A process of dispute

resolution in which a third

party neutral (arbitrator)
renders a decision after a .
hearing at which both
parties have an
opportunity to be heard.
It is a method of settling the disputes
and differences between two or more
parties whereby they appoint one or
more persons to adjudicate upon the
said disputes and differences that
have arisen or that may hereafter arise
and agree to abide by the decision of
the said one or more persons
nominated for the purpose of
adjudication.
 Arbitration is a private and informal
adjudicatory process similar to a court.
The Arbitrator makes a decision that is
legally binding and enforceable upon
the parties.
The hearing is much less formal in
procedure than a court, but each party
has the right to present proofs and
arguments as in a court of law. In
arbitration the disputants give up the
power to create their own solution and
place resolution of their problem in the
hands of the Arbitrator.
International commercial
arbitration
International commercial arbitration is
the process of resolving business
disputes between or among
transnational parties through the use
of one or more arbitrators rather than
through the courts.
 Advantages of
International
Arbitration
 In international business, among the
reasons why arbitration is favored,
there is one which stands out: there is
no international state court for
business disputes. International
arbitration has therefore stepped-in to
fill this gap.
 Other arguments in favor of
arbitration include:
 Neutrality;
 International recognition and
enforcement;
 Speed;
 Costs;
 Confidentiality;
 Experience and background of
arbitrators; and
 Procedural flexibility.
Arbitration consists of:
 Opening statement
 Stipulated facts and documents
 Written evidence from each party
 Witness/expert testimony
 Final closing (oral and/or written)

Party with burden of

proof presents first
Disputes are Inevitable.

OWNER:
SPENT MONEY,
EXPECT QUALITY WORK IN MINIMUM
TIME AND COST.

CONTRACTOR:
-STRIVE HARD FOR A REASONABLE
RATE OF RETURN ON HIS NVESTMENT.

10
Causes of Contractor Claims

The complexities inherent in

the claim identification and resolution
process are illustrated in a brief
examination of some of the consistent
causes of contractor claims against owners,
in both private and public contracts:
1. The owner’s failure to adjust
the construction schedule, or grant a time
extension, even in the face of valid
contractor claims.
2. Changed conditions relating to the
contract between the Owner and Contractor
that are so dramatically different as to
render the original agreement void.
3. Conditions outside the base agreement
that are unilaterally imposed by the Owner
onto the Contractor.
11
Causes of Contractor Claims

4. Contract documents that contain errors

and omissions, code violations, or a lack of
inter-discipline coordination.
5. Failure of one or more of the parties to
perform in a timely manner, thereby
delaying the other party.
6. Failure of the owner’s agent to perform
proper investigation of subsurface and/or
site conditions.
7. Changes in the work unilaterally imposed
by the owner onto the contractor.
8. Conditions known only by the owner that
will adversely affect the contractor’s
performance.
9. Project conditions not contained in the
contract documents that prevent a party
from performing efficiently.
12
Causes of Contractor Claims

10. Unilateral or uncompensated

suspension of the contractor’s work.
11. Contracts that are terminated by the
owner, either for convenience or for cause.
12. Abnormal or unusual weather
conditions.
13. Untimely delivery or deficiency in a
component furnished by the owner.

There may, of course, be other causes of

contractor claims, but the foregoing
represents causes that repeatedly occur on
construction projects.

13
 Prove your case.
Answer the other paty’s case.
Arbitrability and arbitral
subject matter
Arbitrability, - the situation that whether
the dispute under the arbitration
agreement could be settled by
arbitration or not.
 The 1958 New York Convention states
as follows: “each contracting state
shall recognize an agreement in
writing under which the parties
undertake to submit to arbitration all or
any difference which have arisen or
which may arise between them in
respect of a defined legal relationship,
whether contractual or not, concerning
a subject matter capable of settlement
by arbitration.”
 “recognition and enforcement of an
arbitral award may also be refused if
the competent authority in the country
where recognition and enforcement is
sought finds that:
1) the subject matter of the difference is
not capable of settlement by
arbitration under the law of that
country, or
2) the recognition or enforcement of the
ward would be contrary to the public
policy of that country.”
 international vs. domestic;
 institutional vs. ad hoc;
 state vs. private; and
 Specialized vs. General
 International vs. Domestic
 According to Article 1 (3) of the
UNCITRAL Model Law, an arbitration
is international if
 "a) the parties to an arbitration
agreement have, at the time of the
conclusion of that agreement, their
places of business in different States;
or
 b) one of the following places is
situated outside the State in which the
parties have their place of business:
 i) the place of arbitration if
determined in, or pursuant to, the
arbitration agreement;
 ii) any place where a substantial
part of the obligations of the
commercial relationship is to be
performed or the place with which the
subject matter of the dispute is most
closely connected;
 or
 c) the parties have expressly
agreed that the subject matter of the
arbitration agreement relates to more
than one country."

