Mandatory arbitrations

The development of alternative methods of resolution of disputes is accepted generally as a positive step in modern legal systems. Arbitration is one such method. The concept is not new to our legal system, of course, but with the setting up of the Malta Arbitration Centre, the inherent procedural deficiencies and shortcomings in the previous regime were addressed.

The arbitration process traditionally enjoys various advantages over the established judicial process both in terms of speed and efficiency in the settlement of disputes as well as in a number of other aspects. The amendments to the Arbitration Act have taken arbitration one further step ahead with the introduction of the so-called "mandatory arbitrations".

Only last Friday, the relative legal notice bringing the mandatory arbitration provisions into force was published together with a new set of arbitration rules. As of such date all condominium disputes and disputes relating to incidents involving claims for damages to property of a value of between Lm1,500 - Lm5,000 caused by motor vehicles are to be referred to arbitration and not to the ordinary courts (Court of Magistrates). Personal injury claims fall outside the scope of this legislation. The Small Claims Tribunal will continue to hear cases relating to motor claims having a value of under Lm1,500 whereas the First Hall of the Civil Court will continue to hear disputes with a value exceeding Lm5,000. Arbitration proceedings will be conducted, and the award delivered, in public.

It is evident that whereas the Arbitration Centre had been set up initially as an alternative to the ordinary courts, seeking to attract "business" discretely, the government may be looking at the centre now to relieve the courts from some of the burden and to address the court backlog from a different angle.

The Malta Arbitration Centre itself is based on solid foundations. But the point remains that it is really up to the various market players themselves to make the system work efficiently. So far, the legal profession has by and large steered clear away from exploiting its potential and is therefore displeased with its imposition albeit in very limited areas of law. Some are reluctant to refer matters to arbitration because they mistakenly believe sittings must be held in the centre itself or that sittings will interfere with their court schedule ignoring the fact that sittings are fixed by agreement and can therefore be held at any time of day.

Some are under the impression that costs are exorbitant until they are invited to compare costs and see for themselves that it is in fact cheaper to resort to arbitration rather than to resort to court proceedings.

Another misconception relates to choice of arbitrator. The parties are free to choose whosoever they wish and the centre will only intervene should the parties fail to agree on an arbitrator.

Some are unaware of the 2002 amendment that allows appeals on points of law or that an arbitral award, once registered, constitutes an executive title and may be enforced in any part of the world.

Many simply avoid reading the law, assuming it is too complex and prefer to rely on the devil they know.

Some will argue that mandatory arbitrations will attract a different type of clientele to the centre in that its experience to date has been with parties that have voluntarily accepted to resort to arbitration. Whereas this statement may be true in the case of disputes that have been referred to arbitration as they arose, it may not be altogether accurate in the case of disputes referred to arbitration on the strength of an arbitration clause inserted in a contract way back. In the latter case, it is not always the case that both parties are keen to have the matter settled as soon as possible.

In any event, the law has provided the arbitrator with the necessary tools to handle any lack of cooperation by parties or witnesses as well as to prevent any attempt at obstruction of the process or unjustified delays. Here again it is up to the arbitrator to ensure that justice is handed down as expeditiously as reasonably possible.

The success of the Malta Arbitration Centre over the years should not to be gauged in terms of the numbers of cases referred to it but rather by the level of satisfaction of the persons that have opted to refer to it disputes for settlement. The response in this respect has been very encouraging.

I foresee therefore that one possible benefit that will emerge in consequence of the introduction of mandatory arbitrations will be that practitioners unaccustomed to having disputes settled by means of arbitration will come around to appreciating the advantages offered by arbitration and will make better use of the potential that exists in the interest of the client.

Dr Hyzler is chairman of the Malta Arbitration Centre.