I. Introductory remarks

This paper deals with two provisions under the new 1998 ICC Rules (the 'new Rules'), one is a 'novelty', the other a 'remake'. The 'novelty' is article 29 of the new Rules providing for the correction and interpretation of awards. This is an entirely new provision, which, in following a predominant trend in national arbitration laws and international arbitration rules1 contributes to making the new Rules 'state of the art'2 The 'remake' is article 30 of the new Rules revising the system for the payment of advances on costs with the aim of eliminating delays in the arbitration proceedings.3

II. The 'novelty': correction and interpretation of awards under the new-Article 29

What is the need for such a provision in ICC arbitration?

ICC arbitration, in theory, as opposed to other institutional systems, appears to be the only institutional system where such provision might seem to be superfluous, given the fact that every award is scrutinized and approved by the ICC Court prior to its signing by the Tribunal and notification to the parties. Errors of clerical, computational, typographical or of similar nature, therefore, should be detected by the ICC Court during its scrutiny of the award, and corrected prior to the signing of the award by the Tribunal.4

What is foreseen by the new Rules is exactly what does happen in practice: out of approximately 200 awards approved each year by the Court,5 and despite ICC arbitrators using their best efforts in drafting awards, only a handful pass such scrutiny without the Secretariat and/or the Court finding at least one typographical error. In some cases, as part of [Page54:] the scrutiny of the award, the Court also seeks clarification of the reasoning given by the arbitrators, as it is empowered to do under the ICC Rules.

However, as practice has shown, the system is not 100% watertight, and, on past experience, the need to have corrections made to an award has arisen even after the approval of the award by the Court and most often after its notification to the parties.6 The ICC Court has also been faced with requests for the interpretation of awards. The current ICC Rules making no provision in this regard, the ICC Court rightly wanted to fill such gap.

The new provisions under Article 29

Article 29 applies to any award, not just to the final award7, and provides for two possibilities (see Annex 1):

The first situation is where the Tribunal itself detects that it has made an error. It does not matter whether the award has already been notified to the parties as long as the Tribunal submits its request to the ICC Court within 30 days of the date of the award, that is to say, the date of signature, not the date of notification to the parties (Article 29 (1)).

The second situation is where one party, upon receipt of the award, detects an error. Such party then has 30 days to submit an application for correction to the Secretariat of the ICC Court. Within the same time-limit, the party may also submit a request for interpretation or for clarification of the award. In both cases the application is also to be sent to the Tribunal and to the other party. The Tribunal may then fix a time-limit in which the other party is to submit his comments. Once the Tribunal has received these comments, it will decide whether to reject the application or to accept it. If it rejects the application, it will simply write a letter to the parties stating that there is no need to correct or to interpret the award (Article 29 (2)).

If, on the other hand, the Tribunal decides to accept the application, it will have to submit its decision to the ICC Court in the form of a so-called 'addendum' to the award. The ICC Court will then review, scrutinize and approve the addendum to the award. After signature of the addendum by the Tribunal, the Secretariat will notify it to the parties. The addendum is not a new award nor a replacement of the old award but simply, as the word says, an 'addendum,' which will be deemed to be incorporated in the award (Article 29 (3)).

As for any additional costs incurred by the Tribunal in the event of correction or interpretation, Article 2 (7) of the revised Appendix III to the new Rules8 gives the Court the discretion to fix an advance in respect of additional fees and expenses of the Tribunal in dealing with applications made under Article 29 (2) of the new Rules. The need for such a special advance might occur in particular if the interpretation of an award is requested, since the arbitrators may have to meet amongst themselves or even with the parties in order to decide upon the request for interpretation of the award.9

III. The 'remake': advance on costs under the new Rules-Article 30

Why was it necessary to revise the existing provisions?

