ICC Articles

1. The ICC Rules of Arbitration that have just been revised date from 1975 so far as their main characteristics and provisions are concerned. In fact, the amendments made to them in 1987/88 were merely isolated improvements. In 1995, when the ICC Commission on International Arbitration decided to revise the Rules, the main body of the text had not been changed for twenty years. However, the relative age of the Rules was not in itself a sufficient reason for calling them into question. On the contrary, their longevity appeared to be one of their qualities. Translated into more than twenty different languages, the text of the ICC Rules of Arbitration, which has just been revised, is known worldwide to people involved in international trade. Its permanence was hence a guarantee of security for users of arbitration, and this was an urgent reason for being particularly cautious in our approach to revising the text.

2. However, in 1995, it had to be admitted that the world of arbitration in general, and the practice of ICC arbitration in particular, had changed considerably in the course of twenty years. In 1975, the ICC Court of Arbitration had 182 new cases referred to it; in 1995, this number had risen to 427. This spectacular increase was bound to have an impact on the institution itself, its organization and its working methods. But above all, the success of this movement lent greater impetus to a related trend towards accepting arbitration as an ordinary everyday procedure. This trend was already under way as far back as 1980, when it was possible to write that 'parties are tending to view arbitration in the came light as any other judicial forum, with its special characteristic as an independent procedure providing by itself the justification for its particular applicability to international disputes. What may be referred to as the increasingly everyday nature of international commercial arbitration engenders its corollary in the growing concern with issues of a procedural nature. Arbitration, which is grounded above all on the consent of the parties, is ill-equipped to wage battle against this latter trend.'¹

3. Nevertheless, this indisputably negative consequence of the success of international arbitration should not hide its immense advantages. In twenty years, apart from one or two exceptions, states' attitudes towards arbitration, particularly in the international field, have changed from distrust, or even sometimes hostility, to undisguised support. Clear evidence of this can be seen from the number of countries that have reformed their law on arbitration since 1975, always with the aim of facilitating its use. It world be tedious to list them here, so we shall confine ourselves to stressing the fact that the United Nations' adoption of the Model Law on International Arbitration in 1985 was both a dazzling symbol and an effective instrument of the backing that the community of states intends to give to international arbitration as a method for settling international commercial disputes. This development has made the choice of the place of arbitration easier, has limited the effects of this choice on the conduct of the procedure and has given rise to the development of arbitral practices that are characterized by an alliance of practices where the principal legal traditions meet.

4. Lastly, the increase in the number of arbitration institutions across the world cannot be disregarded. By adopting new rules, these institutions supply an almost continuous reflection on what international arbitration practice should be, and contribute to the existence of a world of potential arbitration, abounding with information and ideas.

5. In this new environment, ICC arbitration had a duty to undertake a study of its own system and to analyse how it could be adapted to both the positive and negative constituents of this [Page11:] development. This is what led the ICC Commission on International Arbitration to undertake the general revision of the ICC Rules of Arbitration, which, with the backing of the Court, led to the adoption of the new Rules that will come into force on 1 January 1998.

6. This revision was carried out in a relatively short period of time, since it was decided upon in Paris on 19 October 1995 and completed in Shanghai on 8 April 1997. This has not prevented widespread international consultation. Thus, on three occasions the 65 or so ICC National Committees were consulted about the successive drafts of the Working Party in charge of the revision, which benefited from hundreds of comments on its proposals.

The speed of the revision and openness of the discussions formed part of the directives given to its Working Party by the ICC Commission on International Arbitration. In fact, had the work dragged on, this would have been a source of uncertainty for the users of ICC arbitration and a factor of instability. On the other hand, a lightning revision, the product only of the reflections of a few isolated experts, would not have been compatible with the international scope of ICC arbitration, which has a duty to listen to its users throughout the world.

These requirements, which a priori seem difficult to reconcile, could only be respected by the Working Party because its main aims were clearly defined. While respecting the basic characteristics of ICC arbitration (I), the Working Party was basically pledged

• to reducing delays in arbitration (II);

• to filling in gaps in the Rules and improving certain defective rules (III).

These aims will be defined below, with an explanation of how the revision endeavoured to achieve them.

I. Respect of the basic characteristics of ICC arbitration

7. A survey by the Working Party that was initiated during the first few months of its activity found that users of ICC arbitration were particularly attached to its basic characteristics, which they considered contained essential safeguards.

