ICC Articles

This Article is the third in a series describing various aspects of the ICC arbitration procedure; <em>Part I</em> (prepared by Christophe Imhoos) was devoted to the constitution of the Arbitral Tribunal (published in the ICC Bulletin Vol. 2 / No. 2); <em>Part II</em> (prepared by Erik Schäfer) addressed the Terms of Reference (published in ICC Bulletin Vol. 3 / No. 1 which also contained the Practical Guide on the subject of the Terms of Reference issued by the ICC's Commission on International Arbitration).

Introduction

When I was asked by the ICC whether I would be willing to contribute this Third Part for the ICC Bulletin, my answer was a reluctant "Yes": Having devoted a substantial part of my last 20 years' professional life to arbitration, it amounts to an almost "superhuman task" and in any event a somehow painful exercise to write a "short article" on the ICC's arbitral procedure, as this had been expected from me. How can you be short when there is so much to be said? Nevertheless I have tried. This article intends to convey two things:

(i) an understanding of essential procedural aspects of arbitration under the ICC Rules as well as of their spirit;

(ii) a carefully structured practical guidance through an arbitral procedure.

It is sometimes said that the ICC Rules do not as such offer tangible answers to specific procedural issues as they may arise in the framework of an international arbitration. Indeed, it is true to say that the arbitration rules of various other institutions (and those of UNCITRAL or the provisions of the UNCITRAL Model Law) contain more detailed procedural provisions (including rules as to the basic structuring of the arbitral procedure). Are the ICC Rules, therefore, less complete and less comprehensive than others? Do they lack precision where precision and detailed procedural guidance would be required?

My answer to such or similar questions is a clear NO: In fact, as we will see, the ICC Rules:

- deliberately avoid to prescribe 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.

Essentially, the procedural provisions are contained in Articles 11, 14 and 15 of the Rules; further procedural matters are addressed in Article 6; in addition, the general rule as contained in Article 26 needs to be mentioned. On a superficial reading of the above referred provisions of the ICC Rules one may be tempted to say that indeed, only limited practical guidance is given. However, there is more behind, as the reflections in this Article will show.

This is the Structure of the following Chapters:

Chapter A. Rules Governing the Proceedings-Article 11

[Significance-Questions-How Determined]

Chapter B. The Impact of National Laws-Article 26

[Law of the Situs-Law of Country of Enforcement-Other Laws Applicable to Specific Issues]

Chapter C. Five Special Situations

[Jurisdiction-Bifurcation-Interim Measures-Absence of a Party-Multiparty Arbitration] [Page19:]

Chapter D. How to Establish the Facts-Article 14

["All Appropriate Means"-Civil Law and Common Law Concepts-Time]

Chapter E. Written Submissions

[Importance-How Many?]

Chapter F. The Organization of Evidentiary Proceedings

[Pragmatic Approach-Organizational Meeting, 13 Points to be Considered-Arbitrator's Further Powers-Appointing an Expert]

Chapter G. The Hearing-Article 15

[Importance-How to Call-Time Required-Conference Room-Friendly Ambience-Opening-Oral Pleadings-Witnesses-Documents-Experts-Demonstrative Evidence-Post-Hearing Briefs-Closing of Hearing and/or Proceedings]

Chapter H. Four Crucial Issues

[How Far to Go...? -Issues Not Addressed-When "Enough"?-Partly Insufficient Evidence]

Conclusion

This Article does not discuss matters concerning (i) the law (or rules of law) applicable to the merits of the case (Article 13.3), problems of the relevance or applicability of mandatory rules of law and/or notions of public policy, (ii) the taking into account of trade usages (Article 13.5) and (iii) the power to act as amiable compositeur (Article 13.4), respectively to decide ex aequo et bono. Likewise we will not consider here methods of the arbitrators' deliberations and their rendering the arbitral award.

A. Rules Governing the Proceedings

Article 11

Article II

The Rules governing the proceedings before the arbitrator shall be those resulting from these Rules and, where these Rules are silent, any rules which the parties (or failing them, the arbitrator) may settle, and whether or not reference is thereby made to a municipal procedural law to be applied to the arbitration.

1. Significant changes...

Article 11 was first introduced with the amendment of the ICC Rules in 1975, replacing the former Article 16 of the ICC Rules 1955. No doubt: its amendment in 1975 marked a most significant progress, and still today Article 11 deserves to be recognized as a landmark provision of the ICC Rules, and its importance and significance should be further discussed now:

The old Article 16 as contained in the ICC Rules 1955 read as follows:

The rules by which the arbitration proceedings shall be governed shall be these Rules and, in the event of no provisions being made in these Rules, those of the laws of procedure chosen by the parties, or failing such a choice, those of the law of the country in which the arbitrator holds the proceedings.

The "hierarchy" in the 1955 and 1975 Rules remains the same:

Firstly, the Rules prevail and thus will, in the first instance, govern the procedure; this is the same under the 1955 and the 1975 Rules (Note: see hereto Chapter B below).

Secondly, where the Rules are silent, the choice of the parties will prevail: the 1955 Rules referred to "laws of procedure" which inspired the understanding that such a choice would refer to some municipal or national law of civil procedure, whereas the Rules since 1975 no longer refer to "laws of procedure" but refer to "any rules which the parties may settle", and this does mean that the parties are not only free to choose a particular procedural law as such, but they may also refer to non-municipal rules (such as some other arbitration rules, for instance on the taking of evidence), or they may draft or agree upon procedural rules of a purely ad hoc nature themselves, for instance by reflecting certain procedural provisions within the arbitration clause or within a subsequent submission agreement, or simply by a written agreement or oral understanding reached during the arbitral process. Moreover, where a procedural issue has arisen during the arbitration, they may, of course, themselves determine the same upon mutual accord.

Thirdly, the arbitrator will have the authority to determine the procedure insofar as the parties remained silent. Here is the most important and [Page20:]significant change: While the 1955 Rules had expected the arbitrator to apply the procedural law (thus a national or municipal law) as in force at the place of arbitration, the 1975 Rules have freed the arbitrator in the sense that he is no longer in any way expected to refer to an underlying municipal procedural law, but may determine the rules of procedure freely.

2. ... and a significant progress

With the above changes the ICC Rules have reflected a strong and noticeable trend in the development of modern arbitration. It is a trend away from local ties and particularities of the lex loci arbitri towards a delocalized process governed by ad hoc procedural rules fashioned for the specific needs of the actual case.

Indeed, parties to an international contract generally require and expect that the dispute-settling mechanism be inspired and guided by rules and criteria reflecting an international consensus, and the least they expect is that the arbitral process be detracted by particularities and sometimes pitfalls of local procedures unknown to them.

Thus, by agreeing to the ICC Rules, parties are deemed to have agreed to waive the application of purely municipal rules of procedure, to the extent that such a waiver is legally possible/permissible (see further below, Chapter B).

Article 11, as it now stands since 1975, compares favourably to similar provisions as contained in other modem arbitration rules; see for instance Article 5.1 and 5.2 of the LCIA Rules, Article 16 of the International Arbitration Rules of the AAA, Article 15.1 of the UNCITRAL Arbitration Rules, Article 19.1 of the UNCITRAL Model Law. Disconnecting the international arbitral procedure from purely local/municipal perspectives paved the way towards a universality of the arbitral process and towards a harmonization of its basic rules and notions as they were developed over the past decades of intensive discussions in doctrine and practice. While a unification of the arbitral process around the globe will certainly be and remain a utopia, we may nevertheless say that, for a decade or more, a normative practice of arbitral procedure and a distinctive arbitral culture have been growing around the globe, and this certainly for the benefit of the worldwide business community, for the benefit of peaceful mechanisms for settling commercial disputes, lastly for peace as such.

3. Four questions

Essentially four questions may be asked in connection with the above:

Firstly: If the arbitrator does not have to apply (or refer to) a particular or municipal procedural law, does this not expose the parties to unknown uncertainties and an unpredictability of the procedure?

My personal conviction is to say NO. Instead of deciding a procedural issue by applying simply the provision or solution as prescribed by the municipal procedural law at the seat of the arbitration (as this had been the solution pursuant to the 1955 Rules), the arbitrator under the present Rules has the much more difficult and demanding task to deduce his decision from different sources. And where the procedural rules to be applied had not been determined before, he will have to make his determination upon a very careful evaluation by having regard e.g. to common notions in international arbitration, or by tracing the answers to fundamental principles of the international arbitral process such as (i) the principle (or requirement) of equal treatment, (ii) the right to be heard, (iii) the requirement of acting in good faith. One may thus also expect that an ICC arbitrator, confronted with a particular procedural issue, will not simply look into a local procedural law or code picking the answer as may be offered therein, but instead will have to make a very carefully weighed and considered assessment which takes into account (i) the fair and reasonable expectations of the parties involved and (ii) the specificity of international arbitration.

Therefore, it is certainly correct to say and repeat here that more freedom of the arbitrator means more responsibility. In other words, the procedural autonomy as it is reflected in Article 11 of the ICC Rules is in no way a carte blanche for any sort of arbitrariness, on the contrary, it represents an essential protective device for the parties to international commerce and trade which may be looked on as being a guarantee or an "insurance policy" to safeguard that the fair and reasonable expectations of international parties to an arbitration will not be frustrated by unexpected pitfalls of local/municipal procedural laws. [Page21:]

Secondly: To what extent is this procedural autonomy (as provided for under Article 11) subject to, or restricted by, the general command of Article 26 of the ICC Rules, respectively by imperative norms of national laws such as those at the place of arbitration, or those at the place where most likely an enforcement of the arbitral award will have to take place?

This is a most important question, and we will examine it more closely in Chapter B below.

Thirdly: To what extent can/may the parties, by their common accord, depart from, or exclude, some of the Articles as contained in the ICC Rules?

This is a difficult and sensitive question. In my experience, the ICC has always been very reluctant to accept an exclusion of particular provisions, and this essentially on the argument that the nature of an ICC procedure should not be changed. Indeed, one may fully understand this attitude against the background of the ICC's commitment towards monitoring the due conduct of the entire arbitral process once it is entrusted to the arbitrators. On the other hand one may be less convinced by such an argument where the parties, for instance in the framework of the Terms of Reference, would wish to exclude the application of the six months' time limit as per Article 18.1 (a provision which primarily aims to protect the interests of the parties and where it would seem questionable if the ICC invoked less significant administrative or other interests of its own). It is never wrong to reconsider answers given in the past, and one may say that, fortunately, the ICC has always had a truly open and critical mind towards its Rules which are, so to speak, constantly under scrutiny and, at the same time, do stand the test of time.

Fourthly: What does Article 11 mean in actual practice? How to apply its spirit and the freedom it provides?

This last question will now have to be considered hereinafter.

4. Procedural rules chosen or agreed by the parties

In the first instance it is for the parties to determine the procedure. For example they may agree on a common-law type of procedure with emphasis on oral presentations, or on a civil-law type of

procedure with more emphasis on the exchange of written submissions, or they may sometimes agree that a particular national or municipal code of civil procedure should be followed (a choice which, however, appears to be a step backwards and, in the author's conviction, is neither suitable nor really desirable for international arbitration), or they may agree on certain particular rules of procedure which, in their view, may be of particular interest or concern to them.

