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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
I accepted with pleasure the opportunity to give an overview of the Court's practice in relation to the application of Articles 7 and 8(3) of the Rules,1 being aware of the breadth of the subject but at the same time of the interest deriving from certain cases submitted to the Court for its decision as to whether or not a prima facie arbitration agreement exists. As a result of the way in which the subject has been divided for the purposes of this publication, the present overview does not cover all the cases to which Articles 7 and 8(3) apply, and those studied are not always of interest with regard to the questions which lead to prima facie decisions. However, an interesting feature deriving from the cases I have been asked to consider is the fact that in a number of these cases the very application of Art. 8(3) is open to reflection. It should be emphasised that this overview relates only to the decisions of the Court - administrative decisions - and completely ignores the arbitrators' decisions on the merits concerning the same issues, following the application of Art. 8(3). This is the somewhat frustrating side of the present article, since as a result, these questions, which are sometimes significant from the legal standpoint, are merely referred to without any analysis or commentary on the substantive issues.
It seems essential to make two preliminary observations. Firstly, the application of Articles 7 and 8(3) is limited in time; in other words, these articles are only applicable at the very outset of the procedure before the file has been transmitted to the arbitrator. Secondly, in the case of the application of Art. 12 of the Internal Rules,2 following the Secretariat's application of Art. 7, as well as the application of Art. 8(3), the Court's prima facie decision relates only to the actual existence of the arbitration agreement.
The arguments advanced by the parties - the claimants propounding the existence of the agreement, and the defendants asserting that it does not exist or that it is invalid - are varied, and sometimes incongruous. In light of the varied nature of the cases studied for the purposes of the present overview, it must be borne in mind that the objections put forward by the defendants with [Page15:] a view to preventing an ICC arbitration from proceeding do not always refer, strictly speaking, to "the existence or validity of the arbitration agreement", in accordance with Art. 8(3). It soon becomes apparent that, as a result of this, the Court is being led to use a great deal of latitude in applying Art. 8(3), so much so that the interpretation it gives of these terms is exceeding even the wide meaning which they might have in a pure legal language. Accordingly, in an attempt to classify the two hundred plus decisions of the Court that I studied, I have grouped together those. cases that to my mind exceeded the bounds of the widest possible interpretation of the terms 'existence' and 'validity' into a third category, which I have entitled 'effectiveness of the arbitration agreement'.
I. Existence of the arbitration agreement
Turning to the cases in question, it is very easy to pick out those that relate to the existence of an ICC arbitration agreement as such - indeed these are cases where there is no material presence of an arbitration clause in the contract signed by the parties. Either the defendant has disputed its existence, thus entailing the application of Art. 8(3), or in accordance with Article 12 of the Internal Rules, the claimant has asked the Court to decide on the existence of the arbitration agreement following the Secretariat's application of Art. 7. In this type of situation, the matter at issue is the existence stricto sensu of the arbitration agreement, and the cases relating to this will be grouped together in the first category (A). In a second group of cases, of a type that is remarkably common, since it reflects the numerous complex relationships in the field of international commerce, it is not the existence of the arbitration clause as such that is disputed, but rather its implied limits, or "subjective" scope. And the question which arises for the Court is whether a claimant or defendant implicated by the Request for arbitration appears prima facie to be bound by the arbitration clause or, in other words, whether the arbitration clause exists prima facie in relation to the party in question. In the present overview, the only cases dealt with under this category will be those relating to groups of companies; they will be described separately under the heading of issues involving the subjective existence of the arbitration agreement (B).