 However, domestic arbitration laws

may employ different definitions of
"international".
 Institutional vs. Ad-Hoc
 The distinction between institutional
and ad hoc arbitration is fundamental.
Arbitration is either conducted under
the auspices of an arbitral institution or
it is ad hoc (i.e. without the
involvement of such an institution).
 Pure ad hoc is rarely advisable, in
particular in an international context.
 State vs. Private Parties
 Arbitrations may also be differentiated
by those that involve states as a party,
and those that do not. Special
institutions are available for
arbitrations in which states are a party.
 Specialized vs. General Purpose
 Arbitrations may also be differentiated
by the type of industry which the
contract is about.
For Example construction, oil industry,
mining or general import export trade.
 The Power of Arbitration
It is unlikely to get a court to overturn
an arbitration award simply because
the arbitrator interpreted the law
differently from how a court might
have. Even clear mistakes of law or
fact sometimes will not justify an
arbitration award being overturned.
This is the significance of the
term binding in binding arbitration.
 The Power of Arbitration
In addition, courts are often reluctant to
overturn arbitrator awards since doing so
can reduce the usefulness of arbitration
as an alternative dispute resolution
(ADR) mechanism. Arbitration is less
expensive, less time-consuming, and less
formal than court-based dispute
resolution. Even if a court would have
decided the case differently under existing
law, it will still usually enforce an award.
One possible exception occurs when an
arbitration award or decision is vacated
because it violates public policy.
Arbitrator
 He is a person who is appointed to
settle the disputes.
 Fairness, integrity, full confidence of
the parties, disinterested nature in
either party, capacity to think
logically are some of the attributes
of an arbitrator.
 POWERS AND DUTIES OF
ARBITRATOR:
• To accept the appointment in
writing
• To study the submission to
arbitration
• To give proper notice of meetings
• To hear all parties and witness in
the presence of both parties
• To avoid communicating in private
with any party or any of their
witness.
• Correct in an award any mistake or
error arising from any accidental
slip or omission.
• Strictly follows terms of reference.
Decide nothing more than issues
referred to him.
• To set the procedure, time and
place of meeting as required.
Selecting an Arbitrator

 Each party appoints one arbitrator

and the two appointed arbitrators
shall appoint third arbitrator who
shall act as the presiding arbitrator.
 Agreement language is controlling.
 Past Practice.
An Arbitrator is empowered only
to resolve the issues submitted.
The scope of this ability is
defined by the agreement.
Ways to be a Better Arbitrator
Maintain control over all arbitration
conferences and hearings from the
outset. Set "ground rules" of
behavior at the beginning-and be
consistent about enforcing them!

Be familiar with, understand and be

able to interpret the procedure set
by the institution you belong to.

Be fully prepared for all conferences

and hearings by reading the
pertinent documents in advance.
Be punctual in convening all
conferences and hearings. If
delayed, notify the parties as soon
as possible.

Discourage abuses of the process,

such as: unreasonable requests for
discovery, last-minute requests for
recusal, redundant evidence or
testimony, or procrastination in
scheduling.

Remember your authority if and

when parties fail to comply with your
orders or directives.
Do not use or tolerate hostile,
demeaning or humiliating words in
written or oral communications
among lawyers, parties or
witnesses.

