What Is the Arbitrator's Mandate?

The arbitrator's mandate refers to the authority, scope, and responsibilities conferred upon the arbitrator to adjudicate a dispute in an arbitration proceeding. It defines the extent of the arbitrator's powers, the procedural and substantive rules they must follow, and their duty to resolve the dispute impartially. The mandate is typically established through the arbitration agreement, institutional rules, and national laws, and can vary depending on the arbitration context, such as domestic versus international arbitration.

The arbitrator's mandate outlines their jurisdiction, the permissible scope of the dispute they can resolve, and the boundaries they must operate within. The failure to adhere to this mandate or the exceeding of authority can lead to legal challenges, including the setting aside of an award or the revocation of an arbitrator’s appointment.

Defining the Arbitrator’s Mandate

Source of the Mandate

The mandate of an arbitrator is primarily derived from the arbitration agreement entered into by the parties. This agreement may explicitly define the scope of the dispute to be resolved, any limitations on the arbitrator’s authority, and the procedural framework to be followed.

Additionally, the institutional rules (such as the ICC, LCIA, or UNCITRAL rules) and national arbitration laws (such as the Arbitration and Conciliation Act, 1996 in India or the Federal Arbitration Act in the U.S.) may further define or impose limits on the arbitrator's mandate.

Scope and Jurisdiction

The scope of an arbitrator’s mandate includes the jurisdiction over the dispute, meaning they can only adjudicate matters explicitly or implicitly included within the arbitration agreement. The jurisdictional scope is defined by the contractual language and what is agreed upon by the parties in the arbitration clause.

The arbitrator has the power to make decisions on issues that are within the bounds of the dispute as framed by the agreement. If the parties did not agree to arbitrate certain claims, an arbitrator would lack jurisdiction to decide those matters.

Powers and Authority

An arbitrator typically has broad powers, but these powers are circumscribed by the terms of the arbitration agreement, institutional rules, and applicable national laws. Common powers of an arbitrator include:

• Issuing procedural orders (e.g., setting timelines, conducting hearings).
• Granting interim relief (e.g., freezing assets, preserving evidence).
• Determining the substance of the dispute (e.g., ruling on the merits, awarding damages, or directing specific performance).
• Issuing an arbitral award which is final and binding on the parties, unless it is set aside or annulled under certain conditions.

Duties and Responsibilities

Arbitrators have certain duties and responsibilities that they must fulfill during the arbitration process:

• Impartiality and Independence: The arbitrator must be independent and impartial. Any bias or conflict of interest can lead to the challenge of the arbitrator's appointment or the setting aside of the award.
• Duty to Act Fairly: The arbitrator must act in a manner that provides both parties with an opportunity to present their case and ensures procedural fairness. This includes providing equal access to evidence and ensuring that hearings are conducted impartially.
• Duty to Render an Award: The arbitrator must render a reasoned award within the time limits set by the parties, the rules, or the applicable laws.

Limits on the Arbitrator’s Mandate

Exceeding Jurisdiction

An arbitrator can only resolve disputes that fall within the scope of the arbitration agreement. If an arbitrator exceeds their mandate, either by adjudicating on matters outside the agreed dispute or acting in a manner inconsistent with the terms of the agreement, such actions may be deemed a breach of mandate.

For example, if the arbitration agreement excludes certain types of claims (such as fraud), and the arbitrator decides to rule on those claims, the arbitrator would exceed their authority.

Failure to Fulfill the Mandate

Arbitrators are required to follow the rules of procedure established by the parties or by the institution administering the arbitration. Failure to comply with these rules, such as not providing a fair opportunity for both parties to present their case or exceeding the time limits for issuing an award, can lead to the challenge of the arbitral award.

Similarly, if an arbitrator fails to address the key issues in the dispute or fails to issue a reasoned award, it may be grounds for setting aside the award or challenging the arbitrator's mandate.

Consequences of Exceeding or Failing to Fulfill the Mandate

Setting Aside the Award

If an arbitrator exceeds their mandate or fails to act within the scope of their authority, the parties may apply to a court to have the arbitral award set aside. This is particularly common in international arbitration under the New York Convention or in domestic jurisdictions that recognize arbitration laws based on the UNCITRAL Model Law.

For example, in India, under the Arbitration and Conciliation Act, 1996, an award can be challenged if the arbitrator has acted beyond their mandate, or if the award is inconsistent with the principles of natural justice or public policy.

Challenge to the Arbitrator’s Appointment

If the arbitrator acts outside their jurisdiction or breaches their mandate, the parties may also request that the arbitrator be removed or replaced. Most institutional rules, like those of the ICC, LCIA, or SIAC, allow parties to challenge an arbitrator’s appointment on grounds of partiality, conflict of interest, or exceeding their mandate.

Judicial Intervention

In some cases, national courts may intervene in situations where an arbitrator exceeds their mandate, particularly if the arbitrator's actions are deemed to have violated due process or public policy. This is more likely in jurisdictions where judicial oversight of arbitration is more stringent.

Example

Scenario:

A commercial dispute arises between two companies, A (based in the UK) and B (based in France). The parties agree to arbitrate the dispute under the ICC Arbitration Rules. The arbitration clause in their contract specifies that any disputes related to performance obligations under the contract will be resolved by arbitration. However, during the proceedings, the arbitrator makes a ruling on a claim that was not included in the original scope of the agreement—namely, a fraud claim.

Action:

Company B challenges the award on the grounds that the arbitrator exceeded their mandate by addressing the fraud claim, which was outside the scope of the arbitration agreement.

Outcome:

The court or the ICC Court of Arbitration may find that the arbitrator exceeded their mandate and set aside the award, or it may rule that the issue was implicitly covered by the arbitration clause, depending on the interpretation of the contract and the legal context.

Conclusion

The arbitrator’s mandate is a crucial element of the arbitration process, defining the scope of the arbitrator's powers, responsibilities, and limitations. It derives from the arbitration agreement and the rules under which the arbitration is conducted, and governs the arbitrator’s authority to adjudicate the dispute. Arbitrators must ensure that their actions remain within the scope of their mandate, as exceeding or failing to fulfill this mandate can result in the setting aside of the award or the removal of the arbitrator. The enforcement of this mandate is crucial to maintaining fairness, finality, and efficiency in the arbitration process.