I take issue with the wording of the standard clauses promulgated by the various arbitration institutions. I’ve written about shortcomings in the American Arbitration Association’s standard clause (see this 2010 article), but the same problems are on display in others.
That’s not surprising—most drafting is poor, so why should arbitration clauses be any different? The standard clauses are all short, so it wouldn’t take much to fix them. I have no compunction about fixing them when I use them in my contracts.
But I didn’t write this post to rag on the arbitration institutions. Instead, I have a challenge for MSCD readers. The arbitration institutions recommend that you supplement their standard clause by specifying, among other things, the number of arbitrators. Assuming you’re appointing three arbitrators and not one, here’s what the International Center for Dispute Resolution recommends:
The number of arbitrators shall be three.
And here’s what the International Bar Association recommends:
There shall be three arbitrators.
We can do better than that. I invite you, dear MSCD reader, to suggest, in the comments, what category of contract language should be used to express this idea and how you would express it.
And no verb-structure bingo, please. In other words, don’t just state your version of this sentence. I’m less interested in that than I am in encouraging a process by which you first consider the kind of meaning you’re looking to communicate—in other words, what category of contract language would be appropriate. The verb structure you use would follow from that.
I’ll do the first part for you. See the shall in the two versions above? Each fails the “has a duty” test—you can’t replace shall with has a duty and have those sentences make sense. So we need something else. For all I know, maybe shall would work, but with a different structure.
So have at it! In a couple of days I’ll offer my version.
Update 14 May 2017: For many of you, this post brought to mind the Holy Hand Grenade bit in Monty Python and the Holy Grail, so here it is.
Update 23 May 2017: Sorry for being slow to chime in myself, but I’ve been on the road. I particularly enjoyed my stay in Gastroenteritis-land. But I knew you would play well together in my absence.
Let’s consider the options.
Language of performance? Nah. No action is being taken on signing the contract. Instead, the size of the panel is being specified. Using language of performance for this would be sort of like saying The parties hereby establish New York law as the governing law.
Language of policy? Nah. Saying The arbitral tribunal will consist of three arbitrators suggests that it’s not possible for a different number of arbitrators to be appointed, which isn’t the case. You’d have to say something like The required number of arbitrators is three, which is awkward. (And the word required is redolent of another category of contract language. Hmm, foreshadowing ….) And saying A valid arbitral tribunal will consist of three arbitrators suggests the bizarre notion of a rogue tribunal with too many or too few arbitrators.
A condition? Nah. You could say that arbitration will be valid only if it’s before a panel of three arbitrators, but that suggests, again, the possibility of a rogue arbitration happening with a different number of arbitrators.
If you rule out language of discretion, prohibition, intention, and recommendation, you’re left with obligation. What about language of obligation imposed on the subject of the sentence? Nah: even if the arbitrators are all party-appointed, the arbitral institution would have a role to play if the parties are unable to agree. So shall is out.
Language of obligation imposed on someone other than the subject of the sentence? In other words, The arbitral tribunal must consist of three arbitrators. This provision speaks to the parties and the arbitral institution, a nonparty. It just says, without specifying consequences, that arbitration with a different number of arbitrators won’t work. I’m OK with that.
I like Vance’s suggestion that you consolidate deal points. You could indeed add before a panel of three arbitrators to the provision specifying arbitration. But that would require too much surgery to the model arbitration clauses of the various arbitral institutions. I find myself proposing enough surgery as it is.
I’m sure you’ll let me know if I’m mistaken!
47 thoughts on “Fix This: “The Number of Arbitrators Shall Be Three” [Update: I Have My Say]”
I’d say either an obligation imposed on the proceeding, so a “must”; or a policy regarding possible future event, so a “will + infinitive.”
I like the “will” bc “must _____ three arbitrators” seems like it might need an “exactly” in there. So how about:
The arbitration will be conducted by three arbitrators.
Three arbitrators will preside over the arbitration.