A. Existence stricto sensu of the arbitration agreement
As a general rule, the Court will confirm the Secretariat's application of Art. 7, following a request on the ground of Art. 12 of the Internal Rules, when it is genuinely convinced that no ICC arbitration agreement exists. The following Requests for arbitration are examples falling into this category: a Request for Arbitration by a sub-contractor against the employer, the main contractor and the main contractor's parent company although there was an ICC arbitration agreement in the main contract only; a Request for Arbitration against a bank guarantor although there was no arbitration agreement in the contract of bank guarantee but only - according to the claimant - in the contract for which the guarantee was provided which, moreover, was not produced; a Request for Arbitration on the basis of a standard FIDIC contract for Independent Consultant Engineering Services containing no ICC arbitration clause (this standard contract leaves the arbitration clause blank, for the parties to fill in), with the claimant alleging that Art. 67 of the FDIC Contract for Works of Civil Engineering Construction should be applied by analogy; a Request for Arbitration based on a contract which merely contained a reference to the ICC publication Uniform Customs and Practice for Documentary Credits (UCP) in one of its clauses, whereas the UCP do not contain an arbitration clause; a Request for Arbitration against the social security authorities of a country, based on an arbitration clause contained in the bilateral financing convention between the country in question and the EEC, concerning the project that had engendered the claimant's obligation to pay social security contributions to the defendant.
In one case of more general interest, the Court took the view that no ICC arbitration agreement existed since the amended version of Art. 67 FIDIC contained in the contract specified as follows: "All settlements shall be made by the arbitrators of His Excellency the Minister of ... instead of the arbitrators of the International Chamber of Commerce as referred in Part I, Conditions of Contract, and shall be binding", which clearly turned up to depriving the Court of its powers to administer the arbitration procedure, since any question relating to the replacement or challenge of arbitrators, not to mention the constitution of [Page16:] the arbitral tribunal - also involving the requirement of independence of the arbitrators - was entrusted to a third person. Under these circumstances, the Court instructed the Secretariat to apply Art. 7 and when the claimant subsequently sought a decision on the ground of Article 12, it confirmed that no ICC arbitration agreement existed. This decision is in my opinion important in that, by resorting to ICC arbitration, the parties are deemed to submit to the Rules (Art. 8(1)) in their entirety. An ICC arbitration agreement that derogates from fundamental provisions of the Rules is thus deemed to be non-existent in the eyes of the Court, and the arbitration will not be able to proceed.
Another case that deserves special mention in the context of the application of Art. 7 of the Rules involved a dispute submitted for ICC arbitration by reference to Art. 238 of the Lomé Ill Convention (1984) against the government of a country that was a party to the said Convention, although the contract specified an ad hoc arbitration. One reason why the claimant took this step was because the defendant itself had stated that ICC arbitration under the Lomé Convention should take precedence over the arbitration agreed in the contract; as a result of the defendant taking this stand another ICC arbitration between the same parties based on a different contract concerning another part of the same project, but containing the same ad hoc arbitration clause, was pending. In the second arbitration, the defendant had refuted the ICC's jurisdiction and alleged that Art. 7 should be applied. Under these circumstances, the Committee of the Court instructed the Secretariat to apply Art. 7 with a view to the case being decided in plenary session, expecting Art. 12 of the Internal Rules to be applied. The Committee, in fact, was of the opinion that no prima facie ICC arbitration agreement existed, and that the defendant's agreement with an ICC arbitration procedure in the first case should have no influence on the Court's decision with regard to whether the second case should proceed. The case was actually brought before the plenary session following the application of Art. 12 and, contrary to the Committee, the Court decided that a prima facie ICC arbitration agreement did indeed exist and that, accordingly, the case should be sent to the arbitrators, as they alone had jurisdiction to evaluate the parties' legal arguments on the scope, application and mandatory character of the Lomé Convention.
In the present paragraph are grouped together the cases where, following the defendant's disputing, the existence of an arbitration agreement as such. the Court applied Art. 8(3) and decided that the procedure should go ahead, taking the view that a prima facie arbitration agreement existed. Disputes of this kind are often encountered when the arbitration agreement exists, but is contained in a document other than the contract, and which has not been signed by the two parties, such as, for example, the claimant's general conditions, specifications, or the confirmation of the order or purchase. In fact, the question the arbitrators have to determine following the Court's application of Art. 8(3) is whether or not an arbitration agreement exists as a result of a reference to the document containing the said agreement. But the cases may take a variety of forms: following a partial settlement of the dispute, the remainder had to be decided by arbitration, and the defendant alleged that the ICC had no jurisdiction because the settlement agreement contained no reference to the arbitration clause in the main contract; or, in another case, following the settlement of the dispute by the parties, the Request .for Arbitration based on the settlement agreement signed by the parties was not admissible since, in contrast with the initial contract, it contained no arbitration clause.