Basically, the parties may make their agreement as to procedural rules at various moments in time, for instance:

a) In the framework of the arbitration clause: sometimes, the ICC arbitration clause or model clause is supplemented by some particular provisions of a procedural nature such as provisions on:

- the language to be used for conducting the arbitration (and the languages in which documents may be filed and witnesses and/or experts heard without translation);

- certain aspects for the administration of evidence, such as production of documents, discovery, written witness statements, depositions;

- provisions dealing with the arbitrator's authority or power to rule on interim or conservatory measures;

- particular provisions providing for multiparty arbitration.

b) Immediately before starting the arbitration, e.g. in the framework of a submission agreement; such agreements are rather rare in practice.

c) At the occasion of discussing and settling the Terms of Reference. Indeed, this is the most convenient (and the most frequently used) moment in time where basic procedural issues are addressed); this occasion is ideal, for the following reasons:

- firstly, the discussion in the presence of the arbitrator (who in most cases will carefully direct the same) will provide for a suitable format of the discussions;

- secondly, the basic scope and subject matter of the dispute will be known at that time, and this will enable the parties and the arbitrator to focus on what will be necessary and appropriate under the particular perspectives; [Page22:]

- thirdly, the arbitrator will be able to provide, on the basis of his professional experience, suitable guidance to the parties;

- fourthly, the arbitration is not as yet in a stage where adjudicatory determinations are being made by the arbitrator; discussions at a later stage tend to be more difficult in that one of the parties may fear to suffer direct disadvantage when agreeing on a particular matter.

Further reference is made to the ICC Bulletin Vol. 3 No. 1: Therein Erik Schäfer had addressed the determination of procedural rules within the Terms of Reference on page 12, and a detailed and excellent account was given in the Practical Guide on the Terms of Reference issued by Serge Lazareff, Chairman of a Working Group of the ICC's Commission on International Arbitration, reproduced in the same Bulletin; see page 36, paras. 132 et seq., specifically paras. 138-169.

d) At a later stage or towards the end of the arbitral proceedings; indeed, procedural agreements between the parties are quite frequent, for instance in the following contexts:

- to agree that an expert will have to be appointed, and to agree on his terms of reference;

- to agree that no expert should be appointed, sometimes coupled with the mutual understanding that the arbitrators should themselves assess and determine the issues by using their own best considered appreciation and discretion;

- to agree on the number of witnesses to be heard, on the mode of their examinations, time etc;

- to agree on the mode of taking (or not taking) minutes of hearings, oral pleadings and examinations;

- to agree on the closing of evidentiary proceedings in the sense that the parties are agreed that the arbitrators will not be required or expected to carry on a further fact finding;

- to agree on final pleadings (conclusions) to be made, or on final post-hearing briefs to be submitted within a particular time limit, whether contemporaneous or consecutive.

5. Determination of procedural rules by the arbitrator

To the extent that the parties have not made or agreed upon procedural rules or procedural issues, it will be for the arbitrator to make such a determination. Basically three questions will arise which require further discussion: a) how? b) when? c) in what form?

a) How should the arbitrator determine procedural rules and decide on procedural issues?

More particularly, questions of the following nature may arise:

- Should the arbitrator himself determine that a particular national or municipal procedural law shall be applied, or be applied "by analogy"?

- Should the arbitrator aim to structure himself detailed rules of procedure at the beginning of the arbitral proceedings?

- Should he limit the determination of procedural matters to state the basic framework of the arbitral procedure and, thereafter, give further directions as necessary and determine procedural issues as and when they arise?

The ICC Rules leave it to the arbitrator to answer such or similar questions. Indeed, a variety of different answers were, for good reasons, given in numerous ICC arbitration cases tried in the past, and answers are not likely to be unanimous in the future. Here are some of my personal thoughts on these questions:

Firstly, the arbitrator should have a sound knowledge or the requirements of the arbitration law at his seat (at the place of arbitration which will also be the place of making the arbitral award). If such arbitration law requires particular procedural rules to be observed as mandatory rules or rules forming part of such country's public policy, then he should respect the same or, in any event, take them into account when determining the procedure; see hereto the subsequent Chapter B.

Secondly, the arbitrator may have to take into account particular procedural requirements of the state where most likely the arbitral award should be able to qualify for recognition and enforcement. [Page23:]

Thirdly, apart from taking account of the foregoing and to the extent that he may benefit from a freedom to determine the procedure as the arbitrator thinks appropriate, he should take care to organize a truly international arbitration procedure. More particularly:

- An international arbitration has little to do with and is clearly dissimilar from a domestic litigation or domestic arbitration.

- It would thus be wrong to determine (as this had frequently been done in past decades) that the arbitral procedure should follow a particular national or municipal code of civil procedure, or certain parts thereof; and I would not even recommend to follow a local procedural law (such as the code of civil procedure at the seat of the arbitrator) "by analogy". These are the essential seven reasons:

(i) Local procedural laws are often highly inadequate to respond to the demands of international arbitration.

(ii) Local procedural laws are not normally known to the parties, their counsels or some of the arbitrators. Subjecting the arbitral process to a local procedural law may amount to the quite unbearable inconvenience (i) that such a law may not even be available in the language of the arbitration, for instance English, (ii) that, whenever a procedural difficulty will arise, it will be almost inevitable for the parties and their counsels and the arbitrators to study not only the text of such domestic procedural law but also commentaries and scholarly writings thereon and, as the case may be, the court cases thereon for the past decades, and in most cases all of such material will first have to be translated into the language used in the arbitration. Such an exercise cannot make good sense in international arbitration.

(iii) Any reference to local laws may force a diligent party to seek the assistance of local counsel at the place of arbitration-while it is and should be the advantage of international arbitration that each party may feel comfortable with using its own counsel of confidence, or its in-house counsel.

(iv) Parties to an international contract expect, for good reasons, a procedure oriented at international standards, standards that take a distant look to what is sometimes called the "jungle of processualism". Indeed, international arbitration should not be or become a prebend for professors writing opinions on procedural issues.

(v) Instead, an international arbitration should be inspired by applying the basic rules of procedure and notions of due process as were discussed in the past one or two decades in numerous legal writings.

(vi) While it cannot be the purpose of this article to give a bibliography of such writings, I may in an overall analysis, remark that those discussions/writings have led to a far-reaching harmonization around the globe of basic notions of international arbitration as well as of the basic procedural rules to be applied.

(vii) Thus, instead of falling backwards into a localization/municipalization of international arbitration (as it was handled in certain parts of the world), we now see an ever-growing trend towards an internationalization and globalization of international arbitration, and a new culture is being developed. An ICC arbitrator must be expected to be at the pulse of such development.

Fourthly, it would not seem to be necessary that the arbitrator establishes a detailed procedural structure himself. Instead, I would recommend and normally find it useful that the basic procedural structure be discussed and agreed upon in the framework of the discussion to settle the Terms of Reference. If laid down in the Terms of Reference, such procedural rules will then be covered by the parties' explicit agreement. Taking a broad view, these are the matters of a procedural nature which are often determined within the Terms of Reference:

- Whether, subsequent to the Terms of Reference, there shall be one further exchange of written memorials, or a double exchange (in respect of each, the claim and any counterclaim).

- Whether the parties shall be expected to exhibit, with their memorials, the documents they wish to rely on, and whether they should indicate such other means of proof they intend to adduce (in particular the names and further details of witnesses). [Page24:]

- Whether parties may, or are expected to, file written witness statements.

- Whether the parties may take depositions of witnesses.

It is not normally practical to make, in the framework of the Terms of Reference, further detailed determinations as to evidentiary proceedings which may be necessary after completion of the exchange of written submissions, because it is rather unlikely that the particular requirements may be anticipated at such an early stage of the arbitral proceedings. Such determination should, therefore, be made at a later stage, either upon an organizational hearing to be held after the exchange of memorials (sec below Chapter F para. 3) or, if such an organizational hearing would not seem to be necessary, by issuing an appropriate order containing the further directives for organizing the evidentiary proceedings.

Fifthly, an approach by the arbitrator whereby he will determine procedural issues to the extent necessary if and when they arise stands in line with the provisions of modern (national) arbitration laws, such as e.g. Article 1494 of the French Nouveau Code de Procédure Civile which, in essence, says that the arbitrator may, in the absence of a determination by the parties, direct the procedure "autant qu'il est besoin" either directly or by reference to a law or to arbitration rules. Similarly, the new Swiss Law on International Arbitration contained in Chapter 12 of the Swiss Private International Law Act of 18 December 1987 provides in Article 182.2:

Where the parties have not determined the procedure, the Arbitral Tribunal shall determine it to the extent necessary, either directly or by reference to a law or to arbitration rules.

b) When should such determination be made?

As stated above: whenever necessary throughout the various stages of the arbitral proceedings, step by step. However, concerns of clarity and predictability are of importance and must be taken into account by the arbitrator:

Parties (specifically in those cases where they come from different origin and legal backgrounds) have a legitimate concern to know well in advance what the basic structure and rules will be so as to enable them to determine carefully how to arrange for the pleading of their respective cases. For instance they have a legitimate concern to know whether, after the Terms of Reference, they will have only "one shot" for further written memorials, or two. If the arbitrator expects that written memorials be accompanied by written witness statements, then certainly the parties should know that well in advance. If the arbitrator wishes to determine that the parties, after a certain moment in time or a certain procedural step, should no longer be in a position to plead any new facts, then he will have to make this known to the parties.

The general rule which should be kept in mind by the arbitrator and which may provide an important guidance is the following:

the procedure should not be a surprise to the parties,

procedural determinations and procedural sanctions, likewise, should not come as a surprise, and moreover,

the arbitral award as such in its determinations on both procedural and factual/substantive matters should not come as a surprise,

and the arbitrator must act with the diligence to ascertain the above.

c) In what format should procedural directions be given?

The answer seems clear: unless reflected in the Terms of Reference, procedural determinations should be made by issuing a procedural Order.

Having seen, in my experience, many well done and many "ugly" orders issued by arbitrators, I simply wish to state that, to me, an Order is the "carte de visite" of the arbitrator. A few personal remarks on how I structure Orders:

I prefer to use a neutral stationary and not the stationary of my law firm.

The first page contains the ICC Case No. on top, the title such as e.g. "Fifteenth Order of 31 August 1992" and then: "issued by the Arbitral Tribunal having its seat in (city), consisting of ..." (the full names of all arbitrators including full addresses, telephone and fax numbers will then be listed). Thereafter the parties should be stated in full, that is to say: I prefer to include the full names, full addresses, telephone and fax [Page25:] numbers of each party, followed by the same full particulars as to their counsel. Thus, the front page of the Order can always be used for having all addresses and numbers at hand. Thanks to the computer, such a first page will only have to be established once and of course will have to be kept up-to-date throughout the proceedings.

The second page normally starts with a short recital, e.g. in the following sense:

The Arbitral Tribunal [or: the Sole Arbitrator]

- having received Claimant's Memorial of ...

- having considered Respondent's letter of... [etc. as the case may be, but no motivation as such is required]

now issues the following

ORDER

1. ...