8. These include, first of all, the actual existence of a Court of Arbitration that is genuinely international in structure and exercises close supervision over the conduct of arbitration procedures. The security that results from this is perceived as an advantage that far outweighs the disadvantage of the cumbersomeness that it sometimes entails. Similarly, the role of a highly-educated and multilingual General Secretariat, in which several legal traditions exist side by side, is warmly appreciated. This is a focus of stability and experience both for the parties and for the arbitrators. Accordingly, there was no question of the Working Party calling this institutional aspect of ICC arbitration into question. They simply had to ensure that it did not become the source of unnecessary slowness.

9. The approval of draft arbitral awards by the Court of Arbitration is another of the characteristics of ICC arbitration that is warmly appreciated. This is obviously a guarantee of the effectiveness of arbitral awards. Here too, the Working Party could do nothing other than recommend administrative measures aimed at reducing any delays liable to result from the implementation of this guarantee which is a feature of ICC arbitration and which the users wish to see maintained.

10. The Terms of Reference are a distinctive feature of ICC arbitration. No document of this type is required under the rules of other international arbitration centres (American Arbitration Association, Arbitration Institute of the Stockholm Chamber of Commerce, the London Court of International Arbitration, etc.). However, arbitrators frequently draw up terms of reference in ad hoc procedures, convinced of the advantages of this document as a result of the practice of ICC arbitration.

These advantages have been underlined in the study carried out by the ICC Commission on International Arbitration under the direction of Serge Lazareff in 1992.² Two of these are [Page12:] particularly significant, since they provide the parties with the assurance that the safeguards accorded by ICC arbitration will be respected:

• by listing in a single document the elements of the dispute in question, and more particularly the parties' claims, the Terms of Reference are of great assistance for checking on 'ultra petita'. By comparing the Terms of Reference and the award, the arbitrator can very easily check whether he has ruled on all the points raised or only some of them. Without Terms of Reference, this type of check is more difficult in view of the large number of memoranda and notes supplied by the parties, which often lack consistency. In this connection, what appears to be a safeguard for the arbitrator is an actual necessity for the International Court of Arbitration in its procedure of scrutiny of draft awards. Doing away with the Terms of Reference would boil down to complicating the task of the International Court of Arbitration considerably and would reduce the effectiveness of its scrutiny as to the form of draft awards;

• in the interest of the arbitration procedure itself, it is essential that a final date should be fixed after which normally the parties will no longer be able to present new claims. Otherwise, one of the parties might do so for the sole purpose of repeatedly delaying the settlement of the dispute. As they oblige both the parties and the arbitrators to agree on a definition of the context of the case, barring exceptions, the Terms of Reference mark the final stage for entering new claims.

11. Twenty years ago opinions were divided on these advantages. Practitioners from the common law tradition-particularly English and Americans-regarded them as an unnecessary complication and a resurgence in the ICC Rules of the old French tradition of drafting a compromis-a method which is no longer used nowadays when an arbitration clause has been concluded. Accordingly, the members of the Working Party were particularly surprised to note that nowadays attachment to the Terms of Reference is the strongest in the United Kingdom and the United States. Indeed, it was in these two countries that the Working Party encountered the most obstacles to the acceptance of the proposals aimed at reducing the rigidity of the Terms of Reference, so as to ensure that their conclusion does not lead to holding up the progress of procedures.

II. Reduction of delays in arbitration

12. ICC arbitration is sometimes criticized for its length, often unjustly if one compares it to ad hoc arbitration and other institutional arbitration procedures. But it must be acknowledged that it is extremely frustrating for users that the time-limits laid down by the Rules in force are not always complied with, despite the considerable efforts to speed up procedures made by the International Court of Arbitration and its Secretariat.

This situation is not peculiar to ICC arbitration alone, and it is fair to underline that, whatever rules apply, international arbitration procedures that last for less than a year are extremely rare. Although ICC procedure is criticized more often than others, this is due to the fact that it is the best known because it has been established for so long and because of the significant and increasing number of cases submitted to it by parties from across the whole world. Many characteristic problems of international arbitration are thus, quite wrongly, attributed to the ICC Rules of Arbitration.

Moreover, the length of ICC arbitration is often the price to be paid for administrative procedures which, for dozens of years, have continually provided the parties with guarantees of neutrality and skill as well as ensuring the effectiveness of the arbitral award.

