Commercial Arbitration and Quorums

 

HOW SERIOUS IS THIS !

Members of the Knesset look askance when the Supreme Court takes what they consider to be a too activist role. This is understandable, as after all, the Knesset members are the elected representatives. There can be no question as to the legitimacy of their decision making in passing laws. Take for example the passing of the Amendment to the Arbitration Law. This was a sincere attempt to bring the law of more socialist times into line with today’s business environment of free trade and big business.

There were five committee meetings to discuss this amendment.

Apart from staff, advisors and arbitration firms in attendance, the Members of the Knesset who participated were as follows:

on the 16^th October, 2007     –  3 members, Menachem Ben Sasson, Amira Dotan and Gideon Sa’ar

on the 18^th December, 2007  –  3 members, Menachem Ben Sasson, Amira Dotan and Gideon Sa’ar

on the 24^th February, 2008    –  2 members, Menachem Ben Sasson, and Gideon Sa’ar  

on the  3^rd june, 2008             –  3 members, Menachem Ben Sasson, Yitzhak Levi and Gideon Sa’ar

On the 29^th October, 2008     –  5 members, Menachem Ben Sasson, Amira Dotan, Avraham Michaeli, Gideon Sa’ar and David Rotem

For the 2^nd and 3^rd reading  of the law on 5.12.2008 there were four Knesset Members present: Mohammad Barakeh   – ( the Speaker ),   Menahem Ben-Sasson,  Colette Avital,  Reuvan Rivlin

The meeting closed at12.36 AM. Happily for the promoters of the Amendment to the Arbitration Law,  the protocol does not include the results of the voting. (www.knesset.gov.il/plenum/data/06566208.doc)

There is no need for a Quorum at Knesset committee meetings or the Knesset plenum.

Which reminds me.  

MK Ahmed Tibi’s Multiple Personalities

Deputy Speaker Tibi announced that the next speaker would be MK Tibi. Because no other Deputy Speaker was in the building MK Tibi asked Deputy Speaker Tibi if he could have special permission to give his speech from the Speaker’s chair. Deputy Speaker Tibi announced that he authorized MK Tibi’s request and asked that the Knesset pretend that MK Tibi’s request did not come from the Speaker’s chair. Justice Minister Ya’akov Neaman asked Deputy Speaker Tibi if this would cause a conflict of interest. Deputy Speaker Tibi agreed it would, he said he had considered delaying the motion until another deputy speaker arrived, but because it was a special day, the world cup semifinal, he decided against it. MK Shai asked Deputy Speaker Tibi what would happen if MK Tibi caused a disruption. Deputy Speaker Tibi responded that if MK Tibi caused a disturbance that he would call MK Tibi to order and remove him from the plenum. MK Tibi started his speech by thanking the Deputy Speaker. At the end of his speech Deputy Speaker Tibi thanked MK Tibi for not going over his time limit. (knessetjeremy.com/…/knesset-day-31)

Daphna Kapeliuk’s Advice and the Different Standards of Justice

 

To no avail,  Daphna Kapeliuk advising the Knesset Constitution and Law Committee committee on the Amendment to the Arbitration Bill

Daphna Kapeliuk 

Thank you for inviting me. When I worked with the Justice Ministry on the preliminary bill they took a different approach. When it came to arbitral proceedings, they sought to involve the court to some extent.

Compared to the situation inEngland,Switzerland,Franceand other European countries, our arbitration is unpopular.   Lawyers have grave misgivings about this law. In my opinion, it is a mistake to state that an arbitrator’s award cannot be the subject of broad judicial review. Comparatively, the judicial review of arbitration awards inIsraelare the most restricted that exist. In a study I carried out, there are none that are so restricted. There is virtually no intervention after an award is made.

Gideon Saar

What sort of intervention can there be during arbitration?

Daphna Kapeliuk

Directing the arbitrator, providing temporary remedies, giving the arbitrator injunctions.  In other countries, the court grants the right of appeal, one can chose or give up the right of appeal – but that doesn’t exist here.

In a ruling by Justice Rubinstein, he claims that because there is no appeal against an award, litigants are frightened to use arbitration. His suggestions do not rule out appeals to the court. This Bill doesn’t even mention this possibility.

Chairman Menachem Ben-Sasson

It doesn’t mention it. We have decided that we don’t want the court.

Daphna Kapeliuk

I am here to try to explain why it is worth thinking about this possibility, and not dismiss it out of hand. Litigants don’t fully trust arbitrators. Many business litigants don’t turn to arbitration. Justice Shtruzman, Justice Rubinstein and other judges claim, though not empirically, that litigants are frightened of using arbitration because there isn’t any possibility of reviewing the substantive content of an arbitration decision. As this is the situation, they prefer the court, but this loads the courts. 