Thereafter the Order as such should be reflected, each paragraph to be numbered, and of course greatest care must be given to assure that each point of the Order will be fully comprehensive so that the parties will clearly know what is expected from them. My personal remark on many Orders I have seen is that, more often than not, they are too short and sometimes even (unnecessarily) sharp; an Order is well done when it permits the parties to have a clear and comprehensive understanding of what is meant, expected or requested by the Order. Parties should not be left in doubts and uncertainties.

As the last paragraph I would always specify the exact distribution such as e.g. "this Order is communicated by fax followed by registered mail with acknowledgment of receipt to Claimant's counsel ... and by ordinary mail to Respondent's counsel, to all Parties directly [where this has been so directed], the Co-Arbitrators and the ICC (for information)". Obviously, the mode of dispatch depends on the contents of the Order, taking into account the importance of having a documentary proof as to the postal service of the Order to the party or parties. Where a courier service is used such as DHL or others, they should be specifically requested to return the signed delivery slip evidencing receipt of the envelope.

Before now continuing to discuss the further stages of an arbitral procedure under the ICC Rules, we should briefly interrupt the "film" and focus, in the subsequent Chapter B on the relationship between the ICC Rules and local/ national laws. Thereafter, in Chapter C we will have to discuss five different special situations. Thereafter, the "film", briefly interrupted at this juncture, will continue with the Chapters D, E, F and G.

B. The Impact of National Laws

Article 26

A substantial percentage of ICC arbitrations get started, progress and terminate solely on the basis of the ICC Rules, without interference by national laws or by any local judiciary; and in those cases it may have passed unnoticed by the parties and the arbitrators that "their" arbitration had been and remained under the control of various "sleeping watch-dogs": national laws!

It is necessary to realize that ICC arbitration does not take place in the "outer space", but is and remains embedded in and linked to various national laws which may, depending on the circumstances, have direct or indirect impact on the arbitral proceedings. Forward-looking counsels take these into account already when considering to draft an arbitration clause, and so do prudent arbitrators from the first day of their mission. The so-called General Rule of Article 26 explicitly requires them to do so:

Article 26: General Rule

In all matters not expressly provided for in these Rules, the International Court of Arbitration and the arbitrator shall act in the spirit of these Rules and shall make every effort to make sure that the award is enforceable at law.

What does this mean more precisely?

1. The law at the situs of arbitration

The law of the place of arbitration (lex arbitri, lex loci arbitri) is of utmost significance. It is this regime which, in essence, does provide the legal framework for the ICC arbitration, and it depends on this regime whether or not mandatory rules of law will be imposed, overriding the provisions of the ICC Rules. Due [Page26:] to this direct impact on arbitral proceedings it is essential to select a place of arbitration in an "arbitration-friendly country", i.e. a country with a modern and liberal arbitration law. Essential criteria to be checked are the following:

- Regarding the constitution of the arbitral tribunal: Does the lex arbitri recognize that, pursuant to the arbitration clause or arbitration agreement, matters regarding the appointment, challenge, removal and replacement or an arbitrator pertains to the prerogatives of the ICC (or is the situation such that provisions of the lex arbitri will prevail and that the local court at the place of arbitration will require jurisdiction, or exercise a supervisory jurisdiction over the administrative decisions or the ICC)?

- Regarding the arbitral procedure: Are there mandatory provisions of procedural nature which will have to be followed, for instance provisions as to the establishment of facts and the taking of evidence?

- Regarding interim measures of protection: Does the lex arbitri empower the arbitrator to decide on interim measures, or is such decision reserved to the state court?

- In general: Does the national law provide assistance for arbitral tribunals wherever required?

- Regarding judicial control over arbitral awards: On what grounds may arbitral awards be set aside?

- Are parties free to contract out of any judicial review, if they so wish?

In the 1980s various countries revised their arbitration acts so as to permit arbitration to function with less constraints, recognizing thus the specificity of international arbitration which, among things, requires that arbitration should not be subject to local procedural peculiarities. It is beyond the scope of this Article to render a detailed account of remaining impacts of various national laws imposed on international arbitrations conducted within their territories; however, it is necessary to be fully aware or these so as to start the arbitration on the right foot.

2. The law of the country of enforcement

Should arbitrators take into account particular requirements of the law where most likely the award will have to be enforced? This is a difficult question, given the fact that arbitrators may not be able to predict the country of enforcement (which may involve particular knowledge as to the locus of the losing party's assets). Thus, arbitrators may not be able to do more than to keep in mind the grounds for refusal of exequatur on the basis of the New York Convention of 1958.

3. Other national laws

Of course, for determining the merits of the case, arbitrators will have to apply the substantive law chosen by the parties to govern their contractual relationship. In the absence of such a choice, they may have to determine the substantive law (more correctly: the rules of law) on the basis of a conflict of law rule deemed appropriate; see Article 13.3 of the ICC Rules. While this latter provision would deserve to be commented on more thoroughly (which is beyond the scope of the present Article), the point to be made here is to emphasize that there are a number of issues which may not as such come under the ambit of the lex contractus, but will be governed by a special legal order, such as:

- the validity of the arbitration clause or arbitration agreement (which is regarded as being a separate agreement per se; see also Article 8.4 of the ICC Rules) is "classically" considered to be governed by the lex loci arbitri (but four other solutions have also been advocated and practised, including a delocalized approach by considering the objective criterion or the usages and demands or international trade and the subjective criterion of the reasonable and fair expectations of the parties and the common intent expressed by them); in this connection reference may be made to the in favorem validitatis principle as explicitly reflected in the new Swiss Arbitration Law (Article 178.2 PIL Act); as regards its form, a few national laws contain particular requirements, but mostly the exchange of a document in writing will suffice; see hereto Article 11.2 of the New York Convention of 1958;

- subjective arbitrability (in the sense of a party's capacity to conclude an arbitration agreement) will normally be governed by the lex domicilii;

- immunity from suit of a state may be governed by rules of public international law; [Page27:]

- objective arbitrability may have to be checked against the national laws of the parties, or the law applicable to the contract, or the law at the place of arbitration, or the law of the country where most likely execution of the award will have to be sought (all of these solutions have been advocated and practised), unless the law at the place of arbitration proposes an explicit solution (see e.g. the Swiss law on international arbitration in its Article 177.1 of the Private International Law Act).

- Valid representation of a party is normally a matter governed by the lex domicilii of the party so represented, or by its law of incorporation (whereas the scope of a power of attorney might be determined by the law where the acts on behalf of the represented party were carried out).

- In addition to the lex voluntatis (i.e. the law chosen by the parties to govern their contractual relationship) there may be mandatory rules of (mostly) public law of various countries which may request an extraterritorial recognition and application, and so do rules of public policy, and arbitrators will have to reflect carefully whether (and if so to what extent) such rules will either have to be considered in one way or another, or whether they should be directly applied.

- Where issues are to be determined on the basis of general or transnational rules of law, or lex mercatoria, or trade usages, or where arbitrators should decide ex aequo et bono or act as amiables compositeurs (whether understood as a pure authority or as a mandatory mission), it will be necessary to fashion the arbitral proceedings in a manner so as to ascertain that the implications of these references be properly addressed in the framework of the arbitral proceedings.

It is a demanding task for the arbitrators to be fully aware of the inter-relations of different laws and rules of law, since more often than not they will influence the perspectives of the arbitration and require an appropriate shaping of the arbitral procedure.

C. Five Special Situations

We will now consider briefly five special situations without, however, entering into a more detailed discussion.

1. When jurisdiction is disputed

Jurisdictional issues may have to do with the following questions:

- Has the correct party been sued?

- Does a successor of rights have locus standi?

- Does an assignee have locus standi?

- Is the scope and reach of an arbitration clause extended to other entities of a group of companies?

- Does the arbitration clause signed by a state-controlled company or organization also bind the state to arbitral jurisdiction?

- Is a contract signed by one government official but without a council of ministers' approval valid and binding and thus create arbitral jurisdiction?

- Does the claimant have locus standi to pursue the particular claim?

- Has an arbitration clause been validly signed on behalf of a party?

- Quid ius where signing formalities were not complied with?

- Does a party have capacity to sue or to be sued?

- Is the subject matter arbitrable?

- Is the subject matter covered by the scope and reach of the arbitration clause?

- Can third parties be compelled to take part in an arbitration? Can third parties intervene on their own motion?

- Can the arbitration be conducted as a multiparty arbitration?

- Can a subcontractor be involved in a consolidated arbitration with the employer and the general contractor due to an arbitration clause incorporated by reference?

- Has the arbitral tribunal been validly constituted?

It is quite apparent from these questions that many of them are linked to determinations on the merits. Where the jurisdictional aspects can be sufficiently isolated and where pleas as to a lack of locus standi or jurisdiction do not appear to be of a dilatory nature only, ICC arbitrators normally prefer to adjudicate jurisdiction first.

The ICC Rules do not prescribe the form in which jurisdictional issues must be determined. The normal way, however, is to render an interim award on jurisdiction (which may be a final award if jurisdiction had to be denied). Alternatively, arbitrators sometimes prefer not to render a motivated interim award but instead, after considering and deliberating on the jurisdictional issue, to simply establish a [Page28:] procedural order directing that the arbitration shall proceed. In the latter situation the jurisdictional issues raised by the parties will have to be fully discussed and adjudicated in the framework of the final award.

2. Bifurcation of the arbitral proceedings

Parties occasionally propose to bifurcate the proceedings in the sense that the arbitrators would first concentrate on and deal with issues as to principal liability and proximate causation (an debeatur) and render a decision thereon, whereas the examination of purely quantitative aspects (quantum debetur) would be deferred to a second stage. In each such situation parties and arbitrators should reflect carefully whether such a bifurcation is sufficiently warranted. A bifurcation may take longer, may involve the rendering of a partial award (which may become the object of a setting-aside procedure) and may duplicate the number of memorials to be exchanged by the parties. Moreover, arbitrators should keep in mind to organize a hearing in respect of each separate stage of the arbitral proceedings (see hereto the following Chapters).

3. Interim measures of protection

Under the constraint imposed on me by the ICC to write a "short article" it is not possible to render a sufficiently detailed account on this topic. It must suffice to briefly recall bare essentials:

- Before transmittal of the files to the arbitrators, any request for interim measures will have to be addressed to the local judicial authority, and such a request will not amount to a waiver or forfeiture of the arbitration clause; see hereto the explicit provision in Article 8.5 of the ICC Rules.

- Once the case is in the hands of the arbitrators, requests for interim measures should normally be addressed to them.

- In exceptional circumstances the ICC Rules permit a party to request such measures from ordinary courts even after transmittal of the file to the arbitrators, and indeed a party must have such a possibility for the sake of obtaining quick local relief or protection.

- In all cases where arbitrators are seized with a request for interim measures, they must make

sure whether, according to the laws at the situs of the arbitration (lex arbitri), they are authorized and empowered to issue orders for interim measures. National laws differ significantly between the very liberal approach (as for instance in Switzerland) and clear restrictions in the sense that interim measures will pertain to the reserved prerogative of state courts (as for instance in Italy and various Scandinavian countries).

- Under exceptional circumstances arbitrators may grant interim measures ex parte. However, thereafter, they must give the other party an opportunity to immediately comment thereon, whereupon the arbitrators may have to reconsider their order.