The Court's practice in this regard is quite stable, in compliance with the terms of Art. 8(3), in that it applies this article only when an objection is raised by one of the parties regarding the existence of the arbitration agreement: in one case, for instance, where there. was no arbitration agreement signed by the parties, but where the defendants had consented to arbitration by cooperating in the constitution of the arbitral tribunal, after having entered a plea of lack of jurisdiction before a state court, the ICC Court decided the arbitration should proceed and that. Art. 8(3) was not to be applied.
B. "Subjective" existence of the arbitration agreement - groups of companies
Nearly all the cases involving groups of companies, where the Court has been called to decide on the prima facie existence of an [Page17:] arbitration agreement, are fairly complex and call for a careful examination of the special circumstances of each individual case under which a party who did not sign the contract is implicated in the arbitration. The special circumstances that have led the Court to take the view that a prima facie arbitration agreement exists in relation to a party sometimes derive from certain features of the contract, and sometimes from the actual conduct of the party involved in the arbitration.
In a number of cases, the Court decided that a prima facie arbitration agreement existed that was binding on one or more companies that were members of the same group of companies, despite the fact that the companies in question had not signed the contract. The Court's decision was based on the consideration that one of the defendants having admitted to being bound by the arbitration agreement as a signatory, had signed the contract both on its own account and on account of the subsidiaries against which the arbitration was brought - the other defendants. The Court also applied Art. 8(3) in two cases where the indications of "subjective" existence were less conspicuous. In the first, the defendant alleged that it had no capacity to act because the contract had been signed by a subsidiary, whereas in the second, the defendant was the parent company of the firms that had signed the three contracts in dispute. Art. 8(3) is also often applied, in the same sense, in relation to claimants, for example: in one case where the defendant disputed the locus standi of the two claimants because it had signed the contract with the first claimant's group of companies only; in another case, where the contract had been concluded with the claimant's parent company alone; and in a third case, where the contract had been signed by one of the claimant's subsidiaries, and this subsidiary's rights and obligations had been assigned to the group the claimant - but allegedly without the defendant's consent.
Apart from the circumstances of the signature of the contract, as referred to in the above cases, the content of a particular clause in the contract may also lead the Court to consider that a prima facie arbitration agreement exists which is binding upon a party that did not sign the contract. Here four of the cases studied can be cited: in the first, the Court reached its decision on the basis of the scope of the arbitration clause in the contract, which apparently had a binding effect on subsidiaries, including the defendant company which disputed its locus standi; in the second, a contractual clause apparently created "cross" liabilities between the companies in the group, including the defendants which disputed their locus standi; in the third, the fact that defendant no. 2, which disputed its locus standi, had concluded a contract containing an arbitration clause - with the claimant with a view to the creation of defendant no. 1, the employer of the construction project in dispute. Lastly, in the fourth case, which concerned the locus standi of two of the three claimants, a contractual provision specified that subsidiaries could take part in the performance of the contract.
The Court sometimes decides to confirm the Secretariat's application of Art. 7 or, on the other hand, to apply Art. 8(3) and hold that a prima facie arbitration agreement exists (depending on the case) in the light of the conduct of a party, although not a signatory to the contract which is implicated in the arbitration by the Request, whether as claimant or defendant. It is clear from the cases studied that the criterion used by the Court is whether or not the party in question took part in the negotiations, signature or even the termination of the contract, thus demonstrating its intention to become a party to the arbitration agreement. However, for the Court to decide to apply Art. 8(3) and take the view that a prima facie arbitration agreement exists in relation to the party in question, the latter's intention of being bound by the arbitration agreement has to be demonstrated to the other party. In fact, the cases studied reveal that it is not enough for that intention to be deduced from the group's internal acts or from communications to third parties; moreover, the fact that the group of companies as a common management structure is not per se a sufficient indication for the application of Art. 8(3) either.
