This article is the first in a series describing various aspects of the arbitration procedure set forth in the ICC Rules of Conciliation and Arbitration.

Introduction

The provisions of the ICC Rules of Arbitration relating to the formation of the arbitral tribunal are contained in Article 2. They accord primary weight to the will of the parties. Frequently, however, the parties cannot by themselves resolve all of the difficulties involved in establishing the arbitral tribunal. The Rules therefore also provide for the International Court of Arbitration to play a non-negligible role in this process, especially in ensuring the independence of the arbitrators.

In order to understand better the procedures relating to the formation of the arbitral tribunal, one must first analyze the basic processes and then look to the role delegated to the Court at the time of formation of the arbitral tribunal.

I. Basic processes for the formation of the arbitral tribunal

The International Court of Arbitration, in forming the arbitral tribunal, proceeds with the utmost deference to any agreement reached by the parties on the issue.

If the parties have not reached any such agreement, or if one of them defaults, the Court intervenes in such a manner as to form the arbitral tribunal with the shortest possible delay.

A. Deference to the agreement of the parties

By stipulating that the International Court of Arbitration shall appoint, or confirm the appointment of, arbitrators in accordance with the provisions of its Rules insofar as the parties shall not have provided otherwise, Article 2.1 of the ICC Rules of Arbitration recognizes the primacy of the parties' agreement as to the number, choice and method of selection of arbitrators.

The parties are free to propose an independent arbitrator of their choice, regardless of his nationality or professional qualifications. It should be noted that the International Court of Arbitration has no official list of arbitrators. It should also be noted that in 1991, arbitrators from some 40 different nations sat in arbitrations conducted under the auspices of the International Chamber of Commerce.

The parties are also largely free to choose the method of nominating the arbitrators. They are free to provide, for example, that the arbitrator(s) will be nominated by the parties, by the International Court of Arbitration, or by its chairman.

As for the number of arbitrators, the Rules provide that disputes may be settled by a sole arbitrator or by three arbitrators (Article 2.2). In the latter case, the tribunal is composed of two co-arbitrators, one proposed by each party, and a chairman.

Two situations can therefore be envisioned: first, where the parties agree on a sole arbitrator; second, where the parties provide in their agreement for the formation of a three-member arbitral tribunal.

1. When the parties agree on a sole arbitrator:

This situation arises where the parties have stipulated in their contract that all disputes arising in connection with it shall be settled by a sole arbitrator, or more frequently where, once the dispute has arisen, the parties agree on an arbitrator, in the absence of specific contractual provisions relating to the issue.

In such cases the Rules grant to the parties the power to nominate the sole arbitrator by agreement (Article 2.3). [Page4:]

To do so, the parties have a period of 30 days from the date when the Request for Arbitration is communicated to the other party.

If an agreement is reached, the Court then confirms the sole arbitrator nominated by the parties.

In practice, however, parties rarely reach agreement on a person to act as sole arbitrator, and thus it almost always falls to the Court to proceed on their behalf. The Court selects an ICC National Committee to propose an arbitrator and once the proposal has been made and the Court has accepted it, the arbitrator nominated by the National Committee is "appointed" by the Court.

2. When the parties agree on three arbitrators:

This is most frequently the case where the parties have stipulated in their contract that all disputes which could arise from it shall be submitted to a three-member arbitral tribunal, or when the parties agree, once the dispute has arisen, on the necessity of having their dispute settled by three arbitrators.

The Rules stipulate that each party-in the Request for Arbitration and the Answer thereto-nominates one independent arbitrator for confirmation by the Court (Article 2.4, first sub-paragraph).

It may be noted that the Defendant nominates an arbitrator in his Answer to the Request for Arbitration within a period of 30 days from the receipt of the Request (Article 4.1).

Once an arbitrator has been nominated by a party, the Court confirms him or her after satisfying itself of his or her independence.

If a party abstains from nominating an arbitrator, the Court nominates him or her in its place.

The third arbitrator, who assumes the chairmanship of the arbitral tribunal, is appointed by the Court, unless the parties have provided that the arbitrators nominated by them should agree on the third arbitrator within a predetermined period. It is then up to the Court to grain them the stipulated period, and the Chairman thereby nominated is confirmed by the Court (Article 2.4, second sub-paragraph).

The parties occasionally provide that they or a third person (for example, the Chairman of the ICC or the Chairman of the International Court of Arbitration) will appoint the chairman of the arbitral tribunal (or even the sole arbitrator).

