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PART 8 MISCELLANEOUS
Rule 63 - Immunity of tribunal etc.
172. Arbitrators (including oversmen) should be granted immunity from liability for damages while exercising their functions under the Bill. If arbitrators are not given such immunity, those with needed expertise may not be persuaded to act. This would mean the loss of one of the main advantages of arbitration - that it provides experts to judge specific forms of dispute. It can be said that arbitrators, when carrying out their functions as such, act in a judicial capacity, and in this respect, therefore, should effectively be treated as judges.
173. Lack of immunity is also likely to deter major international arbitrators from working in Scotland: other jurisdictions which do provide such immunity would be chosen instead.
174. We are aware of the argument that arbitration is contractual and therefore immunity is not appropriate as arbitrators may be paid large fees for their expertise - and that much of the case law establishing immunity for arbitrators developed at a time when it was usual for arbitrators not to be paid. However, it is considered necessary to ensure that the role of arbitrators is not compromised by lack of immunity, and that actions for damages against arbitrators are not used as a way for a disgruntled party to the arbitration to challenge or re-open the arbitration itself.
175. Rule 63 puts the legal position beyond doubt and provides a mandatory rule that an arbitrator is not to be liable in damages for anything done or omitted in the exercise or discharge of his or her functions as arbitrator, unless that act or omission is shown to have been in bad faith. This means that immunity will extend to all the arbitrators functions, namely those under the Bill and also those supplemented by contractual provisions of a separate arbitration agreement.
176. In relation to resignation, the Bill provides that the immunity does not affect any liability incurred by the arbitrator by reason of his resigning. Rule 10(5)(a) on the resignation of the arbitrator provides protection for a resigning arbitrator by allowing the court to grant relief from liability if it is satisfied that in all the circumstances it was reasonable for the arbitrator to resign.
177. The Bill extends immunity to any clerk, employee or agent of the arbitrator.
Clerks
178. An argument exists that as clerks (see the discussion above on rule 28) are often lawyers who are paid full professional fees they should not have immunity from damages while carrying out their functions as clerk. However, the benefit of granting immunity to clerks is that it reduces the possibility of challenge and delay, which often necessitates closure of the arbitration process.
179. The Bill therefore also makes mandatory provision for the immunity of clerks in the same way as for arbitrators
Rule 64 - Immunity of appointing arbitral institutions etc
180. The principal difference between nominating and appointing bodies is that nominating bodies put forward the name of an arbitrator who is then appointed by the parties where appointing bodies themselves appoint the arbitrator.
181. In most cases the parties will agree on the identity of the arbitrator but there will be situations when this does not happen. The Bill makes mandatory provision that when either of the parties fails to comply with the appointment procedure, or when the parties have complied with procedures but are unable to agree on the identity of the arbitrator, an arbitrator will be nominated or appointed by an individual or body instructed for that purpose.
182. Nominating or appointing bodies and individuals should be immune from liability because this adds certainty to the process of arbitration by closing another possible avenue for challenge. Although some bodies carry out this function for free, others charge substantial fees and it has been argued that in those circumstances they should be liable for negligence. However, international institutions nominating or appointing arbitrators will be more likely to choose Scotland as a seat for arbitration if those appointing the arbitrators are immune. On balance immunity should be granted to encourage the use of Scotland as a seat for arbitrations and to close a ground for attacking awards and promote finality of arbitration.
183. Rule 64 therefore makes mandatory provision that nominating or appointing bodies or individuals who appoint or nominate arbitrators are not to be liable for damages for anything done or omitted in the exercise or discharge of that function unless that act or omission is shown to have been in bad faith. The same immunity is extended to employees or agents of nominating or appointing bodies. Nominating and appointing bodies will also not be liable for the acts or omissions of the arbitrator whom it appoints.
Consultation Questions
Q27: Nominating or appointing bodies or individuals who appoint or nominate arbitrators will be liable for damages for anything done or omitted in the exercise or discharge of their function to nominate or appoint an arbitrator if it can be demonstrated that the nominating or appointing bodies or individuals acted in bad faith. Do you agree?
