It's not where you do it but how you do it

LONDON and New York have their established positions in the arbitration field. Over recent years, many countries or cities have attempted to attract a share of the arbitration business - some have succeeded while others have failed.

There is no question that an arbitration centre like the LMAA began life with a silver spoon in its mouth. The combination of London's geographical proximity to the European shipping centres, coupled with the presence of underwriters (including the P&I clubs), the banks and the Baltic - not to mention the attractions an anglophile might appreciate on a visit to London - made it an ideal choice. In addition, London has performed on its own merits as an international centre for arbitration with respect to the quality of its arbitrators and its sustained high-profile performance.

It is human to err but it is not for the principals to be divine

New York started life as an alternative to London and as the choice of a number of American charterers. Any distinction between the two is no longer valid and New York's position today is likewise founded on its performance.

Both London and New York conduct arbitrations under the ad hoc system with a professional group, i.e., the LMAA or the SMA providing support for the active arbitrators. Other arbitration groups have focused on providing administered arbitrations, including facilities, such as hearing rooms. The important factor to remember is that form does not overtake substance. The quality of the arbitration proceedings and the awards rendered must not be overshadowed by the niceties and trimmings of the procedural aspects.

It is important to have the proper foundation to be able to stake out one's claim in the arbitration field. To simply state that one could do it faster, better and cheaper than London or New York is not sufficient. Proof is required to justify such contentions. If a new centre attracts arbitration cases, it must ensure perfect execution of its duties to warrant the trust placed in it. I recall an incident when, several years ago, a ‘newcomer’ issued an award which was promptly vacated because the arbitrators had exceeded their powers when rendering their decision. That was not a good start and, because of the procedural shortcomings, a bad decision.

Because of the court review and the application of procedural law and statutes, the adjective ‘bad’ is a relatively objective term. The courts will determine whether arbitrators exceeded their powers, reaching conclusions not before them or granting inappropriate relief. Other examples could be an undisclosed interest in the proceedings, a failure to grant the disputants sufficient time to present their case, or the prejudicial treatment of a party.

In all fairness, a bad decision remains a bad decision, regardless of where it was rendered. One always hopes that they never happen, but they do - and, therefore, one has to deal with this fact. One can philosophise over the reasons and consequences, which may soften the impact, but that does not change the facts. The law of averages should show that an arbitration centre which produces hundreds of awards year after year should be the most likely candidate for producing one or more bad decisions, but the facts do not support such assumptions at all.

The saying goes that it is human to err but it is not for the principals to be divine (and forgive). It is incumbent upon everyone to ensure that for any case the best arbitrators are selected who can deal effectively with the matter in the forum of the principals' choice, be it London, New York, Paris, Hamburg, Hong Kong, Singapore, etc.

The success of the arbitral process is not only dependent upon the qualifications and performance of the participating arbitrators, but it needs to be supported and sustained by a responsive legal system, a conducive environment and a guiding association and/or centre. Some of the newer arbitration groups have recognised this fact and have acted accordingly. For example, the Singapore International Arbitration Centre (SIAC) established a panel of international arbitrators to serve within their system. Likewise, the Hong Kong International Arbitration Centre (HKIAC) and the German Maritime Arbitration Association (GMAA) have included international arbitrators in their rosters, and others may have done the sameTaking this notion at face value, one can only assume that these organisations selected this approach to dispel any parochial notions and to ensure that they are able to offer the users of their systems the most qualified arbitrators.

There are certain aspects of the arbitrator's qualification and conduct that I would like to comment uponThese remarks are not necessarily related to the where but rather to the how aspect of this theme.

How should an arbitrator act?

At a recent seminar, a member of the audience stated that, according to his understanding, arbitrators were making a lot of moneyHe then wanted to know how he could participate in the processI guess it was an understandable question, but not a realistic oneWhat many of the uninitiated do not understand is that being an arbitrator is drastically different from being a craftsman or a bakerThe latter can bake a cake or varieties of bread and then market the productsPotential buyers have the benefit of seeing the productIn contrast, an arbitrator cannot be proactive but rather has to be reactiveIndividuals are not arbitrators because they are brilliant or experienced (although that certainly helps)They are placed in the position by the grace of the parties who select themIf a party or counsel selects an individual for an arbitration, only then does the individual become an arbitratorIt must be taken for granted that arbitrators have certain qualifications, either by education or practical experience, preferably both, which make them suitable to hear, understand and decide disputesArbitrators must have a certain disposition which will make them even-handed finders and triers of facts and not cross-examiners reminiscent of descendants of the Spanish InquisitionArbitrators must also keep up with the developments in their fieldIndustry, as well as the arbitral process, has changed since the days when many arbitrators first entered the arena.