- An order for interim measures does not qualify as an award. It, therefore, does not have to be submitted to the ICC for confirmation in the sense of Article 21 of the ICC Rules, and it will not qualify for recognition and enforcement pursuant to the terms of the New York Convention of 1958 or bilateral treaties regarding the recognition and enforcement of arbitral awards. However, unless the order has been issued ex parte, it may be possible for the arbitral tribunal to require the assistance of a local court for assuring compliance with the order, and thereupon judicial assistance may be available on the basis of multinational conventions such as the Lugano Convention.

4. Default of a party

National or municipal procedural codes frequently provide that, where a party remains absent, a judgment in contumaciam can be rendered essentially on the basis of the facts as pleaded by the claimant party and on a legal construction that, due to the absence of the defendant party, those facts are deemed accepted by the defaulting party. Such procedure with implied assumptions as to the correctness of the claimant's factual assertions and legal conclusions would be clearly incompatible with fundamental notions of international arbitration. The ICC Rules, therefore-in line with other major arbitration rules such as those of UNCITRAL, UNCITRAL Model Law, LCIA, AAA and ICSID-simply provide that the arbitral proceedings shall continue notwithstanding the absence or default of a defendant party. See for instance Article 2.6(4) regarding the appointment of an arbitrator [Page29:] for a defaulting party; Article 8.2 regarding the continuation of arbitration proceedings notwithstanding the refusal or failure of a party to participate; Article 13.2 (2) regarding the refusal of a party to sign the Terms of Reference; Article 15.2 regarding the failure of a duly summoned party to appear at a hearing. Thus, despite the absence or default (partial or total) of the defendant party, the arbitrators will have to investigate the correctness of the facts as alleged by the claimant party, and the difficult question will arise to determine how far investigations should be carried (see hereto below Chapter H para. 1). In any event arbitrators should not go so far to reflect on all possible objections which a defendant party (had it elected to participate) could have raised. Likewise it would not seem correct (as this had sometimes been proposed) that one arbitrator will assume the role and function to speak more or less as a lawyer for the absent party.

Quid ius if a party fails to submit a memorial within the period of time as fixed by the arbitral tribunal? Should the arbitral tribunal disregard or refuse to accept a later filing? Should the failure be deemed a waiver to make its position known to the tribunal? Should it be deemed an admission of the other party's assertions? I would not wish to give a general answer to such or similar questions. It follows from the foregoing paragraph that arbitrators should be moderate in applying sanctions. Very practical orientation may be found in the extensive and carefully discussed moderate practice of the Iran-US Claims Tribunal.

5. Multiparty arbitration

A very significant number of ICC arbitrations are conducted between more than one party on claimant's or respondent's side and in most of these cases parties and arbitrators will be able to handle the procedure without difficulty. It would thus be quite wrong to perceive multiparty arbitration as being a source of inevitable intricacies. However, it is also true to say that delicate problems may arise, not only in the context of the constitution of the arbitral tribunal but also in the further course of the arbitral procedure. It would carry us beyond the limits of this Article to describe the issues that may arise in more detail. Instead we may expect first to receive the final report of the ICC Working Group on Multiparty Arbitration chaired by Mr Jean-Louis Delvolvé.

After this short excursion through the above Chapters B and C we will come on the main track again. In the following we will take a close look at the ICC arbitral process, starting with the basic concept as it comes to us through Article 14.

D. How to Establish the Facts

Article 14

Article 14.1

The arbitrator shall proceed within as short a time as possible to establish the facts of the case by all appropriate means ...

1. "All Appropriate Means"

It is first of all for the arbitrator to establish, after consultation with the parties to the extent necessary, a clear structure for the arbitral process. Such structure must meet three basic criteria and requirements:

Firstly, the structure must ensure equal treatment of the parties.

Secondly, the structure must ensure that each party will have equal opportunities to be heard in adversarial proceedings so as to explain its case.

Thirdly, the structure should be such that all relevant facts can be established in an appropriate procedure.

While the first two requirements form part of truly axiomatic principles and requirements in international arbitration and thus must be considered to be implied in the ICC Rules, the third one is understood to imply that the arbitrator's role is not to be a purely passive or receptive one, but should be active in the sense of an active case management and an active investigation of the relevant facts. It is not possible to exhaustively describe what this may mean in practice, but here are some basic thoughts:

- More often than not memorials, other written submissions and oral pleadings may give rise to uncertainties of understanding. Here it is clearly a task of the arbitrator to ask all those questions for clarification as may be necessary for obtaining the best possible understanding of each party's case. [Page30:]

- Sometimes, written or oral pleadings are lacking clarity and precision, or may not or not comprehensively address relevant issues, and here it is a predominant task of the arbitrator to request all such further and better particulars as may be required for a proper adjudication.

- The active role of the arbitrator is most visible in the framework of evidentiary proceedings, during hearings and the examination of witnesses. We will revert to this active role below; see Chapters E, F, G and H.

2. Civil law and common law concepts

The openness of the ICC Rules is best shown by the fact that they are perfectly acceptable and suitable to businessmen and counsels originating from common law countries as well as to those from civil law countries. While under common law concepts facts are essentially developed at the occasion of hearings and through the examination of witnesses which will introduce documents, counsels from common law countries hardly see an inconvenience to set out the facts in written submissions and to rely on documents as a primary mode of submitting evidence (rather than to rely on oral testimony merely supported by documents). Moreover, common law counsels (who may be accustomed to elaborate rules concerning the admissibility of evidence in court such as those on the objection to hearsay evidence, leading questions, the best evidence rule) will normally be more comfortable with the civil law concept which tends to freely admit as evidence all documentary and testimonial proof, subject to such proof being weighed and evaluated by the arbitrators upon their best considered discretion. Likewise, I have never seen a case where the mode of examining witnesses, their cross-examination and re-examination has given rise to any serious problem in the framework of arbitration. There is no question that all parties do have an extensive right (albeit under the control of the arbitrators) to put questions to witnesses quite in the sense of an examination, cross-examination and reexamination.

We may conclude that the international arbitral practice has largely attenuated differing practices in the mode of taking and receiving evidence. Where parties come from different backgrounds, the arbitrators will tend to combine the advantages of the different systems and will shape the procedure to measure, having regard to the nature and the complexity of the case and the expectations of the parties. In any event, the agreement of the parties to submit to ICC arbitration must be understood as a waiver of the parties to a slavish obedience to a formalistic evidentiary regime in favour of a relaxed mode of receiving evidence.

3. Importance of time

Arbitration is meant to be an expeditious procedure. Arbitrators are expected to act with due diligence and indeed the acceptance of a mandate to serve as an arbitrator implies a duty to devote such time as will be necessary to ascertain an expeditious procedure.

It is advisable to discuss, at the occasion of the Terms of Reference Meeting, a basic time schedule for the exchange of further submissions and, possibly, reserve a number of days for subsequent oral hearings well in advance. This will allow the parties and their counsels to arrange their time schedules. However, it would seem to be wrong to stick to a pre-determined time schedule if the case is developing differently from what was initially expected. The most frequently seen example is the filing by one of the parties of unexpectedly voluminous memorials and supporting documents, and in such a situation it may amount to a denial of the axiomatic right to be heard if the other party was not given an appropriate extension of the time limit for preparing its response with adequate care and within a reasonable time frame.

Some further observations:

Article 6.4 of the ICC Rules contains some provisions regarding periods of time. Instead of fixing a time period, arbitrators prefer to fix a particular day by which a submission must be filed.

What happens if a time limit is not observed by a party? Will it be excluded? If the submission is, for instance, filed 10 days late: Should the arbitrator disregard the same or send it back?

On purpose, the ICC Rules do not provide for sanctions and it is entirely for the arbitrator to consider the imposing of sanctions as deemed appropriate. However, this is a situation and issue to be handled with great diligence; see above Chapter C para. 4. [Page31:]

Time is not essential "as such", but only to the extent that, in each individual case, time will be of essence or relevance to one or more of the parties. Therefore, it is not for the arbitrator to impose a high speed where speed is not relevant or requested. Where both parties wish to have sufficient, relaxed or ample time for preparing their submissions (say for instance four months), it would be unwarranted for the arbitrator to cut this down to two months only because the shorter time limit may be more convenient to him; and certainly the arbitrator should not place counsels under time constraints for the sole reason "to please or impress the ICC".

In mort cases the time required for conducting an arbitration much less depends on the arbitrator than on the parties and their counsels.

I have had cases where the justified expectation for an expeditious adjudication came into conflict with the demands of the principle to be heard. For instance I recall the case where at the very last day of the final hearing new arguments were pleaded by one party which, if they should be taken into account, required a full reopening of the case with new submissions and further hearings. I recall to have decided the controversy by ruling that, within the hierarchy of procedural maxims, the maxim of a speedy conduct of the arbitral proceedings is clearly less important than the overriding maxim to see to it that the parties have sufficient and adequate opportunities to be heard, and thus I had to structure the further proceedings.

Most importantly: thoroughness before speed!

E. Written Submissions

Article 14.1

. . . After study of the written submissions of the parties and of all documents relied upon, the arbitrator . . .

1. Importance

In line with a basic concept in civil law countries, the exchange of written submissions (memorials, briefs; hereinafter we will indistinctively use the terms "written submission" or "memorial") is a cornerstone in ICC arbitration, However, it may be remarked that even within the sphere of common law procedures (where traditionally more emphasis is placed on hearings, oral testimony and examination of witnesses) the pleading of each party's case through written submissions has become more important, and this importance is mirrored also in institutional arbitration rules such as those of the LCIA or AAA.

The arbitrator may reasonably expect that memorials be carefully structured, e.g. by setting out:

- the motions (prayers for relief);

- the table of contents for the various parts of the memorial, so as to allow an orientation;

- a first part which may deal with procedural matters, jurisdiction, locus standi (as necessary);

- one or more further parts setting out the details as to the parties, the contract, the performance or non-performance thereunder, damage, proximate causation; thus focusing on principal liability (an debeatur);

- a subsequent part dealing with quantitative aspects ("quantum debetur");

- a part dealing with legal issues;

- possibly a final part with conclusions;

- a separate schedule listing all the documents filed in support of the memorial;

- an appended or separate volume of documents which should be clearly (consecutively, or on the basis of another system) numbered; documents filed by Claimant are normally labelled for instance "Exhibit C - 52" to identify Claimant's document whereas documents filed by Respondent will be marked with a R - ...);

- where legal materials are cited it is expected that those shall also be exhibited, if necessary with translations of the relevant parts, unless one may assume that such material will easily be available or accessible to all arbitrators and the other party.

2. How many exchanges of memorials?

The classical answer is to allow two full memorials submitted by each party, to be filed consecutively, Within these memorials parties are expected to plead their respective case fully, and arbitrators may sometimes be strict not to allow the pleading of new facts or arguments (which were previously known to the party) at a later stage if they had not been pleaded within the written memorials. However, it is almost [Page32:] impossible to prevent parties from submitting new facts and arguments in the framework of subsequent hearings and evidentiary proceedings, and arbitrators should very carefully reflect whether they may refuse to accept new factual allegations (even though the invoking of such new allegations may slow down or complicate the proceedings).

