The advice of construction consultants should be privileged, as it is for lawyers.

The Society of Construction Arbitrators, [President: Ian Salisbury MA DiplArch RIBA FCIArb] www.constructionarbitrators.org is to host a topical debate shortly,  on the motion:

The advice of construction consultants should be privileged, as it is for lawyers.

The proposer is Mr John Riches, Chartered Surveyor, Henry Cooper Consultants

John L Riches is a Chartered Quantity Surveyor and Chartered Builder with more than 30 years’ experience in the construction industry. He started his career as a surveyor for building contractors and having become a chief surveyor left contracting in 1982 to work in consultancy. This move enabled him to develop his interests in dispute resolution in all facets of the construction industry. His experience covers all types of construction works including large and medium scale building works, power stations, nuclear and process engineering installations, roadworks, riverworks and sea defences.

He is opposed by: Mr James Bowling, Counsel, 4 Pump Court

James’s construction and engineering practice encompasses the full range of construction disputes. He appears regularly in the TCC and in domestic arbitrations. He also has extensive experience of acting in adjudications, as well as having been involved in the TCC in a number of the leading reported cases on adjudication enforcement. James’s practice also encompasses construction-related professional negligence disputes. Previous and current clients include major contractors, development firms, as well as private clients and a range of construction professionals.

The Chairman will be our President Mr Ian Salisbury .  (I acknowledge that the above details were taken from the SCA flyer for the event.)

I thought it would be fun to propose an amendment along these lines:-

As you know, I do not profess law and I do not presume to comment upon what may or may not constitute legal privilege.  However, I do assert two propositions that I verily believe. 

The first is that the paramount duty of an arbitrator or arbitrators is dictated to us by the principle audi alteram partem the necessary corollary of which is that the parties be treated equally. 

The second is that the Arbitration Act 1996 provides, at s.34:

Procedural and evidential matters.

(1)It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter.

(2)Procedural and evidential matters include—

(f)whether to apply strict rules of evidence (or any other rules) as to the admissibility, relevance or weight of any material (oral, written or other) sought to be tendered on any matters of fact or opinion, and the time, manner and form in which such material should be exchanged and presented;

Now, I suggest that the Rules of the Court and other rules as to privilege are rules within the meaning of Subsection 2(f).

If that is right then whether or not a document or other information is required is a matter for the tribunal alone.

My own personal practice of forty years or so is to respond to a request, that I order a lay advocate or adviser to disclose consultation information, by suggesting that I direct both advisers to disclose their advice and consultation materials.  Always so far the application has been withdrawn.

In arbitration, I argue, everything that is necessary for a fair decision is disclosable.  S.1 refers. 

Mr President, I beg to submit that the motion be amended to add the words “in arbitration” after “. . . privileged”.  What is done in Court is none of our concern.

I post my suggestion here for comment, preferably before the day so I may consider it.

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The Institution Decided We were Right – or Wrong!

But it didn’t –

Arbitration, as I have said many times before, is the settlement of a dispute or question at issue by one to whom the conflicting parties agree to refer their claims in order to obtain an equitable decision. That’s the OED definition and, allowing that this is the English language, and I’m writing in England, on the outskirts of its capital, that ought to be good enough for anyone. Certainly it’s good enough for me.

Lawyers, however, have their own way of doing things and, sure enough, the English Arbitration Act 1996 tries to put it’s own gloss on the perfectly sound definition. In s.1(a), we are told that, “the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.”. To be fair (there’s that word again) that is a gloss rather than a definition, You may care to call it a purposive definition but the idea is the same, unless you care to argue that the words “fair” and “equitable” have a different meaning.

Some of my lawyer friends seek to argue that s.1(a) provides for a fair process and go on to argue that the result of a fair process must, ipso facto (engineers aren’t forbidden to use Latin, but, if you’re a lawyer read “necessarily”) be a fair outcome. They go on to say for that reason that, even if a legally correct outcome is unfair in the particular case, the section is not breached. To that the short answer must be, “Get real – read the words.”. There is a longer answer – isn’t there always? – but I’ll come to that later.

I am writing from London, but I realise that we’re not the sole arbiters of the language, even if the OED has been the authority for Britain and the Commonwealth for over a century. However, in the nineteenth century Noah Webster Jr. (October 16, 1758 – May 28, 1843) created his variant for political as well as orthographical reasons. His name became synonymous with “dictionary” in the United States, especially that published in 1828 as An American Dictionary of the English Language. (I would argue that it would have been more correct to call it A Dictionary of the American Language but that’s by the way.)

Merriam-Webster Online gives for “arbitration” the definition: “the action of arbitrating; especially : the hearing and determination of a case in controversy by an arbiter”, which doesn’t take us a lot further. The M-W Learner’s Dictionary, however gives “arbitrate” the meaning, “: to settle an argument between two people or groups after hearing the opinions and ideas of both” which seems fair enough to me.

