ReSolution Issue 17, May 2018 | Page 11

However, it was held that the fact that the arbitration agreement permitted an award by majority vote could not validate a failure to adopt the mandated process, which in this case required each of the three arbitrators to "hear" and "determine" the arbitration. A failure to adopt the process could invalidate the final award, as it would not have been made in accordance with the arbitration agreement.
To meet minimum standards, all arbitrators must genuinely engage and participate in an arbitration. Amongst other things, an arbitrator must "give proper and adequate consideration to the evidence and arguments advanced by the parties, and must turn his or her own mind to the appropriate resolution of the dispute, providing reasons which reveal the intellectual process which was followed to resolve the substantive issues in the dispute". However, as discussed below, without direct evidence of an absentee arbitrator's actual conduct, it can be difficult to prove a breach of this minimum standard.
A failure meet the minimum standard, or a failure to meet the burden of proof?
The long history of the arbitral proceedings showed that an absentee arbitrator was infrequently in contact with the tribunal, and that the tribunal regularly made procedural decisions without input from him. Indeed, the full reasons were prepared by the two active members of the tribunal, and there was no provision for the absentee arbitrator to sign the draft and final awards. Ultimately, the absentee arbitrator waived the fees for his services.
However, there was no documentary evidence that proved that the absentee arbitrator had not given genuine consideration to the evidence and submissions or failed to turn his mind to the proper determination of the dispute. In fact, the documentary evidence that did exist showed that the absentee arbitrator was copied into all communications, and subsequently concurred with the joint reasons.
Therefore, Martin CJ was unable to assess all of the potentially relevant evidence of the arbitral process, as the arbitrators were not joined as parties to the proceeding. As SMS had the onus of proving its positive case, being that the absentee arbitrator did not "hear" or "determine" the arbitration, its arguments were rejected.
As this case was decided based upon a lack of evidence, it does not provide firm guidance on the level of active engagement in the process that an arbitrator must have to satisfy minimum standards. This is significant because Martin CJ suggested that, had SMS been able to establish its case, then it was arguable that the final award would not have been binding on the parties, as it would not have been made in accordance with the arbitration agreement.
That said, it almost goes without saying that, in order to meet minimum standards and preserve the enforceability of an award, it is important that all arbitrators genuinely engage and participate in the arbitration and decision-making processes.
Application to the Model Law
Because of the date the arbitration commenced, the provisions of the Commercial Arbitration Act 1985 (WA) applied for this case. That legislation has since been repealed and replaced by the Commercial Arbitration Act 2012 (WA) (Act), which is modelled on the UNCITRAL Model Law on International Commercial Arbitration. Effectively identical legislation has been enacted in other states of Australia.
To an extent, the new legislation addresses some of the uncertainties raised by this case.
• Section 31(2) of the Act provides that the signatures of the majority of tribunal members is sufficient, provided that the reason for any omitted signature is stated.
• Sections 14 and 15 of the Act provide a mechanism for the parties to remove and replace an arbitrator who fails to act or is unable to perform the arbitrator's functions.