*insert sad trombone sound*
Your two alternatives are equivalent, the main difference being that the first uses the passive voice FOR SOME UNFATHOMABLE REASON! :-)
Language of policy isn’t for actions by parties or others. It’s for stuff that happens automatically. There’s nothing automatic about how many arbitrators will be present at proceedings.
With an effort to avoid overthinking, how about ‘The parties shall select three arbitrators’? ‘To conduct the arbitration’ seems verbose, since what else do arbitrators do?
Imposing an obligation on the parties ignores the essential role of the arbitral institution.
The arbitrators should be three.
Clean and clear.
Since I am not an English speaker I might be all wrong, of course.
But you didn’t specify the category of contract language, as I asked you to. Instead, you played verb-structure bingo. And you got it wrong: should is used to indicate something that’s ideal but not mandatory, so it doesn’t make sense in contracts. If you want to go beyond playing verb-structure bingo, consult my book.
Oh, verb-structure bingo doesn’t sound that bad!
Alas, sometimes it is more important who the arbitrators are than what their number is.
If I ever have to use contract language in English I’ll try to consult your book.
The way you have put arb clauses generally follows the format of “As the exclusive means of resolving any dispute between the parties…a party *may* demand that the dispute be arbitrated pursuant to [organization’s] commercial arbitration rules rules.” It would be easy at that point to insert “An arbitration so convened must be conducted at [situs] before [number of] arbitrators.” That states it as a compliance condition, which is appropriate for a mandatory process. I think “will” is weak here because it’s not an interpretive rule for the contract; it’s a real obligation, but it’s not in so many words imposed directly on the parties. Arbitration rules have provisions for conducting proceedings with one or multiple arbitrators, you’re just specifying here what the parties’ selection is.
I think the passive voice is forgivable under these circs, However, “The demanding party shall specify…” works as to the number of arbitrators, but doesn’t fit as well with the situs, since that really needs to be done up front in the contract.
Agreed, although one could equally insert:
Under those rules, the parties select:
(1) seat of arbitration: Geneva
(2) number of arbitrators: three
(3) language of arbitration: English
Yes, I think Mark has hit it exactly, making the appropriate category “language of performance,” which could be done more discursively than Mark’s list, but which would require a “hereby” before “select.”
See my update!
It seems like an obligation to me.
“The parties must appoint 3 arbitrators to conduct the arbitration.”
Your proposal doesn’t take into account the role of the arbitral institution. See my update.
Language of policy
See my update. By the way, I don’t use the phrase “language of condition,” as conditions are expressed in part by using different categories of contract language.
I think I would specify the details with either language of policy:
“All disputes arising under this agreement must be resolved by a panel of three arbitrators sitting in [location] and complying with the [applicable organization’s rules].”
Or language of obligation:
“The parties shall resolve all disputes arising under this agreement by arbitration before a panel of three arbitrators sitting in [location] and complying with the [applicable organizations rules].”
I think I prefer language of policy because language of obligation might lead a party to believe that they can choose to breach the contract and resolve the dispute in court, weighing out the cost-benefit of doing so. Whether that would actually work, I don’t know, but it seems to me the language policy more clearly limits access to courts.
I would revise your language to state the policy using present tense: “All disputes arising under
this agreement are to be resolved by a panel of three arbitrators from the ___. Jones shall select one arbitrator from the ___ list of member arbitrators, and Smith shall select one arbitrator from the ___ list of member arbitrators. The two arbitrators chosen are then to select the third arbitrator from the ___ list of member arbitrators.”
I think language of policy is intended for things that happen automatically. Arbitration is the essence of not -automatic.
Table 8 in MSCD has several examples of language of policy that don’t happen automatically.
I didn’t see any such examples in Table 8, and Ken says in this very thread that ‘Language of policy isn’t for actions by parties or others. It’s for stuff that happens automatically’. Also, your proposal may be a good arbitration provision overall, but it goes way beyond the apparent task of providing that the number of arbitrators be three. The essence of your proposal seems to be: ‘Three arbitrators are to conduct any arbitrations’. I forget what category ‘are to’ signifies, but it surely has an obligatory feel to it. Although the duty looks as if it’s on the arbitrators, the indirect or ultimate obligors are the parties, for they cannot by the terms of their contract with each other oblige nonparties.
