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The Appointment of an Arbitrator in Dispute Resolution

Date Added: March 04, 2010 07:45:53 PM
Author: Administrator
Category: Arbitrators/Mediators

The basis for arbitration is an agreement between disputing parties to submit the dispute to resolution by arbitration, where an arbitrator is appointed and has legal authority to act.

The disputing parties can directly appoint an arbitrator by direct decision, or indirectly where specified in the arbitration agreement that a third party can be appointed to act. Often in complex commercial agreements several arbitrators are appointed. In the UK under the Arbitration Act, 1950, there is provision for appointing an arbitrator in default of the agreement of the parties or where the nominated arbitrator cannot act.

The law does not set any qualifications for acting as arbitrator – any person chosen by the parties is qualified to act. Often however, the arbitration agreement will stipulate qualifications for the arbitrator.

There is no set fee for the arbitrator to act. The arbitrator’s fee is determined by agreement with the appointing parties and is usually payable jointly by the parties. Typically, the arbitrator’s fee is agreed and put in writing before the commencement of the arbitration, but he is only entitled to receive his fee, once the arbitrator’s award is published. If the arbitrator is not paid, he is legally entitled to sue for his fees. Where there is no agreement as to the arbitrator’s fees, he is entitled to claim a reasonable fee.

An arbitrator’s main duties are to proceed to conduct the arbitration with reasonable progress, to exercise reasonable care, and to act impartially. The first task upon appointment is usually for the arbitrator to determine whether the dispute is one which is capable of resolution by arbitration. The arbitration agreement often stipulates the powers conferred by the disputing parties on the arbitrator.

In the usual performance of his duties, the arbitrator cannot be held liable for negligence. If the arbitrator fails to execute his duties, the main sanctions are to revoke the arbitrator’s authority and to seek to have the award set aside.

An arbitrator in deciding commercial disputes must act with impartiality and must not be seen to be subjectively or objectively biased. The cultivation of a close personal relationship between the arbitrator and one of the referring parties is likely to be considered bias.

The appointment of the arbitrator may be terminated by the arbitrator’s own resignation. The referring parties may also seek to revoke the arbitrator’s authority by application to court, thus no party can unilaterally remove the arbitrator. Under the provisions of the Arbitration Act 1950, the court can order the removal of the arbitrator for displaying bias, for refusing to conduct the arbitration without unjust delay and for other misconduct. What constitutes misconduct depends on the circumstances of each case, though it is clear that an error of fact or in law in the making of an award, does not constitute misconduct.

The arbitrator plays a central role in the arbitration process and has wide ranging powers to make decisions to effect commercial dispute resolution.

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