The advance on costs is the payment required by the Court in order to cover the costs of the arbitration, in other words the ICC's [Page55:] administrative expenses, the fees of the arbitrators, and any arbitration-related expenses, i.e. out-of-pocket expenses, of the arbitrators.10

Costs in ICC arbitration have always been a rather sensitive issue, because all three players in the arbitration are concerned: the institution, i.e. the ICC Court and its Secretariat, the arbitrators, and of course the parties. The requirement to advance the costs of arbitration is also a highly technical and complicated issue, which has a direct impact on the smooth conduct of an ICC arbitration.

Already in 1975 and 1988, the ICC Rules made quite significant changes to the advance on costs system; in 1993, Appendix III to the ICC Rules, which contains the Schedule on Conciliation and Arbitration Costs, was also amended. It should therefore come as no surprise that the new Rules of 1998 have continued along such course and further revised the advance-on-costs system. While no miracle solution has been found (because there is no such solution), there are nevertheless improvements.

The current system of staggered advances on costs

Before examining the changes, the main features of the current system (provided in Article 9 of the ICC Rules) will be recalled. The advance on costs is paid by both parties in two equal installments: the first prior to submission of the file to the arbitrators by both the Claimant and the Respondent in equal shares; the second after the Terms of Reference are signed, and as a condition of the Terms of Reference becoming operative, again by both the Claimant and the Respondent in equal shares (see Annex 2).

In theory, the system only works smoothly if both parties pay their share simultaneously within the 30 days allocated by the Secretariat, but the practice has proven to be quite different. The Respondent will only pay its share once he is advised by the Secretariat that the Claimant has paid. The Claimant, which in practice is therefore to pay first, does not always do so within 30 days. Once the Secretariat has informed the Respondent that the Claimant has paid, the Respondent normally is to pay within an additional period of 15 or 30 days. However, the Respondent may wait until the end of the extended time-limit to make his payment. If the Respondent refuses to pay his share, then the Secretariat will have to go back to the Claimant and ask him to make such payment. Following up on the financial status makes the Secretariat's role of supervision a burdensome task.

The result is that very often there are significant delays before the first 50% installment is received by the Secretariat, which is the condition for transmitting the file to the arbitrators.11 Further delays may subsequently arise since, under the current ICC Rules, only once the second 50% installment has been paid will the Terms of Reference become operative.12 Since the payment of the full advance on costs is a condition for the Terms of Reference entering into force, quite a few arbitrators and parties do not know what to do after signing of the Terms of Reference but prior to their becoming operative. Indeed, the question whether the arbitrators may fix time-limits for the submission of briefs or otherwise proceed with the arbitration has given rise to much debate. In some arbitrations, time has thus been wasted before the Terms of Reference became operative, and the advance-on-costs system has often proven to be a readily available playing field for parties' dilatory tactics. One of the major objectives of the new Rules being an overall reduction of delays, a revision of the advance-on-costs system was therefore required.13[Page56:]

The new provisions under Article 30

The new system is to be found in the chapter of the Rules entitled 'Costs,' which has two

articles: Article 30, 'Advance to cover the Costs of the Arbitration,' and Article 31, 'Decision as to the Costs of the Arbitration'. This paper only deals with Article 30.14

Under Article 30, three steps are necessary in respect of the payment of the advance on costs (Annex 3).

The first step is unchanged with respect to the present system: the Claimant is to pay a non-refundable fee for administrative costs of the ICC Court at the time of filing the Request for Arbitration, which as of 1 January 1998 will amount to US$ 2500.15 Article 4 (4) and (5) of the new Rules now specifically state that as long as the filing fee has not been paid, the Request for Arbitration will not be notified to the Respondent. That is a simple rule-'no money, no notification'.

After receipt of the Request for Arbitration, at the second step, the Secretary General 'may' fix a provisional advance on costs. It will be payable by the Claimant alone. Payment thereof is a pre-condition to the transmission of the file to the Tribunal (Article 30 (1)). The Secretary General is expected to make his decision following receipt of the Answer from the Respondent, and once it is known whether one or three arbitrators will be appointed. The provisional advance is to cover, and normally not to exceed, the ICC's administrative expenses, the fees of the arbitrators-but this time only the minimum provided for in the ICC's scale based on the amount of the claim, or, if the amount is unquantified, fixed at the Secretary General's discretion-and a lump sum amount to cover the out-of-pocket expenses of the arbitrators incurred up to the signing of the Terms of Reference.16 Indeed, the work carried out by the Tribunal up to signature of the Terms of Reference should not be too time-consuming. This justifies the allowance of only the arbitrators' minimum fee expectation for calculating the amount of the advance on costs.

