One of the advantages of arbitration over litigation is its efficiency and flexibility. However, in our experience, poorly drafted arbitration agreements can render the arbitration process cumbersome. This risk is accentuated in the context of arbitrator appointments in Ad Hoc arbitration.
In Ad-hoc arbitration—where parties administer the arbitration process themselves - the risk of deadlocks in arbitrator appointments is elevated by the absence of an appointing authority in most ad-hoc arbitration agreements and the presence of an unsatisfactory statutory failsafe. While parties have the prerogative to choose ad-hoc arbitration, this choice has significant strategic implications which can be an obstacle to efficient arbitration if poorly handled.
In this article, we explore the peculiar potential for deadlocks in arbitrator appointments in ad-hoc arbitration and recommend some practical strategies to resolve deadlocks.
This piece does not and is not intended to provide legal advice to anybody. It is merely the authors’ views on the topic.
The Deadlock Problem
For Ad-Hoc arbitration under the Alternative Dispute Resolution Act (ADR Act)[1], there is ample room for an obstructive party to frustrate the arbitral process by refusing to appoint an arbitrator or unreasonably frustrate the process for appointing arbitrators if the arbitration agreement is not properly drafted.
Generally, the parties to an arbitration agreement may agree on their preferred procedure for the appointment of arbitrators but where the parties do not contractually settle on a procedure for appointing an arbitrator or a procedure for resolving an impasse on the procedure for appointing an arbitrator, the statutory failsafe would apply. In Ghana, the statutory failsafe for breaking the deadlock relies on party-intervention which complicates the issue where one party remains adamant that they will not cooperate.
The ADR Act stipulates that in the absence of an agreed procedure for appointing arbitrators, the default number of arbitrators is three (3).[2] Out of this number, each party shall appoint one arbitrator, and both party-appointed arbitrators shall appoint the third arbitrator who shall be the chairperson of the arbitral tribunal.[3] Each party is required to appoint an arbitrator within fourteen (14) days from receiving a request from the other party to do so.[4] In the case of the party-appointed arbitrators, there is also a similar fourteen (14) day timeline. If the parties do not meet the timelines, the law requires that an appointing authority make the required appointment upon a request by a party.[5]
In the case of a sole arbitrator, the law prescribes the same solution of an appointing authority when the parties fail to agree on the arbitrator within fourteen (14) days after receiving the request for arbitration.[6] Thus, the statutory failsafe in Ghana invariably relies on the parties, except where there is an appointing authority. Herein lies the problem for ad-hoc arbitration.
[1] Alternative Dispute Resolution Act, 2010 (Act 798).
[2] Section 13 of the Alternative Dispute Resolution Act, 2010 (Act 798).
[3] Section 14(1) & (2) of the Alternative Dispute Resolution Act, 2010 (Act 798).
[4] Section 14 (3) of the Alternative Dispute Resolution Act, 2010 (Act 798).
[5] Section 14(3) of the Alternative Dispute Resolution Act, 2010 (Act 798).
[6] Section 14(4) of the Alternative Dispute Resolution Act, 2010 (Act 798).
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