ARBITRATION, a term derived from the nomenclature of Roman law, and applied to an arrangement for taking, and abiding by, the judgment of a selected person in some disputed matter, instead of carrying it to the established courts of justice. In disputes between States, arbitration has long played an im portant part. (See ARBITRATION, INTERNATIONAL.) The present article is restricted to arbitration under municipal law; but a
separate article is also devoted to the use of arbitration in labour disputes. (See INDUSTRIAL RELATIONS.) Law of England.—The law of England as to arbitration is now substantially included in the Arbitration Act, 1889, and cer tain amending statutes. The principal act is an express code as to proceedings in all arbitrations, but "criminal proceedings by the Crown" cannot be referred under it (ss. 13, 14). The statute subdivides its subject matter into two headings : I., References by consent out of court; II., References under order of court.
Here the first matter to be dealt with is the submission. A submission is defined as a written agreement to submit present or future differences to arbitration, whether a particular arbitrator is named in it or not. The capacity of a person to agree to arbitra tion, or to act as arbitrator, depends on the general law of con tract. A submission by an infant is not void, but is voidable at his option. (See INFANT.) Counsel has a general authority to deal with the conduct of an action, which includes authority to refer it to arbitration, but he has no authority to refer an action against the wishes of his client, or on terms different from those which his client has sanctioned ; and if he does so, the reference may be set aside, although the limit put by the client on his counsel's authority is not made known to the other side when the reference is agreed upon (Neale v. Gordon Lennox, 1902, A. C. 465) . The committee of a lunatic, with the sanction of the judge in lunacy, may refer disputes to arbitration. (See INSANITY IN LAW.) As an arbitrator is chosen by the parties themselves, the question of his eligibility is of minor importance; and where an arbitrator has been chosen by both parties, the courts are reluctant to set the appointment aside. This question has arisen chiefly in contracts for works, which frequently contain a provision that the engineer shall be the arbitrator in any dis pute between the contractor and his own employer. The practical result is to make the engineer judge in his own cause. But the courts will not in such cases prevent the engineer from acting, where the contractor was aware of the facts when he signed the contract, and there is no reason to believe that the engineer will be unfair (Ives and Barker v. Willans, 1894, 2 Ch. 478; Hickman & Co. 'v. Roberts, 1913, A. C. 229). So, too, where a barrister was appointed arbitrator, the court refused to stay the arbitration on the mere ground that he was the client of a firm of solicitors, the conduct of one of whom was in question (Bright v. River Plate Construction Co., 1900, 2 Ch. 835). The Arbitration Act, 1889, provides that a submission, unless a contrary intention is expressed in it, is irrevocable except by leave of the court or a judge, and is to have the same effect in all respects as if it had been made an order of court. Provision is made for failure to appoint arbitra tors or umpires. The court may compel parties to carry out an arbitration, not only in the above cases by directly appointing an arbitrator, etc., or by allowing one appointed by a party to pro ceed alone with the reference, but also indirectly by staying any proceedings before the legal tribunals to determine matters which come within the scope of the arbitration. Where the agree ment to refer stipulates that the submission of a dispute to arbi tration shall be a condition precedent to the right to bring an ac tion in regard to it, an action does not lie until the arbitration has been held and an award made. The court will refuse to stay proceedings where the subject matter of the litigation falls out side the scope of the reference, or there is some serious objection to the fitness of the arbitrator, or some other good reason of the kind exists. Under the Arbitration Clauses (Protocol) act, 1924, proceedings may also be stayed in respect of matters to be referred to arbitration in pursuance of agreements to which the protocol of Sept. 24, 1923, on arbitration clauses applies.
An arbitrator is not liable to be sued for want of skill or for negligence in conducting the arbitration (Pappa v. Rose, 1872, L.R. 7 C.P. 525). When a building contract provides that the certificate of the architect, showing the final balance due to the contractor, shall be conclusive evidence of the works having been duly completed, the architect occupies the position of an arbi trator, and enjoys the same immunity from liability for negli gence in the discharge of his functions (Chambers v. Goldthorpe, 1901, 1 Q.B. 624).
