ALTERNATIVE DISPUTE RESOLUTION
Meaning of Arbitral Tribunal
"Arbitral tribunal" means a sole arbitrator or a panel of arbitrators. An arbitral tribunal is a panel of one or more adjudicators which is convened and sits to resolve a dispute by way of arbitration. The tribunal may consist of a sole arbitrator, or there may be two or more arbitrators, which might include either a chairman or an umpire.
Article 16(3) of the Model Law qualifies the jurisdiction of the tribunal further by stipulating that:
The arbitral tribunal may rule on a plea (regarding the jurisdiction of the tribunal) either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the court specified in Article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.
It has been suggested that Article 16(3) promotes the negative effect by supporting tribunals to determine their own jurisdiction as a preliminary question with the provision for expedited, unappealable judicial review of the tribunal’s ruling. The above view of Article 16(3) has received support by some jurisdictions which have adopted the Model Law and their respective courts have interpreted the negative effect into this Article.59 In conclusion, Article 16(3) may be interpreted as a compromise between the more extreme positions concerning when judicial review is authorized during the arbitral process.
THE ARBITRAL TRIBUNAL’S JURISDICTION
SOURCES OF JURISDICTION
A tribunal has no jurisdiction to do anything until it is fully and properly constituted. This is specifically set out in the Domestic Acts and is implicit in the definition of the “arbitral tribunal” in the Model Law.
Jurisdiction by Agreement – Party Autonomy There is no “inherent” jurisdiction in an arbitral tribunal. The arbitral tribunal takes its jurisdiction to decide a particular dispute from the agreement between the parties. An arbitral tribunal does not get its jurisdiction from any legislation. The scope of the tribunal’s jurisdiction will be determined by the scope of the arbitration agreement, subject only to any mandatory legislative enactments governing the arbitration agreement. Under the theory of party autonomy, if two parties have the legal right to settle a dispute between themselves, then they can give jurisdiction to a third party to settle it for them.
For example, suppose there are three people on a desert island somewhere in the South Pacific. A coconut falls from a tree and is seen by A, who claims it as his own. B says, “But the coconut fell on the land that we all agreed would be mine, therefore the coconut belongs to me.” A and B agree to take their dispute to the third inhabitant, C, who decides the coconut belongs to B, but that one half of the coconut’s milk should be given to A as a finder’s fee.
This simple example demonstrates that C needed no state’s legislation to decide the issue or to craft an appropriate remedy. The power to settle the dispute came from A and B’s agreement to bring the dispute to C. If the place of arbitration in our example is moved to Canada, the only effect of Canadian arbitral legislation would be to set standards for procedure that may, if mandatory, circumscribe the otherwise unfettered jurisdiction of the arbitrator to settle the dispute. The arbitrator in our example did not need Canadian arbitral law to give him or her either the power to make a decision, or the power to craft any remedy that seemed appropriate. That jurisdiction comes from the parties.
A broadly drafted arbitration agreement gives an arbitral tribunal full power to decide matters not only sounding in contract, but also tort and equity, either using the law the parties have agreed to or, failing agreement, applying the rules of law appropriate to the circumstances. If appropriate, an arbitral tribunal has power to apply the Canadian Charter of Rights and Freedoms, and consider the validity of any issue in light of the Charter, including the power to declare any provision of a contract unconstitutional as between the parties. Any commercial remedy available at law, in equity, or capable of being granted by a court can be awarded by the tribunal if the agreement to arbitrate is broad enough.
COMPOSITION OF THE ARBITRAL TRIBUNAL
A dispute can go to arbitration on the basis of an agreement between the disputing parties to submit the dispute to resolution by arbitration, where an arbitrator or a tribunal of arbitrators is appointed and has been given the legal authority to act by the parties.
The composition of the arbitral tribunal or the appointing of the sole arbitrator is a characteristic and crucial issue in arbitration. There can be little doubt that the composition of the arbitral tribunal will have a huge effect on the resolution of the dispute. Not only this, but the composition of the tribunal will have some important legal consequences related to the starting date for the arbitration and can have repercussions if a party applies to have the award set aside or enforced later on. These consequences will be explained in greater detail below but are mostly related to the validity of the appointments of the individuals who will act as arbitrators under the conditions set out in the Turkish International Arbitration Code.
