The challenge for a self regulatory organization arbitrator Essay Example for Free

The challenge for a self regulatory organization arbitrator Essay An effective arbitration system requires competent, impartial and just arbitrators who will discharge their duties with great care. It is essential for arbitrators to realize that the disputing parties consider them to be akin to judges and that their power in some respects exceeds that of the judges in the sense that with the exception of a few causes, their decisions cannot be reversed. Arbitrators should not only be impartial but they should also appear to be so. â€Å"In arbitration, even more than in court, not only must justice be done, but justice must also be seen to be done . † Ethical Responsibilities. Sometimes, the arbitrator’s position in respect of a dispute could lead to a conflict of interests. Whenever such an event occurs, the arbitrator has to appraise the Director of Arbitration in this regard or in the alternative the arbitrator may decline to sit on the arbitration panel. The reason for such stringency is that arbitrators, in the course of their work, decide on issues that are of immense importance to the disputing parties, who must at all times be assured that their dispute has been accorded the fairest hearing possible and that justice to the fullest extent possible has been rendered. Independence and Impartiality The concept of independence and impartiality occupies a central place in civil justice and both the Online Dispute Resolution or ODR service provider as well as the individual arbitrator must not only be independent and impartial but must also appear to be so. Further, they should not have any vested interests. Moreover, it should be necessary for individual arbitrators and mediators to strictly adhere to a code of professional ethics. Such a code of professional ethics should ensure that arbitrators and mediators reveal personal interests in the dispute. Further, it should ensure that the arbitrators and mediators avoid conflicts of interest. The extent of the job security and remuneration of third parties should be adequate to ensure neutrality. The ODR user should be granted access to information in respect of the compliance of the arbitrators and mediators with these requirements. Moreover, third party arbitrators and mediators should be allocated on a strictly random basis and no single party should be permitted to select a particular arbitrator or mediator . It is important to note that the rules of international arbitration require the arbitrators to be invariably impartial in their reasoning. Further, these arbitrators have to be independent of the parties involved in the arbitration. The rules however do not specify this applicability in practice and in this respect, Article 7 of the American Arbitration Association’s International Rules allows this impartiality to vary if the parties involved have agreed to so. This Article 7 states that â€Å"Unless the parties agree otherwise, arbitrators acting under these rules shall be impartial and independent. † In an inflexible manner, the ICC Rules provide that â€Å"every arbitrator appointed or confirmed by the Court must be and remain independent of the parties involved in the arbitration† and that they shall make disclosures accordingly . The London Court of International Arbitration makes it mandatory that arbitrators â€Å"be and remain at all times wholly independent and impartial, and shall not act as advocates for any party† . The UCITRAL states that â€Å"Any arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence† . The process of arbitration entails an impartial, independent third party that considers the statements of the disputing parties prior to resolving the dispute by issuing a decision that is binding on all the parties involved in the dispute. This process is utilized in a wide range of disputes. Arbitrators are required to have better knowledge and better focussed expertise on the subject matter in comparison to the ordinary judges or jurors. Moreover, they should deal with the disputed matter with greater efficiency and logic. Due to these requirements, arbitral firms generally maintain information about prospective arbitrators and such information includes the specialised expertise of these arbitrators. However, in cases involving intellectual property, technical know-how though helpful may not always be desirable. Disputes arising out of contractual terms could differ and arbitrators having legal knowledge invariably have greater expertise than arbitrators without such knowledge. This explains the reason why parties always prefer a lawyer to be their arbitrator. In intellectual property matters the chances of a non legal person becoming an arbitrator are remote . In general, arbitration is characterized by parties who consent to use the process, privacy, the determination of the outcome by a third party, a legally binding and absolute process and the existence of narrow grounds on the basis of which an appeal can be made. Such hearings are usually less formal than court hearings and some forms of arbitration are conducted solely on the basis of documents and do not involve hearings . In A. S. M Shipping v. T. T. M. I it was held that in accordance with the precedent set by the European Court of Justice, the English law required the determiner of a bias to be fair minded and knowledgeable. In the case of Porter v. Magill the court created a test