Unfortunately, there are still quite a few who insist on seeing the issues of today through the glasses of yesterday. Arbitrators must have a certain disposition which will make them even-handed finders and triers of facts and not cross-examiners reminiscent of descendants of the Spanish InquisitionThe arbitrator must be able to free himself, when necessary, of the past and take fresh bearings on what is happening todayThere has been a greater integration of the law into the commercial, and previously more laic, arbitration processThe awareness of events or decisions in other centres may not necessarily be of precedential value, but quite helpful when reviewing or deciding one’s own cases.

At the outset I referred to bad decisions, which are different from ‘wrong’ decisionsI recall that a panel member, discussing a decision in its conceptual stage, said to another, "You are wrong", to which the other arbitrator replied, "No, I am not, and neither are you - we just happen to have different opinions." This reminded me of an observation by a politician that you are legally wrong because you are politically in the minority.

Frankly, we cannot see everything at all times in the same light, or reach the same result, even on the same facts and argumentsIf it were different, we would not have disputes or arbitrationsWhen differences of opinion arise, what is important is that intellectual honesty be preserved and not compromised.

Dealing with dissents

If an arbitrator is convinced that the position taken by the majority cannot be reconciled with his or her own position by further discussion, this should be sufficient reason to warrant the writing of a dissent.

Dissenting, as such, cannot come as a total surprise for parties to an arbitrationIt must have been in their expectations as a possibility, as otherwise arbitration clauses would not have included a majority ruling provisionThe question has been raised whether the dissenting opinion should become part of the award. And, since I am convinced of the value of proper dissents, I advocate that they should be included and/or published as part of the decision.

Arbitrators must have a certain disposition which will make them even-handed finders and triers of facts and not cross-examiners reminiscent of descendents of the Spanish Inquisition

Dissents in themselves may be provocative and stimulating but they are nevertheless still the opinion of the minority, and hence without immediate or direct influence upon the decisionThe positive aspect of a well-reasoned and eloquent dissent is that, although without precedential value, it may somehow plant the seed of doubt and may give rise to closer scrutiny or reassessment of earlier or subsequent decisions, thus possibly leading to a sounder interpretation of the law.

Since I have made the distinction and referred to proper dissents, then there must be, by implication, opinions which I consider improperWhen the available records show that an arbitrator consistently finds for his appointer, one must wonder about the dissenter's motivationLikewise, dissenters who simply state "I disagree" without offering a basis for the position are either too lazy, unwilling (or maybe unable) to commit to paper how and why they arrived at their conclusionBut then, why are these types of arbitrators selected?

If an assessment like this can be made about an individual, then it is apparent that this arbitrator is not concerned with the legal or equitable position of the case but rather with serving the appointerIn my opinion, partisans should not have a place in the arbitration process. Aside from being dishonest, arbitrators of this ilk would also lack the respect and power of persuasion among their peersThe party who appointed them may have one certain vote, but little chance that their Paladin has the power of persuasion to forge a majority opinion

On certain occasions, arbitration and arbitrators remind me of the Olympic Games, specifically how the media deals with themWhen newspapers report on the medal standings, who should rank first - the country with three gold medals or the country with no gold or silver medals, but with four bronze medals? Is it the quantity that counts or the quality? Should we not minimise the egocentric approach and focus on the value of participating in an elitist process?

Attorneys have to win arbitrations. Arbitrators, generally speaking, are only concerned with the result and the process of arriving at their decisionIt is this luxury which should prompt and inspire arbitrators to continuously perform their services to the highest standard of efficiency and integrity so that the questions of how or where no longer need to be askedThe importance lies in getting there and staying there - being part of those who have made it to the top and serve the concept well.