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ARBITRATION AND AWARDS
Reference should also be made to the following—
This subject is of considerable importance, and is rapidly becoming more important owing to the increasing tendency in the commercial world to refer disputes to arbitration as a means of settlement, in preference to recourse to an action in the courts. Arbitration has been defined by ROMILY M.R. in Collins v. Collins (1858) as a reference to the decision of one or more persons, either with or without an umpire, of a particular matter in difference between the parties." Such decision binds the parties in the same manner as a judgment.
The Arbitration Act of 1889, hereinafter referred to as "the Act," is practically a codification of the law and previous custom relating to the procedure involved, and it gives a legal sanction to and a means of enforcing the award, that is, the decision of the arbitrator or of the umpire. The arbitration proceedings under the Act are commenced by an agreement, in writing, by the parties concerned, by which they agree that their differences shall be referred to arbitration and that they will not, meanwhile, take proceedings in a court of law. Such an agreement may be made to submit future differences to arbitration. This agreement is known as a submission to arbitration, termed briefly the submission." A submission may be made orally, but in that case it is not under the Act, but under the Common Law.
It is now usual to find in many contracts a stipulation that any dispute arising thereunder shall be referred to an arbitrator, e.g., in many Partnership Articles a clause similar to the following may be found
"If during the continuance of the said partnership, or at any time afterwards, any difference shall arise between the said partners, or any of them, or between one or two of them, and the executors and administrators of the others or other of them or . . . in regard to the construction of any of the articles herein contained, or to any division, act, or thing to be made or done in pursuance hereof, or to any other matter or thing relating to the said partnership or the affairs thereof, such difference shall be forthwith referred to two or more arbitrators (as the case may be) one to be appointed by each party in difference, or to an umpire to be chosen by the arbitrators before entering on the consideration of the matters referred to them. . . .
Arbitration under particular Statutes.
Several statutes now provide that proceedings thereunder shall or may be submitted to arbitration, but such proceedings often are not under the Arbitration Act, 1889, but depend on the particular statute conferring the right, e.g.
Lands Clauses Act, 1845, where lands are authorized by any Act of Parliament to be taken for undertakings of a public nature.
Railway Clauses Act, 1845, where lands are taken or used for the construction of any railway, or are injuriously affected thereby. Similarly, on other points, the Acts of 1859, 1868, and the Light Railways Act, 1896, apply.
Markets and Fairs Clauses Act, 1847, for ascertaining the amount of compensation for lands authorized to be taken or used for making markets and fairs.
Metropolis Management Acts, 1855 and 1878, and the London Building Act, 1894.
Gas Works Clauses Act, 1871, various Electric Lighting Acts, and the Factory and Workshops Acts, 1891-1901; the Building Societies Act, 1894, and the Friendly Societies Act, 1896.
Workmen's Compensation Act, 1906, with reference to the amount of compensation due by the employer to injured workmen.
Companies (Consolidation) Act, 1908, empowers a company to refer to arbitration any existing or future difference between itself and any other company or person. Besides these, there is a large number of Acts of minor importance which give the right to one party to proceed to arbitration rather than to have recourse to litigation.
An arbitrator is the person to whose decision the particular matter in dispute between the parties is referred, either by consent of the parties or by an Order of the Court. Courts of Arbitration have been established by many Chambers of Com
merce and trade organizations in order that disputes between the members of the particular body may be thus easily and expeditiously settled. A panel is formed of persons specially skilled in such matters, who are ready to act as arbitrators, and from this panel the arbitrator for the particular reference is chosen, either by the parties or by the organization.
How Arbitrations are Instituted.
There are four ways in which an arbitration may be commenced, viz.
Voluntary Submission out of Court, i.e., by mutual agreement between the parties, where no action is pending.
Under order of the Court, by consent of the parties, where an action is pending. Under Section 14 (a) of the Act, the court has power to order the whole matter to be tried before a special referee or arbitrator, or before an official referee or officer of the court.
Under compulsory order of the Court. By Section 13 the court may, subject to the right to have a case tried by a jury, refer any question arising in an action for inquiry or report to any official or special referee. And by Section 14 (b) and (c) the court may refer either the whole action or any particular question arising (i) where a prolonged examination of documents or scientific or local examination is necessary, (ii) where the question in dispute is wholly or partly a matter of account.
