Introduction

1. Only 33 new cases were referred to the Court of Arbitration during the year when the ICC introduced its 1955 Rules of Arbitration. When those Rules were revised in 1975, 182 Requests for Arbitration were filed. In 1995, when the work leading to the 1998 revision began, this figure had risen to 427. We can see from comparing these figures the amazing increase in activities at the ICC Court of Arbitration that as taken place in the second half of the twentieth century, and particularly over the past twenty years. There is no doubt that this is evidence of its success as an arbitration institution , but also a consequence of the general tend towards resorting to arbitration as a method for settling international commercial disputes.

This trend is not merely reflected in the increase in the number of cases. It is also demonstrated by a greater diversification in the origin of the parties. Whereas traditionally the majority of the parties came from Western Europe, since 1996 this has no longer been the case, with a substantial role being played by Asia, Latin America, and central and eastern Europe. This development has naturally had an impact on the choice of the place where the arbitration proceedings take place, which also tend to be less concentrated in Europe.

Lastly, because of its worldwide success, international arbitration is becoming less and less a field reserved to specialists, while the procedures are increasingly complex.

2. ICC arbitration had to be adapted to these changes. The modest amendments to the 1975 Rules which led to the adoption in 1988 of the text which will remain in force until the end of 1997, were not sufficient. That is why the Commission on International Arbitration, then under the chairmanship of Dr Ottoarndt Glossner, decided at its meeting in April 1995 to set up a working party to study whether or not it was appropriate to amend the ICC Rules of Arbitration. The Working Party 1 filed a report on 4 October 1995, concluding that a general revision of the Rules of Arbitration sufficient to respond to the needs of users for the next ten years was essential. At its meeting on 19 October 1995, the Commission on International Arbitration entrusted the Working Party with the task it had requested by laying down its working method (I) and defining its objectives (II)

.

I. Method

3. The Commission on International Arbitration wanted the revision to be carried out rapidly, while at the same time involving widespread consultations. Accordingly, the following timetable was adopted:

- December 1995: distribution of a text offering proposed solutions for achieving the defined objectives to the ICC National Committees;

- Spring 1996: discussion of these proposals by the International Commission on Arbitration;

- July 1996: distribution of a set of draft revised Rules to the ICC National Committees; [Page11:]

- Autumn 1996: discussion of the draft by the Commission on International Arbitration;

- adoption of the draft, either at an extraordinary meeting of the Commission on International Arbitration at the end of 1996, or in Spring 1997.

This timetable was kept to overall, since the revised text was finally approved by the Commission on International Arbitration under the chairmanship of Maître Paul-A. Gélinas, on 27 February 1997. After it had been examined at a special meeting of the International Court of Arbitration in March 1997, it was presented to the ICC Council meeting in Shanghai by the Chairman of the International Court of Arbitration, Dr Robert Briner, and finally adopted on 8 April 1997. The consultations had been wider than envisaged since in fact the 65 or so ICC National Committees were consulted three times. In parallel, several conferences with businessmen and lawyers were organized at the international level, as this was essential to ensure that the text of the ICC Rules of Arbitration remains compatible with as wide a range of procedural traditions as possible.

II. The objectives

4. The objectives of the revision specified by the Commission on International Arbitration on 19 October 1995 were the following:

- to reduce delays,

- to reduce unforeseeability,

- to rationalize the costs,

- to improve defective rules,

while at the same time respecting the characteristics of ICC arbitration and ensuring that the guarantees that users expect of it are preserved.

The Working Party's report on 4 October 1995 specifies the following factors as fundamental characteristics of ICC arbitration: its universality, the existence of a Court of Arbitration, the assistance of ICC National Committees, the supervision of time limits and of the financial aspects of the procedure by the institution, its flexibility, and its adaptability, the Terms of Reference and the preliminary scrutiny of draft awards by the Court of Arbitration.

A. Reduction of delays

5. The Working Party devoted the main part of its efforts to this point. Indeed, the feature of arbitral procedure that is criticised the most frequently is its slowness. Merely underlining that these criticisms often go too far or are even unfair, and that the lengthiness of international arbitration procedures is most often the result of extensions of time limits requested by parties to allow them to prepare their submissions and collect their evidence, is not enough. Certain delays can be attributed to the workings of the arbitration institution itself. The Working Party attempted to remedy this by giving itself the following secondary objectives:

- to speed up the transmission of the file to the arbitrators (1);

- to speed up the drawing up of the Terms of Reference (2);

- to speed up the proceedings before the arbitrators (3);

- to speed up the handing down of the arbitral award (4).

