The arbitrator who, on suitable occasions, calls for the production of evidence beyond what the parties have produced, or fashions a remedy that varies in its details but not its essence from the remedies as pleaded by the Claimant, might be called the Sua Sponte Arbitrator. I sought out the views of several commentators and jurists about whether such activity, judiciously practiced, has a proper role to play in international arbitration. Here are some results (boldface and italic type upon quoted material is my emphasis):
Phillip Landolt, in Arbitrators’ Initiatives to Obtain Factual and Legal Evidence, Arbitration International Vol. 28 No. 2 (2012): “[I]t may be considered a general principle…” that arbitrators have “a power … to take initiatives to obtain factual and legal evidence. … The simple reason for this is that, as a general rule in arbitration, the arbitrators are masters of the procedure, except where the parties agree otherwise – and generally they do not – and there [are] usually no adverse legal consequence of arbitrators taking these initiatives.”
Phillip Landolt, in Arbitrators’ Initiatives, supra: “Usually, arbitrators’ interventions [regarding gathering of evidence] will upset the expression and operation of party autonomy in an international arbitration. The answer is, therefore, that in principle arbitrators should not so intervene, and they should only do so where the free operation of party autonomy in an international arbitration will in particular circumstances fail to achieve the benefits which party autonomy achieves as a rule, or where other values of similar importance require expression.”
Phillip Landolt, in Arbitrators’ Initiatives, supra: “[S]pecial circumstances may exist in the individual arbitration where the arbitrator may legitimately perceive that her role goes beyond mere dispute resolution. In such cases, there may be justifications for a more pro-active role for arbitrators in seeking to fulfill those other goals.”
Pierre Mayer, in The Arbitrator’s Initiative: Its Foundation and Its Limits, ASA Special Series No. 45 (2016): “It seems to me that, in international arbitration, it is generally accepted, and even expected, that arbitrators enjoy at least some power of initiative; the parties do not wish them to remain passive when they realize that their award risks not being in conformity with justice, in an exacting sense…. I personally think that, provided that arbitrators give an opportunity to both parties to react to their suggestion, they should be free to explore the avenues which they think might lead them to a better understanding of the case. Their intention is not to help a party, but to find the truth; they are not being partial. If the result is that the truth is is favour of one party, so be it.”
Paul Friedland, in The Arbitrator’s Initiative: When, Why and How Should It Be Used, ASA Special Series No. 45 (2016): “There is no controversy about whether arbitrators have the power to call sua sponte for the production of evidence. They do. … Whether arbitrators should take an activist or deferential role will naturally turn in part on the nature of the issue as to which evidence is perceived to be lacking…. Although the exercise by arbitrators of their power to call for evidence on undeveloped issues can be seen as an activist or intrusive exercise with respect to the ordinary operation of the burden of proof, in another sense, where the issue risks to simmer and to affect the arbitrators’ award, raising it gives control back to the parties.”
The Supreme Court of California, in Advanced Micro Devices v. Intel Corp., 9 Cal.4th 362 (1994): “Arbitrators are not obliged to read contracts literally, and an award may not be vacated merely because the court is unable to find the relief granted was authorized by a specific term of the contract…. The remedy awarded, however, must bear some rational relationship to the contract and the breach. … Where the damage is difficult to determine or measure, the arbitrator enjoys correspondingly broader discretion to fashion a remedy.”
Professor Charles H. Brower II, in Neglected, Perplexing, Unpredictable: Remedies in International Commercial Arbitration, 102 Nebraska L. Rev. 485, 504 (2024): “There is some support in the literature and in case law for treating prayers for relief as placing limits on the tribunal’s remedial powers. For example, [Professor and prominent arbitrator Gary] Born cites French, Swiss U.S. case law for the proposition that courts can vacate awards where arbitrators have granted remedies ‘fundamentally’ different than requested by either party. But citing a handful of Swiss and U.S. cases, [Gary Born] hastens to add that tribunals have the discretion to award remedies that differ ‘materially’ from the relief requested by the parties, as well as remedies that neither party has ‘expressly’ requested, provided that the remedies awarded are ‘subsumed within or reasonably related to [the remedies] requested by the parties.’”
The Ontario Superior Court of Justice (Kimmel, J.) in Mattamy (Downsview) Limited v. KSV Restructuring Inc. (Urbancorp), 2023 ONSC 3013: The trial court in Toronto declined to find than an arbitrator exceeded powers by raising a “New Issue” not addressed in the parties’ submissions, concerning calculation of damages. The New Issue concerned the date on which certain gross receipts were considered to have been received, where the consulting fee in dispute was a percentage of the gross receipts. The Court held that the entitlement to the consulting fee and the mechanics and timing of payment were issues identified in the pleadings, such that the New Issue “introduce[d] a new point of interpretation” but not a new issue that the parties had not submitted to the arbitrator.
The U.S. Court of Appeals for the Fifth Circuit, in Timegate Studios, Inc. v. Southpeak Interactive, L.L.C., 713 F.3d 797 (2013): “[T]he arbitrator’s selection of a particular remedy is given even more deference than [her] reading of the underlying contract….The remedy lies beyond the arbitrator’s jurisdiction only if there is no rational way to explain the remedy handed down by the arbitrator as a logical means of furthering the aims of the contract….[T]he question of an arbitrator’s remedial power hinges upon the aims, wording and purpose, and essence of the underlying agreement.”
