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PART 4 ARBITRAL PROCEEDINGS
95. Arbitrators rely, at present, on submission documents to identify their duties and the powers available to them. However, for the most part, submissions do not contain detailed provisions and arbitrators find themselves with insufficient powers to allow them to manage proceedings properly.
96. If the agreement is silent, arbitrators will look to current domestic arbitration law under which the powers available are limited. For example, there are no powers to award damages, expenses or interest. This means that arbitrators may be unable to meet the needs of parties, as these are fundamental elements of any final award. There is also an absence of powers that allow arbitrators to ensure that proceedings move forward in an efficient manner. The Bill remedies this.
Rule 26 - Procedure and evidence
97. Rule 26 is a default rule that in the absence of agreement between the parties, the arbitrator can determine the procedure to be followed and evidential matters. It is followed by a number of rules that make detailed provision about procedure.
Rule 27 - Place of tribunal meetings
98. A tribunal seated in Scotland may meet anywhere it chooses, which may be outwith Scotland.
Rule 28 - Power to appoint clerk etc.
99. Arbitrators in Scotland often appoint clerks to assist with the arbitration procedure. A clerk is usually a solicitor with experience of arbitration practice. Their duties will include the safe custody of written pleadings and other documents and the provision of advice to the arbitrator on procedure and the drafting of interlocutors and final awards. At hearings or other meetings, the clerk may perform the functions of a clerk to a tribunal. Whether or not the appointment of a clerk is justified financially will depend upon the arbitration, but the Bill provides a default rule that an arbitrator can appoint a clerk (and others) to assist in the arbitration. However, the parties' consent will be required for the appointment of clerks and other staff if significant costs are likely to arise. This aims to ensure clerks and other staff are not appointed unnecessarily.
Rule 29 - Statements of claim and defence
100. In the absence of agreement between the parties, it will be for the tribunal to decide whether to have written statements and what should be in them.
Rule 30 - Failure to submit claim or defence timeously
101. In the absence of agreement between the parties, the arbitrator will have powers to deal with late submission of statements of claim, counterclaims and defences, including the imposition of sanctions which include terminating the arbitration or proceeding in the absence of such statements. Rule 30(4) recognises that a party may simply delay submitting statements in an arbitration where no specific time limit has been imposed for submitting statements - the penalty is, however, the same unless there is a good reason.
Rule 31 - Hearings and examinations
102. In the absence of agreement to the contrary, the arbitrator is free to decide whether or not there should be oral hearings at which the parties can make representations or whether to proceed using documents or other materials only. Any decision of the tribunal to hold or not hold oral hearings must be made whilst having regard to the general principle that each party must be given reasonable opportunity to put its case. The tribunal must hold a hearing if requested to do so by a party.
103. The parties to the arbitration are to be given sufficient advance notice (not less than 14 days) of any hearing or meeting.
Consultation question
Q14: The period of notice proposed for any hearing or meeting is 14 days. Do you consider this period to be:
Too long About right Too short
Rule 32 - Use of experts
104. Rule 32 is a default rule, in the absence if agreement to the contrary, that an arbitrator has the power to instruct an expert (also known as a man of skill or an assessor) to provide advice on areas outwith his or her knowledge to allow a decision in the case. There are detailed rules on the parties being given a copy of and an opportunity to comment on, the expert's opinion.
105. Paragraph (4) of this rule is mandatory to prevent it from being disapplied by the parties who could then disapply the whole rule during an arbitration. This is justified as it will assist in resolving the dispute, and the arbitrator is bound by a duty to avoid unnecessary expense, but it would be unfair to an arbitrator to proceed on the basis that an expert opinion was available but for the parties to later rule that out.
Rule 33 - Powers relating to property
106. The Bill makes default provision for protective measures relating to property, including evidence.
107. One of the features of arbitration in Scotland will be an arbitrator's ability to make orders for the production, preservation etc. of property owned or possessed by a party as a protective measure pending the outcome of an arbitration and also for the purpose of being used as evidence during the proceedings. These are similar to the powers of a court. Rule 33 will promote the smooth running of the arbitral process because it will no longer be necessary for the parties to go to court to obtain orders not presently available from arbitrators.
