Arbitrators — Fees — Appointment without agreement on fees — Arbitrators proposing commitment fee — Whether arbitrators entitled to demand commitment fee — One party prepared to accept fee arrangement — Whether bias — Whether misconduct if arbitrators agree commitment fee with one party — Appeal dismissed
In January 1987, and in accordance with the terms of an arbitration agreement, the parties each appointed an arbitrator and they, in turn, appointed a third arbitrator. The appointments were accepted by the arbitrators without any reference to fees. Because of the size of the dispute and the exceptionally busy nature of the arbitrators, the parties asked the arbitrators to reserve a 12-week period in 1992 for the hearing. The arbitrators were prepared to agree to this subject to fees for a 12-week hearing of £120,000, with a non-returnable 10% fee being payable on fixing the date of the hearing and the balance being payable in instalments. The plaintiffs, who were agreeable to these proposals, sought declarations that their acceptance of the terms would not raise any imputation of bias and that the arbitrators were fit and proper persons; the defendants contending that the arbitrators had misconducted themselves by making and persisting in certain requirements as to their fees. Phillips J granted a declaration that the arbitrators were fit and proper persons to continue to act but refused to declare that the acceptance of the commitment fee arrangements did not show bias (see [1990] EGCS 149). The defendants appealed.
Held The defendants’ appeal was dismissed.
Once an arbitrator has accepted an appointment no term could be implied that entitled him to a commitment fee; the arbitration agreement can only be varied with the agreement of all parties. In appropriate circumstances an arbitrator could ask for a commitment fee prior to the acceptance of his appointment. If an arbitrator insisted on a commitment fee after his appointment, that would constitute misconduct rendering the arbitrator liable to be removed. Any arrangement between one of the parties and the arbitrator without the consent of the other parties would render the arbitrator vulnerable to an imputation of bias.
In the present case the commitment expected of the arbitrators justified a request for a commitment fee and that did not amount to bias. No agreement had been made with the plaintiffs and therefore no misconduct arose. A reasonable fee which a barrister might expect in that capacity was not necessarily the same fee as might be a reasonable fee in his capacity as an arbitrator.
Michael Beloff QC and Timothy Wormington (instructed by Ince & Co) appeared for the appellants; and Jonathan Sumption QC and Mark Howard (instructed by Clifford Chance) appeared for the respondents.
