The Terms of Reference are an instrument or device in the ICC Arbitration Rules that fixes, by agreement between the arbitrator and the parties, the arbitrator's tasks and the procedural means for achieving them. They are settled at a very early stage of the proceedings, normally after a joint examination of the subject matter of the dispute and the procedure for its resolution. The instrument is a characteristic feature of the ICC Arbitration Rules and has been the subject of much controversy.

This presentation will briefly indicate the origin of the instrument and its evolution and will outline the principal features of the controversy. It will then describe the solutions adopted in this respect by the new Rules.

I. The instrument, its origin and evolution

The Terms of Reference, as Yves Derains told us earlier this morning and as we all know, are one of the characteristic features of ICC arbitration. In fact, none of the other well-known international Arbitration Rules provide for such an instrument.

Originally, the Terms of Reference responded to the need for a 'compromis' in the early arbitration law of France, the seat of the institution, and in the law of many other countries. In this earlier legislation, parties were bound by an agreement to arbitrate only if it was made after the dispute had arisen. By the 'compromis', they submitted their dispute to the jurisdiction of a chosen arbitrator.

In the first set of Arbitration Rules of the ICC, those issued in 1923, the Terms of Reference appeared as 'Form of Submission'. It is interesting to recall that, in this early form, the Terms of Reference were drawn up not by the arbitrator but by the Secretary of the Court of Arbitration.

Erik Schäfer has described the evolution of the Form of Submission from its inception in the first set of the ICC Arbitration Rules to the present form of the Terms of Reference in the 1988 Rules.1 It is a very interesting development, which deserves to be kept in mind. Only the principal points of this evolution can be mentioned here.

Soon after the ICC Arbitration Rules were first adopted in 1923, the revision of 1927 transferred the power to draw up the Terms of Reference from the Secretary to the Court itself. More importantly, it conferred on the Court the power to make an order that the arbitration proceed and an award be made even if a party refused to sign the Form of Submission, provided the parties had previously agreed to submit their dispute to ICC arbitration.

The expression 'Terms of Reference' was first introduced in the Rules by the revision of 1955. In that edition of the Rules the function of drawing up the Terms of Reference was vested no longer in the Court but in the arbitrator, who was also given the power to decide on his jurisdiction. In the 1955 Rules the instrument of the Terms of Reference took the form that, with minor modifications in 1975, it has kept until the present Rules. [Page27:]

II. Users' view of the Terms of Reference: from controversy to general acceptance

The Terms of Reference have often been criticized in the past; in particular it has been said that they are a waste of time and effort. A particularly outspoken critic described them as 'one of the most controversial and antiquated relics in the ICC Rules' and wrote that the rule which requires Terms of Reference 'is ill-conceived and [...] the requirement should be abolished in the interest of both economy and justice'.2

With time, acceptance of the instrument has grown among arbitration specialists. They are increasingly recognized as a useful tool for an efficient organization of the proceedings, especially when the participants come from different legal and cultural backgrounds and can be expected to have different experiences and expectations in the procedure. 3 Indeed, they can now be found even in proceedings under rules that do not require them. 4

When the ICC Commission on International Arbitration, at its meeting of 19 October 1995, decided to embark on the revision of the Rules and created a Working Party for its preparation, one of its instructions to the Working Party was that the fundamental characteristics of ICC arbitration be respected. The Working Party understood this instruction to include the Terms of Reference.

In view of the critical comments that had been voiced earlier in legal writings such as the one quoted above and at international conferences, the Working Party expected to meet with strong objections to the Terms of Reference and with frequent requests to abolish them. One of the surprising aspects of the work on the revision of the ICC Rules was that, in the extended consultations with the ICC National Committees and other interested circles, very little opposition was voiced against the Terms of Reference as such. Even proposals such as that made by the Dutch National Committee to make them optional did not meet with much support.

In this respect the evolution in the United Kingdom is of particular interest. Earlier, British arbitration practitioners often opposed the Terms of Reference, considering it as a relic of French particularities, since long overcome. In contrast with such earlier views, the meeting that the UK National Committee held in 1996 on the modification of the Rules was overwhelmingly favourable to their being preserved. Similar support was received from most other National Committees, including that of the United States where, earlier, one could hear much criticism of the instrument.

From the experience of its members and from its consultations, the Working Party concluded that the desirability and usefulness of the Terms of Reference are now generally recognized.