I’ve thrown is to be and are to be on the scrapheap. They’re mostly used to try to suggest that courts have to behave in a certain way. And if that’s not the intended meaning, use something else.
More generally, you’re being too ambitious; see my reply to Sterling. And see my update.
You’re too ambitious, in that you’re going beyond what the sentence at issue is trying to accomplish. You have to take into account the components of the model clauses promulgated by the various institutions. I don’t think it’s realistic to ignore them. See my update.
I’m going to go with language of obligation.
To bring one or more claims, which arise from this agreement, against the other party, the claimant must submit the claims to a panel of 3 arbitrators.
Citation: MSCD 3.263 through 3.269 and Table 12 (specifically [12-1]).
But the non-restrictive relative clause should be restrictive: “To bring one or more claims that arise from this agreement against the other party, the claimant must submit the claims to a panel of 3 arbitrators.”
That’s actually language of obligation used to express a condition. It’s fine, but it goes beyond the sentence at issue, and it doesn’t take into account how the model arbitration clauses work. See my reply to Sterling. And see my update.
First a point about context. obligation not to sue. No one has an obligation to commence an arbitration. The point of arbitration clauses is that they prohibit lawsuits, bind the parties to the rules of the arbitration, and permit the prevailing party to enforce the arbitration award as a judgment. So, I’ll assume that has been dealt with appropriately by using language of discretion for commencing an arbitration, language of prohibition against filing suit (reading “suit” broadly to include administrative proceedings, etc.), and language of discretion permitting the prevailing party to enforce the award in court.
(I wouldn’t really object to language of obligation obligating the parties to settle by arbitration any disputes properly submitted to arbitration. Language of prohibition and language of obligation are often opposite sides of one coin. I prefer language of prohibition here, because the odds are that the parties start the arbitration and settle along the way. If that’s the case, they both breached the agreement, though I assume neither would ever assert that.)
So then the question is what language (a) binds the parties to the arbitration rules promulgated by the arbitration organization and (b) states rules in addition to those set out by the arbitration organization. These are slightly different flavors, but they remain the same question: how does the contract bind the parties to some rules?
I don’t think it is language of obligation. The parties aren’t truly agreeing to follow the rules of the arbitration.They are simply agreeing to the arbitration award being enforceable as a judgment. For example, if the rules say “thou shalt answer the complaint within 10 days” and you don’t, the remedy is not a new suit for breach of contract. It’s a default award against you. Likewise, if the contract says “thou shalt appoint three arbitrators” and you don’t, that’s not a claim for breach of contract.
This seems to me to be the imposition of an obligation on a non-party. See MSCD 3.105 and example [3-6]. Fundamentally, the language in question is telling the arbitration organization how to run the arbitration. It includes things like “follow your own rules,” “run the arbitration in DisneyWorld,” and “use three arbitrators.” Some of that language may be addressed to the arbitrators, like “render a written, reasoned decision” and “begin the arbitration within 30 days after filing.” Based on that, I would use the modal auxiliary of “must.” And that means my language would be: The [arbitration organization] must appoint three arbitrators to conduct the arbitration.
Running through the other categories, I don’t see how I could use language of discretion or prohibition here.
Language of policy seems tempting at first glance. There are two kinds: rules governing an event and rules addressing scope, meaning, etc. The first seems close. But language of policy is supposed to be automatic. Nothing about an arbitration is automatic.
Language of condition also seems tempting, especially if you use language of obligation to require arbitration (instead of prohibiting suit). Essentially, the language of condition would state what counts as an “arbitration” for purposes of that obligation. So, it would implicitly say something like “for a party to be in breach of its obligation to arbitrate, three arbitrators must conduct the arbitration.” Yuck! That’s not what I’d want to mean. Likewise, one could attach language of condition to the ability to enforce the award. That would implicitly mean something like “the prevailing party may enforce the arbitration award, three arbitrators must have conducted the arbitration.” That is at least closer to the appropriate remedy, but it sure seems like a lot. And a strict condition doesn’t seem like the right approach here; if you used that approach for all the arbitration rules, it would open the arbitration award up to challenge based on procedural defects in the arbitration proceeding. No, thanks.
