The lack of a clear framework for arbitration in Scotland makes for a painful process for all concerned. Now, an arbitration code has been launched that aims to change all that. What are its chances?
The deputy first minister and justice minister for Scotland launched the Scottish Arbitration Code on 14 October 1999. It was the hope of those attending the event at Scotland’s national stadium, Hampden Park, that this represented a significant step towards a cure-all for domestic and international dispute resolution.

The aim of the guidelines, drawn up by the Scottish Council for International Arbitration, the Chartered Institute of Arbitrators (Scottish Branch) and the Scottish Building Contract Committee, is to remove the difficulties surrounding domestic arbitration and to present a clear, modern code for Scotland in domestic and international cases. The need arises partly because the law covering domestic arbitration in Scotland is often difficult to identify, being sourced in old case law and a number of statutes.

The code does not purport to be exhaustive: where issues are not addressed, it may be necessary to continue to resort to common law for domestic arbitration, or the model law for international commercial cases. (I wrote about the applicability of the United Nations’ Model Law to international commercial arbitration in Scotland in Building, 22 October.)

The code does not have the force of law in Scotland. It is, in effect, a set of rules for ad hoc arbitration – in other words, arbitration that is not supervised by any administrative arbitral institution. This means that, before the code becomes applicable, parties to a dispute must agree to abide by it.

Of particular interest to the construction industry is that the Scottish Building Contract Committee apparently intends to incorporate the code into its revision of the standard forms of contract. This will ensure that all arbitration in Scotland that is conducted under the standard forms adopts the procedures of the code (unless, if permitted to do so, the parties have chosen to opt out). The Institution of Civil Engineers will also be recommending use of the code.

The tone of the code is reflected in article 15, which provides that the tribunal may conduct the arbitration in whatever manner it considers appropriate, provided the parties are treated equally and given fair opportunity to present their cases. The tribunal is entrusted “in the exercise of the widest discretion” to conduct the proceedings with a view to a fair, speedy and efficient resolution of the dispute. It is this endorsement of transparency, coupled with other specific provisions elsewhere in the code, that should make it attractive.

Speed and efficiency is a recurrent theme. Against the background of the wide discretion given to the tribunal, article 17 encourages it to take a proactive role and submit questions it wishes the parties to answer with “special attention”. The code also exerts pressure on the tribunal to make an award within 45 days of the close of proceedings (which will be a specific stage of the procedure under the code).

Once the award has been made, the parties must carry it out immediately; having agreed to arbitrate under the code, parties waive their right to appeal or to other court review. This will exclude, in the case of an international commercial arbitration, the possibility of challenging the award under article 34 of the model law; and in the case of domestic arbitration, recourse to the court by way of the “case stated” procedure.

The principal author of the code, Professor John Murray, also chaired the Scottish Advisory Committee which, in March 1996, proposed legislation to consolidate the law of arbitration in Scotland. Although Scotland has yet to see this, hopefully the new code will provide a clear procedural framework to parties.

The tribunal’s special powers

  • awarding damages
  • awarding interest, simple or compound, at rates and for periods it deems fit
  • dismissing a party’s case if the party is “unduly dilatory” in presenting it
  • ordering a respondent party to provide security for all or part of the amount in dispute
  • ordering a party to provide security for the expenses of the other
  • ordering interim or conservatory measures, and provisional relief