The tenet of freedom of choice for the parties forms a basis for the Turkish International Arbitration Code and as far as possible this tenet is honoured at all stages of the arbitration process. As a result of this principal, the disputing parties can appoint an arbitrator by their direct decision, or alternatively indirectly by specifying in the arbitration agreement that a third party can be selected as the appointing authority.
Jurisdiction of arbitral tribunals
Competence of arbitral tribunal to rule on its jurisdiction— The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,—
An arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.
A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub- section (3), admit a later plea if it considers the delay justified. The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.
A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34.
Interim measures ordered by arbitral tribunal—
Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.
Arbitration and Conciliation Act, 1996
The arbitration agreement
Section 9.Scope of the arbitration
Disputes concerning legal relationships in respect of which the parties have an unrestricted right of disposition may be determined by arbitration. The private law effects of competition law may be tried by arbitration.
Section 10.The arbitration agreement The parties may agree to submit to arbitration disputes that have arisen and all or certain disputes that may arise between them in respect of a defined legal relationship. Unless otherwise agreed between the parties in the arbitration agreement, the arbitration agreement shall be deemed to be assigned together with any assignment of the legal relationship to which the arbitration agreement relates.
Chapter 4. Composition of the arbitral tribunal
Section 12.Number of arbitrators
The parties are free to determine the number of arbitrators. Failing such determination, the number of arbitrators shall be three.
Section 13.Appointment of arbitrators The arbitrators shall be impartial and independent of the parties and shall be qualified for the office.
The parties shall if possible appoint the arbitrators jointly.
If the arbitral tribunal is to comprise three arbitrators and the parties fail to agree on its composition, each party shall appoint one arbitrator. The time-limit for making the appointment shall be one month after the party received the request to appoint an arbitrator. The two arbitrators thus appointed shall within one month jointly appoint the third arbitrator who shall act as chairman of the arbitral tribunal. If the arbitral tribunal cannot be established pursuant to the agreement or subsections 2 or 3, each of the parties may ask the court to appoint the remaining arbitrator or arbitrators. Such appointment shall not be subject to any appeal. The parties may contract out of the provisions of subsections 1, 2 and 3. Amended by Act 17 June 2005 No. 90 as amended by Act 26 January 2007 No. 3 (in force 1 January 2008).
Section 14.Grounds for challenge of arbitrators
When a person is approached in connection with his possible appointment as an arbitrator, he shall of his own accord disclose any circumstances likely to give rise to justifiable doubts about his impartiality or independence. From the time of his appointment and throughout the arbitral proceedings, an arbitrator shall immediately disclose any new such circumstances to the parties.
An arbitrator may only be challenged if there are circumstances that give rise to justifiable doubts about his impartiality or independence or if he does not possess the qualifications agreed on by the parties.A party may challenge an arbitrator in whose appointment he has participated only for reasons of which he became aware after the appointment was made.
Chapter 7. Determining the arbitration
Section 31.Application of law
The arbitral tribunal shall apply the rules of law chosen by the parties to apply to the substance of the dispute. Unless otherwise expressed, any designation of the law or legal system of a given State shall be construed as a reference to the substantive law of that State and not to its conflict of laws rules. Failing any designation by the parties, the arbitral tribunal shall apply Norwegian conflict of laws rules. The arbitral tribunal shall only decide ex aequo et bono or as amiable compositor if the parties have expressly authorised it to do so. When the arbitral tribunal rules on its own jurisdiction pursuant to section 18 subsection 1, the provisions of this section shall only apply to the extent that they are compatible with section 43 subsection 1 (a) and subsection 2.
Section 32.The arbitral tribunal's position with regard to the procedural steps of the parties. Assessment of evidence. The arbitral tribunal may only determine the claims that the parties have made in the case. The decision must fall within the scope of the parties' prayers for relief and the tribunal may only base its decision on the grounds for the prayers for relief that have been invoked. The arbitral tribunal shall establish the facts on which the case shall be determined based on a free evaluation of the evidence that has been presented to it. The parties may contract out of the provisions of this section.
