UK: Reasons For The Award: Assessing The Evidence

Last Updated: 31 May 2005
Article by Peter Bowsher QC

This article was originally given as a lecture to the Chartered Institute of Arbitrators, Thames Valley Branch, 10th March 2005.
By His Honour Peter Bowsher Q.C., practicing arbitrator and former Judge of the Technology and Construction Court, High Court of Justice, Queens Bench Division.

REASONS FOR THE AWARD

Section 52 (4) of the arbitration Act, 1996 provides that:

"The award shall contain the reasons for the award unless it is an agreed award or the parties have agreed to dispense with reasons."

The parties can agree not to require reasons, but if the parties make no such agreement, the law requires reasons to be given.

It would be wise to enquire at the first Preliminary Meeting whether the parties agree to dispense with reasons.

If the parties have not dispensed with reasons, how should the arbitrator set about giving his reasons?

In Bremer Handelsgesellschaft v. Westzucker (No. 2) [1981] 2 Lloyd’s Report 130 Donaldson L.J. described the task as follows:

"All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is. This is all that is meant by a ‘reasoned award’."

That is all very well, but how do you go about it?

To whom should the account of the reasons be addressed?

The people most interested will be the parties. They will probably not be lawyers and they may or may not be technically qualified in the subject-matter of the dispute.

Others who may read your award may be the lawyers to the parties (if there are lawyers instructed) and a judge or judges to whom appeal may be made. They are unlikely to have technical other than legal qualifications. Technical experts advising the parties also will wish to understand your reasons.

So your reasons should be comprehensible to an intelligent but unqualified person but should also show qualified people that your thought process is in line with their understanding of the law or other relevant technicality.

Imagine that an unqualified friend or relation has asked you what your latest arbitration is about and you (in breach of the rules of confidentiality) set out answer the question.

STARTING TO WRITE

It may at first sound heretical, but it is helpful to begin writing the award at least as early as the close of the opening speeches.

Before the hearing began, you could have written the title page to the award.

From the opening speeches you should have obtained an up to date statement of the issues and an account of the alleged facts.

At the end of the opening speeches, you will probably be able to write a provisional (I stress provisional) draft of the opening passages of your award identifying:

    • The parties
    • Their relationship with one another
    • The claim, the defence and (if any) the counterclaim
    • The issues
    • The incontrovertible facts.

Just tell the story.

Start by telling who are the parties and what is their relationship with each other and what, in the broadest possible terms is the dispute about. e.g.

"1. The claimants are architects. The respondents are property developers. The respondents retained the claimants to act as architects for a hotel to be built on Blackacre, Whitetown. The hotel was built between 1996 and 2000. The claimants claim £x for the balance of their fees. The respondents deny that any balance is due and also counterclaim damages for negligence or breach of contract mainly for delay and failure to supervise."

If the award starts with a simple paragraph like that, the reader can be led more gently deeper into the story.

The story will probably continue with some deeper account of one of the primary issues. e.g.

"2. The claimants allege that at a meeting at the Savoy Hotel on 31 December, 1995 the respondents retained the claimants as architects on terms of the current RIBA Conditions of Engagement. The respondents deny that the RIBA Conditions were agreed as terms of the contract. The claimants claim that they were entitled to scale fees. The respondents allege that the claimants were entitled only to a quantum meruit"

Since this is the first issue to be decided, it would be sensible to set out the incontrovertible facts relating to it.

"3. The parties are agreed that there was a meeting at the Savoy Hotel on 31 December, 1995 between Miss Jane Smith on behalf of the claimants and Mr. John Brown on behalf of the respondents. Neither party took notes of the discussion at the time. Later, in correspondence between February and June 1996, they set out their respective understandings of what had been said and agreed."

To write that before hearing the evidence helps to concentrate the mind on what matters in the evidence. I repeat that this will be only a provisional record. During the course of the hearing the issues may change and what were thought at the beginning to be incontrovertible facts may also change. What the arbitrator wrote at the beginning for the assistance of the arbitrator only will very likely have to be revised before the end of the hearing but it will be helpful to have a starting point. It is, of course, essential to have an open mind, but that is not the same thing as a blank mind.

THE EVIDENCE

When trying a short hearing, you may be able to trust your memory of each witness. In longer cases, however, it is important to keep a daily note of the impression formed of each witness. Moreover, unless a daily transcript is provided, it is essential at the end of each day to read through the note of one’s evidence and make sure that one’s note of the evidence will be legible at the end of the hearing.

THE DECISION

Having heard the evidence and argument about it, you can then continue by analysing the evidence.

In making that analysis, it is important to bear in mind the burden of proof and the standard of proof. By and large, but not invariably, the burden is on the person making an allegation to prove it and the standard of proof requires proof on the balance of probability.

In reviewing the evidence before you, you may rehearse what in summary was said by Miss Jane Smith in evidence and what was said by Mr. John Brown and how it squared up with the correspondence. I emphasise the words in summary because it is not helpful to set out in detail everything said in oral evidence and everything written in correspondence. In assessing the oral evidence, it is usually more helpful to compare the oral evidence with the incontrovertible facts and the contemporary documents than to consider what is sometimes called "the demeanour of the witness". There are many reasons why an untruthful witness may appear from demeanour to be truthful, or an honest witness, through nervousness, may appear to be unconvincing. A mature wife of a judge once (or perhaps more than once) told her husband during a lunchtime adjournment, "The pretty ones are not always the truthful ones".