B. Intervention of the Court

The International Court of Arbitration must sometimes fill in the gaps in the absence of a specific agreement between the parties on the method of forming the arbitral tribunal, or even provide against the default of one of the parties. In practice, two situations are most common: disagreement between the parties on the number of arbitrators and disagreement or failure of one or both parties regarding the nomination of an arbitrator.

1. On the number of arbitrators:

When the parties disagree on the number of arbitrators, the Rules provide that the Court shall appoint a sole arbitrator, unless it appears to the Court that the dispute is such as to warrant the appointment of three arbitrators (Article 2.5). In general, the Court appoints a sole arbitrator when the sum in dispute is less than one million US dollars.

This situation arises when the parties' arbitration clause does not precisely define the number of arbitrators who will solve the dispute, and particularly when the arbitration clause stipulates that ail disputes arising in convection with the contract shall be settled by one or more arbitrators or by one or three arbitrators, and one party desires a sole arbitrator while the other demands the formation of an arbitral tribunal composed of three arbitrators.

If the Court considers, once it sets the procedure in motion, that the dispute should be settled by three arbitrators, it grants a period of 30 days to the parties within which to nominate the arbitrators.

Among the factors taken into consideration by the Court in deciding on the number of arbitrators are the legal and factual complexity of the dispute, the parties to the procedure, the possible existence of a counterclaim, and the sum in dispute. The Court examines whether the dispute involves physical or legal, and public or private, entities, if a State is personally involved, etc.

In addition, when the parties envision a tribunal composed of three arbitrators and the sum in dispute is small, the Secretariat of the Court informs them, prior to the final formation of the arbitral tribunal, of the financial consequences of their choice.

2. On the selection of arbitrators:

The Court may appoint an arbitrator when a party abstains or refuses to do so or when the parties do not agree on the nomination of the sole arbitrator or the chairman. [Page5:]

a) Appointment of the sole arbitrator or chairman of the arbitral tribunal:

Before appointing the sole arbitrator-in the absence of an agreement between the parties on his or her identity-or the chairman, the Court asks one of the 60 National Committees of the ICC to propose an arbitrator. The parties are informed of the preliminary decision of the Court regarding the measures taken toward this end. As soon as the Court selects a National Committee, the Secretariat invites it to make an early proposal, so as to enable the Court to appoint the arbitrator at one of its next sessions (the Court meets twice per month in Committee to make ail decisions necessary to confirm or appoint arbitrators).

In fact, the choice of a National Committee determines the arbitrator's nationality. In making this choice, the Court takes into account the nationalities, home countries or residences of the parties involved and of the arbitrators already nominated (if any). The Court also looks to other indications given to it by the parties (for example, the parties' agreement on the applicable law and/or possibly the place of arbitration). In making its selection, the Court also takes into account Article 26 of the Rules, which calls upon it to make every effort to make sure that the award is enforceable at law.

The Rules provide that the sole arbitrator or the chairman shall be chosen from a country other than those of which the parties are nationals (Article 2.6, third sub-paragraph). However, in suitable circumstances and provided that neither of the parties objects within the period fixed by the Court, the sole arbitrator or the chairman may be chosen from a country of which any of the parties is a national.

When the circumstances so require, the Court may choose the sole arbitrator or the chairman from a country that has no National Committee, if the parties do not object, within the period granted to them by the Court; this situation arises when, for example, the facts in the file require the selection of an arbitrator from a country where there is no National Committee (there are none, for example, in the countries of Eastern Europe or in certain Latin American countries).

The National Committee, for its part, proposes an arbitrator while taking into account the information communicated to it by the Secretariat of the Court, especially the nature of the dispute, the applicable law, the place of arbitration (which is not necessarily in the same country as the chosen National Committee) and the language(s) in the file.