1) Speeding up the transmission of the file to the arbitrators

6. Article 10 of the 1988 Rules is worded as follows:

Transmission of the file to the arbitrator

Subject to the provisions of Article 9, the Secretariat shall transmit the file to the arbitrator as soon as it has received the Defendant's Answer to the Request for Arbitration, at the latest upon the expiry of the time limits fixed in Articles 4 and 5 above for the filing of these documents.

Under Article 4, the Defendant's Answer has to be presented within 30 days from the receipt of the Request for Arbitration, and by virtue of Article 5, the Claimant may file a note in reply to any counterclaim within 30 days from the communication of the counterclaim, which must be submitted with the Answer. Accordingly the file must thus be transmitted to the Arbitral Tribunal pursuant to Article 10: [Page12:]

- either within the 30 days following the date that the Request for Arbitration is filed (35 days taking into account a certain period to cover notification);

- at the latest, 60 days after the date when the Request for Arbitration is filed (70 days, inclusive of the notification periods).

Generally it is not possible to respect these time limits.

It must be recognized that Article 10 of the 1988 Rules draws the parties' attention to the fact that the transmission of the file to the arbitrators may be delayed by the payment of the advance on arbitration costs. Article 9 (3), which is referred to in Article 10, is worded as follows:

The Secretariat may make the transmission of the file to the arbitrator conditional upon the payment by the parties or one of them of the whole or part of the advance on costs to the International Court of Arbitration.

In practice, the transmission of the file to the arbitrators is subject to the parties' payment of 50% of the advance on costs of arbitration, and this is a frequent cause of delay of referal of the case to the arbitrators. This delay is not necessarily due to delay in the parties' payment of the advance, but rather to the fact that it has always been the practice for the amount of the advance to be determined and communicated to the parties only once the time limits referred to in Article 10 have expired.

In any case, this is only one aspect of the problem. Even if the transmission of the file to the arbitrators was not subject to the parties' payment of 50% of the advance on costs, because of the way in which the Rules are drafted and applied in practice, it is not possible for Article 10 to be complied with, even if there is no counterclaim.

How could the file be transmitted to the arbitrator 'as soon as the Defendant's answer is received' when the Secretariat does not invite the Court to take the necessary steps for constituting the Arbitral Tribunal and setting the procedure in place -which includes fixing the advance on arbitration costs - until after the Answer has been received?

Whatever the speed of the Court in taking its decision, of its Secretariat in notifying it, and of the National Committees and the parties in playing their part, it is impossible to comply with the objectives of Article 10 of the 1988 Rules.

7. The revised text does not restate the unrealistic wording of Article 10 and confines itself more simply, in its Article 13, to indicating that the file is to be transmitted to the Arbitral Tribunal as soon as it has been constituted, provided the advance on costs requested at this stage of the procedure has been paid. But, at the same time, it gives the International Court of Arbitration and its Secretariat the means for ensuring that this transmission does take place very quickly. In fact, Article 9 (2) authorizes the Secretary General of the Court of Arbitration to confirm arbitrators nominated by the parties or in application of their individual agreements provided they have filed a statement of independence without qualification or provided that a qualified statement has not given rise to objections. In practice, this means that the Secretary General may confirm the two arbitrators nominated by the parties shortly after the expiry of the 30-day period following the notification of the Request for Arbitration. He will also confirm the chairman of the Arbitral Tribunal as soon as the two arbitrators have nominated him. Naturally this presupposes that the parties have given the co-arbitrators the power to nominate the chairman of the Arbitral Tribunal, but recourse to this type of procedure is becoming increasingly common. In practice under the 1988 Rules the procedure for constituting the Arbitral Tribunal in such a case takes a minimum of 105 days. This period will easily be reduced to 60 days with the 1998 Rules.

Moreover, there should be nothing to prevent the case from being referred to the Arbitral Tribunal as soon as the latter is constituted. Under Article 30(1) of the 1998 Rules, the Secretary General of the International Court of Arbitration is entitled to invite the Claimant to pay a provisional advance in an amount intended to cover the arbitration costs until the Terms of Reference have been drawn up. As the Secretary General will be able to fix this advance when the Request for Arbitration is filed, there is every reason to think that it will already have been paid when the Arbitral Tribunal is constituted. Hence the file will be transmitted to the Arbitral Tribunal immediately. [Page13:]

2) Speeding up the drawing up of the Terms of Reference

8. While the Terms of Reference are undoubtedly very useful, the drafting of these Terms is complicated by two provisions of the 1988 Rules.

First of all, Article 13 (1) d) stipulates that the issues to be determined must be defined. In view of the fact that the submissions set out in both the Request and the Answer are often very brief, it is practically impossible to comply with this obligation.

Experienced arbitrators avoid this difficulty by inserting in the Terms of Reference an expression such as the one set out below which in effect negates Article 13 (1) d):

The Arbitral Tribunal will have to decide whether the claims and counterclaims filed as at today's date are admissible and if so whether they are well-founded.

