It is a fundamental requirement of justice in deciding a dispute between two or more parties,
1. Firstly that the arbitrator or the tribunal must be and must be seen to be disinterested and unbiased.
2. Secondly, every party must be given a fair opportunity to present his case and to answer the case of his opponent.
The first principle is embodied in section 13 of the Arbitration Act (cap 4 of 1995) which provides that when a person is approached for appointment as an arbitrator he must disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. That duty on the part of the arbitrator is a continuing duty right from the time that he is approached through to the time he accepts appointment, conducts the reference, and renders his award.
So under section 13(2) the arbitrator is obliged through the arbitral proceedings to disclose without delay such circumstances.
The arbitrator must be on his guard with respect to connections with a party or connections in the subject matter of dispute or connections with the nature of the dispute. And the test that the arbitrator must always bear in mind is whether a reasonable person not being a party to the dispute would think that the connection was close enough to cause the arbitrator to be biased.
So there are three elements there of connections.-
--nature of the dispute
The arbitrator has an obligation to conduct the reference impartially in both actions and words and to decide each issue put before him fairly and impartially. And whatever the provocation, each decision must be made impartially. There is therefore an overriding duty to work fairly and dispassionately even if one of the parties, for example, provokes the arbitrator by making the wildest of accusations.
The arbitrator should also take pains not to associate with one party of his representative more than with the other. He should, for example, never have lunch with one party during a hearing or in the course of the reference in the absence of the other party. He should also try to avoid even casual conversation with one side in the absence of the other. For his confidence in his own probity may not be shared by a party who does not know him.
Each party must also be given a fair opportunity to present their case and to know the opposing case and to meet the opposing case.
Under section 19 of the Arbitration Act, for example, parties must be treated with equality and each party given full opportunity of presenting their case.
Section 21 is perhaps also relevant in this regard in that if parties have not agreed on the place of arbitration, the tribunal must determine the place having regard to the circumstances of the case and the convenience of the parties. The arbitrator is doing a balancing act.
Under Section 21 the parties have the right to agree on the venue, failing which section 21 (b) intervenes.
Section 24 provides for exchange of statements of claim and statements of defence: To inform parties of the case they are to meet: natural justice.
Section 25 provides that the arbitral tribunal must hold oral hearings unless the parties have agreed that no hearing shall be held. For the same reason an arbitrator should not receive oral evidence or arguments from one party in the absence of the other. Neither should the arbitrator receive any document from one party without ensuring that the other party receives a copy. It is important to make it clear to the parties that all correspondence with the arbitrator must be copied to the other party. This should be in the agenda of the preliminary meeting.
The arbitrator, if there is to be a hearing, must fix hearing dates so far as practicable convenient to both parties.
Other provisions in the Arbitration Act that you may want to look at:
Section 27, where a tribunal appoints an expert if it has the power to do so. The report must be available to the parties and they must have the opportunity to examine that expert and to present their own expert on the subject.
Section 29: obligation on the part of the tribunal to decide the dispute in accordance with the rules agreed upon by the parties
What happens when an arbitrator uses his knowledge and experience to determine the matter? Should the parties have right to influence the judge’s mind? That is where the arbitrator is empowered by the parties to use his own expertise, he should grant the parties an opportunity to comment on his views and so on.
Section 35 deals with the setting aside of an award. If a party was not afforded an opportunity to be heard, notice not served, appointment of arbitrator, etc.
Under section 26 an arbitrator has powers to decide on a hearing date unless otherwise agreed by the parties. Any party that fails to attend a hearing, the hearing could go on, etc.
In summary, the principles of natural justice must be observed in the arbitral process.
Go through the Arbitration Act in your own time and see what sections have a bearing on natural justice.
When drafting the substantive contract it is important to point out that in case of any dispute the matter is to go before arbitration. This can be part of the substantive contract or just a clause.
Invariably almost all insurance companies include arbitration clauses in all their policies.