Where the memorials exchanged prior to the Terms of Reference were merely introductory submissions (such as a Request for Arbitration with a succinct/sketchy Statement of Claim followed by a short/summary Defense) the arbitrator would normally propose that a double exchange of written memorials will start only after the Terms of Reference. Of course, the double exchange will have to be granted in respect of both, the claim and a counterclaim. Thus, the chronological sequence of written memorials could be as follows:

- Claimant: Request for Arbitration with summary Statement of Claim

- Respondent: Summary Defense and summary Counterclaim

Terms of Reference

- Claimant: First Memorial: full Statement of Claim

- Respondent: First Memorial: Defense regarding the Claim and full Statement regarding Counterclaim

- Claimant: Second Memorial: Reply regarding its Claim and Defense regarding Counterclaim

- Respondent: Second Memorial: Rejoinder regarding the Claim and Reply regarding its Counterclaim

- Claimant: Third Memorial confined to a Rejoinder regarding the Counterclaim.

The above will normally conclude the double exchange of written memorials. However, to the extent that a memorial contains new factual allegations, the other party will have a right to be heard and thus may require a further opportunity to give its comments thereto in a subsequent memorial. Sometimes parties or arbitrators feel that, after the conclusion of the above-referred exchange of memorials, "the case is over" and thus may be adjudicated. This, however, is generally wrong except in those cases (i) where none of the parties requires a hearing and (ii) where all material facts and further circumstances appear to be so clear to the arbitrator that no further investigation will be necessary for adjudicating the dispute.

My personal experience is that (particularly continental) arbitrators are sometimes tempted to form their views too quickly on the basis of the memorials exchanged, and I have seen sometimes a great reluctance of arbitrators to see and recognize the desirability or necessity to arrange for an audience (hearing with the parties). And where the reluctance of such arbitrators could be overcome, then some of them felt that a "courtesy hearing" of one day would really be the maximum under the circumstances, showing thereupon impatience if counsels and witnesses took longer than expected. It is my strong belief that such an attitude of arbitrators reveals a serious misconception of the spirit of ICC arbitration since, in fact, the hearing of the parties is another fundamental cornerstone of ICC arbitration (indeed: of international arbitration as such, whether ad hoc or institutional). The hearing will have to be discussed further in Chapter G, but before we will consider further aspects regarding the organization of evidentiary proceedings.

F. The Organization of Evidentiary Proceedings

The moment in time after the exchange of written memorials is significant in that it opens a new phase of the arbitral proceedings. Typically, arbitrators, at that time, will have fully studied the written memorials and the documents submitted, and thus they will have an important task to consider and debate how to proceed with the arbitration. Various different possibilities and steps may be considered by the arbitrator, for instance:

1. Where no further steps seem necessary

In some (rather exceptional) cases the arbitrators may come to the conclusion that "already all has been said" in the framework of the exchange of memorials and that nothing else would be required for adjudicating the dispute. However, in practice, this is a rather exceptional situation. But even in such a situation (where the [Page33:] arbitrators feel that nothing else is necessary) there is a good reason for the arbitrators to check carefully whether they can simply adjudicate the dispute and deliver the arbitral award to the ICC. The reason why a careful consideration is necessary is the fact that a party may be taken by surprise if it will, without further notice, receive an arbitral award. Thus, the arbitrator should only proceed in that direction if both parties had explicitly waived the organization of a hearing, mandating the arbitrators to decide on the basis of the written submissions. A specific provision in this direction is Article 14.3 of the ICC Rules.

2. The pragmatic approach: calling a hearing

A very frequent decision made by arbitrators at this moment in time is to call a hearing to take place during one or two (sometimes three) days so as to give the counsels further opportunities to plead or orally explain their cases, to give the arbitrators an opportunity to ask questions and moreover to hear those persons which the parties may bring to the hearing.

I would call this the "pragmatic approach". "Pragmatic" because the hearing will then be held without great formalities, in particular without a specific preparatory or organizational meeting. In most cases, the hearing which then takes place will prove to be highly productive and valuable for giving the arbitrators a much better understanding, specifically if at such hearing not only counsels can be heard, but also those representatives and witnesses of the parties that are specifically knowledgeable regarding the disputed issues. At such a "pragmatic" hearing much will be "played by ear", and frequently the questions asked by the arbitrators will allow a dialogue which is particularly important for a good understanding. At the end of such a "pragmatic" hearing the arbitrators will have learned a lot more to understand each party's case, and they will also get a precise view whether, and if so in what direction, further evidentiary proceedings should be organized. On balance, such a pragmatic hearing may, in normal cases, not provide sufficient evidentiary materials to solve all of the disputed issues, but indeed it may dispose of a good part of those so that further procedural steps can then focus on the remaining and precisely identified issues.

There is much more to be said about the calling, organizing and conducting of a hearing, but this will be discussed in Chapter G below.

3. Convening an organizational meeting -13 points

In more complex arbitrations arbitrators may be hesitant to simply call the above described "pragmatic" hearing. They may have a desire to organize the hearing with an optimum care and, most essentially, on the basis of careful organizational discussions with the parties respectively and their counsels. Then, in such a situation, the calling of an organizational meeting will be the right decision. The meeting will then serve as a preparation, and indeed there are numerous points which warrant a careful discussion, such as most importantly:

a) Appointment of an expert: If there is a likelihood that the arbitrators may need the assistance of an expert, then it makes good sense to appoint the expert as soon as possible so that, if deemed fit, he may be present during the subsequent oral hearings. This will not only enable the expert to acquaint himself with the case and to obtain the same degree of knowledge as the arbitrators, but would also offer the possibility that the expert may then, at the hearing, ask questions. Regarding the appointment of an expert see further below para. 5.

b) Consulting with witnesses: Under certain domestic laws and codes of ethics counsels should not, in the framework of ordinary court proceedings, get in touch with witnesses and should not consult with them in respect of the testimony they may have to give. However, in respect of international arbitration, it does not seem that such restrictions are applied and, in general, counsels will normally feel free to confer with witnesses and to assist them in preparing for oral testimony. It is nevertheless a matter of each counsel's ethic to clearly stay away from attempts to induce the witness to make a false testimony, and counsels must know that the witness will be asked by the arbitrators to speak the truth; see below Chapter G, para. 8. One may also add that, in many cases, it would be unrealistic to require that witnesses should not be consulted. Counsels may largely depend on instructions given by persons knowledgeable on the matter so as to properly prepare their memorials, and it can hardly make good sense to prohibit such consultation or to disqualify the person as a [Page34:] witness. However, the important aspect is to stress in the present context that this matter warrants to be discussed openly so as to obtain a common consensus as to the rule of conduct. This will avoid the "inequality of arms" which would arise if one party attends the subsequent hearing with fully prepared witnesses while the other felt to be under an ethical duty to stay away from any contacts with potential or future witnesses.

c) Written witness statements: Should the parties be allowed (or should they be requested by the arbitrators) to submit, in advance of the hearing, written witness statements? Should such written witness statements be optional only? Should the arbitrators disregard any such written witness statements if the particular witness would not, in addition, be available, for oral examination at the occasion of the hearing, or should the arbitrators be allowed to take into account such written witness statements even without corroboration at the occasion of an oral hearing and give them such value as may be appropriate under all circumstances? Should the simple written form be sufficient, or are affidavits required or any special solemnity? Should all such witness statements be filed 10 days before the hearing?

d) Depositions: Should the parties proceed to depose witnesses in the sense that, in the presence of both parties but without the presence of the arbitrators, a written record will be established of the oral testimony of a witness? Since both parties can examine (or cross-examine) witnesses, a deposition is a very important possibility to be considered in international arbitration specifically in those cases where the arbitrators may be unable to themselves hear the witness, or to extend the hearing to the number of days or weeks it may take to conduct direct examinations of such witnesses.

e) Names and number of persons/witnesses to be heard: Sometimes dozens of knowledgeable persons are named as potential witnesses to testify in respect of a particular issue and thus it may be a matter not only of convenience but practical necessity to discuss the circle of persons which should be examined and their number. Even in large construction cases where, naturally, hundreds if not thousands of persons are involved, parties may limit the number of witnesses to one or two handfuls of persons who are truly knowledgeable and will have something important to say due to their function and responsibility. A main purpose of the organizational meeting will be to identify those names, and this will give the arbitrators a possibility to somehow structure an agenda for the hearing.

f) Production of documents: Sometimes parties, in the framework of their memorials, request from the other party the submitting of further documents. If so, this should be discussed and agreed. In the absence of an agreement the arbitrators will have to decide whether they should themselves order the reluctant party to submit such documents. ICC arbitrators, however, tend to favour a restrictive approach and would not issue such an order or directive for allowing a "fishing expedition" or a sort of "discovery" (unless of course the parties will have agreed to a discovery for certain categories or identified documents). Nevertheless ICC arbitrators occasionally do request a party to submit some clearly identified documents, and where the parties do not comply with the order, the arbitrators may either draw their conclusions from such non-compliance or may, depending on the arbitration law prevailing at the seat of the particular arbitral tribunal, seek assistance from the local state court for compelling the production of the particular documents.

g) Demonstrative materials: Sometimes, possibilities must be discussed for supplying, at the occasion of the hearing, other demonstrative materials, such as audiovisual devices, models, parts of particular engines, sample of materials etc.

h) Interpretation: Is it necessary to organize interpreters for the hearing? If so, the parties will normally be requested by the arbitrators to make the arrangement as necessary.

i) Record: It is important to discuss with the parties whether the proceedings at the occasion of the hearing should be minuted and if so in what fashion. Do the parties (or the arbitrators) require that verbatim transcripts be produced? If so, court reporters or stenographers will have to be organized well in advance and the issue of costs may have to be discussed. [Page35:]

j) Tape-recording: In lieu of organizing the establishment or transcripts or other written minutes of the hearing, the parties and the arbitrators frequently agree that only a tape-recording should be made in respect of oral pleadings and oral examinations of witnesses (subject to their. agreement). After the hearing, tapes shall, on request, be copied for the parties but otherwise no typed protocol would be established, A tape-recording and copying of tapes is not only extremely cheap but moreover provides the advantage of allowing a full audio control of the proceedings (and in those cases where at subsequent stage an arbitrator had to be replaced by a new appointed arbitrator, proved to be of invaluable importance since the play-back may allow the new arbitrator to obtain sufficient knowledge on the case and may dispense the tribunal from organizing a repetition of the hearing).

k) Dates and agenda: Of course, at the occasion or the organizational meeting, the exact dates and the basic structure should be discussed. The detailed structure, however, can only be made by the arbitrators thereafter once they will have received the names of the witnesses to be examined.

l) Presence of witnesses: Sometimes, in the more complicated cases, the hearing will have to be scheduled for a number of consecutive days or even weeks and then obviously the very practical question arises whether all witnesses should, or may, be present as from the first moment and may attend and listen to examinations or other witnesses. In ordinary proceedings before state courts an isolation of witnesses is quite customary, and a witness is normally only allowed to be present in the court room for giving his own testimony so as to reduce a possibility for the witness to adapt his future statements in the light of what has been said by others. In international arbitration, however, this rationale has very little significance. In most cases it is felt that all witnesses should have a possibility to be present and to attend the examinations of those testifying before or after their own testimony. If a witness has to say something, he should do so in the presence of all those others who will also, in their turn, have to say something on a matter. Openness in such sense is much more in the spirit of international arbitration than some sort of "clandestine" statements made by isolated witnesses. However, in particular circumstances, there may well be a good reason for seeing this differently.

m) Site visit: In complex cases typically in the field of construction parties and arbitrators may wish to discuss to arrange for a site visit so as to afford the arbitrators an opportunity for inspecting the facility, equipment and general environment as far as necessary. Having seen the site, the arbitrators may be better placed to gather the best possible understanding from subsequent hearings, and, therefore, a site visit as early as possible would normally seem to be preferable. A preparatory discussion may be required for ascertaining, throughout the site visit, the other party's presence and for determining to what extent the arbitrators may obtain information from certain personnel on site. [Information so obtained from site personnel cannot be considered to constitute direct evidence, unless the other Party has had an opportunity to discuss such statements and to cross-examine their authors.]

