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Published: Fri, 02 Feb 2018
The Principle Of Arbitrator Immunity
The key concern of this note is to investigate the principle of arbitrator immunity and further evaluate whether section 22 of the Arbitration Act 2010 is a positive improvement in the common law position.
The Common Law Position
Prior to 2005, there was no decided case in Ireland in relation to domestic arbitration as to whether the arbitrator has immunity from suit. Yet almost without exception, arbitral immunity from suit has existed in other common law countries.
The 1954 and 1980 Arbitration Acts were further silent on the issue, leaving Irish arbitrators unsure as to whether they were immune from suit when conducting a domestic arbitration.
Section 12(1) of the Arbitration (International Commercial) Act 1998, however, which was enacted in Ireland in 1998 to implement and adopt the UNCITRAL Model Law provided for such immunity.  Thus, as the Arbitration Acts made no reference to immunity in domestic arbitrations, the position was unclear as to whether legislation was necessary to extend immunity to domestic arbitrations.
The different arbitral bodies had already made provision for such in their Rules. The Rules of the Chartered Institute of Arbitrators Irish Branch for instance provided for arbitral immunity unless bad faith could be proved, whilst the Bar Council of Ireland also provided for the immunity of arbitrators in their new Fast Track Procedure for small claims. 
The decision of Gilligan J in Redahan v Minister for Education  brought clarity to the issue of immunity of arbitrators at common law. In reviewing the case law on arbitral immunity, Gilligan J referred, in his judgment to the policy arguments cited by Lord Denning in Sirros v Moore  , and also referred to the Irish decision of Manning v Shackleton  where the Supreme Court reiterated some of these policy arguments in describing arbitrators as exercising quasi-judicial functions. He concluded that in the absence of bad faith, the arbitrator enjoyed immunity from suit at common law.
The decision in Redahan  clarified the Irish position on the issue of arbitral immunity in Irish law, allowing arbitrators to carry their functions in domestic arbitrations in the knowledge that, in the absence of bad faith, they are immune from suit under common law from a dis satisfied party. It further evidences the pro-arbitration approach, underling the level of support the Irish courts have given to the arbitral process.
Nevertheless, following Redahan  the general view amongst practitioners seemed to be that although arbitrators have immunity under the common law, this is not entirely free from doubt. Indeed the Bar Council, in their ADR guidance note  submitted that it would be prudent for anyone acting as an arbitrator to hold a professional insurance policy so as to protect from risk against any possible changes in the law which may lead to them being held negligent or even in the course of a successful claim that no liability arises, costs could accrue that might be difficult to recover, even if awarded against by the claimant.
Immunity under the Arbitration Act 2010
Section 22 (1) protects the arbitrator from liability in any proceedings for anything done or omitted in the discharge or purported discharge of his functions. This immunity also applies to an employee, agent or advisor. 
Under Subsection (3) an arbitral or other institution or person designated or requested by the parties to appoint or nominate an arbitrator shall not be liable for anything done or omitted in the discharge or purported discharge of that function.
Subsection (4) of section 12 further protects the arbitral or other institution or person by whom an arbitrator is appointed or nominated for anything done or omitted by the arbitrator (or his or her employees or agents) in the discharge or purported discharge of his functions as arbitrator.
Subsections (3) and (4) further apply to an employee or agent of an arbitral or other institution or person as they apply to that arbitral or other institution or that person mentioned in those subsections. 
In light of the above, it is arguable that the section is too broad going further than the comparable English provision contained in the 1996 Act  which provides immunity but excludes it in cases of bad faith. It is firstly necessary to examine the above section and underlying policy considerations to determine why persons other than the arbitrator are granted immunity from suit.
The discussion on arbitrators’ immunity advances on the basis that arbitrators are akin to judges, performing tasks of a quasi-judicial nature. The arbitrator acts as a judge, must be impartial, independent and abide by fair procedures and natural justice.
The rationale behind immunity is not because the law regards arbitrators with special tenderness but rather because the law identifies that, on balance of convenience, public policy demands that they have such immunity.  The argument for immunity from liability thus centers around the fact that, if arbitrators were exposed to claims from the parties, any award or decision might result in further litigation, thereby undermining the judicial process. Thus, in raising the arbitrator to a similar level of that of a judge, the arbitrator is regarded as “the last bite of the cherry” in terms of making decisions, and as a pretext for rehearing a dispute.  It therefore promotes an honest and forthright arbitral process thereby avoiding a defensive approach on the part of the arbitrator.
