UNCITRAL Model Law: Composition of the Arbitration Tribunal Re-considering the Case upon Setting Aside of the Original Arbitration Award
In this article, the author analyses the question whether it is possible for the arbitrators, after their original award had been annulled, to sit on the arbitration tribunal hearing the case again, to reconsider the case, and to issue a second award in the same case in light of the UNCITRAL Model Law regulations. This question is addressed from two basic perspectives. The first one relates to arguments rooted in the functus officio principle, especially in reference to rectification and remission proceedings, as laid down in relevant regulations. The second perspective, meanwhile, encompasses the ethical principles and usages concerning appointment of arbitrators in international commercial arbitration, including the concept of prejudgment. In her conclusions, the author rejects a blanket prohibition on re-appointment of arbitrators, arguing that it does not duly account for all the nuances of the notion of impartiality in the context of actual practice.
During one of the panel discussions deliberating on issues of functus officio of arbitrators, the opinion was voiced that it is not possible for the arbitrators, after their award is annulled, to sit again on the arbitrators tribunal, reconsider the case and issue a second award in the same case. Considering, as Gary Born mentions, that:
[i]t was historically the case, under national legal systems, that an arbitral tribunal lost its capacity to act, including its power to reconsider, correct, interpret or supplement an award it had made after the arbitrators had rendered their final award
Such opinions are a continuation of this historical narration. Nowadays, however, the situation seems to be different and possibly requires a different approach. The UNCITRAL Model Law, as a body of law which sets the standard of the arbitration proceedings worldwide and is followed by a great number of national legislations, is a good ground for analysis. Also, the UNCITRAL Model Law is silent in this respect, so the question remains open to some speculation.
UNCITRAL Model Law provisions do not regulate what composition of the arbitral tribunal after annulment of the award is acceptable. Its provisions are likewise imprecise as to the other practical effects if the original arbitration award is set aside. Basically, it is clear only that setting aside is the sole recourse against the arbitral award (Article 34(1)) and that, if the award is set aside by a court of the country in which, or under the law of which, that award was made, it cannot be enforced (Article 36(1)(a)(v)). Thus, the pertinent UNCITRAL Model Law provisions give rise to the following assumptions. Once it has been set aside, the award is annulled objectively and has no legal effect whatsoever. The object of proceedings for setting aside of an arbitration award lies neither in amendment of the ruling (the one exception being remission proceedings, as discussed further below) nor in overturn of the ruling and referral of the case for renewed consideration. Rather, quashing of an arbitration ruling causes the legal situation of the respective parties, at least as regards the claims to which such ruling refers, to revert to what it was before the arbitration tribunal ruled on the case.
A verdict setting aside an arbitration ruling does not have the nature of an extraordinary appeal (cassation) in the sense that it does not take the original case to another level; it simply eliminates the ruling from the legal environment. In the absence of any particular provisions in the Model Law, the only way for the dispute to continue is for the claimant in the arbitration proceedings to manifest a certain level of activity, first and foremost by initiating new proceedings. There is no clear statement that the arbitration clause expires with the termination of the proceedings, similarly to the termination of the arbitrators’ mandate, as provided in Article 32(3), so it should, as a general rule, survive the setting aside of the award unless the parties provide otherwise. This, however, does not preclude a scenario whereunder, if the arbitration ruling was annulled on the grounds of (1) lack of an arbitration clause or its invalidity/ineffectiveness (Article 34(2)(a)(i)); (2) departure beyond the ambit of the arbitration clause (Article 34(2)(a)(iii)); or (3) lack of arbitrability of the subject matter (Article 34(2)(b)(i)), the ‘new’ claim is brought before a state court. If the annulment was based on the fact that another decision had already been handed down in the same case, the res judicata principle, which is not specifically mentioned in the Model Law (which, however, might fall under the public policy principle set forth in Article 34(2)(b)(ii), or may be derived from the binding character of the award), comes into play and the parties have no further recourse at all because this particular case cannot be relitigated. In other cases, the claimant must once again submit its statement of claim, and the arbitration tribunal must be convened again. This is because the parties continue to be bound by the original arbitration clause, unless they agreed otherwise, but the arbitrators who had handed down the subsequently quashed ruling are functus officio: other than in certain exceptional circumstances, as discussed below, their mandate expires upon pronouncement of their award as provided in Article 32(3). Questions arise as to how the fact of the original award’s annulment might influence appointment of the arbitrators, the criteria of their selection, and, in particular, as to the implications from the perspective of the concept of the arbitrators’ impartiality. The key question is whether the parties or appointing authority, as the case may be, must necessarily appoint an arbitration panel with a different composition; in other words, whether, and absent specific stipulations in the arbitration agreement, there is any legal impediment to re-appointment of the original one.
The doctrine has not formulated too many opinions in this respect. In the context of interpreting Polish law, which follows the UNCITRAL Model Law almost to the letter, contradictory opinions were voiced, on the one hand accepting potential re-appointment of the original arbitration panel as long the arbitrators involved in formulation of the decision which has subsequently been annulled do feel impartial, and on the other rejecting such re-appointment, citing the universally accepted rule that an arbitrator may not disclose his position as to the outcome, or even his tentative assessment of the claims, at any stage prior to announcement of the actual award (referring in this respect to the Waivable Red List and Standard 3.1.5 of the Orange List of the IBA Guidelines as well as a slew of Polish regulations, including Article 48 § 1.5 of the Civil Process Code whereunder a judge may not rule on a case in which he had already been involved at a lower instance).
For the purposes of further analysis, it is proposed to identify two groups of possible arguments, which could be raised in this respect: one group relating to broad interpretation of the functus officio principle, and the other group relating to ethical assumptions of arbitrators’ impartiality.
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