Establishing the facts of the case

The ICC procedure is in most cases detached from the local law at the place of arbitration. Article 20 of the new Rules will fit all legal and procedural systems and establish equality and justice. Its first paragraph provides that: 'The Arbitral Tribunal shall proceed within as short a time as possible to establish the facts of the case by all appropriate means.'

The ICC arbitrator thus has the duty to ascertain the facts immediately, a burden which is not, strictly speaking, that of a common law judge. In common law adversary proceedings, the judge has the passive role of evaluating such evidence as the parties may see fit to present. In contrast, the ICC Rules follow the continental civil law approach under which judges have a duty actively to investigate the facts. 1

The inquisitorial element of the civil law tradition thus remains in Article 20 of the new Rules. It is the arbitrator's-not the parties'-responsibility to establish the facts, and the arbitrator is given powers to do so 'by all appropriate means'. The new Rules are more explicit than the existing 1975 version (modified in 1988); a leading idea in the new Rules is that the arbitrator shall manage the case, take initiatives, be active.

The arbitrator may decide to hear

- a party,

- a witness,

- an expert appointed by a party.

Further, the arbitrator may

- appoint his own expert,

- summon a party to provide additional evidence,

- take measures for protecting trade secrets and confidential information.

But even under the new Rules many procedural issues are left open. The arbitrator may make procedural rulings, although this power is not specifically mentioned in Article 20. He may bifurcate proceedings in order to hold separate, initial hearings on threshold matters that may make further evidence unnecessary. He may order site visits. He may order demonstration of the functioning of disputed goods. He can encourage the parties to use video recordings or other means of modern technology as evidence.

The arbitrator must also combat delaying tactics of one or the other of the parties. This reflects an underlying philosophy of the new Rules, which aims at making ICC arbitration faster and more efficient. Article 20 (1) gives broad powers to the arbitrator which the arbitrator should make use of in order to prevent delays.

Article 20 of the new Rules makes a distinction-as does Article 14 today-between hearing a party and hearing other persons. The arbitrator must hear a party, and may hear others (witnesses, experts). The arbitrator may limit the evidence to be heard to the evidence he considers necessary in order to reach a decision. The ruling of Professor Lalive in ICC case 1512 (Dalmia Dairy Industries) is still, in my view, good law. 2[Page39:]

I will now concentrate on the new elements in the Rules.

Whereas the 1975 Rules give the arbitrator the power to hear 'any other person', the new Rules explicitly name the categories of such persons; they are: 'witnesses', 'experts appointed by the parties' and 'any other person' (Article 20 (3)).

The new Rules reflect existing practice.

Under the American system, the calling and examination of witnesses and the order in which they testify are up to the parties. Each party introduces and questions his own witness. The arbitrators also ask questions, of course, but they are not normally expected to conduct an extensive examination of their own motion.

Continental European arbitrators, on the other hand, may insist on taking control of the witnesses themselves, even questioning them first, before the parties' counsel conduct their examination.

Parties should consider in advance the position they wish to take with respect to the presentation of witness testimony and the hearing of an expert:

i) Examination by the tribunal: Will the principal examination be conducted by the presiding arbitrator? If so, do the parties have the right to question the witness freely after examination by the tribunal?

ii) Examination by counsel: If witnesses are to be presented and examined by a party and cross-examined by the adversary, are any specific limitations on the method of examination envisaged? It is current in ICC practice to permit a witness on direct examination to deliver an essentially narrative statement, punctuated by questions by the counsel who has presented the witness.

iii) Extent of cross-examination: Where examination of a witness is conducted principally by the tribunal or by counsel to the party presenting him, is the adverse party justified in requesting time and liberty to cross-examine the witness? In the absence of agreement by the parties, this issue is left to the discretion of the arbitrators.

iv) Depositions: A deposition is a written record of oral testimony given prior to hearing and without the presence of the tribunal. Both parties are represented at the taking of the deposition to examine and cross-examine the witness. The written record may be filed in the litigation.

Deposition is an important element in American court litigation, but not frequently used in ICC arbitration. Will deposition of witnesses be possible under the new ICC Rules? Probably only with the agreement of the parties and the approval of the arbitrators. I think arbitrators will be reluctant to order a deposition outside the place of arbitration and in their absence unless there are valid reasons such as the ailing health of the witness, a long and costly journey to come and testify at the place of arbitration, or similar grounds.

v) Experts: In major cases involving technical issues, both parties frequently wish to present evidence and testimony by experts whom they have consulted, whether the tribunal desires to be aided by a neutral expert or not. This occurs irrespective of whether the parties come from civil law or common law jurisdictions.

