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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Introduction
ICC arbitration basically remains the same; its essential characteristics will not change. Yes, it came as quite a surprise to those of us working on the revision that the two most characteristic elements, i.e. the Terms of Reference and the scrutiny of the Award by the ICC Court, both frequently criticized by those of (mostly) limited experience of ICC arbitration, were never seriously questioned, and there were virtually no proposals to discard them, on the contrary! Thus, the main aspects which I have already discussed in my earlier article on the ICC Arbitral Process continue to be valid.1
However, progress has to be made in the ICC court's endeavour to speed up its procedure, to reduce unpredictability and to rationalize the costs. Moreover, all of the provisions of the Rules required a fresh look and had to undergo a very thorough 'conditioning program' and 'fitness test' in order to ensure that they would be up to the most modern standards and thus be fit for the year 2000 and beyond. 'Lean administration' by the ICC and efficient procedure and case management were targets to aim for. The result is impressive; not because of some radical changes or any 'miracle rules' (which do not exist), but because of the many elements which were prudently revised, the totality of which will provide a new and strong vitality for the ICC Rules.2
1. Request for Arbitration, Answer, counterclaim
Under the old Article 3(1) ICC 75 a party had the choice to file a Request for Arbitration either directly or through a National Committee. This choice has been abolished by Article 4(1) ICC 9 8; in future, Requests for Arbitration should be filed directly to the ICC Secretariat in Paris. This will not only avoid possible delays, but will moreover remove the uncertainty regarding the determination of the day on which the case will become pending.
What is required for properly filing a Request for Arbitration? The 1998 Rules no longer require 'a statement of the Claimant's case' (as did Article 3(2)(b) ICC 75), but simply require a 'description of the nature and circumstances of the dispute giving rise to the claims', together with a 'statement of the relief sought including, to the extent possible, an indication of any amount(s) claimed' (Article 4(3)(b) and (c) ICC 98 ). The new wording aims to be as broad as possible in the sense that it does not require a full and detailed 'Statement of Claim'. In fact, already in the past, ICC Requests for Arbitration have sometimes been filed by way of a two-page document highlighting [Page17:] the bare essence of the nature of the dispute, and sometimes by way of extensive memorials of one hundred and more pages together with voluminous documents. Both ways, and any solution between those extremes, may be perfectly suitable under the circumstances, and the new Rules want to make clear that the parties enjoy an unrestricted freedom to adopt the way they prefer, provided only that the minimum amount of information is provided. However, the new Rules are also more precise than the old ones in that they require an indication as to the 'relief sought' (in the sense of the 'conclusions' in French).
Article 4(3)(e) ICC 98 now explicitly requires the nomination of the Claimant's arbitrator, if such a nomination is required under Articles 8, 9 and 10 ICC 98 (see in particular Article 8(4)).
Article 4(3)(f) ICC 98 is equally a useful clarification of existing practice; it suggests that the Claimant shall submit, with the Request for Arbitration, its desiderata or comments regarding the three basic elements: the place of arbitration, the applicable rules of law and the language of the arbitration. All three elements, in most cases, will be contained in the arbitration clause. Where this is not the case, the Claimant should make its propositions known up-front.
Article 4(5) ICC 98 makes it clear that the submission of sufficient copies of the Request and pertaining documents and the making of the non refundable advance payment of US$ 2500 (according to Appendix III(1)(1)) are prerequisites for the sending of a copy of the Request to the Respondent by the ICC Secretariat.
Article 4(6) ICC 98 is one of the provisions reflected earlier in the Appendix II of ICC 75 which found its way into the new Rules with slight modifications. It deals with the joinder of claims which may be directed by the Court at the request of one of the parties. However, after the establishment of the Terms of Reference, a joinder of claims will be subjected to the conditions set forth in Article 19 ICC 98.
A remarkable novelty to be noted here is the formula adopted with respect to the advances on costs. Unlike the 1975 Rules, Article 30(1) ICC 98 now provides that, after the receipt of the Request, the Secretary General may request that the Claimant pay the full amount of a provisional advance intended to cover the costs of the procedure up to the drawing up of the Terms of Reference. This new rule has a twofold advantage: firstly, the determination of the provisional advance will not cause any delay, because this pertains to the new competence of the Secretary General (whereas in the past the Court had to rule on the (ordinary) advance as such, which is a more time consuming process); secondly, the provisional advance will only be requested from the Claimant. It is thus for the Claimant to ensure that the start of the procedure does not suffer from any delay (as it frequently and sometimes significantly did in the past, where more often than not the Respondent was slow to pay its share of the (ordinary) advance).
Article 5(1) and (3) ICC 98 on the filing of the Answer to the Request and the filing of a counterclaim have also been re-shaped so as to mirror the requirements for filing the Request for Arbitration. The answer must be filed within 30 days from receipt of the Request; if the Respondent requires the granting of an extension, he will in any event have to comment on those elements which are necessary in order properly to constitute the Arbitral Tribunal (Article 5 (2) ICC 98).
2. Effect of the arbitration agreement
Article 6(1) ICC 98 now explicitly clarifies the sense of the old Article 8(1) ICC 75, i.e. that the applicable ICC Rules shall be those in effect on the date of commencement of the arbitration proceedings, unless the parties have agreed to submit to the Rules in effect on the date of their arbitration agreement. The parties can therefore opt-in or opt-out. A similar provision can be found in Article 2 WIPO AR.
Article 6(2) ICC 98 on the prima facie examination by the ICC Court corresponds to the old Article 8(3) ICC 75, with two clarifications: firstly, it now specifically addresses the situation where the Respondent fails to submit its Answer (a situation which had been dealt with in Article 7 ICC 75), and secondly, it more correctly refers not only to the existence or validity of the arbitration agreement, but also to its scope. The last sentence in this Article is also new. [Page18:]
Article 6(3) ICC 98 deals with the effect of the failure or refusal by either party to take part in the arbitration at any stage thereof. The provision basically corresponds to Article 8(2) ICC 75, by providing that the arbitration shall proceed notwithstanding the said failure or refusal. The Working Party was aware that some other institutional arbitration rules contained more explicit provisions.3 However, it was felt that the old, shorter version should be retained.
It is thus clear that the arbitral proceedings shall nonetheless proceed, but the sometimes more difficult question of how to proceed is left for determination by the Arbitral Tribunal. Nevertheless, it is a quite clearly established concept in international arbitration-in contrast to provisions found in a great number of local procedural codes governing ordinary proceedings before national State courts-that the failure or refusal of the Respondent does not amount to an acceptance of the Claimant's allegations, and cannot be construed as an admission of the claims. The Tribunal, therefore, will have to determine to what extent evidentiary proceedings need to be conducted in order to establish to the satisfaction of the Arbitral Tribunal and 'by all appropriate means' the facts on which the Claimant wishes to rely.
The reverse situation, i.e. the situation where the Claimant fails or refuses to continue to take part in the arbitration, occurs occasionally where the Claimant fails to secure an advance determined by the ICC. In such a case, the Tribunal may have to suspend the procedure and, ultimately, the arbitration may have to be terminated, without prejudice to the Claimant's right to re-introduce the claims at a later stage in other proceedings (Article 30(4) ICC 98 ; the provision in essence corresponds to Article 15 ICC 75, Appendix II).
Quid , however, where, after the Terms of Reference have been signed, the Claimant fails to substantiate its case, or fails otherwise to participate in the proceedings? This situation is neither covered in any of the major institutional arbitration rules, nor has it received much attention in scholarly writings.
At least two recent ICC cases have had to deal with this situation. In one of them, the Claimant had substantiated its claims in a written submission, but then failed to participate in evidentiary proceedings, so that most of its allegations remained unproved. As a consequence of the Tribunal's duty under the Terms of Reference, the Tribunal, nevertheless, had to adjudicate the case on the basis of the file that was before it, and render a decision in the form of an arbitral award. In the other case, the claims had not in any way been substantiated by the Claimant; the Tribunal, therefore, could not render a decision; consequently, the claims had to be considered withdrawn without prejudice, but the cost consequences had to be determined in an arbitral award.
3. Constituting the arbitral tribunal
The general provisions in Article 7(1) to (5) ICC 98 apply in all cases; they are of a mandatory character. Apart from those provisions, the parties are free to determine how their Tribunal should be constituted; this is expressed in the key provision of Article 7 (6) ICC 98. Thus, in the absence of such individual provisions agreed upon by the parties, the provisions of dispositive nature as contained in Articles 8 to 10 ICC 98 shall then apply.
A new provision is Article 8(2) ICC 98 which-in those cases where the ICC Court determines that the dispute warrants the appointment of three arbitrators-now contains the welcome clarification that the Claimant shall always have to nominate its arbitrator first, whereas the Respondent shall only have to make its nomination thereafter (within 15 days). This new timing is a welcome improvement.
