Decision Making in the Context of the Administrative Sanctions Procedure

1. Decision Making in the Context of the Administrative Sanctions Procedure A programme for Inquiry Members of the Financial Service Regulatory Authority 19 and 26 May, 2007 G Brian Hutchinson, BCL LLM DAL FCIArb BL Vice Dean, School of Law

2. Applied Fair Procedures • Heavy Analogies throughout with Arbitral Procedures • But note: • Arbitration final and binding (no appeal) • Arbitration arises through agreement – not by statute;

3. The Conduct of the Process • Introductory • Nothing in Arbitration Acts about Procedure • Flexibility • Confusion and Expense • Agreed Procedure • London Export v. Jubliee Coffee [1958] All ER 494 • EDM Mertens v. Veevoder Import [1979] 2 Lloyds’ Rep 327 - current rules • Agreed Procedures through Conduct • Arbitrator’s Powers under s19 1954 to Direct Procedure – similar powers given to Presiding Member of Inquiry.

4. Stages in a Reference • Commencement • Appointment of Arbitrator • Interlocutory stage • Hearing • Post Hearing/ Pre Award • Award • Post Award

5. Interlocutory Stage • Arbitrator must establish rules of procedure • Pratt v Swanmore • Advisable: Preliminary meeting to: • identify matters in dispute • establish rules

6. Communication with the Parties • Fair Procedures • justice must be done and be seen to be done • Practical Advice • never communicate with one side alone • copy all correspondence to the other side

7. Parties Agreement Issues Fees Representation Reasons Programme for Pleadings Further and Better Particulars Scott Schedule Discovery Security for Costs Conduct of Reference Communications with the Arbitrator Hearing Witnesses Transcripts Oath Opening and Final Addresses AOB The Preliminary Meeting

8. Representation • Choice personal to parties • Arbitrator may warn as to costs • Fairness? • Representation by non-lawyers

9. Pleadings • Pattern • points of claim • points of defence and counterclaim • points of reply to defence and defence to counterclaim • points of reply to defence to counterclaim • Presumptions • if not pleaded can’t be proved (notice) • If not denied taken to be admitted • Further and Better Particulars • may lead to application for amendment of pleadings • potential for delay • Notice to admit facts

10. Discovery and Inspection • General Duty: to Discover documentation etc which may be relevant • Subject to Privilege • Lawyer / Client - privileged • Lawyer / Third Party - if litigation/arbitration contemplated • If admitted privilege is lost • Arbitrator may have to decide on Privilege • Agreed Bundles • Documents are what they purport to be • Identical bundles prepared

11. Order(s) for Directions • Set out the procedure • timetable for exchange of pleadings • arrangements for discovery • Time and venue of hearing • Endorsements • liberty to apply • costs of meeting, order, and applications to be costs in the arbitration

12. Interim Awards • Settlements or agreed matters may be dealt with by way of interim award • Full settlement may be entered - for enforceability

13. The Hearing

14. The Hearing - General • Notification; Venue (Claimant) • Natural justice: Sufficient notice to both sides required • Adjournments • Natural justice: Is it necessary to allow fair opportunity to present case • Proceeding ex parte: • Grangeford Structures v SH Ltd, • notify of intention to proceed • allow reasonable time for response

15. The Hearing Continued… • Privacy • Representation • according to wishes; but note costs • Standard of Proof? Balance of Probabilities • Witnesses & Experts • can be excluded during others’ testimony • Experts owe different duties • Record • notes and tape for personal use • transcript by agreement

16. The Hearing Continued …. • Oath & Affirmation • Challenges to Jurisdiction • Can arbitrator consider? • Rules of Evidence • Must arbitrator adhere? • Own knowledge • Can Arbitrator Rely?

17. Challenges to the Arbitrator’s Jurisdiction • Is there any agreement ? • Is there a dispute? • Is it within the scope? • Is is arbitrable? • Adjourn for case stated?

18. Rules of Evidence in Arbitrations • General Advice: Apply Strict Rules • If agreed, otherwise inadmissible evidence admissible • Henry Bath & Co v. Birgby [1962] 1 Lloyd’s Rep 389 • GKN Gears v. Matbro [1976] 2 Lloyd’s Rep 555 • unless it goes to he heart of the dispute • Walford Baker v McFie & Sons [1915] 113 LT 180 • Natural Justice must be respected • Keighley Maxted & Co v. Durant [1893] 1 QB 405

19. Admissibility of Evidence • If Relevant, then admissible • But: • Hearsay • Opinion • Privilege • Illegally or unconstitutionally obtained • “Without Prejudice Communications” • Query: Defamation possible in Arbitration Proceedings? • Defamation Act, 1961 - “exercising functions equivalent to those of an established court of justice”

20. Witnesses • Are called by parties, not tribunal • Witnesses of Fact • called by the parties • may not refer to notes unless admitted in evidence • Witnesses of Opinion (Expert Witnesses) • Duty is to Arbitral Tribunal (not side) • May refer to notes, Reports etc • Exchange of reports in advance

21. Examination of Witnesses • Oath or Affirmation • Examination in Chief • Cross Examination • Re-examination

22. The Standard and Burden of Proof • Standard: Balance of Probabilities • “more probable than not” • if probabilities equal, not proved • Burden: On party asserting

23. Expert Arbitrators • May rely on own expertise • Eades v Williams 24 LJ Ch 531 • But must allow parties an opportunity to controvert • Fox v Wellfair [1981] 2 Lloyd’s Rep 514.

24. Closing the Hearing • Necessary formally to state