The arbitrator will normally instruct the parties that the expert's testimony should be provided in a report submitted in advance of the hearing. The written report is the foundation upon which the expert's oral examination is built, but he should be able to defend his views in response to questions from both the tribunal and opposing counsel.

The new element is that it is now explicitly stated that a party can appoint its own expert witness. [Page40:]

The arbitrators' authority to order the production of documents is implicit under the 1975 Rules. It has now become explicit (Article 20 (5)).

Article 20 (5) of the new Rules reads: 'At any time during the proceedings, the Arbitral Tribunal may summon any party to provide additional evidence.'

There is no doubt that arbitrators now have the power to order discovery of documents. ICC arbitrators have ordered the production of documents under the existing 1975 Rules, but the important change is that the arbitrators now have the express authority to do so under the ICC Rules. Such authority should be welcome to dispel any doubt in cases where local procedural rules are silent on the subject.

In the past, ICC arbitrators typically declined to issue broad orders of discovery that would open the doors to 'fishing expeditions' in which parties seek to obtain documents favourable to their case. Discovery entails costs, and big companies can crush smaller ones with massive discovery demands. This reluctance to order broad discovery is also explained by the fact that ICC arbitrators have no power to compel production or to sanction a party for failure to comply.

It will be interesting to see whether the new Rules will change these habits. At any rate, I have the impression, which I share with other practitioners, that there is a growing acceptance of discovery in international arbitration. 3

Before appointing his own expert, the arbitrator must consult the parties (Article 20 (4)).

The Arbitral Tribunal may order an expertise even where a party is opposed to it. But at least one party must agree to the appointment. The costs of an expert are not included in the general advance on costs paid by the parties to the ICC, but regulated by a separate provision in Appendix III, Art. 1 (11). Therefore, unless one or both parties advance the fees for the expert, the arbitrator will not be able to have him appointed.

The arbitrator cannot decide the case solely on the documents if one of the parties requests a hearing (Article 20 (6)).

Under the present 1975 (1988) Rules, the wording of Article 14 (3) is not quite clear; it can be interpreted as requiring a joint agreement or a joint request by the parties as a condition for the arbitrator proceeding on the documents alone without holding a hearing.

Under the new Rules, the arbitrator can proceed on the sole basis of the documents unless a party requests a hearing. This modification of the Rules may be seen as a detail without great practical importance; the number of cases that are decided without a hearing must be very low. However, a change has been made to make the Rules clearer. Practice will show whether arbitrators will use this power more often than in the past in order to speed up the procedure.

I would think that the arbitrator must inform the parties in advance of his intention to proceed without a hearing so as to give the parties an opportunity to object and to request a hearing.

The arbitrator has been given the authority to take measures for protection of trade secrets and confidential information (Article 20 (7)).

The general issue of confidentiality is whether the details of the arbitration, the documents produced and the evidence adduced in the arbitration and the final award, must be kept confidential between the parties, arbitrators and lawyers. Or are parties free to disclose details of their arbitrations and use the documents produced in the arbitration freely as they may wish? This general problem has been much discussed lately following the decision of the High Court of Australia in the Esso case.4[Page41:]

Article 20 (7) deals with the power of the arbitrator to regulate the problem in the course of the arbitration.

The provision of Article 20 (7) is a new important addition to the ICC Rules, inspired by recent case law and the WIPO Arbitration Rules. But unlike the WIPO Rules, which are very detailed, the new ICC Rules provide a general statement giving the arbitrators the power to take appropriate measures according to the circumstances of each individual case.

Confidentiality is of particular significance in intellectual property matters because, in most licence and franchise agreements, the information being transferred and licensed is of a secret and confidential nature; confidential information and know-how will only be transferred if it is to be kept secret. It is common to find provisions written into licence and know-how agreements providing an obligation to keep confidential information secret.

The arbitrator's measures for protection could:

- identify the specific areas of confidentiality, e.g. witness evidence, transcripts, documents produced by the other party in the context of the arbitration, and the award;

- confirm that contractual obligations of confidentiality and secrecy such as contained in licence and know-how agreements must be upheld and determine what their effect will be on the arbitration and the parties.

