K/S Norjarl A/S v. Hyundai Heavy Industries Co. Ltd.

Hyundai Heavy Industries Co. Ltd. (Hyundai) (plaintiff) contracted with K/S Norjarl A/S (Norjarl) (defendant) for Hyundai to build a drilling rig for Norjarl. A dispute regarding the contract arose, and the matter was referred to arbitration. The arbitral tribunal was composed of three appointees, who accepted their appointments without any discussion of fees. Each arbitrator entered into a trilateral contract with the two parties, which obligated the arbitrator to conduct his duties with due diligence and obligated the parties to pay the arbitrators. The contract did not contain any terms addressing commitment fees. Hyundai and Norjarl requested that the arbitrators set aside a period of 60 business days, two years in the future, for the arbitration hearing. Two of the arbitrators, Steel and Boyd, agreed to reserve the requested period only if they received part of their payment up front as a commitment fee, which would be paid even if the dispute was settled before reaching arbitration. Hyundai refused, and Norjarl requested to conclude the fee agreement alone with Steel and Boyd. Hyundai objected, which resulted in Steel and Boyd declining. Hyundai filed an action in commercial court seeking to remove Steel and Boyd as arbitrators, arguing in part that the commitment-fee demand constituted misconduct. Norjarl argued that Steel and Boyd should not be removed.