“MANAGING THE INTERLOCUTORY PROCESS OF ARBITRATION”
Yemi Candide-Johnson, FCI Arb.

TIn a foreword to Mark Catos “Arbitration Practice & Procedure”, Lord Mustill (a Lord of appeal and former President of this Institute identifies very clearly, the mystery and uncertainty of the interlocutory process in arbitration:

“ Many practical disciplines have legal aspects, and almost all legal disciplines have practical aspects……. Arbitration is unique, for the law is concerned exclusively with the practice, and yet the practice which actually prevails, combined with the judicial opinion on what ought to prevail, itself generates the law”.

Arbitration is only one of several alternative systems of dispute resolution, and it is in competition with the others. In Nigeria the main competition is litigation, whose rampant disrepute contributes largely to the viability of arbitration. It is so very easy however, for the arbitration process to present parties with a similar nightmare in terms of time, cost and satisfaction. This real threat must be considered against the inroads made into dispute resolution by mediation, conciliation, ombudsmen, and in recent Nigerian history, renegade police and military authorities. The continued good reputation and growth of the arbitral process depends on the ability of the arbitrators especially, and parties in general, to get a grip on the process.

The interlocutory process commences with notice of arbitration and should effectively conclude with the commencement of hearing. Interlocutory processes may however continue beyond this point. The key elements of the process are as follows: (i) Choice of Arbitrator(s) (ii) Preliminary Meetings (iii) Formulation of Claim and Defence (ii) Further and Better Particulars (iii) Discovery (iv) Submission of witness proofs. They may cover interim awards, leave to amend and range from steps within the exclusive power of the tribunal to those exercised by the High Court.

The objective (in common with litigation) of the interlocutory processes is to:

1. Define with clarity and precision the actual matter in controversy.
2. Preclude surprise of either party as to nature of case he has to meet or the documentary evidence in possession of the other party.
3. Enable as full preparation by parties of their cases as possible before Hearing
4. Eliminate cases, which can properly be disposed of before hearing.
5. Save time and reduce costs.

It is highly desirable that managers of the dispute on both sides should be compelled by the procedure and timetable, to consider their briefs very carefully at an early stage and to apply full professional skill and judgement at every stage. It is recognised that leaving the process to the parties is counter productive. The increasingly prevalent view is that the parties are not generally able to express an informed view on procedure and that advocates and the arbitrator may often, design or inspire long and complicated procedure which may better demonstrate their own skills, but which will waste time, add costs and satisfy no business man. Lord Mustill has spoken of Fast Tracking arbitrations: Parties exchange pleadings, submit file of documents and the award is reserved. Generally however, lawyers have Slow Tracked the process and turned it into another arena for the display of their greatest skills, drama and delay.

There are inherent limits in a voluntary, contractual system. Although the arbitrator has certain powers operated by the giving of directions similar to court orders, he does not have the inherent power and authority of a judge. Experienced commentators express the view that arbitrators should become increasingly interventionist and assume greater control of the proceedings. This challenges the accepted wisdom that the process being consensual, the wishes and agreement of the parties is paramount. Ronald Bernstein QC has suggested for example, that the arbitrator should have power to override the party’s agreement on interlocutory matters in order to implement the agenda of swiftly settling the dispute. This fundamentally challenges the accepted notions about managing the entire arbitration process. This type of intervention is considered critical if arbitration is to keep and increase its market share of the dispute resolution business. The arbitrator should be encouraged to take control of the proceedings because in many cases, only he has the correct motivation to impose simplicity and economy of time in regulation of procedure. Ultimately, it is his responsibility to justly, quickly and economically resolve the dispute. According to Margaret Rutherford QC, another leading advocate for interventionist arbitration: “ The arbitrator must initiate and maintain cost effective management of the arbitration process by which the dispute can be resolved quickly and efficiently by using his considerable powers of flexibility, imaginatively, innovatively, firmly and justly, and preferably by agreement of the parties”

Subject to the paramountcy of the agreement, this process is potentially very well arranged to achieve the objectives. The arbitrator is often an expert in the business where the dispute has arisen. Choosing the arbitrator for the dispute is therefore a critical part of the process. In Nigeria where age is unduly venerated even in business matters, many parties have paid the bitter price of appointing aged and confused jurists to preside over complicated commercial matters beyond their experience. The resulting rush to challenge awards has not done great credit to the development of arbitration. An arbitrator who is busy in his own business is more likely to appreciate a modern dispute and will have a greater desire to resolve the matter swiftly. These aside, there are no queues for listing interlocutory proceedings in a private tribunal and these matters can be raised and resolved in a few days. The arbitrator dealing with a matter from scratch and having watched it develop is likely to fully appreciate the key issues and the impact on them of interlocutory arrangements. At the very commencement, he can fix a strict time able for the matter against which the parties will run.
                                      
DELAY IN PROSECUTING ARBITRATION.