However, the Working Party came to the conclusion that without calling these guarantees into question, it was possible to provide solutions that would enable the average length of procedures to be reduced.

13. In seeking to achieve this principal objective, the Working Party gave itself the following secondary objectives:

• to speed up the transmission of the file to the arbitrators (a); [Page13:]

• to speed up the drafting of the Terms of Reference (b);

• to speed up proceedings before the arbitrators (c ),

• to speed up the handing down of the arbitral award ( d )

A. Speeding up the transmission of the file to the arbitrators

14. By virtue of the provisions of article 2 of the Rules that are still in force, the International Court of Arbitration alone has the power to:

confirm co-arbitrators, also sole arbitrators, chairmen of arbitral tribunals nominated by the parties or in accordance wit the parties' agreements;

appoint sole arbitrators and chairmen of arbitral tribunals on the basis of the proposal of a national committee;

decide on the number of arbitrators (1 or 3) if the parties fail to agree on this point;

appoint an arbitrator in the place and stead of a party who fails to do so.

All decision referred to above are taken by a committee of the Court comprising a chairman and two members. The Chairman of the Court generally chairs the Committee, but he may be replaced by a Vice-Chairman. Two meetings of the Committee of the Court responsible for the constitution of arbitral tribunals are held each month.

In most cases several successive interventions by a committee of the Court are needed. For instance, in order to constitute a three-member arbitral tribunal when the parties have given the co-arbitrators the power to nominate the Chairman, a minimum of two meetings of the committee of the Court is essential: one meeting for confirming the co-arbitrators' appointment; and one meeting for confirming the chairman nominated by the co-arbitrators after their own appointement has been confirmed.

Accordingly, it is impossible to constitute the Arbitral Tribunal quickly, since it is necessary to take account of the periods between the meetings of the Committee of the Court. This procedure, which is a guarantee of security for the parties and must be preserved whenever a genuine decision is necessary, becomes an unjustified burden when the International Court of Arbitration confines itself to confirming the parties' or co-arbitrators' choice and no objections are raised.

With a view to introducing greater flexibility and speed, the Working Party proposed that the General Secretariat of the Court should be authorized to confirm as co-arbitrators, sole arbitrators and chairmen of arbitral tribunals, persons nominated by the parties or pursuant to their particular agreements, provided the prospective arbitrators have filed a statement of independence without qualification or a qualified statement of independence that has not given rise to objections. This solution in reflected in Article 9 (2) of the revised Rules.

The increased speed in the constitution of the Arbitral Tribunal and the reduction of costs that should result from this are obvious. In fact, the Committee of the Court will no longer have to intervene, as it does today, when in actual fact there is no decision to take with regard to the constitution of arbitral tribunals. In such a case the intervention of the Secretary General of the Court will be sufficient and it may be immediate.

15. Once the Arbitral Tribunal is constituted, it must have the case referred to it. According to the Rules currently in force, the transmission of the file to the Arbitral Tribunal is subject to the precondition of the payment of 50% of the advance on costs of arbitration fixed by the Court of Arbitration. This advance is calculated on the basis of the amount in dispute and aims to cover the whole of the costs of the procedure. The practical consequence is that, in many cases, there is a delay of several months between the constitution of the Arbitral Tribunal and the transmission of the file to the arbitrator. Indeed, parties-especially defendants-are reluctant to pay out a substantial sum at the outset of the procedure.

An obvious solution would have been to defer the payment of the advance until after the arbitrators have received the file, as provided, for example, in the rules of the London Court of International Arbitration. However, this type of solution would present numerous difficulties vis-à-vis arbitrators, for instance where the case [Page14:] is settled amicably before the advance has been paid. In addition, it would encourage the parties to file Requests for Arbitration when they have no real intention of pursuing the procedure.

The Working Party considered that it was preferable to authorize the Secretary General to determine the amount of an interim advance capable of covering both the costs of the Court of Arbitration and the arbitrators' fees up to the finalization of the Terms of Reference. Once such an advance has been paid, the Claimant deducts it from his obligation to contribute half of the payment of the advance fixed subsequently. Once such an interim payment has been made by the Claimant, the file may be referred to the Arbitral Tribunal. Thus, there should no longer be any delay between the constitution of the Arbitral Tribunal and the referral of the case to it.