Language of declaration and belief seem inapplicable.
Language of intention is a little tempting. The arbitration organization is going to run the arbitration however it decides, just like a court would. But language of intention is used when the ability of the parties to establish something as legal fact is debatable. There’s no debate over whether the arbitration organization will appoint three arbitrators if the parties say so.
Language of recommendation seems inapplicable.
So I like language imposing an obligation on a non-party.
I missed language of performance. I get Vance and Mark’s point below about selecting options within the rules. That could equally apply to the rules themselves: “The parties hereby select the AAA’s Rules for Obscurantist Disputes.” But that’s not fundamentally a performance because there’s no effect right now. Granting a license is effective now; purchasing something is effective now. Selecting the rules to apply to an arbitration (that has not been commenced) of a dispute (that has not yet arisen) isn’t effective now. It very much feels like a statement about a highly contingent future. MSCD 3.30 addresses this. Applying that paragraph would result in “When either party commences an arbitration, the parties will be deemed to have selected [whatever].” That seems a long way around the problem.
You have explored the issue the most thoroughly of all the commenters.
Reflecting on your comments, I have come to think that the idea to be put into words has the logical structure ‘if X happens, the parties must do Y’. ‘If arbitration happens, the parties shall use three arbitrators’.
That boils down to ‘language of obligation using a condition’ in MSCD-speak.
The task is confusing because ‘there must be three arbitrators’ leaves the condition (arbitration) implied but unstated.
My second choice is ‘language of policy using a condition’: ‘Purported arbitration by fewer or more than three arbitrators will be void’.
Ken is tardy in weighing in on this one. Jet lag from Kuwait?
So, assuming that there is an arbitration, if there are other than three arbitrators, both parties are in breach? That’s the implication of using language of obligation.
I really think we’re imposing a duty on a non-party: namely the body running the arbitration to ensure that three arbitrators are appointed. My test for this is, if that body was a party, would we hold it to be in breach if it did not do what we told it to do. Here my answer is yes.
Beautiful issues both. I think the answer to your question is yes, if the parties agreed to use three arbitrators but in the event used five, they would both be out of compliance with their agreement with each other.
Whether that’s a ‘joint breach’ would depend upon whether the parties’ agreement with the ‘arb org’ to use five parties operated to amend, supersede, or waive the ‘three arbitrators’ provision of the agreement.
The test would come when the arbitration loser starts looking for ways to invalidate the arbitration result on the grounds of ‘wrong number of arbitrators’.
The result might turn on whether the loser boycotted the five-arbitrator arbitration from the start (ie never agreed to five arbitrators), participated with a reservation of rights (ie never agreed to five arbitrators, but arbitrated before them anyway), or arbitrated without mention of the irregularity.
My problem with your conclusion that ‘we’re imposing a duty on a nonparty’ is that I don’t see how (with limited or maybe no exceptions) an agreement between A and B can oblige C.
I read your test (‘if that body was a party, would we hold it to be in breach if it did not do what we told it to do’) to mean ‘if A, B, and C were all parties to an agreement and C breached the agreement, would C be in breach?’
Obviously yes, but it doesn’t follow that if A and B but not C are parties to an agreement that purports to oblige nonparty C to do something, and C doesn’t do it, C is in breach of the agreement between A and B. That A-B agreement simply doesn’t bind C.
The issue of 3 arbitrators is a bit like ‘Acme shall cause its accountants to perform an audit of the account and send a copy of the results to Widgetco within 30 days after the end of Acme’s fiscal year’.
‘If Acme and Widgetco arbitrate a dispute, they will cause [the arb org] to use three arbitrators’.
That language obliges Acme and Widgetco to join in doing something if an uncertain future event occurs.