Make all reasonable efforts to decide

promptly all matters presented for
decision.
Arbitrator Ethics
Rules vary by institution but include
Arbitrator’s obligations
• to disclose possible conflicts of
interest
• to resign if conflict is too great
• to conduct a fair and impartial
hearing
• to render a fair award
An arbitrator should uphold
the integrity and fairness of the
arbitration process.
•The arbitrators conduct must
portray a high standard of credibility
such that the parties, the public and
all other participants in the
arbitration process would have
implicit confidence in the arbitral
process and consequently in the
outcome of the proceeding.
•An arbitrator must avoid any
conduct or transactions or interest
which may affect his position as an
impartial arbiter or create an
impression of partiality or bias.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•Arbitrators should act within the
scope of their authority and comply
with the procedures and rules
specified by the agreement of the
parties.
•An arbitrator should be even
tempered, not susceptible to
external pressures and influences,
fair to all the parties and act in a
manner that promotes the prompt
and effective resolution of the
dispute.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•The most important of the concepts
to keep in mind are:
1) Upon accepting an appointment,
arbitrators should avoid entering into
any financial, business or other
relationship that is likely to affect
impartiality or might reasonably create
an appearance of partiality or bias.
2) Attorneys, engineers, expert witnesses,
or accountants who are arbitrators
should be particularly mindful of this
ethical consideration, and should
review the ethical considerations of
their profession.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•Persons who are requested to serve as
arbitrators should make full and complete
disclosure of financial or personal interest
in the outcome of the award whether the
interest is direct or indirect, before
accepting the appointment.
•Disclosure should also be made of any
past relationships with either party which
may affect their partiality or create an
appearance of bias or partiality.
•They should also disclose any such
relationships involving members of their
families or their current employers,
partners or business associates.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•Disclosure should be made at the outset
when the parties, with knowledge of the
relationship are free to either reject or
accept the arbitrator.
•An arbitrator who has made full disclosure
can serve if the parties having full
knowledge of the person’s interest or
relationship agree that he or she serve as
arbitrator.
•The obligation to disclose interests or
relationships is a continuous obligation
and the arbitrator may do so at any stage
of the proceedings as the circumstances
demand.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•The obligation to disclose interests and
relationships also exists between
arbitrators where more than one of them is
appointed.
•An arbitrator should disclose any interest
or relationship likely to affect impartiality or
that might create an appearance of
partiality.
•Not every disclosure gives rise to a
challenge for cause. However, prompt,
complete disclosure might permit a party to
make a more informed decision.
The parties, too, have an obligation to
investigate their own records to identify
possible conflicts and raise them as soon
as they become known.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•The obligation to disclose is a continuing
obligation that doesn't cease until the final
decision is rendered.
•Disclosures are not limited to
relationships with the parties, counsel, or
witnesses. Consider any relationships
between or among arbitrators assigned to
the same case as information to be
disclosed to the parties.
•Focus on both past and present business
relationships between you and the parties,
counsel, witnesses, co-panelists, and the
entities for which they work.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•The most important of the concepts to
keep in mind are:
1) Upon accepting an appointment,
arbitrators should avoid entering into
any financial, business or other
relationship that is likely to affect
impartiality or might reasonably create
an appearance of partiality or bias.
2) Attorneys, engineers, expert witnesses,
or accountants who are arbitrators
should be particularly mindful of this
ethical consideration, and should
review the ethical considerations of
their profession.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•An arbitrator should avoid impropriety or
the appearance of impropriety in
communicating with parties.
•Arbitrator should not hold discussions with
one party in the absence of the other party.
•Written communication to one party
should be copied the other party.
•Also if the arbitrator receives
correspondence from one party he should
forward it to the other.
•Avoid casual conversation, this may
cause a problem.
•Discussions on elevators, in restrooms,
and in restaurants oftentimes can be
overheard.
An arbitrator should uphold the
integrity and fairness of the
arbitration process.. (Cont.)
•In the conduct of arbitration proceeding
the arbitrator should act fairly towards all
the parties and constantly display
evenness and equality.
•An arbitrator should be well mannered,
polite and considerate to all the parties and
other participants in the arbitration
proceedings.
•When more than one arbitrator is involved
in a proceeding the arbitrators should
conduct themselves in such a manner as
to offer each other a fair opportunity to
participate in every aspect of the
proceedings.
•Arbitrator should not hold discussions with
one party in the absence of the other party.
Withdrawal of arbitrators
1) an arbitrator shall be withdrawn
and the parties concerned have the
right to request withdrawal,
whereas:
a) the arbitrator is a party involve in
the case or a blood relation or
relative of the parties concerned or
their attorneys.
b) The arbitrator has vital personal
interests in the case.
c) The arbitrator has other relations
with the parties or their attorneys
involved in the case that might
effect the fair ruling of the case.
d) The arbitrator meets the parties
concerned or their attorneys in
private or has accepted gifts or
attended banquets hosted by the
parties concerned or their attorneys.
2) In requesting or withdrawal, the
parties concerned shall state
reasons before the first hearing of
the tribunal. If the reasons are
known only after the first hearing,
they may be stated before the end
of the last hearing.
3) The withdrawal of an arbitrator of
an arbitrator shall be decided upon
by the chairman of the arbitration
commission. Whereas the
chairman of the arbitration
commission serves as an arbitrator,
the withdrawal shall be decided
upon collectively by the arbitration
commission.
Question: What is the difference
between arbitration and mediation
in a construction case?

