COMMODITY ARBITRATION CLUB
NOTES OF THE LUNCH HELD ON 16 TH NOVEMBER 2004
AT CLIFFORD CHANCE

Judith Prior introduced the first topic, Arbitrators awarding costs and the effect of Mediation.
The topic raised the subject as to how often tribunals were using costs as a sanction. Examples being when a tribunal may wish to consider this are, unreasonable conduct, excessive time being spent on trivial issues.
Can or should a tribunal take account of CPR Part 44?
(5) The conduct of the parties includes,
(a) conduct before, as well as during, the proceedings, and…
(b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue:
(c) the manner in which a party has pursued or defended his case or a particular allegation or issue: and
(d) whether a claimant, who has succeeded in his claim, in whole or in part, exaggerated his claim.
In Fence Gate Ltd v Nel Construction (2001) 1 All ER (D) 214 Judge Thornton was of the view that the arbitrators are not bound by the CPR. However in a subsequent case Linpave Building Ltd v Gillingham Football Co Ltd [July 2002 unreported] it was suggested that whilst arbitrators may not want to follow the CPR they may wish to refer to it by analogy.
It has to be that in the event a tribunal does deviate from the usual cost follow the events rule that reasons for doing so must be given.
Following on from this a question was then posed following the decision on mediation in the Halsey v Milton Keynes General NHS Trust [2004] Court of Appeal 11 May 2004. Should a tribunal give “robust encouragement” to parties that they should mediate?
Halsey decided that the courts could not force parties to mediate as this would be against all our human rights to have disputes decided in public, but the courts could give “Robust encouragement” that parties do mediate.
Those present were firmly of the view that a tribunal should take notice of the CPR by analogy even though many favoured a broad brush approach to costs. Many arbitrators whilst seeing the advantage of mediation part way through an arbitration and do suggest it. Were of the view it is very difficult to get parties to mediate once the arbitral process has actually started. Some were of the view that during oral hearings this course of action was more likely to succeed than in documents only hearings.
When faced with a party’s refusal to mediate how does a tribunal then act? On one side is the argument that if the parties had mediated then there would be no arbitration and thus no costs should be awarded , the other being that if mediation had taken place and no settlement has been reached what percentage of costs should then perhaps considered as a deduction? Indeed should there be a deduction at all for example if the winning party was the one that refused to mediate why should they be penalised, as ultimately they have won. These clearly pose difficult questions for a tribunal to which it was conceded there is no stock answer.

Peter Aeberli introduced the second topic, Jurisdiction a Route Map.
An unwilling Respondent is faced with a number of choices. He can refuse to take part in the proceedings and go directly to court under S 72 to seek an injunction. The alternative is to participate in the arbitration, raise a challenge before the tribunal who will deal with the challenge either in an award on jurisdiction straight away or deal with the matter in the final award.
The Tribunal is then faced with how they deal with this challenge. All too often jurisdiction challenges have their roots in the question as to whether there was an underlying contract or not. In deciding that perhaps say they do not have jurisdiction a Tribunal may well be deciding there is no contract, thus deciding the merits of a dispute when dealing with a jurisdictional issue. The Respondent can then challenge the award under S 67 but the courts will re hear the evidence thereby from the Respondents perspective just increase costs and delay.
Moving the matter forward to enforcement. This poses the question will the decision of an English court carry more weight with an enforcing countries court than an English Tribunal on a question of jurisdiction. The answer probably lies in the parties knowing the views of the enforcing countries courts before they commence the arbitration.
It was suggested that the view of the English Courts is out of step with International views on judicial policy, having an inherent right to decide jurisdiction, whereas Continental courts will give weight to the Tribunal rather than the English Court in this regard.
The point was made about the difficulties of ensuring contracts were correctly formed so that upon enforcement no arguments could be raised in the country of enforcement e.g. contracts correctly signed by designated signatories etc.

Edward Album drew attention to a proposed amendment to the Model Law which would give tribunals the power to grant ex parte interim protection orders(Ed that’s mareva injunctions to the rest of us). Whilst this proposal does not affect anyone operating under the English Arbitration Act as Section 44 deals with these matters, for those operating in countries that adopt the Model Law Arbitration Rules it could be an issue in the unlikely event the amendment were to be accepted. The UK Government is opposing this change.