108. The fact that the parties may not agree on the need for such a preservation order should not be able to restrict the power of an arbitrator to make such an order, because a party inclined to action which would frustrate the possible outcome of the arbitration is unlikely to agree (at least once the dispute has arisen) that the arbitrator should have power to make orders which would interfere with such action.
Rule 34 - Duty to give copies of documents
109. Rule 34 is a default rule that in the absence of inconsistent agreement, a party is to give the other parties a copy of documents sent to the tribunal. This does not have to be in the same form as sent to the tribunal.
Rule 35 - Representation of parties
110. In the absence of inconsistent agreement, a party may be represented by a lawyer or any other person chosen by the party. In other words, legal representation may be unnecessary.
Consultation Question
Q15: Do you believe that the use of legal representation should be at the discretion of:
The Parties The Arbitrator
Rule 36 - Variation of time limits
111. In general, in Scots arbitration law there are no specific time limits which must be applied, although the arbitrator has the power to set time limits, but not to vary time limits set by the parties.
112. The arbitrator can, as matters of general procedure, set time limits for the completion of particular stages of the tribunal, or a timetable for the whole arbitration. Rule 36 is a default rule that, in the absence of agreement between the parties, the arbitrator has the power to vary time limits whenever it seems appropriate to so do.
113. The sheriff is also given the power to vary time limits where someone would suffer substantial injustice if no variation was made, and all arbitral processes for variation have been exhausted. Such provision is made because the arbitration would come to an end and the arbitrator's authority terminate if the specified date expired without an award having been made, and there will be situations where this would not be appropriate.
Rule 37 - Consolidation of proceedings
114. Rule 37 is a default rule which allows the parties to agree to consolidate the arbitration with another arbitration, or hold concurrent hearings, but the tribunal may not do so on its own initiative. Section 9(5) of the Bill states that for statutory arbitrations notwithstanding rule 37 consolidation is only possible for other arbitrations under the same statutory provision.
Consultation Question
Q16: Should the default rule be that tribunals can consolidate different arbitrations on their own initiative?
Rule 38 - Suspension of legal proceedings
115. Rule 38 is a mandatory rule that a court must sist legal proceedings insofar as the matter in dispute is subject of a valid agreement to arbitrate, subject to the conditions in rule 38. The provisions apply to arbitrations seated outwith Scotland, as the court should, for example, have a wide duty to sist in relation to arbitrations in England and Wales and Northern Ireland.
116. We had considered whether it would be possible for a court simply to dismiss rather than sist, the case. There might be advantages from the point of view of court time, particularly given the changes to the powers of the arbitrator and to the law of prescription elsewhere in the Bill. A case dismissed can be re-raised in the Scottish courts. However, we think it is more straightforward to sist rather than dismiss since the arbitral proceedings may fail and there may be practical difficulties for the court in some cases. A court might also prefer to have the papers from the sisted case to hand, for instance in subsequent enforcement proceedings following an award.
Rule 39 - Court's powers in relation to arbitration
117. Rule 39 makes mandatory provision at paragraph (1) that the court has the same power in arbitration proceedings as it would have in ordinary civil proceedings to order the attendance of a witness or the taking of evidence on commission.
118. The rest of the rule is a default rule. It retains the existing law and sets out a range of powers including making an order under section 1 of the Administration of Justice (Scotland) Act 1972 to order the inspection, photographing, preservation, custody and detention of documents and other property (including land) which appear to the court may be relevant to the arbitration proceedings.
119. The court has these powers whether the arbitration has commenced or is likely to be commenced. If an application for an order is made after the arbitration has commenced, then the consent of the arbitrator is required. If the parties agree, however, the powers specified above would not apply to a particular arbitration. The rule does not affect the court's powers under any rule of law or the tribunal's powers (see in particular rule 33).
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