III. The controversial aspects of the Terms of Reference and the solutions adopted in their respect

The very positive conclusion with respect to the Terms of Reference as such did not mean that the provisions on this subject in the present Rules were free from critique and objections. Quite to the contrary, there are a number of aspects in these Rules that gave rise to serious complaint. It was only by agreeing to remedy these causes for complaint that the general acceptance of the instrument as such was achieved. [Page28:]

A. The list of issues

By far the most controversial provision on the Terms of Reference in the present Rules is that which requires a 'definition of the issues to be determined' (Art.13(1) d)). This requirement is at the basis of most of the complaints and objections to the Terms of Reference and not infrequently has caused users or commentators of the Rules to reject the instrument of the Terms of Reference altogether.

Now, it is in the author's opinion certainly very useful for the arbitrator to examine what the dispute is all about and what he has to decide. It is also very useful that he communicate his views in this respect to the parties so that they may adjust their argument and evidence accordingly and, if necessary, draw the arbitrator's attention to points that he may have overlooked or misunderstood.

The problem with the list of issues in Terms of Reference is that, at the beginning of the procedure, when the Terms of Reference must be drawn up, the issues are often unclear. The parties frequently disagree on them. Indeed, discussions about the list of issues are probably the cause of most controversies in the process of drawing up and agreeing on the Terms of Reference; these controversies can cause considerable delay and hard feelings at the very start of the procedure.

Moreover, it is frequent in international arbitration that the issues to be decided evolve during the course of the proceedings as the parties' case unfolds in their argument and evidence. When, at an early stage, the issues are defined in detail, they may tie the arbitrator in a straitjacket or even force him in the wrong direction. Moreover, a failure to address all issues identified in the Terms of Reference may give rise to observations and critique from the ICC International Court of Arbitration, when the arbitrator's draft award is submitted for scrutiny (Article 21 of the present Rules), and may form the basis for annulment proceedings against the award.

In order to avoid these difficulties and risks, arbitrators often apply a formula that is attributed to the much admired and regretted Professor Berthold Goldman. The 'Goldman formula' for the list of issues, as it is sometimes called, simply states that the Arbitral Tribunal 'shall decide all issues that arise from the parties' case as it is expressed in their last submissions', or something along these lines.

Now, it can safely be assumed that this was not what the drafters of the rule on the list of issues had in mind. The formula does not appear as the ideal solution, especially in those cases where the arbitrators feel that there is no need to communicate to the parties, subsequently to the agreement on the Terms of Reference, any other information about their view on the issues that have to be decided.

In response to this critique, the Working Party adopted at a very early stage of its deliberations the view that the requirements for a definition of the issues, and in particular its mandatory nature, should be loosened. The view of the Working Party in this respect did not remain uncontested. Indeed, in the consultations there were voices which favoured the definition of the issues in the Terms of Reference as a mandatory requirement. However, the Working Party and most National Committees advocated that the list of issues should become an optional feature of the Terms of Reference, or even that it should be abolished altogether.

Nevertheless, the matter remained controversial until the very end of the revision process. The version of the draft Rules, as it was issued after the Session of the Arbitration Commission on 27 February 1997, the last Session before the adoption of the new Rules, indicated among the particulars that the Terms of Reference contain: 'd) if the Arbitral Tribunal considers it appropriate, a list of issues to be determined'. 5 In the final text, as adopted in Shanghai, the condition is inverted, the list is required, unless considered inappropriate. The relevant provision in Article 18, paragraph 1, now reads as follows:

'[The Terms of Reference] shall include the following particulars:

[...]

d) unless the Arbitral Tribunal considers it inappropriate, a list of issues to be determined;

[…]' [Page29:]

The wording, as finally adopted, has the advantage of requiring the Arbitral Tribunal to consider in each case whether it is appropriate to include a list of issues in the Terms of Reference. In so doing, it must examine what the possibly relevant issues are and whether they can be formulated in a manner that is not likely to complicate subsequent proceedings and the drafting of the award.

Once it has done so, the Arbitral Tribunal may decide that the case is not yet well enough developed or is too complex for a definition of the issues so that no issues are defined at this stage of the arbitration. It may also decide that a definition of the issues is possible and proceed with it but consider it inappropriate to include the list in the Terms of Reference. The list will then merely be a working document for the guidance of the Arbitral Tribunal and the parties which the Arbitrators can modify as the evolution of the case requires.

In appropriate circumstances the Arbitral Tribunal will decide that a list should be included in the Terms of Reference; it will draft this list with the required detail or simply adopt the 'Goldman formula'. In all cases where a list is included in the Terms of Reference, it should contain a general item that permits the Arbitral Tribunal to complete it as will be required in the light of the latest submissions of the parties. It should also be stated clearly in the Terms of Reference that the Arbitral Tribunal is not required to decide all issues on the list if, in its view, this is not necessary for the award. 6

B. Causes for delay and obstruction: the transmission fo the file and refusal to sign the Terms of Reference

One of the principal objectives of the revision of the Rules was the elimination of the avoidable causes for delay. The Working Party gave particular attention to this objective and, at the beginning of its work, made and discussed a study to identify the main causes for delay in ICC proceedings as they are conducted at present.

