Prerequisites of a Valid arbitration under Maltese Law
Dr Maria Chetcuti
Cauchi. All Rights Reserved.
has been defined as a mode of settlement by referring a dispute to a tribunal of
the parties’ own choice without them having to resort to a court of law.
Arbitration as an alternative means of dispute resolution is not alien to
Maltese law. The aim of successive governments has always been to reduce the
burden of cases encumbering Maltese Courts, hence to strive to find a substitute
for the customary mode of dispute settlement.
Yet, at the outset, one must admit that the development of the institute of
arbitration in this country has been less rapid than in our European
reasons for our dragging of feet include the inadequacy of the domestic legal
regime regulating the institute and the absence of a body which could promote
arbitration and support litigants in the conduct of arbitral proceedings. These
deficiencies have been addressed by the Arbitration Act of 1996.
Under this new piece of legislation, the legal framework for arbitration has
been established and an overseeing institution has been set up.
this article, two of the legal prerequisites for an arbitration to be successful
are discussed, namely arbitration agreements and the filing of the notice of
arbitration with the Malta Arbitration Centre.
arbitration agreement is “an agreement by the parties to submit to arbitration
all or certain disputes which have arisen or which may arise between them in
respect of a defined legal relationship, whether contractual or not.
An arbitration agreement may be in the form of an arbitration clause in a
contract or in the form of a separate agreement.” Such is the definition of
‘arbitration agreement’ provided by Article 7 (1) of the UNCITRAL Model
Law on International Commercial Arbitration
to which the Malta Arbitration Act refers.
arbitration agreements are generally divided into two types. The first type,
which is the most common, is the clause inserted in a contract by which the
parties consent to submitting any future disputes (under that particular
contract) to arbitration. This pre-dispute form of arbitration agreement is
known as an arbitration clause. The
second type of arbitration agreement is one whereby the parties to an existing
dispute agree to submit such existing dispute or disputes to arbitration. This
post-dispute form of arbitration agreement is sometimes referred to as a
‘submission agreement’ or ‘ad hoc’ submission.
to the enactment of the 1996 Act, due to the absence of specific provisions in
Maltese law on arbitration agreements, considerable uncertainty as to the real
nature of arbitration agreements prevailed. This uncertainty was completely
contrary to the general principle that the arbitral process should be regulated
by unequivocal rules. Under the present Act, our Courts of Law have no
competence to decide matters which are subject to arbitration and
therefore, the whole arbitral process must satisfy a number of legal
criteria to make it worthy of recognition by the State.
Hence, the importance of the conditions which ensure the legal
recognition of an arbitration agreement, in the absence of which, the arbitral
process would be deemed invalid.
law requires that the arbitration agreement be in writing. An arbitration
agreement denotes a renunciation of one’s right to normal recourse to the
Courts of Law. Arbitral agreements concluded verbally are more difficult to
prove than an arbitration agreement reduced in writing.
Thus, the written form is essential not so much as a condition for the
validity of the agreement but as proof of the obligation itself. However, the
law also considers references to arbitration clauses contained in other
documents as constituting a valid arbitration agreement.
7 of the UNCITRAL Model law gives a wide interpretation to the concept of an
arbitration agreement, including advanced communication devices – “an
exchange of letters, telex, telegrams or other means of telecommunication which
provide a record of the agreement”. The phrase “other means of
telecommunication” seems to include any electronic recording, even computer
recordings. However, it is important that the entire agreement is contained in
is also essential that both parties accept the arbitration agreement by means of
a positive act. Failure to respond to a party’s claim of an arbitration is not
tantamount to the acceptance of such arbitration agreement. On the other hand,
an exchange of statements of claim and defence in which the existence of an
agreement is alleged by one party and not denied by another constitutes a
confirmation of the existence of an arbitration agreement.
Therefore if the respondent fails to refer to the arbitration agreement
when responding to a claim and he fails to deny the arbitration agreement, then
such agreement is deemed to be valid.
in any other contract, the parties signing the contract that contains an
arbitration clause, have to have the capacity to enter such deed, otherwise the
agreement would be invalid. Matters of personal civil status comprising
questions of personal separation and annulment of marriage cannot be settled by
means of arbitration.
of the Notice with the Centre
Act creates an institution vested with a number of powers and responsibilities
relating to the running of arbitrations. This authority is known as the Malta
Arbitration Centre (MAC) and it has defined powers which are vital to a proper
functioning of the whole arbitral process. An arbitration in Malta will not be
valid if it is not carried out under the auspices of the MAC. The introduction
of this requisite in our law has resulted in the ‘institutionalisation’ of
the whole process. Prior to the enactment of the present Act, it was sufficient
to register an arbitral award in Court for the arbitration process to be deemed
it is at this stage that the necessity to acknowledge the overseeing authority
of the MAC emerges. The law requires the initiator of an arbitration, i.e.,
the claimant, to file
the relative notice of arbitration with the registrar of the MAC and this
same notice shall be transmitted to the other party, the respondent.
It is of the utmost importance to comply with this requirement as failure to
submit such notice to the MAC would render any procedure throughout such
arbitration and any award pursuant thereto null and void and unenforceable.
Dr Maria Chetcuti
Cauchi. All Rights Reserved.