Delay may start even before the issues are settled. An arbitrator has no inherent power and neither does the High Court, to dismiss a claim for want of prosecution. The English House of Lords has held that inordinate and inexcusable delay on the part of the claimant does not of itself amount to a repudiatory breach of the arbitration agreement so as to entitle the respondent to an injunction restraining the continuance of the arbitration. Similarly, the courts have also held that an arbitration agreement is not frustrated where the delay is such that a satisfactory trial of the dispute is no longer possible nor is the agreement subject to an implied term that a party's right to proceed with an arbitration will lapse if not exercised within a reasonable time.

Attempts by defendants to invoke the principle of equitable forbearance or promissory estoppel have also proved unsuccessful. A party who invokes that principle has to establish that the other made, by words or conduct, an unequivocal representation that he did not intend to enforce his strict legal rights. Mere silence and inaction on the part of a claimant will not without more amounts to such representation and the defendant may experience the further difficulty of adducing evidence to show that he has acted upon, or suffered prejudice as a result of any such representation. See: Woodhouse Israel Cocoa Ltd v Nig. Produce Marketing Ltd 1972 AC 741,755.

POWERS OF ARBITRATOR

The Arbitral tribunal is not a High Court, but it has nonetheless similar general powers. An arbitrator has power to order pleadings and particulars and to order discovery by making affidavits or by answering interrogatories on oath. He can make orders for discovery by inspection of documents, and will act on same principles as in the High Court. If a party affected fails to comply however it may be necessary to obtain an order in the High Court and the court has power to make such orders as if it was in an action. The arbitrator may inspect property or premises that is subject of dispute.

Both under common law and the Arbitration Act, these general powers are implied and subject only to provision (Section 14) that the arbitrator must accord equal treatment to the parties and give each party a full opportunity of presenting his case. Section 15(3) of the Act gives the arbitrator, the power to determine the admissibility, relevance, materiality and weight of any evidence before him and that the proceedings shall be in accordance with the 1st schedule of the Act, but where there is a lacuna in the schedule, in a manner that is appropriate that will ensure fair hearing. In general and subject always to any restrictions imposed by the agreement or by the requirements of natural justice, the arbitrator controls his proceedings and the courts have no inherent jurisdiction to direct him on what to do. See: Section 34 1990 Act.

The wide range of his powers is to enable him to tailor the procedure to the needs of the particular dispute rather than take off-the-peg procedure (e.g. litigation procedure) designed to cater for widely differing situations. Among his powers is an implied power to grant injunctions. See: Leontaritis v Nigerian Textile Mills 1967 NCLR 114.

In England, it has been contended that while an arbitrator may decide in accordance with "internationally accepted principles of law governing contractual relations" deusche Schachtbau und Tiefbor Gessel Schaft MBH v Ras al Khaimah National Oil Co 1987 1 wlr 1023 (icc arb), it is doubtful whether he may decide ex aequo et bono (i.e. in justice and fairness, the phrase is a civil law phrase equivalent to equity and good conscience) even if expressly authorised to do so by the terms of the submission to arbitration. The question is one of considerable difficulty. See: Mustill and Boyd pp 74-86,Eagle Star Insurance Co Ltd v Yuval Insurance Co Ltd 1978 1 Lloyds Rep 357,361

In the absence of any express provision the duty of an arbitrator is to decide the questions submitted to him according to the legal rights of the parties and not according to what he may consider "fair and reasonable in the circumstances" taylor David & Son Ltd v Barnett Trading Co 1953 1 WLR 562,568. He must therefore apply some fixed and recognisable system of law whether English or foreign. Orion Compania Espanola de Seguros v Belfort Maatschappijvoor algemeneverzekgrungeen 1962 2 Lloyds Rep 257.

Although the proceedings may be less formal than in court, he is bound to observe the rules of evidence unless the parties otherwise agree and cannot therefore call a witness without the consent of the parties Re Enock & Zaretzky, Bock & Co 1910 1 KB 327.

FAILURE BY PARTIES TO COMPLY WITH ARBITRATOR'S ORDERS.

The psychological prejudice of incurring the arbitrator’s displeasure by reluctance to proceed is the first practical sanction. It is important therefore to obtain clear and simple directions from the arbitrator at the earliest stage and to obtain also he earliest possible hearing date within that schedule. As soon as a party defaults it should be brought to he arbitrator’s attention since a letter may prompt a due response. The award of costs and interest is also an available sanction.