B. Speeding up the drafting of the Terms of Reference

16. The advantages of the Terms of Reference have already been mentioned. However, sometimes the drafting of this document is a source of delay because the parties and the arbitrators do not manage to agree on the list of points at issue that need to be settled, which, according to the Rules that are still in force, have to be set out in the Terms of Reference. Indeed, drawing up such a list at the start of the procedure is often somewhat artificial. The important thing is that there should be no uncertainty as regards the parties' claims, which it is therefore essential to list, rather than as regards the questions that have to be settled in order to rule on such claims.

Accordingly, it was felt that the deletion of the current obligation to specify in the Terms of Reference the points in dispute to be resolved would avoid endless discussions, which get nowhere unless full pleadings are submitted, and which often lead the arbitrator to prejudge the solution of the dispute or, at least, give the parties the impression that he has done so. Moreover, in practice there are many arbitrators who already avoid this obligation in the context of the Rules that are currently in force. Nonetheless, the arbitrator may wish to mention several of the points in dispute to be resolved (applicable law, jurisdiction), and, accordingly, he must be given the freedom to act in this way.

That is why the indication of the points in dispute to be resolved has become optional, as witnessed by Article 18 (1) d) of the new Rules.

17. Another obstacle to the speedy drafting of the Terms of Reference in the Rules that are still in force stems from Article 16.

This Article in fact prohibits the introduction of any new claims after the Terms of Reference have been signed; accordingly, the parties are reluctant to see themselves bound once and for all by their claims as laid down in the Terms of Reference. Moreover, the parties' disquiet is increased through the difficulty of defining the concept of a new claim: does an increase in the amount claimed initially constitute a new claim? Does a change in the legal basis of a claim for damages constitute a new claim?

On the other hand, for arbitration procedures to be effective and rapid, it is essential that the possibility of introducing a new claim be limited, especially if this involves artificial claims filed for the sole purpose of delaying the handing down of the award. Thus, there has to be a cut-off date after which there is no further entitlement to introduce new claims. Under the current ICC Rules, this date is the date of signature of the Terms of Reference and, as we have seen, this is one of the advantages of the existence of this document.

However, the current solution was much too rigid. At the time of signature of the Terms of Reference the parties may be unaware of certain aspects of the case that will only come to light later on during the course of the procedure. If such newly-acquired knowledge constitutes the valid ground of a new claim, it would be both unjust and fairly impracticable to oblige the parties to instigate a new arbitration procedure to enable the claim to be examined.

That is why it was deemed preferable to leave the tank of deciding on the admissibility of claims entered after the finalization of the Terms of Reference to the arbitrators themselves. [Page15:]

C. Speeding up the proceedings before the arbitrator

18. However speedy an arbitral tribunal may be, it can only act effectively provided its Terms of Reference have taken effect. Under the system currently in force, for this to happen, the whole of the advance has to have been paid.

In practice, the parties wait until the Terms of Reference have been signed before paying the second half of the advance. It is generally at this precise moment that they meet the arbitrators for the first time and have the feeling that the arbitration procedure is genuinely under way.

Thus, the Terms of Reference only take effect at the time of their signature in exceptional cases, which is an embarrassing situation. It is true that most often no harmful consequence ensues. In fact, during the meeting held with a view to the adoption of the Terms of Reference, the arbitrators draw up a timetable for the parties to remit their submissions. This period, during which the advance on costs has been paid in full, lasts several months; yet, neither the arbitrators nor the Secretariat have any significant work to carry out during this period. It is only later, before the hearing, that it is checked that the advance has been paid.

However, this situation is unsatisfactory to say the least. The arbitrators' legal position is ill-defined. For example, can they order interim or conservatory measures during this period? Can they issue procedural orders? And, again, what happens when one of the parties increases its claim in a submission when the whole of the advance has already been paid? Does this make the Terms of Reference inapplicable?

In order to resolve this problem, the Working Party proposed that the coming into effect of the Terms of Reference should be totally separate from the payment of the advance, an approach that is reflected in the text of the new Rules.

19. In order to make arbitrators and parties more sensitive to the need for dealing with procedures rapidly, it was suggested that when the Terms of Reference are communicated to the Court, the arbitrators should then present, for information, the procedural timetable that they undertake to follow, if possible until the end of the procedure.

Any modification to the timetable-which will be inevitable in many cases-must be notified to the Court of Arbitration. It is to be hoped that with such a system, extensions to the time-limit for rendering the award will stop being granted routinely and will henceforth be based only on the genuine needs of the procedure.

