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Faqs

Dispute Resolution

Different Battles Require Different Strategies …

The terms of appointment of an arbitrator will typically include

1. Description of the dispute to be resolved

2. confirmation of the arbitrator’s jurisdiction

3. reference to the arbitration agreement under which the arbitrator is to be appointed

4. a declaration of independence and impartiality

5. statement of availability

6. the basis of remuneration and arrangements for payments of fees and expenses on account.

The terms of remuneration may be

(i) fixed fee

(ii) hourly rates for time spent

(iii) based on a % of the value of the dispute

(iv) a mixture of the above

The arbitrator should also include provision for a cancellation fee and make arrangements for payment in the event the matter settles before a final award is given.

1. The fees of the institute

2. The fees of the legal counsel representing the parties

3. The fees of the arbitrator(s)

4. The expenses of the institute – venue and facilities per hearing including food and beverage

5. The expenses of the arbitrators, which may include travel, accommodation, food and other out of pocket expenses subject to the terms of remuneration

6. The cost of experts for the hearings

7. Post award, the legal costs of enforcing or defending enforcement proceedings

Arbitrators who are appointed through an institution may be subject to a fixed scale of fees depending on the value of the dispute and other criteria. However, there may also be some flexibility on the arbitrators fees and the arbitrators may offer lower fees than the maximum scale rates.

In professionally managed institutions, the arbitrators fees will be paid through an advance payment process whereby the parties pay the institute the advance. The arbitrators are then paid by the institute. The terms of remuneration may in certain jurisdictions first be agreed by the appointing party, but later they should be disclosed and all parties should ideally be asked to agree a final document setting out all terms.

The parties will be jointly and severally liable for the fees, and if under the contract, rules and applicable law the costs of the arbitration are awarded to a party in part or in whole, then the other party must meet those costs including the costs of the arbitrator not appointed by that party. During proceedings, the arbitrators will ensure that they have fees on account and if they have drafted their terms of appointment properly, they can cease their works or delay issuance of a final award until their fees are paid.

This depends on the rules of the relevant institute. However, the parties can still agree to determine the number of arbitrators between themselves, but if they fail to agree, the default number under the applicable law and rules will apply. There will generally always be an odd number of arbitrators. For complex arbitrations, there may be a larger panel of arbitrators such as investor-state disputes.

Generally, it would be highly unusual to challenge the arbitrator you selected, but it can happen if circumstances arise under which it would be appropriate to challenge the independence, impartiality or fulfilment of obligations of the arbitrator.

More common are challenges of arbitrators appointed by the other party(res) to an arbitration. Unfortunately, many challenges are strategic and spurious, and such challenges can give rise to delays in the appointment process.

The normal grounds for challenging an arbitrator are lack of independence and impartiality. Parties often research the background of an arbitrator they wish to challenge to see if they can find any links between the arbitrator and the parties involved or even if an arbitrator has published articles on the topic in dispute.

Arbitrators are subject to disclosure requirements and duties to analyse their own independence. They also must preserve their reputation in order to potentially be appointed for future arbitrations.

There are no specific requirements for the qualifications of an arbitrator.

Choosing an arbitrator is tantamount to choosing a ‘judge’. Those not familiar with arbitration may mistakenly believe that by choosing an arbitrator, the arbitrator somehow owes a duty only to the party choosing the arbitrator.

In fact, the arbitrator must be and remain independent and impartial. This is a fundamental principle of arbitration and the arbitrator’s duty.

Aside from that, the qualifications of an arbitrator can vary considerably. Some parties like to choose arbitrators who have a long list of arbitrations to their name and are very senior. Others like to choose an arbitrators of a particular background or nationality. Sometimes an arbitrator may be chosen due to possession of expert knowledge in a particular field or trade.

Many corporations in dispute choosing an arbitrator will look at the formal qualifications and affiliations of an arbitrator to assess credibility and experience. They will look at which institutions the arbitrator is associated with, and whether an arbitrator has undergone any formal training.

There are many institutions which deliver formal training, one of them being the Chartered Institute of Arbitrators (CIArb). CIArb has branches across the globe.