Section 37.Termination of proceedings The arbitral proceedings are terminated by the final award or by an order of the arbitral tribunal for the termination of the arbitral proceedings in accordance with subsections 2 to 4.
The arbitral tribunal shall issue an order for termination of the arbitral proceedings if the claimant withdraws his claim, unless the respondent objects to the termination and the arbitral tribunal finds that the respondent has a legitimate interest in an award being made.
The arbitral tribunal shall issue an order for termination of the arbitral proceedings if the parties agree on such termination. The arbitral tribunal shall issue an order for termination of the arbitral proceedings if it finds that it has become unnecessary or impossible to continue the proceedings.
The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings, subject to the provisions of sections 38 and 44 subsections 2.
Chapter 8. Costs
Section 39.Costs of the arbitral tribunal Unless otherwise agreed between the arbitral tribunal and the parties, the arbitral tribunal shall determine its own compensation and the settlement of its expenses.
The determination of costs shall be included in the award or the order terminating the case. The amount falls due for payment one month after the award or order is made. Unless otherwise agreed between the arbitral tribunal and the parties, the parties are jointly and severally liable for the costs of the arbitral tribunal.
The determination pursuant to subsection 1 shall become enforceable unless brought before the courts within one month after the party received the decision on costs. If pursuant to the provisions of section 38 an award is rectified or a request for rectification is made, or if a supplementary award or a request for a supplementary award is made, a new time-limit shall begin to run from the date when the party received the decision. The court shall determine the issue by way of interlocutory order. Any reduction of the costs of the arbitral tribunal shall also apply to the benefit of parties who did not bring the issue before the courts.
Section 40.Allocation of costs The arbitral tribunal shall at the request of a party allocate the costs of the arbitral tribunal between the parties as it sees fit. The arbitral tribunal may at the request of a party order another party to pay all or part of the costs of the first-mentioned party if it sees fit.
The allocation of costs by the arbitral tribunal shall be included in the award or in the order terminating the case. The allocation of costs by the arbitral tribunal is final. The parties may contract out of the provisions of this section.
Grounds for challenge—
When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall, without delay, disclose to the parties in writing any circumstances referred to in sub-section (1) unless they have already been informed of them by him.
An arbitrator may be challenged only if—
Circumstances exist that give rise to justifiable doubts as to his independence or impartiality, or
He does not possess the qualifications agreed to by the parties.
A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.
Challenge procedure—
Subject to sub-section (4), the parties are free to agree on a procedure for challenging an arbitrator.
Failing any agreement referred to in sub-section (1), a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstances referred to in sub-section (3) of section 12, send a written statement of the reasons for the challenge to the arbitral tribunal.
Unless the arbitrator challenged under sub-section (2) withdraws from his office or the other party agrees to the challenge, the arbitral tribunal shall decide on the challenge. If a challenge under any procedure agreed upon by the parties or under the procedure under sub-section (2) is not successful, the arbitral tribunal shall continue the arbitral proceedings and make an arbitral award.
Where an arbitral award is made under sub-section (4), the party challenging the arbitrator may make an application for setting aside such an arbitral award in accordance with section 34.
Where an arbitral award is set aside on an application made under sub-section (5), the court may decide as to whether the arbitrator who is challenged is entitled to any fees. Failure or impossibility to act—
The mandate of an arbitrator shall terminate if—
he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay; and he withdraws from his office or the parties agree to the termination of his mandate.
If a controversy remains concerning any of the grounds referred to in clause (a) of sub-section (1), a party may, unless otherwise agreed by the parties, apply to the court to decide on the termination of the mandate. If, under this section or sub-section (3) of section 13, an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, it shall not imply acceptance of the validity of any ground referred to in this section or sub-section (3) of section 12.
Termination of mandate and substitution of arbitrator—
In addition to the circumstances referred to in section 13 or section 14, the mandate of an arbitrator shall terminate—
where he withdraws from office for any reason; orby or pursuant to agreement of the parties.
Where the mandate of an arbitrator terminates, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.
Unless otherwise agreed by the parties, where an arbitrator is replaced under sub-section (2), any hearings previously held may be repeated at the discretion of the arbitral tribunal.
Unless otherwise agreed by the parties, an order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator under this section shall not be invalid solely because there has been a change in the composition of the arbitral tribunal.