Immunity of arbitrators from suit: The Rationale of Section 22
The Irish branch of the Chartered Institute of Arbitrators, Irish Branch, who considered it important that the Bill be enacted, was of the opinion that safeguards were necessary in relation to section 22 and arbitral immunity. Deputy Pat Rabbitte moved an amendment on behalf of the Chartered institute during the committee stage of the Arbitration Bill 2008. In respect of section 22, he sought to insert the following subsection to provide for situations where subsections one to five would not apply:
“(6) Subsections (1) to (5) shall not apply where the arbitrator or other institution or
person sought to be made liable is shown to have acted in bad faith.”.
However, once the Bill reached the Report Stage, although the immunity provision has been retained, the proviso as to bad faith has been removed. In his response, Dermot Ahern primarily referred to the motivation behind the 2010 Act, which was to attract international arbitration business to Ireland and create a centre of excellence for international arbitration. 
The model under section 22 mirrors that adopted by the International Court of Arbitration, and adheres to the best international practice laid down by the ICC. It is a model widely accepted by all who choose to have their arbitrations dealt with by the ICC. It is also a model prevalent in the U.S. Consequently, by aligning Ireland’s statutory regime with the ICC, it is hoped that it will enhance Ireland’s ability to attract arbitrations which are administered by the ICC to this country. For example, in 2008 more than 650 requests for arbitration were filed with that court.
The question that pertains is whether this could have been achieved without the blanket immunity clause, or indeed with the insertion of the “bad faith” proviso?
It was further the opinion of the minister that any other approach would limit the possibility of developing Ireland as a centre of international arbitration and further influence parties to choose other jurisdictions as their seat of arbitration, where their immunity is not circumscribed. In light of the above, it was necessary to have a clear statutory statement on the position of the arbitrator
Analysis of Section 22; Is it necessary?
Immunity from suit is clearly a prerogative reserved to the State.  In affording the arbitrators with immunity, the State will weigh the wrong such immunity can cause against the benefits distilled from the public policy reasons to find that the concession is worthwhile.
This concession represents itself in Ireland with blanket immunity from the arbitrator’s part. Prior to the Arbitration Act 2010, immunity from suit was removed if it was found that the arbitrator was acting in bad faith.  The legislator is thus of the opinion that the benefits of blanket immunity are more pressing for public policy reasons thereby overriding the proviso of bad faith. The argument is supported by Moutulsky, who stated: ‘Arbitrators are individuals whom the legal system permits to perform a function that is in principle reserved to the State.’ 
In further extending this concession to, inter alia employees, agents and advisors  , it was felt that if such was to be excluded from the Act, it would most likely influence parties to choose other jurisdictions as ther seat of arbitration, where their immunity is not circumscribed.
In regard to the loss of the “bad faith” provision, it is curious as to why it was dropped during the Committee Stage, and there appears to be no cogent reasons iterated thereto. It is thus arguable that it represents the loss of a necessary safety valve, a need which although untested, acted to preserve the integrity of the decision making process against deliberate abuses of power.
An allegation of bad faith is only to be made where there exists prima facie evidence justifying the allegation, and if there is no reasonable evidence to support the allegation, such an allegation would be struck out as an abuse of process. 
The question at hand considers whether section 22 of the Arbitration Act 2010 represents an improvement over its common law counterpart. Prior to the 2010 Act, neither the common law nor arbitration legislation presented a well defined approach on the issue of arbitrator’s immunity. Its replacement section however is open to criticism
From the point of view of the arbitrator, his position has moved from one it was considered prudent to hold a professional insurance policy so as to protect from risk against any possible changes in the law on the one hand, to blanket immunity on the other. Moreover, the 2010 Act extends immunity to the arbitrators’ agents, institutions, witnesses, barristers, solicitors, and others engaged in arbitrations, whilst the common law only provided immunity for arbitrators.
From the point of the unsuccessful litigant however, it can be argued that they are now faced with an arbitrator armed with a charter for incompetents, who lacks elementary skill, increases costs and delay, and can now carry on in that regard without fear of litigation.  Thus instead of providing a positive motivation to those considering arbitration, it can be argued that the extension of immunity may in fact amount to a turn off. Finally, the section is at variance with the rules of many of the arbitral bodies operating in Ireland, some whom made submissions to retain the “bad faith” provision. 
The net effect of the section is thus dependant on whether you are arbitrator or indeed one of the parties. What is certain though is that the model, which adheres to the best international practice laid down by the ICC has the potential to help attract international arbitration business to Ireland and create a centre of excellence for international arbitration, arguably something which the common law provision could not.
However with a greater level of responsibility, more effort is required from arbitral bodies to develop quality control systems in the training of arbitrators and administration of arbitrations. 
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