The opportunity of selecting arbitrators to decide on a conflict in a final and binding manner is a special feature of arbitration. It allows parties to choose business-savvy practitioners or experts in a particular discipline to decide their dispute.
Arbitral tribunals are usually composed of a sole arbitrator or of three arbitrators. Where a sole arbitrator is to decide on the dispute, he or she is usually nominated by the parties in a joint manner. Where three arbitrators are to decide on the dispute, each party will nominate a co-arbitrator. The third arbitrator, known as the chairperson or presiding arbitrator, is then usually nominated by the two co-arbitrators in agreement, or, in some cases, by the arbitral institution.
Where parties cannot agree on a candidate to act as a sole arbitrator; or where they are supposed to nominate a co-arbitrator but fail to do so, the managing arbitral institution will act as an appointing authority and choose the arbitrators to conduct the proceedings. In ad-hoc proceedings, resort to state courts is necessary in these circumstances, for lack of an arbitral institution. This can significantly delay the setting in motion of the proceedings.
For multi-party arbitral proceedings, the rules on constitution of the arbitral tribunal may vary. Where two or more parties which are on the same side of the dispute fail to agree on a co-arbitrator, the arbitral institution my have the power of disregarding any nominations previously made by the other party (or parties) and appoint all three members of the tribunal.
It should be noted that, while the parties are free to nominate the sole arbitrator or the co-arbitrators, this nomination is subject to confirmation by the managing arbitral institution. Only after the institution has confirmed the nomination, the constitution of the arbitral tribunal will take place. An issue that sometimes arises are objections to nominations based on alleged conflicts of interest.
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