It is not uncommon for dispute resolution clauses to provide for more than one method of settling disputes. Arbitration may be but a second or third step taken when attempts to find an amicable or negotiated settlement are unsuccessful. In this case, the question arises as to whether the parties are obliged to go through the preliminary stages before referring their dispute to arbitration. Failure to do so has led respondents in a number of ICC cases to object to the admissibility of the arbitration request on the grounds that the requirement to seek a settlement by amicable means had been disregarded or not adequately fulfilled.

When such an objection is made, if the ICC International Court of Arbitration is prima facie satisfied that an arbitration agreement under the ICC Rules of Arbitration may exist,2 it may decide that the case shall proceed and leave it to the arbitral tribunal, once constituted, to decide on the question of the parties' compliance with the provisions of the dispute resolution clause.

The following pages contain extracts from [eight] ICC arbitral awards dealing with this issue rendered between 1985 and 2000. 3 In each case, the relevant part of the dispute resolution clause referring to ICC arbitration is reproduced, followed by the arbitral tribunal's decision on the force of the preliminary provision and the parties' compliance with it.

The cases cited do not include those in which dispute resolution was in accordance with the FIDIC Conditions of Contract for Works of Civil Engineering Construction ('the FIDIC Conditions') 4 and similar methods, where there is a clear requirement for parties to exhaust preliminary means before proceeding to arbitration. Case 6276, which refers to the FIDIC Conditions, has nonetheless been included because it provides for a prior step of amicable settlement, which is analysed by the arbitral tribunal and contrasted with the provisions concerning recourse to the engineer.

The arbitral tribunals in the [eight] cases presented hereafter show remarkable consistency in their reasoning. When faced with an objection from a respondent alleging that the claimant has submitted the request for arbitration prematurely, without having completed the necessary steps prior to arbitration, tribunals tend to adopt a two-pronged approach. They first consider whether the parties were under an obligation to attempt amicable dispute resolution before arbitration. If the answer [Page72:] is yes, they then look at the facts to determine whether or not this obligation has been fulfilled.

Arbitrators have found that where the wording of the dispute resolution clause makes the use of ADR optional, a party is entitled to submit a request for arbitration whenever it wishes. The words 'may' - as used in the arbitration clause in case 10256 - and 'however' - as used in the arbitration clause in case 4229 - leave no doubt that the parties wished to be bound only by the obligation to submit their disputes to arbitration, the second option contemplated in the clause. Vagueness in the wording of clauses has also led arbitral tribunals to decide that parties did not wish to be forced into amicable settlement. On the other hand, when a word expressing obligation is used in connection with amicable dispute resolution techniques, arbitrators have found that this makes the provision binding upon the parties. This is illustrated in case 9984, where the word 'shall' requires the parties first to seek an amicable solution. In cases where the arbitrators found the amicable dispute resolution provisions to be compulsory, before taking jurisdiction they carried out a factual analysis to determine whether appropriate efforts had been made to resolve the dispute amicably.

The award in case 6276 points out the difficulty sometimes encountered when conducting such a factual analysis: 'Everything depends on the circumstances and chiefly the good faith of the parties.' In that case, the clause did not state clearly how and by when the parties had to comply with their obligation to seek an amicable settlement of the dispute. Among other things, the tribunal looked at letters of proposals and actions before authorities to conclude that an effort to resolve the dispute amicably had indeed been made. In other cases the arbitration clause has provided the arbitrators with yardsticks whereby to judge whether the parties have complied with their obligations, e.g. the time limit of 30 days to find an amicable solution laid down in case 8462. In the end, of course, arbitrators have the freedom to make whatever decision is most appropriate in the circumstances. The importance of good will in amicable dispute resolution may in the past sometimes have led arbitrators to believe that refusing to allow a request for arbitration when it was quite obvious that the parties were too divided to entertain an amicable settlement may not have been in the parties' best interests.

