The House of Representatives will soon start to debate Bill No. 41, a Bill to amend the Arbitration Act and the Mediation Act. The Bill was published in The Malta Government Gazette on 1 December 2009. The amendments to the Mediation Act are prompted by E.U. exigencies intended to transpose into Maltese law the provisions of Council Directive 2008/52/EC of 21 May 2008 regarding mediation in cross-border civil and commercial matters.

In so far as arbitration is concerned, the declared objects and reasons of the Bill comprise updating of ‘the provisions of the Arbitration Act, to allow for the removal of arbitrators and the right of appeal in mandatory arbitrations’. In essence, the Bill is proposing that the Board of Governors of the Malta Arbitration Centre will be appointed by the President of Malta acting on the advice of the Prime Minister. As the law stands today, it is the Minister responsible for justice who tenders such advice. Once it is current practice for the Board of Governors to be Cabinet approved, it really does not make much difference as to whether it should be the Prime Minister or the Minister responsible for justice who should advice the President of Malta as to the relative appointments.

More worrying is the next amendment. As the law stands today, the Minister responsible for justice (and, in the Bill, it will be the Prime Minister) has to select the Board of Governors ‘from amongst persons who appear to him to be qualified by reason of having had experience of and shown capacity in matters relating to international or domestic arbitration, conciliation and the settlement of disputes, international trade, commerce, industry, investment and maritime affairs.’ In other words, not every Tom, Dick and Harry may be appointed on the Board of Governors but only those persons who have had experience of and shown capacity in a number of areas listed in the law.

The proposed amendment will instead empower the Prime Minister to select the Board ‘from among persons who appear to him to be qualified to be so selected’. This seems to be a step in the wrong direction. The qualifications required for appointment on such Board are being wiped out from the law and instead it is the Prime Minister who decides who is qualified or not to sit on the Board. No criteria for appointment will remain enshrined in the law once Bill No. 41 comes into force leaving it up to the absolute discretion of the Prime Minister whom to appoint. Maltese Administrative Law had quite some time ago moved away from the times of absolute power of Louis XIV and his infamous adage L’etat c’est moi’! So the law should continue to distance itself from the negative influence of Louis XIV on administrative law.

Another amendment will empower the Centre to remove an arbitrator who does not perform. Whilst the Bill is proposing that in the case where there is disagreement between the parties as to whom to appoint sole arbitrator, the Chairman of the Centre’s Board has to call a meeting between the parties, the parties will not be involved at all when the arbitrator is removed, even when s/he is hearing a pending arbitration.

Instead of leaving this matter to the parties to decide to remove the arbitrator and appoint a replacement, or at least to request the Centre to initiate disciplinary proceedings against a misbehaving arbitrator, it will be the Centre which in terms of the Bill will decide on this matter without in any way involving the parties in the arbitral proceedings who might be against such a move, or where not all the parties would agree to such a move or where all the parties might disagree with the appreciation of facts carried out by the Centre.

Although the Centre might be right in its evaluation, and this should normally be the case, the real actors involved in the dispute have no role at all in such disciplinary proceedings, not even the right to refer the matter to the Centre for disciplinary proceedings to be instituted against a recalcitrant arbitrator, to put on record their disagreement with the Centre’s decision to institute disciplinary proceedings against an arbitrator, and the right for the parties to the arbitral award to be heard and make submissions, should they so wish, during the disciplinary proceedings. Moreover, the Board may remove an arbitrator from continuing to hear a pending arbitration without the express consent of the parties. It seems that the Bill is forgetting that after all the parties to the arbitration proceedings are the dramatis personae in those proceedings and not the Centre or the arbitrator! What if the parties or one of the parties does not agree to an arbitrator’s removal from hearing his or her case?

The last proposed amendment is to afford a right of appeal, both on a point of law and of fact, from an arbitral award in the case of mandatory arbitration. An exception to this right is where the parties themselves have excluded this right in writing. The provision tries to correct a wrong by adding another wrong in the form of a right to an appeal from an arbitral award: such right distorts the institute of arbitration. First and foremost, in arbitration, it is anathema to allow rights of appeal from arbitral awards; secondly, forced arbitration should be the exception not the rule; thirdly, if an appeal from an arbitral award is to be allowed, it is to be limited to points of law. Unfortunately, this Bill does not even attempt at all to take on board two landmark judgments on arbitration law delivered by the Civil Court, First Hall, by Mr. Justice Tonio Mallia (Anthony Grech vs. Claire Calleja et on 19 October 2007) and Mr. Justice Geoffrey Valenzia (Joseph Muscat vs. Prime Minister et on 29 May 2009) relating to the infringement of human rights provisions in the case of compulsory arbitration. Of course, the Government may argue that Mr. Justice Tonio Mallia’s judgment was reversed on appeal whilst Mr. Justice Geoffrey Valenzia’s judgment is still subject to appeal and that the Constitutional Court is expected to deliver its judgment in April 2010. True as that might be, the Government still has two authoritative pronouncements by two eminent judges declaring the system of mandatory arbitration as running counter to human rights law as contained both in the Constitution of Malta and the European Convention on Human Rights and Fundamental Freedoms. The way how Bill No. 41 tries to reconcile these two court judgments with human rights law is by introducing a right of appeal from an arbitral award both on points of law and on points of fact to the Court of Appeal sitting in its inferior competence.   The whole point which Bill No. 41 is missing and which was pointed out by the two judgments referred to above, is that the juridical nature of arbitration is premised on voluntary not compulsory arbitration. Arbitration has always been considered to be voluntary the world over. Hence any attempt at rendering arbitration compulsory as has happened in Malta since 2004 has distorted altogether the very juridical nature of the institute of arbitration. By granting the parties a right to appeal on both points of fact and law does not even address the problem ably hinted to by the learned judges in their respective judgment. Again, arbitration, by its very nature, does not normally allow for a system of appeal on a point of law let alone extending it also to an appeal on a point of fact. Yet again, Bill No. 41 is moving in the opposite direction of what the institute of arbitration is all about.

The House of Representatives when discussing Bill No 41 should keep in mind the human rights implications of this Bill. From a human rights perspective the Bill’s provisions do not address the points raised by the Civil Court, First Hall, in these two judgments. Perhaps the time has come for Government to ensure that human rights are respected also in practice. Bill No. 41 gives the Government the golden opportunity to do so.  

Prof. Kevin Aquilina

17.02.10

Prof. Kevin Aquilina is Associate Professor and Head of the Department of Public Law, Faculty of Laws, University of Malta.