Insights

The Small Claims Tribunal felt that the debate as to whether the case should have been referred to arbitration or otherwise gave rise to constitutional implications and held that it was not competent to deal with such issues and for this reason referred the matter to the Civil Court in its constitutional jurisdiction. Anthony Grech v Claire Calleja and Attorney General of the Republic1 makes interesting reading. The Civil Court decision is under appeal to the Constitutional Court, so I will refrain from passing comments or opinions at this stage and simply attempt to reproduce, in summary, the salient features of the judgment.2

The provision of law that gave rise to so much concern provides that in certain traffic collision cases the parties are, “deemed to be bound by an arbitration agreement”, and are, therefore, obliged to refer their dispute to mandatory arbitration.3 The issue that was discussed was whether such a provision violated Art.6 of the European Convention on Human Rights that essentially, amongst other things, sanctions the principle that we are all entitled to a public and impartial hearing by an independent and impartial tribunal set up by law.4 The Court commenced its investigation by stating that, for it to address the question posed, it had to examine whether in such cases “mandatory arbitration” satisfied a party’s right to a hearing by an independent and impartial tribunal as laid down under Art.6. A great deal of emphasis was laid by the court on the words “independent and impartial tribunal”. In interpreting these words the Court referred to various sources and judgments of the European Court of Human Rights5 and held that in order for it to be in a position to decide whether a “tribunal” is independent it had to examine the following issues:

• the manner of appointment of its members and their term of office;

• the existence of guarantees against outside pressures; and

• whether the body presents an appearance of independence.

The Court examined the applicable law and noted that, in cases of “mandatory arbitration”, the tribunal is composed of one arbitrator or, if the parties so desire, by three. If agreement is not reached between the parties on the choice of arbitrator suggested to the parties by the Arbitration Centre, it then will be the Chairman of the Arbitration Centre who will select and nominate the arbitrator. The appointment is made without consulting the parties and that decision is final and conclusive.6 The Court went on to note that the Chairman of the Arbitration Centre is appointed by the Minister of Justice7 for a period of six years. The Court also took note of the fact that the Chairman was eligible for re-appointment once that term came to an end8; that the Minister was also empowered to terminate the appointment of the Chairman in certain circumstances;9 that the Chairmen of the Centre do not have a fixed salary but are entitled to such remuneration and allowances as the Minister may establish from time to time.10 The Court held that these provisions do not sufficiently and objectively guarantee impartiality and independence in cases where the parties do not agree on the arbitrator. The Court came to this conclusion because the appointed arbitrator is selected by the Centre and does not enjoy security of tenure.

The Chairman of the Centre has the discretion to decide whether to appoint a particular person as an arbitrator or not. When one considers that the Centre is under the control of the Minister, the court added, one must necessarily come to the conclusion that the appointment of an arbitrator is not completely independent from the Executive. The Court also pointed out that, apart from the choice of arbitrator, the question whether that person is appointed again in some other arbitration would depend very much on the subjective decision of the Chairman and the Arbitration Centre.

The Court went on to conclude that this meant that the arbitrator did not enjoy security of tenure. The Court also observed that an arbitrator was subject to disciplinary procedures exercised by the Centre. The law also allowed the Registrar of the Centre to interfere in the way an arbitration was run.11 The Court felt that, here again, impartiality and independence was not guaranteed.

The Court referred to an article in Arbitration12 and, drawing from this article, held that arbitration has always been considered not to give the guarantees contemplated in Art.6(1) of the European Convention. Arbitration is only considered to be a valid legal process because the parties have voluntarily chosen that process to resolve their disputes. Unless agreed between them, the parties cannot be denied their right to bring their dispute to court. The Court referred to the argument that access to the courts had not been denied to the parties because they enjoy a right of appeal. It noted, however, that that right of appeal was limited to appeals on points of law, which meant that a party might not have an opportunity to have all aspects of its case heard by a Court.

The presiding judge made it clear that the Court was not against arbitration, pointing out that, prior to being elevated to the bench, he was a member of the Chartered Institute of Arbitrators and that he remains very conscious of the huge advantages that arbitration offers.

However, the whole process, including that of choosing the arbitrator, should be left in the hands of the parties and, when the process or part of it is taken out of their hands, their trust in that process disintegrates; in which case it would have been better had the dispute been left to be decided by the courts, who do offer the trust and the necessary guarantees.

The Court declared the law13 that imposed mandatory arbitration in cases of collision14 as anti-constitutional15 and in breach of Art.6(1) of the European Convention on Human Rights.

1 Anthony Grech v Claire Calleja and Attorney General of the Republic on October 19, 2007

(App. No.11/2007) per Tonio Mallia J.

2 The official judgment is rendered by the Court in Maltese.

3 Arbitration Act Art.15(11) c.387.

4 European Convention on Human Rights Art.6(1).

5 In particular the Court referred to Pieter van Dijk and G.J.H. van Hoot, Theory and Practice

of the European Convention on Human Rights, 3rd edn (Deventer: Kluwer, 1998), p.418; to

the judgments of the European Court of Human Rights Le Compte, van Leuven and Meyere

decided on June 23, 1981, Campbell and Fell, decided June 28, 1984 and Findlay v UK

decided February 25, 1997; and to Paul Sieghart, The International Law of Human Rights

(Oxford: Oxford UP, 1984).

6 Arbitration Act Art.20(3) c.387.

7 Arbitration Act Art.4 c.387.

8 Arbitration Act Art.6(1) c.387.

9 Arbitration Act Art.6(1) c.387.

10 Arbitration Act Art.6(2) c.387.

11 Legal Notice 421 of 2004.

12 Hew R. Dundas, “Recent Arbitration Cases in the English Courts” (2006) 72 Arbitration 272

referring to Weissfisch v Julius [2006] EWCA Civ 218; it also referred to Hew R. Dundas

“The Finality of Arbitration Awards and the Jurisdiction of the Court of Appeal” (2006) 73

Arbitration 127.

13 The relative parts of Legal Notice 279 of 2005.

14 Once the constitutional case had been referred to the Civil Court (in its constitutional

jurisdiction) by the Small Claims Tribunal, the judgment of the Court was necessarily limited

to those collision cases that would have otherwise fallen within the competence of the Small

Claims Tribunal.

15 Violating Art.39(2) of the Constitution of Malta.

This article was first published in ARBITRATION, the international journal of arbitration, mediation and dispute management, Volume 74, No. 2