Under the new system, no provisional advance is payable in respect of any counterclaims the Respondent might submit together with his answer. Therefore, it may be observed that the Respondent (and counter-claimant) will in future sign Terms of Reference without having had to make any advance on the costs of arbitration.

Consequently, the Claimant is now solely responsible for making the required advance payment to the ICC without delay. Once the Claimant has paid, the file will be transmitted to the Tribunal as now stipulated in Article 13, which in substance is unchanged from Article 10 of the current ICC Rules.

In contrast with the current system, the Court will normally only become actively involved at the third step, whereupon the Court is to fix the total advance on costs (Article 30 (3)).

The new Rules stipulate that the total advance is to be fixed 'as soon as practicable'. Many users will find that such stipulation is not helpful, since the determination of when it is practicable to fix the total advance on costs, and by implication the time for it to be paid by the parties, will depend on the circumstances of each case. The new wording leaves wide discretion to the ICC Court to determine the timing of the total advance. In fact, the first exercise of such discretion will be for the Secretary General in deciding whether a matter is to go before the ICC Court for it to fix the total advance. The ICC Court will then have to decide whether it considers the timing to be 'as soon as practicable'.

In the author's view, the latest moment at which the total advance will probably be fixed will be once the Terms of Reference have been signed, since the amounts at stake will then be known. The ICC Court may also do so at a much earlier stage depending on the circumstances of the case. However, the term 'as soon as practicable' certainly does not give the ICC Court carte blanche to act in an arbitrary way. It may be assumed that the ICC Court will establish some internal guidelines so that the system can easily [Page57:] be applied to a large number of cases without giving the appearance of arbitrariness, while allowing the specific circumstances of each case to be carefully considered. The flexibility which is given to the ICC Court should make the new system much easier to adapt to the needs of the parties in a given arbitration.

The ICC Court will determine the total advance by taking into account the amounts of the claim and of the counterclaim. Article 30 (2) specifically says that the advance is to be 'an amount likely to cover costs for claims and counterclaims'. The words 'and counterclaims' are not included in the current existing Rules and have been added in the new Rules as a clarification of what is in fact the existing practice.17

There is now express provision that the value of a set-off which may have been made by one of the parties may be included in the amount in dispute. This provision is taken from Article 16 of the current Internal Rules of the ICC Court (Appendix II), so as such it is not a new provision. This provision has now become Article 30 (5) of the new Rules.

Once the total advance is fixed by the ICC Court, 50% is to be paid by the Claimant, less the provisional advance, if any, already paid, and 50% by the Respondent. The advance on costs will thus be payable by both parties in equal shares, the same principle as in the current ICC Rules.18

Separate advances for principal claims and counterclaims remain possible, the ICC Court now being expressly authorized in the new Rules to re-adjust the advance on costs at any time,

Article 30 (2).19

What happens in case of default in payment of the total advance on costs? The new Rules maintain the possibility of substitution by one of the parties as under the current ICC Rules.20 Normally, the Claimant will have to pay in substitution for the Respondent who is in default, and may still do so by posting a bank guarantee for the unpaid portion (Article 30 (3)).

As mentioned earlier, the payment of the advance on costs will no longer have any impact on the Terms of Reference becoming operative.21 The coming into force of the Terms of Reference is now unconnected to the payment in full of the advance on cost. However, the new Rules expressly provide for a mechanism allowing the arbitrators to proceed only with those claims and those counterclaims for which the advance has been paid.22

In the event of default in payment, once the file has been transmitted to the arbitrators, the Secretariat and the arbitrators are to consult each other to see what exactly should be done, the Secretariat having the express right to direct the arbitrators to suspend their work. The Secretariat may fix a time-limit within which the party in default is to pay, 15 days at a minimum as opposed to 30 days under the current Internal Rules of the ICC Court.23 If within this time-limit the amount has not been paid, or if the time-limit is not extended, then the claim will be considered as withdrawn unless the party in default objects. If the party in default does object, then a second step will be followed but, if at the end there is no payment, the claim will be considered as withdrawn (Article 30 (4)).