I presume that an arbitrator's order can only have effect during the course of the arbitration, but a party wishing to ensure confidentiality after the end of the arbitration could seek an extended or permanent order before a court of law.

Article 20 (7) reflects the confidential nature of ICC arbitration. During the drafting process, one ICC National Committee pointed out that the paragraph must not be interpreted as meaning that the absence of a particular measure to protect confidential information means that the information should not be treated as confidential by the arbitrators and the parties. No a contrario conclusion should be permitted; confidentiality must remain the norm in all ICC arbitration, whether the arbitrators have taken particular measures or not for its protection.

Another National Committee pointed out the difficulties involved in regulating confidentiality. If the arbitrators take measures, they must consider the sanctions for non-observance of the measures. Measures should be limited in time and not persist in perpetuity. Exceptions must be made for a party's obligation under law or otherwise to disclose information, e.g. the party may be forced to disclose, under a stock listing agreement, to its bankers, shareholders, insurers, etc.

Limits to the arbitrator's powers

There are still limits to what an arbitrator can do and decide. The existing memento mori rule still prevails. Article 35, the General Rule of the new Rules, corresponding to Article 26 of the existing Rules, provides that '... the arbitrator shall make every effort to make sure that the award is enforceable at law'. Although the new Rules give the arbitrator wider express powers, he must not disregard mandatory procedural rules at the place of arbitration.

If the arbitrator's authority is far-reaching when it comes to establishing the facts of the case 'by all appropriate means', what powers does he have to establish the law? Does the arbitrator have power to raise questions of law and ask the parties to develop legal arguments relating to issues raised by the arbitrators and not previously raised by a party?

One National Committee proposed the insertion of the following text in Article 20:

The Arbitral Tribunal may, at any time, raise of its own motion any claims, arguments or qualifications as to facts or law which he considers relevant. The Tribunal submits such questions to the parties, upon ordering a further hearing as the case may be, allowing enough time for the parties to respond.

It gave the following reasons for the necessity of such an inclusion:

In many countries, courts and other judicial organs are increasingly stringent (notably with respect to arbitrators) regarding the [Page42:] requirement of a due hearing of the parties. Commentators are generally in favour of this greater stringency; references are numerous.5

In cases which are often complex, where parties have no right of appeal nor access to judicial review before the Cour de cassation or elsewhere, the maxim Da mihi factum, dabo tibi ius is out of place.

This is what Professor Catherine Kessedjian calls 'the stubborn compliance with the broader requirement of a due hearing of the parties'.6

Although the text proposed was not included in the new Rules, the debate over the arbitrator's power to raise questions of law applicable to the facts before him, is not closed-far from it.

Granting conservatory and interim measures

There is frequently a compelling need to seek interim relief, also called conservatory and

provisional measures, in connection with an international arbitration. Interim measures address the requirements of a party for immediate and temporary protection of rights or property pending a decision on the merits by the Arbitral Tribunal.

Perhaps the two most common forms of interim relief are attachments and injunctions. For example, an attachment is sought to prevent the dissipation of the assets that are the subject of the arbitration. An injunction is normally requested to protect property rights at issue in the arbitration. Interim relief can also involve the safeguarding and preservation of perishable property. Interim measures can include orders which require corrective measures in environmental disputes or direct advance payment of part of a claim to alleviate hardship. Other interim measures involve security, i.e. the posting of security for costs and security for the award itself.

The situation under the 1975 Rules

The 1975 (1988) ICC Rules do not explicitly give the arbitrator a power to make an interlocutory order, but they imply such authority. Article 8 (5) of those Rules limits the parties' right to apply 'to any competent judicial authority for interim or conservatory measures' to 'exceptional circumstances'. By implication, in normal circumstances, the parties must apply for such relief to the arbitrator.