A major cause of delay identified in this work was that which occurs at the beginning of the arbitration before the file of the case is transmitted to the arbitrators.

1CC arbitration does not start before the Arbitral Tribunal but before the ICC International Court of Arbitration and its Secretariat. The Request for Arbitration is addressed to the Secretariat and, before the arbitrators can start with a study of the case and the drawing up of the Terms of Reference, the file has to be submitted to them. The initial phase, running from the filing of the Request until the transmission of the file, takes up much time, and the delay that occurs in this phase has been one of the major sources of concern for the Court, the Commission and the Working Party.

The origin of the problem lies in the prerequisites for the transmission of the file. Article 10 of the present Rules prescribes two conditions: the first of these conditions is that the Secretariat must have received the Answer to the Request for Arbitration or the periods for filing this answer, with a possible prolongation, and the answer to a possible counterclaim must have expired. The second condition refers to Article 9, where paragraph 3 provides that '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 Chamber of Commerce'.

The provision seems flexible, and much of the change that the 1998 Rules bring in this respect could have been brought about earlier, had the Secretariat shown more flexibility and imagination in its practice. In fact, the Secretariat now [Page30:] follows the rigid practice prescribed not by the Rules but by the Schedule of Conciliation and Arbitration Costs in Appendix III to the Arbitration Rules (Article 2 b)). It transmits the file to the arbitrator only once one-half of the advance has been paid.

Horacio Grigera Naón, in his earlier presentation, has described the delays that occur due to this practice: the Claimant normally pays his share and waits for the Defendant to do likewise. If the Defendant is late in paying, the Claimant is reluctant to make the payment instead of him. As long as there is still hope that the Defendant will pay his share, there is indeed an advantage in waiting until he does so, since jointly-financed proceedings are in the interest of all participants. If the Defendant does not pay his share, the Claimant must pay. All this takes up much time.

There is a third condition, which is not mentioned in Article 10 but which is obvious: the Arbitral Tribunal must have been formed. Here, too, delays may occur.

The result of these rules and practices is that a long time elapses after the filing of the Request of Arbitration before the parties finally meet the arbitrators. The 1995 Report of the Working Party, mentioned above, explained that often six, seven or even eight months pass until the file is transmitted to the Arbitral Tribunal.

The solution that has been adopted in the new Rules is simple but promises to be effective. The Working Party proposed this solution, following a practice that can be found in ad hoc arbitration: at an initial stage, and prior to the first meeting with the arbitrators, a small advance on costs is required which is sufficient to cover costs and fees of the arbitrators and the institution up to and including the first meeting, when the Terms of Reference are adopted.

Under the new Rules, the file is transmitted to the Arbitral Tribunal 'as soon as it has been constituted', subject to the proviso that 'the advance on costs requested by the Secretariat at this stage has been paid' (Art. 13). The change appears insignificant compared to the wording of the present Rules; it can nevertheless produce substantial savings in time. The advance requested by the Secretariat at the initial stage is not the full advance which both parties must pay in equal shares but only the 'provisional advance' described in Article 30, paragraph 1. This provisional advance is 'in an amount intended to cover the costs of arbitration until the Terms of Reference have been drawn up'. It is paid by the Claimant alone but credited to his payment obligation for the principal advance.

As a result of this change, it can be expected that in most cases the initial financial matters will be resolved by the time the Arbitral Tribunal is constituted. Consequently, the file can be transmitted and the Arbitral Tribunal can commence drawing up the Terms of Reference as soon as it has been formed.

In order to emphasize the concern with rapid proceedings, the opening passage of the provision on the Terms of Reference was modified. In the present Rules it begins with the words 'Before proceeding with the preparation of the case…' The new text starts as follows: 'As soon as it has received the file from the Secretariat, the Arbitral Tribunal shall draw up…' (Art. 18 (1)).

In addition to the delay prior to the transmission of the file, further delay may occur if a party obstructs the proceedings by refusing to sign the Terms of Reference. The obstruction can be overcome, but in the present Rules this is time-consuming: if one of the parties refuses to take part in the preparation of the Terms of Reference or to sign them, the arbitrator must submit to the Court the text signed by the other party and by himself. The Court examines the text and, if it approves it, sets a time-limit for the defaulting party to sign it (Art. 13 (2)). This procedure, and in particular the additional invitation to the defaulting party to sign the text, is cause for unnecessary delay.