4. Exercising further powers of the arbitrator

In line with the concept that the arbitrator should investigate the facts "by all appropriate means", there are some further explicit provisions in the ICC Rules which confer onto the arbitrator specific powers to proceed on his own motion and initiative. These are:

- Article 14.1, last sentence: Even absent a request of a Party to organize a hearing, the arbitrator is empowered to decide of his own motion to hear the parties. The same authority is repeated in Article 15.1.

- Article 14.1, second sub-paragraph: Even absent a proposal coming from one of the parties to hear a particular person, the arbitrator has the authority to decide to hear any person or other person in the presence of the parties, or in their absence provided they have been duly summoned.

- Article 14.2: The arbitrator has the authority to appoint one or more experts, to define their Terms of Reference, to receive their reports and/or to hear them in person, and again, he may do so even in those cases where none of the parties had requested him to do so. See also the next para. 5. [Page36:]

5. The appointment of an expert

Where it may seem that an expert will be needed it makes good sense to discuss his appointment as soon as possible (sec above para. 3.a). It happens quite frequently that claimant on its own motion appoints an expert, submits expert opinions and offers the testimony of such expert, whereupon respondent may deem it necessary, for the sake of maintaining an "equality of arms", to appoint another expert and offer counter-opinions and testimonies. The statements made by such experts will basically be treated in the same way as the statements and pleadings of the respective parties, except that the arbitrators may of course take into consideration that such experts (although paid by the parties) are less directly involved and thus may evaluate issues more objectively. When the famous "battle of experts" ensues, the arbitrators may see no other alternative but to propose or require the appointment of a third expert, at this time nominated by the arbitrators themselves. Quite obviously, such a development may substantially complicate the proceedings, wherefore parties are well advised to consider and discuss already at an early stage whether, rather than to rely on party experts or, if necessary in addition to party experts, they could agree on a formula to appoint a mutually acceptable "neutral expert" to assist the arbitrators. A practical way for doing this should now be discussed below.

The parties may agree to communicate, by a specific date, to the chairman of the arbitral tribunal 3-5 names of experts (or firms of experts) which they would consider qualified to advise and opine in the specific field. It should be understood by the parties that their proposals should list truly independent experts which had nothing to do with the particular project and have no ties to the proposing party which may raise justified doubts as to the expert's independence and impartiality. Once the chairman has received these proposals from each side, he will exchange these proposals. This method will ascertain that neither party will have the benefit of first knowing the proposal of the other side. Thereafter the parties should have an opportunity, within a short period of time, to discuss the proposals of the other side (since, for instance, there may exist too close connections of party A with an expert proposed by party B). Where the above procedure does not provide a solution, it will then be for the arbitral tribunal to propose some candidates, and the parties will again have to be given the opportunity to comment on those names. Frequently, the expert will be a company (such as for instance an engineering firm with special expertise), nominating however one particular person who will carry the overall responsibility, but on the understanding that lie may constitute a team of persons to assist him in his task.

While the appointment of an expert, as discussed above, warrants a careful handling, the arbitrators and the parties will have to discuss and solve a number of further issues which will have to do with the instruction and mandate of the expert. Essentially, the following questions arise:

- What information should be given to the expert to acquaint himself with the case or the issues?

- Should a separate "small file" be constituted for the expert, consisting of extracts of documents submitted, or should the entire files of the arbitrators be copied for the expert, including the written memorials etc.?

- What are the Terms of Reference for the expert, and when should they be settled?

- If an expert is appointed for instance at the occasion of the Organizational Meeting (as discussed in para. 3 above), or shortly thereafter: should he be present in the hearing with the parties and witnesses so that, at the occasion of such hearing, he may further acquaint himself with the case and will have the same level of information as the arbitrators?

- If so, should his precise Terms of Reference only be settled towards the end of such hearing when it will be clear in what sense and direction the expert's opinion will be needed?

- And then, the most difficult question may be this one: In carrying out his fact-finding, should the expert be given a "green light" to conduct his own investigations, for instance by making a site visit to inspect defects of a production facility, or by visiting the home offices or engineering departments of the parties, inspecting their documentation (of which only a small part may have been filed to the arbitrators) and receiving direct information from staff members? And moreover: Should the expert be allowed to carry out such investigations alone, or only in [Page37:] the presence of representatives and/or counsels of both sides, or in the presence of the arbitrators?

- In what form should the expert render his opinion? If delivered in writing it will be normal to give the parties an opportunity to comment thereon.

- Should the expert be heard and examined in the framework of an oral hearing, where both parties will then have an opportunity to ask specific questions, possibly through their own experts or expert witnesses?

- Should the arbitrators be bound by certain factual findings of the expert or should they retain their authority to evaluate, consider and weigh the expert's conclusions on the basis of their own best considered discretion and appreciation? (Where the arbitrators should not remain free to draw their own conclusions, then this will have to be agreed clearly between the parties and the arbitrators).

- The expert should not normally take part in internal deliberations of the arbitrators, because he should not become a "fourth arbitrator", but under specific circumstances parties and arbitrators may adopt a different solution.

- How to determine the costs of the expert, the deposits to be paid by either party, and how to make the final allocation?

G. The Hearing

Article 15

Article 15.1

At the request of one of the parties or if necessary on his own initiative, the arbitrator, giving reasonable notice, shall summon the parties to appear before him on the day and at the place appointed by him and shall so inform the Secretariat of the International Court of Arbitration.

1. Importance

An arbitration without a hearing is like a body without blood. At the hearing the case gets a "face", a "heart", a "real life". Before the hearing the case remains two dimensional, and it is the

hearing which may add to the dispute a third dimension, where pure names get a face and where events get their proper staging. It is thus for good reasons that the ICC Rules, as one of their significant provisions, do explicitly provide that, in any event, each party has the right to ask for a hearing, and it is equally significant that the arbitrator has the power to call a hearing even absent such a request. But how?

2. Calling and organizing a hearing

Normally, the hearing will be called by issuing an appropriate Order. The Order should indicate:

a) the exact dates and venue;

b) the basic purpose of the hearing;

c) the persons expected to attend the hearing; if these had not been defined as yet, the Order may express an invitation to the parties to bring with them to the hearing those persons which are knowledgeable on the case so that they can be examined. In the latter circumstance parties should be asked to communicate at the latest 10 days prior to the hearing the full names and positions of the persons they intend to bring with them, possibly with an indication of the main topics on which they may be examined;

d) the basic structuring of the hearing, subject to particular views or proposals of the parties which they may express at the beginning of the hearing or before;

e) possibly a clear indication that the parties are expected that, at the occasion of the hearing, they will submit (or indicate) all such further documents or means of proof they wish the arbitrators to consider so that, thereafter, the arbitrators may start their deliberations on the merits (subject to further directions of the tribunal);

f) an indication as to the mode of taking minutes or establishing some other record of the hearing; see hereto above Chapter F para. 2 (i) and (k). With the agreement of the parties it is frequently felt sufficient to make a tape-recording, and this may be proposed in the Order, giving the parties an opportunity to request, if they so wish, that a written record or verbatim transcript be established; [Page38:]

g) where the date or dates for the hearing had not as yet been agreed, the Order may state about 3-6 alternative dates convenient to all arbitrators, with a request to the parties to indicate within a time period of (say) two weeks their availabilities so that, thereafter, the date or dates convenient to all concerned can be confirmed by the arbitrators. A footnote: some arbitrators believe that they can simply impose a date and that the parties and their counsels will then simply have to be available. Such an attitude, however, is quite incompatible with the spirit of international arbitration and may amount to a violation of the right to be heard. Dates may only be imposed on a party which has shown a determination to block or avoid the proceedings or otherwise has refused to take a part therein or in the particular hearing;

h) in most cases the Order will also indicate that an opportunity will be given to each party's counsel to orally plead the case (it being understood that a repetition or what already had been stated in written memorials would not be desirable or useful). Likewise, it may be indicated that counsels be given an opportunity to summarize their views at the end of the hearing in respect of oral testimonies.

3. How much time will be needed?

When proposing the date or dates for the hearing, the arbitrators will have to make a difficult forecast as to the time that will be needed for hearing the parties. My personal rule is: twice as much than expected! Thus, instead of setting aside only one day, arbitrators are well advised to set aside two full days and, therefore, to state in the Order that parties are expected to be fully available, if necessary, also on a third subsequent day. When it seems to the arbitrators that 3-4 days will suffice to hear the limited number of about 5 persons per party proposed for examination, it would rather seem advisable to schedule the hearing for two entire weeks.

There are five good reasons for the above recommendation:

- Nothing is more unbearable to the parties and their counsels than the feeling of being under time constraints. Indeed, they should be able to explain and review their respective cases and evidence without any stress.

- Arbitrators sometimes require days in total to ask the counsels and those present the clarifications they may require to obtain the best possible understanding of the case.

- A short oral examination of witnesses is often without any help and value. Any careful examination needs a lot of patience and time, but it is the only effective way to come to a meaningful understanding.

- Hearings will often lead to some sort of an intensive but structured dialogue between the chairman of the arbitral tribunal and those present, and may provide invaluable help to the arbitrators for understanding the case. Again, This takes time.

- Finally, nothing is more inefficient than to realize that the time set aside for the hearing was too short so that a continuation of the hearing will have to be scheduled. Such continuation may then take place perhaps three months or more later, and the inevitable consequence for the arbitrators and the counsels will be that they will again have to study the case almost from fresh.

In this connection the chairman of the arbitral tribunal should also provide for a preparatory meeting of the arbitrators prior to starting the hearing; and with equal importance he should make sure that, after closing the hearing, the arbitrators will remain to be available for deliberations when the memory is still fresh (and it may be good to reserve the subsequent Saturday and/or Sunday for the purpose).

4. Conference room and infrastructure

A suitable conference room is of essence. It should be spacious so as to allow the arrangement of various separate tables for the arbitrators and separate tables for the parties and their counsels and possibly a separate table reserved to examine witnesses.

Those who have made the experience of sitting in a "blind" conference room of a hotel or law firm from early in the morning until late et night (possibly for a number of consecutive days) will know how much aggression may grow simply due to the inconvenience of such a conference room, and they will share my view to say that a conference room must have windows. [Page39:]

In most cases a tape-recording device will be necessary, possibly audiovisual equipment and a possibility to have secretarial assistance, telefax, photocopier.