Article 9(1) ICC 98 imports a new element to be considered in the framework of the Court's or the Secretary General's confirmation of arbitrators, namely the element of 'the prospective arbitrator's availability and ability to conduct the arbitration proceedings in accordance with these Rules'. In this connection, reference may be made to Article 23 (a) WIPO AR which provides that each arbitrator, by accepting an appointment, is deemed to have undertaken to make sufficient time [Page19:] available to enable the arbitration to be conducted and completed expeditiously. Such an undertaking is certainly also implied in ICC arbitration.
The aim to speed up the process for constituting the Arbitral Tribunal has brought with it a new role for the Secretariat which now may itself confirm arbitrators under Article 9(2) ICC 98 in all those cases where they have filed an unqualified statement of independence or a qualified statement that has not given rise to objections. Thus, the procedure will become much swifter and the delays which inevitably occurred under the 1975 ICC Rules (sometimes 90 days or even more) can be avoided in future. Nevertheless, the Secretariat may, for instance in cases of doubt, submit the confirmation of an arbitrator to the decision of the Court; this is expressed by the deliberate choice of the word 'may'.
4. Multiparty arbitration
Arbitration proceedings involving multiple parties as claimants or respondents are a normal phenomenon in international arbitration and there has been a wide international consensus that the multiple claimants or the multiple respondents should, where the Arbitral Tribunal is to be composed of three arbitrators, jointly have to agree on one candidate to serve as their arbitrator. This practice had also been followed by the ICC, until the famous Dutco case 4 came before the French Cour de Cassation.
The essential parameters of the case were as follows: in connection with the construction of a cement plant in the Sultanate of Oman, BKMI had entered into a silent Consortium Agreement with Dutco (essentially for the erection of civil works) and Siemens (essentially for providing the communication network). The Consortium Agreement divided the scope of works among the three partners and did not provide for joint and several liabilities. On 17 December 1986 Dutco filed its Request for Arbitration to the ICC against BKMI and Siemens, and nominated a French arbitrator. On 16 March 1987 the ICC requested BKMI and Siemens jointly to nominate their arbitrator. Thereupon, both Respondents nominated a German Professor. This nomination, however, was made with the express reservation that equal treatment of the parties was, in the Respondents' opinion, violated because the two Respondents were forced to agree on one arbitrator (whereas the Claimant was in a position freely to nominate its arbitrator).
In its Interim Award of 19 May 1988, the Arbitral Tribunal (over which the author of this article had the honour to preside), reached the conclusion that 'the right of a party to appoint its arbitrator is a fundamental though not absolute notion in ICC arbitration' and that, in particular, a party may waive the possibility to designate its own arbitrator and that, in the instant case, on the basis of the Consortium Agreement, all three parties were 'deemed to have contemplated the possibility of a multi-party arbitration' such that it must likewise 'have been clear to them that - by limiting the number of arbitrators to three - there will be only one arbitrator for the two defendant parties'. The Arbitral Tribunal concluded that 'such a waiver, or limited waiver, is valid and it cannot be said that the principle of equality had been violated by the mere fact that both Defendants had to agree on an arbitrator of mutual confidence' (Award, page 26).
The Award, however, was first challenged before the Cour d'Appel of Paris which rejected the challenge in its decision of 5 May 1989, essentially on the argument 'que le principe d'égalité des parties dans la constitution du tribunal arbitral n'a pas été méconnu en l'espèce dès lors que la clause d'arbitrage, telle que convenu entre les parties ayant des intérêts communs, autorisait la liaison entre elles d'un contentieux unique et pouvait placer deux d'entre elles dans l'obligation de choisir un seul arbitre ayant leur confiance mutuelle ...'
However, the decision of the Cour d'Appel was further challenged and brought before the French Cour de Cassation which, surprisingly, reversed the decision of the Cour d'Appelon the grounds that, in its view, the principle of equal treatment in the designation of the arbitrators forms part of public policy and that parties cannot, in advance, waive that principle ('attendu que le principe de l'égalité des parties dans la désignation des arbitres est d'ordre public; qu'on ne peut y renoncer qu'après la naissance du litige').[Page20:]
The decision of the French Cour de Cassation certainly marks a retrograde step and brings back the notion and the spirit of French law that prevailed earlier in this century. Thus, the decision of the Cour de Cassation attracted wide criticism. However, it became a precedent to be recognized in respect of arbitrations taking place in France, and the ICC was forced to consider the implications of that decision in great detail.
The solution now reflected in Article 10 ICC 98 consists of three parts: firstly, the multiple parties (whether as claimants or respondents) shall make a joint nomination of an arbitrator to be confirmed by the ICC; this is reflected in Article 10(1) ICC 98 and corresponds to the (pre- Dutco ) general ICC policy followed by the Court under the 1975 Rules.
Secondly, in the absence of such a joint nomination, the parties may themselves discuss the situation and come up with a proposal for constituting the Arbitral Tribunal.
Thirdly, in the absence of a solution found by the parties themselves for constituting the Arbitral Tribunal, the ICC Court may appoint each member of the Arbitral Tribunal. In passing, it should be noted that some ICC National Committees suggested that any such appointment should only be made by the Court upon the suggestion of an ICC National Committee; however, for good reasons this proposal did not find its way into the Rules. Apart from this marginal remark, we need to realize that the key-word in the sentence is the word 'may'. In fact, during the sessions of the Working Party, it was extensively debated whether 'may' or 'shall' should be used.
The word 'may' was deliberately chosen to make it clear that the ICC Court is not required, in all cases, to appoint each member of the Arbitral Tribunal. Instead, it may employ the pre- Dutco practice of requiring the multiple claimants (or respondents) to make a joint nomination and, in the absence of such a joint nomination, nominate only one arbitrator. In this context, the ICC will have the possibility of appreciating all aspects of the case, and its practice is likely to be different in arbitrations where there are no French elements involved (in particular, where the seat of the Tribunal is not in France) and where, therefore, the Dutco decision will not be decisive. Among those further elements which may be significant for the ICC Court will be whether or not the multiple parties have contradictory interests. Such contradictory interests could, for instance, hardly be assumed if the two respondents are the parent company and one of its subsidiaries. Another factor to take into account is whether the multiple parties are jointly and severally liable, or whether the legal parameters are such that each party is only liable individually.
5. Challenge of arbitrators
Article 11 ICC 98 deals with the challenge of an arbitrator for 'lack of independence or otherwise'. We may note here that the notion of impartiality has not found its way into the ICC Rules. Independence is seen as being the more objective requirement, whereas impartiality is rather a state of mind which may escape scrutiny against objective standards. Interestingly, the Swiss Arbitration Act in force since 1 January 1989 (in Article 180 PIL) reflects the same solution by only requiring the independence of each arbitrator, while the 1996 English Arbitration Act has adopted the opposite view by only requiring impartiality, and not independence, essentially on the rationale that an arbitrator who is not independent can or could be impartial (see Section 1(a) and 24(1)(a)).
The further provisions of Article 11 ICC 98 correspond to Article 2(8) and (9) ICC 75 except that, in Article 11(3) ICC 98 , a last sentence has been added which provides a significant improvement in that the comments received by the Secretariat in respect of a challenge shall now be communicated to the parties and to the arbitrators. This will bring a measure of transparency into the process which, so far, has been lacking. It remains clear that the ICC Court's decision on the challenge (or on a replacement) is not as such an 'award', but a decision of an administrative nature; the reasons underlying the Court's decisions remain confidential and thus shall not be communicated (Article 7(4) ICC 98 ). [Page21:]
6. Replacement of arbitrators
Article 12(1) ICC 98 is new insofar as it now specifically provides that an arbitrator shall be replaced upon a request of all of the parties; this was not the case in Article 2(10) ICC 75.
Article 12(2) ICC 98 deals with the replacement of an arbitrator on the Court's own initiative (thus not in connection with a challenge); it corresponds to Article 2(11) first part ICC 75. This tool has, to my knowledge, very rarely been used (one matter is at present pending); nevertheless, it must be seen as an important safeguard for protecting the integrity of the arbitral process.
The certainly welcome transparency referred to above will also apply in the case of replacement; the comments received from the arbitrator, the parties and other members of the Tribunal shall be made known to all of those involved (Article 12(3) ICC 98 ).
A further improvement is Article 12(4) ICC 98 : the ICC Court now has a discretion as to whether to follow the original nomination process for the substitute arbitrator or not. During the discussions within the Working Party it was said that in 'suspicious circumstances' a party whose arbitrator had to be replaced should not be given the opportunity to nominate a second appointee, but that such a nomination should then be made by the Court. Again, this is certainly a wise provision (which is also reflected in Article 33(b) WIPO AR) and a powerful tool for assuring the integrity of the process.
