What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
International Arbitration (3rd edition)
Not in accordance with the provisions of the Arbitration Law. However, similar to the issue of recusal, this point is also being challenged through court cases.
In 1997, the Paris Court of Appeal (Paris Court of Appeal, 1 July 1997, 1999 Yearbook Commercial Arbitration 281) decided to set aside an ad hoc award rendered by only two arbitrators (one of the party-appointed arbitrators had resigned in protest against how the tribunal’s deliberations were conducted), on the ground that the award at issue had been rendered by an arbitral tribunal lacking one of its members and the composition of which no longer conformed to the agreement on which its jurisdictional power was based. In addition, the president of the Court of First Instance had been seized of the issue and a party had already appointed a new arbitrator.
However, the situation is different where the parties have chosen to apply arbitration rules which have provisions on this matter. For example, under Article 15(5) of the ICC Rules, if an arbitrator has died or has been removed, the ICC Court may decide, when it considers it appropriate, that the remaining arbitrators shall continue the arbitration – but only “[s]ubsequent to the closing of the proceedings”.
In the case of a truncated tribunal the parties may come upon agreement on the replacement of the arbitrator that refuses or is unable to act in the proceedings. If the parties do not concur on the replacement the Court may decide to designate an arbitrator so the said tribunal continues to have an odd number and issue an award. However, if a truncated tribunal goes forward with issuing an award, that award may be challenged.
The Arbitration Act is silent on this matter. In theory, the tribunal could continue, if the arbitration agreement concluded by the parties provides for appropriate provisions. But given the supplemental role of the Code of Civil Procedure arbitral proceedings, a substitute arbitrator should be appointed before continuing with the proceedings.
Pursuant to the CPC, in such cases where an arbitrator cannot fulfill his/her obligations, another arbitrator must be appointed following the procedure provided by the law. Moreover, the CICA Rules provide that in such cases the number of arbitrators should be restored as the truncated tribunal cannot continue the proceedings.
Serbian law does not provide for a possibility that a truncated tribunal may continue with the proceedings.
Instead, a subsequent arbitrator shall be appointed in accordance with the rules that were applicable to the appointment of the arbitrator being replaced.
Article 37 of the Arbitration Law of China provides that if an arbitrator is unable to perform his duties due to withdrawal or any other reason, another arbitrator shall be selected or appointed in accordance with the provisions of this Law. After the selection or appointment of a new arbitrator due to the withdrawal of an arbitrator, the parties may apply for the resumption of the arbitration procedure. The arbitral tribunal shall determine whether the resumption of the procedure may be allowed.
a. According to the Danish Arbitration Act 2005 a new arbitrator must be appointed in accordance with the rules governing the appointment of the arbitrator, who has vacated his/her office.
The DIA-rules states that, if an arbitrator is replaced, the Arbitral Tribunal decides whether procedural steps already taken in the case are to be repeated. If the arbitrator is replaced after the oral hearings has been conducted, the Chairman’s Committee of the DIA decides if the case is to be decided by the remaining arbitrators.
Under arbitration law, in case of termination of an arbitrator’s appointment, a new arbitrator shall be appointed. Therefore, a truncated tribunal cannot continue the proceedings.
However, the rules of the arbitral institutions provide for a possibility of a truncated tribunal to continue proceedings and render an award, if the termination of an arbitrator’s appointment or an arbitrator’s failure to perform his or her duties occurs after the evidentiary proceeding is finished. For instance, under the Rules of the Court of Arbitration at the Polish Chamber of Commerce, a decision on the continuation of proceedings by the truncated tribunal is made by the Arbitral Council.
The authority of a truncated tribunal is not expressly stipulated by Swiss law. However, in both domestic and international arbitration, an arbitral award rendered by an arbitral tribunal that was not properly constituted may be challenged before the Swiss Federal Tribunal (art. 190 para. 2(a) PILA and art. 393(a) CPC).
The Swiss Federal Tribunal particularly held that in a case where the arbitrator resigned without cause the remaining arbitrators may only proceed with the consent of the parties or after a new arbitrator was appointed. Should the remaining arbitrators nevertheless proceed, the arbitral tribunal may be deemed no longer regularly constituted amounting to a violation of article 30 para. 1 of the Swiss Federal Constitution and article 6 of the European Convention on Human Rights. In a later decision, the Swiss Federal Tribunal clarified that the aforementioned circumstances should be distinguished from a situation where a party-appointed arbitrator, without formally tendering his or her resignation, is refusing to collaborate or obstructing the proceeding. The Swiss Federal Tribunal held that in such situation the arbitral tribunal is still considered to be regularly constituted and may continue if a majority of the members of the tribunal decide so.