5. A friendly ambience

A suitable conference room (as discussed above) will provide but the outer frame for the hearing. This "outer frame" will now have to be filled by a "suitable ambience", i.e. by a both respectful and friendly spirit. Indeed, in my view, this is the most important non-written rule in ICC arbitration (as well as in any other arbitration): to create and maintain the ambience of respectfulness, dignity and well-disposed attitude. It is first of all in the hands of the arbitrators to create or allow the genesis of such an ambience. While much will have to do with the characters of the arbitrators and of course of those of counsels and representatives of the parties, there are some elementary matters to be kept in mind:

For the arbitrators: they should have an equally benevolent attitude towards the parties and their respective cases. Such attitude requires that the arbitrators, as their prime duty, will carefully and openly listen to both sides and do the utmost to fully understand each side's positions and concerns. This, among other things, will also require that ample time will be given to counsels and any other persons heard during a hearing for explaining the case and for communicating all information deemed necessary or appropriate. The "impatient arbitrator" is not a suitable arbitrator, and much less is the type of arbitrator who tends to believe that he "already knows everything".

For the counsels: one may strongly differ on the opposite party's case and its arguments, but yet one may do so with respectfulness and certainly without any sort of offensive or insulting statements. Generally, an overly emotional written or oral pleading will do little benefit for the case, but may risk preventing the finding of a suitable amicable solution.

For representatives of parties or witnesses: Many of them will have been directly involved in the matter and, quite understandably, may sometimes be carried away by emotions. Here, I believe, it is often necessary that those emotions may come out at a hearing rather than to keep them under constant suppression. A good arbitrator will know how to handle such a situation, and experience has shown that, thereafter, the arbitral process (and the parties' attitude towards each other) can benefit from a better understanding.

It is a frequent experience I have made after conducting extensive hearings over several days: that the parties' initially antagonistic (if not hostile) attitude towards each other may slightly convert, through carefully handled examinations and discussions, into a new and better understanding of the other side, a new respect for their views, and a new openness to consider the dispute with new eyes and perspectives. It also frequently happens that parties may again, instead of looking only "backwards", start to look towards the future, to evaluate new and further perspectives for continuing or enlarging their cooperation. If the arbitral process can be instrumental for such a development, then, I think, it has achieved the optimum.

After these general remarks let us now focus on some particular and practical aspects of a hearing:

6. Opening the hearing

At the opening session the chairman of the arbitral tribunal will ascertain the presence of each party and will record the names, addresses and positions of all persons attending the hearing. It is quite normal to ask questions as to the various positions and functions of persons which they held during the relevant times. Thereafter, a number of organizational matters will have to be discussed. The Chairman will then explain the Tribunal's proposal as to the sequence of pleadings and examinations, giving the parties an opportunity to comment thereon.

7. Pleadings by counsel

Frequently, counsels require an opportunity to start off the hearings by making oral pleadings, using thus an opportunity to state the essential features of the case and perhaps to address on new facts or arguments as contained in the last memorial of the other party. In most cases where extensive memorials had already been exchanged before such hearing, counsels may be rather brief and thus themselves propose that, for instance, one hour should be sufficient. [Page40:]

However, we have seen cases where counsels required much more time, possibly one full day or even more. It is essential in arbitration that counsels are allowed to plead their cases without time constraints, and nothing is more unbearable for a counsel than to feel the impatience of those arbitrators who anyhow tend to feel that they know enough (not to speak about those who seemingly form their opinion even before carefully listening to pleadings!). In this connection, but also in connection with the examination of witnesses, it may be remarked that the ability to listen is one of the most essential qualifications which the arbitrator should have. This quality may be much more important than certain purely professional qualities.

After the oral pleading the arbitrators may seize the opportunity to ask a number of questions to clarify matters. Thereafter, the counsel of the other party will be heard.

8. Explanations and testimony of witnesses

Should further/other persons or witnesses be allowed to be and remain present during the testimony of a particular witness? This is normally one of the first questions to be solved at a hearing, unless this had already been determined at the occasion of the organizational meeting; see Chapter F para. 3 (m) above.

It is normal for the arbitrator (or chairman of the arbitral tribunal) to open the examination by asking the particulars as to the witness' full name and address and his relationship with one or more of the parties. If he is employed by one of them, it will be normal to ask questions as to the various positions he may have had during the times relevant for the particular dispute, any financial interest he may have etc. It is also quite normal to ask questions to what extent a witness had assisted in the preparation of written memorials, or has knowledge of their contents, and to what extent the oral examination had been prepared.

Should the examination be made under the threat of punishment for false testimony, or should an oath be administered? Answers to these questions are not unanimous and will depend on the venue of the arbitration. Generally speaking, ICC arbitrators do not threaten criminal sanctions, and the administration of oath (even where permitted by the lex arbitri at the seat of the arbitral tribunal) is very rarely contemplated only. Usually, arbitrators do ask witnesses to declare that they will, upon their honour and conscience, speak the truth, the whole truth and nothing but the truth.

What is the method of hearing the testimony of witnesses or the parties' expert witnesses? No categorical answer can be given here and indeed it would seem wrong to favour one particular system as opposed to another one. In general, the examination of persons at a hearing is (and should be) less formal than in court proceedings. On the Continent there is some preference to start an examination by questions asked by the presiding arbitrator. Such questions may first be of a general nature enabling the witness to deliver an extensive narrative statement as to his knowledge on the facts whereupon questions may then become more specific. Further questions may be asked by coarbitrators and thereafter it will be for the counsel (or the party that had named the witness) to put additional questions. The other party will then be allowed to cross-examine the witness in respect of all statements which may be or become relevant for the adjudication of the dispute. Usually a re-examination takes place without particular formalities.

Where an ICC arbitrator feels that he should have a more passive role, he may decide that the examination of the witness should commence with questions put by the counsels of the parties, for the arbitrator to ask complementary questions either during that exercise or thereafter.

Whatever method is applied, the essential aspect is that it will, at the end, be for the arbitrator to evaluate and determine the weight and credibility to be given to each witness and the statements made, and thus the sometimes complicated and elaborate rules of taking and receiving evidence as contained in national codes of civil procedure do have very little significance in the framework of international arbitration.

In litigation before ordinary state courts parties sometimes entertain lengthy arguments on whether a particular person connected to a party (for instance as an employee, manager, officer, director or shareholder) may qualify as a "witness" in a technical legal sense, or whether such person would be qualified as the party's [Page41:] representative whose statements may carry less weight. In international arbitration, such distinctions have little practical significance. It is the arbitrators' duty to evaluate the weight, significance and credibility of oral statements (from whatever source) on the basis of their best considered opinion, having regard to all circumstances.

9. Production and examination of documents

Specifically in construction arbitration the hearing is an important opportunity for examining documents, those already submitted as well as those which may be filed at the occasion of the hearing. Layout and construction drawings, charts and other material can then be explained more comprehensively than in written submissions, An important matter of discussion is to obtain a clear understanding in what direction the arbitrators may wish to obtain further documentary evidence from either party.

Where a party does not voluntarily produce a specified document, the arbitrators do have (whether on request of the other party or on their own motion) the authority to request the production of such document, However, ICC arbitrators are not likely to issue orders for the production of vaguely defined documents. Attempts to obtain "discovery" (even on a limited basis) or attempts to embark on a "fishing expedition" or on a sort of "notice pleading" is not likely to be successful. The Rules do not vest powers to the arbitrators to compel the production of documents, and no particular sanction for a failure to comply with an order for production of documents is contemplated by the ICC Rules. However, the lex arbitri at the place of arbitration may provide judicial assistance in aid of arbitration; for instance, the new Swiss arbitration Law (in Article 185 of the Private International Law Act) provides that the arbitral tribunal may address itself to the local court for assistance, and the local court may request assistance from foreign authorities; Article 1460 of the French Nouveau Code de Procédure Civile grants a power to the arbitrator to order the production of evidence which is in possession of a party. Various common law countries confer onto the arbitrator the power to issue subpoenas in connection with orders for the production of documents or will allow a discovery by list of identified documents, providing moreover for sanctions in case of non-compliance. In practice, however, such steps are taken very rarely only. Instead, arbitrators tend to draw the inferences in connection with one party's refusal to produce a document in its possession or power as may be appropriate and justified.

On balance, and with rare exceptions, one may say that arbitration keeps its consensual nature also in connection with the production of documents, and any fear for broad-brush discovery orders would not be justified.

10. Examination of experts

Party experts will normally be examined in much the same way as witnesses. Likewise a neutral expert will normally be examined at the occasion of oral hearings, and it is of course legitimate that parties may wish to examine and cross-examine such neutral expert through their own party-appointed experts.

11. Demonstrative evidence

It does become more and more frequent that parties and counsels, in their aim for perfection of their presentation, will not only file voluminous papers but will endeavour to convey a better understanding to the arbitrators by other means of an audiovisual nature. For instance, they may show a video film regarding a particular construction site or a facility. Defects of equipment may be carefully documented through photographs properly identified by the date. Where a specific technological process or technical functioning is under review, parties may elect to produce a model so as to allow a three-dimensional visualization. Or they may even consider bringing with them a species of a malfunctioning device, equipment or engine.

Although it is sometimes (quite wrongly) said that arbitrators are in essence "paper eaters" one may safely remark that any such further demonstrative materials, submitted in aid of a proper understanding, will be greatly appreciated by the arbitrators.

12. Post-hearing briefs

The function of these briefs is explained below. Typically, time limits fixed by the Tribunal are on the shorter side (such as 2-3 weeks), except in [Page42:] those cases where first the delivery of a written record or transcript of the hearing will have to be expected. While pre-hearing memorials are normally exchanged consecutively, it is quite customary for post-hearing briefs to contemplate one and the same time limit for the parties (which then will have to file simultaneously by the same date). If so, neither party should have the benefit of knowing (and being able to discuss) the final conclusions made by the other party, and in order to safeguard such rationale, the tribunal may direct that, for this particular brief, all copies should be addressed to the chairman of the arbitral tribunal only, and that the chairman would distribute the copies for the other party/parties and co-arbitrators only once he will have received the briefs from both sides.

13. Closing the hearing and/or proceedings

I have seen arbitrators sitting for days to hear witnesses and, when the last witness was through, simply closed the hearing without further indications. Some time later the chairman submitted a draft award to his coarbitrators. Such a conduct is wrong:

It is a good and well-established practice in international arbitration that, after oral examinations and other evidentiary proceedings, the parties and their counsels will be given a suitable opportunity for final pleadings so as to comment on the outcome of the examinations and to plead the conclusions to be drawn from the evidentiary proceedings. In most cases counsels of the parties are able and prepared to deliver such final pleadings at the end of the hearing, and in general, while memory is still fresh, pleadings can be condensed so as to take not more than half an hour or one hour. In large cases (specifically where examinations over several days or weeks had to be conducted and where a tape-recording or transcript has been made) counsels may feel to be under undue pressure if asked to deliver final oral pleadings on the spot. In such situations the arbitrators should grant a time limit for the filing of post-hearing briefs; see the foregoing paragraph.