In the new Rules the procedure is simplified by the omission of the requirement of an invitation by the Court to the defaulting party. In the case of a refusal by a party to take part in the drawing up of the Terms of Reference or to sign them, 'they shall be transmitted to the Court for approval' (Art. 18 (3)). Once the Terms of Reference are signed or approved, 'the arbitration shall proceed' (ibid.). [Page31:]

C. New claims

In the present Rules, once the Terms of Reference have been signed, new claims may be made only 'within the limits fixed by the Terms of Reference'. If a new claim exceeds these limits, Article 16 of the present Rules requires that a 'rider' to the Terms of Reference be prepared. Both parties must sign this rider. If the other party refuses to sign, this cannot be remedied by an approval by the Court nor is there any other possibility to overcome such a refusal, which may or may not be dilatory.

Apart from this lack of flexibility, Article 16 of the present Rules causes difficulties since the terms used give rise to differing interpretations: in particular, the term 'new claim' is not clear. Is an increase in the amount a 'new claim'? Does a change in the legal basis for a claim meet this characterization? Or can a change in currency amount to a 'new claim'? 7 The questions receive different answers by different practitioners and by different arbitral tribunals.

As a result of this uncertainty about the restrictions that may be imposed on them later, the parties are preoccupied at the time when the Terms of Reference are drafted and signed. They wish to avoid being restricted by the operation of Article 16.

For these reasons, Article 16 of the present Rules was identified as one of those which needed to be revised.

In the discussions of the Working Party it was uncontested that, at some stage of the proceedings, the contours of the dispute must be clearly identified. The Defendant (called 'Respondent' in the new Rules) must know against which claims to defend himself. As a

matter of principle, there should be a certain stage in the proceedings after which a new claim cannot be introduced. The critical date should be, and here, too, the members of the Working Party agreed, the time when the Terms of Reference are drawn up.

Therefore, it was decided that a provision restricting the introduction of new claims should be preserved. This provision is now found in Article 19 of the new Rules. However, the new provision avoids the rigidity of Article 16 in the present Rules by making the introduction of new claims after the signing of the Terms of Reference possible in exceptional cases.

There was some debate as to who should decide whether, exceptionally, a new claim should be admitted. The Working Party reached unanimity in concluding that the Arbitral Tribunal should make this decision, not the Court.

The drafting of the exception also gave rise to a discussion: should new claims be admitted unless they are prohibited by the Arbitral Tribunal or should, inversely, new claims be prohibited unless authorized by the Arbitral Tribunal? This second solution was chosen as it facilitates the Tribunal's control over the proceedings: the party wishing to introduce a new claim must justify why the claim should be authorized, rather than the Arbitral Tribunal having to justify why the introduction of a new claim is refused.

Much thought was given in the Working Party to the question concerning the circumstances under which the Arbitral Tribunal should allow a new claim. Attempts were made to define these circumstances with some precision. However, it soon appeared that such attempts at a precise definition were doomed to fail. The circumstances vary from one case to another and it was thought best to leave the matter to the decision of the Arbitral Tribunal. However, in order to give some guidelines for this decision, two general criteria are mentioned in Article 19 of the new Rules: (i) the nature of the new claim and (ii) the stage of the arbitration when it is made. A general formula, referring to 'other relevant circumstances', makes it clear that the Arbitral Tribunal has a wide discretion in deciding on the admission of new claims. [Page32:]

Among the other criteria considered by the Working Party were (i) the delay caused by the Claimant or, with respect to a counterclaim, the Respondent, in making the new claim; (ii) the consequences on the time by which the award can be rendered; and (iii) the manner in which the position of the other party is affected by having to respond to the new claim. These other criteria were not considered irrelevant but it appeared preferable to leave the matter to the good judgement of the Arbitral Tribunal and not to enter into too much detail in the drafting of the provision.

The requirement of a rider found in the present Rules was abandoned. For the new claim to be admissible, a decision of the Arbitral Tribunal is sufficient. The form of this decision is not prescribed. The Arbitral Tribunal may authorize the new claim in any form which it sees fit. Normally, it can be expected to make a procedural order.

The new provision does not solve the problem of defining what a new claim is. An attempt to provide such a definition would have raised very difficult questions in comparative law of procedure, as the concepts inherent in the criteria for defining a claim vary considerably from one legal system to another 8 and no uniform international arbitration practice has developed.

Therefore, the new provision gives no definition of a 'new claim'. The difficulty persists and the observations in the Lazareff Guidelines 9 remain fully applicable. But the difficulty is now of less consequence. Even if the Arbitral Tribunal reaches the conclusion that a claim is new and outside the scope of the Terms of Reference, it may be admitted.

