Highlights on Miles and Tatham: Disadvantages ofparty appointed Arbitrators in the UK
Article Title: Highlights on Miles and Tatham: Disadvantages ofparty appointed Arbitrators in the UK
In the UK, the arbitration process is a popular and often preferred method of dispute resolution, particularly in commercial and international matters. The flexibility, confidentiality, and impartiality of arbitration make it an attractive option for parties to resolve their disputes while avoiding the time and costs associated with traditional litigation.
However, a recent decision by the Court of Appeal in Miles and Tatham v. Fotel Communications Ltd has highlighted the potential disadvantages of party-appointed arbitrators in the UK and raised the question of whether it is necessary to reform the current system.
Background
The dispute in Miles and Tatham arose from a construction contract between Fotel Communications Ltd (Fotel) and Miles and Tatham Ltd (M&T) for the installation of a cable network. The contract contained an arbitration clause and the parties agreed to appoint a sole arbitrator to resolve any disputes.
M&T proposed Mr. Lovell, a Chartered Surveyor and Quantity Surveyor, as the arbitrator. Fotel raised concerns about Mr. Lovell's relationship with M&T and proposed another arbitrator, but M&T refused to accept the nomination.
The dispute proceeded to arbitration, and Mr. Lovell was appointed as the sole arbitrator. The final award was in favor of M&T, and Fotel challenged the award in the High Court, arguing that Mr. Lovell's relationship with M&T should have excluded him from being appointed as the arbitrator.
Court of Appeal Decision
The Court of Appeal agreed with Fotel and set aside the award. The court held that there was apparent bias on the part of Mr. Lovell as he had previously acted as a professional advisor to M&T, and his relationship with the company could give rise to the impression that he was not impartial.
The court acknowledged that the current system of party-appointed arbitrators can be seen as beneficial as it allows the parties to have a say in the appointment of the arbitrator and can lead to a more efficient and less expensive process. However, the court also raised concerns about the potential for abuse of the system, particularly in cases where there is a close relationship between the arbitrator and one of the parties.
The court noted that in such cases, there may be a perception of a lack of independence and impartiality, which could undermine public confidence in the arbitration process. In this case, the court held that there was a real danger of apparent bias, and accordingly, the award was set aside.
Possible Solutions
The decision in Miles and Tatham has highlighted the need for a review of the current system of party-appointed arbitrators in the UK. There have been several suggestions for reform, including the introduction of a code of conduct for arbitrators, requiring them to disclose any relationships that may give rise to a perceived lack of independence, and allowing for the challenge of an arbitrator's appointment.
There have also been calls for the establishment of an independent body to assist with the appointment of arbitrators, similar to the Singapore International Arbitration Centre and the International Chamber of Commerce. Such a body could ensure that arbitrators are appointed solely on their qualifications and experience, rather than being subject to the influence of the parties.
Additionally, some have suggested implementing a mandatory cooling-off period for arbitrators, during which they would be prohibited from taking on any new appointments once they have a relationship with one of the parties.
These potential solutions may help to address the concerns raised by the court in Miles and Tatham and promote greater confidence in the arbitration process in the UK.
Conclusion
The decision in Miles and Tatham has highlighted the potential drawbacks of the current system of party-appointed arbitrators in the UK and raised questions about the need for reform. While the current system has its benefits, there is a risk of abuse and the perception of a lack of independence and impartiality.
In order to maintain public confidence in the arbitration process and ensure fairness for all parties, it may be necessary to implement changes, such as a code of conduct for arbitrators, an independent body for the appointment of arbitrators, and a mandatory cooling-off period. It is essential for the UK to address these concerns and continue to be a leading jurisdiction for arbitration.