D. Speeding up the handing down of the arbitral award

20. The handing down of the award is often delayed because the arbitrators do not fix a clear deadline for the submission of memoranda and documents by the parties. Thus, whenever a party submits a memorandum or document late, the other party is entitled to comment on it and the situation may be repeated ad infinitum. That is why the idea of obliging the arbitrators to fix a date for closure of the hearings has been adopted.

21. After the final hearing, the parties have no indication as to the length of time before the award is notified to them. Naturally, it would not be realistic to insert a provision in a set of arbitration Rules that stipulated a fixed time-limit, running from the final hearing, within which the award would have to be rendered. In fact, the length of the arbitrators' deliberations will depend on the individual characteristics of each case.

Yet, it is not excessive to require arbitrators to indicate at the time the hearings are closed the date when they expect to be in a position to submit their draft award to the International Court of Arbitration, following the example of numerous national judges, who inform the parties when the judgement will be handed down. There is no doubt that arbitrators will indicate a reasonable time-limit, and will do their best to respect it, even if everybody knows that it will not always be possible.

III. Elimination of gaps in the present Rules and improvement of certain rules

22. One of the essential concerns of the authors of the revision of the Rules of Arbitration was to make their use easier for the parties. In this [Page16:] connection, it was felt that the present version of the rules was perhaps a source of confusion for users. For example, from the standpoint of chronology, it seems somewhat inconsistent that the rules relating to the appointment of arbitrators should be set out in Article 2, whereas the rules concerning the Request for Arbitration and the Answer were set out in Articles 3 and 4. This is only one example.

That is why the Working Party totally rethought the order in which the rules were presented so that a layman could easily follow the conduct of an ICC arbitration.

23. There is no doubt that the ICC Rules of Arbitration contain numerous gaps in their provisions concerning the arbitration procedure and that these provisions are not very detailed.

However, as Marc Blessing indicated in an article concerning ICC arbitration procedure published in this Bulletin,³ the ICC Rules are no less complete and no less detailed than others. To the contrary, the ICC Rules:

'deliberately avoid prescribing a certain type of procedure; this makes them universally acceptable through their openness to whatever system, common-law type, civil-law type, or any combination of them; this also makes them suitable for use in any place throughout the world;

nevertheless, do contain the basic principles that must be observed in arbitration; this makes them sufficiently certain to offer those guarantees regarding a proper and due process as will be expected by the parties to an international arbitration.'

Against this background the Working Party examined the need to add to the Rules or to improve certain of their solutions, always bearing in mind the fact that no procedural rule should be incorporated or added if it put the necessary flexibility and adaptability of the Rules to all types of procedural traditions at risk.

24. The Working Party took the view that the following questions should be dealt with in the new text of the Rules:

• the power of the arbitrators to order interim measures;

• multiparty arbitration;

• the correction and interpretation of awards.

Moreover, the International Court of Arbitration itself had proposed draft clauses to cover these three points.

The article relating to the applicable law was reconsidered also because it appeared to be outdated as a result of recent provisions of national laws and arbitration rules that left the door open to a direct determination of the applicable law by the arbitrators or even to the application of 'general legal rules.'

Lastly, it was decided to introduce rules on the following points:

• the right for arbitrators to fix meetings and deliberate in places other than the place of arbitration;

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

• the protection of business secrecy;

• truncated arbitral tribunals;

• the parties' waiver of any right to criticize the conduct of the procedure by the arbitrators unless they have entered objections during the procedure;

• the liability of arbitrators and of the arbitration institution.

Conclusion

25. Only time will tell whether the solutions proposed by the Working Party responsible for the revision of the ICC Rules of Arbitration and adopted first by the ICC Commission on Arbitration and then by the ICC Council at Shanghai on 8 April 1997, will enable the achievement of the essential objectives: to speed up procedures and adapt the Rules to the new needs of the world of international arbitration, while conserving the general characteristics of the system and the guarantees it offers to users. [Page17:]

However, whatever the value of these solutions, they run the risk of being insufficient if all the people and entities involved in arbitration (parties, arbitrators and institutions) confine themselves to respecting them to the letter without taking account of the spirit behind the revision. This underlying concept is that, in a stable and dependable general context, each

arbitration procedure calls for particular solutions of its own. Hence a tendency to prefer flexibility rather than rigidity, and to trust the International Court of Arbitration, its General Secretariat and the arbitrators so that each in their own respective domain have the power to take the decisions that are essential in each individual case.