The Malta Arbitration Centre will be hosting a business breakfast on Friday to commemorate the 20th anniversary since the coming into force of the Arbitration Act. George Hyzler, who is serving his third term as chairman of the centre’s Board of Governors, spoke to The Sunday Times of Malta about the centre’s operations and the challenges that lie ahead.
Arbitration proceedings and the time taken for the drafting and delivery of awards is taking longer than should be expected, according to Dr Hyzler.
He points out that in mandatory arbitrations in particular there exists a general tendency by arbitrators and lawyers to apply the same negative practices that produce delays in court proceedings.
“Consequently, we are failing to maximise the full potential that the arbitration option has to offer and the advantages of speed, cost-effectiveness and flexibility are being perceived as drawbacks,” he says.
Dr Hyzler explains that the Malta Arbitration Centre was specifically set up to promote, encourage and facilitate the settlement of disputes through arbitration. Arbitration has long existed in our law, he says, however the need was felt to have a specific legal regime on arbitration which would adopt existing international legal conventions and the setting up of an institutional structure to promote Malta as a centre for international arbitration, to provide support services for the conduct of both domestic and international arbitrations and to regulate the recognition and enforcement of arbitral awards.
“Perhaps one of the most significant factors that makes arbitration an attractive proposition is that parties wishing to resolve their differences may appoint by mutual agreement an independent and impartial third party who is well-versed in the subject in dispute and who will hear and determine the issue.
“Another relevant consideration is that arbitration offers numerous other advantages, including confidentiality, which the courts cannot offer. Cost-effectiveness, speed and flexibility are also important factors that make arbitration an attractive alternative to court,” he says.
“Having said that, arbitration should not be seen as an alternative to the court in terms of cost. In fact, the advantage of cost-effectiveness should not be taken to mean that arbitration proceedings are necessarily cheaper than court proceedings; however, if arbitration proceedings are well managed, then yes, arbitration proceedings may result in a more cost-effective option”.
Dr Hyzler stresses that arbitration decisions are as legally binding as court judgements. An arbitral award, once registered with the centre, constitutes an executive title and thus can be enforced in the same manner as a court judgement. In fact, arbitration awards can be enforced internationally even more effectively than court judgments.
Arbitration decisions are as legally binding as court judgments
Foreign arbitration awards, namely awards delivered by arbitral tribunals outside Malta, can be recognised and enforced in Malta. This is the result of Malta’s accession and ratification of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards [1958 New York Convention], which is contained in the Second Schedule to the Arbitration Act.
“Speed, however, remains a major challenge,” he says.
Beyond the issue of certain practitioners who have succeeded in transposing bad court practices into arbitration proceedings, the introduction of the right of appeal in 2002 has also caused delays as arbitration proceedings would find themselves caught in the court timetable, he explains. Statistically, only about 2.5 per cent of the cases filed with the centre since its inception have gone to appeal stage. However, in recent years, the number of appeals against arbital awards has increased slightly. One can appeal against awards on points of law only in voluntary arbitrations, and on points of fact and of law in mandatory arbitrations.
“The introduction of mandatory arbitrations in certain types of disputes has absorbed the centre’s capacity and detracted from its ability to fulfil its intended role as a promoter of Malta as an international centre of arbitration. That idea was ambitious, but is still achievable. I am confident that Malta has the potential to position itself as an international centre of arbitration.
“As is the case with new initiatives, the centre needed time to gain experience and expertise; however, I can safely say that today, the centre, albeit with its limitations, is providing a reliable and efficient service to users.”
He says that looking ahead, he feels that the recent increase in the filing of international cases with the centre is very positive.
“However, although the legislative framework is there – Malta is a party to a number of international conventions on arbitration – the centre needs to strengthen its staff complement. At present, the government’s annual subvention falls short of covering the staff and administration costs. Discussions are ongoing for the restructuring and expansion of the centre’s premises and there are also plans for the implementation of online technology in dispute resolution practices, which should also prove beneficial.”
The 20th anniversary business breakfast on Friday is entitled ‘Arbitration in Malta: A Critical Analysis’. It will be held at the Casino Maltese, Valletta, from 9 to 11am and will include a speech by Malta Arbitration Centre registrar Fiona Galea Farrugia on the topic ‘Advantages of arbitration: Are we maximising the full potential’, and a talk by lawyer and arbitration practitioner Antoine Cremona on the topic ‘The complex relationship between arbitration and the courts in Malta’.
To attend the event one may send an e-mail to info@mac.com.mt.