Establishing Waiver through Conduct in Scottish Arbitration: Analysis of Arbitration Appeal No 2 of 2022 [2023] CSOH 68

Introduction

Arbitration Appeal No 2 of 2022 ([2023] CSOH 68) adjudicated by the Scottish Court of Session represents a significant examination of the principles surrounding waiver of rights within the context of Scottish arbitration. The petitioner, represented by MacColl KC of Currie Gilmour & Co, contested the Part Award issued by an Arbitrator on 12 April 2022, alleging legal errors under rules 69 and 70 of the Scottish Arbitration Rules. The core dispute centered on whether the petitioner had effectively waived its right to advance certain claims based on prior conduct and correspondence. The respondents, Webster KC and Davidson Chalmers Stewart LLP, also challenged the same Part Award in related proceedings, highlighting conflicting interpretations of waiver within arbitration proceedings.

Summary of the Judgment

Lord Richardson delivered the opinion of the Outer House, ultimately rejecting the petitioner’s challenge to the Arbitrator's Part Award. The judgment upheld the conclusion that the petitioner had waived its right to advance specific claims, primarily based on its conduct and correspondence. The court found that the petitioner’s actions, including agreeing to dispose of the first arbitration and limiting the arbitration to expenses, constituted a voluntary, informed, and unequivocal abandonment of certain rights. The decision extensively referenced precedents to support the inference of waiver from the petitioner’s conduct rather than explicit declarations. Consequently, the petition was refused, and all arguments in favor of the petitioner were dismissed.

Analysis

Precedents Cited

The judgment extensively referenced several key precedents to underpin its reasoning on waiver:

City Inn Limited v Shepherd Construction Limited (2011 SC) 127: This case provided authoritative propositions on waiver, emphasizing that waiver can be constituted by either express language or inferred from conduct, requiring an objective assessment of the facts.
Evans v Argus Healthcare (Glenesk) Ltd: Applied the principles from City Inn, reinforcing that waiver does not necessarily require explicit forfeiture of rights but can be inferred from actions indicative of abandonment.
Millar v Dickson: Although a criminal case, Lord Bingham of Cornhill’s opinion in this case highlighted that waiver involves a voluntary, informed, and unequivocal relinquishment of rights, providing a broader understanding applicable to the arbitration context.

Legal Reasoning

The court's legal reasoning centered on the interpretation of waiver within the framework of the Scottish Arbitration Rules. Key aspects include:

Inference from Conduct: The court emphasized that waiver need not be explicit. Instead, it can be inferred from a party's conduct, aligning with Lord Macfadyen’s propositions that waiver can be a matter of inference from the actings of the party.
Objective Assessment: The determination of waiver was based on an objective examination of the petitioner’s actions against the factual background, ensuring that the waiver was voluntary and unequivocal.
Consistency in Arbitration Procedure: The court upheld the Arbitrator’s decision to require evidence on how the respondents conducted themselves post-waiver, distinguishing between the petitioner’s waiver and the respondents' conduct, thereby maintaining procedural consistency.

Furthermore, the court dismissed the petitioner’s arguments regarding the lack of clarity and inconsistency in the Arbitrator’s decision, reinforcing the Arbitrator’s authority and the reasonableness of his conclusions.

Impact

This judgment has significant implications for future arbitration proceedings in Scotland:

Strengthening the Interpretation of Waiver: Courts may more readily infer waiver from a party’s conduct, even in the absence of explicit declarations, provided the actions meet the criteria of being voluntary, informed, and unequivocal.
Emphasis on Procedural Consistency: Arbitrators are affirmed in their discretion to require evidence on specific aspects of conduct related to waiver, ensuring thoroughness without overstepping their mandate.
Guidance on Discretionary Grounds of Appeal: The decision clarifies the standards under rules 69 and 70 of the Scottish Arbitration Rules, guiding practitioners on the necessity of demonstrating legal errors and gaining court leave unless parties agree.

Consequently, parties engaged in arbitration must be mindful of how their actions and communications may be interpreted as waiving rights, emphasizing the importance of clear and consistent conduct throughout arbitration proceedings.

Complex Concepts Simplified

Waiver

In legal terms, a waiver refers to the voluntary relinquishment or abandonment of a known right or privilege. In this context, it involves a party choosing not to enforce a particular right they possess within the arbitration process.

Proof before Answer

Proof before answer is a procedural mechanism where one party must provide evidence supporting their claims or defenses before the opposing party can respond. This ensures that the merits of the case are substantiated by evidence early in the process.

Scottish Arbitration Rules (Rules 69 and 70)

These rules govern the appellate process in Scottish arbitration. Rule 69 outlines the grounds for appealing an arbitration award, while Rule 70 specifies the conditions under which an appeal can proceed, typically requiring the agreement of all parties or the leave (permission) of the court to proceed.

Conclusion

Arbitration Appeal No 2 of 2022 [2023] CSOH 68 serves as a pivotal case in delineating the boundaries and applications of waiver within Scottish arbitration. By upholding the Arbitrator’s determination that the petitioner had waived certain claims through conduct inferred from correspondence and agreed procedures, the court reinforced the principle that waiver can extend beyond explicit statements to encompass actions that unequivocally indicate the abandonment of rights. This judgment underscores the necessity for parties in arbitration to maintain clear and deliberate conduct, as even indirect actions can have substantial legal implications. Moreover, it provides clear guidance on interpreting discretionary grounds of appeal under the Scottish Arbitration Rules, ensuring consistency and fairness in the administration of arbitration proceedings. Overall, the judgment enhances the legal framework governing arbitration in Scotland, promoting a balanced approach to resolving disputes while safeguarding the procedural integrity of arbitration awards.