In assessing the evidence of a witness, that evidence should be taken as a whole. A witness may make a mistake, or misguidedly be tempted to exaggerate or even tell a lie to bolster a perfectly good case. That should not cause the whole of the evidence of that witness to be rejected. Similar considerations apply to the evidence of experts: EPI Environmental Technologies and anr. v. Symphony Plastic Technologies plc and anr. [2004] EWHC 2945.

The facts should be established first in the reasoning process. It is only when the facts have been decided that the experts’ opinions and the law can be applied to them.

Then how do you assess experts, particularly those speaking of a field in which you have no expertise?

Sometimes, experts disagree in a manner that simply requires the application of commonsense bearing in mind always that the standard of proof in civil matters is the balance of probabilities. Is it more likely that the solution is A or that the solution is B?

But often the exercise of commonsense is not sufficient. Often a judgment has to be made by a technically informed mind. The arbitrator is entitled to and should draw on his own knowledge and experience. That is why he was appointed. But that should be done with care. If the dispute between the parties has been between theory A and theory B, the arbitrator is entitled to draw on his own knowledge and experience to decide between the two theories. But if the arbitrator believes that the solution to the problem is theory C, it would be a breach of the principles of natural justice to reveal theory C for the first time in the Award. Theory C should be put to the parties and the experts during the hearing so that it can be tested by the parties and their experts.

A very large number of disputes between experts can be resolved on the basis that the experts are dealing with different versions of the facts. That is often the case with accountants dealing with past or prospective loss of profits or with medical experts or valuers. The expert called by the claimant can naturally only give his opinion on the basis of the facts given to him by the claimant. The expert called by the respondent can only give his opinion on the basis of the facts given to him by the respondent. It is rare that the two versions of the facts are the same.

By deciding the facts, the arbitrator frequently decides which expert he relies on. By doing so, he is not deciding that one expert is less reliable than another: he is simply deciding that one expert has given his opinion on the basis of a version of the facts that the arbitrator has found to be wrong.

If the arbitrator is required to make a decision on a technical or legal matter on which the arbitrator has no expertise, the tribunal may, unless otherwise agreed by the parties, under section 37 of the Arbitration Act, 1996 appoint experts, legal advisers, or assessors to assist. Section 37 expressly spells out the natural justice point that in the event of such an appointment the parties "shall be given a reasonable opportunity to comment on any information, opinion or advice offered by any such person". Before making such an appointment, in addition to obtaining the consent of the parties, the tribunal would be well advised to invite views from the parties about the identity of the appointee and the scale of fees. The fees will be part of the arbitrator’s expenses, but will be reimbursed to the arbitrator only to the extent that they are deemed reasonable.

It is usually only after the facts and the experts’ opinions (if any) have been decided upon that it is possible to apply the law to the case. There is always some law, however simple, involved in an arbitration. At the simplest level, the claimant (or counterclaimant) has to show: (a) the existence of a duty owed to it/him/her; (b) breach of that duty; (c) damage flowing from the breach; (d) the amount of the damages. In some cases, a claim may be dismissed at an early stage on a point of law (for example failure to show the existence of a duty; or a finding that the claim is stale and barred by the Statute of Limitations) but it is usually difficult to decide the relevant law without first deciding the relevant facts.

THE DECISION

It is vital that there should flow from your reasoning and be expressed in simple terms a clear and definite decision.

Ideally, the decision should be expressed in simple monetary terms: namely that the award is that A should pay to B £x plus costs and interest. The monetary amount of costs and interest also should be determined by the tribunal. The determination of the amount of costs and interest often involves very large sums of money and unless the principles can be resolved before the end of the main hearing, the Final Award should be expressed to be a "Final Award except as to Interest and Costs" reserving a further hearing for argument as to interest and costs.

Sometimes a monetary award is not possible and a declaration of rights may be made or the Tribunal may make one of the other orders authorised under section 48 of the Arbitration Act, 1996. Section 48 is in the following terms:

    1. "The parties are free to agree on the powers exercisable by the arbitral tribubunal as regards remedies.
    2. Unless otherwise agreed by the parties, the tribunal has the following powers.
    3. The tribunal may make a declaration as to any matter to be determined in the proceedings.
    4. The tribunal may order the payment of a sum of money, in any currency.
    5. The tribunal has the same powers as the court-

      1. to order a party to do or refrain from doing anything;
      2. to order specific performance of a contract (other than a contract relating to land);
      3. to order the rectification, setting aside or cancellation of a deed or other document."

But it is essential that a Final Award should be final and not depend for its enforcement on some other act or decision. For example: the arbitrator decides that a builder has built a defective house. To order that the builder is to put right the defects to the satisfaction of the arbitrator, or indeed to the satisfaction of anyone else, is likely to lead to endless wrangles. The best approach is to put a value on the defects at a price to be charged by someone other than the builder and award that sum to the complainant. The power to order specific performance of a contract should be exercised only with the greatest care and after considering in detail what is likely to happen if the order is not obeyed.

The articles and papers published by Keating Chambers are for the purpose of raising general awareness of issues and stimulating discussion. The contents must not be relied upon or applied in any given situation. There is no substitute for taking appropriate professional advice.

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