By William Tetley, Q.C.
I had never participated in an arbitration as arbitrator or attorney, when one day in 1982, the phone rang in my office at McGill Law Faculty. It was Andreas Lowenfeld, a distinguished arbitrator and professor at New York University (NYU), Law School, whom I had met ten years before when I was in politics. He was with Patrick Neill Q.C., the Warden of All Souls College, where the Fellows are not obliged to teach but only do research and are the envy of professors all over the world. Neill came on the phone and said “Professor Tetley, we would be honored if you would be chairman of our arbitration panel.” Neill and Lowenfeld had each been chosen as arbitrators by the parties to a very large arbitration and they required a chairman from a neutral country. I said that I would be honored and Neill went on. “Of course, you know the ICC Rules”. I had enough of the politician still left in me to say “Of course.” Neill replied that he would call back in an hour and a half.
I rushed to the McGill Law Library to ask what the ICC was and upon learning that it was the International Chamber of Commerce, in Paris, I asked to see a copy of the Rules. I was told they were on the third floor, but when the Librarian and I arrived breathlessly at the proper shelf, the Rules were missing. I decided to telephone the Montreal Chamber of Commerce and the lady in charge replied that they had copies of the Rules for sale for $4.oo. I said I would be over in a taxi to get them and she replied that she had to go to lunch with here boyfriend. I prevailed on her to wait by offering to pay for the lunch.
I got the Rules, read them in the taxi driving back and found them to be brief, concise and the epitome of common sense.
The phone rang again. By then I seemed to sufficiently understand the procedure for naming the Chairman to an arbitration and the convening of the first meeting, not to expose my ignorance and my appointment was confirmed.
It turned out to be a very large arbitration concerning the construction of airports, air control and air defense systems in seven districts in Saudi Arabia. The main contractor, a giant American company was refusing to pay the principal sub-contractor, a giant Swedish company. Two large American law firms, one in New York and one in Washington, were handling the claim very professionally, but the main contractor was reluctant to pay on time, because it believed that it could not be charged interest under Sharia law of Saudi Arabia, the law of the place of performance of the contract. There were also other important questions one finds in any construction project. My own experience in construction was trivial, consisting of the claim of a friend against a contractor, who had built a defective single-car garage. As it turned out the legal problems were not much different, except in magnitude.
I traveled to Geneva (the agreed place of arbitration), where for three days we had the first meetings of the arbitrators and the parties. Each counsel was backed by a large phalanx of lawyers, company officers and witnesses and it became clear, that if we heard witnesses on every load of cement, and on the construction of the floors and walls of every building, we would spend a lifetime at the hearings. It was therefore agreed that the arbitrators would decide four initial questions – 1) could interest be claimed and if so at what rate? and who was responsible for 2) cost over-runs? 3) for delays? and 4) for changes in specifications?
We also agreed that after the initial decision on the four points of law, we would return to Geneva to decide questions of fact. Each party was to be permitted only three witnesses, who would testify by affidavit and if they wished could give hearsay evidence. Any cross-examination was to be by me (the Chairman).
Sometime later, we three arbitrators met for a week in Montreal in my office at McGill. Neill and Lowenfield were and are first class jurists and by the end of the week were able to agree on all four points of law. The decision was a gem of good sense and was virtually unappealable on technicalities, which is the great bugaboo of arbitration. We held that interest was at London Inter-bank Offered Rate (LIBOR) because the contract had called for New York law “substantive and procedural”. The only real differences between the two arbitators were on style and syntax as Neill and Lowenfeld were also sticklers on language.
When the parties received the interim decision, they settled, as expected. The ICC, for its part was so pleased with the quick and efficient despatch of the arbitration that they wished to name me as Chairman of another ICC arbitration over a petroleum cracking plant in the Near East, that would not crack and was a total loss. One party, which did not want a quick solution to the dispute had named, as its arbitrator, a 90 year old, former member of the International Court of Justice, and the parties had objected to every Chairman suggested by the other side. The party intent on stalling the arbitration objected to me and eventually the ICC imposed Potter Stewart, who had just retired from the US Supreme Court. When he arrived for the first session in Paris, Stewart opened the meeting of assembled counsel, lawyers and company executives with the words: “And what may I ask are the ICC Rules?” The nonagenarian arbitrator, for his part, then said in quavering voice: “I hope we won’t sit in the afternoons.” A London solicitor friend of mine who attended the hearings later told me, that nevertheless, justice was eventually done.
Lowenfeld, as arbitrator in another arbitration, this time in New York over the leasing of planes for United Nations peacekeeping missions in South Africa again suggested my name as Chairman. The other arbitrator was the Dean of Georgetown Law School in Washington D.C. and we three arbitrators were able to agree to a final award on very technical matters, without any errors in the complicated law and bookkeeping, which would have inspired an attempt to appeal. Again the technicalities were left to me (the Chairman) and I avoided disaster by checking and rechecking the mathematics, and of course, the law and the grammar, as well.
Neill, Lowenfeld and I remain the best of friends and have visited and stayed with each over the past twenty years. Neill became Sir Patrick Neill and Vice-Chancellor of Oxford and is now Lord Neill of Bladen. He still arbitrates and appears in Court as counsel in major international litigation.
Andreas Lowenfeld continues to write and teach international law at NYU and to arbitrate major international disputes. He is to give the first John E.C. Brierley Memorial Lecture at McGill on Wednesday March 30, 2005. His title is “Public Policy and Private Arbitrators: Who Elected Us, And What Are We Supposed To Do?”
William Tetley QC, practiced law from 1952 to 1970, in what is now Fasken Martineau, Dumoulin, was in the Quebec National Assembly and as a Minister from 1970-1976 and from 1976 to the present has taught law at McGill University. He is Counsel to Langlois Kronström Desjardins of Montreal and Quebec City and is writing, amongst other things, a book on his experiences in the law.
E-mail: william [dot] tetley [at] mcgill [dot] ca (William Tetley)
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