An arbitrator (and the following observations apply mutatis mutandis to an umpire after he has entered on his duties) has power to administer oaths to, or take the affirmations of, the parties and their witnesses; and any person who wilfully and corruptly gives false evidence before him may be prosecuted and punished for perjury (Arbitration act, 1889, sched. i. and s. 22). At any stage in the reference he may, and shall if he be required by the court, state in the form of a special case for the opinion of the court any question of law arising in the arbitration. The arbitrator may also state his award in whole or in part as a spe cial case (ibid. s. 19), and may correct in an award any clerical mistake or error arising from an accidental slip or omission. The costs of the reference and the award—which, under sched. i. of the act, must be in writing unless the submission otherwise provides—are in the arbitrator's discretion, and he has a lien on the award and the submission for his fees, for which—if there is an express or implied promise to pay them—he can also sue (Crampton v. Ridley, 1887, 20 Q.B.D. 48). A professional man, undertaking the duties of arbitrator without any stipulation as to payment, cannot be presumed to be giving his services gratui tously, and is therefore entitled to remuneration (Macintyre Bros. V. Smith, 1913, S.C. 129, p. 132).
If there is no express provision on the point in the submission, an award under the Arbitration act 1889 must be made within three months after the arbitrator has entered on the reference, or been called upon to act by notice in writing from any party to the submission. The time may, however, be extended by the arbitrator or by the court. An umpire is required to make his award within one month after the original or extended time appointed for making the award of the arbitrators has expired, or any later day to which he may enlarge it. The court may by order remit an award to the arbitrators or umpire for reconsidera tion, in which case the reconsidered award must be made within three months after the date of the order. An arbitrator is a com petent witness in an action to enforce his award, and in modern practice in commercial arbitrations he is entitled to support in the arbitration or before an umpire, the case of the party appointing him.
An award must be intra vires; it must dispose of all the points referred; and it must be final, except as regards certain matters of valuation, etc. (see In Re Stringer and Riley Brothers, 1901, 1 K. B. 105) . An award may, however, be set aside where the arbi trator has misconducted himself (an arbitrator may also be removed by the court on the ground of misconduct), or where it is ultra vires, or lacks any of the other requisites—above men tioned—of a valid award, or where the arbitrator has been wil fully deceived by one of the parties, or some such state of things exists. An award may, by leave of the court, be enforced in the same manner as a judgment or decree to the same effect. Pro visions for the arbitration of special classes of disputes are con tained in many acts of parliament ; e.g., the Acquisition of Land (Assessment of Compensation) act, 1919, the Agricultural Hold ings act, 1923, the Small Holdings and Allotments acts, 1908-26, the Light Railways acts, 1896 and 1912, the Lands Clauses acts, the Housing act, 1925, the Rating and Valuation act, 1925, and the Workmen's Compensation act, 1925-26. In 1892 a chamber of arbitration for business disputes was established by the joint action of the corporation of the City of London and the London Chamber of Commerce. The London Chamber, or as it is now styled, Court of Arbitration is simply a joint committee of per sons nominated partly by the City Corporation and partly by the London Chamber of Commerce, which appoints arbitrators to deal with disputes referred to it irrespective of the nationality of the parties.
The court or a judge may refer any question arising in any cause or matter to an official or special referee, whose report may be enforced like a judgment or order to the same effect. This power may be exercised whether the parties desire it or not. The official referees are salaried officers of court. The remuneration of special referees is determined by the court or judge. An entire action may be referred, if all parties consent, or if it involves any prolonged examination of documents, or scientific or local exam ination, or consists wholly or partly of matters of account. (See the Supreme Court of Judicature [Consolidation] act, 1925, ss.
