15 Jun
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Whose interest should an arbitrator serve first? Ethiopian Perspective

The case between Salini Costruttori S.p.A v. AAWSA, ICC Case 10623, is very interesting. What makes the case appealing is Ethiopian Supreme Court’s interference in the proceeding and the consequent explanation given by the arbitrator tribunal. By the application of AAWSA, the Ethiopian party, a respondent in the case, the Ethiopian court was apparently convinced that the international arbitral panel is partial; hence, the court ordered to the tribunal to cease the proceeding. 

 

After receiving the injunction, the arbitration tribunal said that the primary duty of the arbitral tribunal is owed to the Parties. As an arbitral tribunal is constituted by a contract, it follows that “the tribunal has the duty vis a vis the parties to ensure that their arbitration agreement is not frustrated” (Para 121 et seq). Of course, any contract drives its binding force from the legal system, but at the same time it is necessary to uphold the parties’ dispute settlement agreement.   

 

Before trying to answer the question I posed, I want to put forward another case law: in a case law between Mesfin Industrial Engineering and Tana Transport P.L.C (Cassation No. 36213/2001) it was decided that an arbitrator’s duty is not owed to the parties, but to law, the ethics and moral. The arbitrator chosen by Tana Transportation: “was persistently absent from the proceedings, which made him look partial.” The chair person decided to continue the proceeding with himself and the other arbitrator.

 

Consequently, Tana Transport went to the Federal High Court to set aside the award. The respondent defended that the award was rendered by a tribunal whose arbitrator was missing. The high court set-aside the award alleging that: “the award rendered by the two arbitrators does not comply with the homologation requirement under 319(2) of the procedural law. When a party rejects the arbitrator he chose, another arbitrator should have been substituted.”

 

In Ethiopian arbitration law art 3331-3334, cumulative with art 316 of the civil procedure code, explain about the appointment of an arbitrator. Additionally, art 3339 say that any party may be appointed as an arbitrator and he is free whether or not to accept it. An arbitrator would be disqualified “where he is not of age, where he has been legally or judicially interdicted, or is unable to discharge his functions within a reasonable period of time”(art 3340(1)). An arbitrator may also be disqualified if there are anything that may cast doubt on his impartiality and independence (art 3340(2)).

 

If there are sufficient reasons to believe that the arbitrator is partial or dependent, he can be disqualified from his position. For instance, if he takes an interest in the case or become influenced by one party an arbitrator can be removed from his position. Yet this does not necessarily mean that he will always be removed from his position if there are circumstances that cast doubt upon his impartiality.

 

However, such an allegation of partiality and dependence must be corroborated by evidence. For example, in the case between Harrar Trading Co. v. Gelatali Hankina & Co.(Cassation Decision Vol.2  pp 146-148) the respondent alleged that he fears that the sole arbitrator will be partial, because: “he doesn’t have genuine attitude towards the respondent’s attorney, as the attorney sued him before in discipline committee. Moreover, he argued that the sole arbitrator gave a decision against him while he was a judge in Federal High Court.” However, the single arbitrator decided that the evidences presented were not sufficient for his disqualification. A person who demands the disqualification of an arbitrator has to furnish evidences- mere grievance and doubts are not adequate grounds to apply for the disqualification of an arbitrator (Art 28(3) Proclamation 25/1988).

 

Therefore, the question becomes what is the primary duty of an arbitrator? Should it be to the law or to the parties? I argue that their primary duty is to the parties and then the law.

 

1.  An arbitral submission is a contract whereby the parties to a dispute entrust its solution to a third party, the arbitrator, who undertakes to settle the dispute in accordance with the principles of law (Art 3325 of Ethiopian Civil Code). It can be easily deduced that an arbitral proceeding is a consensual proceeding and its constitution is primarily from contract. Some arbitration tribunals drive their authority from law- Proclamation No. 25/1986, Proclamation No. 678/2010 make arbitration mandatory. Whether or not the arbitration is institutional, the parties are allowed to choose their own arbitrator or arbitrators can be appointed by court (Art 3331 and Art 3332 of the Civil Code).   

 

2. Ethiopian law recognizes the freedom of parties to contract on any moral, legal thing (Art 1731). If Ethiopian contract law recognizes acknowledges parties’ right to choose any arbitrator, why should its primary duty be towards “only the law?” Why should an arbitrator owe its primary duty to the law where it was chosen by the parties? Basically, an arbitration agreement does not have a validity that is independent from the legal system. Its enforceability and bindingness is driven from the legal system. It must also be noted that whatever the law finds immoral, illegal would be automatically void and unenforceable. However, agreements, like arbitration agreements, must be dealt distinctly as they presuppose establishing a quasi-court system and decide to resolve their disagreement thereof. To begin with, arbitration agreement is not only validated by the law but also by the parties’ consent. The law’s rationale is unclear why arbitrators owe their primary duties to the law, the profession. 

 

The mere fact that arbitration is domestic should not be held as a justification to overrule arbitrators’ primary duty. If such the arbitrators owe a duty towards only the law, their profession, then what is the value of recognizing arbitral submission? If the arbitrator’s primary duty is towards the law, then the parties have a restricted ground to remove arbitrator, which will be further elaborated by case law. (The reader should be cognizant about the title of art 3339 that is entitled Functions of Arbitrator; yet is not actually talking about functions of arbitrator but about appointment.)

 

The mere fact that arbitration is domestic should not be held as a justification to overrule arbitrators' primary duty.

 

Michael Teshome

I am a Corporate law and arbitration expert. I am very, very much fascinated by international arbitration: commercial, maritime, and investment. The more I read about arbitration, the more I want to know. I would also like to specialize on the subject matter, which I think is helpful to Ethiopia in the future. In my personal life, I like to hang out with my friends and have fun. After all, I think life is short. Moreover, I like to read books, watch movies, travel a lot, which has become recent addiction, and learn new things. I also want to learn how to make a good documentary, which I want to develop as a hobby. I also like to blog here at Abyssina Law.