Once the final award is rendered, the ICC Court will fix the costs of arbitration. It has to make sure, as it does under the current Rules, that the costs of arbitration have been paid in full (Article 28 (1) ).

To summarize and conclude: the advance on-costs system, although still quite complex, has been streamlined in a way that gives sufficient flexibility for an optimum case-by-case procedure. Obviously, only practice in the future will show how the Secretary General and the ICC Court will make use of this flexibility, and whether the discretion given under Article 30 will, if used in the right way, and at the right time, allow the objective to be achieved: reduction of overall delay in ICC arbitration. This is necessary for the ICC to maintain its premier role in international commercial arbitration. [Page58:]

Annex 124 Correction and Interpretation of Awards The New ICC Rules of 1998

• Clerical, computational, typographical or similar errors may be corrected

( after scrutiny and approval by the ICC Court

(and, usually, after notification of the award to the parties

• On the own initiative of the AT,<sup><a href="#footnote25">25</a></sup> Article 29 (1)

( correction alone

( if submitted to the ICC Court within 30 days of the date of award

• On the application of a party, Article 29 (2)

either for correction and/or interpretation

if submitted to the ICC Secretariat within 30 days of receipt of award

( the application is to be sent to the AT and the other party

( the AT fixes a time-limit for the other party to submit comments

( the AT may either

(i) reject the application

(ii) accept the application

• The correction and/or interpretation is made in the form of an addendum, Article 29 (3)

( AT submits its decision in the form of a (draft) addendum

(ICC Court approves the (draft) addendum

( ICC Secretariat notifies addendum after signature by the AT to the parties

Annex 2 - Advances on Costs - The current ICC Rules of 1988

• ICC Court fixes advance on costs

Payable in two steps, each time within 30 days, as follows:

( Prior to transmission of the file to the AT

(i) 25% by the Claimant

(ii) 25% by the Respondent

( After signing the TOR26 and for the TOR to become operative

(i) 25% by the Claimant

(ii) 25% by the Respondent

Article 9 of the ICC Rules and Appendix III thereto

Annex 3 - Advances on Costs - The New ICC Rules of 1998

• Secretary General fixes provisional advance on costs

( Upon receipt of the Request for Arbitration

Payable, within 30 days, as follows:

( By the Claimant alone

( Prior to transmission of the file to the AT

• ICC Court fixes total advance on costs

( As soon as practicable

Payable, within 30 days, as follows:

(i) 50% by the Claimant (less provisional advance)

(ii) 50% by the Respondent

Article 30 of the ICC Rules and Appendix III thereto

1
Many developed systems of national arbitration laws as well as international Arbitration Rules permit the correction of errors by arbitrators in their award. Some also foresee the possibility of interpretation. One of the considerations of the Working Party in respect to the incorporation of such provision was that since 'most other modern rules today provide tem; so why not the ICC'. Although the need for its incorporation was not perceived as urgent of itself, it was a provision which the Working Party considered should be incorporated 'in the context of a general ' toilettage' of the Rules'. See ICC Commission of International Arbitration, Meeting of 19 October 1995, Doc. N° 420/341, art 7.

2
The revision undertaken by the ICC of its Rules should be the Rules well into the 21st century. At its meeting of 19 October 1995, the Working Party sought a mandate for a general revision of the ICC Rules in order to 'culminate I a text that is capable of responding to the needs of practitioners for at least ten years': see ICC Commission on International Arbitration, Meeting of 19 October 1995, Document No. 420/ 342, at 2.

