Any assessment regarding disclosure or concealment has to be performed without any reference to state of the arbitration proceeding . The procedures governing the process of arbitration had been determined by the arbitration clause of the contract. The drawback with most of these arbitrations was that they were ad hoc in nature. However, the London market and a few international arbitration clauses had considered that the arbitrator should be independent, impartial and neutral despite being appointed by the parties.
Moreover, it was the usual practice of the established institutional arbitrational organizations to ensure that the presiding arbitrators were independent, neutral and impartial . Some of the important instances of the adoption of such provisions are exemplified by the 1975 Inter-American Convention on International Commercial Arbitration, the UNCITRAL Arbitration Rules or the Rules of the United Nations Commission on International Trade Law, the Court of Arbitration of the International Chamber of Commerce or ICC and the London Court of International Arbitration or the LCIA.
A few American lawyers prefer to have party-appointed, non-neutral advocates, which is not to the liking of foreign insurers. These foreign insurers are insistent upon and attach great importance to the arbitrators being independent and neutral not only in domestic arbitrations but also in international arbitrations conducted under the auspices of the various international treaties like the UNCITRAL Treaty . Some of the better known arbitration rules are those of the ICC, UNCITRAL, London Court of International Arbitration and the London Maritime Arbitrators Association Terms.
The UK courts have a tendency to display an ambivalent attitude in respect of the regulation of international arbitrations which are subject to their jurisdiction, in the sense that though they apparently do not seem to interfere, nevertheless they do not abandon all control . Further, the English courts, though willing to set aside awards granted by the arbitrators in instances of misconduct, are averse to pass judgement on the basis of a purely English standard akin to that of Bank Mellat v GAA .
The impartiality and independence of arbitrators has long been recognized as the fundamental prerequisite for an enforceable arbitration award and the UNCITRAL Rules provide for the challenge and removal of an arbitrator against whom justified suspicions as to impartiality or independence exist. Moreover, an arbitrator who manifestly violates the LCIA Rules will not be permitted to conduct the arbitration proceedings.
In England and Wales, this test of impartiality and independence is applicable not only to actual incidents of impartiality and independence but also to events that have the appearance of partiality or lack of independence. The nature of the test is objective in England and the fact taken into account is whether or not a reasonable person would have misgivings about the impartiality of the arbitrator . Thus, much importance is not accorded to the unwarranted sensitivities of the parties to the dispute is not countenanced .
It is incumbent upon arbitrators to disclose any possible connection or involvement with either the parties or the subject matter of the arbitration. In general, international arbitrations involve three arbitrators, one selected by each party and the third independently. The impartiality and independence rules are applicable to such nominated arbitrators. It is permissible to appoint such arbitrators as are totally impartial and independent under the practice in their own jurisdiction.
Accordingly, it is acceptable in the UK, for the arbitrator and the advocate for either side to belong to the same chambers, because barristers in private practice are deemed to be independent. A similar situation prevails in the French courts and despite the English chairman of the UNCITRAL arbitral tribunal and the advocate for one of the parties, belonging to the same chambers, the Court in Icori v KFTCIC did not deem it to involve any lack of independence or impartiality .
In respect of the ICC, the lack of relevant rulings makes it difficult to ascertain whether such challenges would be entertained. Some jurisdictions prohibit certain people from being arbitrators, for example, in Indonesia; women are not permitted to be arbitrators . In order to assess the extent to which the facts of a case and the offers put forth by the conflicting parties affect the decisions taken by arbitrators, a study was conducted. Final interest arbitration has been accepted on the basis of the split-the-difference model of arbitration.
In this method, the arbitrators merely divide the difference between the offers made by the parties and such a procedure enables the parties to obtain better results by espousing extreme positions . However, on the basis of wage awards made by sixty four practicing arbitrators in twenty five hypothetical wage arbitration cases, it was established that arbitrators attached greater importance to the facts of the case rather than to the offers made by the parties. Moreover, with offers becoming more divergent and less reasonable increasing importance was accorded to the facts of the case.
The inference to be drawn from these results is that arbitrators do not follow a simple split-the-difference decision-making process. Bargaining parties will be able to influence arbitration awards by manipulating their offers only when their offers fall within a reasonable range . The two most popular forms of arbitration are conventional arbitration and final offer arbitration. In conventional arbitration, the arbitrator makes an unrestrained resolution; whereas in final offer arbitration, the arbitrator has to perforce exercise a choice between the disputing parties final offers.
In combined arbitration if the arbitrator is of the opinion that fair settlement occupies a position between the disputing parties final offers then recourse is made to the rules of final offer arbitration; otherwise, the rules pertaining to conventional arbitration are employed . Theoretically, a convergent final offer from combined arbitration should emerge if the risks posed by the two standard forms of arbitration are combined in respect of disputing parties who are unwilling to voluntarily settle their differences.
It has been observed that the highest dispute rates are to be found in respect of combined arbitration, whereas conventional arbitration is qualified by the lowest dispute rates. These observations dispute the theoretical predictions made in respect of combined arbitration as well as the contention that final-offer arbitration brings about a reduction in disputes as compared to conventional arbitration . Several legislative enactments and decisions of the courts have enhanced the rights of employees and forced employers to shoulder greater responsibilities in the workplace.
The result has been a phenomenal increase in the number of employment suits being brought before the federal and state courts. Furthermore, federal legislation like the 1991 amendments to the Civil Rights Act and the Age Discrimination and Employment Act (ADEA) of 1990 have explicitly advocated the use of alternative processes in order to resolve claims where appropriate and to the extent authorized by law .
All these factors and the Supreme Courts 1991 decision in the Gilmer case involving a pre-dispute agreement to settle a claim under the ADEA was upheld, have brought about a shift in the public policy debate from deeming arbitration to be the suitable forum for resolving discrimination and other employment disputes to the appropriate form of arbitration and to the procedural safeguards required to prevent the foregoing of substantive rights by employees arbitrating statutory claims .
Arbitration in respect of collective bargaining agreements have been considered to differ from all other such agreements. The courts have resorted to balancing the competing interests of a strong public policy favoring arbitration against the public policy interest in public adjudication of statutory rights .