Arbitration is one of the alternative dispute settlement methods.
Of all the alternative methods for settling disputes, this one is perhaps closest to the court, since the arbitrator in effect decides the dispute by way of deciding, after hearing the parties. At the same time, the arbitration procedure allows parties greater control over the manner in which the proceeding is conducted, since the arbitrator is selected by the parties themselves (as distinct from the courts, where it is not permitted to request that a particular judge hear a case). It is likewise the parties themselves who determine which legal procedures apply to their case, the application of the law, the giving of grounds and the appeal instance. In arbitration proceedings it is also possible to decide that in respect of considerations of justice, morality or business practice or in the absence of agreement as to a particular arbitrator, a motion may be submitted to the court to appoint an arbitrator, or an application may be addressed to professional entities, such as the Head of the Bar Association or the Itro Institute for Consent Arbitration.
The New Method of Arbitration Proceedings
A drastic change in the present status is required, so as to adjust to litigants’ needs and create a fundamental legal right to appeal. In accordance with Amendment No. 2, the new method is distinct from the normal arbitration proceeding in a number of innovations and adjustments that are necessary in current times in respect of the right to appeal and the arbitrator`s duty to give grounds for his award. Apart from these newly introduced changes, regular arbitration proceedings remain unchanged and Section 24 remains as is, with the addition of the requirement to give grounds for the arbitrator’s award.
Section 21.A – Appeal before an Arbitrator
The first route of appeal added in Amendment No. 2 is reflected in Section 21.A of the Arbitration Law under the heading: "Appeal before an Arbitrator". This route allows an appeal procedure to be held before an arbitrator, as distinct from an appeal before a court.
The condition prescribed for the implementation of the route of appeal is the parties` determination in the arbitration agreement that the award should be appealable before an arbitrator. In such event, the arbitrator is under a cogent duty to give grounds for the award. For efficient organization of the legal procedures, a Second Schedule was added to the Law, which incorporates the following: the duty to document arbitration meetings; the dates for filing the appeal; the manner of filing the appeal; the responses to the appeal and the counter-appeal; the manner of conducting the proceeding and the decision therein; the date for rendering the arbitral award in the appeal and the grounds therefor.
With a view to preventing an excess of instances in arbitration proceedings, the right to annul the award of the first arbitrator and the appeal arbitrator was limited to annulment grounds (9) and (10) of Section 24 of the Arbitration Law: Section 24(9): The Content of the Award is in conflict with public policy and Section 24(10) – where there is a ground pursuant to which the court would have annulled a final judgment which is not further appealable.
Section 29.B Leave to Appeal against an Arbitration Award in Court
In Amendment No. 2 the legislator added another route of appeal, entitled "Leave to appeal against an arbitration award in court". The section is designed, inter alia, to allow the State to participate in arbitration proceedings once again. This route allows litigants to conduct a process of leave to appeal against an arbitration award before the court, subject to several conditions: firstly, the parties must consent to conduct the proceeding as specified in Section 29.B and there must be a provision in the arbitration agreement that the arbitrator should render his award in accordance with the law. Secondly, the parties must consent that the award will be appealable with leave from the court in the event of a material error in the implementation of the law amounting to miscarriage of justice. The proceeding will be heard by a single judge and in this route too the arbitrator has a cogent duty to give grounds. Moreover, there is a duty to document the arbitration meetings in minutes, as provided in Section 29.B(b) of the Law. In the event that leave to appeal in court is granted, the litigants may make claims to annul the award on the basis of the grounds for annulment as stipulated in Section 24 of the Law.
Section 24 – Annulment of the Arbitrator`s Award and Addition of a Section Concerning the Duty to Give Grounds for the Award
The traditional arbitration route, with the option to annul an award under Section 24, which does not include an appeal instance, remains unchanged. However, in view of the importance of giving grounds as a tool for the arbitrator in reaching the right decision, it is prescribed in Amendment No. 2, Section O of the First Schedule that even if the parties do not agree that the award is appealable, the arbitrator is subject to the duty to give grounds, unless the parties have expressly resolved to contract out of this provision of the arbitration agreement.
The significance of selecting the route provided in Section 24 is that an arbitration award may not be appealed, but only annulled on grounds pertaining to the manner of conducting the proceeding, and not with respect to rectifying errors in the arbitration award. At the same time, further to the Amendment to the Law, a judge who dismisses a motion pursuant to Section 24 may now do so with a clear conscience, since he may be assured that the applicant had the option to have his day in court, both in the arbitration proceeding and at the appeal stage, when it was possible to examine all aspects of the content of the award.
The Duty to Give Grounds in an Arbitration Award
Amendment No.2 adds the duty to give grounds for the award in all arbitration routes. This is a cogent duty in Section 21.A and Section 29.B, but in the regular arbitration route it is provided in the First Schedule of the Law and may be contracted out in the event that the parties have expressly agreed thereto.
The transition from an arbitration award without grounds to one in which grounds are given is embedded in both law and business. It results in a different type of outcome. Though the outcome may be agreed or disputed, the basis thereof is understood. It is possible to try to appeal it within the framework of the new method, which is proposed with all inherent risks and costs, but the court hearing the appeal may form an impression of the manner and quality of the decision. The duty to give grounds, as incorporated in the Amendment to the Law, is vital and essential in the case of the right to appeal an arbitration award.
The Arbitration Law has opened up a new page in our lawbook. The appeal instances – in both Section 21.A and Section 29.B – as determined in the Amendment to the Law, and the duty to give grounds, will enable litigants to review an arbitration award in the event that an error has occurred therein, and be granted the opportunity for full legal proceedings, a right that was denied them prior to this new change in the Law.
The Amendment strikes a balance between the appropriate right to appeal and the proper exercise thereof and creates a new way of conducting arbitration proceedings as an appropriate alternative for parties seeking out of court dispute settlement.