In case of a replacement, it shall be for the reconstituted Tribunal to determine to what extent previous proceedings should be repeated: Article 12(4) ICC 98 . 5
7. Truncated tribunal
A 'truncated tribunal' clause is another one of the kind of clauses (akin to Article 12(2) ICC 98) which institutional rules by all means should have, with the hope, however, that such a clause will never have to be used or applied in the decades to come! With but a few exceptions, the ICC National Committees clearly recognized the need for, and desirability of, a truncated tribunal clause. The existing models which were closely considered by the Working Party are Article 11 AAA IAR and Article 35 WIPO AR. Both of them reflect a somewhat 'courageous' solution, and the ICC Working Party felt that a more restrictive approach should be favoured.
Questions of the following nature arose: how much discretion should there be for the remaining arbitrators or the ICC Court? Should one aim to formulate a distinction between 'non-suspicious circumstances' (such as death of an arbitrator), where there would be a presumptive right of the party who had nominated him to replace the arbitrator, and others (e.g. manoeuvres of a rather tactical nature)? Should a party in 'non-suspicious circumstances' be granted the right to make a new appointment of an arbitrator, but not in 'suspicious circumstances' where the replacement would have to be made by the ICC?
Finally, a cautious solution was reached in Article 12(5) ICC 98 :
• no truncated tribunal can operate prior to the closing of the proceedings (in contrast to AAA and WIPO, where the stage of the proceedings is simply to be taken into account);
• the competence to determine the issue vests with the ICC Court, and not with the remaining arbitrators (in contrast to AAA and WIPO); the ICC solution thus guarantees an objective approach in a critical situation;
• the 'defaulting' arbitrator has to have been removed by the ICC Court (unless he has died) (in contrast to AAA and WIPO); again, the ICC will remain on top of the situation;
• wisely, the provision does not aim to draw a distinction between 'non-suspicious circumstances', and others;
• in case of replacement, the ICC Court has the appropriate discretion based on Art. 12(4) ICC 98;
• the views of the remaining arbitrators as well as those of the parties shall be taken into account by the ICC Court. [Page22:]
Thus, in my view, the ICC has settled on a very wise and moderately 'tuned down' formula, which is certainly appropriate.
8. Transmission of the file to the arbitral tribunal
In the past, many arbitral procedures under the ICC Rules suffered delays due to the fact that, under the terms of Article 10, in conjunction with those of Article 9 ICC 75, the files were only transmitted to the Arbitral Tribunal once the parties had paid the advances on costs. A respondent party, by not paying its share of the advance as requested by the ICC, was therefore able to cause quite considerable delays of up to, and sometimes beyond, six to nine months.
This serious impact has now been removed by Article 13 ICC 98 in conjunction with Article 30(1) ICC 98 , in that the file will now be transmitted to the Arbitral Tribunal as soon as the latter has been constituted, provided that the provisional advance (as per Article 30(1) ICC 98 ) has been paid. The provisional advance under Article 30(1) ICC 98 will now be an advance payable by the Claimant only, in an amount determined (again a new addition) by the Secretary General sufficient to cover the costs of arbitration until the Terms of Reference have been drawn up (see Appendix III, Article 1(2)). The combined effect of these provisions, therefore, is that it is the Claimant who must ensure that the file is transmitted without delay to the Arbitral Tribunal.
9. Place of arbitration
The 1975 Rules lacked a provision allowing hearings and meetings to be held at a place other than at the formal seat of the arbitration. This lacuna has now been filled by the new provision in Article 14(2) ICC 98. Two elements need to be mentioned here: firstly, the agreement of the parties takes precedence, as can be seen from the words '... unless otherwise agreed by the parties'. The new ICC Rules, therefore, give the parties slightly more weight than e.g. Article 13 (2) AAA IAR, Article 7.2 LCIA 85, Article 16.2 draft LCIA 98, Article 39(b) WIPO AR, Article 16(2) and UNCITRAL AR. The new ICC Rules, however, stand in line with Article 20(2) UNCITRAL ML which also reflects the preponderant weight of the parties. Some commentators suggested that the Arbitral Tribunal should be able to overrule the agreement made by the parties, for instance with regard to the framework of the Terms of Reference (that all hearings shall take place e.g. in Somalia) in cases where it has become impossible to carry out that earlier agreement (e. g. in the event of war, refusal of necessary visas etc.), or where other circumstances require a meeting or hearing to be held at a different place (e.g. where an indispensable third party witness could not be heard except for instance in Brazil). The fear was that a party, by insisting on that agreement, could prevent the Tribunal from being able to hold the hearing whenever that suited his particular interest. However, the Working Party did not find it necessary to draft an overly complicated rule; in any event, a Tribunal will have to appreciate the bona fides of each party, and may wish to disregard a manifest obstruction of either party.
Secondly, the Arbitral Tribunal should not simply impose a place for conducting a particular hearing or meeting, but will have to act in consultation with the parties. This is certainly a very appropriate formula (which in fact was inspired by the provision of Article 29(b) WIPO AR).
As far as internal deliberations among the arbitrators are concerned, the Arbitral Tribunal is free to select the location. This provision was also inspired by Article 46(b) WIPO AR.
10. Rules governing the proceedings
Article 15(1) ICC 98 essentially corresponds to Article 11 ICC 75. The slight changes are of a stylistic nature only. The term 'municipal procedural law' in the old Rules has been changed to 'rules of procedure of a national law', but again, the spirit is the same. Within the Working Party there were discussions as to whether the last part of the sentence should be changed in order to make it more explicit that the Arbitral Tribunal is not expected to make reference to any national procedural law, and in fact should not do so. Such [Page23:] a wording would have indicated more clearly to the less experienced arbitrator that an international arbitration should be conducted under truly international rules and standards, i.e. those standards which parties engaged in international business and trade expect, and thus should not in any respect be conducted following purely national rules of procedure. However, in the end it was felt, within the Working Party, that this principle was already sufficiently well-known and recognized on a worldwide scale today that it was unnecessary to make this more explicit.
Therefore, the wording, by using the formula 'whether or not reference is thereby made to the rules of procedure of a national law...' in fact makes it clear that an Arbitral Tribunal does not need to apply rules of procedure of a national law, and in fact should not apply such rules (unless of course the parties have determined otherwise).
We may recall here that the freeing of the international arbitral procedure from local procedural rules is one of the most significant milestones and achievements of international arbitration, and much of the worldwide success of arbitration and its recognition as the most reliable method for settling disputes has to do with this aspect of liberality. 6
11. Equal treatment
A new provision is Article 15(2) ICC 98 , which provides that the Arbitral Tribunal 'shall act fairly and impartially and ensure that each party has a reasonable opportunity to present its case'. The 1975 ICC Rules did not contain a reference to this rather axiomatic principle in international arbitration. However, this principle is reflected in most other leading institutional rules such as Article 16 (1) AAA IAR, Article 17(1) CAMCA AR, Article 38(b) WIPO AR, Article 15(1) UNCITRAL AR and Article 18 UNCITRAL ML. Obviously, this axiomatic notion has always been at the heart of any ICC procedure, but this will now be spelt out in black and white. All ICC National Committees were in favour of retaining such a provision.
12. Language of the arbitration
The new ICC Rules again make it clear that, in the first place, the agreement of the parties as to the language to be used in the framework of the arbitration shall be decisive. A further slight shift, as compared to the 1975 ICC Rules, should be noted here: under the 1975 Rules, the language of the contract was seen as a particularly important element in determining the language to be used in the framework of the arbitration. This is slightly (but only slightly) played down by the 1998 ICC Rules. This is expressed in the new wording '...due regard being given to all relevant circumstances, including the language of the contract'. By way of comparison, Article 14 AAA IAR, Article 8(1) LCIA 85 and Article 40(a) WIPO AR essentially provide that the language of the arbitration shall be that of the contract containing the arbitration clause, but this is subject to the power of the Arbitral Tribunal to determine otherwise having regard to observations of the parties and the circumstances (thus, those Rules operate on the basis of a presumption which can be rebutted or overruled if the circumstances so suggest).
13. Applicable rules of law
There is no revolutionary change to be reported here; and yet, the new provision in Article 17 ICC 98 is, in the author's view, a landmark, and therefore merits some elaboration. It is of course a very basic concept in international arbitration that, first of all, the choice made by the parties as far as the applicable law is concerned will be fully respected and recognized by the Arbitral Tribunal. In most cases the choice will be explicit; however, sometimes the choice might rather be a tacit or implied choice, and as such might have to be recognized by the Arbitral Tribunal (mostly in the sense of an implied negative choice, e.g. an implied choice not to subject oneself to any one of the national laws of the parties involved.)