There have also been a few instances, though less often, where the Court confirmed the application of Art. 7 or applied Art. 8(3) when confronted by allegedly fraudulent conduct by a non-signatory [Page18:] party dragged in the arbitration (it will be normally, in this case, a defendant to the arbitration). But in order for the Court to apply Art. 8(3), it needs strong indications of fraudulent behaviour, such as a case where all the assets of the subsidiary company - the signatory of the contract - had been stripped by the parent company, which had not signed the contract, and against which the arbitration had been brought.
As a conclusion, it is possible to state that the Court is very circumspect and well aware of the needs and actual raison d'être of groups of companies when it attempts to lift prima facie the corporate veil and applies Art. 8(3), instead of confirming the application of Art. 7; it does so in accordance with the specific circumstances of each case and on the basis of criteria that are both strict and consistent. And that it is anyway for the arbitrators, on each occasion, to make an in-depth and detailed examination of the relevant circumstances, as they are the ones who have the main burden of determining the "subjective" existence of the arbitration agreement.
Il. Validity of the arbitration agreement
Turning to the question of the validity of the arbitration agreement, here it becomes more difficult to classify cases and it becomes apparent that the Court's interpretation of Article 8(3) is very broad. This section groups together the cases where Art. 8(3) was applied as a result of defendants' disputing the validity of the arbitration agreement as such, as well as disputes regarding the validity of the contract containing the agreement. In fact, in a number of cases, notwithstanding the terms of Art, 8(4) which establishes the principle of the severability of the arbitration clause, defendants have contested the validity of the contract - by invoking classic grounds for nullity - using this as a reason for raising a jurisdictional objection against the arbitration. In all these cases, after having noted that a prima facie arbitration agreement existed, the Court referred them to the arbitrators, taking the view that they alone had jurisdiction to rule on the validity of the arbitration clause or the contract.
A. Disputes as to the validity of the arbitration agreement
In this connection Art. 8(3) is applied in strict compliance with its very letter. Moreover, such disputes are specific, linked to the nature of the arbitration agreement, and closely related to the law applicable to the contract, or the law of the nationality of one of the parties which signed the contract in the few rare cases where the issue is one of capacity to arbitrate or of a requirement of a special power to this end.
In two of the cases studied, the defendants alleged that the arbitration clauses were void because they were generally inadmissible under the law applicable to the contract (Turkish law in one of these cases, Spanish law in the other). But arguments concerning the nullity of the arbitration clause are usually more concrete, such as the vexatious nature of the clause which made it void under Italian law; the need for signature of a special submission agreement to arbitrate (compromis) under Brazilian law; the prohibition of recourse to arbitration in an administrative contract under Egyptian or Tunisian law; the nullity of an arbitration clause in a 'mixte' contract (contract between a merchant and a non-merchant party) under French or German law; Iranian law's prohibition on signing any arbitration agreement that does not exclude the appointment of an arbitrator having the nationality of one of the parties or even the requirement under the Iranian constitution for the arbitration agreement to be approved by Parliament.
Moreover, arguments regarding the validity of the arbitration agreement can be particularly inventive. For instance, in one case, the defendant called the validity of the arbitration clause into question on the ground that the courts of the claimant's country considered ICC arbitration clauses to be contrary to public policy, asserting that as a result there was no guarantee for an equal treatment of the parties, since the party who was a national of the country in question (the claimant) would benefit from a quasi-immunity in case the award were rendered in favour of the other party (the defendant).
In addition to the cases referred to above, three further cases involving the "subjective" validity of the arbitration agreement could be mentioned [Page19:] here. In these cases, the defendant opposed the arbitral tribunal's jurisdiction by invoking that, as a public entity, it had no capacity to enter into an arbitration agreement. The first case concerned a state which asserted the said lack of capacity on the ground of its judicial code, despite the existence of a treaty authorising it to submit to arbitration; the other two cases concerned ministries, the one invoking that its country's courts had exclusive jurisdiction, and the other immunity from jurisdiction.