The majority of the legal scholars consider that the resigning arbitrator must be replaced unless the parties agree otherwise or the applicable arbitration rules provide differently.
In its arts. 13 and 14 the Swiss Rules provide for a specific procedure in case an arbitrator has to be replaced. According to art. 13 of the Swiss Rules, the Arbitration Court established by the Swiss Chambers' Arbitration Institution and comprising experienced international arbitration practitioners set a time-limit for the parties to appoint a new arbitrator pursuant to the regular procedure stipulated in arts. 7 and 8 of the Swiss Rules. The Arbitration Court may only in exceptional circumstances and after consulting with the parties and the remaining arbitrators either directly appoint the replacement arbitrator or, after the closure of the proceedings (pursuant to art. 13 para 2 of the Swiss Rules), authorise the remaining arbitrator(s) to proceed with the arbitration and render any decision or award. Finally, art. 14 of the Swiss Rules stipulates that as a rule the proceeding shall resume at the stage reached when the replaced arbitrator ceased to perform his or her function, unless the arbitral tribunal decides otherwise.
UAE - Federal
Article 41 of the UAE Arbitration Law provides that an arbitral award issued by an Arbitral Tribunal comprising more than one arbitrator, must be signed by the majority of the arbitrators.
Where the arbitrators do not sign the arbitral award, the reason for not doing so must be stated.
Where the arbitral award is not signed by the majority of the Arbitral Tribunal, the arbitral award shall be issued by the Chairman, unless otherwise agreed by the parties.
In such a scenario, the dissenting reasons shall be written or attached to the arbitral award.
The arbitral award shall contain the grounds for an arbitral award, unless the parties agree or the applicable law does not so require.
The DIAC Rules (Article 15) provide for the revocation of appointment of the absent arbitrator and appointment of a replacement thereof (Article 14).
The above procedures do not, however, cater for the risk that the arbitrator is not replaced and remaining arbitrators cannot reach a consensus on liability or quantum.
UAE - Free-zone Jurisdictions
The Arbitral Tribunal, on permission of the LCIA Court, may continue proceedings and issue an arbitral award. Alternatively, in the event that the remaining arbitrators do not wish to continue, the LCIA Court may direct for the revocation of the delinquent arbitrator’s appointment and the replacement thereof (Articles 10 to 12 of the DIFC-LCIA Arbitration Rules).
The ADGM Regulations (Regulation 45) provides that where more than one arbitrator has been appointed, the decision of the majority shall be valid unless otherwise agreed by the parties.
Where there is no majority decision, the arbitral award shall be made by the ‘presiding arbitrator’, alone.
The ‘presiding arbitrator’ may further determine questions of procedures if duly authorized by all the members of the Arbitral Tribunal or the parties.
The 1996 Act allows the parties to agree on the procedure to be adopted in instances where there is a truncated tribunal (s.27). If there is no agreement, the provisions of s.16 (procedure for appointment of arbitrators) and 18 (failure of appointment procedure) apply in relation to the filling of the vacancy as they do in relation to an original appointment (s.27(3)).
The tribunal has the power to determine whether and if so to what extent the previous proceedings should stand (s.27(4)).
Article 17(3) of the Law of Arbitration states that the submission of a disqualification petition before an arbitration tribunal shall result in suspension of the arbitration proceedings. An appeal against the arbitration tribunal's decision rejecting the disqualification petition shall not result in suspension of the arbitration proceedings.
Article 17(3) of the Law of Arbitration provides that if the petition to disqualify an arbitrator is accepted, whether by the arbitration tribunal or by the competent court when considering an appeal, all previous arbitration procedures, including the arbitration award, shall be deemed null and void.
Article 19 of the Law of Arbitration states that, if the mandate of an arbitrator expires due to death, disqualification, dismissal, recusal, disability or any other reason, a replacement shall be appointed according to the procedures followed in the appointment of the arbitrator whose mandate has expired.
Therefore, the arbitral tribunal shall continue if a replacement was appointed.
The FAA does not speak to the authority of truncated tribunals. Case law has indicated that truncated tribunals lack authority to decide disputes unless the parties’ agreement states otherwise, including by adopting institutional rules that allow truncated tribunals to proceed to a decision. If parties do not either (i) expressly address this in their agreement or (ii) otherwise adopt institutional rules that allow truncated tribunals to reach a decision, the arbitral process must be repeated. See, e.g., Marine Prods. Exp. Corp. v M.T. Globe Galaxy, 977 F.2d 66, 68 (2d Cir. 1992).