In the absence of a choice made by the parties (whether explicit or implied), the determination will have to be made by the Arbitral Tribunal. Here, [Page24:] we need to distinguish between two components or steps: first, the method or the criteria to be used so as to determine the resultant law or rules of law (the conflict-of-laws aspect), and second, the result as such, i.e. the applicable substantive law or rules of law (the substantive law aspect).
• The 1955 ICC Rules contained no specific provision on the choice of law and on the Tribunal's power to determine the applicable law where the parties had failed to do so. The old solution prevailing in the 1950s was to apply the conflict-of-laws system at the place of arbitration. This solution was pushed into an early grave in 1961, as a consequence of the 1961 European Convention, according to which an Arbitral Tribunal should apply the 'appropriate conflict rule' (but not an entire system of private international law). Using a 'rule' will leave flexibility; using in contrast the 'system' at the place of arbitration risks bringing back all undesired localisms, local perceptions, local court practices and local scholarly writings. This difference of approach ('rule' versus 'system') may lead to opposite results. The new formula as per the 1961 European Convention received almost unanimous acclaim around the globe and was reflected in most institutional arbitration rules as well as in many national legal systems. Thus, it was also reflected in the ICC Rules of 1975.
• Apart from the above, the so-called 'closest connection' test gained importance; it was adopted in Article 4 of the 1980 Rome Convention, in the USA Second Restatement, in Article 187(1) of the Swiss Arbitration Act (PIL) and, most recently, in Article 1051 (2) of the new German Arbitration Act 1997/98 (Book X of the Code of Civil Procedure).
• However, the truly ice-breaking step was taken in France, which became known as the pioneer of the voie directe approach reflected in Article 1496 NCPC . The most modern solution takes its inspiration from this French approach and no longer suggests (or imposes) any particular method of conflict of laws or requirement of a passage via a conflict rule; instead, the matter is deliberately left open. This newest approach has been reflected in Article 28(1) AAA IAR, Article 13(1)(a) LCIA 85, Article 46 Netherlands Arbitration Institute Rules, Article 41 Milan Chamber Rules, Article WIPO AR and Article 30(1) CAMCA AR.
The 1998 ICC Rules now also adopt this newest and most appropriate solution: they are purposefully silent as far as the conflict-of-laws rule is concerned, and thus the arbitrators enjoy a total freedom to work either through one (or more) particular conflict rule(s) and apply it (them) to the case, or to apply the closest connection test (or to search for the centre of gravity and the most characteristic performance), or to avoid any of these 'tools' and to apply the voie directe .
Regarding the aim, i.e. the determination of the 'law' or the 'rules of law', the question is whether a tribunal should be required to apply one particular national law (such as the substantive law of France), or whether the Tribunal should be free to apply 'rules of law' in a wider sense (a term which encompasses a broader concept and which would include, as the case may be, not only a national law, but also national or supranational rules of law, general principles of law, concepts forming part of the lex mercatoria, rules of law contained in multinational conventions (whether or not formally applicable), or rules reflected in the 1994 UNIDROIT Principles. For the sake of clarity, I may add that an arbitral award based on rules of law should not be confused with a decision ex aequo et bono, nor with a decision made simply according to 'natural justice' (a term sometimes used in State contracts), nor with an arbitral function of amiable composition. Instead, a decision based on 'rules of law' is and remains a decision based on law.
• The 1975 ICC Rules only referred to the term 'law'. However, such a term has always been interpreted quite liberally by ICC arbitrators. Already under the 1975 Rules, ICC arbitrators felt free, if the situation so warranted, to rule that a contract should not be governed by one particular (national) law, but by certain 'rules of law', for instance by generally accepted principles of law, etc. [Page25:]
• However, the recent discussions have shown that sometimes the term 'law' is indeed meant to encompass the narrow sense of one particular national law only; compare for example Art. 28 (2) of the UNCITRAL ML (which has been criticized for providing a lesser authority for the Arbitral Tribunal than for the parties themselves); compare also the same distinction which re-appears in Article 1051 (2) of the new German Arbitration Act 1997/98; see also the provision in Section 46 (3) of the 1996 English Arbitration Act.
• For the ICC Working Party, it was clearly perceived as long overdue and necessary to employ correct and unambiguous terminology, and thus the term 'rules of law' was deliberately employed in Article 17 (1) ICC 98.
• In contrast, the term 'law' (used in its narrow sense as referring to a particular national law) would have been too narrow, and the use of such a term (in its narrow sense) in the new ICC Rules would have amounted to a serious retrograde step, and moreover would have placed ICC arbitrators in straight-jackets.
• In addition, the term 'the law' is even in itself misleading, considering that today we are faced with the ever-growing impact and interference of mandatory rules of law, which-beyond national 'law' (as may be determined by the parties or, failing them, the Tribunal)-might have to be taken into account due to their extraterritorial effects (e.g. competition laws, import and export restrictions, boycotts, embargoes and the like).
• Only one National Committee, during the extensive consultation process, expressed some reservations regarding the term 'rules of law'.' However, in the final stage, the wording was simplified to refer to 'rules of law' only. 7
With its provision in Article 15 (1), the 1998 ICC Rules will now reflect not only the most modern but also the most appropriate solution (and indeed, in my firm opinion, the only appropriate solution). They grant the arbitrators the full 'conflict of law autonomy'; arbitrators are no longer the 'slaves' who have to bow down before purely local perceptions which may or may not be appropriate. And they moreover grant the arbitrators the full 'substantive law autonomy', in that they may apply rules of law, and are not restricted to applying a national law only. The importance of these two elements is very significant.
Firstly, they are truly essential for enabling a tribunal to reach a correct decision which satisfies the 'subjectively reasonable and objectively fair expectations' of parties engaged in international business. Secondly, they in fact substantially increase certainty and foreseeability of the law, in that parties should no longer fear that they might become the victims of unexpected local pitfalls. Thus, the new ICC Rules clearly provide for a more reflective responsibility on the part of the arbitrators. It would carry us far beyond the limits of this article to exemplify, on the basis of actual cases and experience, the significance of this element. In any event, the ICC was wise to overcome the uncertainty which still existed during the 1980s when Article 28 (2) UNCITRAL ML was discussed, with its unfortunate and much criticized bifurcation regarding the authority granted to the parties themselves, and the more restricted authority granted to the arbitrators.
The new Article 15(1) ICC 98 is even more important for those countries whose Arbitration Acts still refer to the term 'law' (which may or may not be meant in the restrictive sense as referring to one particular national law only), in particular for England and Germany. As the provisions in arbitration acts regarding the applicable law are normally not mandatory, it would stand to reason that Article 15 (1) ICC 98 will prevail (as an indirect determination made, or an authority conferred unto the Arbitrators, by the parties as a consequence of the arbitration clause providing for ICC arbitration). Thus, parties from any area of the world who are contemplating providing for arbitration in countries such as Germany and England (in respect of contracts lacking a choice of law clause) will certainly be well advised seriously to consider choosing ICC arbitration (or another institution which has a provision up to the standard of Article 15 (1) ICC 98 ). [Page26:]
14. Terms of Reference
The feature of the Terms of Reference is certainly one of the main characteristics of ICC arbitration. Its origin stems from the old French position according to which an arbitration clause contained in a contract was purely a natural (non-enforceable) obligation and, therefore, required a new submission by both parties once a dispute had arisen. French law has for decades not adhered to this concept and, as do all modern legal systems, recognizes the binding force of an arbitration clause. However, the requirement of the Terms of Reference have nevertheless survived. True, in the past, certain criticisms had been voiced-but mostly by those with very little practical experience of ICC arbitration.
As a matter of fact, the support of all of those who commented on the drafts of the ICC Rules wishing to retain the Terms of Reference as one of their key characteristics was overwhelmingly strong. Only one National Committee suggested that the drawing-up of Terms of Reference should be optional, but all others were clearly of the opinion that they should be kept as a useful requirement.
The above does not mean that the Terms of Reference, as they are under the 1975 Rules, remain sacrosanct. On the contrary, they were critically reviewed so as to take into account some of the criticisms and to remove the doubts which had sometimes been expressed by parties about signing the same. The following changes should also be read and appreciated against the background of the new Article 19 ICC 98 which facilitates the making of new claims even after the signing of the Terms of Reference.
• The new Article 18(1)(c) ICC 98 now adds that the Terms of Reference should indicate the particular 'relief sought by each party with an indication to the extent possible of the amounts claimed or counterclaimed'.
• The most significant change, however, is reflected in Article 18(1) d) ICC 98 which will now make the listing of the 'issues to be determined' a dispensable exercise, that is, dispensable in all those cases where the Arbitral Tribunal considers such a listing 'inappropriate'. The wording here is chosen purposefully.
