Building power
The new All-Ireland Arbitration Rules 2020 were designed to take account of the UNCITRAL Model Law on Arbitration. However, the lack of a costs-limitation scheme is a missed opportunity. Tom Wren uses the Force.
In 2019, the committee of the Irish Branch of the Chartered Institute of Arbitrators (CIArb) gave a mandate to an Arbitration Rules Sub-Group to draft new arbitration rules capable of use in both jurisdictions – that is, in the Republic of Ireland under the Arbitration Act 2010 and in Northern Ireland under the Arbitration Act 1996.
The mandate reflected the fact that Irish branch is an all-Ireland endeavour and includes an active Northern Ireland chapter. Delayed by COVID-19, the All-Ireland Arbitration Rules 2020 (AR20) were announced at the branch’s 2021 AGM and are available at www.arbitration.ie.
CIArb (Irish Branch) saw a need for new rules because its previous arbitration rules were devised to meet the needs of arbitration before the United Nations’ Commission on International Trade Law (UNCITRAL) Model Law on Arbitration took hold.
The UNCITRAL Model Law promotes greater uniformity, and assists the enforcement of arbitrators’ awards between jurisdictions under international conventions, such as the 1958 New York Convention. It is enshrined in the current arbitration acts in both jurisdictions on the island. Some countries opted to insert the UNCITRAL Model Law in their domestic
CIArb (Irish Branch) saw a need for new rules because its previous arbitration rules were devised to meet the needs of arbitration before the United Nations’ Commission on International Trade Law (UNCITRAL) Model Law on Arbitration took hold.
The UNCITRAL Model Law promotes greater uniformity, and assists the enforcement of arbitrators’ awards between jurisdictions under international conventions, such as the 1958 New York Convention. It is enshrined in the current arbitration acts in both jurisdictions on the island.
Some countries opted to insert the UNCITRAL Model Law in their domestic arbitration acts to a greater degree than others. In this respect, some differences exist between the legislative regimes North and South.
Luke and see
In addition to the all-Ireland mandate, the Arbitration Rules Sub-Group set for itself a core objective of producing user-friendly rules that provide as much legal certainty as is reasonably possible and capable of operation within the Arbitration Acts and the general body of law in the two jurisdictions.
The means adopted for the achievement of this aim was that the rules would avoid legalese as much as possible, aided by the use of break-out schedules to provide the necessary level of legal detail required for practitioners and parties’ legal advisors, in order to meet any contingency that might arise in arbitration.
A second key objective was to facilitate the achievement of a just, expeditious, and final determination of a dispute at a minimum of cost to the parties, consistent with the standards to be expected of an arbitrator. In this respect, the sub-group devised an arbitration costs limitation scheme, referred to in the draft rules as ‘Schedule G’, but which was pulled before AR20 was approved.
Leia the land
The overarching mandate was encapsulated in rule 1 of AR20, which states: “Wherever a reference is made to ‘act’ or ‘the act’, it shall mean a reference to either the Arbitration Act 2010, if the arbitration is to be conducted under the laws of Ireland, or it shall mean a reference to the Arbitration Act 1996, if the arbitration is to be conducted under the laws of Northern Ireland, whichever is applicable.”
Consistent with the aim of user-friendly rules, sections of either act are not referred to in AR20, nor are articles of the UNCITRAL Model Law. The sub-group took this decision, since to attempt to refer to sections of both Arbitration Acts would have resulted in an unwieldy document with too much opportunity for confusion. The approach taken stresses the need for an arbitrator to be fully familiar with the act and the law relevant to each appointment.
If AR20 applies to a contract where the parties are in dispute, in the absence of agreement on the appointment of an arbitral tribunal by the parties (normally one arbitrator), AR20 provides that the tribunal will be appointed by the Irish branch chair.
An appointment fee of €475 (plus VAT) is required if an application is issued in the Republic of Ireland, and £425 (plus VAT) if issued in Northern Ireland.
Prior to writing this article, I would have said that, to maintain the standard required of arbitrators and to promote fairness in appointments, lists of suitable arbitrators for appointments in both jurisdictions should be kept and managed by CIArb (Irish Branch), which would be charged to keep the branch chair appraised of those available for appointment, with the consent of those individuals.
While I remain of the view that the CIArb is the best-placed institute for the education and training of arbitrators, I believe the silos that exist between the different institutes need to be broken down.
Should a more joined-up approach emerge between the professional bodies as to whom should be the custodian for a panel of arbitrators, a pressing need already exists for a voluntary costs-limitation scheme. I would hope that CIArb (Irish Branch) would deliver as much, in the short to medium term.
Chewie problem
In this author’s opinion, the genesis for the limitation of arbitration costs arose out of two illuminating papers read to the Construction Bar Association’s Annual Conference in 2019 by Anthony Hussey; and by Colm Ó hOisín and Cormac Hynes – and the subsequent authors’ discussion after presentation.