Scots Law.—The Arbitration (Scotland) act, 1894, unlike the English Arbitration act, 1889, did not codify the previously existing law, and it becomes necessary, therefore, to deal with that law in some detail. It differs in important particulars from the law of England. Although (as in England apart from the Arbitration act, 1889) there is nothing to prevent a verbal refer ence, submissions are generally not merely written but are effected by deed. The deed of submission first defines the terms of the reference, the name or names of the arbiters or arbitrators, and the "oversman" or umpire, whose decision in the event of the arbiters differing in opinion is to be final. Formerly, where no oversman was named in the submission, and no power given to the arbiters to name one, the proceedings were abortive if the arbiters disagreed, unless the parties consented to a nomination. But under the Arbitration (Scotland) act, 1894,s. 4, where arbiters differ in opinion, they, or, if they fail to agree on the point, the court, on the application of either party, may nominate an oversman whose decision is to be final. The deed of submission next gives to the arbiters the necessary powers for disposing of the matters referred (e.g., powers to summon witnesses, to administer oaths and to award expenses) and specifies the time within which the "decree arbitral" is to be pronounced. If this date is left blank, practice has limited the arbiter's power of deciding to a year and a day, unless, having express or clearly implied power in the submission, he exercises this power, or the parties expressly or tacitly agree to its prorogation. The deed of submission then goes on to provide that the parties bind themselves, under a stipulated penalty to abide by the decree arbitral, that, in the event of the death of either of them, the submission shall continue in force against their heirs and representatives, and that they consent to the registration, for preservation and execution, both of the deed itself and of the decree arbitral. The power to enforce the award depends on this last provision. Under the common law of Scotland a submission of future disputes or differences to an arbiter, or arbiters, unnamed, was ineffectual except where the agreement to refer did not contemplate the decision of proper disputes between the parties, but the adjustment of some condi tion, or the liquidation of some obligation, contained in the con tract of which the agreement to submit formed a part. And by the Arbitration (Scotland) act, 1894, s. 1., an agreement to refer to arbitration is not invalid by reason of the reference being to a person not named, or to be named by another, or to a person merely described as the holder for the time being of any office or appointment. An arbiter who has accepted office may be com pelled by an action in the court of session to proceed with his duty unless he has sufficient cause, such as ill-health or supervening interest, for renouncing. The court may name a sole arbiter, where provision is made for one only and the parties cannot agree (Arbitration [ Scotland] Act, 1894, 5. 2) ; and may name an arbiter where a party having the right or duty to nominate one of two arbiters will not exercise it (ibid. s. 3) . Scots law as to the requisites of a valid award is practically identical with the law of England. The grounds of reduction of a decree arbitral are "corruption," "bribery," "false hood" (Scots Act of Regulations, 1695, s. 25). An attempt was made to include, under the expres sion "constructive corruption," among these statutory grounds of reduction, irregular conduct on the part of an arbitrator, with no suggestion of any corrupt motive. But it was definitely over ruled by the House of Lords (Adams v. Great North of Scotland Railway [1891], A. C. 31). The statutory definition of the grounds of reduction was intended, however, merely to put an end to the practice which had previously obtained of reviewing awards on their merits, and it does not prevent the courts f rom setting aside an award where the arbitrator has exceeded his juris diction, or disregarded any one of the expressed conditions of the submission, or been guilty of misconduct. The original rule was that a private arbiter could not demand remuneration except in virtue of contract, or by implication from the nature of the work done, or if the reference was in pursuance of some statutory enactment (e.g., the Lands Clauses [Scotland] act, 1845, s. 32). The view taken by the courts of this question in modern times is expressed in the case of Macintyre Bros. v. Smith, cited on p. 219.
Judicial references have been long known to the law of Scotland. When an action is in court the parties may at any stage with draw it from judicial determination, and refer it to arbitration. This is done by minute of reference to which the court interpones its authority. When the award is issued it becomes the judgment of the court. The court has no power to compel parties to enter into a reference of this kind, and it is doubtful whether counsel can bind their clients in such a matter. A judicial reference falls like the other by the elapse of a year; and the court cannot review the award on the ground of miscarriage. By the Court of Session act, 185o, s. 50, a provision is introduced whereby parties to an action in the supreme court may refer judicially any issue for trial to one, three, five or seven persons, who shall sit as a jury and decide by a majority.
