Arbitration gets a Makeover!
One of the crucial factors in drafting any modern commercial contract involves assessing the best choice for resolving any dispute that may arise between the parties. Any prudent business person tends to value efficiency, speed and finality in the conduct of a business deal, and ultimately they want to know that at the end of the day the contract ‘has their back’ if anything goes awry. Arbitration has often been touted as the attractive and relatively new kid on the block compared to conventional Court litigation ordinarily rife with delays, but the legislative regime for arbitration in Jamaica has often left a lot to be desired. However, with the recent passing of the long-awaited new Arbitration Act, 2017 (“new Act”) repealing and replacing the 1900 Arbitration Act (“old Act”), arbitration is finally getting a new face! This has been a long time coming, as the old Act is largely outdated and inadequate to accommodate the needs of arbitration in a modern domestic and international context.
The new Act is largely an adoption of the UNCITRAL Model Law on International Commercial Arbitration adopted by the United Nations Commission on International Trade Law in 1985, and amended in 2006. UNCITRAL reflects widespread consensus on key aspects of international arbitration practice, as it has been accepted by a plethora of geo-politically and economically diverse States. The objectives of the new Act include, inter alia, facilitating and obtaining fair and speedy resolution of disputes by arbitration without unnecessary delay and expense, and facilitating the use of arbitration agreements made in relation to domestic and international trade and commerce. There are too many improvements between the old Act and the new Act to even attempt to fit all of them within this article, and therefore the writer will focus on the main changes.
One of the most obvious deficiencies of the old Act was that it was almost entirely devoid of rules governing the procedure of arbitration proceedings. The new Act introduces provisions regulating the procedure of arbitration proceedings during various stages, such as the arbitration agreement, the qualification of arbitrators, the method of appointment of arbitrators, the composition and jurisdiction of the arbitral tribunal, and the form and content of the arbitral award. This will allow for greater clarity and uniformity on the manner in which arbitrations are conducted, which ultimately should lead to a more streamlined and efficient process. At the same time, the new Act still maintains flexibility in preserving the right of the parties to agree on the procedure to be followed by the arbitral tribunal in conducting proceedings.
Interim Measures and Preliminary Orders
Under the old Act, there was no express provision for interim measures or preliminary orders. An interim measure, pursuant to the new Act, is a temporary and binding measure ordered prior to the final decision of the tribunal on the substance of the dispute. The new Act empowers an arbitral tribunal, provided certain conditions are satisfied, to grant interim measures and preliminary orders at the request of a party, unless otherwise agreed by the parties. The types of interim measures that may be granted by an arbitral tribunal are orders to:
- maintain or restore the status quo pending the determination of the dispute;
- take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself;
- provide a means of preserving assets out of which a subsequent award may be satisfied; or
- preserve evidence that may be relevant and material to the resolution of the dispute.
Interim measures in arbitration may be considered somewhat similar to how Court injunctions or freezing orders generally operate. A party to arbitration proceedings may also make an application for a preliminary order when making a request for an interim measure. A preliminary order directs a party not to frustrate the purpose of the interim measure requested. Furthermore, the new Act also provides for Court-ordered interim measures, whereby it bestows upon courts (whether in Jamaica or not) the same power to order interim measures in the context of arbitral proceedings.
The introduction of interim measures and preliminary orders into the context of arbitration in Jamaica provides a party with a wider scope of remedies which will likely assist in preserving the efficacy of the final award. The new Act also provides for the possibility of enforcement of the interim measures by application to the competent court irrespective of the country in which the measure was issued; a provision which attempts to give the interim measures greater teeth.
Other Key Changes
The new Act also provides express provision giving power to the arbitral tribunal to rule on its own jurisdiction, including any issues that may arise regarding the existence or validity of the arbitration agreement. Therefore, a party will not need to spend additional time and expense seeking to resolve such a question via conventional Court litigation prior to commencing the arbitration procedure.
Moreover, the new Act has introduced a few sanctions for defaulting parties in arbitration proceedings (unless otherwise agreed by the parties), such as mandating the termination of the arbitration if a claimant fails to submit his statement of claim within the requisite timeframe and without sufficient cause. The new Act also specifies other circumstances in which arbitral proceedings are terminated, including when the parties settle the dispute during the arbitral proceeding.
The new Act expressly prohibits any court from intervening in matters governed by the Act except where the Act allows for such intervention, and provides greater certainty regarding the specific areas in which courts may play a role. For example, recourse to the Supreme Court against an arbitral award may only be done by way of an application to set aside the award, which application must be grounded on one of the specific grounds for setting aside stated in the new Act.
The new Act applies to arbitration proceedings which are commenced on or after the date on which the new Act came into force, even if the arbitration agreement was made before that date. The passing of the Act comes at a time when the Mona International Centre for Arbitration and Mediation (MICAM) was recently established. MICAM is geared towards, inter alia, providing institutional support as a neutral and independent centre for the conduct of domestic and international arbitration, including enhanced training for arbitrators. The combination of the new Act and the new MICAM centre seems to bode well for a real transition in the usage of arbitration in Jamaica. The question of whether the new Act will achieve all of its objectives has been hotly debated and remains to be seen, but there is no question that it represents significant progress from the status quo.
Stephanie Ewbank is an Associate Attorney-at-Law at Myers, Fletcher & Gordon, and is a member of the firm’s Litigation Department. Stephanie may be contacted via email@example.com or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.