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What your company must consider when choosing an arbitrator

 BY JACOB MUTEVEDZI

he success or failure of commercial arbitration depends, for the most part, on the quality of the chosen arbitrator. Once appointed, an arbitrator assumes exclusive jurisdiction over the arbitral process and wields enormous powers. It is, therefore, imperative to get the appointment right from the get go. Further, it is important to bear in mind that parties have very limited scope to challenge or appeal against an arbitral award if the arbitrator does a shoddy job. Nothing, therefore, is more important than ensuring that you appoint a competent arbitrator to engender trust and confidence in the arbitral process.

Personality

An arbitrator must have the necessary social skills to interact with lawyers, the parties, expert witnesses and co-arbitrators, in a manner that will enable the conduct of an effective arbitral process. The arbitrator should be able to strike an appropriate balance between observing and actively steering the proceedings. He or she must neither commandeer proceedings nor descend into the arena. The capacity of arbitrators to listen takes precedence over their ability to lead the proceedings.

Further, an arbitrator must be able to arouse in the parties a feeling that he or she is paying attention to their divergent arguments and that there is scope for discussion. A charismatic arbitrator who can hold the proceedings on a steady course is better than an authoritarian one. Nevertheless, a flexible approach must not be allowed to compromise the legal basis of a decision. All in all, however, experience has proved that an arbitrator’s lack of people management skills negates the speed and cost-effectiveness usually associated with arbitration.

Independence and neutrality

One of the fundamental principles of commercial arbitration is that an arbitrator must be and remain independent and neutral. This principle is reflected in most national laws, arbitral rules and international conventions. Independence, as a notion, involves questions arising from the relationship between an arbitrator and one of the parties. The relationship could be financial or otherwise. In commercial arbitration, the term is often used to describe the arbitrator’s lack of a connection to any of the parties, lawyers or co-arbitrators. An arbitrator should have no direct professional relationship with one of the parties or their lawyer. Further, he or she should have no financial interest in the outcome of the dispute.

Impartiality, as a concept, is concerned with the bias of an arbitrator either in favour of one of the parties or in relation to the issues in dispute. It concerns, principally, a state of mind and this makes actual bias very difficult to establish. However, it is relatively easy to establish apparent bias. An arbitrator may, through his or her behaviour, give rise to suspicion that he or she is not impartial. For example, if an arbitrator applies a procedure which is inconsistent with the notions of arbitral due process.

If the requirements of independence and impartiality are not observed the appointment of an arbitrator is susceptible to challenge. Inevitably, such challenges will delay the resolution of the matter and increase costs.

Legal and professional expertise

Normally, arbitral tribunals are required to provide the reasons for their decisions. Once an award is challenged, courts will review the award. Therefore, it is important to choose an arbitrator with a legal background such as a lawyer or retired judge. Globalisation is at our doorstep and frequently, companies that are party to international commercial transactions tend to submit to foreign laws. Consequently, the modern arbitrator often has to wrestle with questions of comparative law, conflict of laws and statutory interpretation more regularly than one might expect. Arbitrators with a legal qualification are better placed to handle these complex issues.

However, legal training is merely the minimum standard. One cannot overstate the practicality of appointing an arbitrator who possesses professional knowledge of the industry related to the dispute. Thus in disputes where the arbitrators have to deal with complex technical issues, for example, aerospace, pharmaceuticals and intellectual property, it is always prudent to appoint an industry expert.

The qualities of the arbitrator lend acceptability and renown to the arbitral process. An arbitrator who does not have the requisite practical experience cannot discharge his mandate effectively.

Availability

Most companies prefer to appoint a well-known arbitrator. However, it is important to bear in mind that popular arbitrators usually have congested schedules and numerous commitments, sometimes involving work abroad. Despite the arbitrator’s extensive knowledge and experience, it is not cost-effective to the parties if the arbitrator does not have time to deal with your matter.

Further, if the arbitrator has a hefty case-load, he or she is not different from a court bogged down by backlogs. This can undermine your desire to obtain a speedy and efficient resolution of the dispute.

Agreed qualifications

Companies have the freedom to prescribe the qualifications they require of arbitrators. Contrary to popular belief, lawyers are not exclusively eligible for appointment as arbitrators. In practice, it is often prudent to appoint an arbitrator with a specialised knowledge of the subject matter of the arbitration.

Depending on the nature of the dispute, parties may stipulate the appointment of a “civil engineer” or “chartered accountant” or “experienced intellectual property lawyer” or some other professional to be the arbitrator. If the nominee does not have all the qualifications stipulated by the parties his appointment is invalid. Consequently, any award made by such an unqualified arbitrator is void. The arbitrator must possess all the qualifications and none of the disqualifications prescribed by the arbitration agreement.

In all dispute resolution processes the most important factor is the decision-making person. In arbitration this person is the arbitrator. Knowing how to choose your arbitrator is the first step in knowing how to get a satisfactory outcome. Choosing an arbitrator without the requisite qualifications and relevant experience negates all the advantages associated with arbitration. A clueless arbitrator often brings to an arbitral hearing the negative attributes which entities seek to avoid by shunning litigation.

  • Jacob Mutevedzi is a commercial lawyer and arbitration practitioner. He can be contacted on jmutevedzi@gmail.com, on Twitter @jmutevedzi_ADR and on +263775987784. He writes in his personal capacity.

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