While I am writing about glosses, Rule 3 of the Scottish Arbitration Rules, referenced in s.7 of the Arbitration (Scotland) Act 2010 reads, “Only an individual may act as an arbitrator.”. Arguably, such a rule is otiose, since any body corporate can act only through delegating to a natural person and an arbitral appointment is personal and cannot be delegated (delegatus non potest delegare).

That is an important issue, a crucial issue, for this essay. An arbitrator is an individual and the arbitral panels, typically three, more commonly seen in international disputes, comprise individuals making independent decisions in a collegiate context. Various bodies have come into being to administer or organise arbitration for an additional fee; a slice off the top, if you will, of the arbitrators’ fees. Often they use the word “Court” for reasons about which I will not speculate. Many derive their being from Chambers of Commerce as did the now autonomous LCIA, the London Court of International Arbitration, which has branches in India and, I believe, other places. The probable leader of the world of international arbitration is the Arbitration Court of the International Chamber of Commerce (ICC), based in Paris, also an autonomous non-government organisation.

The important feature of these bodies is that they don’t decide the issues that are in dispute. They may organise the panels who do but they don’t (or shouldn’t) interfere with the outcome. In passing, I note the Rule of the ICC that the panel’s Award must be scrutinised by the Court (read “Management”) before it can be published. Representatives of the ICC point out, if asked, that the Court’s concern is with the form and presentation of the Award. They argue that to call a panel’s attention to the logic of the Award and to note omissions is an administrative service and not a matter of substance. The point is debatable, it is the one individual or the panel that makes the decision – no-one else.

These arbitral institutions – and in recent years they have sprung up in many countries and cities around the world – are not necessary for an arbitration, except in China where CIETAC, the China International Economic and Trade Arbitration Commission is, at the time of writing, in difference with its former branches or agents. Generally, an arbitrator can be appointed, or a panel convened by choice without reference to them. Even in China, where Awards must be issued on behalf of CIETAC (or perhaps one of its authorised successors) the Awards are prepared by an arbitral panel of individuals chosen by the Parties, chaired by an appointee of the Commission but still acting personally.

The question arises: “If the arbitral institution merely administers the arbitration, doing what the arbitral panel could do itself, what value is added for that often substantial additional fee?”.

Administration itself is a consideration. Some Institutions handle all or most of the formal documents helping to keep the arbitrators and the Parties (and their lawyers) at arm’s length. Although contact shouldn’t be a problem it is not unknown, during a telephone call about some administrative matter, such as arrangements for a meeting, for an unrepresented party (and sometimes even a lawyer, who should know better), to start discussion of some substantive issue that should be discussed only in the presence of both Parties. An experienced Arbitrator will know how to avoid that, perhaps by three-way recording, but the buffer of a panel secretary or Counsel at an Institution is a protection.

Another benefit, not often used, is that Counsel at an Institution can be of great assistance to a new arbitrator. A neophyte may be a layman, perhaps a scientist, a technical specialist, or perhaps a lawyer who understands the issues but has no experience of international arbitration. Counsel charged with administering the case can, and do, advise such a neophyte as to the procedure and the rules. They will know how to avoid straying into the substantive matters that are for the arbitrator(s) alone. In this way a new arbitrator may develop.

My personal opinion, however, is that those responsible for drafting the arbitration provisions in a contract, the management of a company or the officers of a public concern, seek the public relations protection of being able to say, “This decision came from the Arbitration Court of . . .”. So much more convincing than, “This decision came from Dr A, Professor B and Mr C”. The grander the title of the Institution, or the better its reputation, the more credible is that protection, for the arbitrators and for the lawyers concerned.

It’s misleading, of course. The decision may be issued and perhaps approved by the Institution but it isn’t a decision of the Institution. It’s the collegiate decision of Mr C, Dr A and Professor B, and as sound or unsound as those three may be. The fact of the Institution’s involvement certainly should not have, and probably did not influence the substantive decision in any way. Only the perception of the decision is changed by the use of the Institution. And that, I suggest, is its added value.

I said there was a longer answer to the lawyer’s interpretation of the English AA 1996 s.1(a), “the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense”. It isn’t very long because it was encapsulated by the late Sir Michael Kerr in his Keating lecture of 1997. He said words to the effect of “There are times when an international arbitrator can do justice where a Judge can not”. That is because a Judge might be constrained by the national law he applies to reach a decision that may be unjust – or unfair – in all the circumstances of the matter.

Thus, an entirely fair and correct procedure, applying the law, might still fail to achieve the object of arbitration (to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense).

But this is the opinion of an Engineer who is not, and does not hold himself out as, licensed or qualified to practise law or give legal advice in any jurisdiction.

Eur Ing Professor Geoffrey M Beresford Hartwell
Chartered Engineer and Chartered Arbitrator.

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