• Some persons within the Working Party preferred to make it optional, but finally a consensus was reached that, nevertheless, the listing of the issues to be determined is something desirable and helpful. Indeed, the experienced arbitrator has almost never encountered difficulties in formulating the issues to be determined in a way which is totally appropriate to the circumstances, sufficiently precise where precision is desirable, and sufficiently flexible where flexibility has to be maintained in view of parameters which could still change during the continuance of the arbitral proceedings. Nevertheless, the new formula removes a requirement which was sometimes perceived as imposing an overly difficult task.
• The operation of the Terms of Reference has now become dissociated from the requirement (under Article 9(4) ICC 75) that the advance on costs as requested by the Court be paid. Thus, in future, the Arbitral Tribunal can immediately after the signing of the Terms of Reference continue with the procedure; this will avoid delays which have sometimes been substantial.
• In the case of a refusal by one of the parties to take part in the drawing-up of the Terms of Reference, or in the case of a refusal to sign the same, Article 18 (3) ICC 98 now provides for a much simplified procedure for the approval of the Terms of Reference by the Court. The new Rules no longer require the Court to fix a time-limit for the signature by the defaulting party.
The time-limit for signing the Terms of Reference remains at two months from the transmission of the files to the Arbitral Tribunal. Of course, the new Rules do not spell out whether the Terms of Reference should be established at the meeting with the parties, or whether the Terms of Reference should be settled by exchanging correspondence.
My personal preference is that, when sitting as the Chairman, I would prepare a draft of the Terms of Reference and circulate the same to the parties and the co-arbitrators with a proposal of at least five dates on which a Terms of Reference hearing could take place. At such a hearing, the Terms of Reference would then be finalized. My experience is that even in relatively simple cases (where one has the feeling that the Terms of Reference could [Page27:] easily be settled by way of correspondence) the personal meeting between the parties and the Arbitral Tribunal proves to be highly welcome (from the perspective of the parties) and in fact enormously facilitates a good understanding, directly from the beginning, of the major factual and legal parameters of the case as well as of the basic ground rules which are going to be followed. The hearing also affords the parties an opportunity to make the personal acquaintance of the arbitrators, and vice versa. It is therefore at such a hearing that the arbitration will see a 'face' and some 'real life blood'. The sufficiently experienced Chairman will certainly think of a good dozen of fairly important procedural matters which warrant a discussion with the parties or their representatives (including for instance the question whether the legal briefs (memorials) to be submitted by the parties after the Terms of Reference should be accompanied, or not, by written witness statements, or whether such written witness statements should only be prepared after the full exchange of written memorials, and whether the filing of such witness statements should be effectuated by both parties contemporaneously, or with staggered time-limits). In most cases, the result of those discussions regarding the further procedure will be reflected in the last part of the Terms of Reference or, alternatively, in a separate Order on Agreed Terms.
On the other hand, in smaller cases and where parties or their representatives would have to travel far to attend such a hearing, the Tribunal will obviously have to weigh carefully the cost implications against the benefit of such a personal meeting.
15. Establishing a procedural timetable
A further new introduction is the provision in Article 18(4) ICC 98 which now requires the Arbitral Tribunal, after consultation with the parties, to establish in a separate document a provisional timetable which it intends to follow for the future conduct of the arbitral proceedings. Such a timetable should be established when drawing up the Terms of Reference and should be communicated to the parties and to the Court. Subsequent modifications will also need to be communicated in the same way. This is certainly a useful tool for enhancing the efficiency and speed of ICC arbitrations. On the other hand, one must realize that, at the early stage of the Terms of Reference, it is, in most cases, quite impossible to foresee the need for and the scope of further evidentiary proceedings, for instance whether it will be necessary to proceed to the examination of witnesses and experts.
16. New claims
Article 16 of the 1975 ICC Rules has caused certain difficulties and has been the subject of criticism because of its rigidity regarding the making of new claims during the course of the arbitral procedure (after the signing of the Terms of Reference). In fact, the old Article 16 had caused some of the doubts occasionally experienced by parties signing the Terms of Reference. That rigidity had to be cured in a prudent manner. In this regard, the Working Party carefully studied the solutions in Article 44 WIPO AR, Article 20 UNCITRAL AR, Article 23(2) UNCITRAL ML, Article 4 AAA IAR and Article 4 CAMCA AR. The proposal of the Working Party was supported by the comments of all ICC National Committees who were in favour of a relaxation of the stringent rule in Article 16 ICC 75, particularly in situations of new claims resting on newly discovered or revealed facts.
Thus, under the new Article 19 ICC 98 , new claims will now be admissible under the following parameters and without the need for the parties and the arbitrators to draw up and sign a rider to the Terms of Reference:
• The new claims need to be authorized by the Arbitral Tribunal; such authorization will suffice; in other words, the Respondent cannot block the admissibility of new claims, as was the case under the old regime of Article 16 ICC 75.
• The Tribunal, when considering whether to authorize new claims, will have to have regard to the nature of such new claims or counterclaims, the stage of the arbitration and all other relevant circumstances.
Certainly, new claims or counterclaims should not come in at the last minute when the other party [Page28:] may not have a suitable opportunity to defend its case. Thus, arbitrators will have to pay special attention to satisfying the equality principle which is now specifically reflected in Article 15(2) ICC 98. As far as the 'other relevant circumstances' are concerned, the Tribunal will have to consider particularly the delay which might be caused if, for instance, evidentiary proceedings have to be re-opened.
17. Establishing the facts of the case
The question was whether the 1998 ICC Rules should provide more specific guidance regarding procedural matters than the 1975 Rules. The overall attitude regarding this question, however, was a negative one, essentially due to the concern that the ICC Rules need to remain entirely flexible and should accommodate to the largest extent possible the wishes of the parties and, failing them, the case tailored directions of the Arbitral Tribunal. Thus, the key aspects of the procedure of the ICC Rules reflected in Articles 14 and 15 of the old Rules 8 remain the same. This is so regarding:
• the famous concept that the Arbitral Tribunal shall have to establish the facts 'by all appropriate means' (now found in Article 20 (1) ICC 98 ), which implies an active (inquisitorial) role of the Tribunal in all relevant aspects of the case (which includes, for instance, the ordering of site visits, the ordering of demonstrations, the combating of delaying tactics);
• the key notion of the party's right to request a hearing (now found in Article 20(2) ICC 98 );
• the Arbitral Tribunal's authority to organize a hearing of its own volition and to decide on the hearing of witnesses, of experts appointed by the parties or of any other person (see the amplified provision in Article 20(3) ICC 98 ); in short the Tribunal must hear the parties, but may hear witnesses;
• the Arbitral Tribunal's authority, according to Article 20(4) ICC 98 , to appoint experts; this authority has also slightly been amplified in two directions:
firstly , the appointment should be made after consultation with the parties. Consultation, however, does not mean that the parties will have to agree to the appointment of experts; the Arbitral Tribunal, therefore, clearly has the authority to appoint experts even in the absence of a request from one of the parties, if the Tribunal has reached the conclusion that this will be necessary for a proper adjudication. Quid , however, if both parties are agreed that the Tribunal should not appoint any expert, although the Tribunal perceives a need to have certain matters properly established by a neutral expert? This issue gave rise to debate within the Working Party. However, in my view, it is a moot point: in such a situation, the Arbitral Tribunal should make it clear to the parties that it will then undertake to perform its duty by assessing and determining the issues to the best of its ability on the basis of its own knowledge and the best possible understanding and appreciation of the situation, and render its award on that basis. In my view, an Arbitral Tribunal should certainly be prepared to do that. After all, the conferring of such an authority to the Arbitral Tribunal would appear to be a minus in maius in that, for instance, the parties could also go further and authorize and indeed mandate the Arbitral Tribunal to act as amiable compositeur or to decide ex aequo et bono . As a result, a tribunal should appoint a neutral expert only where at least one party has requested such appointment, or has agreed to it. Thereafter, such a party will have to advance the corresponding costs;
secondly , a sentence has been added in Article 20(4) ICC 98 providing that the parties have the right to request a hearing where the tribunal-appointed expert can be questioned by them (or by their own experts); 9
• the Tribunal's authority, according to Article 20(5) ICC 98, to summon any party to provide additional evidence; 10 this authority had [Page29:] of course already been affirmed in arbitral practice under the 1975 Rules, but the new Rules have now made this authority explicit;
• Article 20(6) ICC allows 'document-only arbitrations', provided that none of the parties requests a hearing. However, in my view, an Arbitral Tribunal will have to make its intention to render the award without a hearing known to the parties (indeed, the award should not come as a surprise); this would then enable the party or parties to object and to request a hearing.
Within the Working Party it was also discussed whether the new ICC Rules should contain a provision on the Tribunal's power freely to assess the evidence. Such a provision, found in many other institutional rules, carries its own significance against the background of some more restrictive rules on the receipt of evidence as they are known in certain common law countries (see for instance the provision of Article 48(a) WIPO AR). However, it was felt that such a provision was unnecessary, because the authority of the Arbitral Tribunal freely to appreciate the relevance and significance of the evidence is obvious in itself.
