including the subject matter being arbitrated, its significance to the parties and the interests at stake. There is no qualitative measure of adequacy. The reasons are not required to meet a minimum criterion or extent — or to satisfy the curial standard — except that they must be coherent and comply with an elementary level of logic of adequate substance to enable the parties to understand how and why the arbitrator moved in the particular circumstances from the beginning to the end points. They must engage with the parties’ competing cases and the evidence sufficiently to justify the result. They must be the reasons on which the award is based; if they do not satisfy these requirements, they are not reasons.
Decision
The interim award issued by the arbitral panel on 7 June 2013 and adopted as the final award on 14 November 2014 was set aside.
The Court found that the five paragraphs constitute the only section of the panel’s award which might arguably be said to provide reasons for its decision. The Court said it is perhaps telling that the panel headed the section as its conclusion as the reasons are essentially conclusory in nature, and to the extent that they purport to explain the result, they are so inadequate and inconsistent that they fell short of discharging the panel’s mandate to give a reasoned award. The Court found the reasons were not commensurate with the importance of the subject matter and the panel’s conclusion.
Conclusions and implications
Any decision by an arbitral tribunal is made by applying the appropriate legal principles to the preferred evidence.
What is required first, is a clear identification and formulation of issues which serves as an organised framework for the arbitral reasoning process (while it is not mandatory, arbitrators frequently request the parties to submit a list of issues for that purpose).
The decision must be reached on an adequate factual foundation. That will involve weighing or evaluating the positions of relative evidential strength and identifying the evidence relied upon to reach the decision.
While the arbitral tribunal is effectively ‘master of the facts’ and exclusively entitled to decide ‘the admissibility, relevance, materiality, and weight of any evidence’, such evidentiary discretion does not absolve the arbitral tribunal from stating why it preferred certain evidence, and what that evidence was, and why it disregarded other evidence.
The reasons expose to the parties the disciplined thought pattern of the specialist adjudicator, thereby dispelling any suggestion of arbitrariness. Drawing analogies with the judicial process can be diversionary. The reasons may not necessarily be as extensive as may be expected of a formal judgment - the standard required will be dictated by the context.
The reasons must be sufficiently full for the parties to understand the pathway taken by the arbitral tribunal, and be set out in such a manner as to provide a logical and coherent explanation of adequate substance to enable the parties to understand why the tribunal reached the decision.
John is a professional arbitrator, adjudicator and mediator based in Auckland, New Zealand. He has been appointed in more than 1,200 building, construction, and infrastructure disputes over the past 26 years.
To request the appointment of John Green, please contact the Registrar: [email protected]
By John Green