Reference

The referring of a dispute to arbitrators is known technically as the ‘reference’. Distinction should be made between the ‘costs’ of the reference and the ‘costs’ of the award. Basically, these are in the discretion of the arbitrators. The costs of the reference include all those general and special expenses incurred in the course of enquiries either by the parties or by their legal advisers. The costs of the award are the remuneration and expenses due to the arbitrator and which he has a right to demand as a condition precedent to his delivering his award. The usual rule regarding costs is that they ‘follow the event’. That is to say that the party which is unsuccessful bears all the costs. The arbitrator may, however, in his discretion vary this and may, for example, direct that each party bears his own costs (i.e. his own costs of the reference) and half the costs of the award. The 1979 Act abolished the ‘case stated’ procedure originally introduced by Section 21 of the 1950 Act. In sweeping away this procedure the new Act also removed the right to have an arbitration award set aside because of an error of fact or of law on the face of the award. This was a long standing right under the Common Law. It was due to the strength of this right that Maritime Arbitrators have traditionally given the ‘reasons’ for their award in a separate document for the information of the parties, not to be considered as an official part of the award itself. The new Act introduced a new procedure of Appeal exclusively concerned with an error in law. To some extent also there is still limited latitude given to an Arbitrator or either of the parties, if, during the course of the arbitration proceeding a difficult question of law arises, to apply to the High Court for an answer. The question, however, must be of real importance substantially affecting the rights of one or both parties and one which “might potentially mean substantial saving on the parties’ costs”.