18. Trade secrets and confidentiality
Article 20(7) ICC 98 refers to the Arbitral Tribunal's authority to take measures to protect trade secrets and confidential information. Regarding this article, the Working Party carefully considered the more elaborate provisions on trade secrets such as those contained in the WIPO Arbitration Rules, in particular Article 52 (which authorizes the Tribunal, in exceptional circumstances, to make use of a so-called 'confidentiality adviser' according to Article 52(d) WIPO AR), and the detailed rules on confidentiality contained in Articles 73-76 WIPO AR.
Reactions from the ICC National Committees regarding the introduction of an elaborate rule on the protection of trade secrets and confidentiality were mixed: some were in favour and proposed that provisions similar to those of WIPO should be inserted into the ICC Rules, others felt that the solutions should be left to develop through practice and that the Arbitral Tribunal in any event has the authority to take appropriate measures for safeguarding confidentiality, including the power to decide what evidence it may accept as proof; still others went so far as to raise the question why, at all, arbitration should be confidential. Thus, the issue is highly controversial and difficult. 11
The Working Party also considered the solution adopted in Article 34 AAA IAR, which imposes a confidentiality obligation on the arbitrators and the institution, but not on the parties. In the final discussions, the preference was simply to insert a somewhat 'programmatic article' recalling the authority of the Arbitral Tribunal to take appropriate measures for protecting trade secrets and confidential information, without, however, spelling out more detailed provisions thereon, and without determining more precisely to what extent the memorials and documents filed during the procedure, the statements of witnesses and experts and the decisions taken by the Arbitral Tribunal, for example, ought to remain confidential.
19. Hearings
The new Article 21, by and large, corresponds to the old Article 15. Thus, the changes are rather of a stylistic nature. Article 21 (1) ICC 98 provides that the Arbitral Tribunal 'shall summon the parties to appear before it on the day and at the place fixed by it'. However, we may add here as a footnote that it would be quite extraordinary if an Arbitral Tribunal simply summoned the parties to appear at a hearing without first making enquiries regarding the availability of the parties, their representatives and the witnesses (if witnesses are to be heard) on the dates which the Tribunal proposes to them. This is not only required by minimal standards of politeness, but also by the reason of each party's right to be heard (which could be impaired if, for instance, an arbitral tribunal summoned the parties to appear at a hearing where its counsel were, due to other commitments, not available). [Page30:]
Article 21(2) ICC 98 provides that, in the case of a party's failure to appear without valid excuse, the Tribunal shall have the power to proceed with the hearing. The rather artificial presumption which was contained in Article 15(2) ICC 75 that 'such proceedings shall be deemed to have been conducted in the presence of all parties' has now been eliminated in the new text. Reference should also be made to Article 6(3) ICC 98 , which is the general provision regarding a party's refusal or failure to participate in the proceedings. 12
20. Closing of the proceedings
The new Article 22(1) ICC 98 reflects a good practice which has already been widely used in ICC arbitrations, particularly those handled by French arbitrators who are used to the concept of clôture des débats. The new Rules now transform this practice into a duty of the Arbitral Tribunal. Other institutional rules contain similar provisions. 13
According to Article 22(2) ICC 98 , the Arbitral Tribunal will have to indicate to the ICC Secretariat the approximate date by which the draft award will be submitted to the Court for approval pursuant to Article 27 ICC 98 . Obviously, this is sometimes a difficult issue. My personal experience has shown that sometimes, the Chairman submits a draft award to his co-arbitrators within one or two months, after extensive and carefully structured deliberations. Thereafter, a lengthy procedure can be triggered off during which period numerous efforts are required regarding the fine tuning of the award, with the aim of reaching a unanimous or at least a majority decision. In extreme situations, this difficult exercise has sometimes absorbed many months of deliberations (which have taken place mainly by exchanging faxes). While these difficulties cannot be avoided once a draft award is on the table, it will nevertheless be helpful for an efficient accomplishment of the task, that the Tribunal disciplines itself by indicating the date on which it intends to submit the draft award to the ICC Court.
21. Conservatory and interim measures
The 1975 ICC Rules only contained an indirect reference to the arbitrators' authority to rule on conservatory or interim measures, by providing that, before the transmission of the file to the arbitrator (and in exceptional circumstances even thereafter) the parties were at liberty to apply to any competent judicial authority to seek interim or conservatory measures. Thus, the 1975 Rules did not specifically spell out the Arbitral Tribunal's authority to rule on conservatory and interim measures.
It was not doubted, within the Working Party, that the ICC Rules, in this regard, had to be brought up to a modern standard. The most significant elements of the new provision in Article 23 ICC 98 are the following:
• Article 23(1) ICC 98 is not mandatory; the parties are free to agree otherwise.
• The new Article provides for a broad power, comparable to Article 46 WIPO AR, Article 26 UNCITRAL AR, Articles 21(1) AAA IAR and Article 23 CAMCA AR. The existing Article 13(h) LCIA is slightly more restrictive.
• The Arbitral Tribunal may impose a security on the requesting party.
• There was discussion within the Working Party as to whether the ICC pre-arbitral referee procedure should be incorporated, or at least referenced, in the new Rules. However, this was decided against, in view of the complexity of issues that are connected thereto (which can be seen from the 40 paragraphs packaged into seven articles of the Rules on the Pre-Arbitral Referee Procedure); an incorporation could, it was feared, trigger a disincentive to choose the ICC Rules. [Page31:]
• There were discussions as to whether an explicit reference to the possibility of requesting a security for costs should be made, so as to avoid the impact of the well-known Coppee-Lavalin v/ Ken-Ren case . Some ICC National Committees were against this, some voted for it and some of them expressed the view that a party should have the possibility of requesting a security for costs in exceptional circumstances only (as in article 46(b) WIPO AR). Some suggested a wording expressing that parties 'are deemed to have agreed that an application for security for costs be made solely to the arbitrators', so as to avoid the Ken-Ren situation in the future.
• However, in the end, the Working Party preferred not to make any specific reference to security for costs. Nevertheless, the wording of Article 23 seems to be abroad enough to allow the making of an application by a party for, and the issuing of a decision by the Tribunal on, security for costs.
• The new ICC Rules follow the examples provided by Article 26.2 ( 2) UNCITRAL AR, Article 46 (c) WIPO AR, Article 21 (2) AAA IAR and Article 23 (2) CAMCA AR that interim measures may take the form of an order or of a reasoned award (as considered appropriate by the Arbitral Tribunal).
• There were discussions as to whether there should be a provision regarding the consequences of non-observance, by the aggrieved party, of the measure ordered or awarded by the Tribunal. For instance, it was proposed that such a defaulting party's claims or counterclaims should no longer be considered by the Tribunal. However, such a sanction did not find its way into the new Rules. In this regard it was inter alia argued that 'arbitrators should retain a wide defaulting party, consequences to visit on the defaulting party, to be decided by the arbitrators on a case-by-case basis, in light of the particular facts and applicable law'.
• The authority on the Arbitral Tribunal is not an exclusive one. A party remains free to refer the matter to a competent State court instead of the Tribunal. This is reflected in Article 23 (2) ICC 98 which, essentially, corresponds to Article 8 (5) ICC 75, except that the more restrictive concept under the 1975 Rules 'in exceptional circumstances' has been replaced by 'in appropriate circumstances' in the 1998 Rules.
• In this context, a further legal aspect deserves to be mentioned: the authority granted to the Arbitral Tribunal to decide on conservatory and interim measures is one matter; it is quite another matter to ascertain whether the applicable lex arbitri (i.e. the arbitration act prevailing at the place of arbitration) also allows an arbitral tribunal to rule on interim measures. In Europe, for instance, Austria, Italy, Greece and some Scandinavian countries reserve that authority to State courts. The reserved prerogatives of State courts cannot normally be departed from by agreement of the parties, for instance by agreeing to submit disputes to the ICC Rules. However, this will need to be carefully checked under the relevant arbitration act.
22. Time limit for the award
The slightly altered Article 24(1) ICC 98 now starts the running of the six-month time-limit for rendering the final Award from the date of the last signature on the Terms of Reference or, in the case of Article 18(3) ICC 98 , from the date of notification by the ICC Secretariat to the Tribunal that the Terms of Reference have been approved by the ICC Court. Of course, the well-known six month time-limit was discussed, and the opinion was voiced that the ICC should not miss the opportunity to set a more realistic time-limit within its rules. For instance, the solution in Article 63(a) WIPO AR was discussed, but in the end it was felt that a counter-productive signal would be given if the new Rules indicated a time-limit of, say, nine or twelve months (which would certainly have brought the rule closer to reality). Of course, the time-limit as it is (six months) can be extended upon request by the Arbitral Tribunal, or upon the ICC Court's own initiative. [Page32:]
23. Making of the award
The new Rules, in Article 25(1) ICC 98 , of course retain another one of the characteristic features of ICC arbitration, i.e. the provision that, in the absence of a majority decision, the Chairman of the Arbitral Tribunal shall decide alone. The new Article 25(2) ICC 98 now explicitly requires that awards shall state the reasons upon which they are based.