IV. Other provisions on the Terms of Reference in the 1998 Rules

There are some further aspects in respect of which the new Rules differ from the present ones. In many other respects, the provisions on the Terms of Reference have remained unchanged. Some short comments both on the modified and the unchanged provisions may be of interest to the users of the new Rules.

A. The procedure for drawing up the Terms of Reference and for overcoming obstruction

Under the present as well as under the new Rules, it is the Arbitral Tribunal that should draw up the Terms of Reference. Normally, the Chairman prepares a first draft on which he consults his co-arbitrators before sending it to the parties. The present Rules provide that the Terms of Reference are drawn up 'on the basis of the documents or in the presence of the parties'. The provision has remained unchanged. It means that the Terms of Reference may be either adopted in correspondence or discussed and agreed upon at a meeting.

Adopting the Terms of Reference by correspondence may appear as the cheaper solution, especially when the arbitrators, the parties and their counsel reside in places other than the place of arbitration and the amount in dispute is not very high. But much is to be said for a meeting of all participants at an early stage of the proceedings. Since confidence of the parties in the arbitrators is a very important factor in arbitration, such a personal meeting at the outset of the proceedings is most useful. It is indeed one of the principal advantages of the requirement of Terms of Reference under the ICC Rules that they provide the justification and purpose for such an early meeting.

In cases where one or several participants are not familiar with the process, such a meeting is particularly important, since much time may be lost in correspondence about points which can easily and rapidly be resolved in a meeting. In such cases the extra costs for travelling to the meeting can be outweighed by the saving in [Page33:] time, which would otherwise be spent on correspondence and by avoiding the tension which may mount by frustrating argument about minor points of procedure.

Therefore, the Terms of Reference should be discussed and agreed upon whenever possible in a meeting with the parties. In the rare cases where this is not possible, there should be at least a telephone conference.

The draft Terms of Reference should be sent by the Arbitral Tribunal in advance of the meeting. This draft should, as a matter of principle, set out completely the points which, in the view of the Arbitral Tribunal, must be settled. However, where delicate and controversial points must be addressed, it may be better merely to indicate the subject in the draft and find the agreed solution in an open discussion at the meeting.

Sometimes the parties wish to keep control over the process and prepare the draft themselves. This process is not to be recommended. Normally, it requires more time for the parties to do this task, because of the situation of confrontation in which they find themselves and the resulting distrust of each other.

More importantly, if the parties draw up the Terms of Reference, they forego one of the principal advantages of the process, by relieving the arbitrator of the need to acquaint himself with the file at the very beginning of the case. The task should be left to the arbitrator. The draft that he then submits to the parties gives them a first indication of what he has understood of the case.

When the Arbitral Tribunal encounters resistance from the parties, this may be overcome through the simplified procedure of approval by the Court, as explained above. But such resistance is not always a sign of obstruction or delaying tactics. It may also be the result of inexperience of the party or its counsel or may result from genuine concern and justified objection to one or the other provisions in the draft which they are asked to sign. In such cases it is advisable for the arbitrator not to insist on its draft and seek with the parties a non-controversial wording for the provision in question, or to omit it altogether.

The present Rules provide that the Arbitrator must send the signed Terms of Reference to the Court within two months of the date when the file has been transmitted to him. Motivated by its desire to avoid delay in the procedure, the Working Party considered the possibility of shortening this period. Indeed, there are cases where the process can be completed in less then the time allowed. Some of the modifications in the requirements for the Terms of Reference, and in particular the newly introduced optional nature of the list of issues, suggested that less time may now be required for the completion of the process.

But often it is difficult to find at short notice a date for the meeting which is convenient for all participants. Other complications can occur in the adoption of the text. In view of these considerations, the Working Party was of the opinion that a shortening of the prescribed period was not indicated. Consequently, the new Rules provide a two-month period with a possibility for extension by the Court (Art. 18 (2)), as do the present Rules. Nevertheless, it may be expected that, on average, the time for preparing the Terms of Reference and for having them signed may be shorter under the new Rules than it was under the present ones.

B. Particulars about the parties, the arbitrators, the case and the procedure

The present Rules contain some basic features of the Terms of Reference that are of an administrative nature, are largely uncontested and remain unchanged in the new Rules. The provisions on these. matters require that particulars be given about the parties and their addresses for notification, about the arbitrator and the place of arbitration. These are useful features of the Terms of Reference which have had their place in the Rules since the first version of 1923. In the new Rules, these provisions are practically identical to those in the present ones, with the exception of some changes in the drafting. 10[Page34:]

The present Rules require that the Terms of Reference contain 'a summary of the parties' respective claims'. The provision was kept but further particulars must now be added. 'The relief sought by each party' must be specified, together 'with an indication to the extent possible of the amounts claimed or counterclaimed'. The latter passage, obviously, is intended to assist the Court in fixing the amounts of the advances which the parties must pay according to what has become Article 30 in the new Rules.