Other arbitrators ask the parties to exchange pleadings before they will draw up the Terms of Reference, which not only entails a delay of at least two months but is also a waste of time in view of the fact that the parties will still be entitled to file other submissions after the Terms of Reference have been signed. In the worst cases, the arbitrators and the parties present their conflicting arguments at a hearing held for the purpose of drawing up the Terms of Reference, which can last from 2 to 3 days, whereas such a meeting should normally take no more than half a day.

Article 18 (1) d) of the 1998 Rules makes the determination of the points at issue optional.

The removal of the present obligation to define the points at issue in the Terms of Reference will avoid endless discussions, which are pointless in the absence of full pleadings and often lead the arbitrator to prejudge the solution of the dispute or, at least, to give the parties the impression that he has done so. On the other hand, the arbitrator may wish to indicate one or two of the issues to be determined (applicable law, jurisdiction), and hence he needs to be given freedom of action. The flexibility provided by Article 18 (1) d) of the 1998 Rules allows him to do this.

Article 16 of the 1988 Rules adds to the difficulty of getting the parties to agree on the text of the Terms of Reference. Indeed it prohibits the filing of any new claims after this document has been signed. That is why the Working Party preferred to stipulate in Article 19 of the 1998 Rules that decisions on the admissibility of new claims filed after the finalization of the Terms of Reference should be determined by the arbitrators on a case by case basis. They have to decide on the basis of the nature of the claim, the date when it is presented and finally, on all the circumstances of the dispute.

3) Speeding up the proceedings before the arbitrator

9. One of the main functions of the International Court of Arbitration is to ensure that the arbitrators comply with the time limit accorded to them for handing down their award.

It was felt that such a great responsibility should not be delegated to the Secretary General and should rather be left to the Court. Checking the time limit enables the Court to make an overall assessment of both the arbitrator's conduct of the procedure, and the Secretariat's administration of the file. However, under the Rules currently in force, the International Court of Arbitration does not have enough precise information at its disposal to exercise its control over the compliance with time limits.

Although Article 18 (2) of the 1988 Rules specifies that the 'Court may, pursuant to a reasoned request from the arbitrator or if need be on its own initiative, extend this time limit if it decides it is necessary to do so', in practice extensions of the 6-month time limit are granted systematically. In many cases, the Court has very little information on the content of the file, and a number of arbitrators do not even present a request for an extension which sets out the reasons.

In order to improve the situation, it was decided that when the Terms of Reference are communicated to the Court, the arbitrators should at the same time present a procedural timetable to the Court, for information, which they would undertake to follow until the end of the procedure. Such a timetable would endeavour to comply with the 6-month time limit restated in Article 24 (1) of the 1998 Rules. With this time limit brought to their [Page14:] attention, the arbitrators, and especially the parties, will know that cases where it is not complied with will be the exception, due to the characteristics of the case.

Any modification to the timetable, which will be inevitable in many cases, will be notified to the International Court of Arbitration. With such a system, extensions of the time limit for handing down the arbitral award will cease to be granted routinely and will henceforth depend on the genuine needs of the procedure.

4) Speeding up the handing down of the arbitral award

10. The lack of a definite closure of the hearing delays the handing down of the arbitral award. Yet, the 1988 Rules make no provision for declaring the proceedings closed, though naturally experienced arbitrators do make such an order. Article 22 (1) of the 1998 Rules makes such a declaration obligatory.

Similarly, Article 22 (2) of the 1998 Rules requires the arbitrators to indicate when they close the hearings, the approximate date when their draft award will be submitted to the Court of Arbitration. Any postponement of this date must be communicated to the Secretariat which will oblige the arbitrators to justify it and thus discourage some arbitrators from failing to give the drafting of the arbitral award the priority that it deserves.

B. Reducing unforeseeability

11. The users of ICC arbitration come from the widest possible variety of backgrounds. This means that it is impracticable to rely on a common generally-understood tradition which would make it superfluous to set out in written form solutions that would be obvious within the framework of a particular tradition. But this very diversity, leading to the convergence of many different and often opposing procedural traditions, precludes the possibility of going too far into the detail of procedural rules. If they did so, the ICC Rules would lose their flexibility and adaptability. They must be in a position to admit arbitrations in continental law, in common law, mixed arbitrations, etc... Hence a balance has to be found between flexibility as such and the foreseeability that is also essential.