Any duty the arb org has will arise from a separate (possibly future) agreement between Acme, Widgetco, and the arb org, to which the obliged arb org is, obviously, a party. The arb org can breach that agreement, but not the one between only Acme and Widgetco.
My mind is open, but I sure don’t like the sound of agreements that impose duties on nonparties, no matter what verb is used.
I think your concerns about language that purports to bind the arbitration organization are common to all language that purports to impose a duty on a non-party. Nonetheless, it is in MSCD, and the task at hand is to apply MSCD.
MSCD provides two ways of handling that situation. The first is what I cited above — use “must” per 3.106 and [3-6] (which is arbitration-related). The second, which I think you would prefer, relies on 3.114 and [3-4c]. It involves requiring one or more parties to “cause” the non-party to do something. Here, you could have a list of the procedural components, something like this:
“The parties shall cause the arbitration organization to conduct the arbitration in accordance with the following procedures:
(a) the arbitration organization must appoint three arbitrators;
however, that second solution runs smack into 3.118, which says not to use “shall cause” to impose obligations on a non-party that is not an instrumentality of one or more parties. It specifically points to [3-6f], in which the language is “The parties shall cause the arbitrator to …” So I think Ken disagrees with your approach there. (In a deal, I would not object to your approach. But this is an MSCD exercise, right?)
I addressed something like your language of policy with a condition, but I typoed it. I addressed it as language of discretion with a condition, with the discretion in question being the ability to enforce the judgment. I think that hits the same point, and I’m somewhat indifferent between them. My version would be something like this —
“A party to an arbitration may enforce the award as a judgment, so long as:
(a) three arbitrators conducted the arbitration;
I still think the most direct application of MSCD is using “must” to impose an obligation on a non-party (see 3.119).
1/ An honor and a pleasure to argue with you.
2/ Ken’s appearance like a deus ex machina, resolving all issues, has been delayed because reasons, leaving the mice longer to play.
3/ I agree that this is an MSCD exercise, but the exercise is how to specify three arbitrators, nothing more. Some proposals go way beyond the boundaries of that exercise. Mine don’t.
4/ I also agree that my concerns about language purporting to bind a nonparty arbitration organization are common to all provisions purporting to bind a nonparty. I disagree that MSCD3 says that it’s possible to do so: ‘[A] person or entity [not] a party … cannot be required to assume a duty’. MSCD3 3.105. I don’t read 3.106 as purporting to let the parties bind nonparties.
5/ Table 3, item [3-6] says ‘The arbitrator must issue the award no later than 20 days after the last day of the hearing’. I admit that leans pretty heavily your way, but I read it to belong in a context like this: ‘If the parties engage an arbitrator, the parties shall provide in the engagement that the arbitrator must issue the award no later than midnight at the end of day 20, where day zero is the last day of the hearing’. The obligation is on the parties to *this* contract to bind the arbitrator in *that* contract to do a thing. The analogy is [3-5d], in which the parties envision future contracts with nonparties and specify what they must contain.
6/ MSCD3 3.114 applies when the ‘active subject or by-agent is incapable of assuming a duty’. The fix is to oblige one or more parties to ’cause’ a thing to happen. That works here (‘The parties shall cause any arbitration to be by three arbitrators’) and that fix doesn’t conflict with 3.118.
7/ I’m not seeing a reference to [3-6f] in MSCD3 3.118. Hope we’re looking at the same editon.
8/ Discretion to enforce an arbitration award only if the number of arbitrators was three seems roundabout, as does language of policy making arbitration awards by fewer or more than three arbitrators void. Neither approach binds the parties to use three arbitrators in the first place, which is the point of the exercise as I understand it.
9/ I always lose at predicting what Ken will do, but I’ll climb out on a limb here and predict that he won’t bless a 3.119 ‘must’ approach, because here it *is* possible to restructure the sentence to bind parties instead purporting to bind nonparties: ‘If the parties arbitrate a dispute, they shall use three arbitrators to do so’. This covers the exercise regardless of whether the parties use an arbitration organization and regardless of what other arbitration rules they specify or use.
