Arbitration Gets a Makeover
Newsletter - Vol. 30, Issue 1, March 2018
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 wants to know that at the end of the day the contract ‘has their back’ if anything goes awry. Arbitration is often touted as an attractive and relatively new option compared to conventional Court litigation. With the recent passing of the Arbitration Act, 2017 (“new Act”) which replaced and repealed the 1900 Arbitration Act (“old Act”), arbitration finally has a new face! This has been a long time coming, as the old Act was considered outdated and inadequate to accommodate the needs of arbitration in a modern domestic and international context.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 United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration as amended in 2006. UNCITRAL reflects widespread consensus on key aspects of international arbitration practice. The objectives of the new Act include, facilitating:
- fair and speedy resolution of disputes without unnecessary delay and expense; and
- he use of arbitration agreements for domestic and international trade and commerce.
One of the deficiencies of the old Act was that it was almost entirely devoid of rules governing arbitration procedure. The new Act introduces procedural rules governing various stages of arbitration, such as the agreement to arbitrate, 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. These provide clarity and uniformity on the manner in which arbitrations are conducted, which should lead to a more efficient process. However parties retain the right to agree on the procedure to be followed by the arbitral tribunal.
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 operate similarly to Court injunctions or freezing orders. 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. Furthermore, the new Act bestows upon courts (whether in Jamaica or abroad) the same power to order interim measures in the context of arbitral proceedings (“Court ordered interim measures”).
Interim measures and preliminary orders provide a party with a wider scope of remedies for preserving the efficacy of the final award. Interim measures can be enforced by application to the competent court irrespective of the country in which the measure was issued.
Other Key Changes
The new Act empowers the arbitral tribunal to rule on its own jurisdiction, including on issues relating to the existence or validity of the arbitration agreement. This eliminates the need for resolution of these issues by a Court.
Sanctions have been introduced for defaulting parties in arbitration proceedings, unless otherwise agreed by the parties. Such sanctions include 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, for example if settlement is achieved during the arbitral proceeding.
The Court is expressly prohibited from intervening in matters governed by the Act except where it is allowed. For example, a party may apply to the Supreme Court to set aside an arbitral award on any of the grounds specified in the new Act.
The new Act applies to arbitration commenced on or after July 2017, even if the arbitration agreement was made before that date. The passing of the new Act coincided with the establishment of the Mona International Centre for Arbitration and Mediation (MICAM) in Jamaica. MICAM provides 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 MICAM bodes well for increased use of arbitration in Jamaica.
Please Note: This article is for general information purposes only and does not constitute legal advice