Chapter 10: Appointment of arbitrators and umpires

10.1 It is important to ensure that an arbitrator is properly appointed, as failure to make a valid appointment, or an appointment which does not cover a relevant dispute, may have far-reaching consequences: an award made by an incorrectly appointed tribunal may be set aside as invalid and the defective appointment may be incurable if the time limit for commencing arbitration has expired. 1 The first place to look in order to determine the correct steps for appointing an arbitrator is the arbitration clause. In many cases, however, the arbitration clause (or the rules which it incorporates) will provide no express assistance. In the absence of any other agreement it is necessary to rely on the statutory rules governing appointment. Under English law, the appointment of an arbitrator is based on consent; no special formalities are required and it is essentially a matter of obtaining the arbitrator’s agreement to act and then notifying the other side of that agreement.

10.2 The statutory provisions on appointment are contained in a single section of the 1996 Act entitled “The Arbitral Tribunal”. These provisions give priority to the parties’ choice: section 16(1) makes clear that “the parties are free to agree on the procedure for appointing the arbitrator or arbitrators”. The statutory rules are only applicable in the absence of agreement otherwise and court intervention is minimised to cases where the parties cannot agree and the statutory framework fails to provide a solution. Any agreement on appointment of arbitrators or umpires must be in writing to be given effect under the 1996 Act (see section 5 of the Act).

10.3 The starting point is the parties’ agreement on how many arbitrators are to be appointed. This will ordinarily be found in the arbitration clause. Section 15 of the 1996 Act provides that:

• The parties are free to agree on the number of arbitrators to form the tribunal and whether there is to be a chairman or umpire.

• Unless otherwise agreed by the parties, an agreement that the number of arbitrators shall be two or any other even number shall be understood as requiring the appointment of an additional arbitrator as chairman.

• If there is no such agreement, the tribunal shall consist of a sole arbitrator.

10.4 Section 15(1) follows Article 10 of the Model Law and reflects the principle of party autonomy underlying the Act. Section 15(2) gives statutory recognition to the office of chairman whilst section 20 sets out the role of the chairman (see chapter 19 on decision making). The LMAA Terms largely follow sections 15 and 20 of the Act in providing that if the tribunal is to consist of three arbitrators, the third arbitrator shall be the chairman (unless agreed otherwise) and his view shall prevail in relation to a decision in which there is neither unanimity nor a majority. 2 The LMAA Intermediate Claims Procedure provides that in the absence of agreement the tribunal is to consist of three arbitrators.

10.5 Section 15(3) retains the previous rule that the tribunal should consist of a sole arbitrator in the absence of agreement on the number of arbitrators. 3 For example, where a contract simply provides for “arbitration in London” with no reference to the size of the tribunal, there is a statutory presumption that a sole arbitrator is to be appointed. Even if the contract refers to “arbitrators” but does not specify their number, there is no agreement on the number of arbitrators for the purpose of section 15(3), with the consequence that a sole arbitrator is to be appointed. 4 However, if the clause specifies arbitration in London “in the customary manner” or “in the usual way” this may amount to a choice excluding the statutory presumption.

10.6 Section 16 of the 1996 Act provides as follows:

• The parties are free to agree on the procedure for appointing the arbitrator or arbitrators, including the procedure for appointing any chairman or umpire.

• If or to the extent that there is no such agreement, the following provisions apply.

• If the tribunal is to consist of a sole arbitrator, the parties shall jointly appoint the arbitrator not later than 28 days after service of a request in writing by either party to do so.

• If the tribunal is to consist of two arbitrators, each party shall appoint one arbitrator not later than 14 days after service of a request in writing by either party to do so.

• If the tribunal is to consist of three arbitrators –

  each party shall appoint one arbitrator not later than 14 days after service of a request in writing by either party to do so, and

  • the two so appointed shall forthwith appoint a third arbitrator as the chairman of the tribunal.

• each party shall appoint one arbitrator not later than 14 days after service of a request in writing by either party to do so, and

• the two so appointed shall forthwith appoint a third arbitrator as the chairman of the tribunal.

• If the tribunal is to consist of two arbitrators and an umpire –

  each party shall appoint one arbitrator not later than 14 days after service of a request in writing by either party to do so, and

  • the two so appointed may appoint an umpire at any time after they themselves are appointed and shall do so before any substantive hearing or forthwith if they cannot agree on a matter relating to the arbitration.

• each party shall appoint one arbitrator not later than 14 days after service of a request in writing by either party to do so, and

• the two so appointed may appoint an umpire at any time after they themselves are appointed and shall do so before any substantive hearing or forthwith if they cannot agree on a matter relating to the arbitration.

• In any other case (in particular, if there are more than two parties) section 18 applies as in the case of a failure of the agreed appointment procedure.

10.7 Once again, the starting point is the parties’ agreement. Case law suggests that a “broad and flexible” approach should be taken to the interpretation of section 16, and the focus should be on the substance of relevant communications between parties rather than their form. 6

10.8 The existing common law principles will be of relevance in giving full effect to the parties’ agreement or the statutory provisions applicable in the absence of agreement. The steps required to complete the appointment of an arbitrator may depend upon the context. For example, there is usually an implied requirement that the appointment is only effective where the arbitrator has consented to appointment and notice of the appointment has been communicated to the other party. Notice will certainly be required to complete the appointment where the date of the appointment has consequences for a time-bar or procedural steps in the reference. 7 From a practical perspective, it is always prudent to notify appointment to the other side without delay and extreme caution should be exercised where notice is given to a chartering broker, P&I Club or any other agent who may not have authority to accept the notice. 8