In case of a settlement reached between the parties, Article 26 ICC 98 now provides that the settlement shall be recorded in the form of an award only if so requested by the parties and, if the Arbitral Tribunal agrees to do so. This, of course, is already the practice under Article 17 ICC 75, but the text required this clarification.
The provision on the scrutiny of the Award by the Court (Article 27 ICC 98 ) remains unchanged as to its substance. However, the trivial question remains: what is an award? The term is not defined in institutional rules, nor is it defined in the New York convention of 1958. For instance, is a decision on the applicable law an award? Or a decision that the claims are or are not time-barred? Are they subject to scrutiny, or not? It is obvious that, occasionally, uncertainties will arise which will necessitate communication between the Tribunal and the ICC counsel in charge of the file.
Articles 28(1) to (3) ICC 98 regarding the notification of the Award correspond to Article 23 ICC 75. The further provisions in Articles 28(4) and (5) ICC 98 correspond to Article 25 ICC 75. Article 28(6) ICC 98 reflects the binding nature of the Award and its enforceability. It corresponds to Article 24 ICC 75, except that the word 'final' has been replaced by the more accurate description that the Award 'shall be binding on the parties'. Its 'finality' (in the legal sense) is determined by the arbitration act prevailing at the place of arbitration.
24. Correction and interpretation of the award
Most institutional arbitration rules have explicit provisions empowering the Arbitral Tribunal to correct its Award, either of its own volition or upon application by one of the parties, or further to interpret its Award. Not so the ICC Rules of 1975. However, in practice, under the 1975 Rules the ICC allowed Arbitral Tribunals to correct an award, or to provide an interpretation where necessary. The ICC required the observance of a time-limit of 30 days after receipt of the Award, based on the argument that it might be abusive for a party to wait for a longer period of time (for instance until a challenge procedure or an enforcement procedure had been started) and then submit a request for correction or interpretation.
When discussing the draft for a new provision in the ICC Rules 1998, opinion was divided, particularly as far as the reactions of the ICC National Committees were concerned. Some were against any new provision on this matter while some agreed to introduce a rule on correction only, and were hesitant or even opposed to having a provision on interpretation. Essentially, certain fears were expressed that a potential danger existed that the losing party might be tempted to abuse the request procedure by, for instance, filing a lengthy brief to the Arbitral Tribunal asking for further interpretation on a point which it had lost and on which it might try to challenge the Award before a national court. Another National Committee expressed the view that any time-limit for submitting a request for correction or interpretation should not be strict and that, if any application was made more than 30 days after notification, it should be accompanied 'by adequate justification for the delay, and would be accepted only if the Court determined in its sole discretion that it was appropriate to do so'.
The Working Party analysed all of these reactions and, of course, studied the provisions in other institutional rules such as Article 66(a) and (b) WIPO AR, Article 30 AAA IAR, Article 17 LCIA 85, Articles 35 and 36 UNCITRAL AR, Article 33 UNCITRAL ML, Article 32 CAMCA AR and, by way of further comparison, section 57 of the 1996 English Arbitration Act. In its final discussions, the Working Party decided to retain the time-limit of 30 days for corrections and for requests for an interpretation of the Award. The applications must be made to the ICC Secretariat accompanied by a sufficient number of copies (as per Article 3(1) ICC 98). The Arbitral Tribunal shall then give the other party an opportunity to submit comments and shall, within 30 days after the expiry of the [Page33:] time-limit for the receipt of comments from this party (or within such other period as the ICC Court may decide), submit its draft decision to the Court.
In addition to providing for the correction and interpretation of the Award, the question was raised whether a party should have a right to file a request for an additional award. 14 Obviously, this is a more delicate situation, and most ICC National Committees expressed the view that, in fact, there should be no such provision. After all, it was said, ICC Awards are scrutinized by the Court and thus, not only in theory but also in practice, there should never occur a situation where a particular claim or issue remains undecided by the Tribunal. The Working Party basically shared this view. This explains the reason why the ICC Rules 1998 do not, in contrast to others, provide for additional awards.
25. Advance to cover the costs of the arbitration
I understand that matters of costs are dealt with more extensively elsewhere. I am therefore limiting my comments to a few aspects only.
Article 30(1) ICC 98 contains a new and certainly practical solution according to which the Secretary General (in a new function) may himself, upon receipt of the Request for Arbitration, determine the amount payable by the Claimant. This is only a provisional advance intended to cover the costs of arbitration until the Terms of Reference have been drawn up.
Thereafter, 'as soon as practicable', the ICC Court (not the Secretary General) will fix the global advance, subject to readjustments (Article 30(2) ICC 98). When is it, in this sense, 'practicable' to determine the global advance? This will fall to the ICC Court to decide, as far as possible, after the receipt of the Respondent's answer. Thereafter, upon receipt of the Terms of Reference, the ICC will verify whether a substantial change in the parameters has occurred; if so, a readjustment will be made.
In cases of claims and counterclaims, separate advances may be fixed for the claims (payable by the Claimant) and the counterclaims (payable by the Respondent).
Article 30(4) ICC 98 originates from Article 15 of Appendix II to the 1975 Rules and deals with the consequences of non-payment. Firstly, temporary suspension and thereafter the claims or counterclaims are considered as withdrawn, without prejudice, however, to their reintroduction at a later date in another proceeding.
Likewise, Article 30(5) ICC 98 regarding set-offs corresponds literally to Article 16 of Appendix II under the 1975 Rules. It was certainly appropriate to include this provision in the body of the new Rules itself because, in the past, it has sometimes been argued that the pleading of a set-off, as an emanation of substantive law, extinguishes pro tanto the main claim and, therefore, cannot be made dependent upon the payment of a separate deposit, or an increase of the deposit. Occasionally, therefore, parties pleading a set-off maintained that the Arbitral Tribunal was, as a matter of substantive law, obliged to deal with the set-off irrespective of whether such an additional task was covered by an appropriate advance. In future, such an argument will be untenable. By submitting to ICC arbitration it will now be clear that the pleading of a set-off requiring the Tribunal to consider additional matters may require an increase in the advance, or a separate advance, and each party submitting to ICC arbitration will of course be deemed to have specifically agreed to this. The solution as it now stands is certainly highly appropriate.
26. Costs of the arbitration
Article 31(1) ICC 98 largely corresponds to Article 20(2) ICC 75 except that, regarding party costs, the term 'normal legal costs incurred by the parties' has been replaced by 'the reasonable legal and other costs incurred by the parties for the arbitration' It is thus recognized that 'other costs' (other than legal costs) may constitute [Page34:] allowable expenses which, according to the Tribunal's decision, may have to be reimbursed by the less successful or losing party.
Article 31(2) ICC 98 corresponds to Article 20(3) ICC 75, but contains a quite significant second sentence according to which 'decisions on costs other than those fixed by the Court may be taken by the Arbitral Tribunal at any time during the proceedings'. Again, this is a significant improvement and does away with a sometimes harshly criticized practice under the old Rules, namely that the determination of party costs and their allocation were always deferred to the final award. Thus, where the Tribunal had made an interim Award (e.g. on jurisdiction) or a partial award, the ICC always took the view that the Tribunal should not entertain and determine, within such an interim or partial award, the 'winning' party's claim for reimbursement of its own costs incurred as a consequence of the procedure conducted so far (for instance for outside counsel, party experts, in-house counsel and staff, costs and disbursement of witnesses and party representatives and the like).
Under the new Rules, the Tribunal will now be free to determine immediately the amount of reimbursable party costs in the framework of such an interim or partial award. Given the fact that such costs may sometimes be very substantial, the criticism was certainly appropriate and the Working Party had to propose a more flexible solution. At the ICC Conference of 4 June 1997 it was stressed by the participants that ICC Arbitral Tribunals should, in future, also make use of the new power conferred to them under the last sentence of Article 31 (2) ICC 98.
Article 31(3) ICC 98 on the fixing and allocation of costs among the parties corresponds to Article 20 (1) ICC 75.
27. Modified time limits
Basically, Article 32 ICC 98 is a new article providing that the parties may agree to shorten the various time-limits set out in the Rules. However, such an agreement will only become effective upon approval by the Arbitral Tribunal. The ICC Court, however, may extend the time-limits whenever necessary.
