Approaches to Arbitrators’ Liability: Immunity or Liability?

Abstract

The global economy has turned arbitration into a big business. Historically, arbitration was a special honour rather than a profession, and the arbitrator’s fees were merely of nominal character. In the past few decades, there has been a notable change in the use of arbitration as a dispute resolution mechanism. The increasing number of international commercial disputes has led to a growth in demand for arbitration and consequently a professionalisation of arbitration as a business activity. 
Arbitration has become more complex and time-consuming, often leading to significant arbitration costs, including arbitrator fees and costs. One of the effects of this changing nature of arbitration has been an increase in the parties’ expectations to the arbitrator and the fulfilment of the arbitrator’s task. Since the parties place their trust and confidence in the arbitrator, the expectations to his/her skills, experience and integrity are often considerably high. In the event the arbitrator negligently or fraudulently disregards his/her duties, not only the confidence in the arbitrator will be lost, but the parties might sustain significant economic loss.