When introducing its ADR Rules in July 2001, ICC published four alternative ICC ADR clauses which may be inserted by parties in their contracts. Although there have as yet been no ICC arbitration cases requiring tribunals to decide on the admissibility of an arbitration request based on an arbitration clause incorporating one of the four suggested ICC ADR clauses, one is tempted to speculate how arbitrators might react in such cases. Their response will of course depend on the clause which has been chosen, as these vary as to the obligation placed upon the parties.

The first clause, 5 entitled 'Optional ADR', simply states that the parties 'may at any time . . . seek to settle any dispute arising out of or in connection with the present contract in accordance with the ICC ADR Rules' (emphasis added). If parties have used this clause, an objection to the admissibility of an arbitration request made without any prior attempt to resolve the dispute amicably is likely to be dismissed, as the parties are under no obligation whatsoever to settle amicably.

The second ICC ADR clause6 requires the parties to 'discuss and consider submitting the matter to settlement proceedings under the ICC ADR Rules' (emphasis added). [Page73:] Here it may be expected that arbitrators will carry out an analysis of the parties' 'discussions' and 'considerations' in deciding whether or not the arbitration request has been submitted prematurely.

The third7 and fourth8 ICC ADR clauses lay down a clear obligation to submit the dispute to the ICC ADR Rules. Under the third clause, if the dispute is not settled within a specified time limit, the obligation to use the ICC ADR Rules expires. The fourth clause is similar to the third, but provides for the dispute to be referred to arbitration under the ICC Rules of Arbitration if not settled under the ICC ADR Rules within the set time limit. When faced with either of these two clauses, arbitral tribunals will need to examine the facts to determine whether the obligation to submit the dispute to the ICC ADR Rules was met before the request for arbitration was submitted.

1
This commentary reflects the personal views of the author and should not be interpreted as binding upon ICC. The author wishes to thank María José Poblado Gómez for her research assistance.

2
Article 6(2), ICC Rules of Arbitration: 'If the Respondent does not file an Answer, as provided by Article 5, or if any party raises one or more pleas concerning the existence, validity or scope of the arbitration agreement, the Court may decide, without prejudice to the admissibility or merits of the plea or pleas, that the arbitration shall proceed if it is prima facie satisfied that an arbitration agreement under the Rules may exist. In such a case, any decision as to the jurisdiction of the Arbitral Tribunal shall be taken by the Arbitral Tribunal itself. If the Court is not so satisfied, the parties shall be notified that the arbitration cannot proceed. In such a case, any party retains the right to ask any court having jurisdiction whether or not there is a binding arbitration agreement.'

3
Other awards dealing with this and other issues concerning the relationship between ICC ADR and arbitration are summarized in E. Jolivet, 'Chronique de jurisprudence arbitrale de la Chambre de commerce internationale (CCI) : arbitrage CCI et procédure ADR', Gazette du Palais, Les cahiers de l'arbitrage, 16-17 November 2001, 3.

4
Clause 63 or 67, depending on the edition of the FIDIC Conditions.

5
'The parties may at any time, without prejudice to any other proceedings, seek to settle any dispute arising out of or in connection with the present contract in accordance with the ICC ADR Rules.'

6
'In the event of any dispute arising out of or in connection with the present contract, the parties agree in the first instance to discuss and consider submitting the matter to settlement proceedings under the ICC ADR Rules.'

7
'In the event of any dispute arising out of or in connection with the present contract, the parties agree to submit the matter to settlement proceedings under the ICC ADR Rules. If the dispute has not been settled pursuant to the said Rules within 45 days following the filing of a Request for ADR or within such other period as the parties may agree in writing, the parties shall have no further obligations under this paragraph.'

8
'In the event of any dispute arising out of or in connection with the present contract, the parties agree to submit the matter to settlement proceedings under the ICC ADR Rules. If the dispute has not been settled pursuant to the said Rules within 45 days following the filing of a Request for ADR or within such other period as the parties may agree in writing, such dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules of Arbitration.'