What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
International Arbitration (4th edition)
While the challenge is pending, arbitral proceedings shall remain suspended (Art. 747 CP).
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 any 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.
In such case Art.18 ICCA provides that another arbitrator shall be appointed following the same procedure that led to the appointment of the arbitrator whose powers were terminated. This shall lead to appointment of new presiding arbitrator although not specifically envisaged in ICCA.
The FAA contains a provision that grants courts discretionary authority to appoint an arbitrator to fill a vacancy under certain circumstances. 9 U.S.C. § 5. Even so, the authority does not appear to be settled and the answer is dependent on both the facts and the jurisdiction. The Second Circuit has held that when an arbitrator dies before the tribunal renders an award, the arbitration must start anew with a full panel, unless the parties had a contrary agreement or there are other special circumstances. See Marine Prod. Exp. Corp. v. M.T. Globe Galaxy, 977 F.2d 66, 68 (2d Cir. 1992). One such special circumstance is when one arbitrator dies after the tribunal has decided on the issue of liability, but before it has awarded damages. In this instance, the Second Circuit has approved the appointment of a replacement arbitrator rather than requiring the process to start anew. See Trade & Transp., Inc. v. Nat. Petroleum Charterers Inc., 931 F.2d 191, 195–96 (2d Cir. 1991). The Second and Seventh Circuits have held that under the FAA, the resignation of an arbitrator after the arbitration is underway, but before the panel has entered its award, does not require the arbitration to begin anew, and that an arbitrator can be appointed to fill the vacancy. WellPoint, Inc. v. John Hancock Life Ins. Co., 576 F.3d 643, 644–49 (7th Cir. 2009); Ins. Co. of N. Am. v. Pub. Serv. Mut. Ins. Co., 609 F.3d 122, 127 (2d Cir. 2010).
Generally, if there is a truncated tribunal, whatever procedure the parties have agreed upon will apply to the appointment of a new adjudicator. If the parties have not agreed, all the arbitration acts generally contain procedures for the court appointment of a new arbitrator in the event that an arbitrator is unable to continue for whatever reason.
Parties may also apply to court to have an arbitrator discharged for various reasons. The arbitration acts are fairly consistent on this point throughout Canada, except in British Columbia. In British Columbia, parties may not discharge the authority of an arbitrator without first seeking leave from the court. It provides factors which must be considered in granting leave and if an arbitrator is removed, if the parties can then not decide on a new arbitrator, a court may stay the arbitration in favour of court proceedings.
Under the FAA, courts have the power to compel the respondent’s participation in arbitration. See 9 U.S.C. § 4. Most state laws empower courts to do the same. See, e.g., N.Y. C.P.L.R. § 7503 (2012). Whereas courts may enter default judgment against a party that fails to appear, under applicable JAMS, National Arbitration and Mediation (“NAM”), and AAA rules, an arbitrator may not render an award solely on the basis of the default or absence of a party, but may make the award on the evidence presented to it by the appearing party. See, e.g., JAMS Rules, R.22(j); ICDR Rules art. 26(1)–(2). Such awards are generally enforceable in the United States.
In case of a truncated tribunal, the tribunal will continue with the proceedings while complying with Section 14 of Cap. 4 which provides that following removal of an arbitrator(s) by the Court, the Court may -following request from any of the parties to the arbitration agreement- appoint a person(s) to act as arbitrator(s) replacing the person who has been removed. When the arbitrator is terminated by leave of the Court, or when the Court removes a sole arbitrator or all the arbitrators after the commencement of the arbitration, the Court may following request by any of the parties to the arbitration agreement to:
a) appoint a person to act as the sole arbitrator replacing the person(s) which has been removed or
b) order that the arbitration agreement ceases to apply in respect of any dispute it’s referred in it.
A person which has been appointed as arbitrator by the Court in accordance with this section has the power to act and give a decision as if he was appointed according to the provisions of the arbitration agreement.
Truncated tribunals may be continued if so provided under the arbitration agreement. Otherwise, a substitute arbitrator must be appointed.
UAE- Federal Jurisdiction
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 - Common Law 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 s.18 (failure of appointment procedure) apply in relation to the filling of the vacancy as they do in relation to the 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)).
Art. 15 of the UNCITRAL Model Law provides that, ‘[w]here the mandate of an arbitrator terminates under Article 13 or 14 or because of his withdrawal from office for any other reason or because of the revocation of his mandate by agreement of the parties or in any other case of termination of his mandate, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced’. In addition, s 31(2) of the IAA provides that the Singapore Courts may refuse enforcement of a foreign arbitral award if ‘the person against whom enforcement is sought proves to the satisfaction of the court that . . . (e) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place’. As such, it may be possible for the Singapore Courts to refuse enforcement of an arbitral award rendered by a truncated tribunal.
If an arbitrator’s mandate is terminated, a substitute arbitrator is appointed in accordance with the procedure that was applied in appointing the arbitrator being replaced (Article 16 of the Arbitration Act (the “Act”)). The Act does not speak to any truncated tribunal. However, while an appointment of an arbitrator is being challenged before a court, the tribunal may continue with the arbitral proceedings to make an award even during pendency of the court’s review (Article 14(3) of the Act).
