Originally from the American Review of International Arbitration (ARIA)

PREVIEW

ABSTRACT

 Just as arbitration derives its authority and legitimacy from the fact that the parties choose to subject themselves to the process of arbitration, the popularity and success of arbitration also depend on the parties’ continued desire to subject themselves to this process. Nonetheless, the lack of institutional arbitral liability has been said to have the effect of discouraging parties from resorting to arbitration. Building on the existing academic literature, this note argues that it is in the interest of both arbitral institutions and arbitrators to advocate for greater institutional arbitral liability and the first arbitral institution embracing it will have the most to gain.

Until recently, the topic of institutional arbitral immunity has been the subject of relatively little academic attention. The first—and to date the only—book devoted to this topic was not published until 2017.   The dearth of literature on this topic stands in contrast to the analogous topic of arbitrators’ liability which has been discussed at considerable length.   This is, however, not to say that the topic of institutional arbitral immunity deserves less attention. Indeed, it has been said that “the liability of arbitral institutions is a topic that is gaining momentum in current arbitration scholarship.”

It would be helpful to begin by briefly explaining what is meant by ‘institutional arbitral immunity.’ Institutional arbitral immunity can be said to be rooted in the fact that arbitral institutions are treated as quasi-judicial in nature.   Thus, to say that an arbitral institution enjoys institutional arbitral immunity is to say that the arbitral institution is absolutely or partially immune from civil liabilities for wrongs or omissions arising in the discharge of its duties, particularly during the course of the arbitral proceeding. Similar to the immunity afforded to arbitrators, institutional arbitral immunity ensures that arbitral institutions can carry out their duties free from court intervention which helps to “keep the wheels turning.”   It is therefore no surprise that institutional arbitral immunity is recognized by various pro-arbitration jurisdictions, including the United States.

A.    What’s the Worry?

Why does the seemingly widely accepted notion of institutional arbitral immunity deserve our attention now?  The short answer is that, more than ever, there is trouble brewing beneath the surface. This metaphorical “bubble” of trouble presents itself in the form of the slew of lawsuits launched by aggrieved arbitration-users against arbitral institutions in recent years.