whereby it could be ascertained whether a fair minded, informed observer, â€Å"having considered the facts, would conclude that there was a real possibility that the Tribunal was biased. Trade Arbitrations, like the London Maritime Arbitrators Association of the LMAA, the Grain And Feed Trade Association or GAFTA, the Federation of Oils, Seeds and Fats Association or FOSFA, the London Metal Exchange or the LME, etc, constitute a major characteristic of London arbitration. A sizable amount of the world’s shipping and commodities trading utilize contract forms that specify London as the venue for trade arbitrations. The persons who are members of these arbitral bodies are required to possess widespread experience in the trade and at times they have to be active traders. Accordingly, in Rustal Trading Ltd v Gill Duffus SA one of the consultants of Rustal was being censured for his commercial character. The facts were that previously, one of the arbitrators had been embroiled in trade arbitration against him. While setting aside the challenge to this arbitrator, Moore-Bick J held that it could fairly be assumed that one of the reasons why the parties have agreed to trade arbitration is that they wish to have their dispute decided by people who are themselves active traders and so have direct knowledge of how the trade works. However, if the arbitrators themselves are to be active traders there is every likelihood that at least one member of the tribunal will at some time have had commercial dealings with one or both parties to the dispute. That is something which the parties must be taken to have had in mind . Conclusion The past two to three decades have been witness to the fact that disputes in international business have been resolved by international commercial arbitration. The success of this system is reflected in the resolution of important disputes that had their origin in the nationalization of oil concessions in the 1970s and 1980s, mammoth international construction projects such as the subterranean tunnel under the English Channel and crises brought about by incidents like â€Å"the French sinking of the Rainbow Warrior on its green peace mission. † Moreover, its success has been proved by the tremendous growth â€Å"in the number of arbitration centers, arbitrators and arbitrations . † The world of business has been subjected to tremendous growth with the result that it has become imperative to have in place a reliable and competent business disputes resolution mechanism. In general, businesses are partial to settling their differences in a manner that does not create animosity with the resultant hampering of their business relationship. Thus, arbitration, which entails rapid, pragmatic and efficient dispute resolution, is uniquely suited to such an endeavour. The process of arbitration differs from the usual judicial process as it is carried out by neutral arbitrators who are chosen by the disputing parties. Arbitration involves either one or three arbitrators and the particulars of the arbitration, like organization, arrangement, location and extent are incorporated in their contract. The arbitration clause, which contains these particulars, is in general agreed upon at the time of formulating the initial contract. The process of arbitration consists of a voluntary method of settling disagreements by obtaining a concluding and obligatory verdict from an unbiased third party regarding business disputes between parties. The value of this method is immeasurable in international business transactions which involve business parties who are on several occasions ignorant of the foreign legal systems . This essay examined the role of arbitrators in international trade disputes. The requirement that arbitrators should be impartial and independent had been analyzed by resorting to the decisions in relevant cases, scholarly journals and the United Kingdom’s Government’s Websites, which revealed that in the majority of the cases these arbitrators were functioning in an impartial and independent manner. The challenges faced by arbitrators and the court’s decisions have been discussed at length. International arbitrations are beset with a host of problems that are unique to such arbitrations; this situation arises due to the fact that opinion regarding what is deemed to be acceptable commercial practice differs from country to country. Due to the proclivity of the domestic courts to adopt a more or less laissez faire attitude, international arbitrations are to a large extent self-regulatory. In general, international arbitrations entail commercial disputes in construction, international sale of goods and commodities, and shipping . From the foregoing analysis it can be concluded that in the majority of the cases international arbitrators are impartial and independent. ? Bibliography 1. Arbitrator’s Manual. Available at http://www. nasd. com/ArbitrationMediation/ResourcesforArbitratorsandMediators/GeneralInformationandReference/ArbitratorsManual/EntireDocument/index. htm 2. A. S. M Shipping v. T. T. M. (2005). EWHC 2238. 3. Bank Mellat v Helleniki Technik (1984) QB 291. 4. Bank Mellat v GAA (1988) 2 LI 44. 5. Bazerman, Max H. , Farber, Henry S. Arbitrator Decision Making: When Are Final Offers Important? Industrial Labor Relations Review. Ithaca: Oct 1985. Vol. 39, Iss. 1; pg. 76. 6. Bremer Handles GmbH v EtsSoules e Cie (1985) 2 IR119. 7. David L Dickinson. 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