In arbitral proceedings conducted under the KCAB International Arbitration Rules (the “Rules”), a reconstituted arbitral tribunal must decide, after consultation with the parties, whether and to what extent to repeat a proceeding after an arbitrator has been replaced (Article 15(4) of the Rules). If the arbitral tribunal is truncated after closure of the arbitral proceedings, the KCAB Secretariat may, after consulting with the parties and the remaining arbitrators, direct the truncated tribunal to complete the arbitration (Article 15(5) of the Rules).
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.
The duty to adjudicate disputes independently and impartially is the cornerstone on which a successful arbitration is based. This requirement has become increasingly relevant in today’s complex arbitrations. It is in view of this that Section 12 of the Arbitration Act was amended along with the insertion of Schedules V, VI and VII. As per Section 12(3), an arbitrator may be challenged only if:
- circumstances exist that give rise to justifiable doubts as to his or her independence or impartiality, as per Schedules V of the Act; or
- he or she does not possess the qualifications agreed by the parties.
As per Section 12(4), a party may challenge an arbitrator it has appointed, or in whose appointment it has participated, only for reasons of which it becomes aware after the appointment has been made.
Section 12(5) provides that, notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel, or with the subject matter of the dispute, falls under any of the categories specified in Schedule VII shall be ineligible for appointment as an arbitrator. At the same time, the statute has also empowered the parties to waive this condition by an express agreement in writing. The parties are free to agree on a procedure for challenging an arbitrator under Section 13 of the Arbitration Act.
The circumstances that can give rise to justifiable doubts are set out in Schedule V. Schedule VII lays down a list of circumstances which are more serious. If a person falls under any of the provisions in Schedule VII, he or she shall be disqualified from the position of arbitrator. This is in contrast to Schedule V, as a person who falls under the provisions of this schedule will not necessarily be disqualified from the position of arbitrator.
The interpretation of these schedules and the procedure for challenging an arbitrator, as mentioned in Sections 12, 13 and 14 of the Arbitration Act, were presented before the Supreme Court of India in HRD Corporation v GAIL (India) Limited (SLP (C) 20679 of 2017). In West Haryana Highways Project Private Limited v NHAI (OMP (T) (COMM) 28/2017, decided on 15 May 2017), while adjudicating a petition filed under Section 14 of the Arbitration Act, 1996, the Delhi High Court terminated the mandate of one arbitrator nominated by NHAI, applying the principles of Schedule VII, as that person was advising NHAI on other projects.
Further, in view of Sections 14 and 15 of the act, the courts have the power to terminate the mandate of an arbitrator if he or she becomes de jure or de facto unable to perform his or her duties, and to appoint a replacement arbitrator accordingly.
A substitute arbitrator will be appointed to replace an arbitrator who, for whatever reason, resigns from their position. If the arbitrator chairs the tribunal, the examination will have to start over.
If an arbitrator’s office terminates before the conclusion of the arbitral proceedings, i.e. untimely, a replacement arbitrator has to be appointed following the same principles which have governed the appointment of the exiting arbitrator. In the absence of an agreement between the parties, the arbitral tribunal may continue the arbitral proceedings on the basis of the then existing findings/results of the proceedings.
Articles 13 and 14 of the Liechtenstein Rules contain supplementary provisions on the replacement of arbitrators and the continuation of arbitral proceedings in such a case.
Section 16(1) of the Arbitration Act provides that where an arbitrator becomes in law or in fact unable to perform its functions, or for other reasons fails to act without undue delay, that arbitrator’s mandate is terminated on withdrawal from office or if the parties agree on such termination.
Consequently, a substitute arbitrator shall be appointed in accordance with Section 17(1) of the Arbitration Act.
The Commerce Code establishes that in case an arbitrator does not participates in the proceedings or stop doing his duties, he can be removed from his duties upon a party request, and if there is a disagreement regarding this removal, either party can request the judge the termination of the arbitrator duties (article 1430).
Apart from the above, according to articles 1446 and 1448 of the Commerce Code, even without the substitution of an arbitrator, the proceedings can continue since the president of the tribunal has the authority to decide proceeding matters without the vote of the other arbitrators (if parties previously agreed that way), and finally the award can be valid even if only has the majority of the signatures from the tribunal.
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.
Save for any agreement to the contrary, new arbitrators will be appointed pursuant to the same appointment procedure.
In the event the mandate of any member of an arbitral tribunal terminates by reason of withdrawal, resignation, failure or incapability of performing his or her functions, a substitute arbitrator can be appointed according to rules applicable to the arbitrator being replaced, such as the IRR or the Model Law. (Art. 4.15 and 5.14, IRR)
The Arbitration Law provides that arbitrators may not be dismissed or challenged unless their neutrality or independence is seriously questioned, or if they do not possess the qualifications agreed by the parties to arbitration. No party may demand dismissing the arbitrator they appointed or participated in their appointment unless for reasons that became known after the appointment of such arbitrator.