With or without final pleadings at the occasion of the hearing it is an important task for the arbitrators to carefully consider "where they stand". Are the arbitrators, from their perspectives, satisfied that they require no further evidence from either party for their being able to adjudicate the dispute? If they are satisfied, the chairman should explicitly ask the parties (i) whether they have any further proof they wish to offer or witnesses to be heard, (ii) whether they have any remarks, criticism or protest in respect of the way the hearing (or other evidentiary proceedings) were handled, and if so, this should be noted and considered by the Tribunal, and further (iii) whether the parties agree that the arbitrators may now close their files (possibly subject to a further post-hearing brief, as discussed above) and start the phase of deliberations for deciding the case by rendering the arbitral award (see also below Chapter H).

Thus a correct closure of the hearing is important. It should leave no uncertainties to the parties. Where the closure of the hearing also means the closure of the arbitral proceedings as such, then this should be indicated, possibly in the sense of a formal order communicated by the chairman orally at the end of the hearing.

Despite such formal closure of the proceedings, the arbitrators will still have the authority to reopen the proceedings if, for instance, during the stage of deliberations, they discover that further clarifications of factual or legal issues are necessary; see hereto the subsequent Chapter H para. 2. I would not exclude the possibility that also a party could demand the reopening of the proceedings, but certainly a convincing demonstration of the necessity and absence of prejudice to the other party will be required.

After closing the hearing, arbitrators should not "walk away". It is normally important for them to sit together, to voice their impressions (respectively to continue their exchanges of views which may have taken place at numerous occasions before and/or during the hearing) and, most essentially, to carefully consider how and in what fashion their own internal deliberations should be organized and structured. The various procedures and techniques of the deliberation process will certainly be addressed in a subsequent PART IV of this series, possibly published in one of the next issues of the ICC Bulletin. [Page43:]

H. Four Crucial Issues

1. How far to go ...?

More often than not arbitrators are confronted with the situation that the party X is represented by a very able counsel whereas party Y is not. As a consequence it may happen that party Y does not plead what it should, fails to address or invoke important arguments it could make in support of its case, or fails to furnish proper substantiation or proper documents, or simply remains silent in respect of allegations made by party X.

In all such situations arbitrators may find themselves to be in a difficult dilemma: Should they ask questions for clarification, thus fulfilling their duty to investigate the case "by all appropriate means", even with the risk of raising "a flag" to party Y to invoke possible defences or arguments which otherwise would not have been addressed? For instance, to give a simple example, if the claimant party X has demanded interest at a rate of 12% (which is sometimes done without further justification): Should the arbitrators, noticing that party Y failed to specifically comment on such interest rate, ask whether such rate is admitted? Almost certainly such a question will then cause party Y to deny the appropriateness of the interest rate and may thus be caused to deny a rate exceeding a much lower statutory interest rate.

Other even "more serious" situations may be those where party Y had failed to see that it could invoke a statute of limitation or invoke forfeiture of a particular claim due to a failure of appropriate notification etc. Again here: Is it appropriate for the arbitrators to themselves raise the issue and thus cause party Y to address it?

I would not volunteer to give a general or specific answer to such or similar questions which arise in almost every arbitration. Each individual situation has to be considered very carefully and the arbitrators will have to strike a very carefully considered balance between their duties to, on the one side, investigate the case by all appropriate means and, on the other hand, treat the parties with equality (which under the circumstances may make it questionable whether indications should be given to a party to improve its presentation).

Much less critical are those situations where the arbitral tribunal will have to recommend to both parties to focus on issues neither of them has contemplated in the framework of its pleadings. For instance, again as a typical situation, both parties may have confined the presentation of their respective cases to only state their extreme positions, but without at all addressing a subsidiary position. However, the truth rarely lies in the extreme and it is thus frequently necessary for the arbitrators to specifically ask both parties to consider and fully substantiate subsidiary positions if they should not prevail on their main (extreme) position.

2. Where legal issues had not been addressed

In quite a similar context the following situations may arise:

- neither party addresses legal issues, or

- legal issues are addressed by party X only, but not by party Y, or

- both parties only refer or discuss legal arguments on the basis of the law governing the underlying contract (lex contractus/lex voluntatis), failing to see or realize that, in addition to what has been addressed by the parties, some other provisions or other laws would have to be taken into account (see hereto remarks in Chapter B para. 3 above).

Again, such situations do arise frequently. What to do for instance if, as late as during the final deliberations of the case (after closing the hearing), one of the arbitrators invokes the argument that the disputed issues should not be decided according to the provisions of the contract, nor according to the provisions of the law chosen by the parties to govern the contract, but on the basis of a totally different law (for instance the national law of the buyer) on the argument that such law contains mandatory provisions which must be applied, be they provisions of public law or provisions which are said to form part of such country's public policy? In such a situation: Should the other arbitrators believe or accept such statements and decide accordingly (although neither of the parties had invoked or discussed such issues), or should the arbitrators themselves make investigations of their own to check such matters, or should they, at such a late stage, reopen the case by notifying the parties that such particular question or issue has arisen, giving them a further opportunity to state their comments? [Page44:]

Different answers have been given by ICC arbitrators in respect of such situations, convincing and less convincing ones. How to approach such situations?

My personal view is that one should recall a distinctive (but unwritten) principle in international arbitration which says that the arbitral award (and the discussion contained therein) should not come as a surprise to the parties. This principle does mean and require that the parties should have had an opportunity to address and comment on all those material/ relevant issues which may have an impact on the arbitral decision. Therefore, the chairman may have to issue a further Order indicating to the parties that, in the framework of their internal deliberations, the following further factual or legal issues (not so far addressed by the parties) had been raised and discussed, giving them an opportunity to state their comments thereto. In other words, in such a situation, the topics and contents of a part of the deliberations of the arbitrators will have to be divulged to the parties. One could therefore invoke or criticize that such a procedure stands in violation of the so-called secret du délibéré. Indeed, such a remark or criticism may be quite justified, but quite obviously, the situation here is such that the principle of the secret du délibéré (to the extent it does exist) will stand in conflict with another (and indeed most fundamental) principle, namely the principle of the parties to be heard. In my personal view such latter principle would certainly deserve priority over the concern to keep the arbitrators' deliberations confidential but, for the purpose of this article, the importance is to make the reader aware of this situation so that each individual case can be examined on its particular merits.

In the same context I would find it appropriate and indeed necessary to fully discuss differing or dissenting views of the arbitrators in the framework of the arbitral award, as this has sometimes very extensively been done in recent ICC awards, and I would not necessarily share some concerns of the ICC which sometimes had been expressed in this context. However, this is certainly an important matter to be further discussed in a subsequent article dealing with the deliberations of the arbitrators and the making of the arbitral award.

3. When to say "enough"?

Another one of the most difficult or crucial decisions to be made by ICC arbitrators is the decision as to when to say "enough is enough" (as this has been so correctly expressed in Craig, Park, Paulsson on ICC Arbitration, second edition, p. 392). While it is certainly a most essential feature and requirement in international arbitration that the parties be given ample opportunities to present their case, there must be certain limits, and the moment may come where the arbitrators must apply a "strong hand" to avoid undue complications or prolongations of the proceedings. In particular, there must be a limit for the party for which the arbitration may have evolved unfavourably to try to make up for the weakness by excessive or abusive requests for further procedural steps, or by submitting further memorials or expert opinions, or by submitting huge new materials with the aim to virtually reopen the case.

4. When is the evidence sufficient, when is it not?

Another related issue is the problem of a sometimes inevitable incompleteness of the file. How to handle, for instance, a claim for loss of future profits due to breach of a development contract for a particular engine? How to determine damages sustained as a consequence of a party failing to properly perform an off-shore oil-drilling platform resulting in a production shortfall over the next 10 or 20 years, or causing a huge loss of otherwise recoverable oil? Or assume the situation that, due to non-performance under a contract, the name and reputation of a leading manufacturer has been seriously affected. In all such or similar situations it will be quite impossible for the claimant party to establish a clear legal proof as to the amount of damage, and inevitably the question will arise whether (and if so to what extent) arbitrators should be able to assume an authority to rule on the basis of limited evidence only and base their decision by evaluating the monetary consequences on their best considered discretion.

Another comparable situation typically arises in large construction arbitrations where, on the particular project, ten-if not hundred-thousands of documents exist. Obviously they cannot be filed (and if filed may render the case non-arbitrable for reasons of exceeding natural human resources of the arbitrator). In such situations:

The parties can probably do no better than to limit the filing of documents to those they consider most important, and it will be for [Page45:] the arbitral tribunal to fairly recognize such fact and to make a very careful assessment whether they may regard a particular disputed element as being sufficiently evidenced although the detailed legal proof for a de lege artis adjudication has not been furnished.

The parties, for instance, may have no choice but to establish consolidated schedules on the working hours to cure defects and to carry out those items of the work which the contractor failed to perform. Even such schedules may fill a number of voluminous binders containing thousands of data, and yet the judge of an ordinary state court would probably say that they cannot constitute a sufficient proof unless all the underlying material has been submitted, i.e. any and all detailed working reports and timesheets on which the schedules have been prepared (which in essence would require the filing of ten thousands of documents).

Likewise, where hundreds of persons have been involved in a project, the parties can probably do no better than to limit themselves to offer for testimony their key personnel and witnesses only, and again this does mean that only a reasonable (but not a full or hundred percent) corroboration of disputed issues will be possible.

In all these situations the extremely difficult question arises for the arbitrators to know when, under all prevailing circumstances, a fact has sufficiently been established, and for this task they may have to apply a good amount of fair judgment and of course reasonableness. In fact, the term "sufficient legal proof" is a term that must be measured under all prevailing circumstances, and arbitrators that require more (sometimes using the rigid optics of state court judges in their assessment of totally different and limited factual scenarios) may, depending on the circumstances, (i) not properly fulfil their duties as arbitrators, (ii) probably frustrate the proper and reasonable functioning of the arbitral process, (iii) act contrary to the fair and reasonable expectations of parties to an international arbitration and (iv) deny to do appropriate justice.

What to do in such a situation? My best recommendation is that this matter (limited completeness of the files and of evidence) should be openly discussed with the parties and they should be asked whether they would wish to adduce further particular evidence (e.g. for the arbitrators to obtain further expert advice or to carry out a site visit etc.) The arbitrator should then take appropriate note if both parties confirm that, in their view, no such further steps should be undertaken. Moreover, the arbitrators should, at the end of the hearing (where parties may have had an opportunity to plead and to examine witnesses for one or several weeks), ask the parties whether they would empower and authorize the arbitrators to now close the files and to adjudicate the dispute on the basis of the facts and evidence (as limited as it may be) which is before them up to that moment in time. Parties usually confirm this and then one may say that the arbitrators, despite the fact that evidence may be incomplete, will have a clear authority and indeed a mandate to adjudicate the dispute by applying their best considered assessment and appreciation.

Conclusion

There can be no doubt that the ICC Rules, with their flexibility and openness, provide a highly suitable framework for fashioning any kind of arbitral proceedings between any parties around the globe in a manner which responds adequately to the fair and reasonable expectations of parties to international business and trade. Thus, the tools for assuring a fine quality of arbitration are provided by the ICC Rules, and it is in the hands of the parties, their counsels and the arbitrators to use them with appropriate circumspection. All of them are called upon to handle disputes with fairness and reasonableness. Arbitrators should use the tools of the Rules for fulfilling their nobile officium and for responding to-and for further developing-the demand and challenge of the time: the fine art of arbitration.

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