Arbitration That Works - Article By Mark Appel and Henri Mizzi
31 May 2022
Mark Appel and Henri Mizzi recently had an article published by the Times of Malta entitled “Arbitration That Works”.
In their article, they address arbitration Reform in Malta where they are both based.
The article can be read below or downloaded via PDF here.
Arbitration That Works
Arbitration has long promised an efficient alternative to the Courts for the resolution of commercial disputes. But in too many jurisdictions, including Malta, it’s been a promise left largely unfulfilled. Colleagues say things like “Why would I choose a process that is every bit as slow and inefficient as the Courts? ”. Is a private trial that looks and feels like Maltese litigation all you expect from the arbitration process? The focus of this article is a new approach to the arbitration process, one marked by the efficiency, economy and transparency rightly expected by process users.
PRELIMINARY HEARING ATTENDANCE, AGENDA AND OUTCOME
Edmond Burke famously said that good order is the foundation of all things and, not surprisingly, so it is with arbitration. In a well-managed arbitration process, a preliminary, organizational hearing is scheduled soon after the appointment of the arbitral tribunal. This hearing is for the tribunal, following a discussion with the parties and their counsel, to set a timetable for the conduct of the process from beginning to end, and for the issuance of a procedural order to govern the process. The preliminary hearing has long been an important feature of international arbitration. The UNCITRAL Notes on Organizing Arbitral Proceedings, published in 1996 and updated in 2016, are testimony to the acceptance of well-ordered proceedings.
As the preliminary hearing sets both the tone, procedure and procedural timetable for the arbitration it should be attended by both counsel and client representatives. Counsel should come to the preliminary hearing prepared to briefly summarise their case and agree to matters including disclosure, the method and timing for the presentation of evidence and an arbitration timetable. In order to set tribunal expectations and ease procedural discussions, the tribunal may send the parties a draft procedural order and timetable in advance of the preliminary hearing. In any case, the preliminary hearing will be followed by a tribunal issued procedural order and timetable.
TAKING OF EVIDENCE - PRE-HEARING DISCLOSURE
A well-designed process should maximise preparedness and avoid trial by surprise. The procedural order will provide a time frame within which parties should request information/documents from their counterparty, as well as a time frame for production or objection and, failing agreement, a decision on disputed requests from the tribunal. References may be made to internationally accepted tools for managing disclosure and standards for tribunal review.
TAKING OF EVIDENCE – EXPERT EVIDENCE
The procedural timetable will establish a date by which the parties will identify the need, in apposite disputes, for expert evidence and dates by which any reports will be exchanged. The
tribunal may also ask that expert witnesses for each party meet with the experts for their counter-party and identify/report concerning areas of agreement and areas of disagreement. This process helps narrow the issues.
TAKING OF EVIDENCE – DOCUMENTS ONLY PROCEEDINGS
Perhaps needless to say, both the method and timing of taking evidence significantly impacts the efficiency of the process. In other jurisdictions it has been realized that a good number of disputes can be resolved on the basis of documentary evidence alone because oral evidence will not add any material factual colour. This has led to arbitral processes in which the tribunal is invited to decide the matter on the basis of the documents presented to it, as the documents speak for themselves. This makes for a far more efficient process and, thus, the first question to be asked is whether the arbitration can proceed to decision on documents only. If the parties agree, then much time, effort and expense can be saved.
TAKING OF EVIDENCE - FILING OF MEMORIALS (WITNESS LISTS, WITNESS STATEMENTS, EXHIBITS AND LEGAL AUTHORITIES)
Should witness testimony be required, the timetable will establish a date by which a list of witnesses, accompanied by witness statements in affidavit form and exhibits each party may introduce into evidence will be exchanged between the parties and copied to the tribunal.
Best practice, and so the default choice in international commercial arbitration, is to have witness testimony provided in affidavit form in advance of the evidentiary hearing, together with any documentary evidence to be relied upon. In-person or online hearings can then be reserved for brief witness introduction on direct and otherwise devoted to cross-examination. This method has multiple benefits. The obvious is a considerable savings in hearing time. Another benefit is more focused hearings, with both parties and tribunal having a better understanding of the case and the evidentiary conflicts. Whether direct testimony is presented via affidavit or in-person, counsel should be careful to distinguish between witness preparation (fine) and witness coaching (improper).
Documentary evidence presentation can also be simplified. One helpful approach is to assume the authenticity of any document proffered as an exhibit, absent objection and regardless of whether it is the original document or a copy. This will save time by avoiding the necessity of authentication.
Parties may also be invited to file copies of any legal authorities along with their memorials. Counsel should feel free to highlight language for the tribunal, so long as those same highlights are provided to opposing counsel.
Piecemeal hearings may be the habit in Maltese litigation, but they are the enemy of efficiency. Scheduling consecutive hearing dates in block form, duly anticipated by the full disclosure of all evidence in advance, allows for preparing well, preparing once and preparing to test, not to discover, the evidence, via cross-examination.
The tribunal may offer a set of dates in the draft procedural order. During the preliminary hearing counsel will be invited to comment on the amount of time they will need for direct examination (if any), cross examination and summation, with those times reflected in the final procedural timetable.
SCHEDULING – EXTENTIONS OF TIME AND HEARING POSTPONEMENTS
Given the focus on efficiency, requests for extensions of time and hearing postponements are strongly disfavoured. Accordingly, counsel can expect that rationale along the lines of “this is my first request” will be met with dismay and disapproval by the tribunal. Only serious requests for delay will be entertained. Parties can also expect that actions negatively impacting the efficiency of the process will be considered in the tribunal’s assessment of costs.
SCHEDULING – TRIBUNAL ACCESS AND EFFICIENCY
One of the benefits of a tribunal dedicated to the task-at-hand is availability for interim telephone or on-line hearings should the need present itself. Parties should expect speedy review and rulings on procedural matters. And, perhaps needless to say, the tribunal should rarely, if ever, be responsible for any delay in the proceedings.
The need for post-hearing briefs should be discussed. It may be that the pre-hearing filing of legal authorities and oral closing arguments are sufficient. If briefs are to be filed, the timeframe should be reflected in the procedural timetable.
AWARD OF ARBITRATOR
Cases should be decided while the evidence is still fresh in the mind of the decision-maker. Absent unusual complexity, parties should expect a reasoned award within 60 days of the close of evidence or filing of post-hearing briefs. Perhaps needless to say, the process can be impacted by the size of the tribunal (i.e. sole arbitrator or tri-partite panel).
A NEW KIND OF ARBITRATOR
A more efficient process begins with a tribunal fluent in case management. The tribunal must not only be knowledgeable enough to give a sound award. It must have the time and the ability to devote to the organisational and procedural aspects of the arbitration, so as to ensure that it runs smoothly, fairly and expeditiously. It is hoped that in time a small cadre of available independent and impartial arbitrators will be available to the Maltese business and legal communities. When that happens, counsel and clients will have a real alternative to litigation for the resolution of commercial disputes.
CLOSING – A DIFFERENT KIND OF ARBITRATION
In closing it probably bears mentioning again that effective case management is hardly new in arbitration. On the contrary, every one of the tools and techniques noted above is common, at least in the context of international commercial arbitration. That said, the abiding strength of the process is the ability to tailor the process to the dispute and the expectations of participants or, as one bright person said long ago, “fitting the forum to the fuss”. Party choice/autonomy is a given in a process born of contract. Time will tell, but we believe that Malta is ready for a different kind of arbitration.
Mark Appel and Henri Mizzi are independent arbitrators and members of ArbDB Chambers London/Dubai/Singapore.