If arbitrators are not able to perform their duties, or did not commence them, or discontinued them, leading to unjustifiable delay in the arbitration proceedings, and they did not remove themselves from their position, or if the two parties did not agree on their removal, the competent court, in an ad hoc arbitration, may dismiss them upon the request of any party, by a non-appealable decision.
In an arbitration administered by the SCCA, the administrator would resolve any disputes over the appointment of an arbitrator, without the Court’s intervention.
A truncated tribunal can lead to the interruption of the proceedings, making it impossible for the tribunal to continue the arbitration. This type of situation usually follows an arbitrator’s death, removal, incapacity or refusal to deliberate. This issue will be resolved according to the applicable arbitration rules, or otherwise by agreement of the parties.
In principle, arbitral awards rendered by truncated tribunals are annulled for contravening Egyptian public policy. This is confirmed by article 15.2 of the EAL which states that the number of arbitrators shall be an odd number, otherwise the arbitration is null. To continue with the proceedings the missing arbitrator(s) must be appointed.
Furthermore, it is worth mentioning that in institutional arbitration, it may be acceptable for truncated tribunals to render arbitral awards, and this is the case in the CRCICA arbitration rules which permit, in exceptional circumstances, a truncated tribunal to continue with the arbitral proceedings. This is primarily the case of proceedings governed by the CRCICA rules but seated outside Egypt. In this regard, there are several conditions required so that the CRCICA can take a decision authorising the other arbitrators to proceed with the arbitral proceedings and render the award: (1) a party shall request from the CRCICA to take such decision, i.e. the CRCICA shall not take such decision ex officio; (2) the CRCICA shall allow all parties and the other arbitrators to express their opinion in writing for taking such decision; (3) the CRCICA shall establish the existence of exceptional circumstances that would substantiate taking such decision, which can be proven if there was not a serious cause for the arbitrator to resign or that such resignation was at a very late stage of the proceedings; and (4) the CRCICA Advisory Committee shall approve such decision. (Fathi Waly, Arbitration in local and international commercial disputes, Munsha’at Al Ma’aref, 2014 ed., p. 353)
Nevertheless, if an award is rendered by a truncated tribunal in compliance with the CRCICA arbitration rules, it might be annulled by the competent Egyptian court. It is established by Egyptian courts that even though under the EAL, the parties are free to agree on the usage of institutional procedural rules (article 25), the said rules are applicable insofar as they do not contravene Egyptian public policy. Also, all arbitrators shall participate in the deliberation, otherwise the award would be rendered in breach of the fundamental judicial safeguards. (Cairo Court of Appeal, commercial circuit no. 91, case no. 47 of JY 119, hearing session dated 29 June 2003 and cases nos. 34 and 35 of JY 119, hearing session dated 29 January 2003)
Art. 16 of the LAM provides that an alternate arbitrator must always be appointed to replace any of the arbitrators who have impediment to continue being part of the arbitral tribunal. Additionally, the LAM provides the possibility of challenging or replacing arbitrators who are prevented from continuing to be part of the arbitral tribunal, for which a new selection must be carried out in accordance with the procedure provided in Art. 16 of the LAM.
Therefore, in case of a truncated tribunal, it will be prevented from continuing until the arbitrator who caused it is legally removed and replaced by the alternate arbitrator or until the parties designate a new arbitrator. Arbitration Centers regulations have rules concerning the appointment of alternate arbitrators and their designation as principal is not complicated.
Pursuant to article 15 of the ICA Act, if for any reason an arbitrator is no longer able to perform his or her role, he or she will be replaced according to the same procedure adopted when appointing the arbitrator to be replaced. A truncated tribunal is not able to continue with the proceedings, unless the applicable arbitration rules state otherwise.
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.
In domestic arbitration, absent an agreement to the contrary, the arbitration agreement is deemed terminated in case the appointment of a substitute arbitrator is for any reason not feasible (article 885 GrCCP). The rule applies only to arbitrators jointly appointed by the parties either in the arbitration clause or subsequently. This is because the law presupposes that an arbitrator appointed by one of the parties or by a third party may always be substituted in the same way. Said rule undeniably encompasses a strong presumption against a truncated tribunal’s authority to continue with the proceedings: A truncated tribunal is deemed incapacitated. The situation must be remedied by the appointment of a substitute arbitrator. In case this is not feasible the arbitration agreement ceases to exist.
In international commercial arbitral proceedings having their seat in Greece article 15 L. 2735/1999 applies. As noted above however (see answer under Question 4) said provision incorporates a rule unknown to the Model Law, according to which, once the replacement arbitrator is appointed, absent an agreement by the parties, the arbitral tribunal may by virtue of a unanimous decision decide that arbitral proceedings will resume from the point of “interruption”. The very notion of “interruption” of proceedings suggests that a truncated tribunal may not proceed. This is the only plausible interpretation of the Greek law, even though article 15 of the Model Law does not explicitly foreclose such authority.
If an arbitrator's mandate ends prematurely for whatever reason, a substitute arbitrator is selected by the procedure which were applicable to the appointment of its predecessor. Also the term of the arbitration does not freeze during the replacement of an arbitrator.