3
The aims of the ICC Commission on International Arbitration in revising the Rules was inter alia to reduce delay and rationalize costs : see ICC Commission on International Arbitration, Note to National Committees of 28 December 1995, Document N) 420/344, especially at 1 and 2.

4
For a discussion of the award in ICC arbitration, see e.g. Marcel Fontaine, 'The ICC Arbitral Process, Part VI: The Award, Drafting the Award A Perspective from a Civil Jurist', The ICC International Court of Arbitration Bulletin, Vol. 5/No 1 (1994), 30 et seq. ; see also Alain Plantey, 'A Major Realisation of the ICC: International Arbitration', The ICC International Court of Arbitration Bulletin, Vol. 5/No 1 (1994), 3 at 15-18. See, on correction and interpretation of awards, Wolfgang Kühn, 'Rectification and Interpretation of Arbitral Awards', The ICC International Court of Arbitration Bulletin, Vol. 7/No 2 (1996), 78 et seq.; see also Gunter, 'L'interprétation de la sentence: examen de quelques questions à la lumière d'un cas réel', ASA Bulletin, Vol. 4 (1996), 574 et seq.

5
In 1996, the ICC Court approved 166 final awards, 36 partial awards and 19 awards by consent. See The ICC International Court of Arbitration Bulletin, Vol. 8/No 1 (1997), p. 8.

6
Strictly speaking, once an award has been approved by the ICC Court, no changes may be made by the arbitrator (certainly with the exception of the correction of typographical errors).

7
Under the current ICC Rules, an award may be by consent (Article 17) and 'partial or definitive' (Article 21). Under the new Rules, Article 2 gives a definition of 'Award' as including 'inter alia, an interim, partial or final award, as the case may be'; an award may also be by consent (Article 26); the Court's power of scrutiny applies to 'any award' (Article 27).

8
Appendix III to the ICC Rules of Arbitration relates to the Arbitration costs and fees, and was entirely revised. It will come into force together with the new Rules on 1 January 1998.

9
However, the scrutiny and approval of the addendum by the ICC Court will not lead to further administrative expenses on the part of the ICC.

10
Article 1 (4) of the revised Appendix III to the new Rules (supra n. 9). For a discussion of costs generally under the ICC system, see Eric A. Schwartz, 'The ICC Arbitral Process, Part IV: The Costs of ICC Arbitration', The ICC International Court of Arbitration Bulletin, Vol. 4/No 1 (1993), p.8 et seq.; see also Buhler, 'Costs in ICC Arbitration: A Practitioner's View', 3 The American Review of International Arbitration (1992) 116 et seq. For a discussion on advances on costs under the ICC system, see David Byrne, Payment of Advances on Fees to Arbitrators in ICC Proceedings, The ICC International Court of Arbitration Bulletin, Vol. 7/No 2 (1996), 84-87; and Dobrosav Mitrovic, 'Advance to Cover Costs of Arbitration', ibid., 88-91.

11
Current ICC Rules, Article 9 (3).

12
Current ICC Rules, Article 9 (4).

13
See the ICC Commission on International Arbitration, Note to National Committees of 28 December 1995, Doc. No 420/344, at 3-6 and 25-27.

14
Article 30 together with Article 1 of the revised Appendix III provide for no less than 16 paragraphs in respect of advances on costs, whereas when, in 1923, the ICC issued its first Arbitration Rules, there was just one paragraph dealing with the same subject!

15
Article 1 (1) of the revised Appendix III.

16
See Article 1 (2) and (3) of the new Appendix III.

17
Current ICC Rules, Article 9 (1).

18
Current ICC Rules, Article 9 (2).

19
This confirms the ICC Court's current practice

20
Current ICC Rules, Article 9 (2).

21
See current ICC Rules, Article 9(4)

22
Article 30(4) of the new Rules and Article 1 (3) of the revised Appendix III.

23
Appendix II ( Internal Rules) Article 15.

24
These summaries form part of the article to which they are appended and therefore express the views of the author.

25
AT = Arbitral Tribunal

26
TOR = Terms of Reference