References under certain statutes (see above).
There are many disadvantages when a submission is not in writing, viz.,
(1) It is not governed by the Act of 1889;
(2) An award thereon cannot be enforced, except by action; (3) The terms are liable to be disputed;
so that it is always advisable that it should be in writing. The submission, if under seal, requires a 10s. stamp; if not under seal a 6d. stamp, unless the subject matter is not of the value of £5, where no stamp is required. Unless a contrary intention is expressed, a submission under Section 1 of the Act is irrevocable except by leave of the court or a judge, and it has the same effect as if it had been made by an order of the court; and, by the First Schedule to the Act, in the absence of any expression of a contrary intention,—
(1) If no other mode of reference is provided, the reference shall be to a single arbitrator.
(2) If the reference is to two arbitrators, they may appoint an umpire at any time within the period during which they have power to make an award.
(3) The arbitrators shall make their award in writing within three months, except in cases where they enlarge, by writing, the time for making the award.
(4) If the arbitrators have allowed their time or extended time to expire without making an award, or have given notice in writing that they cannot agree, the umpire may forthwith enter on the reference in lieu of the arbitrators.
(5) The umpire shall, similarly, make his award within one month unless he enlarges, by writing, the time for making the award.
(6) The arbitrators and umpire may examine the parties and witnesses on oath and require the production of all books, papers, accounts and other documents in their possession.
(7) The award shall be final and binding on the parties. (8) The costs of the reference and award shall be in the discretion of the arbitrators or umpire.
If the submission refers to an act which must be performed by deed, or if it is to bind a corporation, it must be under seal. In other cases this is not necessary.
If a party to a submission commences any legal proceedings against the other party in respect of the matter agreed to be referred, the court may, on the application of the other party, make an order staying the proceedings, providing that no steps other than entering appearance have been taken by the applicant, and that he was, and is still, ready and willing to do all things necessary to the proper conduct of the arbitration.
The parties to the submission may, by agreement, alter its terms; but the arbitrator has no power to alter the terms of a submission. It may be amended by the court so as to give effect to the real intention of the parties, but even then no new matter may be introduced; and, by Section 9 of the Act, the court may enlarge the time for making the award, whether the time for making it has expired or not.
Revocation of Submission.-As stated above, unless a contrary intention is expressed therein, a submission under the Act is irrevocable, except by leave of the court or a judge, and it has the same effect in all respects as if it had been made by order of the court. The court will not grant revocation except for very good cause shown, e.g., bankruptcy of one of the parties,
the misconduct of the arbitrator, where, as in Drew v. Drew (1898), there is litigation in progress between one party and the arbitrator, and probably the death of one party.
It was held in In re Smith and Service (1890) that after the submission has been agreed to by the parties, neither party can change his mind as to the desirability of arbitration so as to enable him to commence legal proceedings with the intention of putting an end to the arbitration.
Application for revocation is made by Summons at Chambers, and the parties interested must attend. The following are grounds for revocation of the authority of an arbitrator
(1) Where there is corruption on the part of the arbitrator; (2) Where he has improperly rejected or received evidence; (3) Where he is biassed;
(4) Where he is not impartial;
(5) Where he refuses to state a case on a point of law when required to do so.
What the Submission may include.-Generally, any matter which may be determined by a civil action may be referred to arbitration. Pure questions of law or fact may be submitted, but not matters of a criminal nature, unless the injured party has a civil remedy as well as a remedy by indictment, as also may questions as to judgment, future differences, construction of a will, terms of separation between husband and wife, partition of lands of joint-tenants or tenants-in-common, etc. But matters of a public or purely criminal nature may not form the subject of a reference, nor may illegal matters, or a suit for divorce.
Exceptions to power to submit.-As a rule, any person can make a valid submission, but there are exceptions, viz.,
(1) In the case of an agent, the power to do so will depend on the terms of the agency;
(2) A trustee is dependent on the instrument under which he acts;
(3) One partner cannot bind the firm by a submission to
(4) A bankrupt cannot make a valid submission;
(5) An infant has no capacity to make a submission.
Arbitrators and Umpire.
Any person may be appointed as arbitrator; but where he has misconducted himself, the court may remove him and set aside the award. This applies equally to an umpire.
Power of Court to appoint.—The court has power to appoint