Lastly, some cases that should be noted concerned disputes as to the validity of the arbitration agreement based on one of the signatories' lack of special power to enter into arbitration agreements; as well as two other cases where the defendants alleged that the arbitration clause was void because it required separate signature on the basis of the severability principle.
B. Disputes as to the validity of the contract
There are quite a number of cases in which the defendants have disputed the validity of the contract, and where the Court has applied Art. 8(3) and referred the case to the arbitrators after ascertaining the existence of a prima facie arbitration agreement. In fact, it is clear that in alleging that the contract is void, the parties' intention is for this to lead to the nullity of the arbitration clause included in that contract. Indeed, although in some cases the grounds advanced in support of the contract's being void cannot but coincide with reasons making the arbitration clause void as well, this is not a general rule. And if the arbitrators, who are in any case the 'judges' of the contract, hold that the arbitration agreement is valid, they have the power to determine whether or not the principal contract is also valid, and the consequences of its invalidity should this be the case, in accordance with the express provision of Art. 8(4).
The various grounds invoked by defendants in their attempt to prove that the contract is invalid and that the arbitration should thus be stopped at the very outset of the procedure are the same and are as varied as the grounds of nullity encountered in any country's law of contracts; in fact, the issues involved here are defects in the contract which affect its validity. The cases studied can be grouped into the following categories:
• defects in the formation of the contract: particularly common are cases where the defendant disputes that the exchange of intentions culminated in an agreement, and cases where the written form of the contract is disputed because it is merely initialled;
• lack of powers of representation on the part of one of the signatories to the contract. Defendants frequently dispute their own or the claimant's capacity to take part in the arbitration on this ground;
• defects as to the form of the contract: for example, a case where the defendant alleged that the contract containing the arbitration clause was void because it did not contain the appropriate authorisation;
• defects in the content of the contract: one especially comes across cases where the object of the contract is unlawful according to the law applicable to the contract (e.g. contract between shareholders of a joint-stock company, contract between heirs ).
Lastly, there have been numerous cases where defendants have alleged that the contract has ceased to be valid because it has been terminated, has expired or been cancelled by another contract. Indeed, these are cases regarding the "validity" of the contract in a wide sense of the term which is closely akin to "existence". This comment applies with even greater force in relation to two other cases where the defendants alleged that the contract had never entered into force, unless it is presumed that a condition precedent to its validity and entry into force had not been fulfilled.
III. Effectiveness of the arbitration agreement
Cases covering points that exceed the bounds of the mere existence or validity of the arbitration agreement have been grouped in a third category, outside the wording of Art. 8(3). From the study of the arguments asserted by the defendants, it appears that they very often seem to allege that the arbitration agreement is "inoperative or incapable of being performed", in the sense of Art. II § 3 of the New York Convention, rather [Page20:] than "inexistent" or "invalid". In principle, the Court applies Art. 8(3) to these kinds of cases as well, but sometimes with a certain reluctance.
A. Parallel existence of choice-of-forum clauses
In four cases, a clause stipulating ICC arbitration existed alongside a clause attributing jurisdiction to the state courts, while in one of them the latter clause was stipulated to be exclusive; in another case, the ICC arbitration clause existed alongside an ad hoc arbitration clause which, at the time the matter was referred to the Court, the state courts ruled to be void. Special mention should be made of one case, which related to two interlinked contracts, the parallel existence of clauses was particularly complicated. The two contracts contained different ICC clauses alongside clauses attributing jurisdiction to the national courts, with the choice of jurisdiction being left to the claimant in one of the contracts and to both parties in the other contract; and to complicate matters even further, in one of the contracts the national court was defined as having exclusive jurisdiction in view of certain circumstances.
In this context, two further cases should be mentioned where the situation of competing jurisdictions resulted from pathological clauses, more specifically from the ambiguity of the single clause in one of the cases, and from the existence of a so-called "expert arbitration clause" in addition to an ICC arbitration clause, in the other case.
In all the cases referred to above, when the defendant disputed the jurisdiction of ICC arbitration, the Court decided that the procedure should go ahead in application of Art. 8(3).