4/ I didn’t claim the MSCD says you can bind a non-party. I just said that it described ways of dealing with the situation. I think the best references there are 3.105 and 3.110. No clue why I referred to 3.106.
5/ Presumably, if MSCD was endorsing the approach of [3-5d] in this context, we wouldn’t have [3-6], so I think your reading it that way is not fair to the text. (That’s not saying your wrong; just that you can;t read MSCD to say that you’re right.)
6/ I think literally using “shall cause” with respect to non-party non-instrumentalities is what Ken objects to in 3.117 (though I cited 3.118).
7/ The reference to [3-6f] is in 3.117.
8/ I think whether you choose language of obligation (on one hand) or language of policy or discretion with (in either case) a condition or language imposing an obligation on a non-instrumentality non-party (on the other hand) is really is about remedies. What is the remedy if the parties don’t use three arbitrators? Is it a breach of contract, such that either party can claim damages, such as the cost of the arbitration (and if so, can it only be only by way of arbitration)? That seems silly to me. This language doesn’t seem to be about monetary damages, which is the default remedy for breach of a contractually imposed duty. I think the remedy is when the arbitration will count as being the resolution of the dispute: in short, the remedy revolves around the ability to enforce of the arbitration award. For that reason, I’d steer away from language imposing an obligation on the parties.
I know Ken warns against importing remedies excessively into language (as related to “represents and warrants” for example). But in 3.119, he explicitly warns us to think about remedies in the context of using “must” to impose a duty on a non-party. So I think that implicitly endorses one set of language — using “must” — to set out what the parties expect the non-party to do, then additional language explicitly addressing remedies.
All that said, I’d take your language in a negotiated deal.
So many typos in just one little comment. In particular, the paragraph about language of condition is almost incomprehensible. Here’s what it should say:
Language of condition also seems tempting, especially if you use language of obligation to require arbitration (instead of prohibiting suit). Essentially, the language of condition would state what counts as an “arbitration” for purposes of that obligation. So, it would implicitly say something like “for a party to be in compliance with its obligation to arbitrate, three arbitrators must conduct the arbitration.” Yuck! That’s not what I’d want to mean. Among other things, it means that we’re back to a silly remedy, because this is a condition on a contractual duty, the default remedy for which is money damages. Likewise, one could attach language of condition to the ability to enforce the award. That would implicitly mean something like “for the prevailing party may enforce the arbitration award, three arbitrators must have conducted the arbitration.” That is at least closer to the appropriate remedy, but it sure seems like a lot. And a strict condition doesn’t seem like the right approach here; if you used that approach for all the arbitration rules, it would open the arbitration award up to challenge based on procedural defects in the arbitration proceeding. No, thanks.
Apart from those corrections, I think I have a problem with my original point about technical defects invoking a remedy of no enforcement. The problem is that, as Ken notes in 3.119, there’s the exact same problem with using “must”! So I think you have to address the remedy problem regardless. Therefore, my complaint about using language of condition attached to language of discretion doesn’t really lead to a preference over language imposing an obligation on a non-party.
I too opted for language of obligation with the obligation imposed on someone other than the subject of the sentence. But there’s one thing you missed: it’s standard for the parties to be involved in appointing arbitrators.
And boy, you gnawed on this bone! Excuse me if at the moment I don’t follow all the threads of your various comments.
I am de winnah!
It was fun knocking it around with Wright. You should do more like this, and say ahead of time that you are going to leave them open for a period of time.
Seems like a policy – a “rule that the parties must observe but that don’t, at least expressly, require or permit action or inaction on their part.” The rule is, “The number of arbitrators will be three.” It’s an objective fact. It goes with the lead-in, e.g., “The parties agree as follows: the number of arbitrators will be three.” How the parties come to have three arbitrators is a different matter left to language of obligation. Or, do I need to reread MSCD again?
See my update!