This provision in fact deals with the discussion on the much debated phenomenon of 'fast track arbitration', an expression à la mode to denote some ICC cases which have been conducted on a particularly expeditious time-schedule. The Working Party debated intensively as to whether particular provisions should be drafted for such an expedited procedure, for instance in a manner comparable to the WIPO Expedited Arbitration Rules. Some ICC National Committees strongly suggested that a set of special Rules be established, whereas most others were hesitant. The Working Party finally decided that there should not be a separate set of rules but simply a short article (in the sense of Article 32(1) ICC 98), but with the safeguards reflected in Article 32(2) ICC 98.
In my view, this solution is fully satisfactory because, in any event, a fast track arbitration can only work if both parties agree and are committed to a shortened time-schedule and to the summariness of the procedure. Moreover, such a procedure can only work if the arbitrators also agree to operate on that basis (which, as practice has shown, requires them to defer most of their other commitments during the time-period of the fast track arbitration).
28. Waiver
So far, the ICC Rules have had no explicit waiver rule comparable, for instance, to Article 58 WIPO AR, Article 20(1) LCIA 85, Article 25 AAA IAR, Article 27 CAMCA AR, Article 30 UNCITRAL AR, Article 4 UNCITRAL ML. 15
Although one may say that the concept 'speak or forever hold your peace' stems from a bona fides principle (which in any case should govern the conduct in arbitration), it was still useful to introduce a new provision indicating clearly that a party who does not promptly object if it believes that the procedure is incorrect will be deemed to have waived its right of objection. [Page35:]
The waiver's particular significance is highlighted if a party aims to challenge an award in any subsequent proceedings before State courts. Frequently, in the framework of such challenge procedures, a party will aim to show that the procedure before the Arbitral Tribunal has been defective. However, such arguments will have little merit where the complaining party has already had the opportunity to voice its objections in the framework of the arbitral proceedings. In arbitral practice, it is quite customary for the Arbitral Tribunal specifically to ask the parties, for instance at the end of hearings, whether there are any observations or objections in respect of the procedure conducted so far, thus clearly inviting the parties to make such matters known to the Tribunal immediately, and to record this appropriately.
The ICC National Committees were, with one exception, in favour of inserting a new waiver rule, and the Working Party was unanimously in favour of it. The new ICC provision is certainly a welcome improvement which will enhance certainty and bona fides in the arbitral process.
29. Exclusion of liability
Similarly, so far, the ICC Rules have lacked a provision protecting the ICC Court and the arbitrators from liability. 16
The new ICC provision is admittedly very broad, because it purports to exclude liability 'for any act or omission in connection with the arbitration', whereas other institutional rules are phrased more cautiously, recognizing that conscious and deliberate wrongdoing certainly cannot be covered.
The Working Party's view was that, in the case where a liability claim is filed, it will be for the national court to determine to what extent it was permissible to exclude liability, having regard to the law or laws which govern the relationship between the party and the ICC Court or the arbitrators.
Again, the addition of this provision constitutes a welcome improvement and enhances the integrity of the arbitral process.
30. General rule
But for stylistic adaptations, this rule is the same as the old Article 26 ICC 75. It did not give rise to any particular discussions within the Working Party. The relevance and the meaning of the second part of the sentence 'shall make every effort to make sure that the Award is enforceable at law' have been discussed elsewhere. I would simply add as a footnote that the criterion of enforceability should not outweigh or override the Arbitral Tribunal's task of rendering a correct and legally sound decision.
The new Rules do not come as a shock. They are more evolutionary than revolutionary. ICC procedures remain for the most part in the hands and under the control of the parties. Expediency and efficiency of the process are now certainly enhanced in an altogether impressive way, while at the same time those characteristic elements are preserved which make ICC arbitrations an impressive success story.
The 'product' now on the table is certainly carefully considered and well balanced. It incorporates the experience and the wisdom acquired in the handling of some 7000 cases during the last three decades, and at the same time leaves room for much flexibility and for the developments of the decades to come. Mathieu de Boisséson, in his comments submitted to the Conference of 4 June 1997, spoke (à la Marcel Proust) of a 'recherche de l'équilibre' and of a 'recherche de la sobriété, mais sans moralisme' - and I believe that his words touch on the centre of what inspired the Working Party, and all those inside and outside the ICC who devoted so much of their time to comment on the numerous drafts that circulated around the globe prior to the adoption of the final version of the 1998 Rules. [Page36:]
I cannot conclude without expressing my sincere appreciation for the most impressive work done by Me Yves Derains as the Chairman of the Working Party. The ICC and all of the users of ICC arbitration (in whatever capacity) will remain deeply indebted to him. Our very particular gratitude is owed as well to Stephen Bond as the Vice-Chairman of the Working Party, to Eric A. Schwartz as the former Secretary General and to the General Counsel, Dominique Hascher. The Working Party operated under the control of the Chairman of the ICC Commission on International Arbitration, Me Paul A. Gélinas, who set the parameters for this massive work. When the process for revising the ICC Rules started in April 1995, most practitioners very seriously doubted that it would be possible to undertake such a task within a reasonably short time scale - but they all underestimated Me Gélinas' and Me Derains' energy, commitment and hard work! Thus, the sentence by Wayne W. Dyer once again proves to be true: 'The only limits we have are the limits we believe.'
A very fine 'tool' is now available for the benefit of all parties engaged in the arena of international business and trade. To use it in a very professional manner, whether as arbitrators or as lawyers, will be our challenge and commitment and indeed our nobile officium in the years to come.
1 'The ICC Arbitral Process (Part III) : the Procedure before the Arbitral Tribunal', ICC International Court of Arbitration Bulletin, Vol. 3/No 2, (1992), pp. 18-45
2 The following abbreviations will be used when comparing the ICC Rules to other institutional rules: ICC 75 = the ICC Rules of 1975, as amended in 1988 ICC 98 = the new ICC Rules coming into effect on 1 January 1998 AAA IAR = the International Arbitration Rules of the American Arbitration Association, as amended and effective 1 April 1997 LCIA 85 = London Court of International Arbitration Rules 1985 LCIA 98 = draft for the revision of the LCIA 85 Rules WIPO AR = WIPO Arbitration Rules 1994 UNICITRAL AR = UNICITRAL Arbitration Rules adopted 15 December 1976 UNICITRAL ML = UNICITRAL Model Law on International Commercial Arbitration adopted 21 June 1985 CAMCA AR = Arbitration Rules of the Commercial Arbitration and Mediation Centre for the Americas, of 15 March 1996.
3 Compare e.g. Article 28 UNCITRAL AR, Article 25 UNCITRAL ML, Article 56 WIPO AR, Article 6(7) LCIA 85, Article 23 AAA IAR, Article 25 CAMCA AR; compare also the detailed provisions in some national arbitration acts, such as Section 41 of the 1996 English Arbitration Act.
4 ICC Case No 5836/MB in re: Dutco Construction Co. v/ BKMI Industrieanlagen GmbH and Siemens AG.
5 See also Article 34 WIPO AR; Article 11 (2) AAA IAR
6 Compare hereto Article 5(2) LCIA 85, Article 38 (a) WIPO AR, Article 15(1) UNCITRAL AR and Article 19(2) UNCITRAL ML.
7 The drafts established by the Working Party always referred to 'the law or rules of law' (identical in fact to Art. 59(a) WIPO AR).
8 These are extensively discussed in my Report "The ICC Arbitral Process (Part III): The Procedure before the Arbitral Tribunal", ICC International Court of Arbitration Bulletin, Vol. 3/No. 2, (1992), pp. 18-45.
9 Compare Article 26(2) UNCITRAL ML.
10 Compare hereto Article 48 (b) WIPO AR, Article 24(2) and (3) UNCITRAL AR, Article 19 (3) AAA IAR, Article 13(1)(f) and (i) LCIA 85.
11 Compare hereto the article by Paulsson & Rawding: 'The Trouble with Confidentiality', ICC International Court of Arbitration Bulletin, Vol. 5/No 1 (1994), pp. 48-59.
12 Compare hereto Article 28 UNCITRAL AR, Article 25 UNCITRAL ML, Article 56 WIPO AR, Article 6(7) LCIA 85, Article 23 AAA IAR, Article 25 CAMCA AR; compare also for instance the provisions in Section 41 of the 1996 English Arbitration Act.
13 See e.g. Article 57 WIPO AR, Article 24 AAA IAR, Article 26 CAMCA AR, Article 29 UNCITRAL AR.
14 Compare hereto the provisions in Article 37 UNCITRAL AR, Article 33(3) UNCITRAL Model Law, Article 17(3) LCIA 85, Article 27(3) LCIA 98, Article 66(c) WIPO AR.
15 Compare also the extensive wording in Section 73 of the 1996 English Arbitration Act.
16 Compare hereto Article 77 WIPO AR, Article 35 AAA IAR, Article 19 LCIA 85, Article 37 CAMCA AR; compare also Sections 29 and 74 of the 1996 English Arbitration Act.