MANY contracts include an arbitration clause for the purpose of referring disputes which may arise between the parties to the Arbitration Law. Arbitration constitutes a quasi-judicial procedure which aims at resolving disputes by one or more arbitrators who are appointed by the parties, or by the court. The appointment of an arbitrator requires the signing of an arbitration agreement between the parties, which outlines in brief the disputes which have arisen and evidences the agreement of the parties to refer them to arbitration.
Furthermore, this agreement states that the issues which will be heard before the arbitrator and his decision on any matter, either wholly or on a specific point will be final. At the beginning of the procedure, the arbitrator gives directions and sets the procedure which will be followed. The arbitrator is bound to comply with the rules of evidence and the principles of natural justice. The parties have the right to be represented at every stage by a lawyer having at the same time the obligation to act in such a way as to facilitate the arbitrator to issue his decision.
The arbitrator is bound to issue his decision, which must be duly justified, within a reasonable period of time from his appointment and the parties undertake to pay his remuneration in equal shares. Usually a deposit is agreed to be given on his appointment and provision is made for hourly charges depending on the time spent by the arbitrator on the particular case.
However, where the arbitrator demonstrates bad behaviour or handles the case badly, the court may remove him and in the event that the arbitration procedure was carried out improperly may order the annulment of the arbitration award. Usually, the sum of the arbitral award carries legal interest from the date of its issuance, except if the arbitrator orders otherwise or the debt carries a different interest and the Limitation Law applies to arbitration, too.
The Supreme Court in a recent judgment pointed out that the arbitrator exercises quasi-judicial duties and as an officer of the court he is obliged to comply with the procedural rules which apply in judicial procedures. Otherwise, a separate system of justice for arbitration could arise, independent and perhaps different to the law and the procedures which apply in court, with unpredictable consequences, since the arbitrator could apply such rules of essential and procedural law which he deems necessary to apply under the given circumstances, leading to the violation of isonomy and the basic principles of law.
It was also emphasised that the arbitrator must be focused and strictly comply with the terms of his appointment. In the event of improper performance of his duties, this constitutes a reason for the annulment of his final arbitral award. In the specific case, the Supreme Court did not agree with the judgment of the court of first instance regarding the evaluation of the testimony and its finding was held to be wrong since it was restricted to the external characteristics of the testimony. The Supreme Court concluded
that the court owes to record the reasons for creating good impression in order for them to be kept in mind as a safeguard for the overall assessment of the parties and their testimony.
George Coucounis is a lawyer specialising in the Immovable Property Law, based in Larnaca, Tel: 24 818288, [email protected], www.coucounislaw.com