The addition concerning the relief sought mirrors the additional indications which must be made in the Request for Arbitration and the Answer to the Request (Art. 4 (3) c), Art. 5 (1) c) and Art. 5 (5) b) of the new Rules). The addition is useful since claimants, especially if they come from common law countries, often do not specify what in French practice are the 'conclusions' and in German the 'Anträge'. The specification is of particular importance since it facilitates the task both of the arbitrators and of the parties by focusing argument and evidence on the objective pursued. It also is the reference by which the question can be decided whether a decision is 'ultra petita'.

Often arbitrators leave it to the parties to formulate the part of the Terms of Reference that states their 'respective claims'. While it is true that each party should have the last word in deciding how its claims are formulated, there are often situations where the arbitrator may give some assistance to parties, especially when neither the party nor its counsel are well versed in the language of the arbitration. Therefore, the claims of the parties should not necessarily be taken as they are in the submissions and incorporated without change in the Terms of Reference. However, perceptions of the role of the arbitrator in assisting the parties, as well as his functions and powers in this respect, vary considerably. 11

It is important to remember that the parties' claims, like all other parts of the Terms of Reference, are drafted 'in the light of their most recent submissions'. This passage of the present Rules can also be found in the new ones (Art. 18 (1)). It resolves a controversy that sometimes occurs when parties make submissions which are not expressly foreseen in the Rules, for instance when they submit written statement after the expiration of the time for the answer to the Request for Arbitration and a possible counterclaim or when they change their position at the meeting for the adoption of the Terms of Reference. On such occasions the other party sometimes objects to such additions or changes. While the other party must be protected against surprise movements of its adversary and against dilatory tactics, the positions of the parties recorded in the Terms of Reference should be those that result from their most recent submissions, as the Rules require.

Generally, Terms of Reference contain, beyond the mere summary of the parties' claims, a description of the facts of the case, uncontested facts as well as disputed ones. Some arbitrators seek to establish in the Terms of Reference a record of the uncontested facts. This may indeed be of some help for the remainder of the procedure and for the arbitrator when he has to write his award. But the attempt to record uncontested facts often meets with resistance since the parties and their counsel do not wish to have their hands tied at this early stage. Also, it must not be overlooked that counsel who appear for the parties at the meeting for the Terms of Reference sometimes have been briefed shortly before the meeting and may have only a rudimentary knowledge of the case. Under such circumstances, it may occur that statements are recorded in the Terms of Reference as uncontested facts which later turn out to be contrary to the evidence produced in the proceedings. Great care should thus be taken when drafting the facts of the case for the Terms of Reference.

A further requirement for the Terms of Reference concerns the 'particulars of the applicable procedural rules' that must be specified. This requirement remains unchanged in the new Rules (Art. 18 (1) g)).

Practice in this respect varies considerably. Some arbitrators try to regulate as much of the procedure as possible in the Terms of Reference. [Page35:]

The advantage of the approach is that it gives the parties clear indications of what they have to expect. But the approach also has its disadvantages since time and efforts may be spent on regulating matters that do not become relevant later in the procedure. Moreover, rules agreed in the Terms of Reference restrict the arbitrators' flexibility in responding to unforeseen situations later in the procedure. Unless suitable reservations are made in the Terms of Reference, a later modification of the rules of procedure agreed in tem requires the agreement of all parties.

For this reason it appears preferable to regulate in the Terms of Reference only those aspects of the procedure which must be settled at this stage. Other aspects should be left to directions given by the Arbitral Tribunal, when the need arises and after consultation with the parties.

Finally, two minor modifications may be mentioned. The first is found in sub-paragraph g) of the list of requirements for the Terms of Reference, which states that, where the power to act as amiable compositeur is conferred on the arbitrator, this must be mentioned in the Terms of Reference. The new provision on this point adds the reference to 'decisions ex aequo et bono'.

The other minor modification concerns the old sub-paragraph h) of the list of requirements. It required that the Terms of Reference include 'such other particulars as may be required to make the arbitral award enforceable in law, or may be regarded as helpful by the International Court of Arbitration or the arbitrator'. The first report of the Working Party concluded that this provision, which ad been in the Rules since 955, 'meets no practical need and is generally ignored by the arbitrators'. In its desire to avoid any unnecessary text, the Working Party suggested that the passage be deleted. It is omitted in the new Rules.