If the tribunal is truncated, a new tribunal member has to be appointed pursuant to the rules applicable to the initial appointment of the removed arbitrator. Absent an agreement by the parties, the arbitral may proceed with the proceedings on the basis of the results of the proceedings until the termination of the mandate of the replaced arbitrator.
Under the ACA, where the appointment of an arbitrator is terminated by the parties, or an arbitrator dies or resigns in the course of the arbitral proceedings, or fails to act or is unable to perform his or her functions, a substitute arbitrator will be chosen in accordance with the rules and procedure by which the replaced arbitrator was appointed. Under the Lagos Law, an application to remove an arbitrator can also be made to the court on any of the above grounds. However, the court will not act until the arbitral tribunal has exercised its powers to resolve the issue. Once the replacement is made, the tribunal will continue with the proceedings.
Yes, the arbitral tribunal is able to continue with the proceedings. Even within the pendency of a challenge to an arbitrator, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and issue an award (art. 14 (3) LAV).
On the other hand, if the challenge is accepted, it shall be nominated a substitute arbitrator according to the rules applicable to the appointment of the substituted arbitrator. Notwithstanding, the parties may agree that the replacement of the arbitrator is made in a different form and may even waive its right of substitution. The tribunal shall decide if any procedural acts should be repeated in light of the new composition of the tribunal (art. 16 LAV).
Under the ICA, in case an arbitrator is removed, a new arbitrator shall be appointed in accordance with the rules governing the original appointment, although the rules of some institutions delegate this power to the institution itself. Case law of Russian courts demonstrates that a truncated tribunal is entitled to proceed with a case only on an exceptional basis (for instance, when at a post-hearing stage an arbitrator is no longer able to take part in the proceedings, yet they have taken part in the deliberations and have made their position on the case known to the other arbitrators).
The provisions of Articles 14 and 15 of the Model Law apply in cases of failure or impossibility to act and the appointment of a substitute arbitrator, respectively.
When the mandate of an arbitrator terminates, for instance due to lack of impartiality, a substitute arbitrator shall be appointed according to the rules that were applied when appointing the arbitrator who is being replaced.
All previous arbitral proceedings forming part of the basis upon which the case shall be decided, shall be repeated if a substitute arbitrator is appointed.
Should an arbitrator's mandate, for whatever reason, end prematurely, a substitute arbitrator needs to be appointed according to the rules which were applicable to the appointment of the initial arbitrator, section 1039 (1) ZPO.
In case of termination of the arbitrator’s mandate during the arbitration proceedings, due to any reason provided by the Croatian Arbitration Act, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. Prior to the appointment of a substitute arbitrator the tribunal cannot continue the proceedings.
In domestic arbitration an appointed arbitrator may only cease in its functions in four cases specifically regulated in Article 240 of the CJO. Such are when (i) the parties agree to recur to a local court or another arbitral tribunal for the resolution of the dispute, (ii) the arbitrators are mistreated or injured by one of the parties, (iii) the arbitrators become ill with a disease that prevents them from fulfilling her or his duty, and finally when (iv) the arbitrators must abandon the place of the arbitration.
If the affected arbitrator was appointed in virtue of a submission agreement, and such agreement does not provide for a substitute arbitrator, the agreement will become invalid. On the contrary, arbitration clauses allow for the appointment of a new arbitrator to continue the proceeding, in cases where the arbitrator originally designated is impeded to fulfill his or her duty.
The ICAL states in Article 14(1) that an arbitrator may resign or be removed by the parties if he or she is impeded to perform their functions by de jure o de facto reasons, or if the arbitrator fails to perform their duties within a reasonable period of time.
Under Article 15 of the ICAL, in case of an arbitrators’ recusal, resignation or removal, the procedure applicable to the appointment of the substitute arbitrator shall be the same that was applied to the designation of the former arbitrator.
Finally, the Rules of International Commercial Arbitration of CAM Santiago contain in Article 15 a substitution procedure for arbitrators that leave office for reasons such as recusal, resignation, incapacity or parties agreement. According to the said provision, the substitute arbitrator shall be appointed in accordance to the Rules of International Commercial Arbitration of CAM Santiago that were applicable to the appointment of the arbitrator being substituted, unless such institution decides at its own discretion on the pertinence for applying a different procedure. As for the continuance of the procedure, Article 15(3) states that “a change in the composition of the arbitral tribunal does not invalidate by that mere fact the resolutions rendered by the arbitral tribunal prior to the substitution of an arbitrator”.