I. General considerations

The 1998 ICC Rules of Arbitration constitute, from various viewpoints, the most important revision of the ICC arbitration system since 1955, especially with respect to the powers and obligations of the Court and the Secretary General.

It was therefore necessary for the Court to decide on the appropriate way to deal with the application of these new Rules. In establishing its policy the Court took into consideration the following elements:

- while it will be necessary, in view of the fact that some 900 cases are currently pending, to continue to administer arbitrations for still some time under the old Rules, it is in the interest of all users of ICC arbitration that the new Rules, with the clarifications and new elements they contain, should, as a general rule, apply to all new cases and, if so agreed by the parties, also to existing proceedings;

-it is not at present possible to envisage all questions which will arise in connection with the application of the new Rules.

The Court, a unique feature of ICC arbitration, is responsible for ensuring the proper application of the Rules. Assisted by its Secretariat, the Court is in a position to examine all matters within a short period of time. For all practical purposes, the Court meets every week; once a month in a Plenary Session, otherwise as a Committee. If a Committee considers that a specific issue should be reviewed and decided at a Plenary Session, it will transfer the case accordingly (Appendix II, Article 4 (5) (c)). Decisions regarding the application of the new Rules that are of a general interest will be the object of a Note from the Secretariat or made public through the Bulletin.

At the present time, it is therefore only necessary to issue guidelines to the Secretary General with respect to his new powers and to determine the responsibility of the Committee of the Court.

II. Transition

The new Rules become effective on 1 January 1998. According to Article 6 (1), the parties may agree that a previous version of the Rules will apply:

Where the parties have agreed to submit to arbitration under the Rules, they shall be deemed to have submitted ipso facto to the Rules in effect on the date of commencement of the arbitration proceedings unless they have agreed to submit to the Rules in effect on the date of their arbitration agreement.

In view of the fact that the new Rules contain important clarifications and new features, it can be expected that the parties will normally not make use of this possibility. In view of these improvements, the parties are also given the possibility to agree that the 1998 Rules shall apply to cases filed before 1 January 1998. This can be done by means of a separate agreement, or after the constitution of the Arbitral Tribunal, normally in the Terms of Reference.

Regarding the application of Appendix II, the Court decided that the 1998 version becomes effective on 1 January 1998 and applies to all cases pending on that date as well as to all new cases. [Page8:]

With respect to cases pending on 1 January 1998, and to cases which in accordance with Article 6 (1) of the new Rules will be submitted to the Rules in effect on the date of the parties' arbitration agreement, Articles 12 through to 18 of Appendix II to the 1988 Rules will continue to apply, or, possibly, the relevant provisions of the earlier Rules and Appendixes.

III. New cases

The 1998 Rules grant specific powers to the Secretary General which did not exist until now, especially the power under Article 30 (1) to request the Claimant, immediately after receipt of the Request for Arbitration, to pay a provisional advance to cover the cost of arbitration until the Terms of Reference have been drawn up. Furthermore, under Article 9 (2), the Secretary General may, in certain cases, confirm co-arbitrators, sole arbitrators and chairmen of arbitral tribunals.

The Court has decided that the following distinctions should be made:

- As a general rule all cases filed as from 1 January 1998 will be administered under the new Rules.

- If, however, the arbitration clause which constitutes the basis for the Request for Arbitration contains words to the effect that the arbitration agreement refers to the Rules 'in effect at the time the agreement is concluded' or something similar, the old Rules thus identified (usually the 1988 Rules) will apply. In such cases, however, the Secretariat will invite the parties to consider the possibility of coming to an agreement on the application of the new Rules. If such an agreement is concluded (which can be contained either in identical declarations at the very beginning of the arbitration or then possibly in the Terms of Reference) obviously the new Rules will apply.

IV. Costs of the arbitration

The matter of the application of the 1998 Rules to new arbitral proceedings has to be clearly separated from the provisions regarding the Schedule of Costs. Appendix III, Article 4 (1) provides:

The Scales of Administrative Expenses and Arbitrator' s Fees set forth below shall be effective as of January 1, 1998 in respect of all arbitrations commenced on or after such date, irrespective of the version of the Rules applying to such arbitrations.

This procedure corresponds to the practice which was adopted in the past, when the new Schedule of Costs became effective on 1 January 1993.