B. Concurrent court and arbitral proceedings
In several cases, we find the defendant opposing the arbitration by alleging that the arbitration agreement has ceased to be operative, following the claimant's waiver of it, as a result of its referral of the case to the national courts for the substantive issues in dispute to be dealt with, or even with a view to obtaining an interim measure, despite - in the latter case - the express provision of Art. 8(5) of the Rules which specifically stipulates that such referral is not held to infringe the agreement to arbitrate.
In fact, apart .from one exception where, despite the defendant's entering a plea of lis pendens in view of the claimant's referral of the substantive issues to the German courts, the Court decided that Art. 8(3) was not applicable and the arbitration procedure followed its normal course, its established practice is to apply Article 8(3) and commence the procedure on this basis.
The Court has also decided to apply Art. 8(3) and set the procedure in motion, despite the defendant's plea of lis pendens, in a number of cases where the defendant itself had referred the case to the national courts, before or even after the notification of the Request for Arbitration, whether the referral in question related to the same dispute as the arbitration, to a related case, or to the arbitration agreement's validity and scope. In compliance with the terms of Art. 8(3), the Court has declined to apply this article when, despite the fact that it was known that a case was pending before a national court on the instigation of the defendant, the defendant made no objection to the arbitral tribunal's jurisdiction. Moreover, the Court has applied Art. 8(3) and set in motion the proceedings when the case pending before a national court was used as a ground for a request for a stay. Another case that can be compared to the examples given in the present paragraph is somewhat unusual from the standpoint of the argument advanced by defendant 2 as a means of disputing the arbitral tribunal's jurisdiction: the argument invoked was the fact that defendant no. 1 had been put into receivership under court supervision, and therefore only the national courts had jurisdiction to hear the dispute between the two defendants and the claimant.
Finally, special reference should be made to one case where the Court applied Art. 8(3) while an ICC arbitration procedure was already pending. The defendant asked the Court to decline its jurisdiction because there was no new dispute that was not subject to the pending arbitration. In fact, the other arbitration that was proceeding had been instigated by the defendant against the claimant and one of its directors on the basis of the same contract and in relation to the same dispute; the Terms of Reference had already been signed and the procedure was in progress. The Request in the second arbitration related to a new claim which had not been included in the first arbitration (whether it could be deemed to fall within the scope of the latter's terms of reference or not). However, since in any case the parties to the two [Page21:] arbitrations were different, the Court was not able to decide that the two cases should be joined in accordance with Art. 13 of the Internal Rules. Nothing to say so far; one can however wonder why the Court decided that Art. 8(3) was applicable, since the defendant had not in any way disputed "the existence or validity of the arbitration agreement", even in the widest sense of the term, nor did it oppose the jurisdiction of ICC arbitration. Furthermore, the defendant proposed as an alternative that the same arbitral tribunal should be constituted to deal with the second arbitration. Did the Court adopt the view that the issue in question was related to the admissibility of claims as in the following cases?
C. Admissibility of claims
In a few cases, the defendants objected to the arbitration by alleging that the claims were time-barred, extinguished or even premature. These were cases concerning the admissibility of the claims stricto sensu, where the Court applied Art. 8(3) without hesitation and decided that the procedure should go ahead, despite the objection of some of the parties.
D. Arbitrability of the dispute
The plea that the dispute is not arbitrable is also used fairly often by defendants with a view to having the arbitration stopped, whether or not it is combined with another plea more closely akin to "the existence or validity of the arbitration agreement". In the cases studied, the following issues were alleged not to be arbitrable: French patent law, Belgian competition law, a claim for compensation and unfair commercial practices. Another case that might also be included here was linked to the nature of the claim. This case involved a request for the interpretation of an award in an ad hoc arbitration which the defendant alleged did not fall within the arbitrators' jurisdiction. The Court applied Art. 8(3) and decided the procedure should go ahead in all these cases.
Furthermore, the Court followed the same line in a case where the plea invoked by the defendant was that a request for cancellation of a resolution by its general assembly was outside the scope of the arbitration clause, an issue lying somewhere between the arbitrability of the request and the scope of the arbitration clause.