C. The effective date of the Terms of Reference and the provisional timetable for the procedure

A peculiar results from Article 9, paragraph 4, of the present Rules: once the Terms of Reference are signed or approved by the Court, they are not yet 'operative'. Before they become 'operative', the Secretariat must first collect from the parties the second half of the advance on costs.

The idea behind this provision is to avoid that the proceedings actually commence without full financial coverage. However, as a result of this provision, the period immediately following the signing of the Terms of Reference has an undefined states in the procedure; it constitutes, as it were, a 'grey area' in which it is not clear whether the arbitration may proceed.

The matter normally does not cause any serious problems since, after the signing of the Terms of Reference, several weeks and often months pass during which the parties exchange written statements. It is undisputed that this exchange can take place, even though the Terms of Reference may not yet have become 'operative' But sometimes the Arbitral Tribunal is called upon to intervene during this intermediary period. It may have to issue procedural orders or even make decisions on points of substance. The former possibly is admissible in this period, the latter certainly not.

The new Rules do away with this uncertainty by providing that, when the Terms of Reference are signed or approved, 'the arbitration shall proceed' (Art. 18 (3)). They provide protection of the financial interests of the arbitrators and the institution by the rule that permits the Secretary General of the Court to direct a suspension of the work of the Arbitral Tribunal when a request for an advance on costs has not been complied with (Art. 30 (4)).

Unfortunately, some of the old confusion has been reintroduced by Article 1, paragraph 3, of Appendix III (on Arbitration Costs and Fees). The provision, which had not been considered in the Working Party nor in the Arbitration Commission, states that 'in general, after the Terms of Reference have been signed or approved by the Court and the provisional timetable has been established, the Arbitral Tribunal shall, in accordance with Article 30 (4) of the Rules, proceed only with respect to those claims or counterclaims in regard to which the whole of the advance on costs has been paid'. [Page36:]

The provision is either in conflict with Articles 18 (3) and 30 (4) of the Arbitration Rules or superfluous. If it means that, in the situation described, the Secretary General may order suspension according to Article 30 (4) of the Rules, the provision is perfectly superfluous, since the Secretary General can do this anyway. However, if it means that the Arbitral Tribunal, even in the absence of a suspension order, must not proceed with the claims for which the advance has not been paid, the provision would seem to be in conflict with the Arbitration Rules. In any case it is regrettable that through this provision in Appendix III, the old uncertainty, which the new Arbitration Rules sought to clear away, has been reintroduced through the back door. 12

Hopefully, the elimination of the split advances will simplify and accelerate the payment of the advances and make it less likely that, by the time when the Terms of Reference are signed, the advances are not fully paid. To the extent to which this will be the case, the situation of uncertainty will not arise.

The new Rules also introduce a new feature that very usefully completes the Terms of Reference: the 'provisional timetable that [the Arbitral Tribunal] intends to follow for the conduct of the arbitration'.

In present practice, many ICC arbitrators use the occasion of the meeting held with a view to the adoption of the Terms of Reference for discussing with the parties the organization of the procedure. They fix a procedural calendar or, as the new Rules describe it, a timetable for the procedure. In view of the busy schedule of most participants in ICC arbitrations such an exercise is necessary if one wishes to avoid long waiting periods later in the procedure. It is also a useful exercise in planning for the arbitration. Thus the principle of a procedural timetable was readily admitted.

The particulars of the requirement and the formulation of the provision nevertheless created some difficulties. In particular, there was some opposition in certain National Committees and among some arbitrators to the introduction of a specific requirement, since they feared that this would create a new cause for rigidity, and grounds for procedural moves by parties who seek to obstruct the procedure. The wording as finally adopted took account of these reservations, and it would appear that the new clause should be welcomed by all participants in ICC arbitration, parties, counsel and arbitrators alike. The principal features of the timetable are:

• The timetable is prepared by the Arbitral Tribunal at the time when the Terms of Reference are drawn up or 'as soon as possible thereafter'. The meeting with the parties for the adoption of the Terms of Reference is the best occasion for preparing the timetable. The arbitrators, the parties and their counsel should therefore bring to the meeting their agenda for the year to come, since the period for which the planning must be made can be quite long. When calling the meeting, it is wise for the Chairman of the Arbitral Tribunal to remind all participants of this practical precaution. There may be situations when at the time of the meeting not all the elements for such a timetable are known. The Rules, therefore, provide that it may also be prepared subsequently, provided this is done as soon as possible.

• The timetable is established 'in a separate document': it is important that the timetable should not be included in the Terms of Reference. Otherwise, difficulties may arise when it must be modified subsequently.