Therefore all requests for arbitration received by the Secretariat after 31 December 1997 will have to be accompanied by a non-refundable payment of US$ 2500.

On the other hand, all requests for arbitration received before 1 January 1998 will continue to be administered under the relevant previous Schedule and this also when the parties have agreed that the new Rules will apply to their dispute.

V. Effect of the arbitration agreement

Under the 1988 Rules the effect of the agreement to arbitrate is dealt with in Articles 7 and 8 of the Rules and Article 12 of Appendix II.

In the future, the Secretary General will in all cases, including those where the existence of an ICC arbitration might be deemed to be doubtful, send the Request to the Respondent (Article 4 (5)) and invite the Claimant to pay the provisional advance (Article 30 (1)). If the Respondent in its Answer to the Request does not content the ICC arbitration clause, the arbitration will continue. If the Respondent contents the existence, validity or scope of the arbitration agreement or if the Respondent does not file an answer, the matter will, after payment by the Claimant of the provisional advance, be submitted to the Court. In clear cases of absence of an arbitration agreement under the Rules, the Court will decide that the arbitration cannot proceed. If the Court is prima facie satisfied that an arbitration agreement under the Rules may exist, it will refer the matter to the Arbitral Tribunal, which will then take a decision on its own jurisdiction. [Page9:]

VI. Determination of the decisions that may be taken by the Committee

Under Appendix II, Article 11 (a), to the 1988 Rules 'the Committee is empowered to take any decision within the jurisdiction of the Court, with the exception of decisions concerning challenges of arbitrators, allegations that an arbitrator is not functions and approval of draft awards other than awards made with the consent of the parties'.

Article 4 (5) (a) of the 1998 Appendix II provides: 'The Court shall determine the decisions that may be taken by the Committee.'

The Court has decided that questions dealing with the status of an arbitrator will be decided at a Plenary Session. This especially covers the challenge of arbitrators (Article 11 (3)), replacement of an arbitrator when the Court, on its own initiative, decides 'that he is prevented de jure or de facto from fulfilling his functions, or that he is not fulfilling his functions in accordance with the Rules or within the prescribed time-limits' (Articles 12 (2) and 12 (4)).

Furthermore, decisions not to replace an arbitrator subsequently to the closing of the proceedings (Article 12 (5)) will also be taken by the Court in Plenary Session.

With respect to the scrutiny of the award (Article 27), the Committee will now be empowered to approve finally certain awards, which will allow earlier notification to the parties. Awards which raise particular problems or difficulties will continue to be reviewed and approved at a Plenary Session.

All other matters will first be submitted to the Committee.

Under Appendix II, Article 4 (5) (b), 'decisions of the Committee are taken unanimously.' Article 4 (5) (c) provides that 'when the Committee cannot reach a decision or deems it preferable to abstain, it transfers the case to the next Plenary Session, making any suggestions it deems appropriate'. When dealing with matters which are for the first time expressly addressed in the 1998 Rules (e.g. multiple parties (Article 10), correction and interpretation of the award (Article 29)), the Committee will often want to submit the matter, together with its recommendations, to the next Plenary Session, at least until such time when clear guidelines have been established based on the practice of the Court.

In this connection it should also be mentioned that under Appendix II, Article 4 (4), two members of the Committee constitute a quorum. This rule is intended to be applied to individual matters on the agenda in which a member is involved in any capacity whatsoever and must therefore refrain from participating in the discussions or the decisions of the Court (Appendix II, Article 2 (3) and (4)). The Committee will always consist of three members, but specific decisions can be taken by two members only, provided they are unanimous.

VII. Conclusions

The new Rules do not constitute a revolution of ICC arbitration but, rather, a further step in an evolution dictated by the changes which have occurred on the world arbitration scene during the last twenty years, especially:

- globalization of business, and, flowing therefrom, of arbitration as the preferred method to resolve international business disputes;

- general acceptance of the 1958 New York Convention on the Enforcement and Recognition of Foreign Arbitral Awards;

- denationalization of international arbitration, coupled with a certain degree of harmonization, especially through the UNCITRAL Model Law;

- experience gained when applying the 1975/88 Rules and the analysis of the problems which have arisen over the years.

Because of the unique role which the International Court of Arbitration and its Secretariat play, it can be expected that practical, user-friendly solutions, which are in the interest of the arbitral process, can be found when the Court is called upon to apply the new Rules.