A spot of bovver

The arbitrator in this case has taken a lambasting by the High Court judge. He said that the arbitrator had a "pitifully inadequate comprehension of the nature of his functions as arbitrator". He went on to say that the bloke didn't know what powers he had, nor the appropriate way in which to exercise these powers. Not finished yet, he said that if the claiming party had complied with the orders of the arbitrator, "they would manifestly sustain substantial injustice".

Still not finished, he said that the terms of the arbitrator's directions were "quite the most outrageous that I have ever seen in any arbitration proceedings". Oh dear, oh dear! The arbitrator was removed by the judge for serious irregularity, had his fees docked, was ordered to pay the costs of the hearing for removal and sent away.

The name of the case is Wicketts and Sterndale vs Brine Builders and Siederer. It contains a lot of lessons and a mistake. Let me tell you the story, then some lessons, then the mistake.

Brine Builders had done an extension on Trevor Wicketts and Patricia Sterndale's house in Bristol. They claimed £60,000 from Brine for unsatisfactory work. The arbitrator seems to have worked hard in the build-up towards an award, including some hearings. But, on 1 November last year, Mr Wicketts lost his patience in a meeting with the arbitrator. He accused him of spinning out the proceedings and letting the builder push the costs of the arbitration through the roof. There was a "heated exchange", during which Mr Wicketts accused the arbitrator of negligence and incompetence. The arbitrator said that Mr Wicketts had given his opponent a good excuse to appeal any award in Mr Wicketts' favour, on the grounds that he was applying undue pressure. There is a lesson here. Mr Wicketts objected about improper conduct. When that happens, the arbitrator must carry out a careful inquiry into the complaint. The arbitrator in Wicketts vs Brine did nothing. Perhaps he thought it was an attempt to derail the arbitration. Lesson: take objections seriously and investigate.

The judge said that the terms of the arbitrator’s directions were ‘quite the most outrageous that I have ever seen’. Oh dear, oh dear!

The two parties went on to attempt to negotiate a settlement, but failed. Then the arbitrator wrote something odd. He gave "directions" on what any settlement agreement should contain. He reminded the parties not to overlook how their costs and his arbitral fees were to be paid and by whom. He ordered a draft to be sent to him, "to satisfy myself" that no duress had arisen, and, further, it was to be implemented only once he had received "the whole of my fees". Lesson: No arbitrator can interfere with settlement dialogue; it's none of his (or her) business. But, can you see what the arbitrator was up to? Bear in mind his fees of £20,000 hadn't yet been paid. He didn't get his fees, nor did the parties settle, so the arbitrator wrote again and ordered each party to guarantee the other's costs should it lose. Then he ordered each side to provide security for the arbitrator's fees – estimated now at £26,000. There is power under the Arbitration Act to do this, but not to the tune of double-securing the full amount of anticipated fees and expenses. He was wrong here. Moreover, he had exercised the wrong principles in ordering Wicketts and Brine to give security for each other's costs.

When sacking an arbitrator, the court has to ask if the behaviour has caused, or will cause, substantial injustice. The judge was convinced that the arbitrator didn't know how to arbitrate and out he went. As for his £26,000, the judge reckoned the parties had only had £10,000 worth, so that's all he got.

Then came what I say was the court's mistake.