Chapter 19: Arbitration awards

19.1 There is no definition of an award in the 1996 Act, although section 52 identifies the formal requirements and section 58 describes an award as the final and binding decision of the tribunal made pursuant to an arbitration agreement. 1 As a matter of substance an award is a decision finally disposing of a relevant matter in dispute. 2

19.2 It is important that an award should be final since this reflects the choice of the parties to use arbitration to resolve their disputes and not merely as a precursor to court proceedings. Moreover, as a matter of policy, finality is important since the object of arbitration is to provide an efficient and speedy means of resolving a dispute once and for all. The significance of finality in arbitration means that the procedures available for challenging an award in court are limited (see chapter 22). The courts are always reluctant to allow challenges to be used to prolong a dispute and to this end they are inclined to adopt a generous approach to the interpretation of awards. 3

19.3 The making of an award has important legal consequences. The arbitrator has discharged his duty and except for limited powers to correct mistakes (discussed below) no longer has jurisdiction to make binding decisions in respect of the matters decided in the award – he is described as functus officio (having discharged his duty). The successful party will also be able to enforce the award, invoking, if necessary, the enforcement procedures discussed in chapter 23. Awards are confidential to the parties and may not ordinarily be disclosed to third parties (confidentiality of awards is discussed in chapter 13).

19.4 Different types of award are recognised in the 1996 Act and also as a matter of practice and principle. The Act recognises the distinction between an award and a provisional order (section 39), and between a final award dealing with all issues and a partial award dealing finally with one or more issues (section 47), an agreed award (section 51) and an additional award or correction of an award (section 57). More broadly there is recognition of the distinction between declaratory, monetary and injunctive awards. The 1996 Act also recognises that arbitrators may make decisions of different sorts by referring to the tribunal’s power to make awards, rulings, orders, decisions, declarations and directions. 4 The terminology or title used will usually not be decisive as to the effect of a decision or whether it amounts to a binding award although the form a decision takes would affect its enforceability under the New York Convention or section 66. 5 The most significant distinction is one of substance between awards and other decisions. 6

19.5 A distinction is sometimes drawn between the dispositive part of an award containing the tribunal’s orders and declarations, and the reasons for the award. The dispositive section is usually the most important part of the award for the purpose of enforcement and identifying the outcome. However, the reasons for the award will invariably form part of the award 7 (unless the parties agree otherwise, perhaps by requesting no reasons under paragraph 24 of the LMAA Terms).

19.6 In the interests of candour, the deliberations of arbitrators when forming their decisions are confidential. Apart from the reasons given with an award the parties are not entitled to know how the decision was reached. 8 If a dispute is determined by a sole arbitrator, then he clearly acts alone in deciding the case and writing the award. Decision-making is less simple where there is more than one arbitrator. The position of dissenting arbitrators and their reasons is considered below.

19.7 The governing principle is that after the end of the hearing (or close of written submissions) the parties are entitled to an impartial and fair consideration of all the issues in the case by all the arbitrators acting together. 9 Decision-making must not be delegated: “it is the function of the tribunal itself to decide on the findings of fact, to evaluate and analyse the submissions of law and to arrive at their own reasons for their decisions.” 10 The tribunal may use an assistant to deal with administrative tasks relating to the award. In large international arbitrations a tribunal secretary may sometimes be appointed by the tribunal to deal with correspondence, attend deliberations and assist with drafting. In commodity cases a legal advisor is sometimes appointed to assist with drafting. 11 These practices would be unusual in a shipping case. Deliberations may take place by correspondence and it is usual practice for one arbitrator to volunteer to draft the award and then to circulate it to the other arbitrators for comments and eventual approval. 12

19.8 It is unnecessary for the members of a tribunal to meet together to sign an award. 14 The normal practice is for an award to be drawn up by one member (usually chosen on the basis of expertise and availability) and sent to the others for consideration. Once the draft is agreed it is then sent round and signed separately. When all have signed, it becomes a final document. In practice it could be amended prior to publication if one of those who signed first should change his mind or notice an error. He can tell the others so that any necessary amendments and fresh signatures can be made before publication.

19.9 Where an agreement provides for three arbitrators 15 then decisions, orders and awards will be made by a majority of the tribunal, unless otherwise agreed, but the view of the chairman prevails in the absence of unanimity or a majority. It is also common, for the original party appointed arbitrators to ask the parties to agree that they make a valid award without a third arbitrator. Under the LMAA Terms the two original arbitrators have power to make binding decisions, awards and orders if they are in agreement. 16 If an arbitration proceeds on documents only then the two original arbitrators will commonly not appoint a third arbitrator unless there is disagreement, thereby saving costs and time.

19.10 Where the agreement provides for an umpire, the original arbitrators have the power to make decisions unless and until they cannot agree on a matter relating to the arbitration. In that event the umpire will replace them as the tribunal with power to make decisions. 17 In an arbitration on documents the arbitrators will usually only appoint an umpire if they cannot agree. However, if there is to be an oral hearing the umpire will be appointed at an earlier stage so that he can attend the hearing. Under the LMAA Terms the umpire may take part in the arbitrators’ deliberations. 18 In the unlikely case of an agreement for two or more arbitrators with no umpire or chairman the parties are free to agree how the tribunal is to make decisions and if the tribunal is not in agreement, decisions will be made by a majority. 19

19.11 Paragraph 22 of the LMAA Terms states that “The time required for preparation of an award must vary with the circumstances of the case. The award should normally be available within not more than six weeks from the close of the proceedings.” 20 The six-week period is merely a guideline and many awards take considerably more time. After the six-week period it would be reasonable for a party to make enquiries as to progress on an award. However, parties have little means of ensuring a prompt award although it may help to agree on a timetable when appointing the tribunal. Parties will rarely be willing or able to invoke the ultimate sanction under section 24 of the 1996 Act of removing an arbitrator for delay in making an award (see chapter 11 on removal of an arbitrator). Delay in producing an award could exceptionally give rise to a serious irregularity justifying challenge (or possibly grounds for disputing fees under sections 28 or 56 as discussed in chapter 20 on fees) but in practice it would be difficult to establish such irregularity. 21 When the award is ready the tribunal will notify the parties that it is ready for collection upon payment of their outstanding fees and expenses. 22

19.12 A dispute may raise a number of issues and it may be appropriate to deal with them separately, to save time and expense. For example, it may be possible to decide a claim for unpaid hire without entering into a costly investigation of more complex factual disputes. If jurisdictional objections are raised it may be appropriate for the tribunal to make an award on its own jurisdiction and this may be subject to challenge under section 67 (see chapter 22). Some aspects of a case may also be urgent or commercially or legally determinative of the parties’ dispute (see chapter 16 on preliminary issues). The arbitrator’s power to make an award on part of the claim at an early stage of the proceedings may be of particular tactical significance where a party can establish that a minimum sum (typically hire or freight) is indisputably due to him.

19.13 It is clear that a tribunal has a wide discretion to decide different aspects of a case at different stages in...