E. Pre-arbitral conditions stipulated in the contract
This section basically concerns two groups of cases: in the first group, the defendants take the view that the arbitration is premature and cannot go ahead because the conciliation procedure specified in the contract as a necessary preliminary to arbitration has not been respected; whereas in the second group of cases, it is alleged that the conditions of Art. 67 of the FIDIC General Conditions have not been complied with and, accordingly, the Request for Arbitration is inadmissible. In this connection, the Court's decisions are varied, and the criteria on which it has based its assent or refusal to apply Art. 8(3) are difficult to detect.
In relation to the necessary preliminary stage of conciliation, the Court has applied Art. 8(3) and decided that arbitration should proceed on this ground in five cases. Nonetheless, it should be mentioned that in the earliest of these cases, the defendant alleged that it was bound by a conciliation clause alone as the clause used the expression "friendly arbitration" - which should apparently have led the Court to view the case as involving an issue relating to the very existence of the arbitration clause. Moreover, it is noted that, in one of these cases, the clause in question was not a typical conciliation and arbitration clause, but rather a clause that more specifically made provisions for a conciliation procedure.
In two other cases, the Court held that the defendant's objection did not relate to the existence and validity of the arbitration agreement. Accordingly, it decided that the provisions of Art. 8(3) were not applicable and the arbitration went ahead in the normal way. In a third case, it also decided not to apply Art. 8(3), holding that the defendant had refused to cooperate in the proceedings with a view to an amicable settlement, although the clause provided quite specifically for a conciliation procedure.
No conclusion can actually be drawn from the cases studied as regards the reasons why the Court did or did not apply Art. 8(3) following an objection .from the defendant regarding failure to comply with a pre-arbitral conciliation procedure. The detailed stipulation of a conciliation procedure in the contract which might possibly constitute one [Page22:] criterion has not in practice led to any uniform decisions, as is shown by the two cases referred to above.
The approach with regard to failure to comply with Art. 67 of the FIDIC General Conditions seems to be similar. Indeed, although the Court has applied Art. 8(3) and the procedure has gone ahead on this ground in a number of cases where the defendant's objection related to failure to comply with the terms of Art. 67 of the FIDIC General Conditions, in one case the Court decided that it was not necessary to apply Art. 8(3) because the defendant's objection did not relate to the existence or validity of the arbitration agreement but rather to the admissibility of the claims. The Court had reached a similar decision that the procedure should go ahead and that there was no need to apply Art. 8(3) in essentially the same case, following an objection lodged by the defendant relating to the same claims in an earlier arbitration that had led to the second procedure following the arbitrators' rejection of the claims. Lastly, the Court has applied Art. 8(3) when the requests were allegedly introduced after the time limits laid down by the contract.
Final comments
1. The raison d'être of the inclusion of Arts. 7 and 8(3) in the Rules is, in my opinion, on the one hand, to prevent an ICC arbitration procedure going ahead when the parties have not agreed on such a procedure and, on the other hand, to safeguard ICC arbitration and protect parties acting in good faith by having the procedure set in motion whenever it seems that an ICC arbitration has been actually agreed. The key word (besides the prima facie examination) contained in Arts. 7 and 12, and in Art. 8(3), is the existence of an ICC arbitration agreement, since whatever pleas are invoked by a party, the only issue that the Court examines is the existence of this agreement. Sometimes veritable debates take place at the Court's plenary sessions with a view to determining the prima facie existence of the arbitration agreement "by way of reference", its "explicit" existence (cases of pathological clauses), its "subjective" existence (cases involving the arbitration's binding effect on non-signatories of the contract, including companies that are members of a group, as well as cases of assignment, transfer, novation, etc.), not all of which are the subject of the present overview. In all these cases, although the Court's decisions on application of Art. 12 of the Internal Rules following the Secretariat's application of Art. 7 but also of Art. 8(3) following a dispute on the existence of the arbitration agreement, are administrative, they are nonetheless very important, since as a result of a decision on prima facie existence, an arbitration may well not proceed or be reduced in respect of the persons cited as parties in the Request for Arbitration.