It is a gross oversimplification of the authors’ papers, but it could be said that one advocated that adjudication would predominate, while the other posited the death of arbitration by costs-led strangulation.
The central aim of a cap on arbitration costs would be to make arbitration more attractive to users of dispute-resolution services, and as a ladder to progression – but not at the sacrifice of standards. While the AR20 Sub-Group’s ‘Schedule G’ was not perfect, if implemented (with or without modification), it would presage a new beginning for arbitration, which obtained a bad name primarily because of costs.
If arbitration on the island is to have a future, it must be made competitive. Conciliation – as various studies have shown, most notably that undertaken by Dr Brian Bond in 2014 (see Conciliation: how has it served the construction industry and has it a future?, IEI, 12 March 2014) – has proven to be a successful means of dispute resolution in the construction industry.
In the Republic, a retrograde step was introduced in the public works contracts (PWC), whereby a contractor, having won a recommendation, must provide a bond before payment. In terms of the PWC, conciliation is now less attractive, in that, if a contractor refers a payment dispute to adjudication under the Construction Contracts Act 2013 and wins, the contractor does not have to provide a bond.
Recently, in Gravity Construction v Total Highway Maintenance Ltd, Mr Justice Simons opened a debate on section 6(10) of the Construction Contracts Act as to whether a stay on the execution of an adjudicator’s decision may be ordered pending the issue of an arbitrator’s award.
If section 6(10) is so interpreted, adjudication will also stand to lose its attractiveness, and the need for a binding and cost-effective award of an arbitrator will become more acute.
In both jurisdictions, adjudication has its merits. One is to be found in paragraph 28 of the southern Code of Practice on the Conduct of Adjudications (issued pursuant to section 9 of the Construction Contracts Act), namely: “The adjudicator shall use reasonable endeavours to process the payment dispute between the parties in the shortest time and at the lowest cost.” Yet this does not require an upset amount, and users still won’t know the bottom line.
The Force is strong
The thrust of ‘Schedule G’ was to bring back arbitration into competition with other ADR processes for small-to-medium disputes, leaving higher-value references to arbitration untouched in terms of the capping of costs. To attempt the latter would have been unrealistic, in that few (if any) practitioners might be willing to underwrite the risk of capping costs for disputes that could run for months, with millions of euro and reputations at stake.
As proposed by the AR20 Sub-Group, ‘Schedule G’ stated: “an arbitrator who agrees to participate in any of the below Irish branch costs-limitation schemes shall have his fees fixed at the relevant band, as set forth in this Schedule G, which schemes [the] Irish branch may review and amend from time to time. Any such review shall not apply to an existing appointment under any scheme. Expenses and other costs may be settled and taxed, as provided for in the act.
“None of the below schemes apply to consumer or statutory arbitrations and they apply only to those arbitrators who are approved by [the] Irish branch for each scheme and who have agreed to limit their fees pursuant to this Schedule G, if appointed.
“All monetary values for fixed fees refer to the unit of currency in the jurisdiction where the arbitration takes place. No scheme reduces the standard expected of an arbitrator.
“The ‘maximum fee’ column [in the panel] does not include accommodation, subsistence, travel costs, or VAT.
“The ‘maximum period’ column is the period measured from the last day of the hearing or, if no hearing, from the day the arbitrator receives the last written submission pursuant to rule 19, and is the maximum number of days the arbitrator has to write his substantive award in the reference, and to advise the parties that the award is ready to be taken up.
“The ‘claims value range’ column in each scheme is the claim value only, without reference to the value of any counter-claim in the reference, and which shall be stated in making any request for an appointment of an arbitrator to the branch chairman, pursuant to rule 3.3 at (iv).”
In some respects, Schedule G is possibly too simplistic in approach. What the sub-group recommended was that the schemes be given a chance and that, its use or (depending upon the level of take-up) feed-back would determine the effectiveness or otherwise of Schedule G within two years. The proposal included that all who would wish to be considered for appointment as arbitrators under the Schedule G schemes would be FCIArb or CArb.
A new hope
CIArb Irish Branch was fortunate to have obtained the support of two senior members of the judiciary, one from each jurisdiction, who are closely connected with the administration of commercial law. Both kindly acceded to providing introductory comments on AR20.
My belief is that such support stands to be squandered unless, and until, a costs-limitation scheme is implemented.
LOOK IT UP
Cases:
Legislation:
Literature:
Read and print a PDF of this article here.
Tom Wren
Tom Wren qualified as a quantity surveyor in 1981 and is an ADR consultant. He was secretary to the AR20 Sub-Group of the Irish Branch of the Chartered Institute of Arbitrators