Lloyd's Maritime and Commercial Law Quarterly
TIME NOT OF THE ESSENCE IN NOMINATING ARBITRATOR
R. G. Ashworth, of Messrs
Haight, Gardner, Poor & Havens, New York.
A few United States decisions have considered the effect of arbitration provisions (e.g., Exxonvoy 1969 Clause 24, Shelltime 3 Clause 40) empowering a party to name a second arbitrator if the other party has not named its arbitrator within a specified number of days after receiving a demand for arbitration. United States Courts hold that the right to choose one’s own arbitrator is a valuable one, Astoria Medical Group v. Health Ins. Plan, 11 N.Y. 2d 128 (1962). The right to arbitration by a panel free of partiality is more important than the right to select a unilateral panel, in the absence of an unreasonable neglect or refusal to name an arbitrator, In Re Utility Oil Corp., 10 F. Supp. 678 (1934), in which the Court held that the time of appointment was not of the essence where there was a mistake as to dates or a good-faith dispute as to the existence of an arbitrable dispute. The same result was reached in Lobo & Co. v. Plymouth Navigation Co., 187 F. Supp. 859 (1960), and Texas Eastern Transmission Corp. v. Barnard, 285 F. 2d 536 (1960), in which the U.S. Court of Appeals for the Fifth Circuit refused to permit a unilateral arbitration where the other party had not designated its arbitrator within the 30-day period provided in the arbitration clause, stating:—
“In our view, the controlling consideration in this case is that, in the provisions of the arbitration agreement relating to the time within which appellant was to appoint its arbitrator, time was not of the essence of the contract”.
In a recent case, Cia. Espanola de Petroleos v. Nereus Shipping [1975] A.M.C. 2421, the U.S. Court of Appeals for the Second Circuit on Dec. 12,1975, reversed a District Court decision approving arbitration before a panel unilaterally named by an owner after timecharterer’s guarantor insisted it had not agreed to arbitrate. The Court of Appeals stated its belief “that it is important that each party have its own representative” and directed that arbitration be held before a five-man panel, with arbitrators appointed by owner, charterer, and guarantor. No time limit for the appointment of arbitrators was involved in this case, however.
In another as-yet-unreported decision, Arbitration between Buques Centroamericanos and Akti Comp. Nav., the U.S. District Court for the Southern District of New York on Jan. 16, 1976 strictly enforced contractual (Exxonvoy 1969) requirements as to service of notice of demand for arbitration, refused to permit a unilateral arbitration, and citing the above-summarized decisions, directed arbitration before arbitrators appointed by each party:—
“Even if Buques had delayed a few days beyond the 20 day deadline for appointing its arbitrator, in light of its good faith efforts to comply with the substance of the arbitration agreement, that delay would not necessarily preclude it from exercising its right to appoint a second arbitrator. In an arbitration agreement in which time is not of the essence, the failure of one party to appoint his arbitrator within the exact period specified in the agreement will not deprive him of his right to a fair and impartial panel selected by both parties”.
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