Local Government Lawyer Insight July 2017 LocalGovernmentLawyer 18 Confidentiality As a general rule, parties are constrained by confidentiality (although details of the dispute may become public if a party seeks to challenge an arbitrator’s award). This is a significant benefit of arbitration that allows parties to a dispute to maintain privacy. This can be particularly useful in the case of commercially sensitive disputes and compares favourably to litigation where judgments are routinely reported and publicly accessible. However, confidentiality is not unqualified. Parties should review the contract’s arbitration provisions to determine the appropriate limits, along with the rules of the relevant arbitral body. For instance, rule 30.1 of the London Court of Arbitration (“LCIA”) states: “(unless expressly agreed otherwise in writing), the parties undertake as a general principle to keep confidential all awards in the arbitration, together with all materials in the arbitration created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain, save and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings before a state court or other legal authority”. The principle of confidentiality is also recognised by the common law. Confidentiality may be lifted where there is express or implied consent, where there is an order or leave of the Court, where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party, where the interests of justice require disclosure and where the public interest requires disclosure¹. Jurisdiction There is a general presumption that, where parties have made an agreement for a particular form of dispute resolution that agreement will be binding on both parties and they should be held to it². Jurisdiction to an arbitrator is provided by agreement between the parties – usually in the jurisdiction clause within the contract. The construction of an arbitration clause should commence on the supposition that the parties, as prudent business persons, were likely to have intended that any dispute arising out of the relationship should be resolved by the arbitration tribunal. The provisions set out in the Arbitration Act 1996 will apply in cases where is any disagreement regarding the extent of an arbitrator’s jurisdiction. The arbitration clause will need to be carefully drafted to ensure that the parties know which disputes are to be referred to arbitration. A party that raises jurisdiction arguments with the arbitrator may apply to challenge an award. A party may refuse to participate in an arbitration on one of the following three grounds – (i) there is no valid arbitration agreement, (ii) the tribunal is not properly constituted or (iii) the matter has not been submitted to arbitration in accordance with the arbitration agreement³. Third parties Section 43(1) of the Arbitration Act states: “A party to arbitral proceedings may use the same court procedures as are available in relation to legal proceedings to secure the attendance before the tribunal of a witness in order to give oral testimony or to produce documents or other material evidence.” Section 43(2) goes on to state that a party may only use these powers with permission of the court or agreement of the other party. Section 43(3) limits the powers in this section to where the witness is in the UK and the arbitration is England and Wales or Northern Ireland. If the witness is abroad, then a party must use section 44 (described below). Section 43(4) states that a witness will not be required to produce evidence which it could not be compelled to produce in legal proceedings. Challenges and Appeals The fundamental principle of the Act is that courts should not pry into arbitral decisions except for manifest errors. The arbitrator’s award may be challenged in one of two ways: ● Power to remove an arbitrator based on “serious irregularity”; ● Appeal on a point of law. Power to remove an arbitrator Section 24 of the Act sets out the grounds under which a party may apply to court for the removal of the arbitrator⁴. The arbitrator may be removed if (a) there are justifiable doubts as to his impartiality, (b) he does not possess the qualifications required by the arbitration agreement, (c) he is physically or mentally incapable of conducting the proceedings (or there are justifiable doubts as to his capacity to do so), or (d) he has refused or failed properly to conduct the proceedings or use all reasonable despatch in conducting the proceedings. It is extremely rare for an arbitrator to be removed by the court under section 24. Serious irregularity Under section 68 of the Act, a party may apply to court challenging an award in the proceedings on the grounds of serious irregularity affecting the tribunal, the award or the proceedings⁵. Section 68 (2) goes on to provide a list of nine categories of “serious irregularity”. In Lesotho Development v Imregilo SpA⁶, the House of Lords made a number of observations in respect of section 68 challenges. Firstly, intervention under section 68 is only permissible after an award has been made. Secondly, it is a high threshold to meet⁷. ¹ Emmott v Michael Wilson and Partners Ltd [2008] 2 ALL ER (Comm) 193 ² Channel Tunnel Group Limited v Balfour Beatty Construction [1993] 1 ALL ER 664 ³ Section 72 Arbitration Act 1996 ⁴ Section 24 Arbitration Act 1996 ⁵ Section 68 Arbitration Act 1996 ⁶ Lesotho Development v Imregilo SpA [2006] 1 AC 221 ⁷ See also Compton Beauchamp Estates Limited v Spence [2013] EWHC 1101 (Ch) Despite certain shortcomings, arbitration remains an effective and useful form of commercial dispute resolution. It is seeing a gradual resurgence in the construction arena where the drawbacks of adjudication are all too apparent to parties dealing with complex disputes. If properly used, it can be a practical alternative to litigation, allowing parties to resolve disputes quickly and efficiently.