A study on this topic showed that one of the litigant’s reasons for refraining to turn to arbitration, is the inability to ask the court to review the substantive content of the arbitration decision. Before 1968, this was grounds for an appeal, and the Court was able to review the substantive content of an arbitration decision for a legal mistake in the ruling. This was abolished in the new law of 1968, and now there is no way to challenge a mistake in a ruling unless it is contrary to public policy.

In 1968 the Branzon Committee – then the Arbitration Law Advisory Committee – suggested that the arbitrator should not be subject to substantive law because “the sides would chose a good Jewish person to decide” those were the words of the committee. In 1968, in the spirit of those times, arbitration was between neighbors at the local shop. Now that we perceive arbitration to be commercial, and we want the weighty disputes moved away from the court system because these  disputes use most of the court’s resources, the approach should be different, and the legislators should be responsive to the business sector. The business sector, as I understand it, without checking empirically, is frightened that the arbitrator will make an improper decision, as was the case of Clal Finance and Eli Aroch.  After that arbitration award, Clal Finance said that they would not go to arbitration again. Legislation in other countries is different from the 1968 view of a dispute between neighbors. For example, in all the other laws, the default rule says that the arbitrator will not be exempt from the law, because (arbitration) is seen to be commercial.

[A certain muddying of the waters here regarding non commercial arbitration, so some exchanges have been omitted]

….To try to prevent loading the court, we can just have an opt-in. The parties can agree on an appeal but the appeal has to be authorized, i.e. the court will decide whether it is appropriate or not…

Chairman Menachem Ben-Sasson

But I don’t want to lose what we have achieved in the previous discussions….

 [exchanges – on non commercial arbitration)

Daphna Kopeliuk

…As I see it, this law is unnecessary, as this procedure already exists. The parties can agree to have this special framework today. Secondly, the authority of a replacement arbitrator, and who authorizes his authority, is unclear to me. If you simply want to make this law look more attractive, that’s OK. In my opinion it doesn’t make the law more attractive. It will only be more attractive if the court can repair legal errors.              

    (draft –  from Arbitration Law Committee meeting 2/2008)

Before any comparison can be made as to how other countries are managing  their domestic arbitrations, I thought it wise to check out the subject of user satisfaction. The following, albeit on the subject of international arbitrations, can give us information that is also relevant to the domestic scene.  The key findings are from a  2010 survey based on wide ranging interviews, see:-   http://www.arbitrationonline.org/docs/2010_InternationalArbitrationSurveyReport.pdf

The respondents were general counsel and other corporate counsel from corporations across a range of industries and geographical regions, and a significant number of corporations based in emerging markets.   

The key findings from the 2010 Survey are:

Choices about international arbitration: The law governing the substance of the dispute is usually selected first. 

Choice of the law governing the substance of the dispute: Mostly influenced by the perceived neutrality and impartiality of the legal system

Choice of the seat of arbitration: Mostly influenced by “formal legal infrastructure”, the law governing the contract and convenience. London is the most preferred widely used seat of arbitration.

Choice of arbitration institution: The ICC is the most preferred and widely used institution.

Appointment of arbitrators: Open mindedness, fairness, prior experience of arbitration, quality of awards, availability etc. 

Confidentiality: Confidentiality is not an essential reason for recourse to arbitration.

Time and delay: Disclosure of documents, written submissions, constitution of the tribunal. The parties contribute most to the length of the proceedings but the arbitrators should exert their control.

THE COURT AND ARBITRATION – DIFFERENT STANDARDS OF JUSTICE.

1. Arbitrators to have no constraints, as this would interfere with their autonomy, not constitutional rights or company law, not agreed on procedures or even common sense.

2. Judges to have written ethical rules to help them fulfill their role and  increase the public’s trust in the courts.

The following excerpt is from the Constitution, Law and Judicial Committee, July 2006

The Constitution, Law, and Judicial Committee decided

1. According to the Chairman, the rules will not need the approval of the Constitution Committee
2. The law authorizes the President of the Supreme Court, after consultation with the Minister of Justice, to determine ethical behavior of court judges, in order to establish the rules of ethics to guide judges and raise public confidence in its judges.
3. To make changes to the law that had passed its first reading so that the President of the Supreme court will set the ethical rules of behavior together with a member of the Supreme Court and not this committee.
4. Accordingly the committee acknowledges that the ethics rules will be fixed by the President of the Supreme Court with the assent of a member of its judges after consultation with the Minister of Justice.
5. MK Ben-Sasson: “A person involved in judgment is required to maintain the highest level of personal integrity, norms of behavior and virtue. The responsibility for proper and ethical behavior rests with the judges themselves, in accordance with their obligations to act on the basic principles of the legal system especially the principles of judicial independence, impartiality and fairness. However written ethical rules will guide the judges, help them fulfill their role and increase the public’s trust in the legal system.
6. He said that the eminent position of the Israeli legal system requires a code of ethics. He added that the law would be a model law for other courts to adopt and follow in its footsteps..