1902 Encyclopedia > Arbitration

Arbitration




ARBITRATION, a term derived from the nomenclature of the Roman law, and applied to an arrangement for taking, and abiding by, the judgment of a selected person in some disputed matter, instead of carrying it to the established courts of justice. Arrangements for avoiding" the delay and expense of litigation, and referring a dispute to friends or neutral persons, are a natural practice, of which traces may be found in any state of society; but it is to the Justinian jurisprudence that we owe it as a system which has found its way into the practice of European nations in general, and has even evaded the dislike of the English common lawyers to the civil law. The eighth section of the fourth book of the Pandects is devoted to this subject. Almost all the advantages, as well as the defects of the system in modern practice, seem to have been anticipated by the Roman jurists. Some of the civilians make a distinction between the arbitrator, the name applic-able to a person voluntarily chosen by parties to decide disputes, and the arbiter, an officer to whom the prsetor is supposed to have remitted questions of fact as to a jury. In this sense arbiters appear to have been employed as a substitute for jury trial in some of the old provincial laws of France; and hence, perhaps, it comes that, by a very remarkable provision in the French code of commerce, all questions between partners touching the partnership must be referred to arbitration. In the code of civil procedure the title des arbitrages is treated so fully and minutely, as very forcibly to convey the impression of a separate system of voluntary jurisdiction, being created for performing what ought to be accomplished by the ordinary tribunals in a well-regulated judicial system. In Scotland the practice of arbitration has been imported from the Roman law without requiring, as in England, statutory interven-tion. It is one of the advantages of the Scottish system of registration that the decree-arbitral, or decision of the arbiter, when recorded in pursuance of the consent of the parties in their contract of arbitration or submission, can be enforced as the decree of a court.

ARBITRATION IN SCOTCH LAW.—This term is applied to the contract whereby a dispute is referred to one or more persons by the parties interested, and so withdrawn from the cognisance of the ordinary tribunals. When one person only is chosen he is called sole arbiter or arbitrator; when more than one, an umpire or oversman is appointed either in the contract or by the arbiters themselves, and his award is final if the arbiters differ in opinion. The contract is properly entered into by deed, duly attested and stamped, and is termed a submission. Submissions are either general or special; the former including all disputes sub-sisting at the time, the latter restricted to certain specified matters. The judgment when promulgated is termed the award or decree-arbitral. The deed of submission contains a clause authorising registration for execution, under which, on registration in the books of a competent court, witnesses may be cited and the decree-arbitral put to execution. The procedure may be by written pleadings, and a formal record may be made up if the arbiters deem that desirable. If the determination of the matter falls on the oversman, he may order further debate before deciding. Unless the submission provides otherwise, the powers of the arbiters fall on the expiry of one year; but if it contain a power of prorogation, the arbiters may prorogate from year to year; and in all cases the parties themselves may renew the reference after it has fallen. By Act of Regulations, 1695, c. 25, decrees-arbitral are declared not to be reducible except on the grounds of bribery, corruption, or falsehood; this has, moreover, been so interpreted as not to exclude reduction when the arbiters have plainly travelled out of the powers conferred on them by the submission, or where their procedure has been grossly irregular, e.g., taking evi-dence in absence of one of the parties. An arbiter has the power of awarding costs, even though the deed contain no such provision. It is the general rule that a reference is ineffectual where the arbiters are not named, or where an arbiter is merely designated as the holder of an office, e.g., the Lord Advocate. To this there is, however, an excep-tion, where in a contract the parties bmd themselves to refer, and where a reference is necessary to work out the contract. A rule in friendly societies to refer disputes is binding. Arbiters having once accepted, cannot renounce their office at pleasure ; and if they do so, become liable in damages.

Judicial References have been long known to the law of Scotland. When an action is in court the parties may at any stage withdraw it from judicial determination, and refer it to arbitration. This is done by minute of reference to which the court interpones its authority. When the award is issued it becomes the judgment of the court. The court has no power to compel parties to enter into a reference of this kind, and it is doubtful whether counsel can bind their clients in such a matter. A judicial refer-ence falls like the other by the elapse of a year; and the court cannot review the award on the ground of miscarriage. By 13 and 14 Vict. c. 36, § 50, a provision is introduced whereby parties to an action in the Supreme Court may refer judicially any issue for trial to one, three, five, or seven persons, who shall sit as a jury, and decide by a majority. The Consolidation Acts in reference to the acquisition of lands, &c, for public undertakings, such as railways, also contain provisions for settlement of disputes by arbitration.