Once the National Committee in question has proposed an arbitrator, his or her name is submitted to the Court for eventual appointment. The Court may choose not to accept the National Committee's proposal, in which case it may repeat its request or may request a proposal from another appropriate National Committee (Article 2.6, first sub-paragraph). This is the case, for example, when the proposed arbitrator does not speak fluently the language of the procedure or does not possess certain qualifications deemed necessary for settling the dispute.

b) Appointment of a co-arbitrator:

When the Court appoints an arbitrator on behalf of a party which has failed to nominate one, it makes the appointment after having requested a proposal from the National Committee of the country of which the said party is a national. If the Court does not accept the proposal, a National Committee fails to make the proposal within the period granted by the Court, or the country of which the said party is a national has no National Committee, the Court is free to choose any person whom it regards as suitable, after having informed the National Committee of the country of which the said person is a national, if one exists (Article 2.6, fourth paragraph).

c) Appointment in multiparty cases:

There is no problem when ail the parties to the procedure agree to have their dispute settled by a sole arbitrator, or when the Court decides that the dispute shall be submitted to a sole arbitrator; such an arbitrator is then appointed in accordance with the provisions of Articles 2.3 and 2.5 of the Rules. However, this situation rarely arises in practice.

In the majority of cases concerning arbitrations of this type, either ail the parties agree to have three arbitrators, or a decision to have a three-member panel is taken by the 1CC Court. In this case, both the claimants and defendants are invited to jointly propose an arbitrator.

When a co-arbitrator is nominated jointly by the claimants or defendants, such arbitrator is confirmed by the Court, according to Article 2.4 of the Rules. However, if the co-disputants make no proposal or their proposal is not joint, the Court invites them to do so within a fixed period of time, at the expiration of which it appoints an arbitrator on their behalf white taking into account the choice expressed by the largest number of them. [Page6:]

II. The International Court of Arbitration's supervisory role

The ICC International Court of Arbitration does not simply and automatically proceed to form the arbitral tribunal according w a predefined process. It evaluates, prior to any confirmation or appointment, the stated independence of the arbitrator and exercises control over the course of the procedure, particularly at the time of the replacement of an arbitrator.

Article 2.7 of the Rules sets forth the principle that every arbitrator appointed or confirmed by the Court must be and remain independent of the parties involved in the arbitration. The Rules do not provide a precise definition of "independence"; because of the international character of ICC arbitration, it may be hazardous to furnish a general definition of this concept, which should be interpreted according to the geo-cultural origins of the arbitrator and the parties as well as the relevant legal systems.

This duty of independence, as the Rules suggest, includes a duty to inform the Court of relevant interests. Prior to an appointment or confirmation by the Court, the prospective arbitrator discloses in writing to the Secretary General of the Court any facts or circumstances which might be of such a nature as to call into question the arbitrator's independence in the eyes of the parties (Article 2.7, third sub-paragraph).

In practice, the prospective arbitrator, whether proposed by a party or by an ICC National Committee, communicates his or her résumé and completes a "statement of independence" by which he or she certifies that he or she is independent of the parties to the arbitration and is committed to so remain. The Court does not appoint or confirm an arbitrator before these formalities are completed.

When the arbitrator selected by one or both parties, or indeed by the co-arbitrators, accepts his nomination but states certain reservations regarding his independence, these reservations are communicated to the parties by the Secretary General of the Court, who grants them a period of lime within which to make known their comments.

It is not until these comments have been received, or if no comments are received, the period granted by the Secretary General (generally 30 days) has expired, that the International Court of Arbitration announces its decision as to the confirmation or non-confirmation of the arbitrator. Its decision, which is administrative in nature, is final and the reasons for it are not communicated (Article 2.13).

The Court, in making its decision, makes an overall evaluation of the arbitrator's independence, taking into account-with due respect to its Rules, particularly Article 26, which, as may be recalled, provides that the Court shall make every effort to make sure that the award is enforceable at law-the personal situation of the arbitrator, the parties to the arbitration and their comments on the prospective arbitrator's independence, the place of arbitration and the applicable law.

When the Court decides not to confirm an arbitrator, it invites the party that proposed him to nominate someone else.

In appointing a sole arbitrator or the chairman of the arbitral tribunal following a proposal by a National Committee, the Court examines in the same manner as described above a prospective arbitrator's reservations regarding his independence. However, the details of these reservations are not communicated to the parties if the Court does not foresee his appointment, which becomes effective only in the absence of objections from the parties within a certain period of time.

III. Conclusion

Although the ICC Rules of Arbitration accord a large degree of autonomy to the will of the parties in the formation of the arbitral tribunal, they do not fail to recognize the problems linked to such autonomy and to surmount them through expedient action of the International Court of Arbitration.

Thus ICC arbitration largely meets the parties' legitimate expectations of benefiting from the necessary support for the relatively rapid formation of arbitral tribunals composed of competent and independent members. The parties know that through this process, judicial proceedings may be avoided.