The Arbitration act, 1889, did not extend to Ireland. There has been no independent legislation on the subject since the treaty of 1922, either in Northern Ireland or in the Irish Free State. In both, the Common Law Procedure (Ire land) act, 1856, provides, on the lines of the English Common Law Procedure act, 1854, for the conduct of arbitrations and the enforcement of awards. Irish statute law, both before and since the establishment of the Free State, contains numerous provisions for arbitration under special enactments.
The provisions of the English Arbitration act, 1889, have in substance been adopted by the In dian Legislature (see act ix. of 1899), and by many of the colo nies; e.g., No. 24 of 1898, Natal; C. 20 of 1899, Bahamas; No. 10 of 1895, amended by No. 4 of 1923, Gibraltar; No. 29 of 1898, Cape of Good Hope : s. 7 of this last statute excluded from sub mission to arbitration criminal cases, so far as prosecution and punishment are concerned, and, without the special leave of the court, matters relating to status, matrimonial causes, and matters affecting minors or other persons under legal disability; Trinidad and Tobago, No. 35 of 1898; Ontario, No. 35 of 1909 (consoli dating), No. 36 of 1909 (appointment of Chambers of Arbitra tion) ; Leeward Islands, No. 11 of 1907 ; Saskatchewan, No. 20 of 1920 (consolidating) ; Nigeria, No. 17 of 1914; Federated Malay States, No. 17 of 1912; Victoria, No. 2,265 of 1910. In Newfoundland the Board of Trade was authorized in 1910 (No. 1 of 1910) to appoint committees of arbitration and committees of appeals to decide matters voluntarily referred to them. The award of any such committee is to hare the effect of a judgment of the supreme court.
Voluntary arbitration has always been rec ognized in France. In cases of mercantile partnerships, arbitration was formerly compulsory, but in 1856 (law of July 17, 1856) jurisdiction in disputes between parties was conferred on the Tribunals of Commerce (as to which see Code de Commerce, arts. 615 et seq.). The subject is fully dealt with in the Code de Procedure Civile (arts. 1,003-1,028). The submission to arbitra tion (compromis) must, on pain of nullity, be acted upon within three months from its date (art. 1,007). The submission ter minates (i.) by the death, refusal, resignation or inability to act of one of the arbitrators; (ii.) by the expiration of the period agreed upon, or of three months if no time had been fixed; (iii.) by the disagreement of two arbitrators, unless power be reserved to them to appoint an umpire (art. 1,012). An arbitrator cannot resign if he has once commenced to act, and can only be relieved on some ground arising subsequently to the submission (art. 1,014). Each party to the arbitration is required to produce his evidence at least 15 days before the expiration of the period fixed by the submission (art. 1,o16). If the arbitrators, differing in opinion, cannot agree upon an umpire (tiers arbitre), the presi dent of the Tribunal of Commerce will appoint one, on the applica tion of either party (art. 1,017). The umpire is required to give his decision within one month of his acceptance of the appoint ment ; before making his award, he must confer with the previous arbitrators who disagreed (art. 1,o18). Arbitrators and umpire must proceed according to the ordinary rules of law, unless they are specially empowered by the submission to proceed as amiables compositeurs (art. 1,019). The award is rendered executory by an order of the president of the Civil Tribunal of First Instance (art. 1,020). Awards cannot be set up against third parties (art. 1022), or attacked by way of opposition. An appeal against an award lies to the Civil Tribunal of First Instance, or to the court of appeal, according as the subject matter, in the absence of arbi tration, would have been within the jurisdiction of the justice of the peace, or of the Civil Tribunal of First Instance (art. 1,023).