ARBITRATION, in the Law of England, is described by Blackstone as an arrangement by which "the parties injuring and injured submit all matters in dispute con-cerning any personal chattels or personal wrong to the judgment of two or more arbitrators, who are to decide the controversy; and if they do not agree, it is usual to add that another person be called in as umpire, to whose sole judgment it is then referred; or frequently there is only one arbitrator originally appointed." Pro-ceedings in arbitration were regulated by the Act 9 and 10 Will. ILL c. 15, which allowed the submission to be made a rule of any of the courts of record and subsequent statutes. It may be said in general that all questions relating to civil rights may be referred to arbitration, e.g., personal damages, disputes about real property, and pure questions of law. How far questions involving matters of criminal law may be made the subject of arbitration is not quite clear. In many cases the aggrieved person, having a remedy by indictment as well as by action, may compro-mise the criminal process by referring his civil rights to an arbitrator; but the more serious criminal offences of course could not be dealt with in this way. An arbitrator ought to have no personal interest in the subject of dispute, but this is almost the only restriction recognised by the law. Idiots, lunatics, infants, and married women, who are under a general rule of disqualification in law, may all be arbitrators, for it is said, the parties have selected their own judges and must abide by their choice. In certain cases of arbitration under a statute, the arbitrator must be taken from some special class, e.g., in settling disputes about the proportional expense of county prisoners in a borough gaol, the arbitrator must be a barrister. Under the Common Law Procedure Act of 1854, the reference is to the master of the court. The submission to arbitration may be by agreement between the parties, by order of a court of judge, or by compulsion under the Common Law Act, 1854, or under special statutes. A verbal submission, besides other obvious disadvantages, cannot be made a rule of court. The statute 9 and 10 Will. III. provided that persons might agree that their submission should be made a rule of court, but the insertion of the consent clause in the sub-mission was necessary. The Common Law Procedure Act, 1854, § 17, provides that every agreement or submission to arbitration by consent, whether by deed or instrument in writing, not under seal, may be made a rule of any one of the superior courts of equity or law at Westminster, on the application of any party thereto, unless such agreement or submission contain words purporting that the parties intend that it should not be made a rule of court; or if any particular court is specified, the submission shall be made a rule of that court only. The court has no jurisdic-tion until the submission has been actually made a rule of court, and that is seldom done until it is necessary to enforce or set aside the award. The courts are very jealous of any attempt to "oust their jurisdiction," by agreements to refer differences not yet risen, or covenants not to sue in respect of such differences. The 11th section of the Common Law Procedure Act, however, enables a defendant to take advantage of an agreement to refer by applying to the court to stay proceedings in the actions, and compel the plaintiff to resort to arbitration. In a pending action the matters in dispute may by consent of the parties be referred to arbitration, before or after the action is called on trial, by a rule of court, or by order of a judge at the trial. If it should be made to appear, at any time after the issuing of the writ, to the satisfaction of a court or the judge that the "matter in dispute consists wholly or in part of matters of mere account," the court or judge may order such matter to be referred to an arbitrator or an officer of the court (Common Law Procedure Act, § 3). At the trial of any issue of fact, matter of account therein arising may by order of the judge be similarly referred (section 6). In the latter case the power cannot be exercised after the jury is sworn. Among the statutes authorising reference to arbitration in cases of dispute the most important are the Land Clauses Consolidation Act, 1845, the Eailway Clauses Act, 1845, and the Companies' Clauses Act, 1845—-statutes which consolidate the "com-mon clauses " usually inserted in Acts relating to the sub-jects named in their respective titles.
The powers of the arbitrator are very various. He may have the power of a jury or a judge at Nisi Prius, of a court in banco, of the Lord Chancellor, or of a master. The time for making the award is usually fixed by the submission; in other cases the legal period is three months. The time, however, may be enlarged by a rule of court, or by order of the arbitrators themselves. The award or decision of the arbitrators ought to decide finally all the questions in dispute, and ought to be certain and definite; it ought to be "mutual," i.e., it should ascertain the rights a ad duties of both parties, and it must be possible and consistent with itself. It is a general rule that an award cannot be impeached for a mistake in law or in fact, although it is to be regretted that the practice of the courts on this point is by no means uniform. Where a demurrer, i.e., an issue in point of law, was referred to arbitration, it was held that a mistake in law was no ground for setting aside the award. On the other hand, it has been held that a clear gross mistake affecting the whole award may be a good ground for having it set aside.

ARBITRATION, in International Law, is one of the recognised modes of terminating disputes between independent nations. Vattel calls it " a reasonable and natural mode of deciding such disputes as do not directly interest the safety of a nation." Heffter mentions six cases in which the judg-ment of the arbitrators would not be binding on the contend-ing parties, viz., when the agreement has been insufficient, when the arbitrators have been incapable, when they have acted on bad faith, when the parties have not been under-stood, when the award is in excess of the reference, and when it is contrary to natural justice. Arbitration is sometimes spoken of as a universal substitute for war, but hitherto there has been no inclination, on the part of inde-pendent states, to submit any but secondary questions to the decision of neutral parties. The king of Prussia acted as arbitrator between England and France in 1843, in what were known as the Portendic claims. In the case of the " General Armstrong " privateer, between the United States and Portugal, the president of the French Eepublic (afterwards the Emperor Napoleon) acted as arbitrator. The most formal experiment in arbitration, however, was the Geneva Convention in 1872. The United States having for many years urged upon England the settlement of what were called the "Alabama" claims, a treaty was con-cluded by which the case was referred to five arbitrators named by England, the States, the Swiss Republic, the king of Italy, and the emperor of Brazil, respectively. Three new rules were at the same time drawn up for the arbitrators to follow in deciding on the liability of England. The award was in favour of America, and the English representative (Lord Chief-Justice Cockburn) was the only dissentient.

Arbitration is frequently employed to settle differences not of a legal character, e.g., disputes between masters and workmen as to the rate of wages, hours of labour, fee.







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