Arbitration Law

Chapter 12



12.1 Until relatively recently it was common practice in certain sectors—eg, commodity trading and reinsurance—for the arbitration agreement to provide that each party is to appoint his own arbitrator and that, in the event that the arbitrators fail to agree, the arbitrators are to appoint an umpire to resolve the outstanding issues and are then to withdraw from the decision-making process. The umpire thus becomes the arbitral tribunal, and the arbitrators thereupon cease to be independent and may then act as advocates for the appointing parties. Indeed, under the Arbitration Act 1950, s 8(1), where the parties had each appointed an arbitrator and the arbitrators had failed to agree, the arbitrators were required to appoint an umpire as the fallback mechanism for resolving the dispute. The Arbitration Act 1996 has moved away from the general presumption that such cases are to be resolved by umpires, and has altered the default rules. This is in line with market practice: most (if not all) institutional rules and contracts provide for tribunals to be made up of three arbitrators. Under s 15(2) of the 1996 Act, in the absence of any agreement to the contrary, an agreement that the number of arbitrators is to be two or any other even number carries with it a requirement that an additional arbitrator is to be appointed (in practice, under s 16(5)(b), by the arbitrators themselves), and that the appointee is to act as the chairman of the arbitral tribunal. A chairman merely has a casting vote,1 whereas an umpire himself becomes the arbitral tribunal. This is an important change in the law, as it is now the case that there can be an umpire only if the parties agree that the use of an umpire is their method of breaking a deadlock between their appointees, whereas previously there could be a third arbitrator only in the case of express agreement to that effect.2 It might be added that under the 1996 Act the parties may agree that, in the event of deadlock between the party-appointed arbitrators the third person is to be neither chairman nor umpire, or they may even agree that there is to be no third appointment at all: in such a cases the parties will have provided for deadlock which the court has no power to break.3

The rest of this document is only available to i-law.com online subscribers.

If you are already a subscriber, click Log In button.

Copyright © 2024 Maritime Insights & Intelligence Limited. Maritime Insights & Intelligence Limited is registered in England and Wales with company number 13831625 and address 5th Floor, 10 St Bride Street, London, EC4A 4AD, United Kingdom. Lloyd's List Intelligence is a trading name of Maritime Insights & Intelligence Limited.

Lloyd's is the registered trademark of the Society Incorporated by the Lloyd's Act 1871 by the name of Lloyd's.