Up to the end of 1925 the law of arbitration in France had regard only to the submission of existing disputes, although clauses were sometimes incorporated into contracts providing that they should be governed by English law and thus rendering the reference of future disputes possible. The law of Dec. 31, 1925, for the first time makes general arbitration valid in French law (Sirey, Lois Ann., 1925). A law of June 21, 1924, codifies the law as to arbitration between master and servant, the institution of arbitration courts for dealing with differences, the election of judges, and the extent of their jurisdiction. The law becomes part, and is entitled Book IV., of the Code du Travail.
The provisions of French law as to arbitration were followed in Belgium (Code de Proc. Civ., arts. 1,003 et seq.) ; and a convention (July 8, 1899) between France and Belgium regulates, inter alia, the mutual enforcement of awards. The law of France was also reproduced in substance in Holland (Code of Civil Procedure, art. 62 et seq.). The German Imperial Code of Procedure did not create any system of arbitra tion in civil cases. The matter is at present regulated by the Code of Civil Procedure, 1879 (arts. 1,025 et seq.). Courts of Arbitration, connected with large trade associations, chambers of commerce and stock exchanges were set up. Provision is made for the reference of existing or future disputes. The reference is to two arbitrators, unless the submission otherwise provides. If the arbitrators reach a deadlock and notify it to the parties, the submission is void. There is apparently no provision for the appointment of an umpire. An order of court is necessary for the, enforcement of the award. The law is unsatisfactory and its early amendment is considered probable (43 Law Quarterly Review, 205). Spain followed the French Law (Code Civ. Proc., arts. 1,003-1,028; Civil Code, arts. 1,820-1,821). In Norway the "Arbitration Bureau for Goods," which had been operating in connection with the exchange since 1870, was in 1905 rearranged and subjected to a new regulation as "the Arbitration Bureau of the Exchange." See also the following foreign laws: Brazil C.C. arts. 1,037-1,048; Japan, general law, Code Civ. Proc., and special provisions for mediation, as regards leased lands and houses, Nos. 41 and 339 of 1922, and 17 of 1924, and as regards commercial cases, No. 42 of 1926.
The legality of agreements for general arbitration was recog nized by a protocol signed at Geneva under the League of Nations on Sept. 24, 1923. This occasioned the Act of Great Britain, chap.
39 of 1924; the French law of Dec. 31, 1925, above mentioned, and those laws of other ratifying States.
(For commercial arbitration see INDUSTRIAL RELATIONS.) BIBLIOGRAPHY.-Annual Practice (London, yearly) ; J. H. Redman, A Treatise on the Law of Arbitration and Awards (1903) ; F. Russell, On the Power and Duty of an Arbitrator (11th ed., 1923). As to Scots law: J. M. Bell, A Treatise on the Law of Arbitration in Scot land (1877) ; J. Erskine, Principles of the Law of Scotland (21st ed., 1911) ; W. M. Gloag and R. C. Henderson, Introduction to the Law of Scotland (1927) . As to foreign law generally: the texts of the laws cited ; the Annuaire de legislation etrangere and the Annuaire de legislation francaise. (A. W. R.) The United States.—Beginning with the English common law of arbitration as it existed in the early 18th century, including per haps the substance of 9 and 1 o William III. ch. 15 (Shriver v. State, Md., 1837, 9 Gill and J. 1; contra, Shearer v. Mooers, Mass., 1837, 19 Pickering 308), the several jurisdictions of the United States have in the past deviated far less from that system than has the mother country. Thus, the dictum in V ynior's Case (1609, 8 Coke 81 b) as to revocability and the doctrine of the illegality of attempts to "oust the court of its jurisdiction" are still put forth as common law (Cochrane v. Forbes, 1926, 257 Mass. Rep. 135. Echoes are still found in cases of a r1u18 going back to feudal times excluding titles to realty from the list of arbitral matters (Bunnel v. Reynolds, 1920, 205 Mo. App. 653). The rule that none but actual controversies already arisen can be made the subject of an agreement of arbitrators is still repeated (Cocalis v. Nazlides, 1923, 3o8 I11. 152). Though there are numer ous references in the statute books to arbitration in particular cases such as disputes among stockholders of corporations, in the main the statutes prior to the New York Act of 1920 (except in Pennsylvania) hardly went beyond 9 and Io William III. ch. 15, making it possible by agreement to give to a submission the quality and effect of a rule of court.
