In pursuit of finding an appropriate standard adaptable in challenges against arbitration awards through judicial review
Taisir Hoque : Finality of arbitration award has been considered and viewed as one of the most cited benefits of arbitration, which can be found in most influential legal documents such as 1958 New York Convention and UNCIITRAL Model Law on International Commercial Arbitration. As a general rule prevalent worldwide, decisions of the arbitrators are well accepted to be final and binding. There are in practice no or very limited grounds on the basis of which an arbitrator’s decision, or an arbitral award can be challenged. The only two limited grounds are; either, the arbitrators exceeded the jurisdictional authority in the arbitration agreement, or the arbitrators seriously compromised with the natural justice.
Given the consistent development of the arbitration proceedings worldwide as the world trade is ever expanding, both domestic and international awards are expected to be enforced with ease. The Courts worldwide always do strive to uphold arbitration awards. The conventional approach for the Courts has always been to read an arbitration award in a reasonable and commercial way with no expectation of finding substantial fault in it.
However, Courts in Bangladesh, on the other hand, do tend to interfere often with the arbitration proceedings or awards, and have displayed an increasing willingness to diverge from the robust approach of less interference expounded worldwide, and to intervene in the arbitral process or in the execution of awards by taking the broadest possible view of the devices and methods developed to control administrative bodies while exercising their power conferred under the Article 102 of the Constitution of the People’s Republic of Bangladesh.
Why there is an increasing willingness to interfere with arbitration awards; either, because there might be a growing distrust over the arbitration proceedings, or how this alternative dispute resolution mechanisms work, or might be that the Courts have been traditionally inclined to guard the reviewing role conferred under Article 102 of the Constitution jealously, or reliance or broad application of the methods and devices developed by the English Courts that are integral to the power of the reviewing Courts when Article 102 is triggered, or fear of opening a Pandora’s Box, or might be that the reviewing Courts are less inclined to draw the distinction in terms of ‘nature and function” between administrative decision makers whose sole function is allocation of resources, and arbitration.
Arbitration, however, has indeed evolved as a dynamic dispute resolution mechanism varying according to domestic law and international practices. Few of the essential features of arbitration is that- arbitration is an alternative to the national courts and are largely controlled by the parties throughout the process. One of the essential features that distinguish administrative decision makers or administrative bodies adjudicating dispute from arbitration is that apart from giving decisions administrative bodies do tend to execute administrative functions that essentially involves allocation of resources. Administrative bodies do enjoy a certain degree of discretion under the Act that they operate.
Over the years the laws governing the administrative bodies increased in complexities and evolved, so did the means and principles to ensure that such bodies are kept within their limits while exercising power. One of such means is the judicial review that ensures that such bodies do not transgress the limit. Administrative standards or standards of judicial review have also evolved over the period of time, thanks to the English Court, to the extent that those became integral to the judicial review remedy. Principles of administrative law such as “reasonableness standard”, “perversity and irrationality”, proportionality thus became integral to the judicial review remedy. The philosophy behind developing these standards by the English Courts might have been prompted out of presumption that- when administrative decision-maker bestowed with discretion, that discretion is not unfettered; rather, Parliament intends that that discretion be exercised reasonably and proportionately. Administrative Law practitioners also have witnessed the advent of jurisprudence of a type from Anisminic and post Anisminic, throughout the period when almost every decisions given by an administrative body could have been challenged on the premises that the administrative body exceed its jurisdiction either by –breaking the rule of natural justice; or misconstruing the provisions giving it power to act so that it failed to deal with the question remitted to it; or refusing to take into account something which it was required to take into account; or on the ground that it founded its decision on legally irrelevant consideration.
Higher Judiciary do have power to embark on judicial review of administrative decisions based on these administrative standards of review, while doing so it effectively conducts an in-depth analysis of both the reasoning and the decision of the administrative decision maker. It then, on that basis, decide whether such decision is acceptable or not on the basis of standards of review. This approach adopted by the Courts and the broader application of the administrative standards equally adopted in challenges of arbitral awards under judicial review, however, undermines the value of arbitration as an effective means of settling controversies. The standard of review for commercial arbitrations be it adhoc or institutional must therefore be guided by commercial considerations ensuring party autonomy and minimal judicial interference. Most importantly, in the absence of any clear analogy between administrative decisions and decisions taken by arbitrations, it would not be prudent for the Higher Judiciary to accommodate judicial review of a type, the type currently are being endorsed dearly, which is almost equivalent in practice to a virtually full appeal on the law and facts.
Same is true in terms of statutory arbitration because after an award is given by the Arbitrator, if it is allowed to be challenged on administrative standards, commercial considerations in which are essentially absent, then the arbitration proceeding shall become a mockery and the whole purpose of the arbitration scheme as envisaged in the Acts, shall fail and the legislative purpose of crafting those Acts/legislations might well be frustrated.
Even though judicial review as a remedy has developed through common law in England, the same became a basic feature of our Constitution. Once, an inherent jurisdiction now has become one of the striking features of the higher judiciary of our Country. The Courts have traditionally exercised this power of judicial review in order to restrain the public functionaries from transgressing the limits of authority provided under the Constitution or the law. The Courts have been always approached the decisions of the public functionaries with a meticulous legal eye endeavouring to pick holes, inconsistencies and arbitrariness or faults. In doing so Courts have always been aided with administrative principles and standards devolved over the period of time. Over the years, these administrative standards turned integral to the power of the judicial review to an extent that in challenges of arbitration awards through judicial review Courts are less inclined to distinguish between administrative bodies and arbitration tribunals, even though both are different in terms of ‘function and nature’. Without any clear analogy between administration decisions and arbitration decisions, and without any clear guideline from the Apex Court lending assistance from administrative law in challenges against arbitral award under judicial review is not only problematic but also stands in the way of coherent development of arbitration maintaining international standards. Time is now to indulge into a soul searching or pursuit to establish a proper standard that acknowledge the commercial considerations in the arbitration and the true value of arbitration proceeding. Judicial review of arbitral awards therefore, must take place under a tightly defined regime by adapting a specifically tailored standard of review which gives consideration to commercial considerations dominant in arbitration, and which is virtually different from various standards of judicial review deployed in reviewing decision of an administrative body.
Writer: Taisir Hoque; Advocate, Supreme Court of Bangladesh & an Associate at –The Lawyers & Jurists
