Culture Clash: Appointing a Third Arbitrator
London and Bermuda Newsletter
Bermuda arbitrations often involve disputes between companies based in different jurisdictions and not infrequently the parties are represented by lawyers from different countries. This dynamic can often result in a “culture clash” with the parties having very different views as to the procedures to be followed.
A recent decision of the Bermuda Supreme Court (Kawaley J) provides an insight into what can happen when parties have diametrically opposed views as to the composition of an arbitration panel. In Montpelier Reinsurance Ltd v Manufacturers Property & Casualty Ltd  Bda L.R. 24, the reinsurer (represented by US counsel) appointed a well-known US arbitrator (Charles Foss) and the cedant (represented by London counsel) appointed a well-known UK arbitrator (Bryan Kellett). Although the arbitration clause provided for a “drawing of lots” mechanism in the event that the party-appointed arbitrators were unable to reach agreement on a third arbitrator, Mr. Kellett was unwilling to participate in a lot-drawing which included candidates who did not have experience of Bermuda arbitrations.
International arbitrations with a seat in Bermuda are governed by the UNCITRAL Model law as incorporated into the Bermuda arbitration statute. The Model Law includes a provision enabling the supervising court (here, the Bermuda Supreme Court) to appoint a third arbitrator where the parties and their appointed arbitrators have been unable to reach agreement.
In deciding to appoint an English third arbitrator (Michael Collins QC) the judge expressed the view that, notwithstanding the lack of any express requirement in the arbitration clause, the third arbitrator should have familiarity with Bermuda law and Bermuda arbitrations, stating that “the desirability of such experience in relation to a dispute which potentially raises important Bermuda law issues cannot seriously be doubted”.
This decision provides welcome clarification as to how third arbitrators will be appointed in the event that the parties and their arbitrators are unable to agree. It also provides some guidance as to the type of third arbitrator the Bermuda Court will appoint in a Bermuda arbitration. Just as it is generally believed that English arbitrations should be chaired by an arbitrator experienced in English law and procedures (often an English QC), this decision suggests that, unless the parties otherwise agree, Bermuda arbitrations should be chaired by an arbitrator with experience of Bermuda law and procedures.