Category: discretion?declaration? Although declaration is simpler, the core seems to be either party may object if the case is handled by panel not composed by three arbitrators. If the case is handled by panel not composed by three arbitrators, no one will be required to compensate.(Not obligation.) And such arrangement will not be done only by words. Therefore, though it takes more words, I will say: Either party may object, if the arbitration panel is not composed by three arbitrators (with or without “,”?) which either party may appoint one, and the third arbitrator will be assigned by two arbitrators appointed by both parties. Sad! too long.
It’s certainly not declaration, as no one is asserting facts. See my update.
I would agree with Charles that it’s a condition. The parties are agreeing to arbitrate disputes arising under the agreement, on condition that such arbitration meets certain criteria.
Check out my update.
Now that you’ve dropped the other shoe, a few comments:
1/ Chris Lemens hit the nail on the head! Kudos.
2/ You did the one thing I bet you would not do, so I’m not buying a lottery ticket today.
3/ The text *the arbitral tribunal must consist of three arbitrators* doesn’t deserve the name ‘language of obligation imposed on someone other than the subject of the sentence’, because there’s no ‘obligation imposed’ on anyone.
4/ I think it was Mark who suggested consolidating deal points, not Vance.
5/ Your version ‘ignores the essential role of the arbitral institution’ because it operates whether the parties use such an institution or not. That’s fitting, because the task set was silent on institutional involvement.
6/ James Murphy’s ‘three arbitrators are to conduct any arbitrations’ didn’t use ‘is to be’ or ‘are to be’, nor did his formulation aim to tie a court’s hands any more than ‘must consist’ does. ‘Is to’, ‘shall’, and ‘must’ all try to bind someone. To my mind, his suggestion is the equivalent of the winning one.
7/ You say, ‘This provision [*The arbitral tribunal must consist of three arbitrators*] speaks to the parties and the arbitral institution, a nonparty. It just says, without specifying consequences, that arbitration with a different number of arbitrators won’t work’. My queries: Isn’t ‘not working’ a consequence, and isn’t the ‘must consist’ formula therefore the functional equivalent of a policy that ‘arbitration with fewer or more arbitrators than three will be void’ (ie ‘won’t work’)?
8/ Aren’t provisions specifying what arbitration arrangements must have for them to ‘work’ (=comply with the contract, be valid) analogous to provisions specifying how an agreement can be amended or shares validly transferred? They’re present agreements about what it takes to make some future and uncertain event or circumstance (=amendment, arbitration, share transfer) effective. *No purported (amendment/ arbitration/ share transfer) will be valid unless (in writing/ conducted by three arbitrators/ after the end of the no-transfer period)*. Same logical structure.
9/ The exercise was fun. Note to self: no poker with Lemens. Full and speedy recovery to you, Ken.
If you are a poker player, let’s meet up the next time we are in the same city.
P.S. Bring cash.
Ken: You say “obligation imposed on someone other than the subject of the sentence,” but isn’t “tribunal” the subject of the sentence? Chris speaks of an obligation imposed on a non-party and refers to MSCD 3.105, which addresses imposing obligations on non-parties. It seems to me that we’re speaking about language of obligation imposed on a non-party, regardless of whether it is the subject of the sentence.
Brian: Kudos to you for seeing the overlooked obvious.
I still don’t understand why it’s ever appropriate to use language of obligation to do anything but bind a party, whether the party is the subject of the sentence or not.
Ken’s 23 May update envisions use of language of obligation, not to bind anyone, but ‘to speak to the parties and the arbitral institution, a nonparty [to say], without specifying consequences, that arbitration with a different number of arbitrators won’t work’.
That prompts two questions:
(1) Why use language of *obligation* to ‘speak to’ parties and nonparties to ‘say’ *nonbinding* things?
(2) If such use of language of obligation is permissible, why should it matter whether any entity thus ‘spoken to’ is the subject of the sentence or not? –Wright
As I noted in my update, “This provision speaks to the parties and the arbitral institution, a nonparty.” In other words, it’s not all up to the arbitral institution. What, if anything, the parties have to do depends on the process they opt for, but one standard option is that each party selects one arbitrator, then those arbitrators select a third. Does that make sense?