Unless otherwise agreed by the parties, if without showing sufficient cause a claimant fails to serve points of claim within the period agreed by the parties the arbitrator shall terminate the proceedings and if the respondent fails to state his defence the arbitrator shall continue the proceedings without treating such failure in itself as an admission of the claimant's allegations, and if any party fails to appear he may continue with the proceedings and make an award (section 21) of the Act. A party cannot contend that an award does not bind him because he withdrew from the arbitration before the award was made. See: Commerce Assurance Ltd v Alli 1986 3 NWLR pt 29 at 407.

Ultimately the arbitrator has to hear a party who is in default if he turns up even at zero hour. Therefore the option of fixing and proceeding with ex parte proceedings should be avoided. This apparent short cut may tend to greater delay especially as the award itself may be set aide for misconduct. Even if such challenge fails, its commencement will inevitably add considerable delay to resolution of the matter. One has to be very practical about dealing with delay.

OCCASIONS FOR DELAY & SUGGESTIONS

Preliminary Meeting.
The arbitrator should try and fix with the parties agreement time saving procedures at the preliminary meeting, and to make clear to the parties (represented by senior authorities) advantages o time saving procedures. Arbitration agreements should be drafted with this in mind.

This is to be encouraged in order for all parties and the arbitrator to get a proper picture of the dispute. To determine the level of independent witness evidence, and whether oral or documentary evidence will be used. At this stage an experienced arbitrator should be able to assess the importance or not have witness demeanour in determining truth and also the nature of contentions arising from construction of documents. The arbitrator ought to have a fair view of whether the hearing will be on documents or by oral testimony. The parties may themselves agree to dispense with oral hearing but the arbitrator cannot in practice deny oral hearing to a party who demands one. The direction of the proceedings will turn, even from this stage on the personality and authority of the chosen arbitrator.

A variety of items may be covered here. These range from undisputed costs to interim declarations in favour of one party. Section 14 of the Act empowers the arbitrator to make such awards in interim unless expressly barred by the submission.
 Such an award can be sought and made at any stage, but where a counter claim exists and it may affect the final award, it would be unwise and time wasting to make an interim award.

An injunction may be sought as an interim award, since it is settled that the arbitrator has power to order injunction in respect of reference materials necessary for or subject to the arbitration. Birtley & District Co-op v Wind Nook & District Co-op No 2 1959 I All ER 623. This power allows the arbitrator to exercise full control and protect the task conferred on him. The arbitrator must give full reasons for such interim relief either way. Granting injunction may involve inspection of property or documents, which are subject matter of the arbitration. However, the power has been questioned. In Vasso (Owners) v Vasso (Cargo) The Vasso, 1983 All ER 211 Lloyd J (ahtw) opined that the power to order inspection being analogous to power to grant injunction belongs solely to the court. In Kursell v Timber Operators 1923, Slater J limited the power of an arbitrator to property belonging to a party to the arbitration only. See Section 12 of Act. The arbitrator clearly has this power subject to directions on matter of limiting costs associated with inspection. The costs should be considered against the overall cost and size of claims. If the inspection will assist the arbitrator in clearing up matters in dispute, he ought to insist on proceeding. He should likewise forego it is the costs in context are prohibitive.

Weak Cases.
Unfortunately the arbitrator cannot make a summary ward in face of a useless case. He ought to hold a preliminary hearing and he can split the claim in order to make award on incontestable elements bearing in mind any counter claim. clear the mind of the abitrator.

Obstructions.
Challenges to jurisdiction, imprecise identification of issues and incompetent pleadings all challenge the skill competence and control of the arbitrator. The selection of incompetent or extremely busy arbitrators will therefore impact the process. If the interlocutory process does not control these matters, then hearing itself will be impeded by a deluge of material which has not be subject to judicious selection of a core work bundle. This will be compounded by applications for extension of time and leave to amend at inconvenient points in the proceedings.

Absence of party, resignation of lawyer or one arbitrator are also occasions or delay that can be applied by mischievous parties.

Without amending legislation, it is clear that public policy requires the just, swift and fair resolution of business disputes and that ultimately arbitration is a service to he public. The original intention of those who created the process (the English Merchants of the Middle Ages) was “speed and the maintenance of good relationships. In African culture also, swift and amicable resolution is the paramount object. Today’s arbitration has certainly evolved into a complex business afflicted by technicality and demanding a high degree of professionalism and expertise. We should not loose sight of basic principles. Experience displays a wide variety of reasons and circumstances for either or both parties to deliberately delay or disrupt proceedings. The arbitrator needs to employ available procedures to forestall this.

Yemi Candide-Johnson, FCI Arb.
June 2002.
Solicitors & Advocates