The Working Party first of all took the view that one of the ways of reducing unforeseeability was to make the content of the Rules more accessible to users. In fact the structure of the 1988 Rules has been a cause of confusion for newcomers. For instance, from the standpoint of chronology it is inconsistent that the rules relating to the appointment of arbitrators should feature in Article 2 whereas those concerning the Request for Arbitration and the Answer should be set out in Articles 3 and 4. Similarly, with regard to the appointment of arbitrators, Article 2 with its 13 subsections could not be said to be a model of clarity. Therefore, in order to make the Rules of Arbitration more readable, and hence its solutions more foreseeable, the Working Party changed the structure of the Rules so that a layman can easily follow the course of an ICC arbitration. The same spirit lay behind the decision to give a title to each of the articles.

12. However, foreseeability is not merely a question of form. Any doubts regarding which particular solution to opt for also have to be swept away. That is what the Working Party tried to do, for example, by specifying in Article 7 of the 1998 Rules which particular rules the parties may waive in relation to the constitution of the Arbitral Tribunal. Likewise, fundamental principles regarding establishing the facts of the case are laid down in Article 20. A further example can be found in Article 32 (1) which lays down conditions under which time limits for arbitration may be varied.

C. The rationalization of costs

13. The Working Party's assignment did not include the task of considering the amount of arbitrators' remuneration or what criteria should be borne in mind in calculating it. On the other hand, it was concerned to ensure that financial problems had as limited an impact as possible on the conduct of the arbitral procedure.

As we have seen, the 1988 Rules require 50% of the advance to be paid before the case is referred to the arbitrator, and the outstanding balance has to be paid as a condition of the Terms of Reference coming into force.

The revised text dissociates the payment of the advance from the coming into effect of the Terms of Reference. [Page15:]

D. Improving defective rules

14. Here it was as much a question of filling in gaps in the Rules as modifying articles whose content did not give entire satisfaction.

Article 13 (3) of the 1988 Rules is included in this latter category. This article concerns the law applicable to the merits of the dispute. This article, which was in fact inspired by Article VII of the 1961 Geneva Convention, provides that when the parties have not determined the applicable law, the arbitrator determines the applicable law by applying the conflict of laws rule that he deems appropriate to the particular case. This approach no longer corresponds to modern arbitration practice, where arbitrators are not content simply to apply national laws but also refer to anational standards, such as the UNIDROIT principles or more generally the lex mercatoria. That is why Article 17 of the 1998 Rules no longer uses the expression 'applicable law,' but instead refers to 'rules of law.' Similarly, any reference to the rule of conflict of laws has been removed, to take into account the increasing tendency of arbitrators to resort to the procedure known as the 'direct applicability method.'

So far as the filling in of gaps is concerned, attention should be drawn to the following questions which are dealt with in the ICC Rules of Arbitration for the first time:

- the power of the arbitrators to order interim measures;

- multiparty arbitration;

- the correction and interpretation of awards;

- the right for arbitrators to fix meetings and deliberate elsewhere than at the place of arbitration;

- the parties' right to reduce the time limits laid down by the Rules;

- the protection of business secrecy;

- truncated arbitral tribunals;

- the parties' waiver of the right to criticize the conduct of the procedure by the arbitrators if they have not raised any objections during the procedure;

liability of the arbitrators and the arbitration institution.

Conclusion

15. The 1998 Rules have not radically changed the distinctive features of ICC arbitration. The Working Party was not commissioned to bring about a revolution. However, this is the first time since 1955 that the ICC Rules of Arbitration have undergone a total 'remake'. There is no doubt that new users are bound to find them beneficial in view of the concern for readability that underpinned the revision. However, if they are to obtain maximum benefit from the new Rules - which contain some totally new mechanisms - experienced practitioners of ICC arbitration will have to make an effort to adapt and get rid of a number of the reflexes that can often lead to inflexibility. We may feel that the objectives laid down by the Commission on International Arbitration in the desire to respond to the needs of practice have been achieved. However, we must not close our eyes to the fact that these objectives were limited to the text of the Rules themselves, and that a written text becomes a living reality and thus takes on substantive worth only through the efforts of the people who apply it.

1
The Working Party comprised the following members: Y. Derains (Chairman), S. Bond (Vice-chairman), O. Azizoglu (Turkey), K. Ben Salah (Tunisia), M. Blessing (Switzerland), M. de Boisséson (France), M. Bühler (Germany), W. L. Craig (USA), B. Cremades (Spain), A. Dimolitsa (Greece), S. Jarvin (Sweden), P. Level (France), J. Merret (United Kingdom), R. Morera (Italy), C. Nehring Neto (Brazil), A. Reiner (Austria), L. D. Santos Jimenez (Mexico), D. Sarre (United Kingdom), D. Sutton (United Kingdom), M. Schneider (Switzerland), Y. Takla (Lebanon), R. Van Rooij (Netherlands)-E. Schwartz, then Secretary General of the International Court of Arbitration, and D. Hascher, General Counsel, took part in the work