Prerequisites of a Valid Arbitration under Maltese Law
Dr Maria Chetcuti Cauchi. All Rights Reserved.
has been defined as a means of settling a dispute by referring it to a tribunal
of the parties’ own choice without these having to resort to a court of law.
This alternative means of dispute resolution is not alien to Maltese law.
The aim of successive governments has always been to reduce the case-load of the
Maltese Courts by striving to find a substitute for the customary mode of
dispute settlement – litigation. Yet, the development of the institute of
arbitration in our country has been less rapid than in its European
reasons for the slow pace of the implementation programme for arbitration
include the inadequacy of the domestic legal regime regulating the institute and
the absence of a body dedicated to promoting arbitration and supporting
litigants in the conduct of arbitral proceedings. These deficiencies have been
addressed by the Arbitration Act of 1996. This Act established the legal
framework for arbitration and set up the necessary overseeing body.
article discusses the importance of two of the legal prerequisites for a valid
arbitration: the arbitration agreement and the notice of arbitration filed with
the Malta Arbitration Centre.
arbitration agreement is defined in the Malta Arbitration Act as “an agreement
by the parties to submit to arbitration all or certain disputes which have
arisen or which may arise between them in respect of a defined legal
relationship, whether contractual or not. An
arbitration agreement may be in the form of an arbitration clause in a contract
or in the form of a separate agreement.”
arbitration agreements are generally divided into two types. The first type is
the pre-dispute form known as an arbitration clause. This is a clause inserted
in a contract whereby the parties consent to submit to arbitration any future
disputes arising under that particular contract. It is a fact that Malta is a
litigious nation and it is believed that the courts are the only adequate means
to settle a dispute. However, this mentality is gradually changing. Arbitration
is being appreciated as an alternative method for settlement outside the courts
and is regarded as equally binding. The efficiency and expediency of the whole
process are its most attractive features. However, all depends on the inclusion
of arbitration clauses in commercial contracts.
second type of arbitration agreement is one in which the parties to an existing
dispute agree to submit such dispute to arbitration. This post-dispute form of
arbitration agreement is sometimes referred to as a ‘submission agreement’
or an ‘ad hoc’ submission. In this situation, the parties have to negotiate
the agreement and a common accord is not always easy to achieve. Hence, it is
recommended that the arbitration clause be inserted upon the drafting of the
original commercial agreement rather than after a dispute arises.
law requires the arbitration agreement to be in writing. An arbitration
agreement denotes a renunciation of one’s right to normal recourse to the
Courts of Law. Arbitral agreements concluded verbally are more difficult to
prove than an arbitration agreement in writing.
Thus, the written form is essential not so much as a condition for the
validity of the agreement but as proof of the obligation itself. The law also
considers references to arbitration clauses contained in other documents as
constituting a valid arbitration agreement.
7 of the UNCITRAL Model law gives a wide interpretation to the concept of an
arbitration agreement. It includes
a wide variety of advanced communication devices – “an exchange of letters,
telex, telegrams or other means of telecommunication which provide a record of
the agreement”. The phrase “other means of telecommunication” seems to
include any electronic recording, even computer recordings. However, it is
important that the entire agreement be contained in that same communication.
parties to the contract must also accept the arbitration agreement by means of a
positive act. An exchange of statements of claim and defence in which the
existence of an agreement is alleged by one party and not denied by another
constitutes a confirmation of the existence of an arbitration agreement.
Therefore if the respondent fails to refer to the arbitration agreement
when responding to a claim and he fails to deny the arbitration agreement, then
such agreement is deemed to be valid.
in any other contract, the parties signing the arbitration agreement must have
the capacity to enter such deed, otherwise the agreement would be void. Also,
one should note that matters of personal civil status comprising questions of
personal separation and the annulment of marriage cannot be settled by means of
of the Notice with the Centre
Act creates an institution vested with a number of powers and responsibilities
relating to the running of arbitrations, the Malta Arbitration Centre (MAC). The
Centre has defined powers which are vital to a proper functioning of the whole
arbitral process. An arbitration in Malta will not be valid if it is not carried
out under the auspices of the MAC. The introduction of this requisite in our law
has resulted in the ‘institutionalisation’ of the arbitral process. Prior to
the enactment of the present Act, it was sufficient to register an arbitral
award in Court for the arbitration process to be deemed binding.
legal provision bestows upon the MAC its status as an overseeing authority. The
law requires the initiator of an arbitration, i.e., the claimant,
to file the relative notice
of arbitration with the registrar of the MAC and this same notice shall be
transmitted to the other party, the respondent. It is of the utmost importance
to comply with this requirement. Failure
to submit such notice to the MAC would render the whole process and any arbitral
award pursuant thereto, null and void and unenforceable. Upon the filing of the
notice, the Registrar of the MAC issues a time-schedule for the filing of the
claim and the defence and fixes a time limit for the filing of such documents
which will run even whilst the parties are choosing the arbitrator. This ensures
that when the arbitrator is chosen, the required documents would have been
already filed and available for use by the arbitrator in the decision-making
process. This makes the institutionalised arbitration procedure more speedy and
efficient … this being the raison d’ętre behind this alternative method of
Dr Maria Chetcuti Cauchi. All Rights Reserved.