• The timetable is to be prepared by the Arbitral Tribunal 'after having consulted the parties'. The addition appeared necessary, since there are still arbitrators who fix hearings or other steps in the procedure without such consultation. Judges, who are used to fixing procedural steps at their own convenience, are particularly inclined to act in this fashion when they sit as arbitrators.

• The timetable is 'provisional'. Clearly, there are many circumstances which may cause the need for change during the course [Page37:] of the procedure. It was necessary to point out in the Rules that subsequent adjustments can be made.

• The timetable, obviously, must be communicated to the parties. It must also be communicated to the Court, a requirement which may give to the timetable a more formal and committing nature.

• Subsequent modifications likewise must be communicated both to the parties and to

the Court. It can be expected that this requirement makes such modifications more formal and thus reduces the temptation to make modifications without serious reasons.

It is hoped that this new procedural timetable, by the element of foresight and planning which it introduces, will increase the efficiency of the procedure and thus contribute to strengthening the improvements in the procedure which the modified provisions on the Terms of Reference have introduced in the new Rules.

1
Erik Schafer, 'The ICC Arbitral Process, Part II: Terms of Reference in the Past and at Present' in The International Court of Arbitration Bulletin, Vol. 3/No 1, May 1992.

2
J. Gillis Wetter, 'The Present Status of the International Court of Arbitration of the ICC: An Appraisal' in The American Review of International Arbitration, 1990 No 1, 91, 101.

3
For examples of ICC Terms of Reference, see Andreas Kellerhals (ed.): Schiedsgerichtsbarkeit, Zürich 1997 as annexes to Marc Blessing, Einführung in die Schiedsgerichtsbarkeit (153-186) and to Michael E. Schneider, Das schiedsgerichtliche Verfahren (296-305).

4
In view of the confidential nature of arbitration proceedings it is difficult to provide evidence for this affirmation. Indeed, Wetter writes that 'to the writer's knowledge, no ad hoc tribunals require terms of reference' (loc. cit.). However, the present author has experienced the use of terms of reference in ad hoc arbitrations. In the discussions of the Working Party that prepared the revised ICC Rules and at other meetings of international arbitration specialists, participants have confirmed the increasing frequency of Terms of Reference or similar instruments in arbitration proceedings, even in the absence of a specific requirement to that effect.

5
ICC Document No 420/369, Annex 1

6
The Lazareff Report recommends the following text: 'The issues to be determined shall be those resulting from the parties' submissions and which are relevant to adjudication of the parties' respective claims and defences. In particular, the Arbitral Tribunal may have to consider the following issues (not necessarily all of these and only these, and not in the following order)…' in The ICC International Court of Arbitration Bulletin, Vol. 3/No 1, May 1992, p. 35 § 121. James Carter quotes another, more detailed clause in 'Rights and Obligations of the Arbitrator', Arbitration (Chartered Institute of Arbitrators), August 1997, 175.

7
In an Award quoted by Lazareff, the arbitrators held that a change from a request that an amount be awarded in the contractually stipulated currency to a request that it be awarded in another currency represented the introduction of a new claim; but they held that the new claim remained within the limits of the Terms of Reference, in 'Terms of Reference: A Practical Guide', prepared by a Working Party of the ICC Commission on International Arbitration, chaired by Serge Lazareff, loc. cit., p. 40.

8
For François Perret the Anglo-American concept of 'claim' corresponds to the 'Anträge' or 'Rechtsbegehren' in the Germanic legal systems and to the term 'conclusion' in the Swiss understanding; he points out that in the French system 'conclusion' has a wider sense; see 'Les conclusions et leur cause juridique au regard de la règle ne eat judex ultra petita partium' in Etudes de Droit International en l'honneur de Pierre Lalive, 1993, 594 FN 1.

9
See note above.

10
In the provision requiring the addresses of the parties to which notifications in the arbitration can be made, the word 'validly' was added before 'be made'; the provision concerning the particulars of the arbitrators had to be reworded since the Rules now replace the word Arbitrator (which included the plural) by the term Arbitral Tribunal.

11
On cultural differences in the perception of the role of the arbitrator and the conciliator, see Schneider, Combining Arbitration with Conciliation, Report for the ICCA Conference, Seoul, October 1996.

12
Editor's note: This issue is addressed by Horacio Grigera Naôn in 'The Appendixes to the 1998 ICC Arbitration Rules', The ICC International Court of Arbitration Bulletin, Vol. 8/No 2 (1997). His answer, in short, is that the Arbitral Tribunal has no discretion under Article 1 (3) of Appendix III, but must act in this respect under the direction of the Secretary General, conformably to Article 30 (4) of the Rules.