2. When the parties' objections relate to a question of validity of the arbitration clause - or of the contract - or even a question of its effectiveness (see the cases referred to above), the way in which Art. 8(3) is applied - at the suggestion of the Secretariat and following a decision of the Committee of the Court (usually) - will be quasi-mechanical since the prima facie existence of the arbitration agreement, which is the only issue that the Court's decision may relate to, is not really called into question. The arbitration procedure always goes ahead and it is for the arbitrators to decide, once and for alI in an ICC arbitration procedure, on the validity or effectiveness of the arbitration agreement. This leads to two lines of reflection which take the form of questions taking also into account the possible revision of the Rules.
a) Is it necessary for Article 8(3) to state that a dispute concerning the validity of an arbitration agreement leads to a prima facie decision? Would it not be better to restrict the Court's intervention - and the risk of delay in the procedure - solely to disputes relating to the existence - including the "subjective" existence - of the arbitration agreement?
b) If, on the other hand, the Court's intervention in its administrative capacity is deemed to be a necessary means of formally obliging the arbitrator to decide on any objection raised in relation to the jurisdiction of ICC arbitration, the arbitrators' powers or the admissibility of claims - an objection which should be included in the Terms of Reference as the first issue to be determined - should not the wording of Art. 8(3) be widened in an attempt to genuinely reflect the Court's field of intervention? [Page23:]
3. From the cases studied it appears to me that the Court's practice with regard to the application of Art. 8(3) follows the lines set out below:
• it does not apply Art. 8(3) when the defendant fails to lodge an express objection, even in the face of a known fact that would have led to its application had such an objection been lodged;
• in principle, it applies Art. 8(3) to any opposition to the commencement of the ICC arbitration irrespective of the nature of the arguments advanced;
• the exceptions, in other words the cases where the Court does not apply Art. 8(3) and the procedure goes ahead in the normal way, fall loosely into the nebulous domain of any type of objection - other than those relating to the existence or validity of the arbitration agreement - that a defendant may assert as a ground for opposing ICC arbitration.
Nonetheless, there is no doubt that the Court's application of Art. 8(3) on the basis of a broad interpretation of the terms "existence" and "validity" of the arbitration agreement is motivated by its desire to protect ICC arbitration on all sides: the procedure goes ahead and any tactic based on bad faith is cut short, while the arbitrator is obliged to make a decision on the plea invoked. The intervention by the Court occasionally goes a little too far perhaps, doubtless encouraged by the polysemic wording of Art. 8(3) and incited by the complexity, unusual nature, or sometimes even the extravagance of the objections raised; in any case, it always remains within the bounds of the administration of arbitration.
1 Article 7:"Where there is no prima facie agreement between the parties to arbitrate or where there is an agreement but it does not specify the International Chamber of Commerce, and if the Defendant does not file an Answer within the period of 30 days provided by paragraph I of Article 4 or refuses arbitration by the International Chamber of Continence, the Claimant shall be informed that the arbitration cannot proceed." Article 8(3) : "Should one of the parties raise one or more pleas concerning the existence or validity of the agreement to arbitrate, and should the International Court of Arbitration be satisfied of the prima facie existence of such an agreement, the Court may, without prejudice to the admissibility or merits of the plea or pleas, decide that the arbitration shall proceed. In such a case, any decision as to the arbitrator's jurisdiction shall be taken by the arbitrator himself."
2 Art. 12 of the Internal Rules: "Where there is no prima facie arbitration agreement between the parties or where there is an agreement but it does not specify the ICC, the Secretariat draws the attention of the Claimant to the provisions laid down in Article 7 of the Rules of Arbitration. The Claimant is entitled to require the decision to be taken by the International Court of Arbitration. This decision is of an administrative nature. If the Court decides that the arbitration solicited by the Claimant cannot proceed, the parties retain the right to ask the competent jurisdiction whether or not they are bound by an arbitration agreement in the light of the law applicable. If the Court considers prima facie that the proceedings may take place, the arbitrator appointed has the duty to decide as to his own jurisdiction and, where such jurisdiction exists, as to the merits of the dispute."