Nordisk Skibsrederforening

Requirements for the Valid Appointment of an Arbitrator

ARI v WXJ Queen’s Bench Division, Commercial Court, [2022] EWHC 1543 (Comm) A recent High Court judgment has provided clarification regarding the requirements for a valid appointment and notification thereof.

Facts
The case concerned an appointment made by the respondent in a dispute that was referred to arbitration under the LMAA Terms, in accordance with the arbitration clause in the contract.  The arbitration clause required that a party wishing to refer a dispute to arbitration was to appoint its own arbitrator and give notice to the other party, requiring them to appoint their own arbitrator within 14 days; failing which the referring party could appoint their own arbitrator as sole arbitrator.

Following receipt of a notice of arbitration from the claimant, the respondent wrote to the arbitrator to enquire of their “availability and willingness” to be appointed. The arbitrator advised that they were available, “subject to conflicts”. The next day, the arbitrator confirmed “I can act without any firm conflicts”. The respondent then wrote to the claimant copying in the arbitrator and the claimant’s arbitrator, to “give notice that it appoints [JJJ] as arbitrator”.

Ultimately, the arbitrator was not prepared to act as they could not come to an agreement with the respondent regarding fees. The claimant considered that to be a failure by the respondent to appoint an arbitrator within the 14-day period required by the arbitration clause and sought to appoint their arbitrator as sole.

Findings
Foxton J held that the arbitrator had been properly appointed. The question was not whether a binding contract had been concluded between the respondent and the arbitrator, but rather whether (a) there had been an unconditional communication of willingness by the arbitrator to accept the appointment and (b) following such confirmation, the appointment had been unequivocally communicated to the arbitrator and the other party.  On the facts, those elements had been satisfied.

Conclusion
Although this case was very fact specific, it provides a useful clarification of the requirements for a valid appointment. Whether a valid appointment has been made can become critical in circumstances where there is an upcoming time bar.  It is common when appointing an arbitrator, to do so without making any enquiry about or coming to any agreement, as was the case here, regarding the arbitrator’s fees. Whilst that may appear unsatisfactory when looking at it from a contractual point of view, as recognised by Foxton J, arbitration and particularly service of the notice of arbitration is a process that does not necessarily require the involvement of lawyers. It is also important that the appointment process, which is often time sensitive, does not get delayed by having to agree detailed terms.