the procedures were outside of the agreement. In a similar situation to the Australian Act, s. 6 sets out that the award is in conflict with public policy if it was induced or affected by fraud or corruption, and if the rules of natural justice were breached at any time. An appeal has to be made within three months of the publication of the award.
Other domestic legislation
Part IX of the Singapore Act covers the powers of the court in