Q28: The same immunity will be extended to employees or agents of nominating or appointing bodies. Do you agree?
Rule 65 - Immunity of experts, witnesses and legal representatives
184. As arbitration is a private version of judicial proceedings, it seems right that experts, witnesses and legal representatives should be placed in no more vulnerable a position if they are taking part in arbitration proceedings than if they are taking part in civil court proceedings. If they did not have the same immunity from defamation for anything said in the course of arbitration proceedings as they would enjoy in civil proceedings they might be reluctant to take part.
185. With regard to expert witnesses, in civil proceedings they enjoy immunity against any action brought on the grounds that things said or done by the expert in the ordinary course of proceedings were said or done in bad faith or negligently. It is appropriate to have similar immunity for expert witnesses in arbitrations.
186. Rule 65 therefore makes mandatory provision for this immunity for experts, witnesses and legal representatives in arbitration.
Consultation Question
Q29: It is proposed that witnesses and legal representatives in arbitration will have the same immunity as they would in civil proceedings. Do you agree?
Rule 66 - Raising the question of the tribunal's jurisdiction with the court
187. Rule 66 is a default rule limiting to certain procedures under the Bill the occasions when jurisdictional questions may be raised with the court.
Rule 67 - Loss of right to object
188. As a matter of effective, fair and efficient dispute resolution, an arbitration should not proceed if circumstances exist which compromise the arbitrator or the process. The Bill provides a number of grounds on which a party may object. But this mandatory rule provides that the right to object will be lost if it is not made timeously (unless the delay is because the party did not know of the ground for objection and could not with reasonable diligence discover the information).
Rule 68 - Consideration where tribunal member adjudged not to be impartial
189. Rule 68 is a default rule which applies where an arbitrator is adjudged not to be impartial subject to the agreement of the parties. The court can consider whether a tribunal member has complied with rule 7 by disclosing, without delay, to the parties any circumstances likely to give rise to justifiable doubt as to the member's impartiality when considering whether to make an order about the member's fees and expenses.
Rule 69 - Death of party
190. Rule 69 is a default rule that subject to agreement of the parties, an arbitration agreement is not discharged by the death of a party.
Rule 70 - Formal communications
191. Many arbitrations involve a large amount of correspondence and difficulties may arise if any dispute emerges as to whether a written communication was properly delivered or received, or as to when it was received.
192. Rule 70 provides default rules for the means of intimating certain formal notices or documents under the arbitration agreement or in the course of arbitral proceedings. They also provide that the arbitrator can order how intimation should be made or dispensing with intimation.
193. We are unaware of any clear authority specific to arbitration on how notices and documents should be intimated between the parties and the arbitrator at the common law. Article 3 of the UNCITRAL Model Law contains rules narrating circumstances in which written communications are deemed to have been received, unless otherwise agreed by the parties.
194. The provisions in the Bill provide default rules on how notices and documents should be intimated under an arbitration agreement and in the course of arbitral proceedings, in the event that this is not already agreed between the parties. The default rules make provision for the delivery and receipt of formal communications. They provide that they must be in writing and that any electronic communication will be treated as being in writing only if it gets to its destination in a readable state and can be used as a record.
195. The rule only applies to documents which are being intimated under the arbitration agreement or as part of the arbitration proceedings. If the documents relate to proceedings of the court, then the rules of court in relation to delivery and service of documents will apply.
196. The Bill also provides that where intimation has not taken place under the usual rules, the arbitrator will have the power to determine that another means of intimation is used or for dispensing with intimation. This will allow the arbitrator to move the arbitral process along and will also reduce court involvement. Specific provision for review by the court on this matter has not been made but in some cases the general provisions in Part 6 on challenging the decision of an arbitrator might be relevant.
Consultation Question
Q30: Specific provision for review by the court on the arbitrator's decision on means of intimation or on dispensing with intimation has not been made because of the general provisions in Part 6 on challenging the decision of an arbitrator? Do you agree?
Rule 71 - Periods of time
197. As there are no general rules for how time periods set in or under an arbitration agreement are reckoned, rule 71 provides default provisions for calculating time periods in the absence of agreement between the parties.
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