The arbitrators' powers under the ICC Rules to grant interim relief has been a subject of some debate. ICC arbitral tribunals have found that they have the power, under the ICC Rules, to order interim or conservatory measures 'as directions to the parties' to the arbitration, even though the ICC Rules do not contain any express provision to this effect. In those instances where ICC arbitrators have asserted that they did not enjoy such authority, a national procedural law expressly granting the courts exclusive jurisdiction in respect of interim measures could generally be referred to (e.g., Article 26 of the Swiss Concordat).7 The prevailing doctrinal and judicial opinion in Arab countries does not accept the competence of the Arbitral Tribunal to order interim measures, unless otherwise agreed by the parties. Even in such case, the parties' agreement cannot be legal in respect of all measures such as the writ of property attachment and the provisional measures which should be decided by a State Authority.8[Page43:]

In general, it can be said that the authority of arbitral tribunals to grant interim relief is exercised with reluctance. Other characterizations in published awards and the literature require 'urgency,' 'imminent harm,' 'prevention of aggravation,' 'maintenance of status quo,' and 'likelihood of success on the merits'.

Under the new Rules the arbitrator clearly has the power to grant interim relief (Article 23).

Article 23 (1) introduces an important change in the ICC Rules of Arbitration since the arbitrator's power to grant conservatory and interim measures is now expressly provided. The arbitrator may, however, make the granting of such a measure conditional upon appropriate security being provided by the requesting party.

The arbitrator is competent to decide an interim or conservatory measure as soon as he has received the file. Thus, he need not wait until the Terms of Reference have been signed or otherwise come into force. Where the Claimant quickly pays the advance on costs, the arbitrator can proceed, even if the Defendant is defaulting.

An interim or conservatory measure will take the form of an order or an award. The choice of form is in the hands of the arbitrator who, in either case, must give reasons for his decisions.

The arbitrator will have to decide which form is the most effective in the circumstances, taking into consideration that an order, contrary to an award, need not be submitted to the ICC Court for approval before it is issued, whereas an award needs to be approved, which involves some additional time before it can become effective.

The effectiveness of an arbitrator's order will depend on the legal environment of the case. A conservatory or interim measure may not be enforceable against a recalcitrant party without the assistance of a local court. Ordinarily, in many countries, local courts will be prepared to confirm an interim direction by the Arbitral Tribunal making that direction enforceable by a contempt citation. It is, though, far from certain that courts are prepared to co-operate in all parts of the world. The arbitrator and the local court of law may both be competent to grant interim measures; there is a potential risk for jurisdictional conflicts. Also, there will be a risk of conflicting decisions, so that a court of law may take a decision that runs contrary to a measure decided by the arbitrator.

It is clear from Article 23 (2) that the parties may apply to any competent judicial authority for interim measures, under the conditions described in that article. The new Rules do not preclude a party from going to a court where the urgency of the matter so requires or where the party considers this to be more effective.

1
Craig, Park, Paulsson, International Chamber of Commerce Arbitration, 2nd edition, ICC Publishing, p. 374.

2
In this case, Professor Pierre Lalive, sitting as sole arbitrator, refused to hear oral evidence proffered by the defendant Bank, whose argument was that a state of emergency justified its non-payment of a guarantee. The Bank proposed to call witnesses to explain the extent and practical consequences of hostilities. Having reviewed eight volumes of documents comprising more than a thousand pages, the sole arbitrator stated flatly that the presentation of witnesses was (...)

3
Arthur Rovine, World Arbitration and Mediation Report, Vol. 8, No 3, March 1997, p. 63.

4
Esso Australia Resources Ltd v. The Honourable Sidney James Plowman (1995), 183 CLR 10; also in Arbitration International, Vol. 11, No 3, 1995, p. 235.

5
Georges Bollard, 'Les juges et les droits de la défense' in Etudes offertes à Pierre Bellet, Paris, Litec, 1991, p. 49; G. Flécheux, 'Le droit d'être entendu' id., p. 149; Conseil d'Etat (France), 12 October 1979, quoted by Bollard, supra, with references

6
Prof. C. Kessedjian, 'Principe de la contradiction et arbitrage' Revue de l'Arbitrage, 1995, p. 381. According to this article, matters of qualification might escape this requirement.

7
Eric A. Schwartz, 'The Practices and Experience of the ICC Court' in Conservatory and Provisional Measures in International Arbitration, 9th Joint Colloquium on International Arbitration, 6 November 1992, ICC Headquarters, Paris (organized by the AAA, ICC and ICSID), Supplement to the ICC International Court of Arbitration Bulletin, ICC Publication No 519, pp. 45, 57.

8
Samir El-Sharkawi, 'The Arab Perspective' id. p. 104.