Among the causes contributing to the tardiness of this legisla tion were the spirit and the letter of several clauses in the Federal and State Constitutions, such as those making the courts co ordinate with the legislatures and those pertaining to the right of trial by jury and to due process of law. In fact, the question of the constitutionality of arbitration statutes is still occasionally raised in the courts (Cf. Exell v. Rocky Mountain Bean and Elevator Company, Colorado, 1925, 232 Pacific Rep. 68o). Com pulsory arbitration unless accompanied by adequate provisions for an appeal to the ordinary courts has been deemed unconstitutional (St. Louis, I. M. and S. Ry. Co. v. Williams, 1887, 49 Ark., 492; In re compulsory arbitration, 1886, 9 Colo. 629). When such ap peal is provided for, as in the Pennsylvania Act of 1836, compul sory arbitration has been upheld.
Blackstone (3 Com. 16) speaks of an award as the equivalent of "the agreement of the parties, or the judgment of a court of justice." As between the views assimilating the award to the one or the other, with their corollary treatment of the arbitrators as agents or as judges, and of the entire proceeding as a business negotiation or as a mode of trial, the tendency of the U.S. courts has been generally in the direction of the view that arbitration is essentially a mode of trial. At least holdings are found contrary to those in England under the common law: giving arbitrators judicial exemption from civil liability for mistakes or even fraud in the performance of their functions; allowing them to tax their own costs; to correct errors after an award is made; and many minor points (Harvard Law Review, xl., 129).
In spite of this conservatism of the courts and the legislature the use of arbitration has increased in the United States for com mercial matters, largely under the influence of chambers of com merce and trade associations. The New York State Chamber of Commerce has printed (1913) its earliest arbitration records, con sisting of minutes of its committees from 1779 to 1792. The Year Book on Commercial Arbitration in the United States for 1927 contains the provisions for arbitration including forms, rules and regulations, and panels of arbitrators in trade associations in 30 principal branches of commerce, and a comprehensive list of cham bers of commerce, exchanges, municipal courts, legal aid societies, and bar associations furnishing arbitration facilities in every part of the country. The attitude of bar associations, and particularly the American Bar Association, has been friendly and, in view of a possible conflict of interest, even generous. Largely through the efforts of the latter there has been passed a Federal arbitration act (in effect Jan. I, 1926) limited, of course, to types of disputes cog nizable in tile Federal courts (cases in admiralty, inter-state com merce, diversity of citizenship) and excluding employment con tracts even from these. The act embodied, like the earlier New York (1921) and New Jersey (1923) acts and the contemporary Massachusetts (1925) and Oregon (1925) acts, these three prin ciples: arbitration agreements in writing are valid; they are made enforceable and irrevocable; they may embrace matters not yet in dispute. With the exception of the provision for future disputes these principles are also embodied in the act drafted (192 5) by the Commissioners on Uniform State Laws affiliated with the Ameri can Bar Association (adopted in Nevada, 1925, North Carolina, 1927, Wyoming, 1927). Provision is further made for guidance by the court on questions of law, for the aid of the court in com pelling the attendance and testifying of witnesses, for a limited judicial review, and, in the case of the Uniform act, for provisional and ancillary remedies for the preservation of the property involved and for securing satisfaction of the award.
and Dimond, On Commercial Arbitration Bibliography,-Dunn and Dimond, On Commercial Arbitration (1922) ; J. H. Cohen, Commercial Arbitration and the Law (1918) ; American Arbitration Association, Year Book on Commercial Arbitra tion (5927); Suggestions for the Practice of Commercial Arbitration in the United States (1928). (N. I.)