 Mediation is a voluntary alternative

dispute resolution process. All parties
must consent to participate in good
faith and work toward a mutually
agreeable resolution. Mediating parties
are not bound to resolve their dispute.
However once a resolution is reached, it
can be made binding if the parties
decide to draft a contract called a
settlement agreement. Mediations are
not "decided" in favor of one party or
another; rather, the mediator simply
facilitates the negotiation process. The
parties decide their own outcome.
 Arbitration is a non-voluntary
alternative dispute resolution process.
Unlike mediation, a knowledgeable,
independent, and impartial third party
is empowered to make a decision. The
arbitrator hears the disagreement
between one or more parties and after
considering all relevant information
renders a final decision in favor of one
of the parties. Arbitration decisions may
be either binding or non-binding,
depending on the terms of the
arbitration agreement. Binding
arbitration decisions may be confirmed
by a court and carry the same
significance as a court judgment.
 Question: How is Arbitration
Different from a Court Trial?
 The outcome of a trial can usually be
appealed.
 Arbitration usually cannot be appealed.
 Arbitration is usually less formal than a
trial.
 The rules of evidence may or may not be
followed, depending on what guidelines
the parties agree to.
 An arbitrator can be more flexible than
a judge, because before the arbitration
begins, both sides can agree to what
guidelines and structure the arbitrator
is to consider and follow in rendering
the ‘arbitration award’.
Question: What is the difference
between arbitration and mediation
in a construction case?
 Q1: I am a construction firm with a
client who has not paid me - $100,000.
Our contract calls for arbitration. The
home owner (who is a lawyer) wants to
do mediation. Is this a good idea?

 Q2: Why would parties arbitrate as

opposed to mediate or going to court?
Questions for Discussion
Question 1
 Assume that you are contacted to serve
on a case involving XX. You recently
read in a newspaper article that Mr. XX
had been indicted by a grand jury for
fraud.

Question 2
 At a bar association dinner, you
shared a table with one of the expert
witnesses identified in the pleadings.
You did not, however, speak with the
person during the dinner.
 Should you disclose this contact?
Why or why not?
Questions for Discussion
Question 3
 A member of your family is employed as a
secretary by the attorney for the
respondent in the case.
 Should you disclose this information? Why
or why not?

Question 4: What is international

arbitration?

Question 5: What are the advantages of

arbitration over court litigation?

Question 6: I want to arbitrate, but the other

side has initiated litigation proceedings in
court. Now what?

Question 7: Why is arbitrator selection

important? What should I look for when
appointing an arbitrator?
Questions for Discussion
Question 8: I already have a law firm who
advises me on business disputes before
national courts. Can’t they help me with
my arbitration dispute?

Question 9: Can you go through

arbitration without an attorney?

Question 10: How do you know the

arbitrator is neutral and impartial?