There are currently two main arbitration institutes in Thailand – the Thai Arbitration Institute (“TAI”)  and the newer Thai Arbitration Centre (“THAC”). There is also the Office of the Arbitration Tribunal of the Board of Trade of Thailand.

In order to assess which institute is preferable, an analysis of the arbitrators on the ‘panel’ of arbitrations available to administer a dispute should be reviewed. Further, the style and manner in which an institute oversees a dispute, and the costs involved should be assessed. The parties may also be free to appoint an ‘external’ arbitrator to the panel but with the arbitration to be administered through the institute.  The facilities of the institute should be reviewed for appropriateness, and then the rules issued by the relevant institute will also be an important factor in proceedings.

It is also acceptable for the parties to choose a non-Thai institute to govern a dispute that arises in Thailand, is governed by Thai law, where the parties have agreed the dispute forum will be arbitration and the subject matter is capable of being arbitrated. Some disputes cannot be arbitrated as a matter of public policy or national law.

The considerations for an adviser assisting you with this clause will be:

  1. The location of the parties
  2. The location of the subject matter of the agreement
  3. If the subject matter involves trade across borders, a neutral place where a dispute can be heard
  4. Enforceability of the agreement against assets of the parties in their jurisdictions
  5. The appropriate arbitration institution for the dispute which could be the ICC; a local arbitration institute in a neutral jurisdiction or a trade body
  6. The rules to be applied to the arbitration – these generally speaking should be the rules of the institution chosen, as choosing rules that an institution doesn’t generally administer can be problematic
  7. The law which will govern the arbitration. This is different to the law governing the contract. the procedural law governing the arbitration is the law which governs how the arbitration must be conducted and is generally the law of the place where the institution conducts the arbitration. To avoid doubt, this should be stipulated in the arbitration clause or arbitration agreement.
  8. The venue of hearings. Many rules actually state that the arbitration tribunal will choose the venue of the hearings, so stipulating where the hearings will be can be subject to change. The place of hearings should not be confused with the meaning of the ‘place of arbitration’ which is where the proceedings are deemed to be governed by a body of law. The hearings need not be in the same place at all.
  9. whether legal costs and other costs should be awarded as part of an arbitration award. In some jurisdictions, if you do not specify that legal costs should be awarded, then national legislation dictates that no legal costs will be recoverable. This is a serious matter as it is often only worth pursuing a dispute if there is a strong possibility of recovering costs including legal costs.
  10. How many arbitrators there will be. It is expedient and normal to have an odd number of arbitrators. Some jurisdictions only allow an odd number.
  11. If any expedited procedures can be used. Some institutions offer expedited procedures for smaller value disputes. If the parties agree to use such procedures this can be very helpful.
  12. If there are any pre-conditions before arbitration can commence. Sometimes mediation must first be attempted. Sometimes the parties must first escalate a dispute to a management tier or external dispute board. If any such conditions are to be drafted in an arbitration clause, they must be clear and linked to deadlines.

Other considerations apply.

The simple answer to this is that you should seek advice. The clause relating to arbitration will become very important if you ever have a dispute, and please remember that the reason you have a contract in writing is to make matters clear and to protect you should there be a dispute.

Do not cut, copy and paste an arbitration clause without considering its meaning and applicability.

In order for an agreement to be governed by arbitration, the parties must have agreed to arbitration in an ‘arbitration agreement’. This ‘arbitration agreement’ can be a simple clause contained within the main body of a commercial agreement, it need not be a separate document.

If the parties have not agreed to arbitration by contract, then one party cannot impose an arbitration on the other party. One of the key principles of arbitration is that the parties have chosen this method as a way of determining their disputes. Note however that many sportspersons are made subject to arbitration because there is no other choice for a method of determining their dispute in their industry. You could therefore say that arbitration is forced upon some sportspeople because there are no alternatives.

If both parties are able, notwithstanding being in a dispute, to agree that arbitration would be better than determining a dispute at the court, they may enter into an agreement to arbitrate. Such an agreement can actually narrow the issues of a dispute and make a dispute more cost effective. In practice it is difficult to get the parties to agree to anything at all, once their dispute has begun. It is only later on along the process that agreements are more likely to be reached. However, sometimes the surprise that a matter has escalated to the level of a formal dispute may trigger settlement.

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